Exhibit 99(a)
SETTLEMENT AGREEMENT
1. Parties. The parties (collectively, the "Parties" and
individually, a "Party") to this Settlement Agreement (this
"Agreement") are:
(a) Xxxxxxxx X. "Xxx" Xxxxx, Attorney General of the State of
Missouri (the "Attorney General");
(b) The Missouri Department of Insurance and Xxx X. Xxxxxx, its
Director (referred to collectively as the "Department of
Insurance");
(c) Blue Cross and Blue Shield of Missouri ("Blue Cross Blue
Shield"), a Missouri not for profit health services corporation;
and
(d) RightCHOICE Managed Care, Inc. ("RightCHOICE"), a Missouri
for profit general business corporation.
2. Pending Litigation. A purpose of this Agreement is to
settle certain civil actions. Those actions are:
(a) Blue Cross Blue Shield of Missouri, Plaintiff v. Xxx Xxxxxx,
Director of the Missouri Department of Insurance, the Missouri
Department of Insurance and Xxxxxxxx X. "Xxx" Xxxxx, No. CV196-
619CC, in the Circuit Court of Xxxx County, Missouri (the
"Purposes Litigation"). The Purposes Litigation arises from a
series of transactions consummated in 1994 (the "1994
Reorganization"). In those transactions, certain assets and
liabilities of Blue Cross Blue Shield were transferred to a newly
formed for-profit subsidiary, RightCHOICE, and a minority
interest in RightCHOICE was sold pursuant to a public stock
offering.
(b) Blue Cross Blue Shield of Missouri v. Xxx Xxxxxx, Director
of the Missouri Department of Insurance, the Missouri Department
of Insurance and Xxxxxxxx X. "Xxx" Xxxxx, No. WD 53798, in the
Missouri Court of Appeals, Western District (the "Purposes
Litigation Appeal").
(c) Blue Cross Blue Shield of Missouri v. Xxxxxxxx X. "Xxx"
Xxxxx, Cause No. CV197-1558CC, in the Circuit Court of Xxxx
County (the "Mutual Benefit/Public Benefit Action").
3. Additional Purposes. Additional purposes of this Agreement
include:
(a) Providing that the assets of Blue Cross Blue Shield will be
used in a manner which is consistent with Missouri law and the
history and past purposes of Blue Cross Blue Shield;
(b) Protecting the interests of all those who subscribe to the
indemnity and managed care plans of Blue Cross Blue Shield and
its affiliates, consistent with the contracts that define their
rights and any additional rights that they might have under law;
(c) Providing for the continuation, on the part of a successor
to Blue Cross Blue Shield, of its membership in the national Blue
Cross and Blue Shield Association and rights as a licensee of the
Blue Cross and Blue Shield names and marks;
(d) Fulfilling all duties owed by Blue Cross Blue Shield and its
directors and officers;
(e) Fulfilling all duties owed by RightCHOICE and its directors
and officers to its shareholders;
(f) Providing to the Circuit Court of Xxxx County a reasonable
alternative to dissolution that may be implemented pursuant to
X.X.Xx. 355.726 and which will at the same time provide that
the assets of Blue Cross Blue Shield will be held and applied
pursuant to a fair and equitable settlement of litigation pending
before it; and
(g) Providing for the reorganization of Blue Cross Blue Shield
in accordance with the Missouri General Not For Profit
Corporation Law and the Reorganization Agreement described below.
4. Reorganization Agreement. As partial consideration for
their mutual undertakings in this Agreement, upon the
satisfaction of the Signing Conditions (as defined below):
(a) the Attorney General and Department of Insurance shall
(1) cause a new Missouri not for profit public benefit
corporation (the "Foundation") to be organized and
incorporated by filing with the Missouri Secretary of
State Articles of Incorporation in the form attached
hereto as Exhibit A, causing Bylaws in the form
attached hereto as Exhibit B to be adopted as the
Bylaws of the Foundation, and appointing the initial
members of the Board of Directors of the Foundation,
(2) cause a new Delaware for profit corporation ("New
RIT") to be organized and incorporated by filing with
the Secretary of State of Delaware a Certificate of
Incorporation in the form attached hereto as Exhibit C,
causing one share of its common stock to be issued to
the Foundation, and causing Bylaws in the form attached
as Exhibit D to be adopted as the Bylaws of New RIT,
(3) cause the Board of Directors of the Foundation to
authorize the Foundation to execute an Agreement and
Plan of Reorganization (the "Reorganization Agreement")
in the form attached as Exhibit E and fulfill all
obligations and satisfy all conditions thereunder, and
take all other actions as are necessary or appropriate
to consummate the transactions contemplated by the
Reorganization Agreement in accordance with the
Reorganization Agreement, (4) cause the Board of
Directors of New RIT to authorize New RIT to execute
the Reorganization Agreement and fulfill all
obligations and satisfy all conditions thereunder, and
take all other actions as are necessary or appropriate
to consummate the transactions contemplated by the
Reorganization Agreement in accordance with the
Reorganization Agreement, and (5) cause the Foundation
and New RIT to execute the Reorganization Agreement;
and
(b) Blue Cross Blue Shield and RightCHOICE shall execute
the Reorganization Agreement, and take all other
actions necessary or appropriate to consummate the
transactions contemplated by the Reorganization
Agreement in accordance with the Reorganization
Agreement.
The terms of the Reorganization Agreement and other agreements to
be executed in connection therewith control as to the rights of
the parties and steps to be taken thereunder. The Reorganization
Agreement provides for the consummation of a series of
transactions (the "Reorganization") whereby Blue Cross Blue
Shield will be converted into a Missouri for profit general
business corporation, reincorporated in Delaware, and
subsequently merged with RightCHOICE. The Foundation will become
the owner of the same percentage of the issued and outstanding
stock of the resulting entity ("New RightCHOICE") as Blue Cross
Blue Shield owns in RightCHOICE immediately prior to the
Reorganization. The public shareholders of RightCHOICE
immediately prior to the Reorganization will become the owners of
the remainder of the issued and outstanding stock of New
RightCHOICE. Shares of New RightCHOICE owned by the Foundation
will be liquidated over time and the proceeds applied to purposes
stated in the Foundation's charter documents.
The obligations of Blue Cross Blue Shield and RightCHOICE to
sign the Reorganization Agreement, and the obligations of the
Attorney General and Department of Insurance under paragraph 4(a)
above, are subject to the satisfaction or waiver of each of the
following conditions (the "Signing Conditions"):
(i) Blue Cross Blue Shield and RightCHOICE are
satisfied that the determination of lawfulness
described in paragraph 6 has been obtained;
(ii) Court approval of this Agreement and the
Reorganization as described in paragraph 7 has been
obtained; and
(iii) the putative class action brought by the
Xxxxxx plaintiffs now pending in the Circuit Court for
the City of St. Louis (the "Xxxxxx Litigation"), and
arising out of the 1994 Reorganization, has been
finally resolved to the satisfaction of Blue Cross Blue
Shield, RightCHOICE, the Attorney General and
Department of Insurance.
5. Conditions Precedent. The obligations of the parties to the
Reorganization Agreement to effect the Reorganization are subject
to the satisfaction or waiver of certain conditions specified in
the Reorganization Agreement, including obtaining the
determination of lawfulness described in paragraph 6 hereof, the
court approval of the settlement described in paragraph 7 hereof,
the disposition of the various civil actions as described in
paragraph 8 hereof, and the disposition of the Xxxxxx Litigation
as described in paragraph 12. The date after which all of the
conditions precedent to the Reorganization are satisfied and on
which the Reorganization is consummated is referred to herein and
in the Reorganization Agreement as the "Closing Date."
6. Determination of Lawfulness. Consummation of the
Reorganization is contingent upon entry of a binding final
judgment of the Circuit Court of Xxxx County that the
Reorganization is lawful and consistent with Missouri statutes,
including X.X.Xx. Chapters 354 and 355, that the Reorganization
may be consummated without breaching any of the fiduciary duties
of the directors of Blue Cross Blue Shield, and that the Articles
of Incorporation of Blue Cross Blue Shield may be amended as Blue
Cross Blue Shield deems necessary to consummate the
Reorganization in accordance with the Reorganization Agreement.
The process for securing this determination shall be:
(a) Blue Cross Blue Shield has filed an amended pleading in the
Public Benefit/Mutual Benefit Action. In that pleading, Blue
Cross Blue Shield seeks a declaratory judgment that for it to
consummate the Reorganization is lawful and consistent with
Missouri statutes, including X.X.Xx. Chapters 354 and 355, that
the Reorganization may be consummated without breaching any of
the fiduciary duties of the directors of Blue Cross Blue Shield,
and that the Articles of Incorporation of Blue Cross Blue Shield
may be amended as Blue Cross Blue Shield deems necessary to
consummate the Reorganization in accordance with the
Reorganization Agreement.
(b) The Parties have consented to the addition of Xxxxxxx X.
Xxxxxx, Xx. and Xxxxx Xxxxxxx as parties in the Public
Benefit/Mutual Benefit Action for the purposes of adjudicating
whether those plaintiffs, and the class of similarly situated
persons whom they seek to represent, have standing to litigate
the issues necessary to obtain the ruling described in paragraph
6(a) and (if the court finds they do have such standing) for
purposes of their participation in the adjudication of all such
issues.
(c) The Parties will stipulate to the certification, pursuant to
Mo. Sup. Ct. Rule 52.08(b)(2), of a class of present and former
subscribers of Blue Cross Blue Shield and its subsidiaries, to be
represented by Mr. Hacking and Xx. Xxxxxx for purposes of
obtaining the rulings described in paragraphs 6(a) and 6(b);
(d) If the Court certifies a class as described, the Parties
will use best efforts to secure an early adjudication of the
issues described in paragraphs 6(a) and 6(b).
(e) If, after class certification and hearing in the Circuit
Court of Xxxx County on the issues described in paragraphs 6(a)
and 6(b), the Court enters judgment that consummation of the
Reorganization is lawful and consistent with Missouri statutes,
including X.X.Xx. Chapters 354 and 355, that the Reorganization
may be consummated without breaching any of the fiduciary duties
of the directors of Blue Cross Blue Shield, and that the Articles
of Incorporation of Blue Cross Blue Shield may be amended as Blue
Cross Blue Shield deems necessary to consummate the
Reorganization in accordance with the Reorganization Agreement,
and if no appeal is taken from such judgment (or alternatively,
if such an appeal is taken and resolved in such a manner that the
judgment stands with no further right of appeal) then the
condition precedent described in the first paragraph of this
Section 6 shall be deemed satisfied.
7. Court Approval of Settlement. The Parties shall move in an
appropriate court proceeding (or proceedings) for approval of
this Agreement and the Reorganization, and entry of a final
judgment approving this Agreement and the Reorganization. Such
motion shall take one or both of two forms: a motion for approval
of this Agreement and the Reorganization as a reasonable
alternative to dissolution pursuant to X.X.Xx. 355.726, or a
motion for approval of this Agreement and the Reorganization as a
settlement of contested litigation. In any case, the Parties
agree and shall represent to the Court that the terms of this
Agreement and the Reorganization is a fair and reasonable
settlement of the Purposes Litigation. The Parties shall not
object to any portion of this Agreement or the Reorganization,
and shall use their best efforts to obtain Court approval of this
Agreement and the Reorganization.
(a) If the Parties jointly determine to seek implementation of
this Agreement and the Reorganization as an alternative to
dissolution, they shall as soon as possible after execution of
this Agreement by the Parties move in the Purposes Litigation for
approval of this Agreement and the Reorganization on that basis.
They shall jointly request that the Court schedule and conduct a
hearing on all issues relevant under X.X.Xx. 355.726. They
will co-operate in the presentation of all evidence necessary to
fully to advise the Court on the question of whether this
Agreement and the Reorganization meet all statutory requirements
and should be implemented as a proper exercise of the Court's
remedial discretion. If the Court then enters its judgment
providing that this Agreement and the Reorganization should be so
implemented, and if that judgment becomes final with no party to
that litigation having any further right of appeal (or if such an
appeal is taken and such an appeal is resolved with the final
judgment in the action ordering such implementation) the
condition precedent described in this Paragraph 7 shall be deemed
satisfied.
(b) If the Parties jointly decide to seek implementation of this
Agreement and the Reorganization as a settlement of contested
litigation, they shall jointly so move in such court proceeding
as they deem appropriate. The Parties will cooperate in the
presentation to the Court of such evidence as the Court requires
prior to approval of this Agreement and the Reorganization. If
the Court then enters its judgment providing that this Agreement
and the Reorganization should be so implemented, and if that
judgment becomes final with no party to that litigation having
any further right of appeal (or if such an appeal is taken and
such an appeal is resolved with the final judgment in the action
ordering such implementation) the condition precedent described
in this Paragraph 7 shall be deemed satisfied.
8. Disposition of Litigation. In further consideration of
their mutual undertakings in this Agreement and the
Reorganization Agreement, the Parties shall dispose of the
pending litigation as follows:
(a) If the Purposes Litigation Appeal remains pending at the
date of execution of this Agreement, either on rehearing in the
Missouri Court of Appeals or in the Supreme Court of Missouri,
the Parties who are litigants therein will take such action as
they then deem appropriate, based on the procedural posture of
the case at that time, to bring the case before the Circuit Court
of Xxxx County at a proper time so that the Parties can proceed
with a motion or motions pursuant to Section 7 of this Agreement;
(b) On the Closing Date, the Attorney General and the Department
of Insurance will acknowledge the satisfaction in full of the
judgments entered by the Circuit Court on December 30, 1996, and
any other judgments in their favor in the Purposes Litigation,
and the Parties will stipulate to the dismissal of any claims in
the Purposes Litigation that have not been reduced to judgment,
with prejudice, with each Party to bear its own costs of suit as
to any such dismissed claims; and
(c) On the Closing Date, the Parties who are parties to the
Mutual Benefit/Public Benefit Litigation will stipulate to the
dismissal with prejudice of the remaining claims, if any, in the
Mutual Benefit/Public Benefit Litigation, with each party to bear
its own costs.
9. Releases in Favor of Blue Cross Blue Shield and RightCHOICE.
In further consideration of their mutual undertakings in this
Agreement and the Reorganization Agreement, the Parties agree to
the releases described in this paragraph. The releases described
in this paragraph shall become effective on the Closing Date.
(a) Subject to the exceptions contained in subparagraph 9(e),
the Attorney General and Department of Insurance on behalf of
themselves, their offices, and the State of Missouri
(collectively, "the Paragraph 9 Releasors") release Blue Cross
Blue Shield, RightCHOICE, their respective present and past
affiliated corporations, their successors and assigns, their
present and past directors, officers, agents, employees and
independent contractors (all of whom are collectively referred to
as "the Paragraph 9 Releasees") from any and all claims, causes
of action, liabilities and judgments arising out of or relating
to the 1994 Reorganization or the operation of Blue Cross Blue
Shield from the date of the 1994 Reorganization through April 20,
1998.
(b) Subject to the exceptions contained in subparagraph 9(e),
the Paragraph 9 Releasors release the Paragraph 9 Releasees from
all claims, causes of action, liabilities and judgments that were
asserted or might have been asserted in the Purposes Litigation
and Purposes Litigation Appeal or the Mutual Benefit/Public
Benefit Litigation.
(c) Subject to the exceptions contained in subparagraph 9(e),
the Paragraph 9 Releasors release the Paragraph 9 Releasees from
any and all claims, causes of action, liabilities and judgments
arising from or related to the execution and performance of this
Agreement, the Reorganization Agreement, or the consummation of
the Reorganization.
(d) Subject to the exceptions contained in subparagraph 9(e),
the Paragraph 9 Releasors release the Paragraph 9 Releasees from
any and all claims, causes of action, judgments, claims,
disputes, investigations, audits or complaints listed on
Exhibit F attached hereto. Exhibit F shall be prepared by the
Attorney General and Department of Insurance pursuant to
paragraph 11 hereof.
(e) Claims in the following classes are excluded from the
releases given in this paragraph 9:
(i) Any claim by consumers lodged with the Department of
Insurance or the Attorney General;
(ii) Any claims of criminal liability of any kind;
(iii) Any claims of liability from or on account of any conduct
which is finally adjudged to have been knowingly fraudulent,
deliberately dishonest or willful misconduct; and
(iv) Any claim for breach of this Agreement, the Reorganization
Agreement or any other agreement executed by any of the Paragraph
9 Releasees in connection with the consummation of the
Reorganization.
10. Releases in Favor of the Attorney General and the Department
of Insurance. In further consideration of their mutual
undertakings in this Agreement and the Reorganization Agreement,
the Parties agree to the releases described in this paragraph.
The releases described in this paragraph shall become effective
on the Closing Date.
(a) Subject to the exceptions contained in
subparagraph 10(d), Blue Cross Blue Shield and
RightCHOICE, and their respective affiliated
corporations, successors and assigns (collectively,
"the Paragraph 10 Releasors") release the State of
Missouri, the Attorney General, the Department of
Insurance and their respective present and past
officers, agents, employees, independent contractors,
affiliates, successors and assigns (all of whom are
collectively referred to as "the Paragraph 10
Releasees") from any and all claims, causes of action,
liabilities and judgments arising out of or relating to
actions taken or statements made by the Attorney
General or the Department of Insurance or their past
and present agents, employees or independent
contractors in connection with the 1994 Reorganization.
(b) Subject to the exceptions contained in
subparagraph 10(d), the Paragraph 10 Releasors release
the Paragraph 10 Releasees from all claims, causes of
action, liabilities and judgments that were asserted or
might have been asserted in the Purposes Litigation and
Purposes Litigation Appeal or the Mutual Benefit/Public
Benefit Litigation.
(c) Subject to the exceptions contained in
subparagraph 10(d), the Paragraph 10 Releasors release
the Paragraph 10 Releasees from any and all claims,
causes of action, liabilities and judgments arising out
of or related to the execution and performance of this
Agreement, the Reorganization Agreement, or the
consummation of the Reorganization.
(d) Claims in the following classes are excluded
from the releases given in this paragraph 10:
(i) Any claims of liability from or on
account of any conduct which is finally adjudged
to have been knowingly fraudulent, deliberately
dishonest or willful misconduct; and
(ii) Any claim for breach of this
Agreement, the Reorganization Agreement or any
other agreement executed by any of the Paragraph
10 Releasees in connection with the consummation
of the Reorganization.
11. Representation As To Existence of Claims. The Attorney
General and the Department of Insurance represent and warrant
that, on April 20, 1998, except as described on the list which is
attached hereto as Exhibit F and as described in Paragraph
9(e)(i) above, there were no claims, disputes, investigations,
audits or complaints pending against Blue Cross Blue Shield,
RightCHOICE or any of their affiliates, and to their knowledge
there is no basis for any such claims, disputes, investigations,
audits or complaints. BCBSMo represents and warrants to the
Attorney General and the Department of Insurance that, except as
described on the list attached hereto as Exhibit G, it has no
knowledge on the date hereof of any pending or threatened claim
that will or might be subject to indemnity from the Foundation
under the terms of the Indemnification Agreement attached as
Exhibit K to the Reorganization Agreement.
12. Xxxxxx Litigation. A condition precedent to consummation of
the Reorganization shall be a final resolution, successful to the
satisfaction of each Party hereto, of the Xxxxxx Litigation.
13. Termination.
(a) This Agreement shall automatically terminate upon
termination of the Reorganization Agreement for any
reason.
(b) This Agreement may be terminated by any Party
hereto by giving written notice to all other Parties in
the event (i) the Signing Conditions have not all been
satisfied on or before August 1, 1999, or (ii) the
Closing Date has not occurred on or before October 1,
1999.
(c) This Agreement may be terminated at any time by
written agreement signed by all Parties.
(d) If this Agreement terminates pursuant to
subparagraph (a), or is terminated pursuant to
subparagraph (b) or subparagraph (c), the Agreement
shall thereafter be void and have no force or effect.
14. No Admission of Liability. This Agreement is a good faith,
negotiated resolution of disputed claims. Neither the Agreement
nor any act performed or document executed pursuant to or in
furtherance of this Agreement is admissible in any court
proceeding, except those proceedings leading to judicial approval
of the transactions contemplated by this Agreement and the
Reorganization Agreement, and any proceeding brought to enforce
this Agreement or the Reorganization Agreement. No Party, by
signing this Agreement, admits liability or fault, or admits the
validity of any claim made by any other Party or person with
respect to any matter that is the subject of this Agreement or
the Reorganization Agreement.
15. Binding Effect on Successors of Governmental Parties. This
Agreement shall be binding, to the fullest extent permissible
under law, on the State of Missouri, the Attorney General, the
Department of Insurance, their respective offices and
departments, and all of their successors in office. Should the
State of Missouri, any Attorney General of Missouri or the
Department of Insurance take the position at any time that any of
the commitments or undertakings of the State of Missouri, the
Attorney General, or the Department of Insurance hereunder is not
fully valid and enforceable, then Blue Cross Blue Shield,
RightCHOICE, and each of their corporate successors may, at the
sole option of any of them, declare this Agreement and the
Reorganization Agreement void and of no force or effect, in which
event they will be discharged from any further obligations
thereunder, and may take such actions (including but not limited
to the commencement of a judicial proceeding seeking a
declaration of the rights of the parties, injunctive relief, and
the restoration of the status quo prior to the Reorganization) as
are appropriate to rescind this Agreement and the Reorganization,
and restore the parties to the position that would have applied
had the Reorganization not taken place or this Agreement not been
signed, including the restoration or repayment of all
consideration given or received by any Party, including all
assets received by the Foundation in connection with the
Reorganization. As part of the Reorganization, the Attorney
General and Department of Insurance shall cause the Foundation to
execute an agreement to be bound by the provisions of this
paragraph 15.
16. Approval of Certain Stock Purchases. After consummation of
the Reorganization, New RightCHOICE will have certain options and
rights of first refusal to repurchase its shares from the
Foundation in one or more transactions that may require the prior
approval of the Department of Insurance under applicable law.
The Department of Insurance shall not disapprove any such
transaction unless New RightCHOICE or one of its insurance
subsidiaries licensed in Missouri fails to meet Missouri
regulatory capital and reserve requirements after consummation of
the transaction, or fails to satisfy any other objective criteria
required to be satisfied under Missouri law as a condition to
obtaining approval of the Department of Insurance.
17. Amendments to Charter Documents of the Foundation. From the
date the Foundation is incorporated until the Closing Date, and
thereafter until the Foundation owns less than five percent (5%)
of the issued and outstanding shares of capital stock of New
RightCHOICE, the Attorney General shall not consent to any
amendment to the Articles of Incorporation or Bylaws of the
Foundation if the amendment would increase the influence or
control of any governmental authority or its agents over the
governance of the Foundation over the level of influence and
control provided in the Articles of Incorporation and Bylaws of
the Foundation attached hereto as Exhibits A and B, respectively.
18. Amendments to Reorganization Agreement. Blue Cross Blue
Shield and RightCHOICE shall not consent to any amendment to the
Reorganization Agreement after it is signed without first
obtaining the written consent of the Attorney General and the
Department of Insurance.
19. General Provisions.
(a) Captions contained in this Agreement have been inserted
herein only as a matter of convenience and in no way define,
limit, extend or describe the scope of this Agreement or the
intent of any provision hereof.
(b) This Agreement may be executed by the Parties on any number
of separate counterparts, and all such counterparts so executed
constitute one agreement binding on all the Parties
notwithstanding that all the Parties are not signatories to the
same counterpart.
(c) This Agreement and the Reorganization Agreement, including
all exhibits attached hereto and thereto, constitute the entire
agreement among the Parties pertaining to the subject matter
hereof and supersede all prior agreements, letters of intent,
understandings, negotiations and discussions of the Parties,
whether oral or written.
(d) All of the exhibits attached to this Agreement are material
and integral parts hereof, and are fully incorporated herein by
this reference.
(e) The Parties will execute and deliver such further documents
and do such further acts and things as may be required to carry
out the intent and purpose of this Agreement, including the
execution of all documents necessary to continue existing
standstills of the litigation to be settled by this Agreement,
such standstills to continue until the earlier of the termination
of this Agreement or the Closing Date.
(f) This Agreement and the rights and obligations of the
Parties hereunder are to be governed by and construed
and interpreted in accordance with the laws of the
State of Missouri applicable to contracts made and to
be performed wholly within Missouri, without regard to
choice or conflict of laws rules.
(g) Blue Cross Blue Shield and RightCHOICE shall be solely
responsible for payment of all legal, accounting and investment
banking fees and other costs and expenses incurred by them in
connection with this Agreement and the Reorganization and shall
have no responsibility or liability for payment of any fees,
costs or expenses incurred by any other Party.
(h) All notices, consents, requests, demands and other
communications hereunder are to be in writing, and are deemed to
have been duly given or made: (i) when delivered in person;
(ii) three days after deposited in the United States mail, first
class postage prepaid; (iii) in the case of overnight courier
services, one business day after delivery to the overnight
courier service with payment provided; or (iv) in the case of
telecopy or fax, when sent, verification received; in each case
addressed as follows:
If to Blue Cross Blue Shield:
Xxxx X. X'Xxxxxx
President and Chief Executive Officer
Blue Cross and Blue Shield of Missouri
0000 Xxxxxxxx Xxxxxx
Xx. Xxxxx, Xxxxxxxx 00000-0000
Fax: (000) 000-0000
with a copy to:
Xxxxxx X. Xxxxx, Esq.
Gallop Xxxxxxx & Xxxxxx X.X.
000 Xxxxx Xxxxxx
Xx. Xxxxx, Xxxxxxxx 00000
Fax: (000) 000-0000
If to RightCHOICE:
Xxxx X. X'Xxxxxx
Chairman, President and Chief Executive Officer
RightCHOICE Managed Care, Inc.
0000 Xxxxxxxx Xxxxxx
Xx. Xxxxx, Xxxxxxxx 00000-0000
Fax: (000) 000-0000
with a copy to:
Xxxx X. Xxxxxx, Esq.
Xxxxx, Rice & Xxxxxxxx, X.X.
000 Xxxxx Xxxxxxxx, Xxxxx 0000
Xx. Xxxxx, XX 00000
Fax: (000) 000-0000
If to the Attorney General:
Xxxxxxxx X. (Xxx) Xxxxx
X.X. Xxx 000
Xxxxxxxxx Xxxx, XX 00000
Fax: (000) 000-0000
If to the Department of Insurance:
Xxx Xxxxxx
X.X. Xxx 000
Xxxxxxxxx Xxxx, XX 00000
Fax: (000) 000-0000
or to such other address as any Party may
designate by notice to the other Parties in
accordance with the terms of this paragraph.
(i) All provisions of this Agreement are binding upon, inure to
the benefit of and are enforceable by or against the Parties and
their respective legal representatives and successors and
assigns.
(j) This Agreement is the product of negotiations and shall be
deemed to have been drafted by all of the parties. It shall be
construed in accordance with the fair meaning of its terms and
its language shall not be strictly construed against, nor shall
ambiguities be resolved against, any particular party.
(k) The Parties agree to the following:
(i) that it is their intent to carry out all of the
terms of this Agreement and to consummate the
Reorganization; and
(ii) that they shall cooperate to the extent necessary
to effectuate and implement all terms and satisfy
all of the conditions of the Agreement and, with
respect to BCBSMo and RightCHOICE, subject to
their fiduciary obligations, to exercise their
best efforts promptly to accomplish the terms and
satisfy the conditions of the Reorganization
Agreement.
(l) The Parties executing this Agreement warrant and
represent that they have the full authority to do so
and that they have the authority to take appropriate
action required or permitted to be taken pursuant to
this Agreement to effectuate its terms.
(m) Nothing in this Agreement shall be construed as
preventing the Department of Insurance or the Attorney
General from taking regulatory action against Blue
Cross Blue Shield, RightCHOICE or New RightCHOICE based
on (1) acts or omissions occurring after April 20, 1998
that are not covered by the releases described in
Paragraph 9, (2) acts or omissions occurring prior to
April 20, 1998 that are not covered by the releases
described in Paragraph 9, and (3) claims described in
Paragraph 9(e) of this Agreement.
[Remainder of page intentionally left blank]
Executed this 20th day of September, 1998.
/s/ Xxxxxxxx X. Xxxxx
Xxxxxxxx X. (Xxx) Xxxxx
Attorney General of Missouri
Missouri Department of Insurance
By: /s/ Xxx X. Xxxxxx
Xxx X. Xxxxxx, Director
Director, Missouri Department of Insurance
Blue Cross and Blue Shield of Missouri
By: /s/ Xxxx X. X'Xxxxxx
Xxxx X. X'Xxxxxx, President
RightCHOICE Managed Care, Inc.
By: /s/ Xxxx X. X'Xxxxxx
Xxxx X. X'Xxxxxx, President and
Chief Executive Officer
LIST OF EXHIBITS
Exhibit A Articles of Incorporation of the Foundation
Exhibit B Bylaws of the Foundation
Exhibit C Certificate of Incorporation of New RIT
Exhibit D Bylaws of New RIT
Exhibit E Agreement and Plan of Reorganization
Exhibit F List of Known Claims as of April 20, 1998
Exhibit G List of Claims Prepared by Blue Cross and Blue Shield
of Missouri
Exhibit A
ARTICLES OF INCORPORATION
OF
THE MISSOURI FOUNDATION FOR HEALTH
(A Missouri public benefit nonprofit corporation)
I, the undersigned, being a natural person of the age of
eighteen (18) years or more, for the purpose of forming a
corporation pursuant to the Missouri Nonprofit Corporation Act,
do hereby adopt the following Articles of Incorporation:
ARTICLE I
NAME
The name of the Corporation is The Missouri Foundation For
Health.
ARTICLE II
PUBLIC BENEFIT CORPORATION
The Corporation is a public benefit corporation.
ARTICLE III
PURPOSES
3.1 The Corporation is established with the purpose to:
(a) identify and fill the gaps in the myriad of public
and private health care services already available
to the uninsured and underinsured in the 85
counties (plus the City of St. Louis) comprising
the former service area of Blue Cross and Blue
Shield of Missouri (the "Foundation Region");
(b) identify and address unmet health care needs in
the underserved populations of the Foundation
Region as to which the Corporation can have a
significant and objectively verifiable impact; and
(c) identify and fund health care program
opportunities in the Foundation Region that can
maximize the limited resources of the Corporation
for the greatest possible effect upon the
communities it serves.
3.2 The Corporation shall have and can exercise all lawful
powers necessary or convenient to fulfill its purposes consistent
with its Core Values as set forth in Exhibit A to the
Corporation's By-Laws, and may fulfill these purposes not only by
providing grants to individuals and organizations for their
programs, but also by making direct payments for health care or
health insurance, or by subsidizing or reimbursing payments made
by others for health care or health insurance; provided, however,
that the Corporation shall not have any power to take any action
inconsistent with, or not in furtherance of, these purposes.
3.3 The Corporation shall have the power to solicit and
receive, for corporate purposes only, gifts, grants and
contributions of any kind of property or interest therein,
whether real, personal or mixed.
3.4 The Corporation shall operate exclusively for social
welfare purposes (within the meaning of Section 501(c)(4) of the
Internal Revenue Code of 1986, as amended, the regulations
promulgated pursuant thereto, or the corresponding provision of
any applicable future United States Internal Revenue law or
regulations (collectively, the "Code")). In addition,
notwithstanding the fact that the Corporation is organized to be
recognized as an entity exempt from federal income taxation under
Code Section 501(c)(4), except as provided in Article IV hereof,
the Corporation will operate in such a manner so as to satisfy
all of the requirements imposed on an organization exempt from
federal income tax under Code Section 501(c)(3).
ARTICLE IV
NONPROFIT
4.1 The Corporation is organized without capital stock
exclusively for charitable, educational, and scientific purposes.
The Corporation shall issue no stock nor shall any dividend or
profit ever be declared or paid to any officer or director
thereof.
4.2 The assets and property of the Corporation are
irrevocably dedicated to the purposes stated in Article III, and
no part of the net earnings or property of the Corporation may
inure to the benefit of or be distributable to any private
shareholder or individual (within the meaning of Code Section
501(c)(3)), including without limitation the Corporation's
directors or officers, except that the Corporation is authorized
and empowered to pay reasonable compensation for services
rendered and to make payments and distributions in furtherance of
its purpose.
4.3 No part of the activities of the Corporation may
consist of carrying on propaganda or otherwise attempting to
influence legislation.
4.4 The Corporation may not participate in, or intervene in
(including publication or distribution of any statement), any
political campaign on behalf of any candidate for public office.
4.5 Notwithstanding any other provision of these articles,
the Corporation may not carry on any other activities not
permitted to be carried on (i) by a corporation exempt from
Federal income tax under Code Section 501(c)(3), (ii) by a
corporation, contributions to which are deductible under Code
Section 170(c)(2), or (iii) by a corporation exempt from Federal
income tax under Code Section 501(c)(4).
4.6 The Corporation may not engage in any self-dealing, as
that term is defined in Code Section 4941(d) as though the
Corporation were a private foundation, as that term is defined in
Code Section 509(a), regardless of whether the Corporation is
actually such a private foundation.
4.7 Commencing in the fourth fiscal year of the Corporation
after its incorporation, the Corporation each fiscal year shall
make "qualifying distributions" within the meaning of Code
Section 4942 in an amount equal to or greater than five percent
(5%) of the aggregate fair market value of all of the assets of
the Corporation, other than those assets that are used (or held
for use) directly in carrying out the Corporation's charitable
purposes, and shall make such distributions at the times and in
the manner that would be required of the Corporation if it were a
private foundation, as that term is defined in Code Section
509(a), regardless of whether the Corporation is actually such a
private foundation. Notwithstanding the foregoing, the
Corporation may not expend any amounts other than its investment
earnings on its programmatic activities without the prior
approval of no less than two-thirds (2/3) of the members of the
Board of Directors then in office.
4.8 The Corporation shall not retain any excess business
holdings, as that term is defined in Code Section 4943(c),
provided that the Corporation may exceed these limitations with
respect to the equity securities of RightCHOICE Managed Care,
Inc., a Delaware corporation ("New RIT") for the limited term,
and subject to the conditions and obligations, provided in the
Agreement and Plan of Reorganization and related documents
(collectively, the "Reorganization Documents") appended as
Exhibits to the Settlement Agreement executed on September 15,
1998, among Xxxxxxxx X. ("Xxx") Xxxxx, Attorney General of the
State of Missouri, the Missouri Department of Insurance and Xxx
X. Xxxxxx, its Director, Blue Cross and Blue Shield of Missouri
("BCBSMo") and RightCHOICE Managed Care, Inc., a Missouri
corporation (the "Settlement Agreement").
4.9 The Corporation shall not make any investments which
would subject it to imposition of a tax pursuant to Code Section
4944 if the Corporation were a private foundation, as that term
is defined in Code Section 509(a), regardless of whether the
Corporation is actually such a private foundation.
4.10 The Corporation shall not make any expenditures which
would be taxable expenditures, as that term is defined in Code
Section 4945(d), if the Corporation were a private foundation, as
that term is defined in Code Section 509(a), regardless of
whether the Corporation is actually such a private foundation.
4.11 Except to the extent that equity ownership is permitted
by Section 4.8, the Corporation, and its directors, officers and
employees, shall be and remain independent of New RIT and its
parent, subsidiaries, affiliates, predecessors and successors
(collectively, the "RIT Entities"), and no person who is an
officer, director or employee of any of the RIT Entities at the
time of incorporation of the Corporation or thereafter shall be
qualified to be an officer, director or employee of the
Corporation.
4.12 The Corporation shall report to the public and the
Attorney General of the State of Missouri at least annually
information equivalent to that required of corporations exempt
from Federal income tax under Code Section 501(c)(3), regardless
of whether the Corporation is so recognized.
4.13 It is the policy of the Corporation to subject itself
to the provisions of Mo. Rev. Stat. Chapter 610, as amended, the
regulations promulgated pursuant thereto, or the corresponding
provision of any applicable future law or regulations related to
the same subject matter (collectively, "Chapter 610") as though
the Corporation were a public governmental body (as that term is
defined in Chapter 610) insofar as they can be made applicable
and are not otherwise inconsistent with the Corporation's
Articles or these By-Laws; provided that no action of the
Corporation can be invalidated for having failed to abide by the
provisions of Chapter 610; and provided further that, in addition
to those matters listed in Chapter 610, the Corporation is
authorized to close meetings, records and votes to the extent
that they relate to (1) investment decisions or investments
(including the purchase or sale of any properties or securities)
made by the Corporation, and (2) any decisions or actions to be
taken by the Corporation arising out of or relating to the
Reorganization Documents as defined in the Corporation's Articles
of Incorporation.
4.14 In consideration of the endowment of the Corporation
pursuant to the Settlement Agreement, the Corporation hereby
agrees to satisfy all of its obligations and comply with all of
its covenants under the Reorganization Documents, including
without limitation the Indemnification Agreement, to be entered
into by the Corporation as a precondition to the conversion of
BCBSMo pursuant to the Reorganization Documents.
ARTICLE V
MEMBERS
The Corporation shall have no members.
ARTICLE VI
INCORPORATOR
The name and address of the sole incorporator is as follows:
Xxxx X. Xxxxxxx
Xxxxxxxxxxxx Xxxx & Xxxxxxxxx
0000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx Xxxx, Xxxxxxxx 00000
ARTICLE VII
BOARD OF DIRECTORS
The affairs of the Corporation will be managed in accordance
with the provisions of the Bylaws of the Corporation by a Board
of Directors consisting of three (3) or more Directors.
ARTICLE VIII
REGISTERED AGENT
The address of the registered office in the State of
Missouri is _______________, ______________, Missouri _____, and
the name of the registered agent at such address is
__________________________.
ARTICLE IX
DISSOLUTION
Upon a dissolution of the Corporation, the proceeds from the
liquidation remaining after the payment or satisfaction and
discharge or provision for the payment of any and all liabilities
and obligations of the Corporation shall be distributed, but only
with the prior written approval of the Attorney General of the
State of Missouri, to an entity or entities in accordance with
the provisions of the Bylaws of the Corporation, provided that
each such entity, at the time of such conveyance or distribution,
is recognized as (i) an organization exempt from federal income
tax under Code Section 501(c)(3) and (ii) an organization
described in Code Section 509(a)(1), 509(a)(2) or 509(a)(3).
ARTICLE X
AMENDMENTS; CERTAIN ACTIONS
10.1 Any amendment to these articles or the Bylaws of the
Corporation, any merger, consolidation or other corporate
reorganization involving the Corporation, and sale by the
Corporation of all or substantially all of its assets, and any
plan of distribution of the assets of the Corporation upon its
dissolution, shall require the prior written approval of the
Attorney General of the State of Missouri.
10.2 In no event shall these Articles or the Bylaws of the
Corporation be amended to change the influence or control of any
government authority or its agents or employees over the
governance of the Corporation as long as the Corporation owns
five percent (5%) or more of the issued and outstanding shares of
capital stock of New RIT.
IN WITNESS WHEREOF, these Articles of Incorporation have
been signed this day of ______, 1998.
Incorporator
STATE OF MISSOURI )
) SS.
COUNTY OF XXXXXXX )
On this day of _________________, 1998 before me,
__________________, a Notary Public, in and for the State of
Missouri, personally appeared Xxxx X. Xxxxxxx, who being by me
duly sworn, declared that he is the person who signed the
foregoing documents as incorporator, and that the statements
contained therein are true.
Notary Public
My commission expires:
EXHIBIT B
BYLAWS
OF
THE MISSOURI FOUNDATION FOR HEALTH
(a Missouri public benefit nonprofit corporation)
TABLE OF CONTENTS
ARTICLE 1. DEFINITIONS 1
1.1 Act 1
1.2 Articles 1
1.3 Board 1
1.4 Bylaws 1
1.5 Code 1
1.6 Corporation 1
1.7 Person 1
1.8 State 1
ARTICLE 2. OFFICES 2
ARTICLE 3. MEMBER OF THE CORPORATION 2
3.1 Membership 2
3.2 Approval of the Board 2
ARTICLE 4. BOARD OF DIRECTORS 2
4.1 General Authority 2
4.2 Number, Appointment, and Tenure 2
4.2.1 Number of Board Members 2
4.2.2 Nomination and Election of
Members of the Board 2
4.2.3 Tenure for Members of the Board 3
4.2.4 Qualifications of Directors 4
4.3 Resignations and Removal 5
4.4 Vacancies 5
4.5 Policy of Open Records and Meetings 5
4.6 Annual and Regular Meetings 6
4.7 Special Meetings 6
4.8 Notice, Waiver 6
4.9 Quorum 6
4.10 Manner of Acting 7
4.10.1 Formal Action by Board 7
4.10.2 Informal Action by the Board 7
4.10.3 Telephonic Meeting 7
4.11 Compensation and Immunity of Members of the Board 7
4.12 Standard of Care 7
ARTICLE 5. COMMITTEES 8
5.1 Standing Committees 8
5.1.1 Executive Committee 8
5.1.2 Audit Committee 8
5.1.3 Investment Committee 8
5.1.4 Program/Grants Committee 9
5.1.5 Community Advisory Committee 9
5.2 Other Committees 10
5.3 Limitation on Powers of Committees 10
5.4 Meetings and Actions of Committees 11
ARTICLE 6. OFFICERS 11
6.1 Officers 11
6.2 Appointment and Tenure 11
6.3 Resignations and Removal 12
6.4 Duties of the Officers of the Corporation 12
6.4.1 Chairperson 12
6.4.2 Executive Director 12
6.4.3 Secretary 12
6.4.4 Treasurer 12
6.5 Compensation 13
6.6 Surety Bonds 13
ARTICLE 7. CONFLICTS OF INTEREST 13
ARTICLE 8. INDEMNIFICATION 15
8.1 Indemnity 15
8.2 Authorization by the Board 15
8.3 Cooperation of Indemnitee 16
8.4 Advance of Expenses 16
8.5 Non-Exclusivity 16
8.6 Insurance 16
8.7 Additional Indemnification 17
8.8 Set-off 17
8.9 Limitation 17
ARTICLE 9. GRANTS ADMINISTRATION 17
9.1 Purpose of Grants 17
9.2 Exclusive Power Vested in the Board 17
9.3 Refusal; Withdrawal 18
9.4 Accounting Required 18
9.5 Gifts 18
ARTICLE 10. MISCELLANEOUS 18
10.1 Contracts 18
10.2 Checks, Drafts, Etc 18
10.3 Deposits 18
10.4 Books and Records 19
10.5 Annual Financial Report 19
10.6 Fiscal Year 19
10.7 Seal 19
10.8 Notice 19
10.8.1 Effective Date 19
10.8.2 Waiver of Notice 19
10.9 Loans to Officers and Board Members Prohibited 19
10.10 Revocation of Authorizations 19
10.11 Policies 20
10.12 Vote by Presiding Officer 20
10.13 Gender and Number 20
10.14 Articles and Other Headings 20
ARTICLE 11. AMENDMENTS 20
11.1 Proposed Amendments 20
11.2 Amendments to Governance 20
BYLAWS
OF
THE MISSOURI FOUNDATION FOR HEALTH
(a Missouri public benefit nonprofit corporation)
ARTICLE 1. DEFINITIONS
The terms set forth below shall have the following meanings
unless otherwise required by the context in which they may be
used:
1.1 Act. The term "Act" means the Missouri Nonprofit
Corporation, as amended (Missouri Revised Statutes 355.001 et
seq.), or successor provisions.
1.2 Articles. The term "Articles" shall mean the Articles
of Incorporation of the Corporation filed with and accepted by
the Secretary of State of the State of Missouri, on the ____ day
of ______, 1998, as thereafter amended.
1.3 Board. The term "Board" shall mean the Board of
Directors of the Corporation.
1.4 Bylaws. The term "Bylaws" shall mean the bylaws of the
Corporation except where reference is specifically made to the
bylaws of another corporation, entity, or unit.
1.5 Code. The term "Code" shall mean the Internal Revenue
Code of 1986, as amended, the regulations promulgated pursuant
thereto, or the corresponding provision of any applicable future
United States Internal Revenue Law or regulations.
1.6 Corporation. The term "Corporation" shall mean The
Missouri Foundation For Health, a Missouri public benefit
nonprofit corporation.
1.7 Person. The term "Person" shall mean an individual, a
corporation, a partnership, a limited liability company, an
association, a joint stock company, a joint venture, a trust, an
unincorporated organization or any agency or subdivision thereof.
1.8 State. The term "State" shall mean the State of
Missouri.
ARTICLE 2. OFFICES
The principal office of the Corporation shall be located at
__________________, _______________, Missouri. The registered
office required by the laws of the State shall be located at
________________________, ____________________, Missouri. The
Corporation may also have offices at such other places as the
Corporation shall from time to time determine or as the business
of the Corporation may require.
ARTICLE 3. MEMBER OF THE CORPORATION
3.1 Membership. The Corporation shall have no members.
3.2 Approval of the Board. Any action which would
otherwise require approval by the members pursuant to the Act
shall require only approval of the Board. All rights which would
otherwise vest to the members under the Act shall vest in the
Board.
ARTICLE 4. BOARD OF DIRECTORS
4.1 General Authority. Subject to the limitations imposed
by the Act, the Articles and these Bylaws, the business and
affairs of the Corporation shall be managed by the Board. The
Board shall make appropriate delegations of authority to the
officers of the Corporation.
4.2 Number, Appointment, and Tenure.
4.2.1 Number of Board Members. At all times prior
to the effective time (the "Closing Time") that Blue Cross
and Blue Shield of Missouri, Inc., a Missouri general
business corporation which will be a wholly owned subsidiary
of the Corporation immediately prior to the Closing Time,
merges into RightCHOICE Managed Care, Inc., a Delaware
corporation which will be a wholly owned subsidiary of the
Corporation immediately prior to the Closing Time, the total
number constituting the members of the Board shall be three
(3). From and after the Closing Time, the total number
constituting the members of the Board shall be fifteen (15).
These numbers are exclusive of the Executive Director who,
from the time of his or her election, shall be an ex
officio, non-voting member of the Board.
4.2.2 Nomination and Election of Members of the
Board. The initial members of the Board who shall serve
until the Closing Time (the "Pre-Closing Board") shall be
appointed by the Attorney General of the State of Missouri.
Of the initial members of the Board who shall serve from and
after the Closing Time (the "Post-Closing Board"), ten (10)
Directors shall be appointed by the Governor and five (5)
Directors shall be appointed by the Attorney General. Each
year subsequent to the appointment of the initial members of
the Post-Closing Board at the annual meeting of the Board,
or at a special meeting of the Board called for the purpose
of filling one or more specified Board vacancies, that
number of directors equal to the number of directors of the
class whose terms expire at the end of such meeting (or, in
the case of a special meeting to fill one or more vacancies,
that number of directors equal to the number of specified
vacancies) shall be elected by the Board from among the
persons nominated by the Community Advisory Committee in
accordance with Section 5.1.5, to hold office for the terms
as provided in Section 4.2.3.
4.2.3 Tenure for Members of the Board. The members
of the Pre-Closing Board shall serve for terms which
commence on their appointment and continue until the Closing
Time. Other than the members of the Pre-Closing Board and
the initial members of the Post-Closing Board, Board members
shall serve for terms commencing at the end of the annual
meeting of the Board at which they are elected and, except
as provided for herein, continuing for three (3) years
thereafter and until their respective successors are elected
and qualified, unless the members sooner die, become
disabled, resign or are removed. Upon appointment of the
initial members of the Post-Closing Board pursuant to
Section 4.2.2, classification of such members of the
Post-Closing Board shall be made by dividing them into three
(3) classes, each class to be comprised of five (5) members.
The term of office of members of the first class shall
expire at the end of the first annual meeting of the Board
held after such classification; the term of office of
members of the second class shall expire at the end of the
second annual meeting of the Board held after such
classification; and the term of office of members of the
third class shall expire at the end of the third annual
meeting of the Board held after such classification. Three
(3) of the Governor's initial appointments shall be members
of third class, three (3) of the Governor's initial
appointments shall be members of the second class, and four
(4) of the Governor's initial appointments shall be members
of the first class. The Attorney General's initial
appointments shall fill the remainder of the classes. At
each annual meeting of the Board after such classification,
a number of directors equal to the number of the class whose
terms expire at the end of such meeting shall be elected
pursuant to the mechanism set forth in Section 4.2.2. No
member of the Board may be elected for more than two (2)
consecutive terms. For purposes of term limits, a partial
term of less than eighteen (18) full calendar months shall
not be counted as a term, and a partial term of eighteen
(18) or more full calendar months shall be counted as a full
term.
4.2.4 Qualifications of Directors. In selecting
the Post-Closing Board, and in nominating and selecting all
subsequent Directors, consideration shall be given to
ensuring that the Board collectively possess experience in
all of the areas mentioned below, and represent the state's
gender, racial, cultural, geographic and ethnic diversity;
and each Director shall, prior to his or her selection or
nomination, possess the following qualifications:
(a) Each Director must be at least eighteen years of
age and a resident of Missouri;
(b) Each Director must have expertise and education in
one or more of the following areas: provision of health
care, asset management and investment strategy,
philanthropic administration or public health care;
(c) Each Director must have demonstrated an ability to
contribute perspective in one or more of the following
areas: health care access for the poor and uninsured,
affordable care for the poor and uninsured, health
promotion in underserved communities, health care
quality and outcome improvement, health care needs of
women, children, the elderly, low income, ethnic and
cultural minorities, health education or general issues
of public health;
(d) Each Director must have demonstrated core leadership
attributes;
(e) Each Director must have a recognized reputation
for integrity and competence;
(f) Each Director must have demonstrated an ability to
understand and appreciate the role and responsibility
of a public health care philanthropic foundation and
the need to balance various constituency requirements;
(g) Each Director must have demonstrated a personal
interest in and concern for the public health and
welfare and a commitment to accomplishing the
Foundation's overall mission, purposes and goals;
(h) Each Director must have demonstrated an ability to
devote the time necessary to fulfill Board
responsibilities and regularly attend meetings;
(i) No Director shall be an officer, agent, employee
or independent contractor of any governmental authority
whatsoever, whether federal, state or local.
4.3 Resignations and Removal. Any member of the Board may
resign from the Board at any time by giving written notice to the
Chairman or, if the resigning member is the Chairman, to the
Executive Director. Such resignation shall take effect at the
time specified therein and, unless otherwise specified therein,
the acceptance of such resignation shall not be necessary to make
it effective. The Chairman (or if the resigning member is the
Chairman, then the Executive Director) shall provide the
remaining members of the Board with immediate notification of the
resignation. Any member of Board may be removed from such
position at any time, but only for good cause, by the vote of
three-fourths (3/4) of the other members of the Board then in
office. The Attorney General may petition the Circuit Court of
Xxxx County for the removal of any member of the Board and, upon
a showing of good cause, shall be entitled to an order removing
that Director. Good cause, as used in this sub-section, shall
include without limitation any breach of fiduciary duty,
dereliction of duty, or conviction of any felony whatsoever.
4.4 Vacancies. Any vacancy occurring in the membership of
the Board and any membership thereon to be filled by reason of an
increase in the number of members of the Board shall be filled by
the mechanism set out in Section 4.2.2. A member of the Board
elected to fill a vacancy shall be elected for the unexpired term
of such member's predecessor in office and until such member's
successor is elected and qualified, unless the member sooner
dies, becomes disabled, resigns or is removed. Any member
elected by reason of an increase in the number of members of the
Board shall hold office until the next election of the class for
which such member was chosen and until such member's successor is
elected and qualified, unless the member sooner dies, becomes
disabled, resigns or is removed.
4.5 Policy of Open Records and Meetings: It is the policy
of the Corporation to subject itself to the provisions of Mo.
Rev. Stat. Chapter 610, as amended, the regulations promulgated
pursuant thereto, or the corresponding provision of any
applicable future law or regulations related to the same subject
matter (collectively, "Chapter 610") as though the Corporation
were a public governmental body (as that term is defined in
Chapter 610) insofar as they can be made applicable and are not
otherwise inconsistent with the Corporation's Articles or these
By-Laws; provided that no action of the Corporation can be
invalidated for having failed to abide by the provisions of
Chapter 610; and provided further that, in addition to those
matters listed in Chapter 610, the Corporation is authorized to
close meetings, records and votes to the extent that they relate
to (1) investment decisions or investments (including the
purchase or sale of any properties or securities) made by the
Corporation, and (2) any decisions or actions to be taken by the
Corporation arising out of or relating to the Reorganization
Documents as defined in the Corporation's Articles of
Incorporation.
4.6 Annual and Regular Meetings. An annual meeting of the
Board shall be held on the _____ Wednesday of _________ of each
year, or such other time or date as designated by the Board by
resolution or by written consent of the members of the Board, for
the purposes of electing members of the Board and officers and
for the transaction of such other business as may properly come
before the meeting. The Board shall hold at least one regular
meeting within each quarter of the calendar year. The Board, by
resolution adopted by a majority of its members, may prescribe
the time and place for the holding of the annual and regular
meetings of the Board and may provide that the adoption of such
resolution shall constitute notice of such meetings. If the
Board does not prescribe the time and place for the holding of
the annual or regular meetings, such meetings shall be held at
the time and place specified by the Executive Director of the
Corporation in the notice of each such regular meeting.
4.7 Special Meetings. Special meetings of the Board may be
called by, or at the direction of, the Chairperson or the
Executive Director, or shall be called by the Executive Director
or Secretary upon written request of a majority of the members of
the Board, to be held at such time and place as shall be
designated in the notice of the meeting.
4.8 Notice, Waiver. Except as provided in Section 4.5 of
these Bylaws, notice of the time and place of the annual and any
regular or special meeting of the Board shall be delivered in
writing, as provided in Section 10.8 of these Bylaws, to each
member of the Board at least two (2) days prior to such meeting.
Any member of the Board may waive notice of any meeting. The
attendance of a member of the Board at any meeting shall
constitute a waiver of notice of such meeting, except where a
member of the Board attends such meeting for the express purpose
of objecting to the transaction of any business at the meeting
because the meeting is not lawfully called or convened. The
purpose or purposes of any annual or regular meeting of the Board
need not be specified in the notice or waiver of notice of such
meeting unless required by statute. If the meeting is a special
meeting, the purpose or purposes of the meeting shall be
specified in the notice or waiver of notice of such meeting.
4.9 Quorum. A majority of the members of the Board then in
office shall constitute a quorum for the transaction of business
at any meeting of the Board, but if less than a majority of the
members of the Board are present at such meeting, a majority of
the members of the Board present may adjourn the meeting from
time to time without further notice.
4.10 Manner of Acting.
4.10.1 Formal Action by Board. The act of a
majority of the members of the Board present at a meeting at
which a quorum is present shall constitute the act of the
Board, unless otherwise required by these Bylaws, the
Articles of Incorporation, or the Act.
4.10.2 Informal Action by the Board. No action of
the Board shall be valid unless taken at a meeting at which
a quorum is present, except that any action which may be
taken at a meeting of the Board may be taken without a
meeting if a consent in writing (setting forth the action so
taken) shall be signed by all members of the Board. Such
consent (which may be signed in counterparts) shall have the
same force and effect as a unanimous vote of the members of
the Board.
4.10.3 Telephonic Meeting. Members of the Board may
participate in any meeting of the Board by means of a
conference telephone or similar communications equipment by
means of which all persons participating in such meeting can
hear each other, unless otherwise prohibited by statute.
Participation in a meeting pursuant to this section shall
constitute presence in person at such meeting.
4.11 Compensation and Immunity of Members of the Board.
Members of the Board or any committee with Board delegated powers
serve in a voluntary capacity and, as such, shall not receive any
compensation for their services as members of the Board or of
such committee, but may be reimbursed for reasonable expenses of
attendance at meetings of the Board or the applicable committee.
This section shall not be construed to preclude any member of the
Board or any committee with Board delegated powers from serving
the Corporation in any other capacity and receiving compensation
therefor. It is the intent of the Corporation that the members
of the Board be immune from personal liability for any civil
damages arising from acts performed in his or her official
capacity, except for damages caused by such person's intentional,
wanton or willful conduct, or gross negligence, as provided in
Revised Missouri Statutes Section 537.117, as it may be amended
from time to time.
4.12 Standard of Care. The members of the Board shall
perform their duties, including duties as a member of any
Committee on which such member may serve, in good faith, in a
manner such member believes to be in the best interests of the
Corporation and consistent with the Corporation's Core Values as
set forth in Exhibit A hereto, and shall perform those duties
with such care, including reasonable inquiry, as an ordinarily
prudent person in a like situation would use under similar
circumstances.
ARTICLE 5. COMMITTEES
5.1 Standing Committees. The Board shall have the
following Standing Committees:
5.1.1 Executive Committee. There shall be an
Executive Committee of the Board which shall consist of the
Chairperson and two other members of the Board elected by
the Board for terms of one year. The Chairperson shall
serve as Chair of the Executive Committee. The Executive
Committee shall act on behalf of the Board and shall have
all of the powers of the Board between meetings of the
Board, except as provided in Section 5.3 below.
5.1.2 Audit Committee. There shall be an Audit
Committee of the Board which shall consist of not less than
three members of the Board, none of whom may be employed by,
or be an officer of, the Corporation. The members of the
Audit Committee shall be elected by the Board for terms of
one year. The Board shall elect one of the members of the
Audit Committee to serve as the Chair of the Audit
Committee. No member of the Board shall serve more than
three consecutive one-year terms as a member of the Audit
Committee. The Audit Committee shall recommend to the Board
annually who shall be employed as the independent auditors
of the Corporation, shall visit with such auditors, shall
receive and review the annual audit and other reports of
such auditors and shall perform such other duties as the
Board may from time to time direct.
5.1.3 Investment Committee. There shall be an
Investment Committee of the Board which shall consist of not
less than three members of the Board. The members of the
Investment Committee shall be elected by the Board for terms
of one year. The Board shall elect one of the members of
the Investment Committee to serve as the Chair of the
Investment Committee. No member of the Board shall serve
more than three consecutive one-year terms as a member of
the Investment Committee. The Investment Committee shall
propose to the Board, for review and approval, criteria,
policies and procedures for the investment and protection of
the investment assets of the Corporation, determine
permitted investments in accordance with such criteria,
policies and procedures and shall perform such other duties
as the Board may from time to time direct.
5.1.4 Program/Grants Committee. There shall be a
Program/Grants Committee of the Board which shall consist of
not less than three members of the Board and such other
persons as the Board may determine. The members of the
Program/Grants Committee shall be elected by the Board for
terms of one year. The Board shall elect one of the members
of the Program/Grants Committee who is also a member of the
Board to serve as the Chair of the Program/Grants Committee.
No member of the Board shall serve more than three
consecutive one-year terms as a member of the Program/Grants
Committee. The Program/Grants Committee shall recommend to
the Board what programs, grants and other expenditures
should be made by the Corporation in furtherance of the
Corporation's purposes and shall perform such other duties
as the Board may from time to time direct.
5.1.5 Community Advisory Committee. There shall be
a Community Advisory Committee which shall consist of not
less than nine (9) persons, none of whom may be members of
the Board. The initial members of the Community Advisory
Committee shall be appointed by the Governor and the
Attorney General of the State of Missouri, acting jointly,
in consultation with community representatives from the
communities to be served by the Corporation, as provided in
the Articles, and shall reflect the broad and diverse
interests of such communities. Members of the Community
Advisory Committee shall serve for terms of three years. No
member of the Community Advisory Committee shall serve more
than two consecutive three-year terms. Subsequent members
of the Community Advisory Committee shall be appointed by
the Governor and the Attorney General of the State of
Missouri, acting jointly, in consultation with community
representatives from the communities to be served by the
Corporation, as provided in the Articles, and shall reflect
the broad and diverse interests of such communities. Any
vacancies on the Community Advisory Committee shall be
filled in the same manner as the initial members were
appointed. The Community Advisory Committee shall be
responsible for (1) advising the Board on no less than a
annual basis as to the efficacy of the Foundation's programs
from the communities' perspectives, as well as the
communities' priorities for future efforts of the
Foundations, and (2) nominating persons to serve on the
Board subsequent to the appointment of the initial members
of the Post-Closing Board as provided in Section 4.2.2. The
Community Advisory Committee shall nominate a number of
candidates equal to five (5) times the number of vacancies
to be filled. In arriving at its nominations, the Community
Advisory Committee shall adhere to the following process:
(1) The Community Advisory Committee shall
apply the selection criteria set forth in Section 4.2,
and shall not nominate a candidate who would be unable
to serve pursuant to any other provision of Section
4.2.
(2) The Community Advisory Committee shall
be guided by a self-assessment of the skills and
experience of the continuing members of the Board and
by consideration of the skills and experience needed by
the Board to accomplish the mission and programmatic
objectives of the Corporation.
(3) The Community Advisory Committee shall
conduct a public outreach and notification process.
(4) With respect to the vacancies to be
filled at each annual meeting of the Board, the
Community Advisory Committee shall complete its process
and shall present its nominations in writing to the
Board no later than the first business day of the
calendar year in which such annual meeting is to be
held (or such other date as the Board may designate).
(5) With respect to any vacancy on the Board
occurring by reason of the death, resignation or
removal of any director, the Community Advisory
Committee shall complete its process and nominate no
less than five (5) candidates no later than the date
requested by the Board, which shall be no less than
thirty (30) days after written notification of the
vacancy has been delivered to the Chair of the
Community Advisory Committee.
5.2 Other Committees. The Board may form one or more
committees in addition to the Standing Committees, each of which
consists of two or more Directors, to serve at the Board's
pleasure and to have such powers and perform such functions as
may be delegated to them by the Board. The resolution forming a
committee must set forth the composition and responsibilities of
any such committee. Committees of the Board may consist of one
or more persons other than Directors, provided only Directors may
be seated on a committee of the Board to which the Board has
delegated or granted full or limited authority of the Board.
5.3 Limitation on Powers of Committees. No committee of
the Board shall have the power to:
(a) elect or remove members of the Board;
(b) fill vacancies occurring in the members of the
Board;
(c) adopt amendments to the Articles;
(d) amend or repeal or adopt new Bylaws;
(e) amend or repeal any resolution of the Board;
(f) create any other committees of the Board
or appoint the members of any such committee; or
(g) approve any merger, reorganization,
voluntary dissolution or disposition of all or
substantially all of the assets of the
Corporation.
5.4 Meetings and Actions of Committees. Meetings and
actions of committees of the Board shall be held and governed in
accordance with the provisions of Article IV of these Bylaws
concerning meetings and actions of the Board, with such changes
in the content of those provisions as are necessary to substitute
the committees and their members for the Board and its members.
Minutes shall be kept of each meeting of each committee of the
Board and shall be filed with the records and minutes of the
Board.
ARTICLE 6. OFFICERS
6.1 Officers. The officers of the Corporation shall be a
Chairperson, Executive Director, Secretary and Treasurer. The
Chairperson must be a member of the Board, but the Secretary and
Treasurer shall not be members of the Board. One person may hold
two or more offices, if permitted by the Act. Some of the duties
of certain offices are prescribed in the following sections.
When the incumbent of an office other than the Executive Director
is unable or unwilling to perform the duties thereof or when
there is no incumbent of an office (both such situations referred
to hereafter as the "absence" of the officer), the duties of the
office shall, unless otherwise provided by the Board, be
performed by the Executive Director or a person designated by the
Executive Director. The Board may elect or authorize the
appointment of, and may authorize the Executive Director or
another officer to appoint, such other officers as the business
of the Corporation may require, none of whom may be members of
the Board, and each of whom shall have the title, hold office for
such period, have such authority and perform such duties as are
provided in these By-Laws or as the Board may from time to time
authorize or determine.
6.2 Appointment and Tenure. The elected officers of the
Corporation shall be elected by the Board at each regular annual
meeting of the Board. If the election of officers shall not be
held at such meeting, such election shall be held as soon as
convenient thereafter. Each officer shall hold office until the
officer's successor shall have been duly elected and qualified,
or until the officer's earlier death, disability, resignation or
removal; provided however that the Chairperson shall serve a term
of no more than one (1) year and that no person may serve as the
Chairperson for more than one such term.
6.3 Resignations and Removal. Any officer may resign at
any time by giving written notice to the Board. Such resignation
shall take effect at the time specified therein and, unless
otherwise specified therein, the acceptance of such resignation
shall not be necessary to make it effective. Any officer may be
removed from such office at any time, with or without cause, by
the Board, without prejudice to the contract rights, if any, of
the person so removed. Election of an officer shall not in
itself create any contract rights.
6.4 Duties of the Officers of the Corporation.
6.4.1 Chairperson. The Chairperson shall preside
over all meetings of the Board. The Chairperson shall have
no authority to act outside of the meetings of the Board.
The Chairperson shall exercise such other powers and perform
such duties as are set forth from time to time by the Board,
except as otherwise provided by these Bylaws, the Articles,
and the laws of the State.
6.4.2 Executive Director. The Executive Director
shall, subject to the direction and supervision of the
Board, (1) be the chief executive officer of the
Corporation and have general and active control of its
affairs and business and general supervision of its
officers, agents and employees, (2) be responsible for
directing and administering the activities, departments, and
programs of the Corporation, (3) see that all orders and
resolutions of the Board are carried into effect, and (4)
perform all other duties incident to the office of Executive
Director and as from time to time may be assigned to the
Executive Director by the Board.
6.4.3 Secretary. The Secretary shall (1) attend
and record the minutes of all meetings of the Board and
provide for the retention of said minutes in the official
minute book of the Corporation, (2) give or cause to be
given notice of all special meetings of the Board, (3) be
the custodian of the corporate records and seal. Subject to
the approval of the Board, and (4) perform all other duties
incident to the office of Secretary and as from time to time
may be assigned to the Secretary by the Board and/or the
Executive Director. The Secretary may delegate any duties
to one or more assistants or others as may be deemed
appropriate.
6.4.4 Treasurer. The Treasurer shall (1) be the
principal financial officer of the Corporation, (2) keep an
account of the financial transactions and condition of the
Corporation, (3) be responsible for and have the custody of
all of the funds, securities, evidences of indebtedness and
other personal property of the Corporation, (4) provide a
full and accurate accounting of all receipts and
disbursements and books belonging to the Corporation, (5)
deposit all monies and valuable assets in the name and
credit of the Corporation into such depositaries as may be
designated by the Board, (6) render to the Board, whenever
the Board shall require it, as well as at all regular
meetings, an accounting of the financial transactions and
condition of the Corporation, and (7) perform all other
duties incident to the office of Treasurer and as from time
to time may be assigned to the Treasurer by the Board and/or
the Executive Director. Subject to the approval of the
Board, the Treasurer may delegate any duties to one or more
assistants or others as may be deemed appropriate.
6.5 Compensation. The compensation of the officers shall
be as fixed from time to time by the Board, and no officer shall
be prevented from receiving a salary or other compensation as an
officer by reason of the fact that such officer is also a member
of the Board. However, no payment of compensation (or payment or
reimbursement of expenses) shall be made in any manner so as to
result in the imposition of any liability under Section 4958 of
the Code.
6.6 Surety Bonds. The Board may require any officer or
agent of the Corporation to execute to the Corporation a bond in
such sums and with such sureties as shall be satisfactory to the
Board, conditioned upon the faithful performance of such person's
duties and for the restoration to the Corporation of all books,
papers, vouchers, money and other property of whatever kind in
such person's possession or under such person's control belonging
to the Corporation.
ARTICLE 7. CONFLICTS OF INTEREST
All members of the Board, members of any committees of the
Corporation and officers of the Corporation (collectively, the
"Key Individuals") have a duty of undivided loyalty to the
Corporation in all matters affecting the Corporation's interests.
With respect to such matters, all Key Individuals shall act in
accordance with the following requirements.
In the event there exists a conflict between the personal
interest (direct or indirect) of a Key Individual and the
interests of the Corporation with respect to any transaction or
activity, such Key Individual shall not take any action in his or
her capacity as a Key Individual with respect to such transaction
or activity, except in instances where such transaction or
activity has been approved by the affirmative vote of a majority
of the disinterested members of the Board after such majority
determines that the transaction or activity is reasonable and
upon terms that at that time were fair and in the best interests
of the Corporation, but in no case shall such transaction or
activity be approved by less than a majority of all of the
members of the entire Board.
Without limiting the foregoing prohibition (and any
authorized exceptions thereto), any possible conflict of interest
on the part of any Key Individual (or such Key Individual's
business or profession or member of his or her family) shall be
disclosed to the Board and made a matter of record. When any
such interest becomes relevant to any matter requiring action by
the Board or any of its committees, the Key Individual having
such possible conflict shall disclose such possible conflict to
the Board or committee and such Key Individual shall not vote on
such matter, shall not use personal influence in connection
therewith and shall not be counted in determining the quorum for
the meeting. The minutes of the meeting shall reflect that a
disclosure was made, that the Key Individual, if a member of the
Board or committee, abstained from voting and was not counted in
determining the quorum for the meeting.
In disclosing a potential or possible conflict of interest
as required above, a Key Individual must include the following
information:
(a) All relevant facts as to such Key Individual's
interest in any pending or proposed transaction and as to
any common directorship, officership, or financial or
influential interest which the Key Individual has with
respect to any party to such transaction; and
(b) All relevant facts known to such Key Individual
with respect to such transaction which might reasonably be
construed to be adverse to the Corporation's interest.
For purposes of this Article 7, a Key Individual is
"indirectly" a party to a transaction if the other party to the
transaction is an entity in which the Key Individual has a
material financial interest or of which the Key Individual is an
officer, director or general partner.
If a transaction is fair to the Corporation at the time it
is authorized, approved or ratified, the fact that a Key
Individual is directly or indirectly a party to the transaction
is not grounds for invalidating the transaction, so long as the
requirements of this Article 7 have been satisfied. The presence
of a member of the Board who is directly or indirectly a party to
such a transaction, or a member of the Board who is otherwise not
disinterested, may be counted in determining whether a quorum is
present.
ARTICLE 8. INDEMNIFICATION
8.1 Indemnity. The Corporation shall indemnify and hold
harmless any member of the Board or officer of the Corporation,
or former member of the Board or officer of the Corporation, who
was or is a party to or is threatened to be made a party to, any
threatened, pending, or completed action, suit, or proceeding,
whether civil, criminal, administrative, or investigative by
reason of the fact that such Person is or was a member of the
Board or officer of the Corporation, or is or was serving the
Corporation with a contractual commitment of indemnification, or
is or was serving at the request of the Corporation as a member,
manager, director, officer, or agent of another Person, against
expenses (including reasonable attorneys' fees), losses, costs,
damages, judgments, fines, and amounts paid in settlement
actually and reasonably incurred by that Person in connection
with such action, suit, or proceeding if the Person acted in good
faith and in a manner the Person reasonably believed to be in or
not opposed to the best interests of the Corporation, and, with
respect to any criminal action or proceeding, had no reasonable
cause to believe his/her/its conduct unlawful; provided, however,
the Corporation will not be required to indemnify any Person in
respect of any claim, issue, or matter as to which such Person
shall have been adjudged to be liable for negligence or
misconduct in the performance of his/her/its duty to the
Corporation unless and only to the extent that the court in which
the action or suit was brought determines upon application that,
despite the adjudication of liability but in view of all the
circumstances of the case, the Person is fairly and reasonably
entitled to indemnity for such expenses which the court shall
deem proper. The termination of any action, suit, or proceeding
by judgment, order, settlement, conviction, or upon a plea of
nolo contendere or its equivalent, shall not, of itself, create a
presumption that the Person did not act in good faith and in a
manner which the Person reasonably believed to be in or not
opposed to the best interests of the Corporation, and, with
respect to any criminal action or proceeding, had reasonable
cause to believe that his/her/its conduct was unlawful.
8.2 Authorization by the Board. Any indemnification
hereunder shall be made by the Corporation upon the occurrence of
either one of the following: (a) authorization in the specific
case upon a determination that indemnification of the Person is
proper under the circumstances because the Person has met the
applicable standard of conduct set forth in this Article 8; or
(b) issuance of a final court judgment or order requiring
indemnification or stating that it would be lawful in the
specific case. The determination described in clause (a) of this
Section 8.2 shall be made (i) by the Board by a majority vote of
the members of the Board who were not parties to such action,
suit, or proceeding, or (ii) if a quorum is not obtainable, or
even if obtainable, and a majority of disinterested members of
the Board so directs, by independent legal counsel in a written
opinion.
8.3 Cooperation of Indemnitee. Any Person seeking
indemnification pursuant to this Article 8 shall promptly notify
the Corporation of any action, suit, or proceeding for which
indemnification is sought and shall in all ways cooperate fully
with the Corporation and its insurer, if any, in their efforts to
determine whether or not indemnification is proper in the
circumstances, given the applicable standard of conduct set forth
in this Article 8. Any Person seeking indemnification pursuant
to this Article 8 other than with respect to (a) a criminal
action, suit, or proceeding, or (b) an action, suit, or
proceeding by or in the right of the Corporation, shall (i) allow
the Corporation and/or its insurer the right to assume direction
and control of the defense thereof, if they elect to do so,
including the right to select or approve defense counsel, (ii)
allow the Corporation and/or its insurer the right to settle such
actions, suits, or proceedings at the sole discretion of the
Corporation and/or its insurer, and (iii) cooperate fully with
the Corporation and its insurer in defending against, and
settling such actions, suits, or proceedings.
8.4 Advance of Expenses. Expenses incurred in defending a
civil or criminal action, suit, or proceeding brought other than
by the Corporation shall be paid by the Corporation in advance
until the earlier to occur of (a) the final disposition of the
action, suit, or proceeding in the specific case, or (b) a
determination by the Board that indemnification is not proper
under the circumstances because the applicable standard of
conduct set forth in this Article 8 has not been met. Expenses
incurred in defending a civil or criminal action, suit, or
proceeding brought by the Corporation may be paid by the
Corporation in advance of the final disposition of the action,
suit, or proceeding, as authorized by the Board in its sole
discretion in the specific case. Any advance of expenses shall
not commence until receipt by the Board of an undertaking by or
on behalf of the individual seeking such advance to repay any
advanced amount unless it shall ultimately be determined that
he/she/it is entitled to be indemnified by the Corporation as
authorized in this Article 8.
8.5 Non-Exclusivity. The indemnification provided by this
Article 8 shall not be deemed exclusive of any other rights to
which those seeking indemnification may be entitled under
Missouri Revised Statute Sections 537.117, 355.471. or 355.476.,
these Bylaws or any agreement, or otherwise, both as to action in
an official capacity and as to action in another capacity while
holding such office or position, and shall continue as to a
Person who has ceased to be a member of the Board or officer of
the Corporation and shall inure to the benefit of the heirs,
executors, and administrators of such Person.
8.6 Insurance. The Corporation may purchase and maintain
insurance on behalf of any Person who is or was a member of the
Board, officer, employee, or agent of the Corporation, or is or
was serving the Corporation with a contractual commitment of
indemnification, or is or was serving at the request of the
Corporation as a member, manager, director, officer, employee, or
agent of another Person against any liability asserted against
that Person and incurred by him/her/it in any such capacity, or
arising out of his/her/its status as such, whether or not the
Corporation would have the power to indemnify the Person against
such liability under the provisions of the Act. The acquisition
of insurance for any such Person under this Section 8.6 shall not
give rise to or increase, as the case may be, the obligation of
the Corporation to indemnify any Person.
8.7 Additional Indemnification. The Corporation may
provide further indemnity, in addition to the indemnity provided
by this Article 8 to any Person who is or was member of the Board
or officer of the Corporation, or is or was serving the
Corporation with a contractual commitment of indemnification, or
is or was serving at the request of the Corporation as a member,
manager, director, officer, or agent of another Person, provided
that no such indemnity shall indemnify any Person from or on
account of such Person's conduct which was finally adjudged to
have been knowingly fraudulent, deliberately dishonest, or
willful misconduct.
8.8 Set-off. The Corporation's indemnity of any Person who
is or was a member of the Board or officer of the Corporation, or
is or was serving the Corporation with a contractual commitment
of indemnification, or is or was serving at the request of the
Corporation as a member, manager, director, officer, or agent of
another Person, shall be reduced by any amounts such Person may
collect as indemnification (a) under any policy of insurance
purchased and maintained in his/her/its behalf by the
Corporation, or (b) from another Person, or from insurance
purchased by any of them.
8.9 Limitation. Nothing contained in this Article 8, or
elsewhere in these Bylaws, will operate to indemnify a member of
the Board or officer of the Corporation or any other Person if
such indemnification is for any reason contrary to law, either as
a matter of public policy, or under the provisions of any
applicable state or federal law.
ARTICLE 9. GRANTS ADMINISTRATION
9.1 Purpose of Grants. The Corporation shall have the
power to make grants and contributions and to render other
financial assistance to achieve the purpose set forth in the
Articles and, in so doing, shall be guided by the Core Values of
the Corporation as set forth in Appendix A to these Bylaws.
9.2 Exclusive Power Vested in the Board. The Board shall
have exclusive control over all grants, contributions and other
financial assistance given by the Corporation. The Board shall
review all requests for funds and shall require that such
requests specify the use to which the funds will be put. If the
Board approves a request for funds, the Board shall authorize
payment of such funds to the approved grantee.
9.3 Refusal; Withdrawal. The Board, in its absolute
discretion, shall have the right to refuse to make any grants or
contributions, or to render other financial assistance, for any
or all purposes for which the funds are requested. In addition,
the Board, in its absolute discretion, shall have the right to
withdraw its approval of any grant at any time and use the funds
for other purposes within the scope of purposes expressed in the
Articles.
9.4 Accounting Required. The Board shall require that
grantees furnish a periodic accounting to show that the funds
granted by the Corporation were expended for the purposes that
were approved by the Board.
9.5 Gifts. The Board may accept on behalf of the
Corporation any contribution, gift, bequest, or devise for and
consistent with the general purposes, or for and consistent with
any specific purpose, of the Corporation. The Corporation shall
retain complete control and discretion over the use of all
contributions, gifts, bequests and devises it receives.
Contributions received by the Corporation from solicitations for
specific grants shall be regarded as for the use of the
Corporation and not for any particular organization or individual
mentioned in the solicitation.
ARTICLE 10. MISCELLANEOUS
10.1 Contracts. To the extent of its authority, the Board
may authorize any officer or agent of the Corporation, in
addition to the officers so authorized by these Bylaws, to enter
into any contract or execute any instrument in the name of and on
behalf of the Corporation, and such authority may be general or
confined to specific instances.
10.2 Checks, Drafts, Etc. All checks, drafts, or other
orders for the payment of money, and all notes or other evidences
of indebtedness issued in the name of the Corporation shall be
signed by such officer or officers, agent or agents of the
Corporation and in such manner as shall from time to time be
determined by resolution of the Board. In the absence of such
determination by the Board, such instruments shall be signed by
the Treasurer and countersigned by the Secretary.
10.3 Deposits. All funds of the Corporation shall be
deposited from time to time to the credit of the Corporation in
accounts maintained with such financial institutions, trust
companies, or other depositaries as the Board may from time to
time determine.
10.4 Books and Records. The Corporation shall keep correct
and complete books and records of account and the minutes of the
proceedings of the Board; records shall be open to inspection by
members of the Board at any reasonable time and the right to make
such inspection shall include the right to make extracts.
10.5 Annual Financial Report. The Treasurer shall cause an
annual financial report to be submitted to the Board no later
than ninety (90) days after the close of each fiscal year of the
Corporation containing such information as shall be specified by
the Board.
10.6 Fiscal Year. The fiscal year of the Corporation shall
begin on the first day of January and end on the last day of
December in each year.
10.7 Seal. The Board may provide a corporate seal for use
by the Corporation.
10.8 Notice.
10.8.1 Effective Date. Any notice required or
permitted to be given pursuant to the provisions of the
applicable laws of the State, the Articles or these Bylaws,
shall be effective as of the date personally delivered; if
sent via facsimile transmission, on the date of transmission
if confirmation is received; or, if sent by mail, on the
date deposited with the United States Postal Service prepaid
and addressed to the intended receiver at his or her last
known address as shown in the records of the Corporation.
10.8.2 Waiver of Notice. Whenever any notice is
required to be given pursuant to the provisions of the
applicable laws of the State, the Articles or these Bylaws,
a waiver thereof in writing signed by the persons entitled
to such notice whether before or after the time stated
therein shall be deemed equivalent to the giving of such
notice.
10.9 Loans to Officers and Board Members Prohibited. No
loans shall be made by the Corporation to members of the Board or
officers of the Corporation.
10.10 Revocation of Authorizations. No authorization,
assignment, referral or delegation of authority by the Board to
any committee, officer, or agent shall preclude the Board from
exercising the authority required to meet its responsibility for
the conduct of the Corporation. The Board shall retain the right
to rescind any such authorization, assignment, referral, or
delegation.
10.11 Policies. The Board may adopt, amend, or repeal
policies (not inconsistent with these Bylaws) for the management
of the internal affairs of the Corporation and the governance of
its officers, agents, employees, and committees.
10.12 Vote by Presiding Officer. The person acting as
presiding officer at any meeting held pursuant to these Bylaws
shall, if a voting member, be entitled to vote on the same basis
as if not acting as presiding officer.
10.13 Gender and Number. Whenever the context requires,
the gender of all words used herein shall include the masculine,
feminine, and neuter, and the number of all words shall include
the singular and plural thereof.
10.14 Articles and Other Headings. The Articles and
other headings contained in these Bylaws are for reference
purposes only and shall not affect the meaning or interpretation
of these Bylaws.
ARTICLE 11. AMENDMENTS
11.1 Proposed Amendments. Proposed amendments to these
Bylaws must be submitted in writing to the members of the Board
no less than thirty (30) days in advance of the meeting of the
Board at which they will be considered for adoption. The vote of
a majority of the members of the Board then in office, and the
written consent of the Attorney General of the State of Missouri,
shall be required to adopt an amendment to these Bylaws.
11.2 Amendments to Governance. In no event shall these
Bylaws be amended to change the influence or control of any
government authority or its agents or employees over the
governance of the Corporation as long as the Corporation owns
five percent (5%) or more of the issued and outstanding shares of
capital stock of RightCHOICE Managed Care, Inc., a Delaware
Corporation.
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Core Values
of
The Missouri Foundation For Health
(Exhibit A to the Corporation's Bylaws)
Underlying the Corporation's purposes as set forth in its
Articles of Incorporation, and essential to the fulfillment of
that mission, is adherence to the following Core Values:
Foundation programs and grants will support activities that
aim to achieve objectively measurable improvements in the
health of Missouri's citizens, particularly the health of
underserved populations.
Foundation programs and grants will supplement and not
supplant the activities of established governmental and non-
governmental health care programs.
Health care program initiatives will be designed with the
flexibility to incorporate ongoing community input and
collaboration in their definition and implementation. The
flexibility will permit small grants as well as larger,
longer-term grants; and will permit funding existing as well
as new community programs.
The Foundation will incorporate population-based vital
statistics and other health indicators relevant to local
communities in its strategic decision-making and funding
priorities.
The Foundation will seek opportunities to collaborate with
other foundations as well as public and private
organizations in the pursuit of its health care related
purposes and goals.
The Foundation will follow the best practices of foundation
management, including but not limited to periodic board self-
assessment, education of Board members, annual financial
audits, and full conflict of interest disclosure.
The Foundation will from time to time establish multi-year
health care program initiatives based on a systematic
strategic planning process.
EXHIBIT C
FORM OF
CERTIFICATE OF INCORPORATION
OF
RIGHTCHOICE MANAGED CARE, INC.
The undersigned, being a natural person, for the purpose of
organizing a corporation under the General Corporation Law of the
State of Delaware, hereby certifies that:
ARTICLE I NAME
The name of the corporation is RightCHOICE Managed Care,
Inc. (the "Corporation").
ARTICLE II PURPOSE
The nature of the business or purposes to be conducted or
promoted by the Corporation is to engage in any lawful act or
activity for which corporations may be organized under the
General Corporation Law of Delaware, as from time to time amended
(the "DGCL").
ARTICLE III
AUTHORIZED CAPITAL STOCK
SECTION 1. The total number of shares of all classes of
stock which the Corporation shall have authority to issue is
__________ [to be determined by RIT prior to the filing of this
Certificate of Incorporation] million (_______) shares consisting
of (a) __________ [to be determined by RIT prior to the filing of
this Certificate of Incorporation] million (________) shares of
common stock, $______ [to be determined by RIT prior to the
filing of this Certificate of Incorporation] par value per share
(the "Common Stock"), and (b) ________ [to be determined by RIT
prior to the filing of this Certificate of Incorporation] million
(________) shares of preferred stock, $________ [to be determined
by RIT prior to the filing of this Certificate of Incorporation]
par value per share (the "Preferred Stock").
SECTION 2. The powers, designations, rights, preferences,
privileges and restrictions of the Common Stock and the Preferred
Stock are as follows:
A. Common Stock.
1. General. The Common Stock shall have such rights (i) as are
provided by the DGCL and as are customarily attendant to shares
of common stock, and (ii) the rights set forth below in this
Paragraph A.
2. Dividends. Subject to any other provisions of this
Certificate of Incorporation, holders of Common Stock shall be
entitled to receive, to the extent permitted by law, such
dividends and other distributions in cash, stock or property of
the Corporation as may be declared thereon from time to time by
the Board of Directors of the Corporation out of assets or funds
of the Corporation legally available therefor.
3. Voting. At every meeting of the stockholders of the
Corporation, each holder of Common Stock shall be entitled to one
(1) vote in person or by proxy for each share of Common Stock
standing in his or her name on the transfer books of the
Corporation.
B. Preferred Stock. Shares of Preferred Stock may be issued in
one or more series as determined from time to time by the Board
of Directors of the Corporation. All shares of any one series of
Preferred Stock shall be identical, except as to the dates of
issue and the dates from which dividends on shares of the series
issued on different dates shall cumulate, if dividends on the
shares of such series are cumulative. Authority is hereby
expressly granted to the Board of Directors of the Corporation to
authorize the issuance of one or more series of Preferred Stock,
and to fix by one or more resolutions providing for the issuance
of each such series the voting powers, designations, preferences
and relative, participating, optional, redemption, conversion,
exchange or other special rights, qualifications, limitations or
restrictions of such series, and the number of shares in such
series, to the full extent now or hereafter permitted by law.
ARTICLE IV
BOARD OF DIRECTORS
AND STOCKHOLDER MEETINGS
SECTION 1. Except as may be otherwise specifically
provided by the DGCL, all powers of management, direction and
control of the Corporation shall be, and hereby are, vested in
the Board of Directors of the Corporation.
SECTION 2. A majority of the whole Board of Directors of
the Corporation shall constitute a quorum for the transaction of
business and, except as otherwise provided in this Certificate of
Incorporation or the Bylaws of the Corporation, the vote of a
majority of the directors present at a meeting at which a quorum
is then present shall be the act of the Board of Directors of the
Corporation. The term "whole Board of Directors of the
Corporation," as used in this Certificate of Incorporation, means
the total number of directors which the Corporation would have as
of the date of such determination if the Board of Directors of
the Corporation had no vacancies.
SECTION 3. The Board of Directors of the Corporation shall
consist of no less than 3 nor more than ____ [to be determined by
RIT prior to the filing of this Certificate of Incorporation]
directors, the exact number of directors to be determined in
accordance with the Bylaws of the Corporation. The directors
shall be divided into three classes, designated Class I, Class II
and Class III. Each class shall consist, as nearly as may be
possible, of one-third of the total number of directors
constituting the whole Board of Directors of the Corporation.
[name(s)] [to be determined by Foundation with the prior approval
of BCBSMo] [is/are] hereby named as the Class I directors to hold
office for a term expiring at the annual meeting of stockholders
in 200_ and until [his/their] [respective] successor[s] are duly
elected and qualified or until [his/their] earlier resignation or
removal; [name(s)] [to be determined by Foundation with the prior
approval of BCBSMo] [is/are] hereby named as the Class II
directors to hold office for a term expiring at the annual
meeting of stockholders in 200_ and until [his/their]
[respective] successor[s] are duly elected and qualified or until
[his/their] earlier resignation or removal; and [name(s)] [to be
determined by Foundation with the prior approval of BCBSMo] are
hereby named as the Class III directors to hold office for a term
expiring at the annual meeting of stockholders in 200_ and until
[his/their] [respective] successor[s] are duly elected and
qualified or until [his/their] earlier resignation or removal.
At each annual meeting of stockholders beginning in 200_,
successors to the class of directors whose term expires at that
annual meeting shall be elected for a three-year term. If the
number of directors is changed, any increase or decrease shall be
apportioned among the classes so as to maintain the number of
directors in each class as nearly equal as possible, but in no
case shall a decrease in the number of directors shorten the term
of any incumbent director. A director shall hold office until
the annual meeting for the year in which his or her term shall
expire and until his or her successor shall be elected and shall
qualify, subject, however, to prior death, resignation,
retirement, disqualification or removal from office.
SECTION 4.
A. Qualifications. No person shall be elected or appointed to
the Board of Directors of the Corporation unless either (i) such
person would qualify as an Independent Director (as defined in
Paragraph B.1 of this Section 4 of Article IV), or
(ii) immediately after giving effect to such election or
appointment, at least 80% of the members of the whole Board of
Directors of the Corporation would qualify as Independent
Directors.
B. Definitions.
1. "Independent Director" means any person who, during the
entirety of any term of service on the Board of Directors of the
Corporation, satisfies each of the following conditions: (i) he
or she shall have affirmed in writing that, at the time of his or
her election or appointment for such term, he or she was
Independent (as defined in Paragraph B.2 of this Section 4 of
Article IV), and (ii) he or she shall have agreed to serve only
in the capacity of an Independent Director for such term.
2. "Independent" means a person who, at any given time,
(i) shall not be a Major Participant (as defined in Paragraph B.4
of this Section 4 of Article IV), (ii) shall not have been
nominated to the Board of Directors of the Corporation at the
initiative of a Major Participant, (iii) shall not have announced
a commitment to any proposal made by a Major Participant that has
not been approved by an Independent Board Majority (as defined in
Paragraph B.3 of this Section 4 of Article IV), and (iv) shall
not have been determined by an Independent Board Majority to have
been subject to any relationship, arrangement or circumstance
(including any relationship with a Major Participant) which, in
the judgment of such Independent Board Majority, is reasonably
possible or likely to interfere to an extent deemed unacceptable
by such Independent Board Majority with his or her exercise of
independent judgment as a director.
3. "Independent Board Majority" means a group of directors
comprised of (i) a majority of all directors who qualify as
Independent Directors at the time of such determination, and
(ii) a majority of all directors at the time of such
determination.
4. "Major Participant" means: (i) the Foundation (as defined
in Section 1 of Article VII hereof) or a Person (as defined in
Section 1 of Article VII hereof) who shall, in the judgment of an
Independent Board Majority, succeed to the position held by the
Foundation, (ii) a Person who, except as provided in the next
sentence, is an Excess Owner (as defined in Section 1 of
Article VII hereof), (iii) a Person that has filed proxy
materials with the SEC (as defined in Section 1 of Article VII
hereof) supporting a candidate for election to the Board of
Directors of the Corporation in opposition to candidates approved
by an Independent Board Majority, (iv) a Person that has made a
proposal, made a filing with the SEC or taken other actions in
which such Person indicates that such Person may seek to become a
Major Participant or which in the judgment of an Independent
Board Majority indicates that it is reasonably possible or likely
that such Person will seek to become a Major Participant, or
(v) such Person is an affiliate or associate (as defined in
Section 1 of Article VII hereof) of a Major Participant.
Notwithstanding the foregoing, in the event that an Independent
Board Majority shall have approved an acquisition of outstanding
Capital Stock (as defined in Section 1 of Article VII hereof) of
the Corporation, prior to the time such acquisition shall occur,
which would otherwise render a Person a Major Participant and
such Person (a) shall not have made any subsequent acquisition of
outstanding Capital Stock of the Corporation not approved by an
Independent Board Majority and (b) shall not have subsequently
taken any of the actions specified in the preceding sentence
without the prior approval of an Independent Board Majority, then
such Person shall not be deemed a Major Participant; provided
that the Foundation shall always be deemed a Major Participant
notwithstanding any approval of any acquisition of Capital Stock
of the Corporation or any other development or fact of any kind.
In the event there shall be any question as to whether a
particular Person is a Major Participant, the determination of an
Independent Board Majority shall be binding upon all parties
concerned.
SECTION 5. Each election of directors shall be by plurality
vote except that an individual shall not be elected to the Board
of Directors of the Corporation if such election is prohibited by
Section 4 of this Article IV or the individual does not meet the
qualifications which may be required by the Bylaws of the
Corporation as constituted at the time of such election. The
Board of Directors of the Corporation shall have the right to
adopt Bylaw provisions to implement and apply the provisions in
the preceding sentence and to achieve the outcome prescribed and
intended thereby. The election of directors need not be by
ballot unless the Bylaws of the Corporation shall so require.
SECTION 6. Any newly created directorships resulting from
any increase in the number of directors or from the removal,
resignation or death of a director may be filled only by the
affirmative vote of an Independent Board Majority and any
directors so chosen shall hold office until the next election of
the class for which such directors shall have been chosen and
until their successors shall be elected and qualified or until
their respective earlier resignation, removal or death.
SECTION 7. Stockholders of the Corporation shall have no
right to remove any director or the whole Board of Directors of
the Corporation unless such removal is for Cause (as defined
below in this Section 7 of Article IV) and unless the holders of
at least seventy-five percent (75%) of the issued and outstanding
shares of Common Stock then entitled to vote at an election of
directors shall have voted in favor of such removal for Cause
(notwithstanding the fact that some lesser percentage may be
specified by the DGCL). "Cause," as used in this Section 7,
means conviction of a felony or a finding by a court of competent
jurisdiction of liability for gross negligence, or willful
misconduct, in the performance of the director's duty to the
Corporation in a matter of substantial importance to the
Corporation, where such adjudication is no longer subject to
direct appeal.
SECTION 8. Whenever the holders of any series of Preferred
Stock issued by the Corporation or of any other securities of the
Corporation shall have the right, voting separately by series, to
elect directors at an annual or special meeting of stockholders,
the election, term of office, filling of vacancies and other
features of such directorships shall be governed by the terms of
this Certificate of Incorporation then applicable thereto.
SECTION 9. Meetings of the stockholders of the Corporation
for any purpose or purposes may be held within or without the
State of Delaware, as the Bylaws of the Corporation may provide.
SECTION 10. No action required or permitted to be taken at
any annual or special meeting of stockholders of the Corporation
may be taken by written consent without a meeting of such
stockholders.
SECTION 11. Subject to the rights, if any, of the holders
of Preferred Stock or any series thereof, special meetings of the
stockholders of the Corporation for any purpose or purposes may
be called at any time only by the Chairman of the Board of the
Corporation, the Chief Executive Officer of the Corporation, the
President of the Corporation, or an Independent Board Majority.
Special meetings of the stockholders of the Corporation may not
be called by any other person or persons or in any other manner.
ARTICLE V
INDEMNIFICATION
SECTION 1. The Corporation shall indemnify any person who
was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative, by
reason of the fact that he or she is or was a director or an
officer of the Corporation, or is or was a director or an officer
of the Corporation and is or was serving at the request of the
Corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other
enterprise, against expenses (including, but not limited to,
attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by him or her in connection with
such action, suit or proceeding to the fullest extent and in the
manner set forth in and permitted by the DGCL and other
applicable law, as from time to time in effect. To the maximum
extent permitted by the DGCL, the Corporation shall advance
expenses (including attorneys' fees) incurred by any person
indemnified hereunder in defending any civil, criminal,
administrative or investigative action, suit or proceeding upon
an undertaking by or on behalf of such person to repay such
amount if it shall ultimately be determined that he or she is not
entitled to be indemnified by the Corporation. Such rights of
indemnification and advancement of expenses shall not be deemed
to be exclusive of any other rights to which such director or
officer may be entitled apart from the foregoing provisions. The
foregoing provisions of this Section 1 of Article V shall be
deemed to be a contract between the Corporation and each director
and officer who serves in such capacity at any time while this
Section 1 of Article V and the relevant provisions of the DGCL
and other applicable law, if any, are in effect, and any repeal
or modification thereof shall not affect any rights or
obligations then existing, with respect to any state of facts
then or theretofore existing, or any action, suit or proceeding
theretofore or thereafter brought or threatened based in whole or
in part upon any such state of facts.
SECTION 2. The Corporation may indemnify any person who was
or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative, by
reason of the fact that he or she is or was an employee or agent
of the Corporation, or is or was serving at the request of the
Corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other
enterprise, against expenses (including, but not limited to,
attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by him or her in connection with
such action, suit or proceeding to the extent and in the manner
set forth in and permitted by the DGCL and other applicable law
as from time to time in effect. Such right of indemnification
shall not be deemed to be exclusive of any other rights to which
any such person may be entitled apart from the foregoing
provisions.
ARTICLE VI
LIABILITY FOR BREACH OF FIDUCIARY DUTY
A director of the Corporation shall not be personally liable
to the Corporation or its stockholders for monetary damages for
breach of fiduciary duty as a director, except for liability
(i) for any breach of his or her duty of loyalty to the
Corporation or its stockholders, (ii) for acts or omissions not
in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) under Section 174 of the DGCL, or
(iv) for any transaction from which he or she derived any
improper personal benefit. In no event shall any director be
deemed to breach any fiduciary duty or other obligation owed to
any stockholders of the Corporation or any other person by reason
of (i) his or her failure to vote for (or by reason of such
director's vote against) any proposal or course of action that in
such director's judgment would breach any requirement imposed by
the Blue Cross and Blue Shield Association (or its then
successor) (the "BCBSA") or could lead to termination of any
license granted by the BCBSA to the Corporation or any subsidiary
or affiliate of the Corporation, or (ii) his or her decision to
vote in favor of any proposal or course of action that in such
director's judgment is necessary to prevent a breach of any
requirement imposed by the BCBSA or could prevent termination of
any license granted by the BCBSA to the Corporation or any
subsidiary or affiliate of the Corporation. If the DGCL is
hereafter amended to authorize, with the approval of a
corporation's stockholders, further reductions in the liability
of a corporation's directors for breach of fiduciary duty, then a
director of the Corporation shall not be liable for any such
breach to the fullest extent permitted by the DGCL as so amended.
Any repeal or modification of the foregoing provisions of this
Article VI by the stockholders of the Corporation shall not
adversely affect any right or protection of a director of the
Corporation existing at the time of such repeal or modification.
ARTICLE VII
RESTRICTION ON TRANSFER
SECTION 1. The following definitions shall apply with
respect to this Article VII:
(a) "affiliate" and "associate" have the respective
meanings ascribed to such terms in Rule 12b-2 of the General
Rules and Regulations under the Exchange Act.
(b) a Person shall be deemed to "Beneficially Own," be the
"Beneficial Owner" of or have "Beneficial Ownership" of any
Capital Stock:
(1) in which such Person shall then have a direct or
indirect beneficial ownership interest;
(2) in which such Person shall have the right to
acquire any direct or indirect beneficial ownership interest
pursuant to any option or other agreement (either immediately or
after the passage of time or the occurrence of any contingency);
(3) which such Person shall have the right to vote;
(4) in which such Person shall hold any other interest
which would count in determining whether such Person would be
required to file a Schedule 13D or Schedule 13G under
Regulation 13D-G under the Exchange Act; or
(5) which shall be Beneficially Owned (under the
concepts provided in the preceding clauses) by any affiliate or
associate of the particular Person or by any other Person with
whom the particular Person or any such affiliate or associate has
any agreement, arrangement or understanding (other than customary
agreements with and between underwriters and selling group
members with respect to a bona fide public offering of securities
and other than pursuant to the Registration Rights Agreement);
provided, however, that
(6) a Person shall not be deemed to Beneficially Own,
be the Beneficial Owner of, or have Beneficial Ownership of
Capital Stock by reason of possessing the right to vote if
(i) such right arises solely from a revocable proxy or consent
given to such Person in response to a public proxy or consent
solicitation made pursuant to, and in accordance with, the
applicable rules and regulations promulgated under the Exchange
Act, and (ii) such Person is not the Excess Owner of any Excess
Shares, is not named as holding a beneficial ownership interest
in any Capital Stock in any filing on Schedule 13D or
Schedule 13G, and is not an affiliate or associate of any such
Excess Owner or named Person;
(7) a member of a national securities exchange or a
registered depositary shall not be deemed to Beneficially Own, be
the Beneficial Owner of or have Beneficial Ownership of Capital
Stock held directly or indirectly by it on behalf of another
Person (and not for its own account) solely because such member
or depositary is the record holder of such Capital Stock, and (in
the case of such member), pursuant to the rules of such exchange,
such member may direct the vote of such Capital Stock without
instruction on matters which are uncontested and do not affect
substantially the rights or privileges of the holders of the
Capital Stock to be voted, but is otherwise precluded by the
rules of such exchange from voting such Capital Stock without
instruction on either contested matters or matters that may
affect substantially the rights or the privileges of the holders
of such Capital Stock to be voted;
(8) a Person who in the ordinary course of business is
a pledgee of Capital Stock under a written pledge agreement shall
not be deemed to Beneficially Own, be the Beneficial Owner of or
have Beneficial Ownership of such pledged Capital Stock solely by
reason of such pledge until the pledgee has taken all formal
steps which are necessary to declare a default or has otherwise
acquired the power to vote or to direct to vote such pledged
Capital Stock, provided that:
(A) the pledge agreement is bona fide and was not
entered into with the purpose nor with the effect of changing or
influencing the control of the Corporation, nor in connection
with any transaction having such purpose or effect, including any
transaction subject to Rule 13d-3(b) promulgated under the
Exchange Act; and
(B) the pledge agreement does not grant to the
pledgee the right to vote or to direct the vote of the pledged
securities prior to the time the pledgee has taken all formal
steps which are necessary to declare a default;
(9) a Person engaged in business as an underwriter or
a placement agent for securities who enters into an agreement to
acquire or acquires Capital Stock solely by reason of its
participation in good faith and in the ordinary course of its
business in the capacity of underwriter or placement agent in any
underwriting or agent representation registered under the
Securities Act, as a bona fide private placement, a resale under
Rule 144A promulgated under the Securities Act, or in any foreign
or other offering exempt from the registration requirements under
the Securities Act shall not be deemed to Beneficially Own, be
the Beneficial Owner of or have Beneficial Ownership of such
securities until the expiration of forty (40) days after the date
of such acquisition so long as (i) such Person does not vote such
Capital Stock during such period, and (ii) such participation is
not with the purpose or with the effect of changing or
influencing control of the Corporation, nor in connection with or
facilitating any transaction having such purpose or effect,
including any transaction subject to Rule 13d-3(b) promulgated
under the Exchange Act;
(10) if the Corporation shall sell shares in a
transaction not involving any public offering, then each
purchaser in such offering shall be deemed to obtain Beneficial
Ownership in such offering of the shares purchased by such
purchaser, but no particular purchaser shall be deemed to
Beneficially Own or have acquired Beneficial Ownership or be the
Beneficial Owner in such offering of shares purchased by any
other purchaser solely by reason of the fact that all such
purchasers are parties to customary agreements relating to the
purchase of equity securities directly from the Corporation in a
transaction not involving a public offering, provided that:
(A) all the purchasers are persons specified in
Rule 13d-l(b)(l)(ii) promulgated under the Exchange Act;
(B) the purchase is in the ordinary course of
each purchaser's business and not with the purpose nor with the
effect of changing or influencing control of the Corporation, nor
in connection with or as a participant in any transaction having
such purpose or effect, including any transaction subject to
Rule 13d-3(b) promulgated under the Exchange Act;
(C) there is no agreement among or between any
purchasers to act together with respect to the Corporation or its
securities except for the purpose of facilitating the specific
purchase involved; and
(D) the only actions among or between any
purchasers with respect to the Corporation or its securities
subsequent to the closing date of the nonpublic offering are
those which are necessary to conclude ministerial matters
directly related to the completion of the offer or sale of the
securities sold in such offering;
(11) the Share Escrow Agent shall not be deemed to be
the Beneficial Owner of any Excess Share held by such Share
Escrow Agent pursuant to an Excess Share Escrow Agreement, nor
shall any such Excess Shares be aggregated with any other shares
of Capital Stock held by affiliates or associates of such Share
Escrow Agent; and
(12) a Person shall not be deemed to Beneficially Own,
be the Beneficial Owner of, or have Beneficial Ownership of
Capital Stock by reason of the fact that such Person shall have
entered into an agreement with the Corporation pursuant to which
such Person, or its associates or affiliates, shall, upon
consummation of the transaction described in such agreement,
acquire, directly or indirectly, all of the Capital Stock of the
Corporation (by means of a merger, consolidation, stock purchase
or otherwise), provided that:
(A) such agreement shall have been approved by an
Independent Board Majority prior to the execution thereof by the
Corporation;
(B) neither such Person nor its associates or
affiliates shall have been the Excess Owner of any Excess Shares
immediately prior to the execution of such agreement;
(C) the consummation of the transaction described
in such agreement shall be subject to the approval of the holders
of Capital Stock of the Corporation entitled to vote thereon
under the DGCL or pursuant to other applicable law or the rules
of the New York Stock Exchange, Inc. or any other national
securities exchange or automated quotation system on which any of
the Capital Stock shall then be listed or quoted; and
(D) neither such Person nor its associates or
affiliates shall have made any acquisition of Capital Stock after
the execution of such agreement other than pursuant to the terms
of such agreement.
Anything herein to the contrary notwithstanding, a Person shall
continue to be deemed to Beneficially Own, be the Beneficial
Owner of, and have Beneficial Ownership of, such Person's Excess
Shares which shall have been conveyed, or shall be deemed to have
been conveyed, to the Share Escrow Agent in accordance with this
Article VII until such time as such Excess Shares shall have been
sold by the Share Escrow Agent as provided in this Article VII.
(c) "BCBSA" has the meaning set forth in Article VI hereof.
(d) "Capital Stock" means shares (or any basic unit) of any
class or series of any equity security, voting or non-voting,
common or preferred, which the Corporation may at any time issue
or be authorized to issue.
(e) "Common Stock" has the meaning set forth in Section 1
of Article III hereof.
(f) "Excess Owner" means a Person who Beneficially Owns
Excess Shares.
(g) "Excess Shares" means (i) with respect to any
Institutional Investor, all the shares of Capital Stock
Beneficially Owned by such Institutional Investor in excess of
the Institutional Investor Ownership Limit, (ii) with respect to
any Noninstitutional Investor, all the shares of Capital Stock
Beneficially Owned by such Noninstitutional Investor in excess of
the Noninstitutional Investor Ownership Limit, and (iii) with
respect to any Person, all the shares of Capital Stock
Beneficially Owned by such Person in excess of the General
Ownership Limit; provided, however, that in the event the Excess
Shares with respect to such Person results from the Beneficial
Ownership of Capital Stock of such Person being aggregated with
the Beneficial Ownership of Capital Stock of any other Person,
then the number of Excess Shares with respect to such Person
shall be allocated pro rata in proportion to each Person's total
Beneficial Ownership (as calculated without giving effect to this
Article VII). All Excess Shares shall be deemed to be issued and
outstanding shares of Capital Stock even when subject to or held
pursuant to this Article VII.
(h) "Exchange Act" means the Securities Exchange Act of
1934, as amended or supplemented and any other federal law which
the BCBSA shall reasonably judge to have replaced or supplemented
the coverage of the Exchange Act.
(i) "Foundation" means The Missouri Foundation For Health,
a Missouri nonprofit corporation.
(j) "General Ownership Limit" means (i) that number of
shares of Common Stock one share lower than the number of shares
of Common Stock which would represent 20% of all shares of Common
Stock issued and outstanding at the time of determination, or
(ii) any combination of shares of Capital Stock in any series or
class that represents 20% of the ownership interest in the
Corporation at the time of determination; provided, however, that
the General Ownership Limit may be revised from time to time
pursuant to Section 15 of this Article VII. Unless an
Independent Board Majority otherwise determines pursuant to the
authority granted in Section 15 of this Article VII, the manner
in which shares in different classes or series of Capital Stock
shall be counted to determine the ownership interest represented
by any particular combination of those shares of Capital Stock
pursuant to clause (ii) above shall be the same manner prescribed
by the BCBSA under the License Agreements. So long as Common
Stock (carrying identical voting rights per share) shall be the
only class of Capital Stock issued by the Corporation, the
General Ownership Limit shall be irrelevant for purposes of this
Article VII because the Institutional Investor Ownership Limit
shall exclusively determine whether any shares of Common Stock
owned by any Institutional Investor constitute Excess Shares and
the Noninstitutional Investor Ownership Limit shall exclusively
determine whether any shares of Common Stock owned by any
Noninstitutional Investor constitute Excess Shares. If, however,
the Corporation were to issue a series of Preferred Stock or
other class of Capital Stock other than Common Stock, then (i)
shares Beneficially Owned by an Institutional Investor in excess
of either the Institutional Investor Ownership Limit or the
General Ownership Limit would constitute Excess Shares, and (ii)
shares Beneficially Owned by a Noninstitutional Investor in
excess of either the Noninstitutional Investor Ownership Limit or
the General Ownership Limit would constitute Excess Shares.
(k) "Institutional Investor" means any Person that is an
entity or group identified in Rule 13d-1(b)(1)(ii) under the
Exchange Act as constituted on June 1, 1997, provided that every
filing made by such Person with the SEC under Regulation 13D-G
(or any successor Regulation) under the Exchange Act with respect
to such Person's Beneficial Ownership of Capital Stock by such
Person shall have contained a certification identical to the one
required by Item 10 of Schedule 13G constituted on June 1, 1997,
or such other affirmation as shall be approved by the BCBSA and
the Board of Directors.
(l) "Institutional Investor Ownership Limit" means that
number of shares of Capital Stock one share lower than the number
of shares of Capital Stock which would represent 10% of the
Voting Power of all shares of Capital Stock issued and
outstanding at the time of determination; provided, however, that
the Institutional Investor Ownership Limit may be revised from
time to time pursuant to Section 15 of this Article VII.
(m) "License Agreements" means the license agreements as
constituted from time to time between the Corporation or any of
its subsidiaries or affiliates and the BCBSA, including any and
all addenda thereto, with respect to, among other things, the
"Blue Cross" and "Blue Shield" names and marks.
(n) "Noninstitutional Investor" means any Person that is
not an Institutional Investor.
(o) "Noninstitutional Investor Ownership Limit" means that
number of shares of Capital Stock one share lower than the number
of shares of Capital Stock which would represent 5% of the Voting
Power of all shares of Capital Stock issued and outstanding at
the time of determination; provided, however, that the
Noninstitutional Investor Ownership Limit may be revised from
time to time pursuant to Section 15 of this Article VII.
(p) "Ownership Limit" means each of the General Ownership
Limit, the Institutional Investor Ownership Limit and the
Noninstitutional Investor Ownership Limit, as each may be revised
from time to time pursuant to Section 15 of this Article VII.
(q) "Permitted Transferee" means a Person whose acquisition
of Capital Stock will not violate any Ownership Limit applicable
to such Person.
(r) "Person" means any individual, firm, partnership,
corporation, limited liability company, trust, association, joint
venture or other entity, and shall include any successor (by
merger or otherwise) or of any such entity.
(s) "Registration Rights Agreement" means that certain
Registration Rights Agreement, between the Corporation and the
Foundation, referred to in the Agreement and Plan of
Reorganization described in Section 14 of this Article VII.
(t) "Schedule 13D" means a report on Schedule 13D under
Regulation 13D-G under the Exchange Act and any report which may
be required in the future under any requirements which the BCBSA
shall reasonably judge to have any of the purposes served by
Schedule 13D.
(u) "Schedule 13G" means a report on Schedule 13G under
Regulation 13D-G under the Exchange Act and any report which may
be required in the future under any requirements which the BCBSA
shall reasonably judge to have any of the purposes served by
Schedule 13G.
(v) "SEC" means the United States Securities and Exchange
Commission and any successor federal agency having similar
powers.
(w) "Securities Act" means the Securities Act of 1933, as
amended or supplemented, and any other federal law which the
BCBSA shall reasonably judge to have replaced or supplemented the
coverage of the Securities Act.
(x) "Share Escrow Agent" means the Person appointed by the
Corporation to act as escrow agent with respect to the Excess
Shares.
(y) "Transfer" means any of the following which would
affect the Beneficial Ownership of Capital Stock: (a) any direct
or indirect sale, transfer, gift, hypothecation, pledge,
assignment, devise or other disposition of Capital Stock
(including (i) the granting of any option or entering into any
agreement for the sale, transfer or other disposition of Capital
Stock, or (ii) the sale, transfer, assignment or other
disposition of any securities or rights convertible into or
exchangeable for Capital Stock), whether voluntary or
involuntary, whether of record, constructively or beneficially
and whether by operation of law or otherwise, and (b) any other
transaction or event, including without limitation a merger,
consolidation, or acquisition of any Person, the expiration of a
voting trust which is not renewed, or the aggregation of the
Capital Stock Beneficially Owned by one Person with the Capital
Stock Beneficially Owned by any other Person.
(z) "Voting Power" means the voting power attributable to
the shares of Capital Stock issued and outstanding at the time of
determination and shall be equal to the number of all votes which
could be cast in any election of any director which could be
accounted for by all shares of Capital Stock issued and
outstanding at the time of determination. If, in connection with
an election for any particular position on the Board of Directors
of the Corporation, shares in different classes or series are
entitled to be voted together for purposes of such election, then
in determining the number of "all votes which could be cast" in
the election for that particular position for purposes of the
preceding sentence, the number shall be equal to the number of
votes which could be cast in the election for that particular
position if all shares entitled to be voted in such election
(regardless of series or class) were in fact voted in such
election. For any particular Person, the Voting Power of such
Person shall be equal to the quotient, expressed as a percentage,
of the number of votes that may be cast with respect to shares of
Capital Stock Beneficially Owned by such Person (including, for
these purposes, any Excess Shares Beneficially Owned by such
Person and held and/or voted by the Escrow Share Agent) divided
by the total number of votes that could be cast by all
stockholders of the Corporation (including such particular
Person) based upon the issued and outstanding shares of Capital
Stock at the time of determination. If the Corporation shall
issue any series or class of shares for which positions on the
Board of Directors of the Corporation are reserved or shall
otherwise issue shares which have voting rights which can arise
or vary based upon terms governing that class or series, then the
percentage of the voting power represented by the shares of
Capital Stock Beneficially Owned by any particular Person shall
be the highest percentage of the total votes which could be
accounted for by those shares in any election of any director.
(aa) "Voting Trust Divestiture Agreement" means that certain
Voting Trust and Divestiture Agreement by and between the
Corporation and the Foundation and the trustee named therein,
referred to in the Agreement and Plan or Reorganization described
in Section 14 of this Article VII.
SECTION 2.
(a) No Institutional Investor shall Beneficially Own shares
of Capital Stock in excess of the Institutional Investor
Ownership Limit. No Noninstitutional Investor shall Beneficially
Own shares of Capital Stock in excess of the Noninstitutional
Investor Ownership Limit. No Person shall Beneficially Own
shares of Capital Stock in excess of the General Ownership Limit.
(b) The occurrence of any Transfer which would cause any
Person to Beneficially Own Capital Stock in excess of any
Ownership Limit applicable to such Person shall have the
following legal consequences: (i) such Person shall receive no
rights to the Excess Shares resulting from such Transfer (other
than as specified in this Article VII), and (ii) the Excess
Shares resulting from such Transfer immediately shall be deemed
to be conveyed to the Share Escrow Agent.
(c) Notwithstanding the foregoing, a Person's Beneficial
Ownership of Capital Stock shall not be deemed to exceed any
Ownership Limit applicable to such Person if (A) the Excess
Shares with respect to such Person do not exceed the lesser of 1%
of the Voting Power of the Capital Stock or 1% of the ownership
interest in the Corporation, and (B) within fifteen (15) days of
the time when such Person becomes aware of the existence of such
Excess Shares such Person transfers or otherwise disposes of
sufficient shares of Capital Stock so that such Person's
Beneficial Ownership of Capital Stock shall not exceed any
Ownership Limit.
SECTION 3. Any Excess Owner who acquires or attempts to
acquire shares of Capital Stock in violation of Section 2 of this
Article VII, or any Excess Owner who is a transferee such that
any shares of Capital Stock are deemed Excess Shares, shall
immediately give written notice to the Corporation of such event
and shall provide to the Corporation such other information as
the Corporation may request.
SECTION 4. The Corporation shall have the right to take
such actions as it deems necessary to give effect to the transfer
of Excess Shares to the Share Escrow Agent, including refusing to
give effect to the Transfer or any subsequent Transfer of Excess
Shares by the Excess Owner on the books of the Corporation.
Excess Shares so held or deemed held by the Share Escrow Agent
shall be issued and outstanding shares of Capital Stock. An
Excess Owner shall have no rights in such Excess Shares except as
expressly provided in this Article VII and the administration of
the Excess Shares escrow shall be governed by the terms of an
Excess Share Escrow Agreement to be entered into between the
Corporation and the Share Escrow Agent and having such terms as
the Corporation shall deem appropriate.
SECTION 5. The Share Escrow Agent, as record holder of
Excess Shares, shall be entitled to receive all dividends and
distributions as may be declared by the Board of Directors of the
Corporation with respect to Excess Shares (the "Excess Share
Dividends") and shall hold the Excess Share Dividends until
disbursed in accordance with the provisions of Section 9 of this
Article VII. In the event an Excess Owner receives any Excess
Share Dividends (including without limitation Excess Share
Dividends received prior to the time the Corporation determines
that Excess Shares exist with respect to such Excess Owner) such
Excess Owner shall repay such Excess Share Dividends to the Share
Escrow Agent or the Corporation. The Corporation shall take all
measures that it determines reasonably necessary to recover the
amount of any Excess Share Dividends paid to an Excess Owner,
including, if necessary, withholding any portion of future
dividends or distributions payable on shares of Capital Stock
Beneficially Owned by any Excess Owner (including future
dividends on distributions on shares of Capital Stock which fall
below the Ownership Limit as well as on Excess Shares), and, as
soon as practicable following the Corporation's receipt or
withholding thereof, shall pay over to the Share Escrow Agent the
dividends so received or withheld, as the case may be.
SECTION 6. In the event of any voluntary or involuntary
liquidation, dissolution, or winding up of, or any distribution
of the assets of, the Corporation, the Share Escrow Agent shall
be entitled to receive, ratably with each other holder of Capital
Stock of the same class or series, that portion of the assets of
the Corporation that shall be available for distribution to the
holders of such class or series of Capital Stock. The Share
Escrow Agent shall distribute to the Excess Owner the amounts
received upon such liquidation, dissolution or winding up or
distribution in accordance with the provisions of Section 9 of
this Article VII.
SECTION 7. The Share Escrow Agent shall be entitled to vote
all Excess Shares. The Share Escrow Agent shall vote, consent,
or assent Excess Shares as follows:
(a) to vote in favor of each nominee to the Board of
Directors of the Corporation whose nomination has been approved
by an Independent Board Majority and to vote against any
candidate for the Board of Directors of the Corporation for whom
no competing candidate has been nominated or selected by an
Independent Board Majority;
(b) unless such action is initiated by or with the consent
of the Board of Directors of the Corporation, (i) to vote against
removal of any director of the Corporation, (ii) to vote against
any alteration, amendment, change or addition to or repeal
(collectively, "Change") of the Bylaws or this Certificate of
Incorporation, (iii) not to nominate any candidate to fill any
vacancy of the Board of Directors of the Corporation, (iv) not to
call any special meeting of the stockholders of the Corporation,
and (v) not take any action by voting such Excess Shares that
would be inconsistent with or would have the effect, directly or
indirectly, of defeating or subverting the voting requirements
contained in Section 7(a) of this Article VII or this
Section 7(b) of Article VII;
(c) to the extent not covered by clauses (a) and (b) above,
on any action, proposal or resolution requiring the approval of
the Board of Directors of the Corporation as a prerequisite to
entitle the stockholders of the Corporation to vote thereon and
as a prerequisite to become effective, to vote in the same
proportion as all other votes represented by shares of Capital
Stock are cast with respect to such action, proposal or
resolution; and
(d) to the extent not covered by clauses (a), (b) and (c)
above, to vote as recommended by the Board of Directors of the
Corporation.
SECTION 8.
(a) The Share Escrow Agent shall hold all Excess Shares
until such time as they are sold in accordance with this
Section 8 of Article VII.
(b) The Share Escrow Agent shall sell or cause the sale of
Excess Shares at such time or times and on such terms as shall be
determined by the Corporation. The Share Escrow Agent shall have
the right to take such actions as the Corporation shall deem
appropriate to ensure that sales of Excess Shares shall be made
only to Permitted Transferees.
(c) The Share Escrow Agent shall have the power to convey
to the purchaser of any Excess Shares sold by the Share Escrow
Agent ownership of such Excess Shares free of any interest of the
Excess Owner of those Excess Shares and free of any other adverse
interest arising through the Excess Owner. The Share Escrow
Agent shall be authorized to execute any and all documents
sufficient to transfer title to any Permitted Transferee.
(d) Upon acquisition by any Permitted Transferee of any
Excess Shares sold by the Share Escrow Agent or the Excess Owner,
such shares shall upon such sale cease to be Excess Shares and
shall become regular shares of Capital Stock in the class or
series to which such Excess Shares otherwise belong, and the
purchaser of such shares shall acquire such shares free of any
claims of the Share Escrow Agent or the Excess Owner.
(e) To the extent permitted by the DGCL or other applicable
law, neither the Corporation, the Share Escrow Agent nor anyone
else shall have any liability to the Excess Owner or anyone else
by reason of any action or inaction the Corporation or the Share
Escrow Agent or any director, officer or agent of the Corporation
shall take which any of them shall in good faith believe to be
within the scope of their authority under this Article VII or by
reason of any decision as to when or how to sell any Excess
Shares or by reason of any other action or inaction in connection
with the activities permitted under this Article VII which does
not constitute gross negligence or willful misconduct. Without
limiting by implication the scope of the preceding sentence, to
the extent permitted by law, neither the Share Escrow Agent nor
the Corporation nor any director, officer or agent of the
Corporation (a) shall have any liability on grounds that any of
them failed to take actions which would or could have produced
higher proceeds for any of the Excess Shares or by reason of the
manner or timing for any disposition of any Excess Shares, and
(b) shall be deemed to be a fiduciary or agent of any Excess
Owner.
SECTION 9. The proceeds from the sale of the Excess Shares
and any Excess Share Dividends shall be distributed as follows:
(i) first, to the Share Escrow Agent for any costs and expenses
incurred in respect of its administration of the Excess Shares
that have not theretofore been reimbursed by the Corporation;
(ii) second, to the Corporation for all costs and expenses
incurred by the Corporation in connection with the appointment of
the Share Escrow Agent, the payment of fees to the Share Escrow
Agent with respect to the services provided by the Share Escrow
Agent in respect of the escrow and for any other direct or
indirect and out of pocket expenses incurred by the Corporation
in connection with the Excess Shares, including any litigation
costs and expenses, and all funds expended by the Corporation to
reimburse the Share Escrow Agent for costs and expenses incurred
by the Share Escrow Agent in respect of its administration of the
Excess Shares and for all fees, disbursements and expenses
incurred by the Share Escrow Agent in connection with the sale of
the Excess Shares; and (iii) third, the remainder thereof (as the
case may be) to the Excess Owner; provided, however, if the
Corporation shall have any questions as to whether any security
interest or other interest adverse to the Excess Owner shall have
existed with respect to any Excess Shares, neither the Share
Escrow Agent, the Corporation nor anyone else shall have the
obligation to disburse proceeds for those shares until the Share
Escrow Agent shall be provided with such evidence as the
Corporation shall deem necessary to determine the parties who
shall be entitled to such proceeds.
SECTION 10. Each certificate for Capital Stock shall bear
the following legend:
"The shares of stock represented by this certificate are subject
to restrictions on ownership and transfer. All capitalized terms
in this legend have the meanings ascribed to them in the
Corporation's Certificate of Incorporation, as the same may be
amended from time to time, a copy of which, including the
restrictions on ownership and transfer, shall be sent without
charge to each stockholder who so requests. No Person shall
Beneficially Own shares of Capital Stock in excess of any
Ownership Limit applicable to such Person. Subject to certain
limited specific exemptions, (i) Beneficial Ownership of that
number of shares of Capital Stock by an Institutional Investor
which would represent 10% or more of the Voting Power would
exceed the Institutional Investor Ownership Limit,
(ii) Beneficial Ownership of that number of shares of Capital
Stock by a Noninstitutional Investor which would represent 5% or
more of the Voting Power would exceed the Noninstitutional
Investor Ownership Limit, and (iii) Beneficial Ownership of (a)
20% or more of the issued and outstanding shares of Common Stock
or (b) any combination of shares in any series or class of
Capital Stock that represents 20% or more of the ownership
interest in the Corporation (determined as provided in the
Corporation's Certificate of Incorporation) would exceed the
General Ownership Limit. Any Person who attempts to Beneficially
Own shares of Capital Stock in violation of this limitation must
immediately notify the Corporation. Upon the occurrence of any
event that would cause any Person to exceed any Ownership Limit
applicable to such Person (including without limitation the
expiration of a voting trust that entitled such Person to an
exemption from any Ownership Limit applicable to such Person),
all shares of Capital Stock Beneficially Owned by such Person in
excess of any Ownership Limit applicable to such Person shall
automatically be deemed Excess Shares and shall be transferred
immediately to the Share Escrow Agent and shall be subject to the
provisions of the Corporation's Certificate of Incorporation.
The foregoing summary of the restrictions on ownership and
transfer is qualified in its entirety by reference to the
Corporation's Certificate of Incorporation."
The legend may be amended from time to time to reflect amendments
to this Certificate of Incorporation, or revisions to the
Ownership Limits in accordance with Section 15 of this
Article VII.
SECTION 11. Subject to Section 12 of this Article VII, nothing
contained in this Article VII or in any other provision of this
Certificate of Incorporation shall limit the authority of the
Corporation to take such other action as it deems necessary or
advisable to protect the Corporation and the interests of its
stockholders.
SECTION 12. Nothing contained in this Certificate of
Incorporation shall preclude the settlement of any transactions
entered into through the facilities of the New York Stock
Exchange, Inc. or any other exchange or through the means of any
automated quotation system now or hereafter in effect.
SECTION 13. Except in the case of manifest error, any
interpretation of this Article VII by the Board of Directors of
the Corporation shall be conclusive and binding; provided,
however, that in making any such interpretation, the Board of
Directors of the Corporation shall consider, wherever relevant,
the Corporation's obligations to the BCBSA.
SECTION 14. This Article VII shall not be applicable with
respect to any shares of Capital Stock owned by the Foundation
which were (i) issued by the Corporation to the Foundation upon
the incorporation of the Corporation, or (ii) issued by the
Corporation to the Foundation pursuant to that certain Agreement
and Plan of Reorganization, dated as of __________ ____, 199___
[date to be completed prior to filing this Certificate of
Incorporation], among the Corporation, Blue Cross and Blue Shield
of Missouri, RightCHOICE Managed Care, Inc., a Missouri
corporation, and the Foundation (such shares of Capital Stock
being referred to as "Exchange Shares"), or (iii) acquired by the
Foundation with respect to Exchange Shares as a result of a stock
dividend, stock split, conversion, recapitalization, exchange of
shares or the like, so long as such shares of Capital Stock shall
be Beneficially Owned by the Foundation or by a trustee for the
account of the Foundation and subject to the terms of the Voting
Trust and Divestiture Agreement. Upon the Transfer of any
Beneficial Ownership interest in any Exchange Shares (and such
other shares of Capital Stock received by the Foundation or by a
trustee for the account of the Foundation as a result of a stock
dividend, stock split, conversion, recapitalization, exchange of
shares or the like relating to such Exchange Shares) from the
Foundation or trustee thereof or the voting trust established by
the Voting Trust and Divestiture Agreement to any transferee,
those shares of Capital Stock shall become fully subject to this
Article VII from and at all times after such transfer.
SECTION 15. An Independent Board Majority shall have the right
to revise the definition of one or more Ownership Limits to
change the percentage ownership of Capital Stock under such
Ownership Limit to conform the definition to a change to the
terms of the License Agreements or as required or permitted by
the BCBSA. In the event the Corporation issues any series or
class of Capital Stock other than Common Stock, then an
Independent Board Majority shall have the power to determine the
manner in which each class or series of Capital Stock shall be
counted for purposes of determining each Ownership Limit. Any
such revision to the definition of any Ownership Limit shall not
be deemed a Change to this Certificate of Incorporation, and
shall not require stockholder approval under Article XII hereof;
provided, however, that no such revision shall be effective until
such time as the Corporation shall have notified the stockholders
of such revision in such manner as it shall deem appropriate
under the circumstances (provided that notification of any such
revision by means of a filing by the Corporation describing such
revision with the SEC under the Exchange Act or with the
Secretary of State of the State of Delaware under the DGCL shall
be deemed appropriate notice under all circumstances).
ARTICLE VIII
BYLAWS
SECTION 1. The Bylaws shall govern the management and
affairs of the Corporation, the rights and powers of the
directors, officers, employees and stockholders of the
Corporation in accordance with its terms and shall govern the
rights of all persons concerned relating in any way to the
Corporation except that if any provision in the Bylaws shall be
irreconcilably inconsistent with any provision in this
Certificate of Incorporation, the provision in this Certificate
of Incorporation shall control.
SECTION 2. The Board of Directors of the Corporation shall
have the power to amend or replace the Bylaws of the Corporation
by the vote of a majority of the whole Board of Directors of the
Corporation, except that the approval of an Independent Board
Majority shall be required to amend or replace any provision of
the Bylaws of the Corporation which, pursuant to the terms
thereof, may now or hereafter require the approval of an
Independent Board Majority. The stockholders of the Corporation
shall not have the power to Change (as defined in Section 7 of
Article VII hereof) the Bylaws of the Corporation unless such
Change shall be approved by the holders of at least seventy-five
percent (75%) of the then issued and outstanding shares of Common
Stock entitled to vote thereon.
ARTICLE IX
NO PREFERENTIAL RIGHTS
No stockholder of the Corporation shall, by reason of his,
her or its holding shares of any class or series, have any
preemptive or preferential rights to purchase or subscribe to any
shares of Capital Stock of the Corporation now or hereafter to be
authorized, or any notes, debentures, bonds or other securities
convertible into or carrying options or warrants to purchase
shares of any class now or hereafter to be authorized (whether or
not the issuance of any such shares or such notes, debentures,
bonds or other securities would adversely affect the dividend or
voting rights of such stockholder) other than such rights, if
any, as the Board of Directors of the Corporation in its
discretion from time to time may grant and at such price as the
Board of Directors of the Corporation may fix; and the Board of
Directors of the Corporation may issue shares of Capital Stock of
the Corporation or any notes, debentures, bonds or other
securities, convertible into or carrying options or warrants to
purchase shares of Capital Stock without offering any such shares
of Capital Stock, either in whole or in part, to the existing
stockholders.
ARTICLE X
NO CUMULATIVE VOTING
There shall be no cumulative voting by stockholders of any
class or series of Capital Stock in the election of directors of
the Corporation.
ARTICLE XI
BOOKS AND RECORDS
The books and records of the Corporation may be kept
(subject to any provision contained in the DGCL or other
applicable law) at such place or places as may be designated from
time to time by the Board of Directors of the Corporation or in
the Bylaws of the Corporation.
ARTICLE XII
RIGHT TO AMEND CERTIFICATE OF INCORPORATION
The Corporation reserves the right to Change (as defined in
Section 7 of Article VII hereof) any provision contained in this
Certificate of Incorporation, in the manner now or hereafter
prescribed by the DGCL or other applicable law and this
Certificate of Incorporation, and all rights conferred upon
stockholders herein are granted subject to this reservation;
provided, however, that notwithstanding anything contained in
this Certificate of Incorporation to the contrary, (a) the
approval of an Independent Board Majority shall be required for
the Board of Directors to approve and authorize any Change to
Sections 1, 3, 4, 5, 6, 7, 10 and 11 of Article IV, Article V,
Article VI, Article VII, Article VIII, Article X or this
Article XII, and (b) the affirmative vote of the holders of at
least seventy-five percent (75%) of the then issued and
outstanding shares of Common Stock entitled to vote thereon shall
be required to Change Sections 1, 3, 4, 5, 6, 7, 10, and 11 of
Article IV, Article V, Article VI, Article VII, Article VIII,
Article X and this Article XII (the "Supermajority Stockholder
Vote"); and provided further, however, that (i) the Supermajority
Stockholder Vote shall become ineffective and shall be of no
further force and effect with respect to a Change to Article VII
hereof in the event that each and every License Agreement to
which the Corporation shall be subject shall have been
terminated; and (ii) the Supermajority Stockholder Vote shall not
apply to (1) any Change to Article VII to conform Article VII
hereof to a change to the terms of any License Agreement, (2) any
Change to Article VII hereof required or permitted by the BCBSA
(whether or not constituting a change to the terms of any License
Agreement), or (3) any Change to Article VII hereof approved by
an Independent Board Majority in connection with a proposal to
acquire (by means of a merger, consolidation or otherwise) all of
the outstanding Capital Stock of the Corporation. The
affirmative vote of the holders of at least the percentage of the
issued and outstanding Capital Stock entitled to vote thereon
required by the DGCL or other applicable law shall be required to
Change any provisions of this Certificate of Incorporation that
shall not require the Supermajority Stockholder Vote under this
Article XII.
ARTICLE XIII
REGISTERED AGENT
The address of the registered office of the corporation in
the state of Delaware is
______________________________________________________. The name
of its registered agent at such address is
___________________________.
ARTICLE XIV
COMPROMISE
Whenever a compromise or arrangement is proposed between the
Corporation and its creditors or any class of them and/or between
the Corporation and its stockholders or any class of them, any
court of equitable jurisdiction within the State of Delaware may,
on the application in a summary way of the Corporation or of any
creditor or stockholder thereof or on the application of any
receiver or receivers appointed for the Corporation under 291
of Title 8 of the Delaware Code or on the application of trustees
in dissolution or of any receiver or receivers appointed for the
Corporation under 279 of Title 8 of the Delaware Code under a
meeting of the creditors or class of creditors, and/or of the
stockholders or class of stockholders of the Corporation, as the
case may be, to be summoned in such manner as the said court
directs. If a majority in number representing three fourths
(3/4) in value of the creditors or class of creditors, and/or of
the stockholders or class of stockholders of the Corporation, as
the case may be, agree to any compromise or arrangement and to
any reorganization of the Corporation as consequence of such
compromise or arrangement, the said compromise or arrangement and
the said reorganization shall, if sanctioned by the court to
which the said application has been made, be binding on all the
creditors or class of creditors, and/or on all the stockholders
or class of stockholders, of the Corporation, as the case may be,
and also on the Corporation.
IN WITNESS WHEREOF, the undersigned duly executed this
Certificate of Incorporation on this ____ day of ________, 199__.
Incorporator
EXHIBIT D
FORM OF
BYLAWS
OF
RIGHTCHOICE MANAGED CARE, INC.
TABLE OF CONTENTS
Page
ARTICLE I - OFFICES AND RECORDS 1
ARTICLE II - SHAREHOLDERS 1
ARTICLE III - BOARD OF DIRECTORS 6
ARTICLE IV - OFFICERS 15
ARTICLE V - INDEMNIFICATION 19
ARTICLE VI - STOCK 21
ARTICLE VII - CORPORATE FINANCE 22
ARTICLE VIII - GENERAL PROVISIONS 23
ARTICLE I - OFFICES AND RECORDS
Section 1.1 Registered Office and Registered Agent. The
location of the registered office and the name of the registered
agent of the Corporation in the State of Delaware shall be as
stated in the Certificate of Incorporation of the Corporation (as
the same may be further amended and/or restated) (the
"Certificate of Incorporation") or as shall be determined from
time to time by the Board of Directors and on file in the
appropriate office of the State of Delaware pursuant to
applicable provisions of law. Unless otherwise permitted by law,
the address of the registered office of the Corporation and the
address of the business office of the registered agent shall be
identical.
Section 1.2 Corporate Offices. The Corporation may have such
corporate offices anywhere within or without the State of
Delaware as the Board of Directors from time to time may
determine or the business of the Corporation may require.
Section 1.3 Books and Records. The Corporation shall keep
correct and complete books and records of account, including the
amount of its assets and liabilities, minutes of its proceedings
of its stockholders and Board of Directors (and any committee
having the authority of the Board of Directors) and the names and
places of residence of its officers. The Corporation shall keep
at its registered office or principal place of business in the
State of Missouri, or at the office of its transfer agent in the
State of Missouri, if any, books and records in which shall be
recorded the number of shares subscribed, the names of the owners
of the shares, the numbers owned by them respectively, the amount
of shares paid, and by whom, and the transfer of such shares with
the date of transfer.
Section 1.4 Inspection of Records. A stockholder may, upon
written demand under oath stating the proper purpose thereof,
inspect the records of the Corporation, pursuant to any statutory
or other legal right, during the usual and customary hours of
business and in such manner as will not unduly interfere with the
regular conduct of the business of the Corporation. A
stockholder may delegate such stockholder's right of inspection
to a certified or public accountant on the condition, to be
enforced at the option of the Corporation, that the stockholder
and accountant agree with the Corporation to furnish to the
Corporation promptly a true and correct copy of each report with
respect to such inspection made by such accountant. No
stockholder shall use, permit to be used or acquiesce in the use
by others of any information so obtained to the detriment
competitively of the Corporation, nor shall such stockholder
furnish or permit to be furnished any information so obtained to
any competitor or prospective competitor of the Corporation. The
Corporation as a condition precedent to any stockholder's
inspection of the records of the Corporation may require the
stockholder to indemnify the Corporation, in such manner and for
such amount as may be determined by the Board of Directors,
against any loss or damage which may be suffered by it arising
out of or resulting from any unauthorized disclosure made or
permitted to be made by such stockholder of information obtained
in the course of such inspection.
ARTICLE II - SHAREHOLDERS
Section 2.1 Place of Meetings. Meetings of stockholders shall
be held at any place within or outside the State of Delaware
designated by the Board of Directors. In the absence of any such
designation by the Board of Directors, stockholders' meetings
shall be held at the principal place of business of the
Corporation.
Section 2.2 Annual Meetings. An annual meeting of the
stockholders of the Corporation for the election of directors
shall be held on the second Tuesday in May of each year, if not a
legal holiday, and if a legal holiday, then on the next business
day following, at 10:00 a.m., or at such other date and time as
shall be designated from time to time by the Board of Directors
and stated in the notice of the meeting, at which the
stockholders entitled to vote thereon shall elect directors to
serve until expiration of their respective term of office as
specified in Section 3 of Article IV of the Certificate of
Incorporation and until their respective successors are duly
elected and qualified, or until their respective earlier
resignation, removal or death, and shall transact such other
business as may properly come before the meeting as provided
herein.
Section 2.3 Special Meetings. Special meetings of
stockholders may be called only by the Chairman of the Board, the
Chief Executive Officer, the President, or an Independent Board
Majority (as defined in Section 4.B.3 of Article IV of the
Certificate of Incorporation). The Chairman of the Board, the
Chief Executive Officer, the President, or an Independent Board
Majority, as the case may be, shall have the right to determine
the business to be transacted at any special meeting and no issue
or matter may be acted upon by any stockholders at any special
meeting unless such issue or matter has been approved by the
Board of Directors for vote by stockholders at such meeting.
Section 2.4 Notice; Waiver of Notice; Affidavit of Notice.
(a) Written or printed notice of each meeting of the
stockholders, whether annual or special, stating the place, day
and hour of the meeting and, in case of a special meeting, the
purpose or purposes thereof and that no other business may be
transacted, and, in the case of an annual meeting, those matters
which the Board of Directors, at the time of giving the notice,
intends to present for action by the stockholders, shall be
delivered or given to each stockholder entitled to vote at such
meeting, as determined in accordance with Section 2.8 of these
Bylaws, not less than ten (10) days or more than sixty (60) days
before the date of the meeting, either personally or by mail, by
or at the direction of the President, the Secretary, or the
officer or persons calling the meeting pursuant to Section 2.3 of
these Bylaws, unless, as to a particular matter, other or further
notice is required by the General Corporation Law of the State of
Delaware (the "DGCL") or other applicable law, in which case such
other or further notice shall be given.
(b) Any notice to a stockholder of a stockholders' meeting
sent by mail shall be deemed to be delivered when deposited in
the United States mail with postage thereon prepaid and addressed
to the stockholder at such stockholder's address as it appears on
the records of the Corporation.
(c) Whenever any notice is required to be given to any
stockholder under the provisions of these Bylaws, or of the
Certificate of Incorporation or of the DGCL or other applicable
law, a written waiver thereof, signed by the stockholder entitled
to such notice, whether before or after the time stated therein,
shall be deemed equivalent to the giving of such notice.
(d) To the extent provided by the DGCL or other applicable
law, attendance of a stockholder at any meeting shall constitute
a waiver of notice of such meeting except where a stockholder
attends a meeting for the express purpose of objecting to the
transaction of any business because the meeting is not lawfully
called or convened.
(e) An affidavit of the mailing or other means of giving
any notice of any stockholders' meeting shall be executed by the
Secretary, the Assistant Secretary, or any transfer agent of the
Corporation giving the notice, and shall be filed and maintained
in the minute book of the Corporation.
Section 2.5 Presiding Officials. Every meeting of the
stockholders, for whatever purpose, shall be convened by the
President, the Secretary or the officer or any of the persons who
called the meeting pursuant to Section 2.3 of these Bylaws. The
meeting shall be presided over by the officers specified in
Sections 4.7, 4.8 and 4.9 of these Bylaws as provided therein.
Section 2.6 Quorum; Adjournment. Unless otherwise provided by
the DGCL or other applicable law, the Certificate of
Incorporation or these Bylaws, the constitution of a quorum at
any meeting of the stockholders shall require a majority of the
outstanding shares of the Corporation's capital stock entitled to
vote at such meeting, represented in person or by proxy;
provided, however, that in the event that less than a quorum is
represented at a meeting, the shares so represented, by a
majority vote, shall have the right successively to adjourn the
meeting, without notice to any stockholder not present at the
meeting, to a specified date no later than 90 days after such
adjournment. In all matters, every decision of a majority of the
outstanding shares then entitled to vote on the subject matter
and represented in person or by proxy at a meeting at which a
quorum is present shall be valid as an act of the stockholders,
unless a larger vote is required by the DGCL or other applicable
law, by the Certificate of Incorporation or by these Bylaws;
provided, however, that if there are two or more classes of stock
entitled to vote as separate classes, then in the case of each
such class, the holders of a majority (or such higher proportion
as may be required by the DGCL or other applicable law or the
Certificate of Incorporation or these Bylaws) of the shares of
each such class must be voted affirmatively to approve any matter
requiring such separate class vote. Shares represented by a
proxy which directs that the shares be voted to abstain or to
withhold a vote on a matter shall be deemed to be represented at
the meeting as to such matter. At any subsequent session of an
adjourned meeting at which a quorum is present in person or by
proxy, any business may be transacted which could have been
transacted at the initial session of the meeting if a quorum had
been present.
Section 2.7 Proxies. Every person entitled to vote for
directors or on any other matter shall have the right to do so
either in person or by one or more agents authorized by a written
proxy signed by the person and filed with the Secretary of the
Corporation. A proxy shall be deemed signed if the stockholder's
name is placed on the proxy (whether by manual signature,
typewriting, telegraphic transmission, or otherwise) by the
stockholder or the stockholder's attorney-in-fact. A validly
executed proxy which does not state that it is irrevocable shall
continue in full force and effect unless (i) revoked by the
person executing it, before the vote pursuant to that proxy, by a
writing delivered to the Corporation stating that the proxy is
revoked, or by a subsequent proxy executed by, or attendance at
the meeting and voting in person by, the person executing the
proxy; or (ii) written notice of the death or incapacity of the
maker of that proxy is received by the Corporation before the
vote pursuant to that proxy is counted; provided, however, that
no proxy shall be valid after the expiration of three (3) years
from the date of the proxy, unless otherwise provided in the
proxy. The revocability of a proxy that states on its face that
it is irrevocable shall be governed by the provisions of Section
212 of the DGCL.
Section 2.8 Voting.
(a) Each stockholder shall have the number of votes
provided in the Certificate of Incorporation for each share of
stock entitled to vote under the provisions of the Certificate of
Incorporation and registered in such stockholder's name on the
books of the Corporation.
(b) Cumulative voting is not permitted with respect to the
election of directors, and thus no stockholder entitled to vote
in the election of directors shall have the right to cast as many
votes in the aggregate as shall equal the number of votes held by
the stockholder in the Corporation, multiplied by the number of
directors to be elected at the election, for one candidate, or
distribute them among two or more candidates.
(c) In order that the Corporation may determine the
stockholders entitled to notice of or to vote at any meeting of
stockholders or any adjournment thereof, or entitled to receive
payment of any dividend or other distribution or allotment of any
rights, or entitled to exercise any rights in respect of any
change, conversion or exchange of shares or for the purpose of
any other lawful action, the Board of Directors may fix, in
advance, a record date, which shall not be more than sixty (60)
days nor less than ten (10) days before the date of such meeting,
nor more than sixty (60) days prior to any other action. A
determination of stockholders of record entitled to notice of, or
to vote at, a meeting of stockholders shall apply to any
adjournment of the meeting; provided, however, that the Board of
Directors may fix a new record date for the adjourned meeting.
(d) If the Board of Directors does not close the transfer
books or set a record date for the determination of its
stockholders entitled to notice of, or to vote at, a meeting of
stockholders in accordance with Section 2.8(d) of these Bylaws,
only those persons who are stockholders of record at the close of
business on the day preceding the next day on which notice of
such meeting is given, or, if notice is waived, at the close of
business on the day next preceding the day on which such meeting
is held, shall be entitled to notice of, and to vote at, such
meeting and any adjournment of such meeting; except that, if
prior to such meeting written waivers of notice of such meeting
are signed and delivered to the Corporation by all of the
stockholders of record at the time such meeting is convened, only
those persons who are stockholders of record at the time such
meeting is convened shall be entitled to vote at such meeting and
any adjournment thereof.
Section 2.9 Stockholders' Lists. A complete list of the
stockholders entitled to vote at each meeting of the
stockholders, arranged in alphabetical order, with the address of
and the number of voting shares of each class owned of record by
each stockholder of record as of the date determined pursuant to
Sections 2.8(d) or (e) of these Bylaws as the case may be, shall
be prepared by the officer of the Corporation having charge of
the stock transfer books of the Corporation, and shall, for a
period of ten (10) days prior to the meeting, be kept on file at
a place within the city where the meeting is to be held and shall
at any time during the usual hours for business be subject to
inspection by any stockholder. Such list or a duplicate thereof
shall also be produced and kept open at the time and place of the
meeting and shall be subject to the inspection of any stockholder
during the whole time of the meeting. The original share ledger
or transfer book, or a duplicate thereof kept in the State of
Missouri, shall be prima facie evidence as to who are the
stockholders entitled to examine such list, share ledger or
transfer book or to vote at any meeting of stockholders.
Section 2.10 Conduct of Stockholder Meetings. The date and
time of the opening and the closing of the polls for each matter
upon which the stockholders will vote at a meeting shall be
announced at the meeting by the person presiding over the
meeting. The Board of Directors of the Corporation may, to the
extent not prohibited by the DGCL or other applicable law, adopt
by resolution such rules and regulations for the conduct of the
meetings or any meeting of stockholders as it shall deem
appropriate. Except to the extent inconsistent with such rules
and regulations, the Chairman of the meeting may prescribe such
rules, regulations and procedures and do all such acts as, in the
judgment of such Chairman, are appropriate for the proper conduct
of the meeting. Such rules, regulations or procedures, whether
adopted by the Board of Directors or prescribed by the Chairman
of the meeting, may, to the extent not prohibited by the DGCL or
other applicable law, include, without limitation, the following:
(i) the establishment of an agenda for the meeting; (ii) the
maintenance of order at the meeting; (iii) limitations on
attendance at or participation in the meeting to stockholders of
record of the Corporation, their duly authorized proxies and such
other persons as shall be determined; (iv) restrictions on entry
to the meeting after a specified time; (v) limitation on the time
allotted to questions or comments by participants; (vi) a
determination of whether the proponent of any proposal is
entitled to obtain a vote by stockholders on that proposal at
that meeting under the standards prescribed in these Bylaws and
such other standards as the Chairman of the meeting shall
determine to be applicable; (vii) the taking and counting of
votes at such meetings; and (viii) the resolution of any other
questions which may be raised at such meeting. Unless otherwise
determined by the Board of Directors or the Chairman of the
meeting, meetings of stockholders shall not be required to be
held in accordance with any rules of parliamentary procedure.
Section 2.11 Stockholder Action By Written Consent without a
Meeting. No action required or permitted to be taken at any
annual or special meeting of stockholders of the Corporation may
be taken by written consent without a meeting of such
stockholders.
Section 2.12 Inspectors of Election. Before any meeting of
stockholders, the Board of Directors shall appoint a person
(other than nominees for office, directors or stockholders) to
act as inspectors of election at the meeting or its adjournment.
If any person appointed as inspector fails to appear or fails or
refuses to act, the Chairman of the meeting shall appoint a
person to fill such vacancy. The inspector shall: (a) determine
the number of shares outstanding and the voting power of each,
the shares represented at the meeting, the existence of a quorum,
and the authenticity, validity, and effect of proxies;
(b) receive votes or ballots; (c) hear and determine all
challenges and questions in any way arising in connection with
the right to vote; (d) count and tabulate all votes;
(e) determine when the polls shall close; (f) determine the
result; and (g) do any other acts that may be proper to conduct
the election or vote with fairness to all stockholders.
Section 2.13 Stockholder Proposals.
(a) Stockholders shall be entitled to submit proposals to be
voted upon by stockholders at an annual meeting of the
Corporation provided that they comply with the procedures set
forth in this Section 2.13. Only those proposals which satisfy
all requirements specified in this Section 2.13 shall be deemed
"Qualified Stockholder Proposals."
(b) In order for a proposal to constitute a "Qualified
Stockholder Proposal," all of the following requirements must be
satisfied:
(1) The proposal must be made for submission at an annual
meeting of stockholders;
(2) The proposal must be a proper subject for stockholder
action. The Board of Directors shall be entitled to determine
that any proposal which the stockholder is not entitled to have
included in the Corporation's proxy statement for the annual
meeting under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), and the regulations issued by the
Securities and Exchange Commission (which are collectively
referred to herein as the "SEC Proxy Rules") is not a proper
subject for stockholder action;
(3) The proposal must be made by a stockholder who shall be the
record holder on the record date for such annual meeting and at
that meeting of shares entitled to be voted for the proposal (a
"Proposing Stockholder");
(4) The Proposing Stockholder must deliver a written notice
identifying such proposal to the office of the Corporation's
Corporate Secretary at the Corporation's principal place of
business which provides the information required by these Bylaws
which is timely under the standards given in Section 3.5(e)(4) of
these Bylaws;
(5) Such Proposing Stockholder's proposal notice shall:
(i) contain a description of the proposal, the reasons for the
proposal and any material interest in such proposal by the
Proposing Stockholder or the beneficial owner of the
stockholder's record shares; (ii) contain an affirmation by the
Proposing Stockholder that the stockholder satisfies the
requirements specified in this Section 2.13 for presentation of
such proposal; and (iii) as to the Proposing Stockholder and the
beneficial owner, if any, on whose behalf the proposal is made
(x) the name and address of such Proposing Stockholder, as they
appear on the Corporation's books, and of such beneficial owner
and the telephone number at which each may be contacted during
normal business hours through the time for which the meeting is
scheduled, and (y) the class and number of shares of the
Corporation which are owned beneficially and of record by such
Proposing Stockholder and such beneficial owner; and
(6) The Proposing Stockholder and the beneficial owner shall
provide such other information as any officer of the Corporation
shall reasonably deem relevant within such time limits as any
officer of the Corporation shall reasonably impose for such
information.
(c) Nothing in these Bylaws shall be deemed to prohibit a
stockholder from including any proposals in the Corporation's
proxy statement to the extent such inclusion shall be required by
the SEC Proxy Rules or to lessen any obligation by any
stockholder to comply with the SEC Proxy Rules; provided,
however, that neither the fact that a stockholder's nominee
qualifies as a Qualified Candidate (as defined in Section 3.5 of
these Bylaws) nor the fact that a Proposing Stockholder's
proposal qualifies as a Qualified Stockholder Proposal under this
Section 2.13 shall obligate the Corporation to endorse that
candidate or proposal or (except to the extent required by the
SEC Proxy Rules) to provide a means to vote on that proposal on
proxy cards solicited by the Corporation or to include
information about that proposal in the Corporation's proxy
statement. To the extent this Section 2.13 shall be deemed by
the Board of Directors or the Securities and Exchange Commission,
or adjudged by a court of competent jurisdiction, to be
inconsistent with the rights of stockholders to request inclusion
of a proposal in the Corporation's proxy statement pursuant to
the SEC Proxy Rules, the SEC Proxy Rules shall prevail.
ARTICLE III - BOARD OF DIRECTORS
Section 3.1 General Powers. The business and affairs of the
Corporation shall be managed by or under the direction of the
Board of Directors. In addition to the powers and authorities
expressly conferred upon it by these Bylaws, the Board of
Directors may exercise all such powers of the Corporation and do
all such lawful acts and things as are not directed or required
to be exercised or done exclusively by the stockholders by the
DGCL or other applicable law or by the Certificate of
Incorporation or by these Bylaws.
Section 3.2 Number of Directors. Until otherwise determined
by the Board of Directors acting pursuant to Section 3.4 of these
Bylaws, the number of positions on the Board of Directors shall
be three (3).
Section 3.3 Division of the Board of Directors into Classes.
The Board of Directors shall be divided into three classes in
accordance with the Certificate of Incorporation. The positions
within each class shall be the same in number as reasonably
practicable. Directors within a given class shall be designated
as the "Class of [Year]," with the entry for "Year" being the
year in which the next triennial election for directors in that
class is scheduled to occur.
Section 3.4 Board of Directors' Power to Alter the Number of
Directors and the Size of Classes. The Board of Directors shall
have the power (within the limitations prescribed by the
Certificate of Incorporation) by a resolution adopted by an
Independent Board Majority at the time of such adoption to alter
at any time and from time to time (i) the total number of
directorship positions on the Board of Directors, and (ii) the
number of directorship positions in any of the three classes of
directors established by the Certificate of Incorporation.
Except as otherwise expressly provided in the Certificate of
Incorporation, from the adoption of any particular resolution in
the manner provided in the preceding sentence until the adoption
in the manner prescribed by the preceding sentence of any
subsequent resolution altering the results of the particular
resolution, (i) the total number of directorship positions on the
Board of Directors shall be equal to the number specified in the
particular resolution, and (ii) the number of directorship
positions in each of the three classes of directors established
by the Certificate of Incorporation shall be the number
established in the particular resolution.
Section 3.5 Election of Directors by Stockholders.
(a) Qualified Candidates (as defined below in this Section 3.5)
for election as directors at any meeting of the stockholders of
the Corporation shall be elected by plurality vote. (Under
plurality voting, if five positions on the Board of Directors
were up for election at any particular stockholders' meeting,
then the five Qualified Candidates who receive more votes than
any other Qualified Candidates shall be deemed elected at that
meeting. It shall not, therefore, be necessary for election to
the Board of Directors that a candidate receive a majority of the
votes comprising the quorum for the meeting so long as the
individual receives a number of votes sufficient for election
under the terms hereof.)
(b) Only Qualified Candidates may be elected to the Board of
Directors at any particular stockholders' meeting. Votes cast in
favor of an individual who is not a Qualified Candidate shall not
be effective to elect that individual to the Board of Directors
regardless of whether (i) that individual receives a greater
number of votes than Qualified Candidates who are elected to the
Board of Directors under the preceding provisions of this
Section 3.5, or (ii) no other individual receives any votes at
that meeting.
(c) An individual shall be deemed a "Qualified Candidate" for
election to the Board of Directors at any particular
stockholders' meeting if that individual (i) shall have been
nominated for election by the affirmative vote of an Independent
Board Majority or shall have been nominated for election in a
manner which satisfies all of the requirements specified in
Section 3.5(e) hereof, and (ii) is not disqualified under the
provisions of Section 3.5(d) hereof.
(d) The term "Non-Independent Candidate," as used with respect
to any particular election of directors, means an individual who
satisfies the conditions of clause (i) of Section 3.5(c) hereof
but who does not qualify as an "Independent Director" as defined
in Section 4.B.1 of Article IV of the Certificate of
Incorporation. In the event that, in any particular election of
directors, some but not all of the Non-Independent Candidates for
director at such election may be eligible for election to the
Board of Directors pursuant to Section 4.A of Article IV of the
Certificate of Incorporation, then the Non-Independent Candidates
shall be treated as Qualified Candidates until all positions
available for Non-Independent Candidates at such election
pursuant to Section 4.A of Article IV of the Certificate of
Incorporation shall have been elected in the manner set forth in
this Section 3.5. The remaining Non-Independent Candidates
shall, in accordance with Section 3.5(b), be deemed to not be
Qualified Candidates.
(e) An individual who is not nominated for election by the
affirmative vote of an Independent Board Majority, and who would
otherwise qualify as a Qualified Candidate as provided in
Sections 3.5(c) and 3.5(d) hereof, shall be a Qualified Candidate
if all of the following requirements are satisfied:
(1) The nomination must be made for an election to be held at an
annual meeting of stockholders or a special meeting of
stockholders in which the Board of Directors has determined that
candidates will be elected by the issued and outstanding shares
of the Corporation's common stock to one or more positions on the
Board of Directors;
(2) The individual must be nominated by a stockholder who shall
be the record owner on the record date for such meeting and at
that meeting of shares entitled to be voted at that meeting for
the election of directors (a "Nominating Stockholder");
(3) The Nominating Stockholder must deliver a timely written
nomination notice to the office the Corporation's Corporate
Secretary at the Corporation's principal place of business which
provides the information required by this Section 3.5(e);
(4) To be timely for an annual meeting, a Nominating
Stockholder's notice must be actually delivered to the Corporate
Secretary at the Corporation's principal place of business not
later than the close of business on the 60th day nor earlier than
the close of business on the 90th day prior to the first
anniversary of the preceding year's annual meeting; provided,
however, that: (i) if the date of the annual meeting is more
than 30 days before or more than 60 days after such anniversary
date, notice by the stockholder to be timely must be so delivered
not earlier than the close of business on the 90th day prior to
such annual meeting and not later than the close of business on
the later of the 60th day prior to such annual meeting or the
10th day following the day on which public announcement of the
date of such meeting is first made by the Corporation, and
(ii) if the number of directors to be elected to the Board of
Directors is increased and there is no public announcement by the
Corporation naming all of the nominees for director or specifying
the size of the increased Board of Directors at least 70 days
prior to the first anniversary of the preceding year's annual
meeting, a Nominating Stockholder's nominating notice required by
this Section 3.5(e) shall also be considered timely, but only
with respect to nominees for any new positions created by such
increase, if (x) the Nominating Stockholder shall have nominated
candidates in accordance with the requirements in this
Section 3.5(e) for all Board of Directors positions not covered
by such increase, and (y) the nomination notice for candidates to
fill the expanded positions shall be actually delivered to the
Corporate Secretary at the Corporation's principal place of
business not later than the close of business on the 10th day
following the day on which such public announcement is first made
by the Corporation;
(5) If the election is to be held at a special stockholders'
meeting, a Nominating Stockholder's nominating notice required by
this Section 3.5(e) shall be considered timely for such meeting
if it shall be actually delivered to the Corporate Secretary at
the Corporation's principal place of business not later than the
close of business on the 10th day following the day on which the
Corporation shall first publicly announce the date of the special
meeting and that a vote by stockholders shall be taken at such
meeting to elect one or more directors;
(6) In no event shall the public announcement of an adjournment
of an annual meeting commence a new time period for the giving of
a Nominating Stockholder's notice as described above. "Public
Announcement" means, for these purposes, disclosure in a press
release reported by the Dow Xxxxx News Service, Associated Press
or comparable national news service or in a document publicly
filed by the Corporation with the Securities and Exchange
Commission pursuant to Section 13, 14 or 15(d) of the Exchange
Act.
(7) Such Nominating Stockholder's nomination notice shall:
(i) set forth as to each person whom the Nominating Stockholder
proposes to nominate for election or reelection as a director all
information relating to such person that is required to be
disclosed in solicitations of proxies for election of directors
in an election contest, or is otherwise required, in each case
pursuant to Regulation 14A under the Exchange Act, and
Rule 14a-11 thereunder; (ii) be accompanied by each nominee's
written consent to being named in the proxy statement as a
nominee and to serving as a director if elected; (iii) set forth
the name and address of the stockholder giving the notice and the
beneficial owner of the shares owned of record by the beneficial
owner, and the telephone number at which the Corporation will be
able to contact the stockholder, the beneficial owner and each
nominee during usual business hours during the period through the
meeting at which the nomination is to take place; and (iv) set
forth the class and number of shares of the Corporation which are
owned beneficially and of record by such Nominating Stockholder
and such beneficial owner;
(8) The Nominating Stockholder, the beneficial owner and each
nominee shall provide such other information as any officer of
the Corporation shall reasonably deem relevant within such time
limits as any officer of the Corporation shall reasonably impose
for such information.
Section 3.6 Vacancies. Neither the provisions of Section 3.5
nor any other provision set forth herein shall diminish the right
granted to the Directors to elect individuals to fill any vacancy
which shall occur for any reason as provided in the Certificate
of Incorporation.
Section 3.7 Meetings of the Newly Elected Board of Directors.
The members of each newly elected Board of Directors (i) shall
meet at such time and place, either within or without the State
of Delaware, as shall be provided for by resolution of the
stockholders at the annual meeting, and no notice of such meeting
shall be necessary to the newly elected directors in order
legally to constitute the meeting, provided a quorum shall be
present, or (ii) if not so provided for by resolution of the
stockholders, or if a quorum shall not be present, may meet at
such time and place as shall be consented to in writing by a
majority of the newly elected directors, provided that written or
printed notice of such meeting shall be given to each of the
other directors in the same manner as provided in these Bylaws
with respect to the giving of notice for special meetings of the
Board of Directors, except that it shall not be necessary to
state the purpose of the meeting in such notice, or
(iii) regardless of whether or not the time and place of such
meeting shall be provided for by resolution of the stockholders
at the annual meeting, may meet at such time and place as shall
be consented to in writing by all of the newly elected directors.
Each director of the Corporation, upon such director's election,
shall qualify by accepting the office of director, and such
director's attendance at, or written approval of the minutes of,
any meeting of the Board of Directors subsequent to such
director's election shall constitute such director's acceptance
of such office; or such director may execute such acceptance by a
separate writing, which shall be placed in the minute book.
Section 3.8 Notice of Meeting; Waiver of Notice.
(a) Regular Meetings. Regular meetings of the Board of
Directors may be held without notice at such times and places
either within or without the State of Delaware as shall from time
to time be fixed by resolution adopted by the whole Board of
Directors (as defined in Section 2 of Article IV of the
Certificate of Incorporation). Any business may be transacted at
a regular meeting.
(b) Special Meetings.
(i) Except as otherwise required by the DGCL or other
applicable law and subject to the rights of the holders of
Preferred Stock or any series thereof, special meetings of the
Board of Directors may be called at any time by the Chairman of
the Board, the President or the Board of Directors pursuant to a
resolution approved by a majority of the whole Board of Directors
and shall be called by the Secretary on the written request of
any of the foregoing. The place may be within or without the
State of Delaware as designated in the notice.
(ii) Written or printed notice of each special meeting of
the Board of Directors, stating the place, day and hour of the
meeting and the purpose or purposes thereof, shall be mailed to
each director at least three (3) days before the day on which the
meeting is to be held, or shall be delivered to such director
personally or sent to such director by telegram or facsimile at
least two (2) days before the day on which the meeting is to be
held. If mailed, such notice shall be deemed to be delivered
when it is deposited in the United States mail with postage
thereon prepaid, addressed to the director at such director's
residence or usual place of business. If given by telegraph, such
notice shall be deemed to be delivered when it is delivered to
the telegraph company. If given by facsimile, such notice shall
be deemed delivered upon receipt of verification. The notice may
be given by any person having authority to call the meeting.
(iii) "Notice" and "call" with respect to such meetings
shall be deemed to be synonymous.
(c) Waiver of Notice. Whenever any notice is required to
be given to any director under the provisions of the DGCL or
other applicable law, the Certificate of Incorporation or these
Bylaws, a waiver thereof in writing signed by such director,
whether before or after the time stated therein, shall be deemed
equivalent to the giving of such notice. Attendance of a
director at any meeting shall constitute a waiver of notice of
the meeting except where a director attends such meeting for the
express purpose of objecting to the transaction of any business
because the meeting is not lawfully called or convened. Neither
the business to be transacted at, nor the purpose of, any regular
meeting of the Board of Directors need be specified in the notice
or waiver of notice of the meeting.
Section 3.9 Meetings by Conference Telephone or Similar
Communications Equipment. Unless otherwise prohibited by the
DGCL or other applicable law, the Certificate of Incorporation or
these Bylaws, members of the Board of Directors of the
Corporation, or any committee designated by the Board of
Directors, may participate in a meeting of the Board of Directors
or committee by means of conference telephone or similar
communications equipment whereby all persons participating in the
meeting can hear each other, and participation in a meeting in
such manner shall constitute presence in person at the meeting.
Section 3.10 Action Without a Meeting. Any action which is
required to be or may be taken at a meeting of the directors, or
of the executive committee or any other committee of the
directors, may be taken without a meeting if consents in writing,
setting forth the action so taken, are signed by all of the
members of the Board of Directors or of the committee as the case
may be. The consents shall have the same force and effect as a
unanimous vote at a meeting duly held. The Secretary shall file
such consents with the minutes of the meetings of the Board of
Directors or of the committee as the case may be.
Section 3.11 Quorum and Voting. At all meetings of the Board
of Directors, a majority of the whole Board of Directors shall,
unless a greater number as to any particular matter is required
by the DGCL or other applicable law, the Certificate of
Incorporation or these Bylaws, constitute a quorum for the
transaction of business. The act of a majority of the directors
present at any meeting of the Board of Directors at which a
quorum is present shall be the act of the Board of Directors,
subject to the provisions of Section 144 of the DGCL (as to
approval of contracts or transactions in which a director has a
direct or indirect material financial interest), Section 141 of
the DGCL (as to appointment of committees), and Section 145 of
the DGCL (as to indemnification of directors), and unless the act
of a greater number is required by the DGCL or other applicable
law, the Certificate of Incorporation or these Bylaws.
Section 3.12 Committees.
(a) The Board of Directors may, by resolution or
resolutions adopted by a majority of the whole Board of
Directors, designate two or more directors of the Corporation to
constitute one or more committees (including, without limitation,
an executive committee). Each such committee, to the extent
provided in such resolution or resolutions, shall have and may
exercise all of the authority of the Board of Directors in the
management of the Corporation; provided, however, that the
designation of each such committee and the delegation thereto of
authority shall not operate to relieve the Board of Directors, or
any member thereof, of any responsibility imposed upon it or such
member by law.
(b) Each such committee shall keep regular minutes of its
proceedings, which minutes shall be recorded in the minute book
of the Corporation. The Secretary or an Assistant Secretary of
the Corporation may act as Secretary for each such committee if
the committee so requests.
Section 3.13 Audit Committee.
(a) The Board of Directors at the annual or any regular or
special meeting of the directors shall, by resolution adopted by
a majority of the whole Board of Directors, designate and elect
two or more directors to constitute an Audit Committee and
appoint one of the directors so designated as the chairman of the
Audit Committee. Membership on the Audit Committee shall be
restricted to those directors who are independent of the
management of the Corporation and are free from any relationship
that, in the opinion of the Board of Directors, would interfere
with the exercise of independent judgment as a member of the
committee. Vacancies in the Audit Committee may be filled by the
Board of Directors at any meeting thereof. Each member of the
Audit Committee shall hold office until such Audit Committee
member's successor has been duly elected and qualified, or until
such Audit Committee member's resignation or removal from the
Audit Committee by the Board of Directors, or until such Audit
Committee member otherwise ceases to be a director. Any member
of the Audit Committee may be removed from the Audit Committee by
resolution adopted by a majority of the whole Board of Directors.
The compensation, if any, of members of the Audit Committee shall
be established by resolution of the Board of Directors.
(b) The Audit Committee shall be responsible for: recommending
to the Board of Directors the appointment or discharge of
independent auditors; reviewing with the management and the
independent auditors the terms of engagement of independent
auditors, including the fees, scope and timing of the audit and
any other services rendered by the independent auditors;
reviewing with the independent auditors and management the
Corporation's policies and procedures with respect to internal
auditing, accounting and financial controls; reviewing with the
management the independent statements; audit results and reports
and the recommendation made by any of the auditors with respect
to changes in accounting procedures and internal controls;
reviewing the results of studies of the Corporation's system of
internal accounting controls; and performing any other duties or
functions deemed appropriate by the Board of Directors. The Audit
Committee shall have the powers and rights necessary or desirable
to fulfill these responsibilities, including the power and right
to consult with legal counsel and to rely upon the opinion of
legal counsel. The Audit Committee is authorized to communicate
directly with the Corporation's financial officers and employees,
internal auditors and independent auditors as it deems desirable
and to have the internal auditors or independent auditors perform
any additional procedures as it deems appropriate.
(c) All actions of the Audit Committee shall be reported to
the Board of Directors at the next meeting of the Board of
Directors. The minute books of the Audit Committee shall at all
times be open to the inspection of any director.
(d) The Audit Committee shall meet at the call of its
chairman or of any two members of the Audit Committee (or if
there shall be only one other member, then at the call of that
member). A majority of the Audit Committee shall constitute a
quorum for the transaction of business (or if there shall only be
two members, then both must be present), and the act of a
majority of those present at any meeting at which a quorum is
present (or if there shall be only two members, then they must
act unanimously) shall constitute the act of the Audit Committee.
Section 3.14 Compensation Committee.
(a) The Board of Directors at the annual or any regular or
special meeting shall, by resolution adopted by a majority of the
whole Board of Directors, designate and elect two or more
directors to constitute a Compensation Committee. Membership on
the Compensation Committee shall be restricted to disinterested
persons which for this purpose shall mean any director who,
during the time such director is a member of the Compensation
Committee is not eligible, and has not at any time within one
year prior thereto been eligible, for selection to participate
(other than in a manner as to which the Compensation Committee
has no discretion) in any of the compensation plans administered
by the Compensation Committee. Vacancies in the Compensation
Committee may be filled by the Board of Directors at any meeting.
Each member of the Compensation Committee shall hold office until
such Compensation Committee member's successor has been duly
elected and qualified, or until such Compensation Committee
member's resignation or removal from the Compensation Committee
by the Board of Directors, or until such Compensation Committee
member otherwise ceases to be a director or a disinterested
person. Any member of the Compensation Committee may be removed
by resolution adopted by a majority of the whole Board of
Directors. The compensation, if any, of the members of the
Compensation Committee shall be established by resolution of the
Board of Directors.
(b) The Compensation Committee shall, from time to time,
recommend to the Board of Directors the compensation and benefits
of the executive officers of the Corporation. The Compensation
Committee shall have the power and authority vested in the Board
of Directors by any benefit plan of the Corporation. The
Compensation Committee shall also make recommendations to the
Board of Directors with regard to the compensation of the Board
of Directors and its committees, with the exception of the
Compensation Committee.
(c) All actions of the Compensation Committee shall be
reported to the Board of Directors at the next meeting of the
Board of Directors. The minute books or the Compensation
Committee shall at all times be open to the inspection of any
director
(d) The Compensation Committee shall meet at the call of
the chairman of the Compensation Committee or of any two members
of the Compensation Committee (or if there shall be only one
other member, then at the call of that member). A majority of the
Compensation Committee shall constitute a quorum for the
transaction of business (or if there shall be only two members,
then both must be present), and the act of a majority of those
present at any meeting at which a quorum is present (or if there
shall be only two members, then they must act unanimously) shall
be the act of the Compensation Committee.
Section 3.15 Nominating Committee.
(a) The Board of Directors at the annual or any regular or
special meeting of the directors shall, by resolution adopted by
a majority of the whole Board of Directors, designate and elect
two or more directors to constitute a Nominating Committee and
appoint one of the directors so designated as the chairman of the
Nominating Committee. Membership on the Nominating Committee
shall be restricted to Independent Directors (as defined in
Section 4.B.1 of Article IV of the Certificate of Incorporation).
Vacancies in the Nominating Committee may be filled by the Board
of Directors at any meeting thereof. Each member of the
Nominating Committee shall hold office until such Nominating
Committee member's successor has been duly elected and qualified,
or until such Nominating Committee member's resignation or
removal from the Nominating Committee by the Board of Directors,
or until such Nominating Committee member otherwise ceases to be
a director. Any member of the Nominating Committee may be
removed from the Nominating Committee by resolution adopted by a
majority of the whole Board of Directors. The compensation, if
any, of members of the Nominating Committee shall be established
by resolution of the Board of Directors.
(b) The Nominating Committee shall be responsible for:
recommending to the Board of Directors a slate of directors to be
presented for election by stockholders at each annual meeting of
the stockholders of the Corporation and any other duties or
functions deemed appropriate by the Board of Directors. The
Nominating Committee shall have the powers and rights necessary
or desirable to fulfill these responsibilities, including the
power and right to consult with legal counsel and to rely upon
the opinion of legal counsel.
(c) All actions of the Nominating Committee shall be
reported to the Board of Directors at the next meeting of the
Board of Directors. The minute books of the Nominating Committee
shall at all times be open to the inspection of any director.
(d) The Nominating Committee shall meet at the call of its
chairman or of any two members of the Nominating Committee (or if
there shall be only one other member, then at the call of that
member). A majority of the Nominating Committee shall constitute
a quorum for the transaction of business (or if there shall be
only two members, then both must be present), and the act of a
majority of those present at any meeting at which a quorum is
present (or if there shall be only two members, then they must
act unanimously) shall be the act of the Nominating Committee.
Section 3.16 Alternate Committee Members. The Board of
Directors, by resolution adopted by a majority of the whole Board
of Directors, may designate one or more additional directors as
alternate members of any committee to replace any absent or
disqualified member at any meeting of that committee, and at any
time may change the membership of any committee or amend or
rescind the resolution designating the committee. In the absence
or disqualification of a member or alternate member of a
committee, the member or members thereof present at any meeting
and not disqualified from voting, whether or not the member or
members constitute a quorum, may unanimously appoint another
director to act at the meeting in the place of any such absent or
disqualified member, provided that the director so appointed
meets any qualifications stated in these Bylaws or the resolution
designating the committee or any amendment thereto.
Section 3.17 Committee Procedures. Unless otherwise provided
in these Bylaws or in the resolution designating any committee,
any committee may fix its rules or procedures and fix the time
and place of its meetings and specify what notice of meetings, if
any, shall be given.
Section 3.18 Limitation of Committee Powers. Notwithstanding
any other provision of these Bylaws, no committee of the Board of
Directors shall have the power or authority of the Board of
Directors with respect to (i) amending the Certificate of
Incorporation, (ii) approving any action which under the DGCL or
other applicable law, also requires stockholders' approval or
approval of the outstanding shares, (iii) approving or
recommending to the stockholders a dissolution of the Corporation
or a revocation of a dissolution, (iv) amending these Bylaws,
(v) declaring a dividend or making any other distribution to the
stockholders, (vi) authorizing the issuance of stock otherwise
than pursuant to (the grant or exercise of a stock option under
employee stock options of the Corporation or in connection with a
public offering of securities registered under the Securities Act
of 1933, (vii) filling vacancies on the Board of Directors or any
committee thereof, or (viii) amending or repealing any resolution
of the Board of Directors.
Section 3.19 Compensation of Directors and Committee Members.
Directors and members of all committees shall not receive any
stated salary for their services as such, unless authorized by
resolution of the Board of Directors. By resolution of the Board
of Directors a fixed sum and expenses of attendance, if any, also
may be allowed for attendance at each regular or special meeting
of the Board of Directors or any committee. Nothing herein
contained shall be construed to preclude any director or
committee member from serving the Corporation in any other
capacity and receiving compensation therefor.
Section 3.20 Resignations. Any director may resign at any time
upon written notice to the Corporation. Such resignation shall
take effect at the time specified therein or, if no time is
specified therein, upon receipt thereof by the Corporation, and,
unless otherwise specified therein, the acceptance of such
resignation by the Corporation shall not be necessary to make
such resignation effective.
Section 3.21 Removal of Directors. Directors may be removed
only in the manner provided in the Certificate of Incorporation.
Section 3.22 Stakeholder Interests. The Board of Directors
shall have the authority to make its decisions based on a long
term perspective and in doing so shall be entitled to make
decisions which may produce short term outcomes less favorable
than alternatives which may be available to the Corporation or
its stockholders. The Board of Directors, in making its
decisions, shall be entitled to consider the interests of
stakeholders in the Company other than stockholders, including
employees, areas in which the Corporation maintains operations,
creditors, and other persons who in the Board of Directors' sole
judgment have a legitimate stake in the Board of Directors'
decision. The Board of Directors shall have discretion to
determine how to balance any interests of stockholders and other
stakeholders in arriving at any decision.
ARTICLE IV - OFFICERS
Section 4.1 Designations.
(a) The officers of the Corporation shall be a Chairman of
the Board, a Vice Chairman of the Board, a President, one or more
Executive Vice Presidents, one or more Vice Presidents, a
Secretary, a Treasurer, one or more Assistant Secretaries and one
or more Assistant Treasurers. The Board of Directors shall elect
a Chairman of the Board, a Vice Chairman of the Board, a
President, a Treasurer and a Secretary at its first meeting after
each annual meeting of the stockholders. The Board of Directors
then, or from time to time, may also elect one or more of the
other prescribed officers as it shall deem advisable, but need
not elect any officers other than a Chairman of the Board, a Vice
Chairman of the Board, a President, a Treasurer and a Secretary.
The Board of Directors may, if it desires, elect or appoint
additional officers and may further identify or describe any one
or more of the officers of the Corporation.
(b) The Chairman and the Vice Chairman of the Board shall
be chosen from among the Board of Directors, but the other
officers of the Corporation need not be members of the Board of
Directors. Any two or more offices may be held by the same
person.
(c) An officer shall be deemed qualified when such person
enters upon the duties of the office to which such person has
been elected or appointed and furnishes any bond required by the
Board of Directors; but the Board of Directors may also require
such person's written acceptance and promise faithfully to
discharge the duties of such office.
Section 4.2 Term of Office. Each officer of the Corporation
shall hold such person's office at the pleasure of the Board of
Directors or for such other period as the Board of Directors may
specify at the time of such person's election or appointment, or
until such person's resignation, removal by the Board of
Directors or death, whichever first occurs. In any event, each
officer of the Corporation who is not reelected or reappointed at
the annual election of officers by the Board of Directors next
succeeding such person's election or appointment shall be deemed
to have been removed by the Board of Directors, unless the Board
of Directors provides otherwise at the time of such person's
election or appointment.
Section 4.3 Other Agents. The Board of Directors from time to
time may appoint such other agents for the Corporation as the
Board of Directors shall deem necessary or advisable, each of
whom shall serve at the pleasure of the Board of Directors or for
such period as the Board of Directors may specify and shall
exercise such powers, have such titles and perform such duties as
shall be determined from time to time by the Board of Directors
or by an officer empowered by the Board of Directors to make such
determinations.
Section 4.4 Removal. Any officer or agent elected or
appointed by the Board of Directors, and any employee, may be
removed or discharged by the Board of Directors whenever in its
judgment the best interests of the Corporation would be served
thereby, but such removal or discharge shall be without prejudice
to the contract rights, if any, of the person so removed or
discharged.
Section 4.5 Salaries and Compensation. Salaries and
compensation of all elected officers of the Corporation shall be
fixed, increased or decreased by the Board of Directors, but this
power, except as to the salary or compensation of the Chairman of
the Board and the President, may, unless prohibited by law, be
delegated by the Board of Directors to the Chairman of the Board,
the President or a committee. Salaries and compensation of all
appointed officers, agents and employees of the Corporation may
be fixed, increased and decreased by the Board of Directors, but
until action is taken with respect thereof by the Board of
Directors, the same may be fixed, increased or decreased by the
President or by such other officer or officers as may be
empowered by the Board of Directors to do so.
Section 4.6 Delegation of Authority to Hire, Discharge and
Designate Duties. The Board of Directors from time to time may
delegate to the Chairman of the Board, the President or other
officer or executive employees of the Corporation, authority to
hire and discharge and to fix and modify the duties and salary or
other compensation of employees of the Corporation under the
jurisdiction of such person, and the Board of Directors may
delegate to such officer or executive employee similar authority
with respect to obtaining and retaining for the Corporation the
services of attorneys, accountants and other experts.
Section 4.7 Chairman of the Board. If a Chairman of the Board
is elected, such Chairman of the Board shall preside at all
meetings of the stockholders and directors at which such Chairman
of the Board may be present and shall perform such other duties
and have such other powers, responsibilities and authority as may
be prescribed elsewhere in these Bylaws. The Board of Directors
may delegate such other powers, responsibilities and authority
and assign such additional duties to the Chairman of the Board,
other than those conferred by law exclusively upon the President
or other officer, as the Board of Directors may from time to time
determine, and, to the extent permissible by law, the Board of
Directors may designate the Chairman of the Board as the chief
executive officer of the Corporation with all of the duties,
powers, responsibilities and authority otherwise conferred upon
the President of the Corporation under Section 4.8 of these
Bylaws, or the Board of Directors may from time to time divide
the duties, powers, responsibilities and authority for the
general control and management of the Corporation's business and
affairs between the Chairman of the Board and the President. If
the Chairman of the Board is designated as the chief executive
officer of the Corporation or to have the powers of the chief
executive officer coextensively with the President, notice
thereof shall be given to the extent and in the manner as may be
required by law.
Section 4.8 President.
(a) Unless the Board of Directors otherwise provides, the
President shall be the chief executive officer of the Corporation
with such general executive duties, powers, responsibilities and
authority of supervision and management as are usually vested in
the office of the Chief Executive Officer of a corporation, and
such President shall carry into effect all directions and
resolutions of the Board of Directors. In the absence of the
Chairman of the Board, or if there is no Chairman of the Board,
the President shall preside at all meetings of the stockholders
and the Board of Directors.
(b) The President may execute all bonds, notes, debentures,
mortgages and other contracts requiring the seal of the
Corporation, may cause the seal to be affixed thereof, and may
execute all other instruments, for and in the name of the
Corporation.
(c) Unless the Board of Directors otherwise provides, the
President, or any person designated in writing by the President,
shall have full power and authority on behalf of the Corporation
to (i) attend and to vote or take action at any meeting of the
holders of securities of corporations in which the Corporation
may hold securities, and at such meeting shall possess and may
exercise any and all rights and powers incident to being a holder
of such securities, and (ii) execute and deliver waivers of
notice and proxies for and in the name of this Corporation with
respect to securities of any such corporation held by this
Corporation.
(d) The President shall, unless the Board of Directors
otherwise provides, be an ex officio member of all standing
committees.
(e) The President shall perform such other duties and have
such other powers, responsibilities and authority as may be
prescribed elsewhere in these Bylaws or from time to time by the
Board of Directors.
(f) If a Chairman of the Board is elected and designated as
the chief executive officer of the Corporation, as provided in
Section 4.7 of these Bylaws, the President shall perform such
duties and have such powers, responsibilities and authority as
may be specifically delegated to the President by the Board of
Directors or are conferred by law exclusively upon the President
and, in the absence or disability of the Chairman of the Board or
in the event of the Chairman of the Board's inability or refusal
to act, the President shall perform the duties and exercise the
powers of the Chairman of the Board.
Section 4.9 Executive Vice Presidents and Vice Presidents. In
the absence or disability of the President, or in the event of
the President's inability or refusal to act, any Executive Vice
President or Vice President may perform the duties and exercise
the powers of the President, including presiding at meetings of
the stockholders of the Corporation and meetings of the Board of
Directors in the absence of the Chairman of the Board, until the
Board of Directors otherwise provides. Executive Vice Presidents
and Vice Presidents shall perform such other duties and have such
other powers, responsibilities and authority as the Board of
Directors may from time to time prescribe.
Section 4.10 Secretary and Assistant Secretaries.
(a) The Secretary shall attend all meetings of the Board of
Directors and, except as otherwise provided for in Section 2.5 of
these Bylaws, all meetings of the stockholders. The Secretary
shall prepare minutes of all proceedings at such meetings and
shall preserve them in a minute book of the Corporation. The
Secretary shall perform similar duties for each standing or
temporary committee when requested by the Board of Directors or
such committee.
(b) The Secretary shall see that all books, records, lists
and information, or duplicates, required to be maintained at the
registered or other office of the Corporation in the State of
Missouri, or elsewhere, are so maintained.
(c) The Secretary shall keep in safe custody the seal of
the Corporation, and shall have authority to affix the seal of
the Corporation to any instrument requiring a corporate seal and,
when so affixed, the Secretary may attest the seal by the
Secretary's signature.
(d) The Secretary shall have the general duties, powers,
responsibilities and authority of a secretary of a corporation
and shall perform such other duties and have such other powers,
responsibilities and authority as may be prescribed elsewhere in
these Bylaws or from time to time by the Board of Directors or
the chief executive officer of the Corporation, under whose
direct supervision the secretary shall be.
(e) In the absence or disability of the Secretary or in the
event of the Secretary's inability or refusal to act, any
Assistant Secretary may perform the duties and exercise the
powers of the Secretary until the Board of Directors otherwise
provides. Assistant Secretaries shall perform such other duties
and have such other powers, responsibilities and authority as the
Board of Directors may from time to time prescribe.
Section 4.11 Treasurer and Assistant Treasurers.
(a) The Treasurer shall have responsibility for the
safekeeping of the funds and securities of the Corporation, shall
keep or cause to be kept full and accurate accounts of receipts
and disbursements in books belonging to the Corporation and shall
keep or cause to be kept all other books of account and
accounting records of the Corporation. The Treasurer shall
deposit or cause to be deposited all moneys and other valuable
effects in the name and to the credit of the Corporation in such
depositories as may be designated by the Board of Directors or by
any officer of the Corporation to whom such authority has been
granted by the Board of Directors.
(b) The Treasurer shall disburse, or permit to be
disbursed, the funds of the Corporation as may be ordered, or
authorized generally, by the Board of Directors, and shall render
to the chief executive officer of the Corporation and the
directors, whenever they may require, an account of all
transactions as treasurer and of those under the Treasurer's
jurisdiction, and of the financial condition of the Corporation.
(c) The Treasurer shall have the general duties, powers,
responsibilities and authority of a treasurer of a corporation
and shall, unless otherwise provided by the Board of Directors,
be the chief financial and accounting officer of the Corporation.
The Treasurer shall perform such other duties and shall have such
other powers, responsibilities and authority as may be prescribed
elsewhere in these Bylaws or from time to time by the Board of
Directors.
(d) If required by the Board of Directors, the Treasurer
shall give the Corporation a bond in a sum and with one or more
sureties satisfactory to the Board of Directors for the faithful
performance of the duties of the Treasurer's office and for the
restoration to the Corporation, in the case of the Treasurer's
death, resignation, retirement or removal from office, of all
books, papers, vouchers, money and other property of whatever
kind in the Treasurer's possession or under the Treasurer's
control which belong to the Corporation.
(e) In the absence or disability of the Treasurer or in the
event of the Treasurer's inability or refusal to act, any
Assistant Treasurer may perform the duties and exercise the
powers of the Treasurer until the Board of Directors otherwise
provides. Assistant Treasurers shall perform such other duties
and have such other powers, responsibilities and authority as the
Board of Directors may from time to time prescribe.
Section 4.12 Duties of Officers May Be Delegated. If any
officer of the Corporation is absent or unable to act, or for any
other reason that the Board of Directors may deem sufficient, the
Board of Directors may delegate, for the time being, some or all
of the functions, duties, powers, responsibilities and authority
of any officer to any other officer, or to any other agent or
employee of the Corporation or other responsible person, provided
a majority of the whole Board of Directors concurs.
ARTICLE V - INDEMNIFICATION
Section 5.1 Indemnification of Directors and Officers. The
Corporation shall be required, to the maximum extent permitted by
the DGCL and the Certificate of Incorporation, to indemnify each
of its directors and officers and any director or officer who is
or was serving at the request of the Corporation as a director,
officer, employee, or agent of another corporation, partnership,
joint venture, trust, limited liability company or other
enterprise against expenses, judgments, fines, settlements, and
other amounts actually and reasonably incurred in connection with
any proceeding arising by reason of the fact that any such person
is or was a director or an officer of the Corporation or is or
was serving at the request of the Corporation as a director,
officer, employee, or agent of another corporation, partnership,
joint venture, trust, limited liability company or other
enterprise.
Section 5.2 Indemnification of Other Agents. The Corporation
may, in its absolute discretion, up to the maximum extent
permitted by the DGCL and the Certificate of Incorporation,
indemnify each person who is not required to be indemnified under
Section 5.1 against expenses, judgments, fines, settlements, and
other amounts actually and reasonably incurred in connection with
any proceeding arising by reason of the fact that any such person
is or was an employee or agent of the Corporation or is or was
serving at the request of the Corporation as a director, officer,
employee, or agent of another corporation, partnership, joint
venture, trust, limited liability company or other enterprise.
Section 5.3 Indemnification of Fiduciaries. The Corporation
shall indemnify any director, officer, employee, or other agent
of the Corporation against expenses, judgments, fines,
settlements, and other amounts actually and reasonably incurred
in connection with any proceeding arising by reason of the fact
that any such person is or was a trustee, investment manager, or
other fiduciary under any employee benefit plan of the
Corporation. The provisions of this Section 5.3 shall be deemed
to constitute a contract between the Corporation and any such
indemnified person, or for the benefit of any such indemnified
person.
Section 5.4 Advances of Expenses. To the extent permitted by
the DGCL and the Certificate of Incorporation, expenses incurred
in defending any proceeding in the case described in Section 5.1
of these Bylaws shall be advanced by the Corporation prior to the
final disposition of such proceeding upon receipt of any
undertaking by or on behalf of such person to repay such amount
if it shall be determined ultimately that he or she is not
entitled to be indemnified by the Corporation.
Section 5.5 Non-Exclusivity. The indemnification and the
advancement of expenses provided by this Article V shall not be
exclusive of any other rights to which those seeking
indemnification or advancement of expenses may be entitled under
any statute, the Certificate of Incorporation, these Bylaws or
any agreement, vote of stockholders or disinterested directors,
policy of insurance or otherwise, both as to action in their
official capacity and as to action in another capacity while
holding their respective offices, and shall not limit in any way
any right which the Corporation may have to provide additional
indemnification with respect to the same or different persons or
classes of persons. The indemnification and advancement of
expenses provided by this Article V shall continue as to a person
who has ceased to serve in a capacity that entitles such person
to indemnity under this Article V (an "Indemnifiable Capacity")
and shall inure to the benefit of the heirs, executors and
administrators of such a person.
Section 5.6 Insurance. Upon resolution passed by the Board of
Directors, the Corporation may purchase and maintain insurance on
behalf of any person who is or was serving in an Indemnifiable
Capacity against any liability asserted against such person and
incurred by such person in any such capacity, or arising out of
such person's status as such, whether or not the Corporation
would have the power to indemnify such person against such
liability under the provisions of this Article V. Notwithstanding
anything in this Article V to the contrary: (i) the Corporation
shall not be obligated to indemnify any person serving in an
Indemnifiable Capacity for any amounts which have been paid
directly to such person by any insurance maintained by the
Corporation; and (ii) any indemnification provided pursuant to
this Article V (A) shall not be used as a source of contribution
to, or as a substitute for, or as a basis for recoupment of any
payments pursuant to, any indemnification obligation or insurance
coverage which is available from any Other Enterprise, and
(B) shall become operative, and payments shall be required to be
made thereunder, only in the event and to the extent that the
amounts in question have not been fully paid by any
indemnification obligation or insurance coverage which is
available from any Other Enterprise.
Section 5.7 Vesting of Rights. The rights granted or created
hereby shall be vested in each person entitled to indemnification
hereunder as a bargained-for contractual condition of such
person's serving or having served in an Indemnifiable Capacity
and, while this Article V may be amended or repealed, no such
amendment or repeal shall release, terminate or adversely affect
the rights of such person under this Article V with respect to
any act taken or the failure to take any act by such person prior
to such amendment or repeal or with respect to any action, suit
or proceeding with respect to such act or failure to act filed
after such amendment or repeal.
Section 5.8 Severability. If any provision of this Article V
or the application of any such provision to any person or
circumstance is held invalid, illegal or unenforceable for any
reason whatsoever, the remaining provisions of this Article V and
the application of such provision to other persons or
circumstances shall not be affected thereby and, to the fullest
extent possible, the court finding such provision invalid,
illegal or unenforceable shall modify and construe the provision
so as to render it valid and enforceable as against all persons
or entities and to give the maximum possible protection to
persons subject to indemnification hereby within the bounds of
validity, legality and enforceability. Without limiting the
generality of the foregoing, if any person who is or was serving
in an Indemnifiable Capacity is entitled under any provision of
this Article V to indemnification by the Corporation for some or
a portion of the judgments, amounts paid in settlement,
attorneys' fees, ERISA excise taxes or penalties, fines or other
expenses actually and reasonably incurred by any such person in
connection with any threatened, pending or completed action, suit
or proceeding (including, without limitation, the investigation,
defense, settlement or appeal of such action, suit or
proceeding), whether civil, criminal, administrative,
investigative or appellate, but not, however, for all of the
total amount thereof, the Corporation shall nevertheless
indemnify such person for the portion thereof to which such
person is entitled.
ARTICLE VI - STOCK
Section 6.1 Payment for Shares of Stock. The Corporation
shall not issue shares of stock of the Corporation except for
money paid, labor done or property actually received or in
consideration of valid bona fide antecedent debts. No note or
obligation given by any stockholder, whether secured by deed of
trust, mortgage or otherwise, shall be considered as payment of
any part or any share or shares, and no loan of money for the
purpose of such payment shall be made by the Corporation.
Section 6.2 Certificates Representing Shares of Stock. The
certificates representing shares of stock of the Corporation
shall be issued in numerical order and shall be in such form as
may be prescribed by the Board of Directors in conformity with
the Certificate of Incorporation, the DGCL or other applicable
law. The issuance of shares shall be entered in the stock books
of the Corporation as they are issued. Such entries shall show
the name and address of the person, firm, partnership,
corporation or association to whom each certificate is issued.
Each certificate shall have printed, typed or written thereon the
name or the person, firm, partnership, corporation or association
to whom it is issued and the number of shares represented
thereby. It shall be signed by the President, an Executive Vice
President or a Vice President and by the Secretary, an Assistant
Secretary, the Treasurer or an Assistant Treasurer of the
Corporation, and sealed with the seal of the Corporation. Any or
all signatures on such certificate may be facsimiles and the seal
may be facsimile, engraved or printed. In case any such officer,
transfer agent or registrar who has signed or whose facsimile
signature has been placed upon any such certificate shall have
ceased to be such officer, transfer agent or registrar before
such certificate is issued, such certificate may nevertheless be
issued by the Corporation with the same effect as if such person
were such officer, transfer agent or registrar at the date of
issue.
Section 6.3 Transfers of Shares - Transfer Agent - Registrar.
Transfers of shares of stock shall be made on the stock record or
transfer books of the Corporation only by the person named in the
stock certificate, or by such stockholder's attorney lawfully
constituted in writing, and upon surrender of the certificate
therefor. The stock record book and other transfer records shall
be in the possession of the Secretary or of a transfer agent for
the Corporation. The Corporation, by resolution of the Board of
Directors, may from time to time appoint a transfer agent and, if
desired, a registrar, under such arrangements and upon such terms
and conditions as the Board of Directors deems advisable, but
until and unless the Board of Directors appoints some other
person, firm or corporation as its transfer agent (and upon the
revocation of any such appointment, thereafter until a new
appointment is similarly made) the Secretary of the Corporation
shall be the transfer agent of the Corporation without the
necessity of any formal action of the Board of Directors, and the
Secretary, or any person designated by the Secretary, shall
perform all of the duties of such transfer agent.
Section 6.4 Closing of Transfer Books. The Board of Directors
shall have power to close the stock transfer books of the
Corporation for a period not exceeding sixty (60) days preceding
the date of any meeting of the stockholders, or the date of
payment of any dividend, or the date for the allotment of rights,
or the date when any change or conversion or exchange of shares
shall go into effect; provided, however, that in lieu of closing
the stock transfer books, the Board of Directors may fix in
advance a date, not exceeding sixty (60) days preceding the date
of any meeting of stockholders, or the date for the payment of
any dividend, or the date for the allotment of rights, or the
date when any change or conversion or exchange of shares shall go
into effect, as a record date for the determination of the
stockholders entitled to notice of, and to vote at, any such
meeting and any adjournment thereof, or entitled to receive
payment of any such dividend, or entitled to any such allotment
of rights, or entitled to exercise the rights in respect of any
such change, conversion or exchange of shares. In such case only
the stockholders who are stockholders of record on the date of
closing of the transfer books or on the record date so fixed
shall be entitled to notice of, and to vote at, such meeting, and
any adjournment thereof, or to receive payment of such dividend,
or to receive such allotment of rights, or to exercise such
rights, as the case may be, notwithstanding any transfer of any
shares on the books of the Corporation after such date of closing
of the transfer books or such record date fixed as aforesaid.
Section 6.5 Lost or Destroyed Certificates. In case of the
loss or destruction of any certificate for shares of stock of the
Corporation, another may be issued in its place upon proof of
such loss or destruction and upon the giving of a satisfactory
bond of indemnity to the Corporation and the transfer agent and
registrar, if any, in such sum as the Board of Directors may
provide; provided, however, that a new certificate may be issued
without requiring a bond when in the judgment of the Board of
Directors it is proper to do so.
Section 6.6 Regulations. The Board of Directors shall have
power and authority to make all such rules and regulations as it
may deem expedient concerning the issue, transfer, conversion and
registration of certificates for shares of stock of the
Corporation, not inconsistent with the DGCL and other applicable
law, the Certificate of Incorporation or these Bylaws.
ARTICLE VII - CORPORATE FINANCE
Section 7.1 Fixing of Capital - Transfers of Surplus. Except
as may be specifically otherwise provided in the Certificate of
Incorporation, the Board of Directors is expressly empowered to
exercise all authority conferred upon it or the Corporation by
any law or statute, and in conformity therewith, relative to:
(a) determining what part of the consideration received for
shares of the Corporation shall be stated capital; (b) increasing
or decreasing stated capital; (c) transferring surplus to stated
capital; (d) transferring stated capital to surplus;
(e) determining the consideration to be received by the
Corporation for its shares; and (f) determining all similar or
related matters; provided, however, that any concurrent action or
consent by or of the Corporation and its stockholders, required
to be taken or given pursuant to the DGCL and other applicable
law, shall be duly taken or given in connection therewith.
Section 7.2 Dividend.
(a) Dividends on the outstanding shares of the Corporation,
subject to the provisions of the Certificate of Incorporation and
the DGCL and other applicable law, may be declared by the Board
of Directors at any meeting. Dividends may be paid in cash,
property or shares of the Corporation's stock.
(b) Liquidating dividends or dividends representing a
distribution of paid-in surplus or a return of capital shall be
made only when and in the manner permitted by law.
(c) A member of the Board of Directors shall be fully
protected in relying in good faith upon the books of account of
the Corporation or statements prepared by any of the
Corporation's officials as to the value and amount of the assets,
liabilities and earnings of the Corporation, or any facts
pertinent to the existence and amount of surplus or other funds
from which dividends might properly be declared and paid.
Section 7.3 Creation of Reserves. Before the payment of any
dividend, there may be set aside out of any funds of the
Corporation available for dividends such sum or sums as the Board
of Directors from time to time deems proper as a reserve fund or
funds to meet contingencies or for equalizing dividends,
repairing or maintaining any property of the Corporation or any
other purpose deemed by the Board of Directors to be conducive to
the interests of the Corporation, and the Board of Directors may
abolish any such reserve in the manner in which it was created.
ARTICLE VIII - GENERAL PROVISIONS
Section 8.1 Fiscal Year. The Board of Directors shall have
power to fix and from time to time change the fiscal year of the
Corporation. In the absence of action by the Board of Directors,
the fiscal year of the Corporation shall end each year on the
date which the Corporation treated as the close of its first
fiscal year, until such time, if any, as the fiscal year shall be
changed by the Board of Directors.
Section 8.2 Corporate Seal. The corporate seal shall have
inscribed thereon the name of the Corporation and the words:
"Corporate Seal - Delaware." The corporate seal may be used by
causing it, or a facsimile thereof, to be impressed or affixed or
in any manner reproduced. As provided in Section 4.10(c) of these
Bylaws, the Secretary of the Corporation shall have the authority
to affix and attest the corporate seal. The Board of Directors
may give general authority to any other officer of the
Corporation to affix the corporate seal and, when so affixed, to
attest the seal by such officer's signature.
Section 8.3 Depositories. The moneys of the Corporation shall
be deposited in the name of the Corporation in such bank or banks
or other depositories as the Board of Directors shall designate,
and shall be drawn out only by check or draft signed by persons
designated by resolution adopted by the Board of Directors.
Notwithstanding the foregoing, the Board of Directors may by
resolution authorize an officer or officers of the Corporation to
designate any bank or banks or other depositories in which moneys
of the Corporation may be deposited, and to designate the persons
who may sign checks or drafts on any particular account or
accounts of the Corporation, whether created by direct
designation of the Board of Directors or by an authorized officer
or officers as aforesaid.
Section 8.4 Amendments of the Bylaws.
(a) The Board of Directors shall have the power to amend
these Bylaws by the vote of a majority of the directors present
at a meeting at which a quorum is then present except that any
amendment to Sections 2.3, 2.8(b), 2.11, 2.13, 3.3, 3.5, 8.4 or
8.5 or Article V of these Bylaws shall require the approval of an
Independent Board Majority.
(b) The holders of the Corporation's capital stock shall
not have the power to amend or replace these Bylaws in whole or
in part unless such amendment or replacement shall be approved by
the holders of at least seventy-five percent (75%) of the issued
and outstanding shares of Common Stock of the Corporation.
Section 8.5 Inconsistent Provisions. The Board of Directors
shall have the authority to interpret these Bylaws and to resolve
any question or issue which may arise under these Bylaws.
Whenever possible, each provision of these Bylaws shall be
interpreted in such manner as to be valid and enforceable under
applicable law and the provision of the Certificate of
Incorporation, but if any provision of these Bylaws shall be held
to be prohibited by or unenforceable under or to be in
irreconcilable conflict with applicable law or the Certificate of
Incorporation, (i) such provision shall be applied to accomplish
the objectives of the provision as originally written to the
fullest extent permitted by law, and (ii) all other provisions of
these Bylaws shall remain in full force and effect.
EXHIBIT E
AGREEMENT AND PLAN OF REORGANIZATION
by and among
BLUE CROSS AND BLUE SHIELD OF MISSOURI,
a Missouri nonprofit health services corporation
RIGHTCHOICE MANAGED CARE, INC.,
a Missouri corporation
THE MISSOURI FOUNDATION FOR HEALTH,
a Missouri nonprofit public benefit corporation
and
RIGHTCHOICE MANAGED CARE, INC.,
a Delaware corporation
DATED ____________ ___, 1998
TABLE OF CONTENTS
ARTICLE I TERMS OF REORGANIZATION; CLOSING 3
Section 1.01. Sequence of Transactions 3
Section 1.02. Transfer and Assumption Transaction 3
(a) Assumption Reinsurance Agreement 3
(b) Regulatory Approvals 3
(c) Consummation of Transaction 4
(d) Tax Consequences 4
Section 1.03. Charter Conversion Transaction 4
(a) Filing of Articles of
Incorporation; Bylaws 4
(b) Effective Time 4
(c) Issuance of Stock 4
(d) Regulatory Approvals 4
(e) Directors and Officers 4
(f) Consummation of Transaction 4
(g) Tax Consequences 5
Section 1.04. Reincorporation Merger Transaction 5
(a) Structure of Merger 5
(b) Effective Time 5
(c) Conversion of Shares 5
(d) Effects of Merger 5
(e) Regulatory Approvals 5
(f) Certificate of Incorporation and
Bylaws 5
(g) Directors and Officers 6
(h) Consummation of Transaction 6
(i) Tax Consequences 6
(j) Dissenters' Rights 6
Section 1.05. RIT/New RIT Merger Transaction 6
(a) Structure of Merger 6
(b) Effective Time 6
(c) Conversion of Shares 7
(d) Treasury Shares 7
(e) Dissenters' Rights 7
(f) Effects of Merger 7
(g) Regulatory Approvals 7
(h) Certificate of Incorporation and
Bylaws 7
(i) New RIT Directors and Officers 7
(j) Exchange of Certificates 8
(1) Exchange Agent 8
(2) Exchange Procedure for Public
Shareholders 8
(3) Exchange Procedure for
Foundation 8
(4) Distributions With Respect to
Unexchanged Shares 9
(5) Transfers of Ownership 9
(6) No Liability 9
(7) Lost, Stolen or Destroyed
Certificates 9
(k) Stock Transfer Books 9
(l) Tax Consequences 9
(m) Consummation of Transaction 10
Section 1.06. Stock Options 10
Section 1.07. Closing; Closing Date 10
ARTICLE II REPRESENTATIONS AND WARRANTIES 11
Section 2.01. Disclosure Schedule; Standard 11
(a) Disclosure Schedule 11
(b) Standard 11
Section 2.02. Representations and Warranties of RIT 11
(a) Corporate Existence and Power 11
(b) Authorization; No Defaults 12
(c) Capitalization 12
(d) Financial Information 12
(e) Reports 13
(f) Absence of Changes 13
(g) Undisclosed Liabilities 13
Section 2.03. Representations and Warranties
of BCBSMo 13
(a) Authorization; No Defaults 13
(b) Capitalization 14
(c) Financial Information 14
(d) Reports 14
(e) Absence of Changes 14
(f) Undisclosed Liabilities 15
Section 2.04. Representations and Warranties
of New RIT 15
(a) Corporate Existence and Power 15
(b) Authorization; No Defaults 15
(c) Capitalization 15
Section 2.05. Representations and Warranties
of the Foundation 16
(a) Corporate Existence and Power 16
(b) Authorization; No Defaults 16
ARTICLE III COVENANTS 16
Section 3.01. Pre-Closing Covenants of RIT 16
(a) Submission to Shareholders 16
(b) Consummation of Reorganization 17
(c) Consents and Approvals 17
Section 3.02. Pre-Closing Covenants of BCBSMo 17
(a) Agreement to Vote in Favor 17
(b) Consummation of Reorganization 17
(c) Consents and Approvals 17
Section 3.03. Pre-Closing Covenants of New RIT 17
(a) Other Actions 17
(b) Consummation of Reorganization 17
(c) Plans of Merger 18
Section 3.04. Pre-Closing Covenants of Foundation 18
(a) No Sale or Transfer 18
(b) Agreements to Vote in Favor 18
(1) Reincorporation Merger
Transaction 18
(2) RIT/New RIT Merger Transaction 18
(c) Consummation of Reorganization 18
(d) Tax Opinion 18
Section 3.05. Proxy Statement/Prospectus;
Registration Statement 18
Section 3.06. Public Announcements 19
Section 3.07. Registration Rights Agreement 19
Section 3.08. Indemnification Agreement 19
Section 3.09. Voting Trust and Divestiture
Agreement 19
Section 3.10. Public Offering 19
Section 3.11. Indemnification and Insurance 19
Section 3.12. Accountants' Letters 20
Section 3.13. Purchase of Health Benefit Products 20
Section 3.14. Foundation Governance 20
Section 3.15. Due Diligence 20
Section 3.16. Payment to Foundation 21
ARTICLE IV CONDITIONS PRECEDENT TO REORGANIZATION 21
Section 4.01. Conditions to Reorganization 21
(a) Satisfaction of Conditions Under
Settlement Agreement 21
(b) Court Approval of Settlement
Agreement 21
(c) Injunction 21
(d) Regulatory and Shareholder Approval 21
(e) Effective Registration Statement 21
(f) Tax Determination 21
(g) NYSE Listing 21
(h) Resolution of Xxxxxx Litigation 22
Section 4.02. Conditions to Obligations of BCBSMo 22
(a) Representations and Warranties 22
(b) Compliance with Agreements 22
(c) Delivery of Documents 22
(d) Other Consents 22
(e) Comfort Letter 22
(f) Favorable Ruling 22
(g) Tax Opinions 23
(h) Determination of Lawfulness 23
(i) Resolution of Pending Litigation 23
(j) Legal Opinions 23
Section 4.03. Conditions to Obligations of RIT 23
(a) Representations and Warranties 24
(b) Compliance with Agreements 24
(c) Delivery of Documents 24
(d) Other Consents 24
(e) Comfort Letter 24
(f) Favorable Ruling 24
(g) Tax Opinions 24
(h) Association Approval 25
(i) Opinions of Financial Advisors to
RIT 25
(j) Determination of Lawfulness 25
(k) Bank Approval 25
(l) Legal Opinions 25
Section 4.04. Conditions to Obligations of New RIT 25
(a) Representations and Warranties 25
(b) Compliance with Agreements 25
(c) Delivery of Documents 26
(d) Comfort Letter 26
(e) Legal Opinions 26
Section 4.05. Conditions to Obligations
of Foundation 26
(a) Representations and Warranties 26
(b) Compliance with Agreements 26
(c) Delivery of Documents 26
(d) Other Consents 26
(e) Comfort Letter 26
(f) Favorable Ruling 26
(g) Tax Opinions 27
(h) Legal Opinions 27
ARTICLE V TERMINATION 27
ARTICLE VI GENERAL PROVISIONS 28
Section 6.01. Fees and Expenses 28
Section 6.02. Nonsurvival of Representations,
Warranties and Agreements 28
Section 6.03. Notices 28
Section 6.04. Amendment 28
Section 6.05. Waiver 29
Section 6.06. Entire Agreement 29
Section 6.07. Parties in Interest 29
Section 6.08. Governing Law 29
Section 6.09. Counterparts 29
Section 6.10. Recitals 29
Section 6.11. Fair Construction 29
Section 6.12. Headings and Captions 29
Section 6.13. Assignment 29
LIST OF EXHIBITS
Exhibit Description
A Settlement Agreement (without
Exhibits thereto).
B Form of Assumption Reinsurance
Agreement.
C Form of Articles of Incorporation
of New BCBSMo.
D Form of Bylaws of New BCBSMo.
E Intercompany Liabilities.
F Certificate of Incorporation of New RIT.
G Bylaws of New RIT.
H Form of Foundation Reincorporation
Merger Resolution.
I Form of Foundation RIT/New RIT
Merger Resolution.
J Form of Registration Rights
Agreement.
K Form of Indemnification
Agreement.
L Form of Voting Trust and Divestiture
Agreement.
INDEX OF DEFINED TERMS
DEFINED TERM LOCATION
Agreement Preamble
Ancillary Agreements Section 2.02(b)
Association Recital A
Assumption Reinsurance Agreement Section 1.02(a)
Attorney General Recital D
Bank Approvals Section 4.03(k)
BCBSMo Preamble
BCBSMo Board Recital J
BCBSMo Disclosure Schedule Section 2.01(a)
BCBSMo Financial Statements Section 2.03(c)
BCBSMo Independent Committee Recital J
BCBSMo Legal Opinion Section 4.03(l)
BCBSMo/RIT Stock Option Section 1.06(a)
BCBSMo/RIT Stock Option Plans Section 1.06(a)
Charter Conversion Effective Time Section 1.03(b)
Charter Conversion Transaction Recital H(2)
Closing Section 1.07
Closing Date Section 1.07
Code Recital F
Delaware Corporate Law Section 1.04(a)
DOI Recital D
Exchange Act Section 2.02(f)
Exchange Agent Section 1.05(j)(1)
Existing Licenses Section 4.03(h)
Favorable Ruling Section 4.02(f)
Favorable Ruling Matter Section 4.02(f)
Foundation Preamble
Foundation Legal Opinion Section 4.02(j)
Foundation Reincorporation Merger Resolution Section 3.04(b)(1)
Foundation RIT/New RIT Merger Resolution Section 3.04(b)(2)
HALIC Recital H(1)
Health Benefit Products Section 3.13
Indemnification Agreement Section 3.08
Indemnified Party Section 3.11(a)
Litigation Recital D
Marks Recital A
Material Adverse Effect Section 2.01(b)
Missouri Corporate Law Section 1.03(a)
New BCBSMo Recital H(2)
New BCBSMo Articles Section 1.03(a)
New BCBSMo Board Section 1.03(a)
New BCBSMo Bylaws Section 1.03(a)
New BCBSMo Stock Recital H(2)
New RIT Preamble
New RIT Board Section 1.04(g)
New RIT Bylaws Section 1.04(f)
New RIT Certificate of Incorporation Section 1.04(f)
New RIT Certificates Section 1.05(j)(1)
New RIT Legal Opinion Section 4.02(j)
New RIT Stock Recital G
NYSE Recital C
Proxy Statement/Prospectus Section 3.05
Public Exchange Ratio Section 1.05(c)
Registration Rights Agreement Section 3.07
Registration Statement Section 3.05
Regulatory Authority Section 2.02(e)
Reincorporation Merger Effective Time Section 1.04(b)
Reincorporation Merger Transaction Recital H(3)
Reorganization Recital I
RIT Preamble
RIT Board Recital J
RIT Certificates Section 1.05(j)(2)
RIT Class A Stock Recital C
RIT Class B Stock Recital C
RIT Disclosure Schedule Section 2.01(a)
RIT Financial Statements Section 2.02(d)
RIT Independent Committee Recital J
RIT Legal Opinion Section 4.02(j)
RIT Preferred Stock Section 2.02(c)
RIT Shareholders' Meeting Section 3.01(a)
RIT Stock Recital C
RIT/New RIT Merger Effective Time Section 1.05(b)
RIT/New RIT Merger Transaction Recital H(4)
SEC Section 1.06(c)
Securities Act Section 1.06(c)
Settlement Agreement Recital E
Transfer and Assumption Transaction Recital H(1)
Voting Trust and Divestiture Agreement Section 3.09
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (this
"Agreement"), dated as of ________ ___, 199___, is made and
entered into by and among BLUE CROSS AND BLUE SHIELD OF MISSOURI,
a Missouri non-profit health services corporation ("BCBSMo"),
RIGHTCHOICE MANAGED CARE, INC., a Missouri corporation ("RIT"),
THE MISSOURI FOUNDATION FOR HEALTH, a Missouri non-profit public
benefit corporation (the "Foundation"), and RIGHTCHOICE MANAGED
CARE, INC., a Delaware corporation and wholly-owned subsidiary of
the Foundation ("New RIT").
RECITALS
A. BCBSMo is a Missouri non-profit non-stock health
services corporation that offers health benefits and related
products and services. BCBSMo holds a license from the Blue
Cross and Blue Shield Association (the "Association") to use the
Blue Cross and Blue Shield names, trademarks and service marks
(the "Marks").
B. RIT is a Missouri general business corporation, doing
business under the name "Alliance Blue Cross Blue Shield," that
provides health care products and services. RIT also holds a
license from the Association to use the Marks.
C. RIT has outstanding 3,710,426 shares of Class A Common
Stock (the "RIT Class A Stock") and 14,962,500 shares of Class B
Common Stock (the "RIT Class B Stock;" together with the RIT
Class A Stock, the "RIT Stock"). Each share of RIT Class A Stock
has one vote per share, and each share of RIT Class B Stock has
ten votes per share. The issued and outstanding shares of RIT
Class B Stock, representing approximately 80.1% of the issued and
outstanding shares of RIT Stock and approximately 97.6% of the
voting power of the issued and outstanding shares of RIT Stock,
are owned by BCBSMo. The issued and outstanding shares of RIT
Class A Stock, representing approximately 19.9% of the issued and
outstanding shares of RIT Stock and approximately 2.4% of the
voting power of the issued and outstanding shares of RIT Stock,
are listed for trading on the New York Stock Exchange, Inc. (the
"NYSE").
D. RIT and BCBSMo are currently involved in certain
litigation and disputes with the Missouri Attorney General,
Xxxxxxxx X. "Xxx" Xxxxx (the "Attorney General"), the Director of
the Missouri Department of Insurance, Xxx X. Xxxxxx, and the
Missouri Department of Insurance (together, the "DOI") including
the following: Blue Cross Blue Shield of Missouri, Plaintiff v.
Xxx Xxxxxx, Director of the Missouri Department of Insurance, the
Missouri Department of Insurance and Xxxxxxxx X. "Xxx" Xxxxx,
No. CV196-619CC, in the Circuit Court of Xxxx County, Missouri;
and Blue Cross Blue Shield of Missouri v. Xxxxxxxx X. "Xxx"
Xxxxx, No. CV197-1558CC, in the Circuit Court of Xxxx County,
Missouri; as well as certain other litigation and disputes
(collectively, the "Litigation").
E. BCBSMo, RIT, the Attorney General and the DOI have
entered into a Settlement Agreement, dated __________, 1998 (the
"Settlement Agreement"), to resolve the Litigation and other
disputes between such parties. The Settlement Agreement is
specifically contingent upon the consummation of the transactions
set forth in this Agreement. The Settlement Agreement is
attached hereto as Exhibit A.
F. The Foundation was recently organized pursuant to the
Settlement Agreement as a Missouri non-profit public benefit
corporation that will apply for an exemption from federal income
tax under Section 501(c)(4) of the Internal Revenue Code of 1986,
as amended (the "Code"). The Foundation was established to serve
the purposes set forth in its Articles of Incorporation and to,
among other things, receive and hold for those purposes the New
RIT Stock (as defined in Recital G hereof) that it will receive
upon consummation of the Reorganization (as defined in Recital I
hereof).
G. New RIT was recently organized pursuant to the
Settlement Agreement as a Delaware corporation solely to
facilitate the Reorganization. The one (1) share of common stock
of New RIT, par value $_____ [to be determined by RIT prior to
signing date] per share (the "New RIT Stock"), issued and
outstanding as of the date hereof is owned by the Foundation.
H. The Reorganization shall be comprised of the following
transactions, which shall be consummated in the following order,
and which shall be conditioned upon the satisfaction (or, where
permissible, waiver) of each of the conditions set forth in
Article IV of this Agreement:
(1) BCBSMo shall transfer certain assets, contracts
and agreements, including its existing contracts
of insurance and certain other assets required to
satisfy policy liabilities and applicable
statutory reserve and Association capital
requirements, to Healthy Alliance Life Insurance
Company ("HALIC"), a wholly-owned subsidiary of
RIT, and HALIC shall assume all liabilities
related thereto (such transaction is referred to
herein as the "Transfer and Assumption
Transaction" and is described in Section 1.02
hereof);
(2) BCBSMo shall change from a Missouri non-profit non-
stock corporation to a Missouri for-profit stock
corporation by, among other things, amending and
restating its Amended and Restated Articles of
Incorporation in accordance with applicable law
(such transaction is referred to herein as the
"Charter Conversion Transaction" and is described
in Section 1.03 hereof). BCBSMo, upon its
conversion to a stock form corporation pursuant to
the Charter Conversion Transaction, is referred to
herein as "New BCBSMo." As part of the Charter
Conversion Transaction, New BCBSMo shall issue one
(1) share of its common stock, par value $.01 per
share (the "New BCBSMo Stock"), to the Foundation
(which shall then be the sole shareholder of New
BCBSMo);
(3) New BCBSMo shall be reincorporated under the
corporate laws of the State of Delaware by means
of the merger of New BCBSMo (which shall be wholly-
owned by the Foundation), with and into New RIT
(which also shall be wholly-owned by the
Foundation), and New RIT shall be the surviving
corporation (such transaction is referred to
herein as the "Reincorporation Merger Transaction"
and is described in Section 1.04 hereof). In the
Reincorporation Merger Transaction, (a) the one
(1) issued and outstanding share of New RIT Stock
owned by the Foundation shall remain issued,
outstanding and unaffected, and (b) the one (1)
issued and outstanding share of New BCBSMo Stock
owned by the Foundation shall be cancelled; and
(4) RIT shall merge with and into New RIT (which
immediately prior to such merger shall be wholly-
owned by the Foundation), and New RIT shall be the
surviving corporation (such transaction is
referred to herein as the "RIT/New RIT Merger
Transaction" and is described in Section 1.05
hereof). In the RIT/New RIT Merger Transaction,
(a) each issued and outstanding share of RIT Class
A Stock shall be converted into one (1) share of
New RIT Stock, (b) each issued and outstanding
share of RIT Class B Stock (which immediately
prior to the RIT/New RIT Merger Transaction shall
be owned by New RIT) shall be cancelled, and (c)
the one (1) issued and outstanding share of New
RIT Stock (which immediately prior to the RIT/New
RIT Merger Transaction shall be owned by the
Foundation) shall be converted into a number of
shares of New RIT Stock equal to the number of
shares of RIT Class B Stock issued and outstanding
immediately prior to the consummation of the
RIT/New RIT Merger Transaction.
I. The Transfer and Assumption Transaction, the Charter
Conversion Transaction, the Reincorporation Merger Transaction
and the RIT/New RIT Merger Transaction are referred to herein
collectively as the "Reorganization." Upon consummation of the
Reorganization, (i) BCBSMo and RIT shall cease to exist as
separate entities, and (ii) the issued and outstanding shares of
New RIT Stock shall be owned (a) by the public in the same
aggregate amount that the RIT Class A Stock was owned by the
public immediately prior to the Reorganization, and (b) by the
Foundation in the same aggregate amount that the RIT Class B
Stock was owned by BCBSMo immediately prior to the
Reorganization.
J. The Board of Directors of BCBSMo (the "BCBSMo Board")
and the committee comprised of the five members of the BCBSMo
Board who are not employees or officers of BCBSMo or RIT or
directors of RIT (the "BCBSMo Independent Committee"), on the one
hand, and the Board of Directors of RIT (the "RIT Board") and the
committee comprised of three members of the RIT Board who are not
employees or officers of RIT or BCBSMo or directors of BCBSMo
(the "RIT Independent Committee"), on the other hand, have each
determined that it is advisable and in the best interests of
BCBSMo and RIT, respectively, to enter into this Agreement and to
consummate the Reorganization and the other transactions
contemplated by this Agreement.
AGREEMENT
In consideration of the foregoing and the mutual covenants
and agreements contained in this Agreement, BCBSMo, RIT, the
Foundation and New RIT agree as follows:
ARTICLE I
TERMS OF REORGANIZATION; CLOSING
Section 1.01. Sequence of Transactions. The Reorganization
shall be accomplished by means of the Transfer and Assumption
Transaction, the Charter Conversion Transaction, the
Reincorporation Merger Transaction and the RIT/New RIT Merger
Transaction, each of which shall be consummated in sequential
order on the Closing Date (as defined in Section 1.07 hereof).
Section 1.02. Transfer and Assumption Transaction. On the
Closing Date, BCBSMo shall consummate the Transfer and Assumption
Transaction as provided below in this Section 1.02.
(a) Assumption Reinsurance Agreement. BCBSMo shall,
and RIT shall cause HALIC to, sign on the date hereof the
Assumption Reinsurance Agreement (the "Assumption Reinsurance
Agreement") in the form attached hereto as Exhibit B and shall
consummate the Transfer and Assumption Transaction in accordance
with the terms of the Assumption Reinsurance Agreement.
(b) Regulatory Approvals. BCBSMo and RIT shall file,
or shall cause to be filed, all necessary applications, notices,
agreements and other documents reasonably required to obtain the
approval of the Association and all Regulatory Authorities (as
defined in Section 2.02(e) hereof) having jurisdiction with
respect to the Transfer and Assumption Transaction.
(c) Consummation of Transaction. BCBSMo and RIT shall
take all reasonable and lawful action and shall execute all
documents, certificates and other papers as may be necessary or
appropriate in order to consummate the Transfer and Assumption
Transaction in accordance with this Agreement and the Assumption
Reinsurance Agreement.
(d) Tax Consequences. It is intended by the parties
hereto that the Transfer and Assumption Transaction shall
constitute a tax-free transfer to a controlled corporation within
the meaning of Section 351 of the Code.
Section 1.03. Charter Conversion Transaction. On the
Closing Date, immediately upon consummation of the Transfer and
Assumption Transaction, BCBSMo and the Foundation shall
consummate the Charter Conversion Transaction as provided below
in this Section 1.03.
(a) Filing of Articles of Incorporation; Bylaws.
BCBSMo shall, in accordance with Section 351.025.2 of The General
and Business Corporation Law of Missouri (the "Missouri Corporate
Law") and Section 354.065 of the Missouri Health Services
Corporations law, take all action reasonably necessary to convert
to a for-profit corporation governed by the Missouri Corporate
Law including, without limitation, filing amended and restated
Articles of Incorporation with the Missouri Secretary of State in
substantially the form of that attached hereto as Exhibit C (the
"New BCBSMo Articles"). The New BCBSMo Articles shall be the
Articles of Incorporation of New BCBSMo until thereafter amended
in accordance with applicable law. At the Charter Conversion
Effective Time (as defined in Section 1.03(b) hereof), the Board
of Directors of New BCBSMo, as designated in the New BCBSMo
Articles (the "New BCBSMo Board"), shall adopt the Bylaws in
substantially the form of that attached hereto as Exhibit D (the
"New BCBSMo Bylaws"). The New BCBSMo Bylaws shall be the Bylaws
of New BCBSMo until thereafter amended in accordance with
applicable law.
(b) Effective Time. The Charter Conversion
Transaction shall become effective (the "Charter Conversion
Effective Time") upon approval of all Regulatory Authorities
having jurisdiction with respect to the Charter Conversion
Transaction and on the date and at the time that BCBSMo files a
certificate of acceptance of the Missouri Corporate Law with the
Missouri Secretary of State and the Missouri Secretary of State
accepts the New BCBSMo Articles for filing. BCBSMo shall use its
best efforts to cause the Charter Conversion Effective Time to
occur immediately after consummation of the Transfer and
Assumption Transaction on the Closing Date.
(c) Issuance of Stock. At the Charter Conversion
Effective Time, New BCBSMo shall issue one (1) share of New
BCBSMo Stock to the Foundation. The Foundation shall be the sole
shareholder of New BCBSMo immediately after and following the
Charter Conversion Effective Time.
(d) Regulatory Approvals. BCBSMo shall file, or shall
cause to be filed, all necessary applications, notices,
agreements and other documents reasonably required to obtain the
approval of the Association and all Regulatory Authorities having
jurisdiction with respect to the Charter Conversion Transaction.
(e) Directors and Officers. The persons who were
serving as directors and officers of BCBSMo immediately prior to
the Charter Conversion Effective Time shall resign as directors
and officers of BCBSMo effective as of the Charter Conversion
Effective Time. The New BCBSMo Board shall appoint the officers
of New BCBSMo at the Charter Conversion Effective Time.
(f) Consummation of Transaction. BCBSMo and the
Foundation shall take all reasonable and lawful action and shall
execute all documents, certificates and other papers as may be
necessary or appropriate in order to effectuate the Charter
Conversion Transaction in accordance with this Agreement and
applicable law.
(g) Tax Consequences. It is intended by the parties
hereto that the Charter Conversion Transaction shall constitute a
tax-free reorganization within the meaning of
Section 368(a)(1)(E) of the Code. The parties hereto hereby
adopt this Agreement as a "plan of reorganization" within the
meaning of Sections 1.368-2(g) and 1.368-3(a) of the United
States Treasury Regulations.
Section 1.04. Reincorporation Merger Transaction. On the
Closing Date, immediately upon consummation of the Charter
Conversion Transaction, New BCBSMo, New RIT and the Foundation
shall consummate the Reincorporation Merger Transaction as
provided below in this Section 1.04.
(a) Structure of Merger. Subject to the terms and
conditions of this Agreement, the Delaware General Corporation
Law (the "Delaware Corporate Law") and the Missouri Corporate
Law, New BCBSMo shall merge with and into New RIT. New BCBSMo
shall be the merging corporation in the Reincorporation Merger
Transaction and its corporate identity and existence, separate
and apart from New RIT, shall cease to exist upon consummation of
the Reincorporation Merger Transaction. New RIT shall be the
surviving corporation resulting from the Reincorporation Merger
Transaction and shall continue to be governed by the Delaware
Corporate Law.
(b) Effective Time. The Reincorporation Merger
Transaction shall become effective (the "Reincorporation Merger
Effective Time") on the date and time when the Certificate of
Merger reflecting the Reincorporation Merger Transaction becomes
effective with the Delaware Secretary of State. New BCBSMo and
New RIT shall use their best efforts to cause the Reincorporation
Merger Effective Time to occur immediately after the Charter
Conversion Effective Time on the Closing Date.
(c) Conversion of Shares. At the Reincorporation
Merger Effective Time, by virtue of the Reincorporation Merger
Transaction and without any action on the part of New BCBSMo, New
RIT or the shareholder of either New RIT and New BCBSMo, (i) the
one (1) share of New RIT Stock issued and outstanding immediately
prior to the Reincorporation Merger Effective Time shall remain
issued and outstanding and unaffected by the Reincorporation
Merger Transaction; and (ii) the one (1) share of New BCBSMo
Stock issued and outstanding immediately prior to the
Reincorporation Merger Effective Time shall be cancelled and
retired and all rights with respect thereto shall cease to exist
without any conversion thereof.
(d) Effects of Merger. The Reincorporation Merger
Transaction shall have all of the effects provided for in this
Agreement and under the Delaware Corporate Law and the Missouri
Corporate Law. Without limiting the generality of the foregoing,
and subject thereto, at the Reincorporation Merger Effective
Time, all property, rights and powers and franchises of New
BCBSMo and New RIT shall vest in New RIT, and all debts,
liabilities and duties of New BCBSMo and New RIT shall become the
debts, liabilities and duties of New RIT.
(e) Regulatory Approvals. BCBSMo and New RIT shall
file, or shall cause to be filed, all necessary applications,
notices, agreements and other documents reasonably required to
obtain the approval of the Association and all Regulatory
Authorities having jurisdiction with respect to the
Reincorporation Merger Transaction.
(f) Certificate of Incorporation and Bylaws. No
changes in the Certificate of Incorporation of New RIT, attached
hereto as Exhibit F (the "New RIT Certificate of Incorporation"),
or Bylaws of New RIT, attached hereto as Exhibit G (the "New RIT
Bylaws"), shall be effected by the Reincorporation Merger
Transaction.
(g) Directors and Officers. At the Reincorporation
Merger Effective Time, the Board of Directors of New RIT (the
"New RIT Board") and the officers of New RIT shall be identical
to the Board of Directors and officers of New RIT immediately
prior to the Reincorporation Merger Effective Time, and each such
director and officer shall hold his or her position until his or
her resignation or removal or the election or appointment of his
or her successor in the manner provided by the New RIT
Certificate of Incorporation and the New RIT Bylaws and
applicable law. The persons who were serving as directors and
officers of New BCBSMo immediately prior to the Reincorporation
Merger Effective Time shall resign as directors and officers of
the New BCBSMo effective as of the Reincorporation Merger
Effective Time.
(h) Consummation of Transaction. Each of New BCBSMo,
New RIT and the Foundation shall take all reasonable and lawful
action and shall execute all documents, certificates and other
papers as may be necessary or appropriate in order to effectuate
the Reincorporation Merger Transaction in accordance with this
Agreement. If, at any time after the Reincorporation Merger
Transaction, any such further action is necessary or desirable to
carry out the purposes of this Agreement and to vest New RIT with
full right and title to and possession of all assets, property,
rights, privileges, powers, liabilities, obligations and
franchises of New BCBSMo, the responsible officers and directors
of New RIT and New BCBSMo are fully authorized to take, and shall
take, all such lawful and necessary action.
(i) Tax Consequences. It is intended by the parties
hereto that the Reincorporation Merger Transaction shall
constitute a tax-free reorganization within the meaning of
Section 368(a)(1)(F) of the Code. The parties hereto hereby
adopt this Agreement as a "plan of reorganization" within the
meaning of Sections 1.368-2(g) and 1.368-3(a) of the United
States Treasury Regulations.
(j) Dissenters' Rights. The Foundation, as the sole
holder of New BCBSMo Stock and New RIT Stock immediately prior to
the Reincorporation Merger Effective Time, shall not be entitled
to dissent, and hereby waives any right it may have to dissent,
from the Reincorporation Merger Transaction.
Section 1.05. RIT/New RIT Merger Transaction. On the
Closing Date, immediately upon consummation of the
Reincorporation Merger Transaction, RIT, New RIT and the
Foundation shall consummate the RIT/New RIT Merger Transaction as
provided below in this Section 1.05.
(a) Structure of Merger. Subject to the terms and
conditions of this Agreement, the Delaware Corporate Law and the
Missouri Corporate Law, RIT shall merge with and into New RIT.
RIT shall be the merging corporation in the RIT/New RIT Merger
Transaction and its corporate identity and existence, separate
and apart from New RIT, shall cease to exist upon consummation of
the RIT/New RIT Merger Transaction. New RIT shall be the
surviving corporation resulting from the RIT/New RIT Merger
Transaction and shall continue to be governed by the Delaware
Corporate Law.
(b) Effective Time. The RIT/New RIT Merger
Transaction shall become effective (the "RIT/New RIT Merger
Effective Time") on the date and time when the Certificate of
Merger reflecting the RIT/New RIT Merger Transaction becomes
effective with the Delaware Secretary of State. RIT and New RIT
shall use their best efforts to cause the RIT/New RIT Merger
Effective Time to occur immediately after the Reincorporation
Merger Effective Time on the Closing Date.
(c) Conversion of Shares. At the RIT/New RIT Merger
Effective Time, by virtue of the RIT/New RIT Merger Transaction
and without any action on the part of RIT, New RIT or the
shareholders of either of RIT or New RIT, (i) each share of RIT
Class A Stock issued and outstanding immediately prior to the
RIT/New RIT Merger Effective Time (other than shares of RIT
Class A Stock held in the treasury of RIT or by any direct or
indirect subsidiary of RIT (as provided in Section 1.05(d)
hereof) or shares the holders of which have duly exercised and
perfected their dissenters' rights under the Missouri Corporate
Law (as provided in Section 1.05(e) hereof) shall cease to be
outstanding and shall be converted into the right to receive one
(1) share of New RIT Stock (the "Public Exchange Ratio"); (ii)
each share of RIT Class B Stock issued and outstanding
immediately prior to the RIT/New RIT Merger Effective Time shall
cease to be outstanding and shall be cancelled and retired and
all rights with respect thereto shall cease to exist without any
conversion thereof; and (iii) the one (1) share of New RIT Stock
issued and outstanding immediately prior to the RIT/New RIT
Merger Effective Time shall cease to be outstanding and shall be
converted into the right to receive a number of shares of New RIT
Stock equal to the number of shares of RIT Class B Stock issued
and outstanding immediately prior to the RIT/New RIT Merger
Effective Time.
(d) Treasury Shares. Each share, if any, of RIT Stock
that is held as treasury stock of RIT or held by any direct or
indirect subsidiary of RIT immediately prior to the RIT/New RIT
Merger Effective Time shall, by virtue of the RIT/New RIT Merger
and without any action on the part of the holder thereof, cease
to be outstanding and shall be cancelled and retired without
payment of any consideration therefor and shall cease to exist.
(e) Dissenters' Rights. Holders of RIT Class A Stock
shall be entitled to dissent from the RIT/New RIT Merger
Transaction pursuant to the procedures set forth in the Missouri
Corporate Law. Any shares of RIT Class A Stock held by a
dissenting holder shall not be converted as described in
Section 1.05(c) hereof but, from and after the RIT/New RIT Merger
Effective Time, shall represent only the right to receive such
consideration as may be determined to be due such dissenting
holder pursuant to the Missouri Corporate Law. New RIT, as the
holder of the RIT Class B Stock immediately prior to the RIT/New
RIT Merger Effective Time, shall not be entitled to dissent, and
hereby waives any rights it may have to dissent, from the RIT/New
RIT Merger Agreement.
(f) Effects of Merger. The RIT/New RIT Merger
Transaction shall have all of the effects provided for in this
Agreement and under the Delaware Corporate Law and the Missouri
Corporate Law. Without limiting the generality of the foregoing,
and subject thereto, at the RIT/New RIT Merger Effective Time,
all of the property, rights, privileges, powers and franchises of
RIT and New RIT shall vest in New RIT, and all debts, liabilities
and duties of RIT and New RIT shall become the debts, liabilities
and duties of New RIT and all debts, liabilities and duties owed
by New RIT to RIT and by RIT to New RIT (including, without
limitation, certain agreements listed in Exhibit E attached
hereto, which shall be updated by RIT as of the Closing Date)
shall terminate and be of no effect.
(g) Regulatory Approvals. RIT and New RIT shall file,
or shall cause to be filed, all necessary applications, notices,
agreements and other documents reasonably required to obtain the
approval of the Association and all Regulatory Authorities having
jurisdiction with respect to the RIT/New RIT Merger Transaction.
(h) Certificate of Incorporation and Bylaws. No
changes in the New RIT Certificate of Incorporation or the New
RIT Bylaws shall be affected by the RIT/New RIT Merger
Transaction.
(i) New RIT Directors and Officers. The directors of
New RIT immediately upon consummation of the RIT/New RIT Merger
Transaction shall be those persons designated by RIT and included
on a list to be delivered by RIT to New RIT and the Foundation on
or before the date that the Proxy Statement/Prospectus (as
defined in Section 3.05 hereof) shall be mailed to the
shareholders of RIT in connection with the RIT Shareholders'
Meeting (as defined in Section 3.01(a) hereof), and such persons
shall serve in such capacities for New RIT after the RIT/New RIT
Merger Effective Time and until their resignation or removal or
the election or appointment of their successors in the manner
provided in the New RIT Certificate of Incorporation, the New RIT
Bylaws and applicable law. The persons who were serving as
officers of RIT immediately prior to the Reincorporation Merger
Transaction shall serve in such capacities (retaining their
respective positions and terms of office) for New RIT after the
RIT/New RIT Effective Time and until their resignation or removal
or the election or appointment of their successors in the manner
provided in the New RIT Bylaws and applicable law. New RIT shall
have such additional officers as may be determined by the Board
of Directors of New RIT after the RIT/New RIT Merger Effective
Time. The persons who were serving as directors and officers of
RIT and New RIT, respectively, immediately prior to the RIT/New
RIT Merger Effective Time shall resign as directors and officers
of RIT and New RIT, respectively, effective as of the RIT/New RIT
Merger Effective Time.
(j) Exchange of Certificates.
(1) Exchange Agent. As of the RIT/New RIT Merger
Effective Time, New RIT shall supply, or shall cause to be
supplied, to or for the account of a bank or trust company
designated by RIT (the "Exchange Agent"), in trust for the
benefit of the holders of shares of RIT Class A Stock to be
exchanged through the Exchange Agent in accordance with this
Section 1.05, certificates (the "New RIT Certificates")
evidencing the shares of New RIT Stock issuable in exchange for
outstanding shares of RIT Class A Stock pursuant to Section
1.05(c) hereof.
(2) Exchange Procedure for Public Shareholders.
As soon as reasonably practicable after the RIT/New RIT Merger
Effective Time, New RIT shall instruct the Exchange Agent to mail
to each holder of record of a certificate or certificates which
immediately prior to the RIT/New RIT Merger Effective Time
evidenced outstanding shares of RIT Class A Stock (the "RIT
Certificates") (i) a letter of transmittal (which shall specify
that delivery shall be effected, and risk of loss and title to
the RIT Certificates shall pass, only upon proper delivery of the
RIT Certificates to the Exchange Agent and shall be in such form
and have such other provisions as RIT may reasonably specify),
and (ii) instructions to effect the surrender of the RIT
Certificates in exchange for New RIT Certificates. Upon
surrender of a RIT Certificate for cancellation to the Exchange
Agent together with such letter of transmittal, duly executed,
and such other customary documents as may be required pursuant to
such instructions, the holder of such RIT Certificate shall be
entitled to receive in exchange therefor New RIT Certificate(s)
evidencing that number of shares of New RIT Stock which such
holder has the right to receive in accordance with the Public
Exchange Ratio in respect of the shares of RIT Class A Stock
formerly evidenced by such RIT Certificate and the RIT
Certificate so surrendered shall forthwith be cancelled. In the
event of a transfer of ownership of shares of RIT Class A Stock
to a person who is not registered in the transfer records of RIT
as of the RIT/New RIT Merger Effective Time, New RIT Stock may be
issued and paid in accordance with this Section 1.05(j) to a
transferee of the registered shares if the RIT Certificate
evidencing such shares of RIT Class A Stock is presented to the
Exchange Agent, accompanied by all documents required to evidence
and effect such transfer pursuant to this Section 1.05(j) and by
evidence that any applicable stock transfer taxes have been paid.
Until surrendered, each RIT Certificate that, prior to the
RIT/New RIT Merger Effective Time, represented outstanding shares
of RIT Class A Stock shall be deemed from and after the RIT/New
RIT Merger Effective Time, for all corporate purposes, other than
the payment of dividends, to evidence the ownership of the number
of shares of New RIT Stock into which such shares shall have been
so converted.
(3) Exchange Procedure for Foundation. The
Foundation authorizes and directs New RIT to issue each share of
New RIT Stock issuable in exchange for the outstanding share of
New RIT Stock pursuant to Section 1.05(c) hereof directly to the
trustee designated by the Voting Trust and Divestiture Agreement
(as defined in Section 3.09 hereof) to be held in the voting
trust established by the Voting Trust and Divestiture Agreement.
(4) Distributions With Respect to Unexchanged
Shares. No dividends or other distributions, if any, declared or
made after the RIT/New RIT Merger Effective Time with respect to
New RIT Stock with a record date after the RIT/New RIT Merger
Effective Time shall be paid to the holder of any unsurrendered
RIT Certificate with respect to the shares of New RIT Stock such
holder is entitled to receive pursuant to Section 1.05(c) hereof
until the holder of such RIT Certificate shall surrender such RIT
Certificate. Subject to applicable law, following surrender of
any such RIT Certificate, there shall be paid to the record
holder of New RIT Certificates representing shares of New RIT
Stock issued in exchange therefor, without interest, at the time
of such surrender, the amount of dividends or other distributions
with a record date after the RIT/New RIT Merger Effective Time
theretofore paid with respect to such shares of New RIT Stock.
(5) Transfers of Ownership. If any New RIT
Certificate is to be issued in a name other than that in which
the RIT Certificate surrendered in exchange therefor is
registered, it will be a condition of the issuance thereof that
the RIT Certificate so surrendered shall have been properly
endorsed and otherwise in proper form for transfer and that the
person requesting such exchange shall have paid to New RIT, or
any agent designated by it, any transfer or other taxes required
by reason of the issuance of the New RIT Certificate in any name
other than that of the registered holder of the RIT Certificate
surrendered, or established to the satisfaction of New RIT, or
any agent designated by it, that such tax has been paid or is not
payable.
(6) No Liability. Neither RIT nor New RIT shall
be liable to any holder of shares of RIT Class A Stock or New RIT
Stock for any RIT/New RIT Merger Transaction consideration (or
dividends or distributions with respect thereto) delivered to a
public official pursuant to any applicable abandoned property,
escheat or similar law.
(7) Lost, Stolen or Destroyed Certificates. In
the event that any RIT Certificates shall have been lost, stolen
or destroyed, the Exchange Agent shall issue in exchange for such
lost, stolen or destroyed RIT Certificate, upon the making of an
affidavit of the fact by the holder thereof, such shares of New
RIT Stock as may be required pursuant to Section 1.05(c);
provided, however, that New RIT may, in its discretion and as a
condition precedent to the issuance thereof, require the owner of
such lost, stolen or destroyed RIT Certificate to deliver a bond
in such sum as it may reasonably direct as indemnity against any
claim that may be made against New RIT or the Exchange Agent with
respect to the RIT Certificate alleged to have been lost, stolen
or destroyed.
(k) Stock Transfer Books. At the RIT/New RIT Merger
Effective Time, the stock transfer books of RIT shall be closed,
and there shall be no further registration of transfers of shares
of RIT Stock on the records of RIT.
(l) Tax Consequences. It is intended by the parties
hereto that the RIT/New RIT Merger Transaction shall constitute
both (i) a tax free liquidation of a subsidiary under
Sections 332 and 337 of the Code as to New RIT and RIT, and (ii)
a tax-free reorganization within the meaning of
Section 368(a)(1)(A) of the Code. The parties hereto hereby
adopt this Agreement as (i) a plan of liquidation within the
meaning of Section 332(b)(2) of the Code and Sections 1.332-2(a)
and 1.332-6 of the United States Treasury Regulations, and (ii) a
"plan of reorganization" within the meaning of Sections 1.368-
2(g) and 1.368-3(a) of the United States Treasury Regulations.
(m) Consummation of Transaction. Each of RIT and New
RIT shall take all reasonable and lawful action and shall execute
all documents, certificates and other papers as may be necessary
or appropriate in order to effectuate the RIT/New RIT Merger
Transaction in accordance with this Agreement. If, at any time
after the RIT/New RIT Merger Effective Time, any such further
action is necessary or desirable to carry out the purposes of
this Agreement and to vest New RIT with full right and title to
and possession of all assets, property, rights, privileges,
powers, liabilities, obligations and franchises of RIT, the
responsible officers and directors of New RIT and RIT are fully
authorized to take, and shall take, all such lawful and necessary
action.
Section 1.06. Stock Options.
(a) At the RIT/New RIT Merger Effective Time, each
outstanding option (a "BCBSMo/RIT Stock Option") to purchase
shares of RIT Class A Stock issued, granted or awarded pursuant
to the RightCHOICE Managed Care, Inc. 1994 Equity Incentive Plan,
the RightCHOICE Managed Care, Inc. Nonemployee Directors' Stock
Option Plan or the Blue Cross and Blue Shield of Missouri Stock
Option Agreements, as the case may be (collectively, the
"BCBSMo/RIT Stock Option Plans"), whether or not exercisable or
vested, shall cease to represent a right to acquire shares of RIT
Class A Stock and shall be converted automatically into an option
to acquire, from and after the RIT/New RIT Effective Time, on the
same terms and conditions as were applicable under such
BCBSMo/RIT Stock Option, the number of shares of New RIT Stock as
the holder of such BCBSMo/RIT Stock Option would have been
entitled to receive pursuant to the RIT/New RIT Merger
Transaction had such holder exercised such option in full
immediately prior to the RIT/New RIT Merger Effective Time
(determined by multiplying the aggregate number of shares of RIT
Class A Stock covered by such BCBSMo/RIT Stock Option by the
Public Exchange Ratio), at a price per share equal to the price
per share under the BCBSMo/RIT Stock Option. New RIT shall
acknowledge and assume, from and after the RIT/New RIT Merger
Effective Time, all obligations of RIT and BCBSMo under the
BCBSMo/RIT Stock Option Plans as provided in this Section 1.06.
(b) As soon as practicable after the RIT/New RIT
Merger Effective Time, New RIT shall deliver to each holder of a
BCBSMo/RIT Stock Option appropriate notices setting forth such
holders' rights with respect to such BCBSMo/RIT Stock Option, and
the BCBSMo/RIT Stock Option Plans shall continue in effect on the
same terms and conditions (subject to the conversion required by
this Section 1.06 after giving effect to the RIT/New RIT Merger
Transaction and the assumption by New RIT as provided herein).
To the extent necessary to effectuate the provisions of this
Section 1.06, New RIT shall deliver new or amended agreements
reflecting the terms of each BCBSMo/RIT Stock Option assumed by
New RIT and amend the BCBSMo/RIT Stock Option Plans to reflect
the terms hereof.
(c) As soon as practicable after the RIT/New RIT
Merger Effective Time, New RIT shall file with the Securities and
Exchange Commission (the "SEC") pursuant to the Securities Act of
1933, as amended (the "Securities Act"), a registration statement
on an appropriate form with respect to the shares of New RIT
Stock subject to such BCBSMo/RIT Stock Options and shall use its
best efforts to maintain the effectiveness of such registration
statement or registration statements (and maintain the current
status of the prospectus or prospectuses with respect thereto)
for so long as such BCBSMo/RIT Stock Options remain outstanding.
Section 1.07. Closing; Closing Date. The closing (the
"Closing") of the Reorganization shall take place at the offices
of Xxxxx, Xxxx & Xxxxxxxx, X.X., 000 Xxxxx Xxxxxxxx, Xxxxx 0000,
Xx. Xxxxx, Xxxxxxxx as promptly as practicable (but in any event
within five (5) days) after the last day upon which each of the
conditions described in Article IV is satisfied or waived by the
appropriate party (the "Closing Date").
ARTICLE II
REPRESENTATIONS AND WARRANTIES
Section 2.01. Disclosure Schedule; Standard.
(a) Disclosure Schedule. BCBSMo has delivered to RIT,
New RIT and the Foundation a confidential schedule (the "BCBSMo
Disclosure Schedule"), executed by the parties hereto
concurrently with the delivery and execution hereof, and RIT has
delivered to BCBSMo, New RIT and the Foundation a confidential
schedule (the "RIT Disclosure Schedule"), executed by the parties
hereto concurrently with the delivery and execution hereof. The
BCBSMo Disclosure Schedule and the RIT Disclosure Schedule set
forth, among other things, items the disclosure of which shall be
necessary or appropriate either in response to an express
disclosure requirement contained in a provision hereof or as an
exception to one or more representations or warranties contained
in this Article II; provided, that (a) no such item shall be
required to be set forth in the BCBSMo Disclosure Schedule or the
RIT Disclosure Schedule, as the case may be, as an exception to a
representation or warranty if its absence would not be reasonably
likely to result in the related representation or warranty being
deemed untrue or incorrect under the standard established by
Section 2.01(b) hereof, (b) the mere inclusion of an item in the
BCBSMo Disclosure Schedule or the RIT Disclosure Schedule, as the
case may be, as an exception to a representation or warranty
shall not be deemed an admission by BCBSMo or RIT, as the case
may be, that such item represents a material exception or fact,
event or circumstance or that such item is reasonably likely to
result in a Material Adverse Effect (as defined in Section
2.01(b) hereof), (c) any matter described in the public filings
made by RIT with the SEC, the DOI or the Attorney General shall
be deemed incorporated by reference in the RIT Disclosure
Schedule, and (d) any matter described in the public filings made
by BCBSMo with the DOI or the Attorney General shall be deemed
incorporated by reference in the BCBSMo Disclosure Schedule.
(b) Standard. No representation or warranty of BCBSMo
or RIT contained in this Article II shall be deemed untrue or
incorrect, and BCBSMo and RIT, as the case may be, shall not be
deemed to have breached a representation or warranty, as a
consequence of the existence of any fact, event or circumstance
unless such fact, circumstance or event, individually or taken
together with all other facts, events or circumstances
inconsistent with any representation or warranty contained in
this Article II has had or is reasonably likely to have a
Material Adverse Effect on the party making such representation
or warranty. The term "Material Adverse Effect," as used herein,
means, with respect to BCBSMo or RIT, any effect that is, or is
reasonably expected to be, material and adverse to the financial
position, results of operations or business of BCBSMo and its
subsidiaries taken as a whole, or RIT and its subsidiaries taken
as a whole, respectively; provided, however, that Material
Adverse Effect shall not be deemed to include the impact of
(i) changes in laws, regulations and rules of the United States
and of the various states governing insurance company holding
systems, health maintenance organizations, health care service
plans, third party administrators, utilization review agents,
preferred provider organizations and managed healthcare
organizations and similar laws of general applicability or
interpretations thereof by courts or Regulatory Authorities, and
(ii) changes in generally accepted accounting principles or
regulatory accounting requirements applicable to BCBSMo, RIT and
their respective subsidiaries, and (iii) the Litigation and the
other matters covered by the Settlement Agreement.
Section 2.02. Representations and Warranties of RIT.
Subject to Section 2.01 hereof and except as disclosed in any
portion of the RIT Disclosure Schedule, RIT hereby makes the
following representations and warranties with respect to itself
and its subsidiaries:
(a) Corporate Existence and Power. RIT is a
corporation duly organized, validly existing and in good standing
under the laws of the State of Missouri and has the corporate
power to own all of its property and assets, incur all of its
liabilities and to carry on its business as now being conducted
and to consummate the transactions contemplated hereby.
(b) Authorization; No Defaults. The RIT Board and the
RIT Independent Committee each have, by all appropriate action,
approved this Agreement and each of the other agreements
contemplated hereby, described herein or attached hereto
(collectively, the "Ancillary Agreements") to which RIT is or
will be a party and authorized the execution hereof and thereof
on RIT's behalf by its duly authorized officers and the
performance by RIT of its obligations hereunder and thereunder.
Except for the adoption and approval of this Agreement and the
transactions contemplated herein by RIT's shareholders to the
extent required by applicable law, NYSE rules and regulations and
as described herein, no other corporate proceedings on the part
of RIT are necessary to approve this Agreement and the Ancillary
Agreements to which it is a party and to consummate the
transactions contemplated hereby and thereby. Nothing contained
in the Articles of Incorporation, as amended, or Bylaws, as
amended, of RIT or any other agreement, instrument, decree,
proceeding, law or regulation (except as specifically referred to
in or contemplated by this Agreement) by or to which it or any of
its subsidiaries are bound or subject would prohibit or inhibit
RIT from consummating this Agreement and the Ancillary Agreements
to which it is or will be a party and the transactions
contemplated herein and therein on the terms and conditions
contained herein and therein. This Agreement has been duly and
validly executed and delivered by RIT and, assuming the due
authorization, execution and delivery hereof by the other parties
hereto, constitutes a legal, valid and binding obligation of RIT,
enforceable against RIT in accordance with its terms, except that
such enforceability may be subject to bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter
in effect relating to or affecting creditors' rights generally,
and general principles of equity (regardless of whether
enforcement is sought in a proceeding in equity or at law).
(c) Capitalization. The authorized capital stock of
RIT consists of 125,000,000 shares of RIT Class A Stock,
100,000,000 shares of RIT Class B Stock and 25,000,000 shares of
preferred stock, par value $.01 per share (the "RIT Preferred
Stock"). As of _______, 199__, there were outstanding:
(i) 3,710,426 shares of RIT Class A Stock; (ii) 14,962,500 shares
of RIT Class B Stock; and (iii) no shares of RIT Preferred Stock
[to be updated by RIT based on signing date]. All outstanding
shares of RIT Class A Stock and all outstanding shares of RIT
Class B Stock have been duly authorized and validly issued and
are fully paid and nonassessable and free from any preemptive
rights. As of __________, 199__, RIT has outstanding stock
options representing the right to acquire not more than ___ [to
be provided by RIT prior to signing date] shares of RIT Class A
Stock. Except for such stock options, there are no shares of
capital stock or other equity securities of RIT outstanding and
no outstanding options, warrants, rights to subscribe for, calls,
or commitments of any character whatsoever relating to, or
securities or rights convertible into or exchangeable for, shares
of RIT Stock or RIT Preferred Stock or contracts, commitments,
understandings or arrangements by which RIT is or may be
obligated to issue additional shares of its RIT Stock or RIT
Preferred Stock, and there are no outstanding stock appreciation,
phantom stock or similar rights. All of the outstanding capital
stock of, or other ownership interests in, each subsidiary of RIT
is owned by RIT, directly or indirectly, free and clear of any
material lien and free of any other material limitation or
restriction on its rights as owner thereof (including any
restriction on the right to vote, sell or otherwise dispose of
such capital stock or other ownership interests), other than
those imposed by applicable law. There are no existing options,
calls or commitments of any character relating to the issued or
unissued capital stock or other securities or equity interests of
any subsidiaries of RIT.
(d) Financial Information. The consolidated balance
sheets of RIT and its subsidiaries as of December 31, 1997 and
1996 [to be updated by RIT based on signing date], and related
consolidated statements of income, changes in shareholders'
equity and cash flows for the three (3) years ended December 31,
1997 [to be updated by RIT based on signing date], together with
the notes thereto, included in RIT's Annual Report on Form 10-K
for the year ended December 31, 1997 [to be updated by RIT based
on signing date], as currently on file with the SEC, and the
unaudited consolidated balance sheets of RIT and its subsidiaries
as of March 31, 1998 and June 30, 1998 [to be updated by RIT
based on signing date], and the related unaudited consolidated
income statements and statements of changes in shareholders'
equity and cash flows for the three (3) months and six (6)
months, respectively, then ended included in RIT's Quarterly
Reports on Form 10-Q for the quarters then ended, as currently on
file with the SEC (the "RIT Financial Statements"), have been
prepared in accordance with generally accepted accounting
principles applied on a consistent basis (except as may be
disclosed therein) and fairly present in all material respects
the consolidated financial position and the consolidated results
of operations, changes in shareholders' equity and cash flows of
RIT and its consolidated subsidiaries as of the dates and for the
periods indicated (subject, in the case of interim financial
statements, to normal recurring year-end adjustments, none of
which shall be material).
(e) Reports. Since January 1, 1995, RIT and each of
its subsidiaries have filed all reports and statements, together
with any amendments required to be made with respect thereto, if
any, that it was required to file with the SEC, the NYSE and any
other Regulatory Authority with jurisdiction over RIT or any of
its subsidiaries, and have paid all fees and assessments due and
payable in connection therewith. As of their respective dates,
each of such reports and documents, as amended, including any
financial statements, exhibits and schedules thereto, complied
with the relevant statutes, rules and regulations enforced or
promulgated by the regulatory authority with which they were
filed, and did not contain any untrue statement of a material
fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not
misleading. The term "Regulatory Authority," as used herein,
means any federal or state agency charged with the supervision or
regulation of insurance companies, health maintenance
organizations, healthcare services plans, third party
administrators or managed health care organizations and any other
court, administrative agency or commission or other governmental
agency, authority or instrumentality having supervisory or
regulatory authority with respect to BCBSMo, RIT or any of their
respective subsidiaries.
(f) Absence of Changes. Since December 31, 1997 [to
be updated by RIT based on signing date], there has not been any
change in the financial condition, the results of operations or
the business of RIT and its subsidiaries which would have a
Material Adverse Effect on RIT, except as disclosed by RIT since
December 31, 1997 [to be updated by RIT based on signing date],
in its periodic reports filed with the SEC under the Securities
Exchange Act of 1934, as amended (the "Exchange Act").
(g) Undisclosed Liabilities. RIT and its subsidiaries
do not have any liability, whether known or unknown, whether
asserted or unasserted, whether absolute or contingent, whether
accrued or unaccrued, whether liquidated or unliquidated, and
whether due or to become due, including any liability for taxes
(and there is no past or present fact, situation, circumstance,
condition or other basis for any present or future action, suit
or proceeding, hearing, charge, complaint, claim or demand
against RIT or its subsidiaries giving rise to any such
liability), except (i) for liabilities set forth in the RIT
Financial Statements, and (ii) normal fluctuation in the amount
of the liabilities referred to in clause (i) above occurring in
the ordinary course of business of RIT and its subsidiaries since
the date of the June 30, 1998 [to be updated by RIT based on
signing date] balance sheet included in the RIT Financial
Statements.
Section 2.03. Representations and Warranties of BCBSMo.
Subject to Section 2.01 hereof and except as disclosed in any
portion of the BCBSMo Disclosure Schedule, BCBSMo hereby makes
the following representations and warranties with respect to
itself and its subsidiaries (other than RIT and its
subsidiaries):
(a) Authorization; No Defaults. The BCBSMo Board and
the BCBSMo Independent Committee each have, by all appropriate
action, approved this Agreement and each of the Ancillary
Agreements to which BCBSMo is or will be a party and authorized
the execution hereof and thereof on its behalf by its duly
authorized officers and the performance by BCBSMo of its
obligations hereunder and thereunder. No other corporate
proceedings on the part of BCBSMo is necessary to approve this
Agreement and the Ancillary Agreements to which it is or will be
a party and to consummate the transactions contemplated hereby
and thereby. Nothing contained in the Amended and Restated
Articles of Incorporation or Bylaws, as amended, of BCBSMo or any
other agreement, instrument, decree, proceeding, law or
regulation (except as specifically referred to in or contemplated
by this Agreement) by or to which it or any of its subsidiaries
are bound or subject would prohibit or inhibit BCBSMo from
consummating this Agreement and the Ancillary Agreements to which
it is or will be a party and the transactions contemplated herein
on the terms and conditions contained herein and therein. This
Agreement has been duly and validly executed and delivered by
BCBSMo and, assuming the due authorization, execution and
delivery hereof by the other parties hereto, constitutes a legal,
valid and binding obligation of BCBSMo, enforceable against
BCBSMo in accordance with its terms, except that such
enforceability may be subject to bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter
in effect relating to or affecting creditors' rights generally,
and general principles of equity (regardless of whether
enforcement is sough in a proceeding in equity or at law).
(b) Capitalization. BCBSMo has no authorized capital
stock, and no shares of BCBSMo capital stock are outstanding
(until such time as the Charter Conversion Transaction shall have
been consummated as provided herein).
(c) Financial Information. The consolidated balance
sheets of BCBSMo and its subsidiaries as of December 31, 1997 and
1996 [to be updated by BCBSMo based on signing date], and related
consolidated statements of income for the three (3) years ended
December 31, 1997 [to be updated by BCBSMo based on signing
date], together with the notes thereto, as currently on file with
the DOI, and the unaudited consolidated balance sheets of BCBSMo
and its subsidiaries as of March 31, 1998 and June 30, 1998 [to
be updated by BCBSMo based on signing date], and the related
unaudited consolidated income statements for the three (3) months
and six (6) months, respectively, then ended, as currently on
file with the DOI (together, the "BCBSMo Financial Statements"),
have been prepared in accordance with regulatory accounting
principles applied on a consistent basis (except as may be
disclosed therein) and fairly present in all material respects
the consolidated financial position and the consolidated results
of operations of BCBSMo and its consolidated subsidiaries as of
the dates and for the periods indicated (subject, in the case of
interim financial statements, to normal recurring year-end
adjustments, none of which shall be material).
(d) Reports. Since January 1, 1995, BCBSMo and each
of its subsidiaries have filed all reports and statements,
together with any amendments required to be made with respect
thereto, if any, that it was required to file with any Regulatory
Authority with jurisdiction over BCBSMo or any of its
subsidiaries, and have paid all fees and assessments due and
payable in connection therewith. As of their respective dates,
each of such reports and documents, as amended, including any
financial statements, exhibits and schedules thereto, complied
with the relevant statutes, rules and regulations enforced or
promulgated by the Regulatory Authority with which they were
filed, and did not contain any untrue statement of a material
fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not
misleading.
(e) Absence of Changes. Since December 31, 1997 [to
be updated by BCBSMo based on signing date], there has not been
any change in the financial condition, the results of operations
or the business of BCBSMo and its subsidiaries which would have a
Material Adverse Effect on BCBSMo, except as disclosed by BCBSMo
since December 31, 1997 [to be updated by BCBSMo based on signing
date] in its periodic reports filed with the DOI.
(f) Undisclosed Liabilities. BCBSMo and its
subsidiaries do not have any liability, whether known or unknown,
whether asserted or unasserted, whether absolute or contingent,
whether accrued or unaccrued, whether liquidated or unliquidated,
and whether due or to become due, including any liability for
taxes (and there is no past or present fact, situation,
circumstance, condition or other basis for any present or future
action, suit or proceeding, hearing, charge, complaint, claim or
demand against BCBSMo or its subsidiaries giving rise to any such
liability), except (i) for liabilities set forth in the BCBSMo
Financial Statements, and (ii) normal fluctuation in the amount
of the liabilities referred to in clause (i) above occurring in
the ordinary course of business of BCBSMo and its subsidiaries
since the date of the June 30, 1998 [to be updated by BCBSMo
based on signing date] balance sheet included in the BCBSMo
Financial Statements.
Section 2.04. Representations and Warranties of New RIT.
New RIT hereby makes the following representations and
warranties:
(a) Corporate Existence and Power. New RIT is a
corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware and has the corporate
power to own all of its property and assets, incur all of its
liabilities and to carry on its business as now being conducted
and to consummate the transactions contemplated hereby.
(b) Authorization; No Defaults. The Board of
Directors of New RIT has, by all appropriate action, approved
this Agreement and each of the Ancillary Agreements to which New
RIT is or will be a party and authorized the execution hereof and
thereof on New RIT's behalf by its duly authorized officers and
the performance by New RIT of its obligations hereunder and
thereunder. Except for the adoption and approval of this
Agreement and the transactions contemplated herein by the
shareholders of New RIT (which the Foundation, as the sole
shareholder, shall do pursuant to Section 3.04(b)), no other
corporate proceedings on the part of New RIT are necessary to
approve this Agreement and the Ancillary Agreements to which it
is or will be a party and to consummate the transactions
contemplated hereby and thereby. Nothing contained in the New
RIT Certificate of Incorporation or the New RIT Bylaws, or any
other agreement, instrument, decree, proceeding, law or
regulation (except as specifically referred to in or contemplated
by this Agreement) by or to which it is bound or subject would
prohibit or inhibit New RIT from consummating this Agreement and
the Ancillary Agreements to which it is or will be a party and
the transactions contemplated herein on the terms and conditions
contained herein and therein. This Agreement has been duly and
validly executed and delivered by New RIT and, assuming the due
authorization, execution and delivery hereof by the other parties
hereto, constitutes a legal, valid and binding obligation of New
RIT, enforceable against New RIT in accordance with its
respective terms, except that such enforceability may be subject
to bankruptcy, insolvency, reorganization, moratorium or other
similar laws now or hereafter in effect relating to or affecting
creditors' rights generally, and general principles of equity
(regardless of whether enforcement is sought in a proceeding in
equity or at law).
(c) Capitalization. The authorized capital stock of
New RIT consists of ________ [to be completed by RIT prior to
signing date] shares of New RIT Stock and, as of the date hereof,
one (1) share of New RIT Stock is issued and outstanding and
owned beneficially and of record by the Foundation. The
outstanding share of New RIT Stock has been duly authorized and
validly issued and is fully paid and nonassessable and free from
any preemptive rights. There are no shares of capital stock or
other equity securities of New RIT outstanding and no outstanding
options, warrants, rights to subscribe for, calls, or commitments
or any character whatsoever relating to, or securities or rights
convertible into or exchangeable for, shares of New RIT Stock
and, except as set forth herein, no contracts, commitments,
understandings or arrangements by which New RIT is or may be
obligated to issue additional shares of its New RIT Stock, and
there are no outstanding stock appreciation, phantom stock or
similar rights.
Section 2.05. Representations and Warranties of the
Foundation. The Foundation hereby makes the following
representations and warranties:
(a) Corporate Existence and Power. The Foundation is
a non-profit public benefit corporation duly organized, validly
existing and in good standing under the laws of the State of
Missouri and has the corporate power to own all of its property
and assets, incur all of its liabilities and to carry on its
business as now conducted, and as contemplated by this Agreement,
and to consummate the transactions contemplated hereby.
(b) Authorization; No Defaults. The Board of
Directors of the Foundation has, by all appropriate action,
approved this Agreement and each of the Ancillary Agreements to
which the Foundation is or will be a party and authorized the
execution hereof and thereof on the Foundation's behalf by its
duly authorized officers and the performance by the Foundation of
its obligations hereunder. No other corporate proceedings on the
part of the Foundation are necessary to approve this Agreement
and the Ancillary Agreements to which it is or will be a party
and to consummate the transactions contemplated hereby and
thereby. Nothing contained in the Articles of Incorporation or
Bylaws of the Foundation, or any other agreement, instrument,
decree, proceeding, law or regulation (except as specifically
referred to in or contemplated by this Agreement) by or to which
it is bound or subject would prohibit or inhibit the Foundation
from consummating this Agreement and the Ancillary Agreements to
which it is or will be a party and the transactions contemplated
herein and therein on the terms and conditions contained herein
and therein. This Agreement has been duly and validly executed
and delivered by the Foundation and, assuming the due
authorization, execution and delivery hereof by the other parties
hereto, constitutes a legal, valid and binding obligation of the
Foundation, enforceable against the Foundation in accordance with
its respective terms, except that such enforceability may be
subject to bankruptcy, insolvency, reorganization, moratorium or
other similar laws now or hereafter in effect relating to or
affecting creditors' rights generally, and general principles of
equity (regardless of whether enforcement is sought in a
proceeding in equity or at law).
ARTICLE III
COVENANTS
Section 3.01. Pre-Closing Covenants of RIT. From the date
hereof until the earlier to occur of the RIT/New RIT Merger
Effective Time or the termination of this Agreement, RIT hereby
agrees as follows:
(a) Submission to Shareholders. RIT shall cause to be
duly called and held, on a date selected by RIT as soon as
reasonably practicable after the date hereof, a special meeting
of its shareholders (the "RIT Shareholders' Meeting") for
submission of this Agreement and the RIT/New RIT Merger
Transaction for approval of such RIT shareholders as required by
the Missouri Corporate Law; provided, however, that anything in
the Missouri Corporate Law or the Articles of Incorporation, as
amended, of RIT to the contrary notwithstanding, the adoption and
approval of this Agreement and the RIT/New RIT Merger Transaction
shall require (i) the affirmative vote of the holders of two-
thirds of the issued and outstanding shares of the RIT Stock and
(ii) the affirmative vote of the holders of a majority of the
issued and outstanding shares of the RIT Class A Stock (excluding
for these purposes any shares of RIT Class A Stock owned by
BCBSMo or by any executive officer or director of BCBSMo or RIT),
voting as a class separate and apart from the RIT Class B Stock.
In connection with the RIT Shareholders' Meeting, RIT shall
prepare and file a Proxy Statement/Prospectus with the SEC and
mail it to its shareholders, and the RIT Board (subject to
compliance with its fiduciary duties as advised by counsel) and
the RIT Independent Committee (subject to compliance with its
fiduciary duties as advised by counsel) shall recommend to the
RIT shareholders the approval of this Agreement and the RIT/New
RIT Merger Transaction contemplated by this Agreement and use
their best efforts to obtain such shareholder approval.
(b) Consummation of Reorganization. RIT shall use its
best efforts to perform and fulfill all conditions and
obligations on its part to be performed or fulfilled hereunder
and shall use its best efforts to take, or cause to be taken, all
actions, and to do, or cause to be done, all other things
necessary, proper or advisable to effect the Reorganization and
the other transactions contemplated hereby in accordance with the
terms and provisions hereof. RIT shall not take any action that
would prevent consummation of the Reorganization.
(c) Consents and Approvals. RIT shall use its best
efforts to obtain all necessary consents, waivers, approvals,
authorizations and orders with respect to all interests of RIT
and its subsidiaries in the Marks and in any other material
agreements, leases, licenses, contracts, instruments and rights
which require the consent of another person (including, without
limitation, the Association and the Bank Approvals (as defined in
Section 4.03(k) hereof)) for their transfer or assumption
pursuant to the Reorganization.
Section 3.02. Pre-Closing Covenants of BCBSMo. From the
date hereof until the earlier to occur of the RIT/New RIT Merger
Effective Time or the termination of this Agreement, BCBSMo
hereby agrees as follows:
(a) Agreement to Vote in Favor. BCBSMo shall vote all
of the shares of RIT Stock that it owns of record and
beneficially in favor of this Agreement and the RIT/New RIT
Merger Transaction at the RIT Shareholders' Meeting (and any
postponements, adjournments or continuations thereof) and against
approval of any proposal made in opposition to, or in competition
with or contravention of, such transactions.
(b) Consummation of Reorganization. BCBSMo shall use
its best efforts to perform and fulfill all conditions and
obligations on its part to be performed or fulfilled hereunder
and shall use its best efforts to take, or cause to be taken, all
actions, and to do, or cause to be done, all other things
necessary, proper or advisable to effect the Reorganization and
the other transactions contemplated hereby in accordance with the
terms and provisions hereof. BCBSMo shall not take any action
that would prevent consummation of the Reorganization.
(c) Consents and Approvals. BCBSMo shall use its best
efforts to obtain all necessary consents, waivers, approvals,
authorizations and orders with respect to all interests of BCBSMo
and its subsidiaries in the Marks and in any other material
agreements, leases, licenses, contracts, instruments and rights
which require the consent of another person (including, without
limitation, the Association) for their transfer or assumption
pursuant to the Reorganization.
Section 3.03. Pre-Closing Covenants of New RIT. From the
date hereof until the earlier to occur of the RIT/New RIT Merger
Effective Time or the termination of this Agreement, New RIT
hereby agrees as follows:
(a) Other Actions. New RIT shall not take any action
unless such action is expressly permitted by this Agreement.
(b) Consummation of Reorganization. New RIT shall use
its best efforts to perform and fulfill all conditions and
obligations on its part to be performed or fulfilled hereunder
and shall use its best efforts to take, or cause to be taken, all
actions, and to do, or cause to be done, all other things
necessary, proper or advisable to effect the Reorganization and
the other transactions contemplated hereby in accordance with the
terms and provisions hereof. New RIT shall not take any action
that would prevent consummation of the Reorganization.
(c) Plans of Merger. At the request of BCBSMo, New
RIT shall enter into a separate plan of merger reflecting the
terms of the Reincorporation Merger Transaction, and, at the
request of RIT, New RIT shall enter into a separate plan of
merger reflecting the terms of the RIT/New RIT Merger
Transaction, for purposes of satisfying any requirement of the
Missouri Corporate Law or the Delaware Corporate Law.
Section 3.04. Pre-Closing Covenants of Foundation. From
the date hereof until the earlier to occur of the RIT/New RIT
Merger Effective Time or the termination of this Agreement, the
Foundation hereby agrees as follows:
(a) No Sale or Transfer. Except as contemplated
hereby, the Foundation shall not sell, transfer, pledge,
encumber, or otherwise affect its ownership in, or rights with
respect to, the New BCBSMo Stock to be received by it upon
consummation of the Charter Conversion Transaction or the New RIT
Stock.
(b) Agreements to Vote in Favor.
(1) Reincorporation Merger Transaction. The
Foundation, as the sole shareholder of New BCBSMo upon
consummation of the Charter Conversion Transaction and the sole
shareholder of New RIT, shall take all actions necessary under
applicable law to approve this Agreement and the Reincorporation
Merger Transaction by, among other things, adopting the
stockholder resolutions substantially in the form attached hereto
as Exhibit H (together, the "Foundation Reincorporation Merger
Resolution") and shall vote against approval of any proposal made
in opposition to, or in competition with or contravention of,
such transaction.
(2) RIT/New RIT Merger Transaction. The
Foundation, as the sole stockholder of New RIT upon consummation
of the Reincorporation Merger Transaction, take all actions
necessary under applicable law to approve this Agreement and the
RIT/New RIT Merger Transaction by, among other things, adopting
the stockholder resolution substantially in the form attached
hereto as Exhibit I (the "Foundation RIT/New RIT Merger
Resolution") and shall vote against approval of any proposal made
in opposition to, or in competition with or contravention of,
such transaction.
(c) Consummation of Reorganization. The Foundation
shall use its best efforts to perform and fulfill all conditions
and obligations on its part to be performed or fulfilled
hereunder and shall use its best efforts to take, or cause to be
taken, all actions, and to do, or cause to be done, all other
things necessary, proper or advisable to effect the
Reorganization and the other transactions contemplated hereby in
accordance with the terms and provisions hereof. The Foundation
shall not take any action that would prevent consummation of the
Reorganization.
(d) Tax Opinion. In the event that the Foundation
shall not receive the opinions of [the professionals identified
in Section 4.03(g)] as provided in Section 4.05(g) hereof, the
Foundation shall use its best efforts to obtain the opinion of
[professionals to be identified by Foundation prior to signing or
other professionals reasonably acceptable to RIT] with respect to
the matters described in Section 4.05(g) hereof.
Section 3.05. Proxy Statement/Prospectus; Registration
Statement. As soon as reasonably practicable after the date
hereof, RIT, BCBSMo and New RIT shall prepare and file with the
SEC preliminary proxy materials which shall constitute the Proxy
Statement of RIT and the Prospectus of New RIT with respect to
the shares of New RIT Stock to be issued in connection with the
RIT/New RIT Merger Transaction (the "Proxy
Statement/Prospectus"). As soon as practicable after comments
are received from the SEC thereon, New RIT shall file (with the
assistance of RIT and BCBSMo) with the SEC a Registration
Statement on Form S-4 (or on such other form as shall be
appropriate) (the "Registration Statement") which shall include
the Proxy Statement/Prospectus as a part thereof, and New RIT,
RIT and BCBSMo shall use all reasonable efforts to cause the
Registration Statement to become effective as soon thereafter as
practicable. RIT and BCBSMo shall each furnish all information
about it required to be included in the Proxy
Statement/Prospectus and the Registration Statement. New RIT
also shall file any other documents or registration statements
necessary under the Securities Act, the Exchange Act, state
securities and "blue sky" statutes and the rules of the NYSE to
consummate the transactions contemplated hereby and cause the New
RIT Stock to be listed for trading on the NYSE as of the RIT/New
RIT Merger Effective Time.
Section 3.06. Public Announcements. RIT, BCBSMo, New RIT
and the Foundation shall consult with each other before issuing
any press release or other public statement or announcement with
respect to this Agreement or the Reorganization and shall not
issue any such press release or make any such public statement or
announcement without the prior consent of the others as to the
content thereof, which consent shall not be unreasonably
withheld; provided, however, that any one of such parties may,
without the prior consent of the others, issue such press release
or make such public statement as may upon the advice of counsel
be required by law or the NYSE if it has used all reasonable
efforts to consult with the others.
Section 3.07. Registration Rights Agreement. On or before
the Closing Date, each of New RIT and the Foundation shall
execute and deliver to the other that certain Registration Rights
Agreement substantially in the form of that attached hereto as
Exhibit J (the "Registration Rights Agreement"). The
Registration Rights Agreement shall become effective at the
RIT/New RIT Merger Effective Time.
Section 3.08. Indemnification Agreement. On or before the
Closing Date, each of New RIT and the Foundation shall execute
and deliver to the other that certain Indemnification Agreement
substantially in the form of that attached hereto as Exhibit K
(the "Indemnification Agreement"). The Indemnification Agreement
shall become effective at the RIT/New RIT Merger Effective Time.
Section 3.09. Voting Trust and Divestiture Agreement. On
or before the Closing Date, each of New RIT and the Foundation
shall execute and deliver that certain Voting Trust and
Divestiture Agreement substantially in the form of that attached
hereto as Exhibit L (the "Voting Trust and Divestiture
Agreement"). The Voting Trust and Divestiture Agreement shall
become effective at the RIT/New RIT Merger Effective Time.
Section 3.10. Public Offering. The Foundation shall, at
the request of RIT, take all actions necessary to consummate,
pursuant to the terms and conditions of a Demand Registration (as
such term is defined in the Registration Rights Agreement), an
underwritten public offering of New RIT Stock owned by the
Foundation on such date on or within six (6) months following the
Closing Date as the parties shall mutually select. The number of
shares of New RIT Stock to be included in such offering, and the
other terms and provisions of such offering, shall be as mutually
agreed upon by RIT and the Foundation.
Section 3.11. Indemnification and Insurance.
(a) For the applicable statute of limitations period,
New RIT shall indemnify, defend and hold harmless the present and
former officers, directors, employees and agents of RIT and
BCBSMo and their respective subsidiaries (each, an "Indemnified
Party") against all losses, expenses, claims, damages or
liabilities arising out of actions or omissions occurring on or
prior to the RIT/New RIT Merger Effective Time (including,
without limitation, the transactions contemplated by this
Agreement and the Ancillary Agreements) to the full extent
provided under the articles of incorporation, bylaws and
indemnification agreements of RIT and BCBSMo, including
provisions relating to advancement of expenses incurred in the
defense of any action or suit; provided, however, that new RIT
shall have no obligation to indemnify, defend or hold harmless
any present or former officer, director, employee or agent of
BCBSMo against any losses, expenses, claims, damages or
liabilities against which the Foundation has agreed to provide
indemnity pursuant to the Indemnification Agreement.
(b) For a period of six (6) years after the RIT/New
RIT Merger Effective Time, New RIT shall cause to be maintained
in effect the current policies of directors' and officers'
liability insurance maintained by BCBSMo and RIT (provided that
New RIT may substitute therefor policies of comparable coverage
from companies reasonably acceptable to the Foundation with
respect to claims arising from facts or events which occurred
before the RIT/New RIT Merger Effective Time). All such policies
shall require the insurer to provide the Foundation with thirty
(30) days prior written notice of cancellation, and the
Foundation shall have the right, but not the obligation, to pay
the premiums on such policies if New RIT should fail to pay such
premiums.
(c) This Section 3.11 shall survive any termination of
this Agreement and the consummation of the RIT/New RIT Merger
Transaction at the RIT/New RIT Merger Effective Time, and is
intended to benefit the Indemnified Parties, and shall be binding
on all successors and assigns of New RIT and shall be enforceable
by the Indemnified Parties.
Section 3.12. Accountants' Letters. Each of RIT and BCBSMo
shall use its reasonable best efforts to cause to be delivered to
the other party, and to the directors and officers who sign the
Registration Statement, a letter of the independent auditors for
each, dated (i) the date on which the Registration Statement
shall become effective, and (ii) a date shortly prior to the
Closing Date, and addressed to such other party, and such
directors and officers, in form and substance customary for
"comfort" letters delivered by independent accountants in
accordance with Statement of Accounting Standards No. 72.
Section 3.13. Purchase of Health Benefit Products. As long
as the Foundation shall own five percent (5%) or more of the
issued and outstanding New RIT Stock, its bylaws shall provide
that (a) the Foundation may purchase health benefit plans,
insurance coverage or related products or services customarily
offered by health insurance companies ("Health Benefit Products")
from New RIT and its affiliates, (b) New RIT shall be granted
preferential status as a provider of Health Benefit Products, and
(c) by reason of having preferential status as a provider of
Health Benefit Products, the Foundation shall provide New RIT
with the final opportunity to provide Health Benefit Products to
the Foundation on the most favorable bona fide terms (including
price, product design and other objective matters) offered to the
Foundation by any other potential provider before the Foundation
purchases any Health Benefit Products from any other provider.
It is understood that the Foundation is not obligated to purchase
Health Benefit Products, and that it will do so only if its
directors make a determination that the purchase of Health
Benefit Products is an appropriate use of the Foundation's assets
in furtherance of its purposes.
Section 3.14. Foundation Governance. For so long as the
Voting Trust and Divestiture Agreement shall be in effect, the
Foundation shall not take any action to change, amend, repeal or
replace any provision of the Articles of Incorporation, Bylaws or
other charter documents of the Foundation pertaining to the
governance of the Foundation if such change would increase the
influence or control of any governmental authority or its agents
over the governance of the Foundation over the level of influence
and control provided in the Articles of Incorporation and Bylaws
of the Foundation on the date hereof.
Section 3.15. Due Diligence. The Foundation shall be
entitled during the period beginning on the date that this
Agreement is signed by all parties hereto and ending fifteen (15)
days prior to the Closing Date to conduct a reasonable due
diligence investigation of BCBSMo and RIT for the purpose of
verifying the accuracy of the representations and warranties of
BCBSMo and RIT set forth herein provided that such due diligence
shall be conducted during normal business hours with minimal
disruption to the business operations of BCBSMo and RIT.
Section 3.16. Payment to Foundation. Immediately following
the Closing, New RIT shall pay One Hundred Seventy-Five Thousand
Dollars ($175,000) to the Foundation in partial settlement of the
Litigation, and in partial satisfaction of any obligation of
BCBSMo under Section 355.621 of The General and Business
Corporation Law of Missouri resulting from the Charter Conversion
Transaction.
ARTICLE IV
CONDITIONS PRECEDENT TO REORGANIZATION
Section 4.01. Conditions to Reorganization. The respective
obligations of the parties hereto to effect the Reorganization
shall be subject to the satisfaction (or, where permissible,
waiver) of each of the following conditions:
(a) Satisfaction of Conditions Under Settlement
Agreement. Each of the conditions precedent to the obligations
of the parties under the Settlement Agreement shall have been
satisfied;
(b) Court Approval of Settlement Agreement. Court
approval of the Settlement Agreement, as required by paragraph 7
thereof, shall have been obtained;
(c) Injunction. No temporary restraining order,
preliminary or permanent injunction or other order issued by any
court of competent jurisdiction or other legal restraint or
prohibition preventing the consummation of the Reorganization
shall be in effect, nor shall any proceeding by any Regulatory
Authority or other person seeking any of the foregoing be
pending. There shall not be any action taken, or any statute,
rule, regulation or order enacted, entered, enforced or deemed
applicable to the Reorganization which makes the consummation of
the Reorganization illegal;
(d) Regulatory and Shareholder Approvals. All
necessary regulatory approvals, consents, authorizations and
other approvals, including any approval required under the Xxxx-
Xxxxx-Xxxxxx Antitrust Improvement Act of 1976, and the requisite
approval of this Agreement and the Reorganization by the
shareholders of New BCBSMo, New RIT and RIT (including the
shareholders of RIT pursuant to Section 3.01(b) and the
Foundation pursuant to the Foundation Reincorporation Merger
Resolution and the Foundation RIT/New RIT Merger Resolution),
required by law or the NYSE for consummation of the
Reorganization shall have been obtained and all waiting periods
required by law shall have expired; provided, however, that
nothing in this Section 4.01(d) shall affect the obligations of
the Foundation to vote in favor of and approve the
Reincorporation Merger Transaction and the RIT/New RIT Merger
Transaction as required under Section 3.04(b) hereof;
(e) Effective Registration Statement. The
Registration Statement shall be effective under the Securities
Act, and no stop orders suspending the effectiveness of the
Registration Statement shall be in effect or proceedings for such
purpose pending before or threatened by the SEC or any state
securities agency;
(f) Tax Determination. The Foundation shall have
received a determination letter from the Internal Revenue
Service that it is a tax exempt entity under Section 501(c)(4) of
the Code;
(g) NYSE Listing. The shares of New RIT Stock
issuable pursuant to the RIT/New RIT Merger Transaction shall
have been approved for listing on the NYSE, subject to official
notice of issuance; and
(h) Resolution of Xxxxxx Litigation. Each party
hereto shall be satisfied, in its sole and absolute discretion,
with the final resolution of the lawsuit styled Xxxxxxx Xxxxxx
and Xxxxx Xxxxxxx on behalf of themselves and all others
similarly situated v. Xxx X. Xxxxxxxxxx, et al., No. 962-00938 in
the Circuit Court of the City of St. Louis, Missouri, currently
pending in the Circuit Court for the City of St. Louis, Missouri.
Section 4.02. Conditions to Obligations of BCBSMo. The
obligation of BCBSMo to effect the Reorganization shall be
subject to the satisfaction or waiver by BCBSMo of each of the
following conditions:
(a) Representations and Warranties. The
representations and warranties made by RIT, New RIT and the
Foundation in this Agreement shall be true and correct (subject
to the standard in Section 2.01 hereof) on and as of the Closing
Date with the same effect as though such representations and
warranties had been made or given on and as of the Closing Date
(except for any such representations and warranties made only as
of a specified date which shall be true and correct (subject to
the standard in Section 2.01 hereof) as of such date);
(b) Compliance with Agreements. RIT, New RIT and the
Foundation shall have performed and complied in all material
respects with all of their respective obligations and agreements
required to be performed on or prior to the Closing Date under
this Agreement;
(c) Delivery of Documents. BCBSMo shall have received
all documents required to be received from RIT, New RIT and the
Foundation on or prior to the Closing Date (including, without
limitation, the Ancillary Agreements), all in form and substance
reasonably satisfactory to BCBSMo;
(d) Other Consents. There shall have been obtained
all other consents and approvals of governmental authorities and
private parties required under law or contract except where the
failure to have obtained such consents and approvals would not
have a Material Adverse Effect on RIT or would not be material
and adverse to the financial position, results of operations or
business of New RIT or the Foundation;
(e) Comfort Letter. BCBSMo shall have received the
letter referred to in Section 3.12 hereof from its independent
auditor;
(f) Favorable Ruling. BCBSMo shall have received a
private letter ruling (the "Favorable Ruling") from the Internal
Revenue Service that (i) the Transfer and Assumption Transaction
shall constitute a tax-free transfer to a controlled corporation
within the meaning of Section 351 of the Code and no gain or loss
shall be recognized by BCBSMo for federal income tax purposes;
(ii) the Charter Conversion Transaction shall constitute a tax
free reorganization under Section 368(a) of the Code and shall
not result in the recognition of gain or loss by BCBSMo for
federal income tax purposes, (iii) the Reincorporation Merger
Transaction qualifies as a tax-free reorganization under Section
368(a)(1)(F) of the Code and no gain or loss shall be recognized
by New BCBSMo or New RIT for federal income tax purposes,
(iv) the RIT/New RIT Merger transaction qualifies as both a
liquidation under Sections 332 and 337 of the Code and a
reorganization under Section 368(a)(1)(A) of the Code and no gain
or loss will be recognized by RIT, New RIT or their shareholders
for federal income tax purposes, and (v) no gain will be
recognized by any party under Section 337(d) of the Code
((i)-(v), each a "Favorable Ruling Matter"), and the Favorable
Ruling shall not have been revoked, withdrawn, amended or
modified (in whole or in part) and there shall have been no
change in applicable law (including, without limitation, the
Code, judicial decisions, administrative regulations and
published rulings) with regard to matters covered by the
Favorable Ruling; provided, however, that in the event that the
Internal Revenue Service shall fail to include in the Favorable
Ruling any or all Favorable Ruling Matters other than as
described in subparagraph (ii) hereof because such excluded
Favorable Ruling Matter is a no ruling area or for any other
reason, the Favorable Ruling Matter(s) not so included shall
nonetheless be deemed to be included in the Favorable Ruling for
purposes of satisfying this condition provided that BCBSMo shall
have received the opinions provided in Section 4.02(g) hereof on
such excluded Favorable Ruling Matter(s) in form and substance
reasonably acceptable to BCBSMo;
(g) Tax Opinions. BCBSMo shall have received opinions
of [professionals to be identified by RIT prior to signing] that
(i) the Transfer and Assumption Transaction shall constitute a
tax-free transfer to a controlled corporation within the meaning
of Section 351 of the Code and no gain or loss shall be
recognized by BCBSMo for federal income tax purposes; (ii) the
Charter Conversion Transaction shall constitute a tax free
reorganization under Section 368(a)(1)(E) of the Code and shall
not result in the recognition of gain or loss by BCBSMo for
federal income tax purposes, (iii) the Reincorporation Merger
Transaction qualifies as a tax-free reorganization under Section
368(a)(1)(F) of the Code and no gain or loss shall be recognized
by New BCBSMo or New RIT for federal income tax purposes,
(iv) the RIT/New RIT Merger transaction qualifies as both a
liquidation under Sections 332 and 337 of the Code and a
reorganization under Section 368(a)(1)(A) of the Code and no gain
or loss will be recognized by RIT, New RIT or their shareholders
for federal income tax purposes, and (v) no gain will be
recognized by any party under Section 337(d) of the Code. Such
opinions shall be in form and substance reasonably satisfactory
to BCBSMo;
(h) Determination of Lawfulness. BCBSMo shall be
satisfied, in its sole and absolute discretion, that the
determination of lawfulness required under paragraph 6 of the
Settlement Agreement shall have been obtained;
(i) Resolution of Pending Litigation. All of the
pending litigation described in paragraph 2 of the Settlement
Agreement shall have been disposed of by all parties thereto as
required under paragraph 8 thereof; and
(j) Legal Opinions. BCBSMo shall have received,
addressed to BCBSMo and in form and substance reasonably
satisfactory to BCBSMo (with such qualifications and assumptions
as are customary and reasonable), (i) the opinion of counsel for
RIT, dated as of the Closing Date, to the effect that all
corporate acts and proceedings required to be taken by RIT to
authorize the execution, delivery and performance of this
Agreement, and the Ancillary Agreements to which RIT is a party,
and the consummation of the transactions contemplated hereby and
thereby, have been duly and properly taken and performed (the
"RIT Legal Opinion"); (ii) the opinion of counsel for New RIT,
dated as of the Closing Date, to the effect that (a) all
corporate acts and proceedings required to be taken by New RIT to
authorize the execution, delivery and performance of this
Agreement, and the Ancillary Agreements to which New RIT is a
party, and the consummation of the transactions contemplated
hereby and thereby, have been duly and properly taken and
performed, and (b) the shares of New RIT Stock to be issued in
the RIT/New RIT Merger Transaction, when issued in exchange for
RIT Stock as provided herein, will be duly and validly authorized
and issued and will be fully paid and nonassessable (the "New RIT
Legal Opinion"); and (iii) the opinion of counsel for the
Foundation, dated as of the Closing Date, to the effect that all
corporate acts and proceedings required to be taken by the
Foundation to authorize the execution, delivery and performance
of this Agreement, and the Ancillary Agreements to which the
Foundation is a party, and the consummation of the transaction
contemplated hereby and thereby, have been duly and properly
taken and performed (the "Foundation Legal Opinion").
Section 4.03. Conditions to Obligations of RIT. The
obligations of RIT to effect the Reorganization shall be subject
to the satisfaction or waiver by RIT of each of the following
conditions:
(a) Representations and Warranties. The
representations and warranties made by BCBSMo, New RIT and the
Foundation in this Agreement shall be true and correct (subject
to the standard in Section 2.01 hereof) on and as of the Closing
Date with the same effect as though such representations and
warranties had been made or given on and as of the Closing Date
(except for any such representations and warranties made only as
of a specified date which shall be true and correct (subject to
the standard in Section 2.01 hereof) as of such date);
(b) Compliance with Agreements. BCBSMo, New RIT and
the Foundation shall have performed and complied in all material
respects with all of their respective obligations and agreements
required to be performed on or prior to the Closing Date under
this Agreement;
(c) Delivery of Documents. RIT shall have received
all documents required to be received from BCBSMo, New RIT and
the Foundation on or prior to the Closing Date (including,
without limitation, the Ancillary Agreements), all in form and
substance reasonably satisfactory to RIT;
(d) Other Consents. There shall have been obtained
all other consents and approvals of governmental authorities and
private parties required under law or contract except where the
failure to have obtained such consents and approvals would not
have a Material Adverse Effect on RIT or would not be material
and adverse to the financial position, results of operations or
business of New RIT or the Foundation;
(e) Comfort Letter. RIT shall have received the
letter referred to in Section 3.12 from its independent auditor;
(f) Favorable Ruling. RIT shall have received a copy
of the Favorable Ruling obtained by BCBSMo, and the Favorable
Ruling shall not have been revoked, withdrawn, amended or
modified (in whole or in part) and there shall have been no
change in applicable law (including, without limitation, the
Code, judicial decisions, administrative regulations and
published rulings) with regard to matters covered by the
Favorable Ruling; provided, however, that in the event that the
Internal Revenue Service shall fail to include in the Favorable
Ruling any or all Favorable Ruling Matters other than as
described in subparagraph (ii) of Section 4.02(f) hereof because
such excluded Favorable Ruling Matter is a no ruling area or for
any other reason, the Favorable Ruling Matter(s) not so included
shall nonetheless be deemed to be included in the Favorable
Ruling for purposes of satisfying this condition provided that
RIT shall have received the opinions provided in Section 4.03(g)
hereof on such excluded Favorable Ruling Matter(s) in form and
substance reasonably acceptable to RIT;
(g) Tax Opinions. RIT shall have received opinions of
[professionals to be identified by RIT prior to signing], that
(i) the Transfer and Assumption Transaction shall constitute a
tax-free transfer to a controlled corporation within the meaning
of Section 351 of the Code and no gain or loss shall be
recognized by BCBSMo for federal income tax purposes, (ii) the
Charter Conversion Transaction shall constitute a tax free
reorganization under Section 368(a)(1)(E) of the Code and shall
not result in the recognition of gain or loss by BCBSMo for
federal income tax purposes, (iii) the Reincorporation Merger
Transaction qualifies as a tax-free reorganization under Section
368(a)(1)(F) of the Code and no gain or loss shall be recognized
by New BCBSMo or New RIT for federal income tax purposes,
(iv) the RIT/New RIT Merger transaction qualifies as both a
liquidation under Sections 332 and 337 of the Code and a
reorganization under Section 368(a)(1)(A) of the Code and no gain
or loss will be recognized by RIT, New RIT or their shareholders
for federal income tax purposes, and (v) no gain will be
recognized by any party under Section 337(d) of the Code. Such
opinions shall be in form and substance reasonably satisfactory
to RIT;
(h) Association Approval. RIT and all of its
controlled affiliates that presently have license agreements with
the Association shall have entered into new license agreements
with the Association, acceptable to RIT, in its sole discretion,
providing for the use by New RIT and the same controlled
affiliates of the Marks on terms no less favorable to New RIT and
such controlled affiliates (including terms relating to
termination and the payment of royalties, other than terms
arising out of the for-profit status of New RIT, which status
does not affect the rate of dues or royalties payable) than the
license agreements in effect on the date hereof (the "Existing
Licenses"), and only subject to the conditions to which the
Existing Licenses are subject (other than conditions arising out
of the for-profit status of New RIT acceptable to RIT);
(i) Opinions of Financial Advisors to RIT. Xxxxxxx
Xxxxx Xxxxxx shall have, as of the date of the mailing of the
Proxy Statement/ Prospectus to the shareholders of RIT in
connection with the RIT Shareholders' Meeting, updated as
necessary and not withdrawn its written opinion, dated as of
September 8, 1998, given to the RIT Board and the RIT Independent
Committee that the Public Exchange Ratio is fair, from a
financial point of view, to the holders of RIT Class A Stock;
(j) Determination of Lawfulness. RIT shall be
satisfied, in its sole and absolute discretion, that the
determination of lawfulness required under paragraph 6 of the
Settlement Agreement shall have been obtained;
(k) Bank Approval. RIT shall have received all
necessary consents or approvals of any financial institution
under any credit facility or other financing agreement between
such financial institution and RIT to the extent that the
transactions contemplated by this Agreement require the consent
or approval of such financial institution (the "Bank Approvals");
and
(l) Legal Opinions. RIT shall have received,
addressed to RIT and in form and substance reasonably
satisfactory to RIT (with such qualifications and assumptions as
are customary and reasonable), (i) the opinion of counsel for
BCBSMo, dated as of the Closing Date, to the effect that all
corporate acts and proceedings required to be taken by BCBSMo to
authorize the execution, delivery and performance of this
Agreement, and the Ancillary Agreements to which BCBSMo is a
party, and the consummation of the transactions contemplated
hereby and thereby, have been duly and properly taken and
performed (the "BCBSMo Legal Opinion"); (ii) the New RIT Legal
Opinion; and (iii) the Foundation Legal Opinion.
Section 4.04. Conditions to Obligations of New RIT . The
respective obligations of New RIT to effect the Reorganization
shall be subject to the satisfaction or waiver by New RIT of each
of the following conditions:
(a) Representations and Warranties. The
representations and warranties made by RIT, BCBSMo and the
Foundation in this Agreement shall be true and correct (subject
to the standard in Section 2.01 hereof) on and as of the Closing
Date with the same effect as though such representations and
warranties had been made or given on and as of the Closing Date
(except for any such representations and warranties made only as
of a specified date which shall be true and correct (subject to
the standard in Section 2.01 hereof) as of such date);
(b) Compliance with Agreements. RIT, BCBSMo and the
Foundation shall have performed and complied in all material
respects with all of their respective obligations and agreements
required to be performed on or prior to the Closing Date under
this Agreement;
(c) Delivery of Documents. New RIT shall have
received all documents required to be received from BCBSMo, RIT
and the Foundation on or prior to the Closing Date (including,
without limitation, the Ancillary Agreements), all in form and
substance reasonably satisfactory to New RIT; and
(d) Comfort Letter. New RIT shall have received
copies of the letters referred to in Section 3.12.
(e) Legal Opinions. New RIT shall have received,
addressed to New RIT and in form and substance reasonably
satisfactory to New RIT (with such qualifications and assumptions
as are customary and reasonable) (i) the RIT Legal Opinion; and
(ii) the BCBSMo Legal Opinion.
Section 4.05. Conditions to Obligations of Foundation. The
respective obligations of the Foundation to effect the
Reorganization shall be subject to the satisfaction or waiver by
the Foundation of each of the following conditions:
(a) Representations and Warranties. The
representations and warranties made by RIT, BCBSMo and New RIT in
this Agreement shall be true and correct (subject to the standard
in Section 2.01 hereof) on and as of the Closing Date with the
same effect as though such representations and warranties had
been made or given on and as of the Closing Date (except for any
such representations and warranties made only as of a specified
date which shall be true and correct (subject to the standard in
Section 2.01 hereof) as of such date);
(b) Compliance with Agreements. RIT, BCBSMo and New
RIT shall have performed and complied in all material respects
with all of their respective obligations and agreements hereunder
required to be performed on or prior to the Closing Date under
this Agreement;
(c) Delivery of Documents. The Foundation shall have
received all documents required to be received from BCBSMo, RIT
and New RIT on or prior to the Closing Date (including, without
limitation, the Ancillary Agreements), all in form and substance
reasonably satisfactory to the Foundation;
(d) Other Consents. There shall have been obtained
all other consents and approvals of governmental authorities and
private parties required under law or contract except where the
failure to have obtained such consents and approvals would not be
material and adverse to the financial position, results of
operations or business of New RIT or the Foundation;
(e) Comfort Letter. The Foundation shall have
received copies of the letters referred to in Section 3.12;
(f) Favorable Ruling. The Foundation shall have
received a copy of the Favorable Ruling obtained by BCBSMo, and
the Favorable Ruling shall not have been revoked, withdrawn,
amended or modified (in whole or in part) and there shall have
been no change in applicable law (including, without limitation,
the Code, judicial decisions, administrative regulations and
published rulings) with regard to matters covered by the
Favorable Ruling; provided, however, that in the event that the
Internal Revenue Service shall fail to include in the Favorable
Ruling any or all Favorable Ruling Matters other than as
described in subparagraph (ii) of Section 4.02(f) hereof because
such excluded Favorable Ruling Matter is a no ruling area or for
any other reason, the Favorable Ruling Matter(s) not so included
shall nonetheless be deemed to be included in the Favorable
Ruling for purposes of satisfying this condition provided that
the Foundation shall have received the opinions provided in
Section 4.05(g) hereof on such excluded Favorable Ruling
Matter(s) in form and substance reasonably acceptable to the
Foundation; and
(g) Tax Opinions. The Foundation shall have received
opinions of [the professionals identified in Section 4.03(g)], or
if the [the professionals identified in Section 4.03(g)] shall
not address the opinions identified in Section 4.03(g) hereof to
the Foundation, the Foundation shall have received the opinion of
[professionals to be identified by the Foundation prior to
signing or other professional reasonably satisfactory to RIT]
that (i) the Transfer and Assumption Transaction shall constitute
a tax-free transfer to a controlled corporation within the
meaning of Section 351 of the Code and no gain or loss shall be
recognized by BCBSMo for federal income tax purposes, (ii) the
Charter Conversion Transaction shall constitute a tax free
reorganization under Section 368(a)(1)(E) of the Code and shall
not result in the recognition of gain or loss by BCBSMo for
federal income tax purposes, (iii) the Reincorporation Merger
Transaction qualifies as a tax-free reorganization under Section
368(a)(1)(F) of the Code and no gain or loss shall be recognized
by New BCBSMo or New RIT for federal income tax purposes,
(iv) the RIT/New RIT Merger transaction qualifies as both a
liquidation under Sections 332 and 337 of the Code and a
reorganization under Section 368(a)(1)(A) of the Code and no gain
or loss will be recognized by RIT, New RIT or their shareholders
for federal income tax purposes, and (v) no gain will be
recognized by any party under Section 337(d) of the Code. Such
opinions shall be in form and substance reasonably satisfactory
to the Foundation.
(h) Legal Opinions. The Foundation shall have
received, addressed to the Foundation and in form and substance
reasonably satisfactory to the Foundation (with such
qualifications and assumptions as are customary and reasonable),
(i) the RIT Legal Opinion; and (ii) the BCBSMo Legal Opinion.
ARTICLE V
TERMINATION
This Agreement and the obligations of the parties hereunder
may be terminated at any time prior to the RIT/New RIT Merger
Effective Time, notwithstanding approval hereof by the
shareholders of RIT as provided herein:
(a) by mutual written consent duly authorized by all
parties (including the RIT Independent Committee); or
(b) by any party, by giving notice to all other
parties, if a court of competent jurisdiction or any other
Regulatory Authority shall have issued a nonappealable final
order, decree or ruling or taken any other action, in each case
having the effect of permanently restraining, enjoining or
otherwise prohibiting any one or more of the Transfer and
Assumption Transaction, the Charter Conversion Transaction, the
Reincorporation Merger Transaction and the RIT/New RIT Merger
Transaction; or
(c) by any party, by giving notice to all other
parties, if any of the conditions to such party's obligations
hereunder set forth in Article IV hereof shall have not been
satisfied (or waived, where permissible, by the party entitled to
the benefit thereof) on or before October 1, 1999; or
(d) by RIT, by giving notice to all other parties, if
termination of this Agreement shall be necessary to satisfy the
fiduciary duties of the RIT Board or the RIT Independent
Committee as advised by legal counsel.
In the event that this Agreement shall be terminated
pursuant to the provisions of this Article V, no party hereto
shall have any liability to any other party hereto for costs,
expenses, damages or otherwise, except as provided in Section
6.01 hereof or as may be agreed to in writing by the party that
shall be obligated to pay such costs, expenses or damages.
ARTICLE VI
GENERAL PROVISIONS
Section 6.01. Fees and Expenses. Each party shall each
bear their own expenses, including the fees and expenses of their
own advisors, incurred in connection with this Agreement and the
transactions contemplated hereby, provided, however, that RIT
shall pay all SEC filing fees, NYSE listing fees, and printing
and mailing expenses incurred in connection with the Proxy
Statement/Prospectus and Registration Statement.
Section 6.02. Nonsurvival of Representations, Warranties
and Agreements. Except for and as provided in this Section 6.02,
no representation, warranty, covenant or agreement contained
herein shall survive the RIT/New RIT Effective Time or the
earlier termination of this Agreement; provided, however, that no
such representation, warranty, covenant or agreement shall be
deemed to be terminated or extinguished so as to deprive any
party hereto (or any director, officer or controlling person
thereof) of any defense in law or equity which otherwise would be
available against the claims of any person, including, without
limitation, any shareholder or former shareholder of any party
hereto; the aforesaid representations, warranties, covenants and
agreements being material inducements to the consummation by the
parties hereto of the transactions contemplated hereby.
Notwithstanding the foregoing, the covenants and agreements set
forth in Sections 1.06, 3.10, 3.11, 3.13 and 3.14 hereof and the
agreements set forth in the Ancillary Agreements shall survive
the RIT/New RIT Merger Effective Time and shall be enforceable as
provided therein.
Section 6.03. Notices. All notices and other
communications given or made pursuant hereto shall be in writing
and shall be deemed to have been duly given or made as of the
date delivered or mailed if delivered personally or mailed by
registered or certified mail (postage prepaid, return receipt
requested) to the parties at the following addresses (or at such
other address for a party as shall be specified by the like
changes of address which shall be effective upon receipt) or sent
by electronic transmission, with confirmation received, to the
telecopy number specified below (a) if to the Foundation:
, [to be determined by Foundation prior to signing] with a copy
to: ; [to be
determined by Foundation prior to signing] (b) if to New RIT:
, [to be determined by New RIT prior to signing] with a copy to:
; [to be determined by New RIT prior to signing] (c) if to
BCBSMo: Xxxx X. X'Xxxxxx, President and Chief Executive Officer,
Blue Cross and Blue Shield of Missouri, 0000 Xxxxxxxx Xxxxxx,
Xx. Xxxxx, Xxxxxxxx 00000-0000, Fax: (000) 000-0000; with a copy
to: Xxxxxx X. Xxxxx, Esq., Gallop Xxxxxxx & Xxxxxx X.X., 000
Xxxxx Xxxxxx, Xx. Xxxxx, Xxxxxxxx 00000, Fax: (000) 000-0000;
(d) if to RIT: Xxxx X. X'Xxxxxx, Chairman, President and Chief
Executive Officer, RightCHOICE Managed Care, Inc., 0000 Xxxxxxxx
Xxxxxx, Xx. Xxxxx, Xxxxxxxx 00000-0000, Fax: (000) 000-0000; with
a copy to: Xxxxx, Xxxx & Xxxxxxxx, X.X., 000 Xxxxx Xxxxxxxx,
Xxxxx 0000, Xx. Xxxxx, Xxxxxxxx 00000, Attn: Xxxx X. Xxxxxx,
Esq., Fax: (000) 000-0000.
Section 6.04. Amendment. This Agreement may be amended by
the parties hereto by action taken by or on behalf of their
respective Boards of Directors (or where such authority shall
have been delegated to a special committee, by that special
committee) at any time prior to the Closing Date; provided,
however, that, after approval of the RIT/New RIT Merger
Transaction by the requisite shareholders of RIT as provided in
Section 3.01(b) hereof, no amendment may be made which by law
requires further approval by such shareholders without such
further approval. This Agreement may not be amended except by an
instrument in writing signed by the parties hereto.
Section 6.05. Waiver. At any time prior to the RIT/New RIT
Merger Effective Time, any party hereto may with respect to any
other party hereto (a) extend the time for the performance of any
of the obligations or other acts, (b) waive any inaccuracies in
the representations and warranties contained herein or in any
document delivered pursuant hereto, and (c) waive compliance with
any of the agreements or conditions contained herein. Any such
extension or waiver shall be valid if set forth in an instrument
in writing signed by the party or parties to be bound thereby.
Section 6.06. Entire Agreement. This Agreement, and the
other agreements and instruments referenced herein, including the
Ancillary Agreements, constitute the entire understanding and
agreements of the parties with respect to the subject matter
hereof and supersede all prior and contemporaneous agreements and
understandings, both written and oral, among the parties with
respect thereto or any of them, with respect to the subject
matter hereof and, except as otherwise expressly provided herein,
are not intended to confer upon any other person any rights or
remedies hereunder.
Section 6.07. Parties in Interest. 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 or shall confer upon any other person any right,
benefit or remedy of any nature whatsoever under or by reason of
this Agreement, other than Section 3.11 hereof (which is intended
to be for the benefit of the Indemnified Parties and may be
enforced by such Indemnified Parties).
Section 6.08. Governing Law. This Agreement shall be
governed by, and construed in accordance with, the laws of the
State of Missouri, without regard to the principles and conflicts
of laws thereof.
Section 6.09. Counterparts. This Agreement may be executed
in one or more counterparts, and by the different parties hereto
in separate counterparts, each of which when executed shall be
deemed to be an original but all of which taken together shall
constitute one and the same agreement.
Section 6.10. Recitals. The Recitals to this Agreement
shall be deemed to be part of this Agreement and incorporated
herein.
Section 6.11. Fair Construction. This Agreement is the
product of negotiations and shall be deemed to have been drafted
by all of the parties. It shall be construed in accordance with
the fair meaning of its terms and its language shall not be
strictly construed against, nor shall ambiguities be resolved
against, any particular party.
Section 6.12. Headings and Captions. The captions of
Articles and Sections hereof are for convenience only and shall
not control or affect the meaning or construction of any
provisions of this Agreement.
Section 6.13. Assignment. This Agreement may not be
assigned by any of the parties hereto.
[signature page appears on next page]
IN WITNESS WHEREOF, the parties have executed this
Agreement as of the date set forth above.
BLUE CROSS AND BLUE SHIELD OF
MISSOURI, a Missouri nonprofit
health services corporation
Name:
Title:
RIGHTCHOICE MANAGED CARE, INC.,
a Missouri corporation
Name:
Title:
THE MISSOURI FOUNDATION FOR HEALTH,
a Missouri nonprofit public benefit
corporation
Name:
Title:
RIGHTCHOICE MANAGED CARE, INC.,
a Delaware corporation
Name:
Title:
EXHIBIT A
SETTLEMENT AGREEMENT
1. Parties. The parties (collectively, the "Parties" and
individually, a "Party") to this Settlement Agreement (this
"Agreement") are:
(a) Xxxxxxxx X. "Xxx" Xxxxx, Attorney General of the State of
Missouri (the "Attorney General");
(b) The Missouri Department of Insurance and Xxx X. Xxxxxx, its
Director (referred to collectively as the "Department of
Insurance");
(c) Blue Cross and Blue Shield of Missouri ("Blue Cross Blue
Shield"), a Missouri not for profit health services corporation;
and
(d) RightCHOICE Managed Care, Inc. ("RightCHOICE"), a Missouri
for profit general business corporation.
2. Pending Litigation. A purpose of this Agreement is to
settle certain civil actions. Those actions are:
(a) Blue Cross Blue Shield of Missouri, Plaintiff v. Xxx Xxxxxx,
Director of the Missouri Department of Insurance, the Missouri
Department of Insurance and Xxxxxxxx X. "Xxx" Xxxxx, No. CV196-
619CC, in the Circuit Court of Xxxx County, Missouri (the
"Purposes Litigation"). The Purposes Litigation arises from a
series of transactions consummated in 1994 (the "1994
Reorganization"). In those transactions, certain assets and
liabilities of Blue Cross Blue Shield were transferred to a newly
formed for-profit subsidiary, RightCHOICE, and a minority
interest in RightCHOICE was sold pursuant to a public stock
offering.
(b) Blue Cross Blue Shield of Missouri v. Xxx Xxxxxx, Director
of the Missouri Department of Insurance, the Missouri Department
of Insurance and Xxxxxxxx X. "Xxx" Xxxxx, No. WD 53798, in the
Missouri Court of Appeals, Western District (the "Purposes
Litigation Appeal").
(c) Blue Cross Blue Shield of Missouri v. Xxxxxxxx X. "Xxx"
Xxxxx, Cause No. CV197-1558CC, in the Circuit Court of Xxxx
County (the "Mutual Benefit/Public Benefit Action").
3. Additional Purposes. Additional purposes of this Agreement
include:
(a) Providing that the assets of Blue Cross Blue Shield will be
used in a manner which is consistent with Missouri law and the
history and past purposes of Blue Cross Blue Shield;
(b) Protecting the interests of all those who subscribe to the
indemnity and managed care plans of Blue Cross Blue Shield and
its affiliates, consistent with the contracts that define their
rights and any additional rights that they might have under law;
(c) Providing for the continuation, on the part of a successor
to Blue Cross Blue Shield, of its membership in the national Blue
Cross and Blue Shield Association and rights as a licensee of the
Blue Cross and Blue Shield names and marks;
(d) Fulfilling all duties owed by Blue Cross Blue Shield and its
directors and officers;
(e) Fulfilling all duties owed by RightCHOICE and its directors
and officers to its shareholders;
(f) Providing to the Circuit Court of Xxxx County a reasonable
alternative to dissolution that may be implemented pursuant to
X.X.Xx. 355.726 and which will at the same time provide that
the assets of Blue Cross Blue Shield will be held and applied
pursuant to a fair and equitable settlement of litigation pending
before it; and
(g) Providing for the reorganization of Blue Cross Blue Shield
in accordance with the Missouri General Not For Profit
Corporation Law and the Reorganization Agreement described below.
4. Reorganization Agreement. As partial consideration for
their mutual undertakings in this Agreement, upon the
satisfaction of the Signing Conditions (as defined below):
(a) the Attorney General and Department of Insurance shall
(1) cause a new Missouri not for profit public benefit
corporation (the "Foundation") to be organized and
incorporated by filing with the Missouri Secretary of
State Articles of Incorporation in the form attached
hereto as Exhibit A, causing Bylaws in the form
attached hereto as Exhibit B to be adopted as the
Bylaws of the Foundation, and appointing the initial
members of the Board of Directors of the Foundation,
(2) cause a new Delaware for profit corporation ("New
RIT") to be organized and incorporated by filing with
the Secretary of State of Delaware a Certificate of
Incorporation in the form attached hereto as Exhibit C,
causing one share of its common stock to be issued to
the Foundation, and causing Bylaws in the form attached
as Exhibit D to be adopted as the Bylaws of New RIT,
(3) cause the Board of Directors of the Foundation to
authorize the Foundation to execute an Agreement and
Plan of Reorganization (the "Reorganization Agreement")
in the form attached as Exhibit E and fulfill all
obligations and satisfy all conditions thereunder, and
take all other actions as are necessary or appropriate
to consummate the transactions contemplated by the
Reorganization Agreement in accordance with the
Reorganization Agreement, (4) cause the Board of
Directors of New RIT to authorize New RIT to execute
the Reorganization Agreement and fulfill all
obligations and satisfy all conditions thereunder, and
take all other actions as are necessary or appropriate
to consummate the transactions contemplated by the
Reorganization Agreement in accordance with the
Reorganization Agreement, and (5) cause the Foundation
and New RIT to execute the Reorganization Agreement;
and
(b) Blue Cross Blue Shield and RightCHOICE shall execute
the Reorganization Agreement, and take all other
actions necessary or appropriate to consummate the
transactions contemplated by the Reorganization
Agreement in accordance with the Reorganization
Agreement.
The terms of the Reorganization Agreement and other agreements to
be executed in connection therewith control as to the rights of
the parties and steps to be taken thereunder. The Reorganization
Agreement provides for the consummation of a series of
transactions (the "Reorganization") whereby Blue Cross Blue
Shield will be converted into a Missouri for profit general
business corporation, reincorporated in Delaware, and
subsequently merged with RightCHOICE. The Foundation will become
the owner of the same percentage of the issued and outstanding
stock of the resulting entity ("New RightCHOICE") as Blue Cross
Blue Shield owns in RightCHOICE immediately prior to the
Reorganization. The public shareholders of RightCHOICE
immediately prior to the Reorganization will become the owners of
the remainder of the issued and outstanding stock of New
RightCHOICE. Shares of New RightCHOICE owned by the Foundation
will be liquidated over time and the proceeds applied to purposes
stated in the Foundation's charter documents.
The obligations of Blue Cross Blue Shield and RightCHOICE to
sign the Reorganization Agreement, and the obligations of the
Attorney General and Department of Insurance under paragraph 4(a)
above, are subject to the satisfaction or waiver of each of the
following conditions (the "Signing Conditions"):
(i) Blue Cross Blue Shield and RightCHOICE are
satisfied that the determination of lawfulness
described in paragraph 6 has been obtained;
(ii) Court approval of this Agreement and the
Reorganization as described in paragraph 7 has been
obtained; and
(iii) the putative class action brought by the
Xxxxxx plaintiffs now pending in the Circuit Court for
the City of St. Louis (the "Xxxxxx Litigation"), and
arising out of the 1994 Reorganization, has been
finally resolved to the satisfaction of Blue Cross Blue
Shield, RightCHOICE, the Attorney General and
Department of Insurance.
5. Conditions Precedent. The obligations of the parties to the
Reorganization Agreement to effect the Reorganization are subject
to the satisfaction or waiver of certain conditions specified in
the Reorganization Agreement, including obtaining the
determination of lawfulness described in paragraph 6 hereof, the
court approval of the settlement described in paragraph 7 hereof,
the disposition of the various civil actions as described in
paragraph 8 hereof, and the disposition of the Xxxxxx Litigation
as described in paragraph 12. The date after which all of the
conditions precedent to the Reorganization are satisfied and on
which the Reorganization is consummated is referred to herein and
in the Reorganization Agreement as the "Closing Date."
6. Determination of Lawfulness. Consummation of the
Reorganization is contingent upon entry of a binding final
judgment of the Circuit Court of Xxxx County that the
Reorganization is lawful and consistent with Missouri statutes,
including X.X.Xx. Chapters 354 and 355, that the Reorganization
may be consummated without breaching any of the fiduciary duties
of the directors of Blue Cross Blue Shield, and that the Articles
of Incorporation of Blue Cross Blue Shield may be amended as Blue
Cross Blue Shield deems necessary to consummate the
Reorganization in accordance with the Reorganization Agreement.
The process for securing this determination shall be:
(a) Blue Cross Blue Shield has filed an amended pleading in the
Public Benefit/Mutual Benefit Action. In that pleading, Blue
Cross Blue Shield seeks a declaratory judgment that for it to
consummate the Reorganization is lawful and consistent with
Missouri statutes, including X.X.Xx. Chapters 354 and 355, that
the Reorganization may be consummated without breaching any of
the fiduciary duties of the directors of Blue Cross Blue Shield,
and that the Articles of Incorporation of Blue Cross Blue Shield
may be amended as Blue Cross Blue Shield deems necessary to
consummate the Reorganization in accordance with the
Reorganization Agreement.
(b) The Parties have consented to the addition of Xxxxxxx X.
Xxxxxx, Xx. and Xxxxx Xxxxxxx as parties in the Public
Benefit/Mutual Benefit Action for the purposes of adjudicating
whether those plaintiffs, and the class of similarly situated
persons whom they seek to represent, have standing to litigate
the issues necessary to obtain the ruling described in paragraph
6(a) and (if the court finds they do have such standing) for
purposes of their participation in the adjudication of all such
issues.
(c) The Parties will stipulate to the certification, pursuant to
Mo. Sup. Ct. Rule 52.08(b)(2), of a class of present and former
subscribers of Blue Cross Blue Shield and its subsidiaries, to be
represented by Mr. Hacking and Xx. Xxxxxx for purposes of
obtaining the rulings described in paragraphs 6(a) and 6(b);
(d) If the Court certifies a class as described, the Parties
will use best efforts to secure an early adjudication of the
issues described in paragraphs 6(a) and 6(b).
(e) If, after class certification and hearing in the Circuit
Court of Xxxx County on the issues described in paragraphs 6(a)
and 6(b), the Court enters judgment that consummation of the
Reorganization is lawful and consistent with Missouri statutes,
including X.X.Xx. Chapters 354 and 355, that the Reorganization
may be consummated without breaching any of the fiduciary duties
of the directors of Blue Cross Blue Shield, and that the Articles
of Incorporation of Blue Cross Blue Shield may be amended as Blue
Cross Blue Shield deems necessary to consummate the
Reorganization in accordance with the Reorganization Agreement,
and if no appeal is taken from such judgment (or alternatively,
if such an appeal is taken and resolved in such a manner that the
judgment stands with no further right of appeal) then the
condition precedent described in the first paragraph of this
Section 6 shall be deemed satisfied.
7. Court Approval of Settlement. The Parties shall move in an
appropriate court proceeding (or proceedings) for approval of
this Agreement and the Reorganization, and entry of a final
judgment approving this Agreement and the Reorganization. Such
motion shall take one or both of two forms: a motion for approval
of this Agreement and the Reorganization as a reasonable
alternative to dissolution pursuant to X.X.Xx. 355.726, or a
motion for approval of this Agreement and the Reorganization as a
settlement of contested litigation. In any case, the Parties
agree and shall represent to the Court that the terms of this
Agreement and the Reorganization is a fair and reasonable
settlement of the Purposes Litigation. The Parties shall not
object to any portion of this Agreement or the Reorganization,
and shall use their best efforts to obtain Court approval of this
Agreement and the Reorganization.
(a) If the Parties jointly determine to seek implementation of
this Agreement and the Reorganization as an alternative to
dissolution, they shall as soon as possible after execution of
this Agreement by the Parties move in the Purposes Litigation for
approval of this Agreement and the Reorganization on that basis.
They shall jointly request that the Court schedule and conduct a
hearing on all issues relevant under X.X.Xx. 355.726. They
will co-operate in the presentation of all evidence necessary to
fully to advise the Court on the question of whether this
Agreement and the Reorganization meet all statutory requirements
and should be implemented as a proper exercise of the Court's
remedial discretion. If the Court then enters its judgment
providing that this Agreement and the Reorganization should be so
implemented, and if that judgment becomes final with no party to
that litigation having any further right of appeal (or if such an
appeal is taken and such an appeal is resolved with the final
judgment in the action ordering such implementation) the
condition precedent described in this Paragraph 7 shall be deemed
satisfied.
(b) If the Parties jointly decide to seek implementation of this
Agreement and the Reorganization as a settlement of contested
litigation, they shall jointly so move in such court proceeding
as they deem appropriate. The Parties will cooperate in the
presentation to the Court of such evidence as the Court requires
prior to approval of this Agreement and the Reorganization. If
the Court then enters its judgment providing that this Agreement
and the Reorganization should be so implemented, and if that
judgment becomes final with no party to that litigation having
any further right of appeal (or if such an appeal is taken and
such an appeal is resolved with the final judgment in the action
ordering such implementation) the condition precedent described
in this Paragraph 7 shall be deemed satisfied.
8. Disposition of Litigation. In further consideration of
their mutual undertakings in this Agreement and the
Reorganization Agreement, the Parties shall dispose of the
pending litigation as follows:
(a) If the Purposes Litigation Appeal remains pending at the
date of execution of this Agreement, either on rehearing in the
Missouri Court of Appeals or in the Supreme Court of Missouri,
the Parties who are litigants therein will take such action as
they then deem appropriate, based on the procedural posture of
the case at that time, to bring the case before the Circuit Court
of Xxxx County at a proper time so that the Parties can proceed
with a motion or motions pursuant to Section 7 of this Agreement;
(b) On the Closing Date, the Attorney General and the Department
of Insurance will acknowledge the satisfaction in full of the
judgments entered by the Circuit Court on December 30, 1996, and
any other judgments in their favor in the Purposes Litigation,
and the Parties will stipulate to the dismissal of any claims in
the Purposes Litigation that have not been reduced to judgment,
with prejudice, with each Party to bear its own costs of suit as
to any such dismissed claims; and
(c) On the Closing Date, the Parties who are parties to the
Mutual Benefit/Public Benefit Litigation will stipulate to the
dismissal with prejudice of the remaining claims, if any, in the
Mutual Benefit/Public Benefit Litigation, with each party to bear
its own costs.
9. Releases in Favor of Blue Cross Blue Shield and RightCHOICE.
In further consideration of their mutual undertakings in this
Agreement and the Reorganization Agreement, the Parties agree to
the releases described in this paragraph. The releases described
in this paragraph shall become effective on the Closing Date.
(a) Subject to the exceptions contained in subparagraph 9(e),
the Attorney General and Department of Insurance on behalf of
themselves, their offices, and the State of Missouri
(collectively, "the Paragraph 9 Releasors") release Blue Cross
Blue Shield, RightCHOICE, their respective present and past
affiliated corporations, their successors and assigns, their
present and past directors, officers, agents, employees and
independent contractors (all of whom are collectively referred to
as "the Paragraph 9 Releasees") from any and all claims, causes
of action, liabilities and judgments arising out of or relating
to the 1994 Reorganization or the operation of Blue Cross Blue
Shield from the date of the 1994 Reorganization through April 20,
1998.
(b) Subject to the exceptions contained in subparagraph 9(e),
the Paragraph 9 Releasors release the Paragraph 9 Releasees from
all claims, causes of action, liabilities and judgments that were
asserted or might have been asserted in the Purposes Litigation
and Purposes Litigation Appeal or the Mutual Benefit/Public
Benefit Litigation.
(c) Subject to the exceptions contained in subparagraph 9(e),
the Paragraph 9 Releasors release the Paragraph 9 Releasees from
any and all claims, causes of action, liabilities and judgments
arising from or related to the execution and performance of this
Agreement, the Reorganization Agreement, or the consummation of
the Reorganization.
(d) Subject to the exceptions contained in subparagraph 9(e),
the Paragraph 9 Releasors release the Paragraph 9 Releasees from
any and all claims, causes of action, judgments, claims,
disputes, investigations, audits or complaints listed on
Exhibit F attached hereto. Exhibit F shall be prepared by the
Attorney General and Department of Insurance pursuant to
paragraph 11 hereof.
(e) Claims in the following classes are excluded from the
releases given in this paragraph 9:
(i) Any claim by consumers lodged with the Department of
Insurance or the Attorney General;
(ii) Any claims of criminal liability of any kind;
(iii) Any claims of liability from or on account of any conduct
which is finally adjudged to have been knowingly fraudulent,
deliberately dishonest or willful misconduct; and
(iv) Any claim for breach of this Agreement, the Reorganization
Agreement or any other agreement executed by any of the Paragraph
9 Releasees in connection with the consummation of the
Reorganization.
10. Releases in Favor of the Attorney General and the Department
of Insurance. In further consideration of their mutual
undertakings in this Agreement and the Reorganization Agreement,
the Parties agree to the releases described in this paragraph.
The releases described in this paragraph shall become effective
on the Closing Date.
(a) Subject to the exceptions contained in
subparagraph 10(d), Blue Cross Blue Shield and
RightCHOICE, and their respective affiliated
corporations, successors and assigns (collectively,
"the Paragraph 10 Releasors") release the State of
Missouri, the Attorney General, the Department of
Insurance and their respective present and past
officers, agents, employees, independent contractors,
affiliates, successors and assigns (all of whom are
collectively referred to as "the Paragraph 10
Releasees") from any and all claims, causes of action,
liabilities and judgments arising out of or relating to
actions taken or statements made by the Attorney
General or the Department of Insurance or their past
and present agents, employees or independent
contractors in connection with the 1994 Reorganization.
(b) Subject to the exceptions contained in
subparagraph 10(d), the Paragraph 10 Releasors release
the Paragraph 10 Releasees from all claims, causes of
action, liabilities and judgments that were asserted or
might have been asserted in the Purposes Litigation and
Purposes Litigation Appeal or the Mutual Benefit/Public
Benefit Litigation.
(c) Subject to the exceptions contained in
subparagraph 10(d), the Paragraph 10 Releasors release
the Paragraph 10 Releasees from any and all claims,
causes of action, liabilities and judgments arising out
of or related to the execution and performance of this
Agreement, the Reorganization Agreement, or the
consummation of the Reorganization.
(d) Claims in the following classes are excluded
from the releases given in this paragraph 10:
(i) Any claims of liability from or on
account of any conduct which is finally adjudged
to have been knowingly fraudulent, deliberately
dishonest or willful misconduct; and
(ii) Any claim for breach of this
Agreement, the Reorganization Agreement or any
other agreement executed by any of the Paragraph
10 Releasees in connection with the consummation
of the Reorganization.
11. Representation As To Existence of Claims. The Attorney
General and the Department of Insurance represent and warrant
that, on April 20, 1998, except as described on the list which is
attached hereto as Exhibit F and as described in Paragraph
9(e)(i) above, there were no claims, disputes, investigations,
audits or complaints pending against Blue Cross Blue Shield,
RightCHOICE or any of their affiliates, and to their knowledge
there is no basis for any such claims, disputes, investigations,
audits or complaints. BCBSMo represents and warrants to the
Attorney General and the Department of Insurance that, except as
described on the list attached hereto as Exhibit G, it has no
knowledge on the date hereof of any pending or threatened claim
that will or might be subject to indemnity from the Foundation
under the terms of the Indemnification Agreement attached as
Exhibit K to the Reorganization Agreement.
12. Xxxxxx Litigation. A condition precedent to consummation of
the Reorganization shall be a final resolution, successful to the
satisfaction of each Party hereto, of the Xxxxxx Litigation.
13. Termination.
(a) This Agreement shall automatically terminate upon
termination of the Reorganization Agreement for any
reason.
(b) This Agreement may be terminated by any Party
hereto by giving written notice to all other Parties in
the event (i) the Signing Conditions have not all been
satisfied on or before August 1, 1999, or (ii) the
Closing Date has not occurred on or before October 1,
1999.
(c) This Agreement may be terminated at any time by
written agreement signed by all Parties.
(d) If this Agreement terminates pursuant to
subparagraph (a), or is terminated pursuant to
subparagraph (b) or subparagraph (c), the Agreement
shall thereafter be void and have no force or effect.
14. No Admission of Liability. This Agreement is a good faith,
negotiated resolution of disputed claims. Neither the Agreement
nor any act performed or document executed pursuant to or in
furtherance of this Agreement is admissible in any court
proceeding, except those proceedings leading to judicial approval
of the transactions contemplated by this Agreement and the
Reorganization Agreement, and any proceeding brought to enforce
this Agreement or the Reorganization Agreement. No Party, by
signing this Agreement, admits liability or fault, or admits the
validity of any claim made by any other Party or person with
respect to any matter that is the subject of this Agreement or
the Reorganization Agreement.
15. Binding Effect on Successors of Governmental Parties. This
Agreement shall be binding, to the fullest extent permissible
under law, on the State of Missouri, the Attorney General, the
Department of Insurance, their respective offices and
departments, and all of their successors in office. Should the
State of Missouri, any Attorney General of Missouri or the
Department of Insurance take the position at any time that any of
the commitments or undertakings of the State of Missouri, the
Attorney General, or the Department of Insurance hereunder is not
fully valid and enforceable, then Blue Cross Blue Shield,
RightCHOICE, and each of their corporate successors may, at the
sole option of any of them, declare this Agreement and the
Reorganization Agreement void and of no force or effect, in which
event they will be discharged from any further obligations
thereunder, and may take such actions (including but not limited
to the commencement of a judicial proceeding seeking a
declaration of the rights of the parties, injunctive relief, and
the restoration of the status quo prior to the Reorganization) as
are appropriate to rescind this Agreement and the Reorganization,
and restore the parties to the position that would have applied
had the Reorganization not taken place or this Agreement not been
signed, including the restoration or repayment of all
consideration given or received by any Party, including all
assets received by the Foundation in connection with the
Reorganization. As part of the Reorganization, the Attorney
General and Department of Insurance shall cause the Foundation to
execute an agreement to be bound by the provisions of this
paragraph 15.
16. Approval of Certain Stock Purchases. After consummation of
the Reorganization, New RightCHOICE will have certain options and
rights of first refusal to repurchase its shares from the
Foundation in one or more transactions that may require the prior
approval of the Department of Insurance under applicable law.
The Department of Insurance shall not disapprove any such
transaction unless New RightCHOICE or one of its insurance
subsidiaries licensed in Missouri fails to meet Missouri
regulatory capital and reserve requirements after consummation of
the transaction, or fails to satisfy any other objective criteria
required to be satisfied under Missouri law as a condition to
obtaining approval of the Department of Insurance.
17. Amendments to Charter Documents of the Foundation. From the
date the Foundation is incorporated until the Closing Date, and
thereafter until the Foundation owns less than five percent (5%)
of the issued and outstanding shares of capital stock of New
RightCHOICE, the Attorney General shall not consent to any
amendment to the Articles of Incorporation or Bylaws of the
Foundation if the amendment would increase the influence or
control of any governmental authority or its agents over the
governance of the Foundation over the level of influence and
control provided in the Articles of Incorporation and Bylaws of
the Foundation attached hereto as Exhibits A and B, respectively.
18. Amendments to Reorganization Agreement. Blue Cross Blue
Shield and RightCHOICE shall not consent to any amendment to the
Reorganization Agreement after it is signed without first
obtaining the written consent of the Attorney General and the
Department of Insurance.
19. General Provisions.
(a) Captions contained in this Agreement have been inserted
herein only as a matter of convenience and in no way define,
limit, extend or describe the scope of this Agreement or the
intent of any provision hereof.
(b) This Agreement may be executed by the Parties on any number
of separate counterparts, and all such counterparts so executed
constitute one agreement binding on all the Parties
notwithstanding that all the Parties are not signatories to the
same counterpart.
(c) This Agreement and the Reorganization Agreement, including
all exhibits attached hereto and thereto, constitute the entire
agreement among the Parties pertaining to the subject matter
hereof and supersede all prior agreements, letters of intent,
understandings, negotiations and discussions of the Parties,
whether oral or written.
(d) All of the exhibits attached to this Agreement are material
and integral parts hereof, and are fully incorporated herein by
this reference.
(e) The Parties will execute and deliver such further documents
and do such further acts and things as may be required to carry
out the intent and purpose of this Agreement, including the
execution of all documents necessary to continue existing
standstills of the litigation to be settled by this Agreement,
such standstills to continue until the earlier of the termination
of this Agreement or the Closing Date.
(f) This Agreement and the rights and obligations of the
Parties hereunder are to be governed by and construed
and interpreted in accordance with the laws of the
State of Missouri applicable to contracts made and to
be performed wholly within Missouri, without regard to
choice or conflict of laws rules.
(g) Blue Cross Blue Shield and RightCHOICE shall be solely
responsible for payment of all legal, accounting and investment
banking fees and other costs and expenses incurred by them in
connection with this Agreement and the Reorganization and shall
have no responsibility or liability for payment of any fees,
costs or expenses incurred by any other Party.
(h) All notices, consents, requests, demands and other
communications hereunder are to be in writing, and are deemed to
have been duly given or made: (i) when delivered in person;
(ii) three days after deposited in the United States mail, first
class postage prepaid; (iii) in the case of overnight courier
services, one business day after delivery to the overnight
courier service with payment provided; or (iv) in the case of
telecopy or fax, when sent, verification received; in each case
addressed as follows:
If to Blue Cross Blue Shield:
Xxxx X. X'Xxxxxx
President and Chief Executive Officer
Blue Cross and Blue Shield of Missouri
0000 Xxxxxxxx Xxxxxx
Xx. Xxxxx, Xxxxxxxx 00000-0000
Fax: (000) 000-0000
with a copy to:
Xxxxxx X. Xxxxx, Esq.
Gallop Xxxxxxx & Xxxxxx X.X.
000 Xxxxx Xxxxxx
Xx. Xxxxx, Xxxxxxxx 00000
Fax: (000) 000-0000
If to RightCHOICE:
Xxxx X. X'Xxxxxx
Chairman, President and Chief Executive Officer
RightCHOICE Managed Care, Inc.
0000 Xxxxxxxx Xxxxxx
Xx. Xxxxx, Xxxxxxxx 00000-0000
Fax: (000) 000-0000
with a copy to:
Xxxx X. Xxxxxx, Esq.
Xxxxx, Rice & Xxxxxxxx, X.X.
000 Xxxxx Xxxxxxxx, Xxxxx 0000
Xx. Xxxxx, XX 00000
Fax: (000) 000-0000
If to the Attorney General:
Xxxxxxxx X. (Xxx) Xxxxx
X.X. Xxx 000
Xxxxxxxxx Xxxx, XX 00000
Fax: (000) 000-0000
If to the Department of Insurance:
Xxx Xxxxxx
X.X. Xxx 000
Xxxxxxxxx Xxxx, XX 00000
Fax: (000) 000-0000
or to such other address as any Party may
designate by notice to the other Parties in
accordance with the terms of this paragraph.
(i) All provisions of this Agreement are binding upon, inure to
the benefit of and are enforceable by or against the Parties and
their respective legal representatives and successors and
assigns.
(j) This Agreement is the product of negotiations and shall be
deemed to have been drafted by all of the parties. It shall be
construed in accordance with the fair meaning of its terms and
its language shall not be strictly construed against, nor shall
ambiguities be resolved against, any particular party.
(k) The Parties agree to the following:
(i) that it is their intent to carry out all of the
terms of this Agreement and to consummate the
Reorganization; and
(ii) that they shall cooperate to the extent necessary
to effectuate and implement all terms and satisfy
all of the conditions of the Agreement and, with
respect to BCBSMo and RightCHOICE, subject to
their fiduciary obligations, to exercise their
best efforts promptly to accomplish the terms and
satisfy the conditions of the Reorganization
Agreement.
(l) The Parties executing this Agreement warrant and
represent that they have the full authority to do so
and that they have the authority to take appropriate
action required or permitted to be taken pursuant to
this Agreement to effectuate its terms.
(m) Nothing in this Agreement shall be construed as
preventing the Department of Insurance or the Attorney
General from taking regulatory action against Blue
Cross Blue Shield, RightCHOICE or New RightCHOICE based
on (1) acts or omissions occurring after April 20, 1998
that are not covered by the releases described in
Paragraph 9, (2) acts or omissions occurring prior to
April 20, 1998 that are not covered by the releases
described in Paragraph 9, and (3) claims described in
Paragraph 9(e) of this Agreement.
[Remainder of page intentionally left blank]
Executed this 20th day of September, 1998.
/s/ Xxxxxxxx X. Xxxxx
Xxxxxxxx X. (Xxx) Xxxxx
Attorney General of Missouri
Missouri Department of Insurance
By: /s/ Xxx X. Xxxxxx
Xxx X. Xxxxxx, Director
Director, Missouri Department of Insurance
Blue Cross and Blue Shield of Missouri
By: /s/ Xxxx X. X'Xxxxxx
Xxxx X. X'Xxxxxx, President
RightCHOICE Managed Care, Inc.
By: /s/ Xxxx X. X'Xxxxxx
Xxxx X. X'Xxxxxx, President and
Chief Executive Officer
LIST OF EXHIBITS
Exhibit A Articles of Incorporation of the Foundation
Exhibit B Bylaws of the Foundation
Exhibit C Certificate of Incorporation of New RIT
Exhibit D Bylaws of New RIT
Exhibit E Agreement and Plan of Reorganization
Exhibit F List of Known Claims as of April 20, 1998
Exhibit G List of Claims Prepared by Blue Cross and Blue Shield
of Missouri
EXHIBIT B
FORM OF
ASSUMPTION REINSURANCE AGREEMENT
by and between
BLUE CROSS AND BLUE SHIELD OF MISSOURI,
a Missouri nonprofit health services corporation
and
HEALTHY ALLIANCE LIFE INSURANCE COMPANY,
a Missouri corporation
DATED _______________, 1998
ASSUMPTION REINSURANCE AGREEMENT
THIS ASSUMPTION REINSURANCE AGREEMENT (this "Agreement"),
dated as of ___________, 1998 ("Effective Date"), is made and
entered into by and between BLUE CROSS AND BLUE SHIELD OF
MISSOURI, a Missouri non-profit health services corporation
("BCBSMo"), and HEALTHY ALLIANCE LIFE INSURANCE COMPANY, a
Missouri corporation ("Healthy Alliance").
RECITALS
A. BCBSMo is a Missouri non-profit non-stock health
services corporation that offers health benefits and related
products and services. BCBSMo holds a license from the Blue
Cross and Blue Shield Association (the "Association") to use the
Blue Cross and Blue Shield names, trademarks and service marks
(the "Marks").
B. Healthy Alliance is a Missouri life and health
insurance company and wholly owned subsidiary of RightCHOICE
Managed Care, Inc., a Missouri corporation ("RightCHOICE"), that
offers life and health benefits and related products and services
pursuant to its certificate of authorities issued by the Missouri
Department of Insurance. Healthy Alliance also holds a license
from the Association to use the Marks.
C. Pursuant to the terms of that certain Agreement and
Plan of Reorganization dated , 199 , by and among
BCBSMo, RightCHOICE, and certain other parties (the
"Reorganization Agreement"), BCBSMo, RightCHOICE and such other
parties agreed to accomplish a reorganization by means of certain
transactions described in the Reorganization Agreement, one of
which is the "Transfer and Assumption Transaction" (as defined in
the Reorganization Agreement) by which existing contracts of
insurance and other assets of BCBSMo would be transferred to
Healthy Alliance.
D. The parties hereto desire to consummate the Transfer
and Assumption Transaction pursuant to this Agreement.
E. In connection with the Transfer and Assumption
Transaction, BCBSMo desires to cede and transfer to Healthy
Alliance all contracts of insurance issued or underwritten by
BCBSMo in force at the Closing Time (as defined below), and
Healthy Alliance desires to assume the rights, obligations and
liabilities of BCBSMo in respect to such insurance contracts,
under the terms and conditions set forth herein.
F. It is intended that, as a result of the consummation of
the transactions contemplated by this Agreement, BCBSMo shall be
discharged, on an assumption reinsurance and novation basis under
Section 375.1294 of the Missouri Revised Statutes and other
applicable law, from any further obligation in connection with
such insurance contracts.
NOW, THEREFORE, in consideration of the foregoing premises,
the mutual promises and undertakings herein contained, and for
other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, BCBSMo and Healthy
Alliance do hereby agree as follows:
ARTICLE I - DEFINITIONS
In addition to the terms defined elsewhere in this
Agreement, the following quoted and capitalized words and phrases
shall have the meanings set forth below unless the context
clearly requires otherwise.
1.1 Affiliate. "Affiliate" means, with respect to any
Person, at the time in question, any other Person who directly or
indirectly through one or more intermediaries, controls, is
controlled by or is under common control with such Person.
1.2 Assumed Policy. "Assumed Policy" means each of the
Policies.
1.3 Assumed Policy Liabilities. "Assumed Policy
Liabilities" means any and all liabilities and obligations
arising under or relating to the Assumed Policies, but excluding
all Excluded Liabilities.
1.4 Books and Records. "Books and Records" means all
policy information, data, records and all policy forms pertaining
to the Policies, including, but not limited to, rating plans,
administrative records, claim files and records, files and
records, relating to regulatory matters (including, without
limitation, correspondence, notifications and similar documents
from regulatory authorities), files and records relating to tax
information reporting with respect to the Policies (including,
without limitation, the tax basis of each Policy, issue date,
premium payments and distributions), complaint files,
correspondence with Policyholders, underwriting records,
accounting records, consent forms from insureds under the
Policies and census data; provided, however, that Books and
Records shall not include the original charter, certificate or
articles of incorporation, corporate seal, original licenses to
do business, original minute books and other original corporate
records relating exclusively to the corporate organization or
capitalization, original Tax and corporate accounting records
relating to the Policies.
1.5 Closing Date. "Closing Date" has the meaning set forth
in the Reorganization Agreement.
1.6 Closing Time. "Closing Time" means 12:01 a.m., St.
Louis, Missouri time, on the Closing Date.
1.7 Excluded Liabilities. "Excluded Liabilities" means any
liability of BCBSMo for any of the following: (i) any liability
to any Person to the extent it arises out of or is related to any
business or operation of BCBSMo other than its business or
operations related to the underwriting or insuring of the
Policies or the adjudication of claims under the Policies;
(ii) any liability for commission payments and other compensation
payable with respect to the Policies to or for the benefit of any
Representative with respect to the face amount of coverage in
effect as of the Closing Time where such liability arises prior
to the Closing Time; and (iii) the lawsuits, proceedings and
other actions or occurrences identified in the "BCBSMo Disclosure
Schedule" (as defined in the Reorganization Agreement) or which
arise in connection with any aspect of the Reorganization.
1.8 Extracontractual Liabilities. "Extracontractual
Liabilities" means all liabilities, other than the express
obligations set forth in the Policies, including, without
limitation, any liability for consequential, exemplary, punitive
or similar damages or statutory penalties including treble
damages, relating to the Policies, which liability arises from
any act, error or omission by BCBSMo or its respective
Representatives occurring prior to the Closing Date, whether
intentional or otherwise, or from any bad faith occurring in
connection with the handling of any claim or obligation under any
of the Policies or in connection with the issuance, delivery or
cancellation of any of the Policies.
1.9 Person. "Person" means any individual, corporation,
partnership, firm, trust, joint venture, association, limited
liability company, trust, unincorporated organization,
governmental, judicial, or regulatory body, or other entity.
1.10 Policy. "Policy" means each insurance contract insured
or underwritten by BCBSMo that is in force at the Closing Time or
that is not in force at the Closing Time but for which an
insurance related liability exists or may exist. Attached hereto
as Exhibit A is a list of the Policy types in force as of the
Effective Date of this Agreement. For purposes of this
Agreement, the term "Policy" does not include any self-funded or
self-insured portion of any benefit program or contract
administered by BCBSMo.
1.11 Policyholder. "Policyholder" means the owner or holder
of one or more Policies.
1.12 Representative. "Representative" means, with respect
to any party hereto, its employees, agents, brokers, officers,
directors, counsel, consultants, and other representatives.
1.13 Regulatory Authority. "Regulatory Authority" means any
federal or state agency charged with the supervision or
regulation of insurance companies, health maintenance
organizations, healthcare services plans, third party
administrators or managed health care organizations and any other
court, administrative agency or commission or other governmental
agency, authority or instrumentality having supervisory or
regulatory authority with respect to BCBSMo, Healthy Alliance or
any of their respective Affiliates.
1.14 Reorganization. "Reorganization" has the meaning set
forth in the Reorganization Agreement.
1.15 Reorganization Agreement. "Reorganization Agreement"
has the meaning set forth in the Preamble hereof.
1.16 Statutory Reserves. "Statutory Reserves" means all of
the assessments, reserves and liabilities required to be
maintained by BCBSMo or Healthy Alliance for the Policies,
calculated in accordance with generally accepted actuarial
principles and practices and statutory accounting principles and
practices consistently applied, and in accordance with
requirements published by the National Association of Insurance
Commissioners, including, but not necessarily limited to:
aggregate reserves for accident and health policies, including
active life reserves, claims reserves, and unearned premium
reserves.
1.17 Taxes. "Taxes" means all federal, state, county,
local, foreign and other taxes (including, without limitation,
income taxes, payroll and employee withholding taxes,
unemployment insurance, social security taxes, premium taxes,
excise taxes, capital property taxes, import duties and other
governmental charges and assessments), and includes interest,
additions to tax and penalties with respect thereto, whether
disputed or not.
ARTICLE II - ASSUMPTION AND REINSURANCE
2.1 Assumption and Reinsurance. As of the Closing Time and
subject to the conditions and other provisions of this Agreement,
BCBSMo hereby agrees to and does transfer and cede to Healthy
Alliance, and Healthy Alliance hereby agrees to and does accept
and assume as its direct obligations, on an assumption
reinsurance and novation basis, as if Healthy Alliance were the
original issuer thereof, each of the Assumed Policies and 100% of
the Assumed Policy Liabilities. All Assumed Policy Liabilities
will be deemed transferred to and assumed by Healthy Alliance as
of the Closing Time. All Assumed Policies will be deemed to have
been assumed by novation as of the Closing Time. Healthy
Alliance's liability under this Agreement shall be subject to all
the terms and conditions of the Assumed Policies. Healthy
Alliance does not assume, and shall not be liable for, Excluded
Liabilities.
2.2 Healthy Alliance as Successor. Healthy Alliance shall,
from and after the Closing Time, succeed to all of the rights and
obligations (other than Excluded Liabilities) of BCBSMo under the
Assumed Policies and shall perform all of BCBSMo's obligations
(other than Excluded Liabilities) under the Assumed Policies as
if it had been the original issuer or contracting party thereof.
Except as required by applicable law, the Assumed Policies shall
be direct obligations of Healthy Alliance. From and after the
Closing Time, BCBSMo shall have no further obligations to the
Policyholders under the Assumed Policies. Healthy Alliance shall
substitute itself in the place of BCBSMo as if named in the place
of BCBSMo and the Policyholders and insureds may thereafter
disregard BCBSMo as a party to the Assumed Policies and treat
Healthy Alliance as if it had been originally obligated for the
Assumed Policy Liabilities in place of BCBSMo. From and after
the Closing Time, Policyholders under the Assumed Policies shall
have the right to file claims for Assumed Policy Liabilities
directly with Healthy Alliance and shall have a direct right of
action against Healthy Alliance for Assumed Policy Liabilities.
Healthy Alliance consents to being subject to direct action taken
by any Policyholder of an Assumed Policy. The rights of a
Policyholder shall be limited to and consist of those rights
expressly set forth in the Assumed Policy and applicable law, and
no effect shall be given to any bankruptcy, liquidation,
receivership, insolvency, reorganization or moratorium on
obligations of BCBSMo.
2.3 Preservation of Defenses. Healthy Alliance accepts and
assumes the Assumed Policy Liabilities subject to any and all
rights, defenses, setoffs and counterclaims to which BCBSMo or
Healthy Alliance would be entitled with respect to the Assumed
Policies. It is expressly understood and agreed by the parties
that no defenses, setoffs or counterclaims are waived by the
execution of this Agreement or the consummation of the
transactions contemplated by this Agreement and that, as of the
Closing Time, Healthy Alliance shall be fully subrogated to all
such defenses, setoffs and counterclaims and entitled to the
benefits thereof as if it were BCBSMo.
2.4 Taxes. BCBSMo shall be solely liable for payment of
any and all Taxes relating to the Assumed Policies prior to the
Closing Time. Healthy Alliance shall be solely liable for
payment of any and all Taxes payable on account of premiums or
renewal premiums received on the Assumed Policies after the
Closing Time.
2.5 Policy Premiums. BCBSMo and Healthy Alliance mutually
agree that, as of the Closing Time, Healthy Alliance shall
receive and retain one hundred percent (100%) of the premiums
paid by the Policyholders of the Assumed Policies, in
consideration of Healthy Alliance's assumption of all of BCBSMo's
contractual rights, obligations, liabilities and risks under such
Assumed Policies after the Closing Time. All premiums and other
receipts on the Assumed Policies (whether in the form of checks,
drafts, money orders, postal notes or otherwise) received by any
Person allocable to periods after the Closing Time shall be the
sole property of Healthy Alliance. BCBSMo shall promptly deliver
to Healthy Alliance all premiums and other receipts received by
BCBSMo on the Assumed Policies allocable to periods after the
Closing Time. All premiums and other receipts delivered shall
bear all necessary endorsements required to effect transfer to
Healthy Alliance.
2.6 Bank Draft or Debit Authorizations. Subject to the
terms and conditions of this Agreement, BCBSMo hereby assigns to
Healthy Alliance all of its rights and privileges to draft, draw
or debit the accounts of Policyholders for premiums due under the
Policies under existing pre-authorized bank draft or electronic
fund transfer arrangements between BCBSMo and Policyholders.
2.7 Lawsuits. Except with respect to Excluded Liabilities
or BCBSMo's obligations under Section 5.2 hereof, Healthy
Alliance shall be responsible for all litigation and other
proceedings arising out of, or related to, the Assumed Polices.
BCBSMo shall promptly notify Healthy Alliance, in writing, of all
lawsuits and occurrences not listed in the BCBSMo Disclosure
Schedule that arise prior to the Closing Date.
2.8 No Agency. For purposes of this Agreement, Healthy
Alliance does not act as agent of BCBSMo either before or after
the Effective Date of this Agreement. BCBSMo assumes no
liability for any act or omission of Healthy Alliance or any of
Healthy Alliance's Representatives either before or after the
Effective Date of this Agreement. All such liability is expressly
reserved by Healthy Alliance.
2.9 Regulatory Approvals. BCBSMo and Healthy Alliance
shall file and give, or cause to be filed and given, all
necessary applications, notices, agreements and other documents
reasonably required by, or to obtain the approval of, all
Regulatory Authorities having jurisdiction with respect to the
transaction contemplated by this Agreement, including, but not
limited to, the documentation necessary to obtain the Missouri
Director of Insurance's approval of the transactions contemplated
by this Agreement under Section 375.1294 of the Missouri Revised
Statutes. Each party shall use its best efforts to assist the
other party in obtaining any Regulatory Approvals for the
reinsurance and servicing of the Policies by Healthy Alliance in
accordance with the provisions of this Agreement, including but
not limited to, furnishing historical financial information on
the Policies, furnishing data necessary for the preparation of
pro forma statements reflecting the financial impact of the
consummation of this Agreement on Healthy Alliance and furnishing
affidavits or fulfilling other requirements necessary to obtain
approval of such Regulatory Authorities for the reinsurance and
servicing of the Policies by Healthy Alliance.
2.10 Association Approval. BCBSMo and Healthy Alliance
shall execute, deliver and file all necessary notices, agreements
and other documents reasonably required to obtain the approval of
the Association, on or before the Closing Date, with respect to
any aspect of the transaction contemplated by this Agreement that
may affect either party's license for the Marks and any business
derived through or from the Association. With respect to the
Policies issued under the Federal Employees Benefits Program, the
parties shall enter into and deliver to the Association a
"novation agreement" in substantially the same form as attached
hereto as Exhibit B. In addition, BCBSMo shall enter into a
"plan participation agreement" with the Association for the
period prior to the Closing Time in substantially the same form
as attached hereto as Exhibit C, and Healthy Alliance shall enter
into a "plan participation agreement" with the Association for
the period after the Closing Time in substantially the same form
as attached hereto as Exhibit D, or Healthy Alliance shall enter
into a written agreement with BCBSMo, pursuant to which all of
the rights, interests and obligations of BCBSMo under that
certain "plan participation agreement" between BCBSMo and the
Association are transferred to and assumed by Healthy Alliance.
2.11 Other Approvals. Each party shall use its best efforts
to assist the other party in obtaining any other approvals,
consents or agreements of any other Person for the reinsurance
and servicing of the Policies by Healthy Alliance in accordance
with the provisions of this Agreement.
ARTICLE III - NOTICE AND TRANSFER
3.1 Policyholder Notices. BCBSMo shall, at its expense,
provide notice of the assumption and novation of the Policies by
Healthy Alliance to those Policyholders required by law or under
the Policies to be notified, as well as to BCBSMo's
Representatives (i.e., agents and brokers of record). Except
where other language is required by a specific Regulatory
Authority, the notice to such Policyholders shall be
substantially in the form attached hereto as Exhibit E, and shall
be mailed on or before date referenced on Exhibit E, unless
otherwise agreed to, in writing, by the parties. BCBSMo shall be
responsible for providing notifications to and for obtaining the
approvals of any Regulatory Authority.
3.2 Issuance of Certificates of Assumption. On or after
the Closing Date, Healthy Alliance shall, at the expense of
BCBSMo, confirm the assumption and novation of the Assumed
Policies by Healthy Alliance through issuance of a "Certificate
of Assumption" to each Policyholder. The Certificate of
Assumption shall be in the form attached hereto as Exhibit F,
except where other language is required by a specific Regulatory
Authority. The assumption represented by the Certificate of
Assumption is subject to the terms and conditions of this
Agreement, and any defenses or rights that are now or may
hereafter become available to BCBSMo or Healthy Alliance.
Healthy Alliance shall be responsible for providing notifications
to, and for obtaining approvals of, any Regulatory Authority of
its Certificate of Assumption to be issued to the Policyholders
of the Assumed Policies as may be required under applicable
insurance laws or regulations. BCBSMo shall reasonably cooperate
with Healthy Alliance to obtain any such approvals and cause the
Certificate of Assumption to be mailed to each Policyholder at
the address last shown upon the records of BCBSMo for such
Policyholder. All records maintained by Healthy Alliance in
connection with the mailing of the Certificate of Assumption
shall be made available for inspection by BCBSMo upon request.
Healthy Alliance shall take all other actions reasonably
necessary to assume the obligations of BCBSMo under the Assumed
Policies.
ARTICLE IV - ADMINISTRATION, PAYMENTS, POLICIES AND PREMIUMS
4.1 Administration of Assumed Policies by Healthy Alliance.
After the Closing Time, Healthy Alliance shall be solely
responsible, at its own expense, for the administration and
servicing of all aspects of the Assumed Policies in accordance
with the terms and conditions of the Assumed Policies and with
applicable state laws and regulations and in a manner consistent
with the level of policyholder and administrative services
provided by Healthy Alliance in the ordinary course of its
business to insureds and contractual counterparties.
4.2 Inadvertent Payments. With respect to the Assumed
Policies, in the event of a payment being inadvertently made by
BCBSMo after the Closing Time for an amount which by the terms of
this Agreement Healthy Alliance is liable or responsible for
payment, BCBSMo shall notify Healthy Alliance of such payment and
Healthy Alliance shall promptly reimburse BCBSMo to the extent of
such payment. If a payment is inadvertently made by Healthy
Alliance for, which by the terms of this Agreement BCBSMo is
liable or responsible for payment, BCBSMo shall promptly
reimburse Healthy Alliance to the extent of such payment.
4.3 Benefit Modifications. From the Effective Date of this
Agreement and thereafter until the Closing Date, BCBSMo agrees
that no Policy has been or will be rewritten, substantially
changed, or in any way affected by BCBSMo, except in individual
cases in the normal course of business.
4.4 Responsibility for Commissions and Compensation Due
Producers. Healthy Alliance shall assume one hundred percent
(100%) of the liability for commissions and all other
compensation and fees due to producers with respect to the
Assumed Policies, after the Closing Time. Healthy Alliance shall
calculate and pay all agent's commissions and overwriting
commissions due and payable on the Assumed Policies for periods
which commence after the Closing Time in accordance with the
terms and conditions of any applicable valid agents contracts and
commission schedules with BCBSMo as of the Closing Time. No
agent shall gain or lose rights to earned commissions as a result
of this Agreement. For the salaried employees of BCBSMo
receiving incentive compensation on the Assumed Policies, if any,
Healthy Alliance shall calculate the incentive compensation
payable and transfer to BCBSMo the funds necessary to pay the
incentive compensation. From the funds transferred, BCBSMo shall
pay the incentive compensation to those employees.
4.5 Books and Records. On and before the Closing Date,
BCBSMo will make the Books and Records relating to the Policies
and Assumed Policy Liabilities available to Healthy Alliance for
inspection. As of the Closing Time, BCBSMo does hereby transfer
and assign, and shall deliver, to Healthy Alliance or its
designated representative all Books and Records relating to the
Assumed Policies and Assumed Policy Liabilities.
4.6 Information, Reports and Access.
(a) BCBSMo shall undertake such arrangements as are
reasonably requested by Healthy Alliance from time to time to
ensure that all information, claims and notices received after
the Closing Date by BCBSMo are promptly delivered to Healthy
Alliance.
(b) Healthy Alliance shall provide BCBSMo with
financial and any other information reasonably requested by
BCBSMo to enable BCBSMo to prepare and file its statutory
financial statements within the time periods prescribed by law or
to forecast cash flow, operating income or other data required
for proper financial management, or to respond to inquiries from
insurance regulators or other parties in connection with the
transactions contemplated by this Agreement.
(c) Each party agrees to furnish the other with such
financial information as may be required for the completion of
quarterly and annual statements and internal records. Each party
agrees to permit the other to inspect its books and records
relative to the Assumed Policies and Assumed Policy Liabilities
at any reasonable time.
ARTICLE V - CONSIDERATION AND INDEMNIFICATION
5.1 Consideration. As consideration for the assumption
reinsurance by Healthy Alliance of the Assumed Policy Liabilities
hereunder, BCBSMo shall transfer to Healthy Alliance assets with
an aggregate value to BCBSMo equal to the sum of (i) one hundred
percent (100%) of the estimated Assumed Policy Liabilities of
BCBSMo in support of the policy liabilities under the Policies,
including, but not limited, to liabilities for benefits,
surrenders, returns and premium refunds, and (ii) that amount, if
any, necessary for Healthy Alliance to meet the Statutory Reserve
requirements, as of the Closing Time, as determined by mutual
agreement of the parties (collectively, the "Settlement Amount").
5.2 Indemnification. From the Effective Date of this
Agreement and thereafter, BCBSMo shall indemnify, defend and hold
harmless Healthy Alliance from and against any and all claims,
liabilities, losses, damages, costs, attorneys' fees and expenses
arising from or relating to, directly or indirectly, any
Extracontractual Liability or Excluded Liability.
ARTICLE VI - CLOSING AND TERMINATION
6.1 Closing. The transactions contemplated by this
Agreement are subject to the satisfaction or waiver of each of
the conditions precedent to the obligations of BCBSMo and
RightCHOICE to effect the Reorganization set forth in Article IV
of the Reorganization Agreement. The assumption, reinsurance and
novation of BCBSMo's liabilities under the Assumed Policies shall
become effective as of the Closing Time. As part of the closing
of the Reorganization, BCBSMo shall transfer to Healthy Alliance
the Books and Records, the Settlement Amount by wire transfer of
funds as directed by Healthy Alliance, and deliver a complete
listing of the Assumed Policies as of the Closing Date.
6.2 Termination. This Agreement and the obligations of the
parties hereunder may be terminated at any time prior to the
Closing Date:
(a) by mutual written consent duly authorized by all
parties; or
(b) by any party, by giving notice to all other
parties, if a court of competent jurisdiction or any other
Regulatory Authority shall have issued a nonappealable final
order, decree or ruling or taken any other action, in each case
having the effect of permanently restraining, enjoining or
otherwise prohibiting the transaction contemplated by this
Agreement; or
(c) by any party, if the Reorganization Agreement is
terminated for whatever reason.
6.3 Effect of Termination. In the event that this
Agreement shall be terminated pursuant to the provisions of this
Article VI, no party hereto shall have any liability to any other
party hereto for costs, expenses, damages or otherwise.
ARTICLE VII - GENERAL PROVISIONS
7.1 Fees and Expenses. Except as otherwise expressly
provided in this Agreement, each party shall each bear their own
expenses, including the fees and expenses of their own advisors,
incurred in connection with this Agreement and the transactions
contemplated hereby.
7.2 Notices. All notices and other communications given or
made pursuant hereto shall be in writing and shall be deemed to
have been duly given or made as of the date delivered or mailed
if delivered personally or mailed by registered or certified mail
(postage prepaid, return receipt requested) to the parties at the
following addresses (or at such other address for a party as
shall be specified by the like changes of address which shall be
effective upon receipt) or sent by electronic transmission, with
confirmation received, to the telecopy number specified below:
(a) if to BCBSMO: 0000 Xxxxxxxx Xxxxxx
Xx. Xxxxx, Xxxxxxxx 00000
Telecopy (000) 000-0000
(b) if to Healthy Alliance: 0000 Xxxxxxxx Xxxxxx
Xx. Xxxxx, Xxxxxxxx 00000
Telecopy (000) 000-0000
7.3 Amendment. This Agreement may be amended by the
parties hereto by action taken by or on behalf of their
respective Boards of Directors (or where such authority shall
have been delegated to a special committee, by that special
committee) at any time prior to the Closing Date. This Agreement
may not be amended except by an instrument in writing signed by
the parties hereto. The parties acknowledge that any amendment
to this Agreement will require the approval of the Missouri
Department of Insurance.
7.4 Waiver. At any time prior to the Closing Date, any
party hereto may with respect to any other party hereto
(a) extend the time for the performance of any of the obligations
or other acts, and (b) waive compliance with any of the
agreements or conditions contained herein. Any such extension or
waiver shall be valid if set forth in an instrument in writing
signed by the party or parties to be bound thereby.
7.5 Entire Agreement. This Agreement and the Exhibits
attached hereto and referenced herein supersede all previous
agreements between the parties and constitute the entire
agreement between the parties with regard to the reinsurance and
assumption of the Policies. This Agreement cannot be changed or
modified except by a written instrument signed by both Healthy
Alliance and BCBSMo.
7.6 Parties in Interest. This Agreement shall be binding
upon and inure solely to the benefit of each party hereto and
their respective successors and assigns and, except as otherwise
expressly set forth herein, nothing in this Agreement, express or
implied, is intended to or shall confer upon any other Person any
right, benefit or remedy of any nature whatsoever under or by
reason of this Agreement.
7.7 Governing Law. This Agreement shall be governed by,
and construed in accordance with, the laws of the State of
Missouri, without regard to the principles and conflicts of laws
thereof.
7.8 Counterparts. This Agreement may be executed in one or
more counterparts, and by the different parties hereto in
separate counterparts, each of which when executed shall be
deemed to be an original but all of which taken together shall
constitute one and the same agreement.
7.9 Recitals. The Recitals to this Agreement shall be
deemed to be part of this Agreement and incorporated herein.
7.10 Fair Construction. This Agreement is the product of
negotiations and shall be deemed to have been drafted by all of
the parties. It shall be construed in accordance with the fair
meaning of its terms and its language shall not be strictly
construed against, nor shall ambiguities be resolved against, any
particular party.
7.11 Headings and Captions. The captions of Articles and
Sections hereof are for convenience only and shall not control or
affect the meaning or construction of any provisions of this
Agreement.
7.12 Assignment. This Agreement may not be assigned by any
of the parties hereto.
7.13 Independent Contractor. Each of the parties is an
independent contractor with respect to the other and not an
agent, servant, employee, or joint venturer. It is expressly
understood that without prior, written authorization of the other
party, neither party shall be the agent of the other party and
shall have no authority to bind the other party to the terms of
any agreements.
[remainder of page intentionally left blank]
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date set forth above.
BLUE CROSS AND BLUE SHIELD OF MISSOURI
By:
Print Name:
Title:
HEALTHY ALLIANCE LIFE INSURANCE
COMPANY
By:
Print Name:
Title:
EXHIBITS ATTACHED:
Exhibit A List of Policy Types
Exhibit B Novation Agreement
Exhibit C Plan Participation Agreement - BCBSMo
Exhibit D Plan Participation Agreement - Healthy Alliance
Exhibit E Policyholder Notice
Exhibit F Certificate of Assumption
EXHIBIT A - LIST OF POLICY TYPES
TYPES OF POLICIES:
Base Major - Direct Pay
Base Major - Large Group Fully-Insured
Base Major - Small Group Fully-Insured
Base Major - Large Group Self-Funded
Base Major - Small Group Self-Funded
Base Major - Indemnity Hospital Fully Insured (Direct Pay)
Basic Blue - Limited Mandate Health Insurance
Federal Employees Health Benefits Program
Medicare Supplemental (including Medigap)
BlueAdvantage - Long Term Care
EXHIBIT B
NOVATION AGREEMENT
Blue Cross and Blue Shield of Missouri, a corporation duly
organized and existing under the laws of the State of Missouri,
with its principal office in St. Louis, Missouri ("Transferor");
Healthy Alliance Life Insurance Company, a life and health
insurance company duly organized and existing under the laws of
the State of Missouri, with its principal office in St. Louis,
Missouri ("Transferee"); the Blue Cross and Blue Shield
Association, a not-for-profit corporation duly organized and
existing under the laws of the State of Illinois, with its
principal offices in Chicago, Illinois and Washington, D.C.
("Association"); and the United States Of America ("Government")
enter into this Agreement as of ___________________, 19____
("Effective Date").
(a) THE PARTIES AGREE TO THE FOLLOWING FACTS:
(1) The Government, represented by various Contracting
Officers of the U.S. Office of Personnel Management ("OPM"), has
entered into a certain contract with Transferor through the
Association; namely, Contract No. CS 1039 pursuant to the Federal
Employee Health Benefits Program. The term "the Contract" as
used in this Agreement, means Contract No. CS 1039, including all
modification, made between the Government and Transferor before
the effective date of this Agreement (whether or not performance
and payment have been completed and releases executed if the
Government or Transferor has any remaining rights, duties, or
obligations under this contract). Included in the term "the
Contract" are also all modifications made under the terms and
conditions of this Contract and purchase orders between the
Government and Transferee, on or after the effective date of this
Agreement.
(2) As of the Effective Date, Transferor has transferred to
Transferee all of its existing contracts of insurance, on an
assumption reinsurance basis, as part of a settlement agreement
in order to resolve certain litigation and disputes with the
Missouri Attorney General, Missouri Department of Insurance, and
others.
(3) Transferee has acquired all the existing contracts of
insurance of Transferor by virtue of the above transfer.
(4) Transferee has assumed all obligations and liabilities
of Transferor under the Contract by virtue of the above transfer.
(5) Transferee is in a position to fully perform all
obligations that may exist under the Contract.
(6) It is consistent with the Government's interest to
recognize Transferee as the successor party to the Contract.
(7) Evidence of the above transfer has been filed with the
Government.
(b) IN CONSIDERATION OF THESE FACTS, THE PARTIES AGREE THAT BY
THIS AGREEMENT -
(1) Transferor confirms the transfer to Transferee.
Transferor also waives any claims and rights against the
Government that it now has or may have in the future in
connection with the Contract, with the exception of the following
claims and/or rights (which are also transferred to Transferee):
(a) outstanding claims related to the audits of Transferor's
performance under the Contract conducted prior to Effective Date;
(b) claims arising from audits conducted after the Effective Date
of Transferor's performance prior to the Effective Date;
(c) claims arising from any adjustment by OPM to Transferor's
1996 annual cost submission report; and (d) adjustments for other
party liability to claims paid prior to the Effective Date.
(2) Transferee agrees to be bound by and to perform the
Contract in accordance with the conditions contained in the
Contract. Transferee also assumes all obligations and
liabilities of, and all claims against, Transferor under the
Contract as if Transferee were the original party to the
Contract.
(3) Transferee ratifies all previous actions taken by
Transferor with respect to the Contract, with the same force and
effect as if the action had been taken by Transferee.
(4) The Government recognizes Transferee as Transferor's
successor on interest in and to the Contract. Transferee by this
Agreement becomes entitled to all rights, titles, and interests
of Transferor in and to the Contract as if Transferee were the
original party to the Contract. Following the Effective Date of
this Agreement, the term "Contractor," as used in the Contract,
shall refer to Transferee.
(5) Except as expressly provided in this Agreement, nothing
in it shall be construed as a waiver of any rights of the
Government against Transferor.
(6) All payments and reimbursements previously made by the
Government to Transferor, and all other previous actions taken by
the Government under the Contract, shall be considered to have
discharged those parts of the Government's obligations under the
Contract. All payments and reimbursements made by the Government
after the date of this Agreement in the name of or to the
Transferor shall have the same force and effect as if made to
Transferee, and shall constitute a complete discharge of the
Government's obligations under the Contract, to the extent of the
amounts paid or reimbursed.
(7) Transferor and Transferee agree that the Government is
not obligated to pay or reimburse either of them for, or
otherwise give effect to, any costs, taxes, or other expenses, or
any related increase, directly or indirectly arising out of or
resulting from the transfer to this Agreement, other than those
that the Government in the absence of this transfer or Agreement
would have been obligated to pay or reimburse under the terms of
the Contract.
(8) Transferor guarantees payment of all liabilities and
the performance of all obligations that the Transferee
(a) assumes under this Agreement or (b) may undertake in the
future should the Contract be modified under its terms and
conditions. Transferor waives notice of, and consents to, any
such future modifications.
(9) The Contract shall remain in full force and effect,
except as modified by this Agreement. Each party has executed
this Agreement as of the day and year first above written.
BLUE CROSS AND BLUE SHIELD ASSOCIATION
By:
Print Name:
Title:
BLUE CROSS AND BLUE SHIELD OF MISSOURI
By:
Print Name:
Title:
HEALTHY ALLIANCE LIFE INSURANCE COMPANY
By:
Print Name:
Title:
Certificate
I, _________________________________, certify that I am
Secretary of Transferor; that __________________________________,
who signed this Agreement for this corporation, was then _________
of this corporation; and that this Agreement was duly signed for
and on behalf of this corporation and within the scope of its
corporate powers. Witness my hand and the seal of this
corporation ____ day of ______________, 19___.
By
[CORPORATE SEAL]
Certificate
I, __________________________________, certify that I am
Secretary of Transferee; that
_____________________________________, who signed this Agreement
for this corporation, was then ________________________ of this
corporation; and that this Agreement was duly signed for and on
behalf of this corporation and within the scope of its corporate
powers. Witness my hand and the seal of this corporation ____
day of ________________, 19___.
By
[CORPORATE SEAL]
EXHIBIT C
PLAN PARTICIPATION AGREEMENT
(Blue Cross and Blue Shield - Federal Employee Program)
Blue Cross and Blue Shield of Missouri
This Plan Participation Agreement is made and entered into
between the Blue Cross and Blue Shield Association, an Illinois
not-for-profit corporation ("Association"), and Blue Cross and
Blue Shield of Missouri, a Missouri health services corporation
("Plan").
WHEREAS, the Plan has executed an agreement (identified as
"Exhibit A") authorizing the Association to obligate the Plan to
underwrite and administer benefits under Title 0, Xxxxxxx 00,
Xxxxxx Xxxxxx Code (hereinafter referred to as the "Federal
Employee Program" or "FEP"); and
WHEREAS, the Association has entered into Contract No. C.S.
1039 with the United States Office of Personnel Management
(hereinafter referred to as "OPM"), for the provision of health
care benefits under FEP (hereinafter referred to as the
"Contract"), on behalf of the undersigned Plan and other Blue
Cross and Blue Shield organizations (hereinafter referred to as
"Participating Plans"); and
WHEREAS, it is desirable to set forth more fully the
obligations and authorities of the Plan and the Association with
respect to FEP,
NOW, THEREFORE, in consideration of the mutual obligations
of the parties to this Agreement as hereinafter set forth, and in
consideration of the execution of identical Agreements (excluding
schedules specifying the areas to be serviced and underwritten by
the Participating Plans) by other Participating Plans, it is
agreed that:
1. Functions of the Association
The Association shall:
1.1. On behalf of the Plan, contract with the Office of
Personnel Management to underwrite and administer health care
benefits for FEP subscribers in consideration of subscription
charges which are intended to maintain the sound financial
condition of FEP.
1.2. Establish policies, practices, and procedures for the
administration of FEP.
1.3. Interpret the provisions of the Contract.
1.4. Provide the Plan (at reasonable intervals and no less
than annually) with financial reports reflecting the financial
condition of FEP.
1.5. Make determinations with respect to (i) the Plan's FEP
budget, (ii) resolution of issues arising from audits of the Plan
with respect to FEP, (iii) the Plan's charges to the Contract,
(iv) appeals from FEP benefits determinations by the Plan, and
(v) lawsuits involving the Plan arising under the Contract.
1.6. Promptly provide to the Plan information needed to
permit it to perform its functions under FEP and assist it in
every reasonable way to administer its assigned functions.
1.7. Maintain the confidentiality of all information
concerning the Plan which comes to the attention of the
Association in the course of FEP reviews and audits of the Plan
except as disclosure is required by law or is necessary for the
administration of the Contract, and notify the Plan upon the
Association's receipt of a request for Plan records under the
Freedom of Information Act or upon receipt of a subpoena for such
records. This requirement will be satisfied, in instances in
which the Association discloses information to consultants or
subcontractors in the administration of the Contract, if the
consultant or subcontractor agrees to maintain the
confidentiality of the information.
1.8. Perform central administrative services for FEP
directly or through an agent, including but no limited to
(a) receipt of subscription income, (b) maintenance of central
eligibility files, (c) advertising, (d) retention, investment,
use and distribution of the Service Charge as specified in this
Agreement, (e) execution of contracts on behalf of Participating
Plans with vendors that are providing health care services or
supplies or other administrative services for the Federal
Employee Program on a national basis, including a mail order
prescription drug benefit and a national retail prescription drug
program, and (f) arranging for the temporary underwriting and
servicing of FEP benefits (including marketing and contracting
with providers) in an area that is not being serviced or
underwritten by a Participation Plan, giving priority to
arranging for the provision of such services through one or more
Participating Plans.
2. Functions of the Plan
The Plan shall:
2.1. Underwrite and administer FEP benefits, in accordance
with the terms of the Contract and in the manner set forth
herein, as assigned pursuant to Schedule A.
2.2. Comply with the policies, practices, and procedures
adopted by the Association for the administration and provision
of benefits under FEP, including timely submission of the
certification with respect to the Plan's data reflected in the
Annual Accounting Statement to be submitted to OPM.
2.3. Comply with the Association's interpretations of the
Contract.
2.4. Comply with the Association's determinations with
respect to (i) questions involving the Plan's FEP budget,
(ii) issues arising from audits of the Plan with respect to FEP,
(iii) the Plan's charges to the Contract, (iv) appeals from FEP
benefits determinations, and (v) lawsuits involving the Plan
arising under the Contract.
2.5. Comply with the terms, provisions and conditions of the
Contract, the Federal Employees Health Benefits Act [5 U.S.C. Ch.
89] and regulations issued thereunder, the Federal Acquisition
Regulation [48 C.F.R.], and the Federal Employees Health Benefits
Acquisition Regulation [48 C.F.R. Ch. 16].
2.6. Conform to all reasonable requests of the Association
in connection with the administration of FEP, including providing
OPM and the Association access to all of the Plan's records and
other information relating to FEP.
2.7. Notify the Association of any occurrence or anticipated
occurrence that might reasonably be expected to materially affect
the Plan's ability to meet its obligations under the Contract.
2.8. Hold harmless and indemnify the officers, board of
directors, Board of Managers of FEP, employees, and agents of the
Association for all judgments, awards, liabilities, settlements,
or other costs, including court costs, and taxes, interest and
penalties, which are not the direct consequence of their gross
negligence or criminal misconduct, incurred by the aforementioned
individuals in the performance of the obligations or duties of
the Association, pursuant to this Agreement.
3. Finances
3.1. Claims Expense
The Plan shall be reimbursed currently (to the extent
funds are available) for the cost of health care benefits
chargeable to the Contract, net of any refunds, rebates,
allowances or other credits (such as provider discounts and
rebates, hospital year-end settlements, and other credits
specified by regulation as reducing the cost of the Contract).
3.2. Administrative Expense
3.2.1. The Association's Administrative Expense.
3.2.1.1. The Association (including administrative
agencies selected by the Association to perform functions under
FEP, such as the Operations Center) shall be reimbursed currently
for chargeable FEP administrative expenses estimated to be
incurred by it for the contract year.
3.2.1.2. The actual administrative expenses
incurred by the Association for the contract year, which are
chargeable under FEP, shall be determined following the close of
the contract year.
3.2.1.3. The amounts determined under 3.2.1.2.
shall be compared to the amounts paid under 3.2.1.1., and the
Association or FEP shall be credited with the balance as
appropriate.
3.2.1.4. The Association shall be reimbursed for
non-chargeable FEP expenses, from the Service Charge, to the
extent authorized by the Board of Managers of FEP.
3.2.2. The Plan's Administrative Expense.
3.2.2.1. The Plan shall be reimbursed currently
for its estimated administrative costs chargeable to the Contract
for the contract year, as determined by the Association, taking
into account the Plan's FEP budget and any limitations on amounts
payable under the Contract.
3.2.2.2. The administrative costs of the Plan for
the contract year will be those costs approved by the Association
pursuant to the budget process and chargeable under the terms of
the Contract, provided, however, that those administrative costs
shall not exceed an amount which the Association determines
would, together with payments subject to the administrative
expense limitation under the Contract, cause the administrative
expenses subject to limitation under the Contract to exceed that
limitation.
3.2.2.3. The amounts reimbursed to the Plan under
3.2.2.1. shall be compared to the administrative costs determined
under 3.2.2.2., and the Plan or FEP shall be credited with the
balance, as appropriate.
3.3. Mandatory, Statutory Reserve Payments
The mandatory, statutory reserve payments incurred by
the Plan for the contract year with respect to FEP claims
allocated to the Plan pursuant to Section 5.2 hereof, which are
in excess of the Plan's share of the Service Charge for the
contract year and are chargeable under the terms of the Contract,
shall be determined by the Association and paid to the Plan. If
the statutory reserve is no longer required for the purpose for
which it was created, and these funds become available for the
general use of the Plan, a pro rata share based upon FEP's
contribution to the Plan's total statutory reserves shall be
returned to FEP in accordance with 48 C.F.R. 31.201-5.
3.4. [Reserved]
3.5. Service Charge
3.5.1. The Service Charge shall be allocated to
Plans in the following manner:
3.5.1.1. One-half of the Service Charge remaining
after an appropriation made pursuant to 3.5.2 will be allocated
among the Participating Plans in the ratio of each Plan's
contract months for the current contract year to the total FEP
contract months for the contract year, as determined by the
Association.
3.5.1.2. One-half of the Service Charge remaining
after an appropriation made pursuant to 3.5.2 will be allocated
among the Participating Plans based on each Participating Plan's
relative performance for that contract year, determined on the
basis of performance measurement criteria approved by the Board
of Managers and applied by the Association.
3.5.2. In its discretion, the Association may
appropriate up to 50 percent of the Service Charge for purposes
which it determines are in the best interest of FEP. The
Director of FEP may exercise that authority with respect to
amounts not in excess of $50,000 which in the aggregate do not
exceed 1% of the Service Charge for the contract year, but
appropriations in excess of those limits must be approved by the
Board of Managers. The amounts appropriated by the Association
will be subtracted from the Service Charge that is to be
distributed to the Participating Plans.
3.5.3. In general, the Plan's share of the
unappropriated Service Charge shall be paid to the Plan at a time
when the Association determines to distribute the unappropriated
Service Charge for that year to all Plans. Any amount of
appropriated Service Charge and interest not expended on the FEP
shall be paid to the Plans, at a time determined by the
Association, in accordance with 3.5.1. In its discretion, the
Association may withhold payment of the Plan's share of the
Service Charge if the Plan has not supplied the certification
referred to in 2.2.
3.6. Accounting
3.6.1. The income and expenses of FEP shall be
determined for the contract year as follows:
3.6.2. The income shall include subscription income
(including payments from the Contingency Reserve for each
contract year) and investment income.
3.6.3. The expenses for each contract year shall
include incurred claims, chargeable administrative expenses, the
Service Charge, and mandatory, statutory reserve payments.
Adjustments in the expenses which are made after the submission
of the Annual Accounting Statement to OPM for a contract year
shall be reflected in the expenses for the year in which the
adjustment becomes final.
3.6.4. The net gain or loss for a contract year
shall be the difference between the amounts specified in 3.6.2.
and 3.6.3.
3.6.5. The gain or loss specified in 3.6.4. for a
contract year shall be added to or subtracted from the Special
Reserve balance as of the beginning of that contract year and the
result shall be the Special Reserve balance at the end of that
contract year.
3.6.6. Solely for the purpose of determining the
Plan's share of a negative balance in the Special Reserve under
this Section 3.6.6, the balance in the Contingency Reserve in the
U.S. Treasury Department for the Government-wide Service Benefit
Plan as of the end of the contract year shall be allocated to the
Special Reserve, and the Special Reserve shall be reduced by a
reasonable estimate of the administrative costs of paying
incurred claims which are unpaid as of the end of the contract
year. If the Special Reserve is negative after the Contingency
Reserve balance is allocated, the Plan's liability at the end of
the contract year shall be determined in the following manner:
3.6.6.1. A portion of the negative balance shall
be allocated to the Plan in an amount which bears the same ratio
to the total negative balance that the claims expense allocated
to the Plan pursuant to Section 5.2. hereof for the current
contract year and the four preceding contract years bears to the
total claims expenses of all Plans for the current contract year
and the four preceding contract years.
3.6.6.2. In the event a Plan ceases to be a
Participating Plan at a time when the Special Reserve balance is
negative, the Plan's liability in subsequent contract years shall
be determined as follows:
3.6.6.2.1 If a negative balance in the
Special Reserve at the end of a subsequent contract year equals
or exceeds the negative balance at the end of the contract year
in which the Plan ceased to be a Participating Plan, the Plan's
share of the liability shall be the amount of its liability
determined for the contract year in which the Plan ceased to
share responsibility unless that liability is reduced by reason
of Section 3.6.6.2.2. or 3.6.6.2.3.
3.6.6.2.2 If a negative balance in the
Special Reserve at the end of a subsequent contract year is less
than the negative balance at the end of the contract year in
which the Plan ceased to be a Participating Plan, the Plan's
liability shall be an amount which bears the same ratio to the
negative balance in that subsequent year that the portion of the
negative balance allocated to the Plan under Section 3.6.6.1. did
bear to the negative balance at the end of the contract year in
which the Plan ceased to be a Participating Plan. If a Plan's
liability decreases by reason of this Section 3.6.6.2.2., it
shall not thereafter increase except by reason of an allocation
of liability under Section 3.6.6.1. in the event the
Participating Plan resumes participation.
3.6.6.2.3 If the balance in the Special
Reserve is positive at the end of a contract year following the
year in which a Plan ceases to be a Participating Plan, the Plan
shall have no further liability with respect to FEP unless it
resumes its status as a Participating Plan.
3.6.6.3. In the event a Participating Plan is
discharged by a court of competent jurisdiction from its
obligation to pay all or part of its share of the liability
reflected by a negative Special Reserve, that amount shall be
reallocated to the remaining Plans in proportion to their
liabilities under the Plan Participation Agreement.
3.7. Special Reserve
3.7.1. A positive balance in the FEP Special Reserve
shall be available to offset subsequent losses and to increase
benefits.
3.7.2. A deficit in the Special Reserve shall be
recovered from the FEP Special Reserve in future years to the
extent funds are available.
3.7.3. Upon termination of the Contract and
satisfaction of all Contract liabilities, a positive balance in
the FEP Special Reserve shall be paid to the Office of Personnel
Management for credit to the Federal Employees Health Benefits
Fund.
3.7.4. Upon termination of the Contract and failure
to satisfy all Contract liabilities after exhaustion of all FEP
reserves, the deficit shall be allocated in accordance with the
provisions of 3.6.6.
3.8. FEP liabilities of an insolvent Participating Plan.
3.8.1. In the event a Participating Plan is
discharged by a court of competent jurisdiction from its
obligation to pay all or part of a FEP liability and the
liability is not chargeable to the FEP contract, that amount
shall be reallocated to the remaining Plans in proportion to
their liabilities under the Plan Participation Agreement at the
time the court order becomes final.
3.8.2. The FEP liability reallocated to the
remaining Plans, pursuant to 3.8.1, shall be paid promptly to
the Special Reserve by those Plans.
3.8.3. Notwithstanding the above, payment of a
reallocated portion of the remaining liability pursuant to
3.8.2 shall not be construed as an admission by the Plan of
liability for another Participating Plan's non-FEP liability, but
is paid only in recognition of the unique nature of the Federal
Employee Program and the contractual obligations agreed to
hereunder.
4. Taxes Not Chargeable to the Contract
The Plan shall be liable for its proportionate share of any
taxes, interest and penalties imposed on the Federal Employee
Program which amounts are not chargeable to the Contract. The
Plan shall share in any such liability in the same proportion
that the claims expense allocated to the Plan pursuant to
Section 5.2 bears to the total claims expense allocated to all
Plans for the year with respect to which the liability is
incurred.
5. Areas of Responsibility for Claims Payments and
Participation
5.1. The undersigned Plan shall underwrite FEP benefits as
specified in Schedule A to this Agreement.
Schedule A may be revised by the parties from time to time,
without reexecution of this Agreement.
5.2. For the purpose of determining the undersigned Plan's
share, if any, of any negative balance in the Special Reserve or
of any unsatisfied liabilities, determined in accordance with 3.6
hereof, the total FEP claims allocated to the Plan for a contract
year shall be the total benefits underwritten by the Plan as
provided in Schedule A.
5.3. The Association, acting pursuant to a performance
evaluation program adopted by the Board of Managers and
applicable to all Plans participating in FEP, is authorized to
reassign all or part of one or both of the following functions
from the Plan to another Plan: (a) claims processing or,
(b) subscriber servicing. Any reassigned function will be
administered in keeping with service area limitations on the use
of the Blue Cross and Blue Shield marks.
6. Delegation of Authority
6.1. The Association
The Association may delegate its functions under this
Agreement, and references herein to the Association shall be
applicable to said delegate or delegates, but said delegation
shall not release the Association of its obligations under this
Agreement.
6.2. The Plan
6.2.1. Only Blue Cross and Blue Shield Plans or
their wholly-owned affiliates are authorized to perform the
functions set forth in this Agreement. However, no such Plan or
affiliate may perform such functions without the express written
authority of the Association acting on behalf of all
Participating Plans. Execution of this Agreement by the
Association constitutes such authority with respect to the
undersigned Plan or affiliate.
6.2.2. The rights and duties of the Plan set forth
in this Agreement may not be delegated, assigned or transferred
by the Plan in any manner whatsoever without the express written
approval of the Association acting on behalf of all Participating
Plans.
7. Definitions
Terms used in this Agreement shall have the same meaning
that they have in the Contract. The term "Board of Managers"
refers to the Standing Committee of the Board of Directors of the
Association which has been assigned the responsibility delegated
to the Association by this Agreement, or the successor to said
Committee, and the term "Service Charge", as used hereafter in
this Agreement, refers to the sum of other Service Charge and the
interest income earned on the Service Charge.
8. Integration
This Agreement, together with its Schedule A and Exhibit A
to the Contract with OPM, constitutes the entire agreement
between the parties with respect to the underwriting and
administration of benefits under the FEP. This Agreement is
subject to the terms of a validly executed and effective License
Agreement(s) pertaining to the Plan's right to use the Blue Cross
or Blue Shield licensed xxxx(s) and name(s) (hereafter, "License
Agreement(s)") and shall be construed in accordance with such
terms.
9. Amendment of Agreement
9.1. This Agreement may be amended by the mutual agreement
of the parties.
9.2. The Agreement may be amended by the following process:
9.2.1. The Association or the Plan, with the
approval of the Board of Managers, may propose an amendment for
adoption by all Participating Plans.
9.2.2. The Association shall notify all
Participating Plans, by first class mail, when it has received
executed amendments from three-fourths of the Participating
Plans.
9.2.3. If the Association fails to obtain such
executed amendments within three months from the date of the
proposal, the Association shall notify all Participating Plans,
by first class mail, that the proposal has been recalled.
9.2.4. Upon receipt of executed amendments from
three-fourths of the Participating Plans before a recall
specified in Section 9.2.3, the amendment will become effective
with respect to the Plan, if it did not execute the amendment,
unless the Plan notifies the Association in writing, within 30
days of receipt of the mailing of the notice referenced in
Section 9.2.2, that it elects to not be bound by the amendment.
9.2.5. The effective date of the amendment with
respect to the Plan, if it has executed the amendment or has not
given timely notice of its election to not be bound by the
amendment as required by Section 9.2.4, will be the first day of
the second month following the mailing of the notice referred to
in Section 9.2.2.
9.2.6. This Agreement will terminate with respect to
the Plan pursuant to Section 10.3 of this Agreement if the Plan
elects not to be bound by an amendment adopted pursuant this
Section 9.2.
10. Termination of Agreement
10.1. This Agreement may be terminated without cause by
either party to this Agreement by giving notice to the other
party at least 120 days prior to the last day of the then current
contract term of the FEP Contract between the Association and the
Office of Personnel Management. Termination pursuant to this
Section 10.1 will not affect the rights or obligations of either
party that have accrued under this Agreement or the Contract,
including the provisions of the Contract relating to terminated
costs.
10.2. The Association may terminate this Agreement if
the Plan's license(s) to use the Blue Cross or Blue Shield
licensed xxxx(s) and name(s) is terminated with full legal force
and effect. In the event the Agreement is terminated pursuant to
this paragraph, the Association will issue a Notice of
Termination to the Plan specifying the termination date which
shall be no earlier than the effective date of the termination of
the Plan's License Agreement(s).
10.3. If the Plan elects, pursuant to Section 9.2.4, to
not be bound by an amendment made pursuant to Section 9.2, this
Agreement will terminate. In the event this Agreement is
terminated pursuant to this Section 10.3, the Association will
issue a Notice of Termination to the Plan specifying the
termination date which shall be no earlier than the last day
prior to the effective date of the amendment as specified in
Section 9.2.5.
10.4. The parties understand that it may be necessary
for the Plan to continue to perform obligations undertaken under
the this Agreement and the Contract with OPM following the
effective date of termination of this Agreement. In those
circumstances -
10.4.1. The Plan will implement procedures, as
directed by the Association, to close down its operations
pursuant to this Agreement. During the period of closing down
operations, the provisions of this Agreement will continue to
apply.
10.4.2. During the period of performance subsequent
to the effective date of termination, the Plan will continue to
perform the functions specified in this Agreement except as
directed by the Association. The Association will fund the
continuing operations of the Plan in accordance with the terms of
this Agreement.
10.4.3. The Plan will cooperate fully with the
Association in the transfer of its functions under this Agreement
to another organization specified by the Association.
10.5. Termination of this Agreement automatically will
terminate the power of attorney given to the Association by the
Plan, and referred to as Exhibit A to the Contract with OPM, as
of the effective date of the termination of this Agreement.
11. Appeals
The Plan may appeal to the Board of Managers if it disagrees
with the Association's decision with respect to a matter that the
Association is authorized to decide under the terms of the
Agreement, and it may appeal to the Board of Directors if it
disagrees with the Board of Managers' decision on appeal. This
provision does not affect the rights of the parties, under the
License Agreement(s), with respect to disputes resolution.
12. Partnership Not Intended
Nothing in this Agreement is intended, or shall be deemed,
to constitute a partnership or joint venture between the parties
or among the Plan and other Participating Plans.
13. Law Governing and Severability
This Agreement shall be governed by the laws of the state of
Illinois, both as to interpretation and performance. If any
provision of this Agreement is held invalid or unenforceable, the
invalidity or unenforceability shall not affect any other
provisions of this Agreement, and the rights and obligations of
the parties shall be construed and enforced as if the Agreement
did not contain the particular provision held to be invalid.
14. Notices
Notices made pursuant to this Agreement shall be sent by
first class mail, postage prepaid, to the address of the party
specified below on the signature page of this Agreement, unless
written notice of a change of address has been provided.
15. Force Majeure
Neither party shall be liable for damages due to delay or
failure to perform any obligation under this Agreement if such
delay or failure results directly or indirectly from
circumstances beyond the control of such party. Such
circumstances shall include, but shall not be limited to, acts of
God, acts of war, civil commotions, riots, strikes, lockouts,
acts of the government in either its sovereign or contractual
capacity, perturbation in telecommunications transmissions,
inability to obtain suitable equipment or components, accident,
fire, water damage, flood, earthquake, or other natural
catastrophe.
This Agreement may be executed in counterparts and shall be
effective as of the January 1, 1995.
BLUE CROSS AND BLUE SHIELD BLUE CROSS AND BLUE SHIELD OF
ASSOCIATION MISSOURI
By: By:
Print Name: Print Name:
Title: Vice President Title:
Federal Employee Program
Address: Address:
Date: Date:
EXHIBIT A - AGREEMENT
AGREEMENT made this day of , 199 by
and between Blue Cross and Blue Shield Association, a not-for-
profit corporation, authorized and existing under the laws of the
State of Illinois (hereinafter called the "Association") and Blue
Cross and Blue Shield of Missouri, a corporation, authorized and
existing under the laws of the State of Missouri (hereinafter
called the "Plan").
WHEREAS, Title 5, Chapter 89 of the United States Code
contemplates the provision of health benefit xxxxxx one
Government-wide Service Benefit Plan, and
WHEREAS, the Plan is engaged in providing health care
benefits to subscribers.
NOW, THEREFORE in consideration of the execution of this
agreement by Blue Cross and Blue Shield Plans, other than the
undersigned, and in further consideration of the undertakings set
forth in this Exhibit,
IT IS AGREED AS FOLLOWS:
ARTICLE I
The Association is hereby authorized and directed by the
undersigned Plan to execute on behalf of the Plan the necessary
documents, including any amendments thereof, with the United
States Office of Personnel Management (hereinafter called
"Agency") to furnish health benefits through the undersigned Plan
and other similar Plans as provided by the Government-wide
Service Benefit Plan, to those employees and annuitants,
including their dependents, if any, enrolled under the Contract
between the Association and the Agency.
ARTICLE II
In accordance with the authority herein granted, the Association
is authorized to receive, on behalf of the undersigned Plan,
subscription charges paid by the Agency in accordance with the
terms of the contract.
ARTICLE III
The mutual obligations undertaken by the Association and the Plan
under this agreement shall be a matter of separate agreement
between the parties of this agreement.
ARTICLE IV
The Association may delegate its authority under this agreement,
but said delegations shall not relieve the Association of its
obligations under this agreement.
ARTICLE V
This agreement may be canceled by either party giving to the
other party written notice at least 120 days prior to the last
day of the then current contract term of the Contract between the
Agency and the Association.
ARTICLE VI
This agreement supersedes any prior agreement authorizing the
Blue Cross and Blue Shield Association to act for the Plan in
connection with furnishing benefits under the Government-wide
Service Benefit Plan.
IN WITNESS WHEREOF, the parties hereto have executed this
agreement the day and year aforesaid:
BLUE CROSS AND BLUE SHIELD BLUE CROSS AND BLUE SHIELD OF
ASSOCIATION MISSOURI
By By
(Typed or Printed)
Name Name
(Signature) (Signature)
Title Senior Vice President Title
Federal Employee Program
Date Date
SCHEDULE A - BENEFITS
PLAN PARTICIPATION AGREEMENT
The Association and the Plan agree, pursuant to Section 5 of
the Agreement, that the Plan shall provide (except as set forth
in Section 2.1. of the Agreement), for the period beginning
January 1, 1995, and continuing until this Schedule is amended or
the Agreement is terminated, the following FEP benefits, as
described in the FEP Administrative Manual, for the counties of
Adair, Audrain, Barry, Barton, Bollinger, Boone, Butler,
Callaway, Camden, Cape Girardeau, Carter, Cedar, Xxxxxxxx,
Xxxxxxxxx, Clark, Cole, Cooper, Crawford, Dade, Dallas, Xxxx,
Xxxxxxx, Dunklin, Franklin, Gasconade, Xxxxxx, Hickory, Howard,
Howell, Iron, Jasper, Jefferson, Knox, Laclede, Lawrence, Lewis,
Lincoln, Linn, Macon, Madison, Maries, Xxxxxx, McDonald, Miller,
Mississippi, Moniteau, Monroe, Montgomery, Morgan, New Madrid,
Newton, Oregon, Osage, Ozark, Pemiscot, Perry, Xxxxxx., Pike,
Polk, Pulaski, Putnam, Ralls, Randolph, Reynolds, Ripley, Saint
Xxxxxxx, Sainte Xxxxxxxxx, Saint Francois, Saint Louis, Saint
Louis City, Xxxxxxxx, Scotland, Scott, Shannon, Shelby, Stoddard,
Stone, Sullivan, Taney, Texas, Warren, Washington, Wayne,
Webster, and Xxxxxx in the State of Missouri.
HIGH OPTION
(A) Benefits for institutional inpatient and outpatient services
rendered by and payable to institutions located within the Plan's
service area.
(B) Benefits for professional inpatient and outpatient services
rendered by and payable to professionals located within the
Plan's service area.
(C) Benefits for institutional and professional inpatient
services rendered by institutional and professional providers
located within the Plan's service area that are payable to
subscribers.
(D) Benefits for institutional and professional outpatient, and
other health care services payable to subscribers residing in the
Plan's service area or rendered by providers located within the
Plan's service area.
STANDARD OPTION
(A) Benefits for institutional inpatient and outpatient services
rendered by and payable to institutions located within the Plan's
service area.
(B) Benefits for dental services rendered by and payable to
professional dental providers located within the Plan's service
area.
(C) Benefits for professional inpatient and outpatient services
rendered by and payable to professionals located within the
Plan's service area.
(D) Benefits for institutional and professional inpatient
services rendered by institutional and professional providers
located within the Plan's service area that are payable to
subscribers.
(E) Benefits for institutional and professional outpatient,
dental, and other health care services payable to subscribers
residing in the Plan's service area or rendered by providers
located within the Plan's service area.
BLUE CROSS AND BLUE SHIELD BLUE CROSS AND BLUE SHIELD
ASSOCIATION OF MISSOURI
By By
(Printed or Typed)
Name Name
(Signature)
Title Vice President Title
Federal Employee Program
Date Date
EXHIBIT D
[AMENDED AND RESTATED]1 PLAN PARTICIPATION AGREEMENT
(Blue Cross and Blue Shield - Federal Employee Program)
Healthy Alliance Life Insurance Company
This [Amended and Restated] Plan Participation Agreement is
made and entered into between the Blue Cross and Blue Shield
Association, an Illinois not-for-profit corporation
("Association"), and Healthy Alliance Life Insurance Company, a
Missouri corporation ("Plan").
[WHEREAS, the Association and Blue Cross and Blue Shield of
Missouri ("BCBSMo") entered into that certain Plan Participation
Agreement effective as of January 1, 1995, as the same may have
been amended and supplemented from time to time (as amended and
supplemented, the "Original Agreement"); and]
[WHEREAS, Plan succeeded to and assumed the rights,
interests and obligations of BCBSMo under the Original Agreement,
pursuant to that certain Assignment and Assumption Agreement
dated ; and]
[WHEREAS, the Association and the Plan desire to amend and
restate the Original Agreement, all as hereinafter provided,
effective as of ; and]
WHEREAS, the Plan has executed an agreement (identified as
"Exhibit A") authorizing the Association to obligate the Plan to
underwrite and administer benefits under Title 0, Xxxxxxx 00,
Xxxxxx Xxxxxx Code (hereinafter referred to as the "Federal
Employee Program" or "FEP"); and
WHEREAS, the Association has entered into Contract No. C.S.
1039 with the United States Office of Personnel Management
(hereinafter referred to as "OPM"), for the provision of health
care benefits under FEP (hereinafter referred to as the
"Contract"), on behalf of the undersigned Plan and other Blue
Cross and Blue Shield organizations (hereinafter referred to as
"Participating Plans"); and
WHEREAS, it is desirable to set forth more fully the
obligations and authorities of the Plan and the Association with
respect to FEP,
NOW, THEREFORE, in consideration of the mutual obligations
of the parties to this Agreement as hereinafter set forth, and in
consideration of the execution of identical Agreements (excluding
schedules specifying the areas to be serviced and underwritten by
the Participating Plans) by other Participating Plans, it is
agreed that:
1. Functions of the Association
The Association shall:
1.1. On behalf of the Plan, contract with the Office of
Personnel Management to underwrite and administer health care
benefits for FEP subscribers in consideration of subscription
charges which are intended to maintain the sound financial
condition of FEP.
1.2. Establish policies, practices, and procedures for the
administration of FEP.
______________________
1 Bracketed information denotes optional wording.
1.3. Interpret the provisions of the Contract.
1.4. Provide the Plan (at reasonable intervals and no less
than annually) with financial reports reflecting the financial
condition of FEP.
1.5. Make determinations with respect to (i) the Plan's FEP
budget, (ii) resolution of issues arising from audits of the Plan
with respect to FEP, (iii) the Plan's charges to the Contract,
(iv) appeals from FEP benefits determinations by the Plan, and
(v) lawsuits involving the Plan arising under the Contract.
1.6. Promptly provide to the Plan information needed to
permit it to perform its functions under FEP and assist it in
every reasonable way to administer its assigned functions.
1.7. Maintain the confidentiality of all information
concerning the Plan which comes to the attention of the
Association in the course of FEP reviews and audits of the Plan
except as disclosure is required by law or is necessary for the
administration of the Contract, and notify the Plan upon the
Association's receipt of a request for Plan records under the
Freedom of Information Act or upon receipt of a subpoena for such
records. This requirement will be satisfied, in instances in
which the Association discloses information to consultants or
subcontractors in the administration of the Contract, if the
consultant or subcontractor agrees to maintain the
confidentiality of the information.
1.8. Perform central administrative services for FEP
directly or through an agent, including but no limited to
(a) receipt of subscription income, (b) maintenance of central
eligibility files, (c) advertising, (d) retention, investment,
use and distribution of the Service Charge as specified in this
Agreement, (e) execution of contracts on behalf of Participating
Plans with vendors that are providing health care services or
supplies or other administrative services for the Federal
Employee Program on a national basis, including a mail order
prescription drug benefit and a national retail prescription drug
program, and (f) arranging for the temporary underwriting and
servicing of FEP benefits (including marketing and contracting
with providers) in an area that is not being serviced or
underwritten by a Participation Plan, giving priority to
arranging for the provision of such services through one or more
Participating Plans.
2. Functions of the Plan
The Plan shall:
2.1. Underwrite and administer FEP benefits, in accordance
with the terms of the Contract and in the manner set forth
herein, as assigned pursuant to Schedule A.
2.2. Comply with the policies, practices, and procedures
adopted by the Association for the administration and provision
of benefits under FEP, including timely submission of the
certification with respect to the Plan's data reflected in the
Annual Accounting Statement to be submitted to OPM.
2.3. Comply with the Association's interpretations of the
Contract.
2.4. Comply with the Association's determinations with
respect to (i) questions involving the Plan's FEP budget,
(ii) issues arising from audits of the Plan with respect to FEP,
(iii) the Plan's charges to the Contract, (iv) appeals from FEP
benefits determinations, and (v) lawsuits involving the Plan
arising under the Contract.
2.5. Comply with the terms, provisions and conditions of the
Contract, the Federal Employees Health Benefits Act [5 U.S.C. Ch.
89] and regulations issued thereunder, the Federal Acquisition
Regulation [48 C.F.R.], and the Federal Employees Health Benefits
Acquisition Regulation [48 C.F.R. Ch. 16].
2.6. Conform to all reasonable requests of the Association
in connection with the administration of FEP, including providing
OPM and the Association access to all of the Plan's records and
other information relating to FEP.
2.7. Notify the Association of any occurrence or anticipated
occurrence that might reasonably be expected to materially affect
the Plan's ability to meet its obligations under the Contract.
2.8. Hold harmless and indemnify the officers, board of
directors, Board of Managers of FEP, employees, and agents of the
Association for all judgments, awards, liabilities, settlements,
or other costs, including court costs, and taxes, interest and
penalties, which are not the direct consequence of their gross
negligence or criminal misconduct, incurred by the aforementioned
individuals in the performance of the obligations or duties of
the Association, pursuant to this Agreement.
3. Finances
3.1. Claims Expense
The Plan shall be reimbursed currently (to the extent
funds are available) for the cost of health care benefits
chargeable to the Contract, net of any refunds, rebates,
allowances or other credits (such as provider discounts and
rebates, hospital year-end settlements, and other credits
specified by regulation as reducing the cost of the Contract).
3.2. Administrative Expense
3.2.1. The Association's Administrative Expense.
3.2.1.1. The Association (including administrative
agencies selected by the Association to perform functions under
FEP, such as the Operations Center) shall be reimbursed currently
for chargeable FEP administrative expenses estimated to be
incurred by it for the contract year.
3.2.1.2. The actual administrative expenses
incurred by the Association for the contract year, which are
chargeable under FEP, shall be determined following the close of
the contract year.
3.2.1.3. The amounts determined under 3.2.1.2.
shall be compared to the amounts paid under 3.2.1.1., and the
Association or FEP shall be credited with the balance as
appropriate.
3.2.1.4. The Association shall be reimbursed for
non-chargeable FEP expenses, from the Service Charge, to the
extent authorized by the Board of Managers of FEP.
3.2.2. The Plan's Administrative Expense.
3.2.2.1. The Plan shall be reimbursed currently
for its estimated administrative costs chargeable to the Contract
for the contract year, as determined by the Association, taking
into account the Plan's FEP budget and any limitations on amounts
payable under the Contract.
3.2.2.2. The administrative costs of the Plan for
the contract year will be those costs approved by the Association
pursuant to the budget process and chargeable under the terms of
the Contract, provided, however, that those administrative costs
shall not exceed an amount which the Association determines
would, together with payments subject to the administrative
expense limitation under the Contract, cause the administrative
expenses subject to limitation under the Contract to exceed that
limitation.
3.2.2.3. The amounts reimbursed to the Plan under
3.2.2.1. shall be compared to the administrative costs determined
under 3.2.2.2., and the Plan or FEP shall be credited with the
balance, as appropriate.
3.3. Mandatory, Statutory Reserve Payments
The mandatory, statutory reserve payments incurred by
the Plan for the contract year with respect to FEP claims
allocated to the Plan pursuant to Section 5.2 hereof, which are
in excess of the Plan's share of the Service Charge for the
contract year and are chargeable under the terms of the Contract,
shall be determined by the Association and paid to the Plan. If
the statutory reserve is no longer required for the purpose for
which it was created, and these funds become available for the
general use of the Plan, a pro rata share based upon FEP's
contribution to the Plan's total statutory reserves shall be
returned to FEP in accordance with 48 C.F.R. 31.201-5.
3.4. [Reserved]
3.5. Service Charge
3.5.1. The Service Charge shall be allocated to
Plans in the following manner:
3.5.1.1. One-half of the Service Charge remaining
after an appropriation made pursuant to 3.5.2 will be allocated
among the Participating Plans in the ratio of each Plan's
contract months for the current contract year to the total FEP
contract months for the contract year, as determined by the
Association.
3.5.1.2. One-half of the Service Charge remaining
after an appropriation made pursuant to 3.5.2 will be allocated
among the Participating Plans based on each Participating Plan's
relative performance for that contract year, determined on the
basis of performance measurement criteria approved by the Board
of Managers and applied by the Association.
3.5.2. In its discretion, the Association may
appropriate up to 50 percent of the Service Charge for purposes
which it determines are in the best interest of FEP. The
Director of FEP may exercise that authority with respect to
amounts not in excess of $50,000 which in the aggregate do not
exceed 1% of the Service Charge for the contract year, but
appropriations in excess of those limits must be approved by the
Board of Managers. The amounts appropriated by the Association
will be subtracted from the Service Charge that is to be
distributed to the Participating Plans.
3.5.3. In general, the Plan's share of the
unappropriated Service Charge shall be paid to the Plan at a time
when the Association determines to distribute the unappropriated
Service Charge for that year to all Plans. Any amount of
appropriated Service Charge and interest not expended on the FEP
shall be paid to the Plans, at a time determined by the
Association, in accordance with 3.5.1. In its discretion, the
Association may withhold payment of the Plan's share of the
Service Charge if the Plan has not supplied the certification
referred to in 2.2.
3.6. Accounting
3.6.1. The income and expenses of FEP shall be
determined for the contract year as follows:
3.6.2. The income shall include subscription income
(including payments from the Contingency Reserve for each
contract year) and investment income.
3.6.3. The expenses for each contract year shall
include incurred claims, chargeable administrative expenses, the
Service Charge, and mandatory, statutory reserve payments.
Adjustments in the expenses which are made after the submission
of the Annual Accounting Statement to OPM for a contract year
shall be reflected in the expenses for the year in which the
adjustment becomes final.
3.6.4. The net gain or loss for a contract year
shall be the difference between the amounts specified in 3.6.2.
and 3.6.3.
3.6.5. The gain or loss specified in 3.6.4. for a
contract year shall be added to or subtracted from the Special
Reserve balance as of the beginning of that contract year and the
result shall be the Special Reserve balance at the end of that
contract year.
3.6.6. Solely for the purpose of determining the
Plan's share of a negative balance in the Special Reserve under
this Section 3.6.6, the balance in the Contingency Reserve in the
U.S. Treasury Department for the Government-wide Service Benefit
Plan as of the end of the contract year shall be allocated to the
Special Reserve, and the Special Reserve shall be reduced by a
reasonable estimate of the administrative costs of paying
incurred claims which are unpaid as of the end of the contract
year. If the Special Reserve is negative after the Contingency
Reserve balance is allocated, the Plan's liability at the end of
the contract year shall be determined in the following manner:
3.6.6.1. A portion of the negative balance shall
be allocated to the Plan in an amount which bears the same ratio
to the total negative balance that the claims expense allocated
to the Plan pursuant to Section 5.2. hereof for the current
contract year and the four preceding contract years bears to the
total claims expenses of all Plans for the current contract year
and the four preceding contract years.
3.6.6.2. In the event a Plan ceases to be a
Participating Plan at a time when the Special Reserve balance is
negative, the Plan's liability in subsequent contract years shall
be determined as follows:
3.6.6.2.1 If a negative balance in the
Special Reserve at the end of a subsequent contract year equals
or exceeds the negative balance at the end of the contract year
in which the Plan ceased to be a Participating Plan, the Plan's
share of the liability shall be the amount of its liability
determined for the contract year in which the Plan ceased to
share responsibility unless that liability is reduced by reason
of Section 3.6.6.2.2. or 3.6.6.2.3.
3.6.6.2.2 If a negative balance in the
Special Reserve at the end of a subsequent contract year is less
than the negative balance at the end of the contract year in
which the Plan ceased to be a Participating Plan, the Plan's
liability shall be an amount which bears the same ratio to the
negative balance in that subsequent year that the portion of the
negative balance allocated to the Plan under Section 3.6.6.1. did
bear to the negative balance at the end of the contract year in
which the Plan ceased to be a Participating Plan. If a Plan's
liability decreases by reason of this Section 3.6.6.2.2., it
shall not thereafter increase except by reason of an allocation
of liability under Section 3.6.6.1. in the event the
Participating Plan resumes participation.
3.6.6.2.3 If the balance in the Special
Reserve is positive at the end of a contract year following the
year in which a Plan ceases to be a Participating Plan, the Plan
shall have no further liability with respect to FEP unless it
resumes its status as a Participating Plan.
3.6.6.3. In the event a Participating Plan is
discharged by a court of competent jurisdiction from its
obligation to pay all or part of its share of the liability
reflected by a negative Special Reserve, that amount shall be
reallocated to the remaining Plans in proportion to their
liabilities under the Plan Participation Agreement.
3.7. Special Reserve
3.7.1. A positive balance in the FEP Special Reserve
shall be available to offset subsequent losses and to increase
benefits.
3.7.2. A deficit in the Special Reserve shall be
recovered from the FEP Special Reserve in future years to the
extent funds are available.
3.7.3. Upon termination of the Contract and
satisfaction of all Contract liabilities, a positive balance in
the FEP Special Reserve shall be paid to the Office of Personnel
Management for credit to the Federal Employees Health Benefits
Fund.
3.7.4. Upon termination of the Contract and failure
to satisfy all Contract liabilities after exhaustion of all FEP
reserves, the deficit shall be allocated in accordance with the
provisions of 3.6.6.
3.8. FEP liabilities of an insolvent Participating Plan.
3.8.1. In the event a Participating Plan is
discharged by a court of competent jurisdiction from its
obligation to pay all or part of a FEP liability and the
liability is not chargeable to the FEP contract, that amount
shall be reallocated to the remaining Plans in proportion to
their liabilities under the Plan Participation Agreement at the
time the court order becomes final.
3.8.2. The FEP liability reallocated to the
remaining Plans, pursuant to 3.8.1, shall be paid promptly to
the Special Reserve by those Plans.
3.8.3. Notwithstanding the above, payment of a
reallocated portion of the remaining liability pursuant to
3.8.2 shall not be construed as an admission by the Plan of
liability for another Participating Plan's non-FEP liability, but
is paid only in recognition of the unique nature of the Federal
Employee Program and the contractual obligations agreed to
hereunder.
4. Taxes Not Chargeable to the Contract
The Plan shall be liable for its proportionate share of any
taxes, interest and penalties imposed on the Federal Employee
Program which amounts are not chargeable to the Contract. The
Plan shall share in any such liability in the same proportion
that the claims expense allocated to the Plan pursuant to
Section 5.2 bears to the total claims expense allocated to all
Plans for the year with respect to which the liability is
incurred.
5. Areas of Responsibility for Claims Payments and
Participation
5.1. The undersigned Plan shall underwrite FEP benefits as
specified in Schedule A to this Agreement.
Schedule A may be revised by the parties from time to time,
without reexecution of this Agreement.
5.2. For the purpose of determining the undersigned Plan's
share, if any, of any negative balance in the Special Reserve or
of any unsatisfied liabilities, determined in accordance with 3.6
hereof, the total FEP claims allocated to the Plan for a contract
year shall be the total benefits underwritten by the Plan as
provided in Schedule A.
5.3. The Association, acting pursuant to a performance
evaluation program adopted by the Board of Managers and
applicable to all Plans participating in FEP, is authorized to
reassign all or part of one or both of the following functions
from the Plan to another Plan: (a) claims processing or,
(b) subscriber servicing. Any reassigned function will be
administered in keeping with service area limitations on the use
of the Blue Cross and Blue Shield marks.
6. Delegation of Authority
6.1. The Association
The Association may delegate its functions under this
Agreement, and references herein to the Association shall be
applicable to said delegate or delegates, but said delegation
shall not release the Association of its obligations under this
Agreement.
6.2. The Plan
6.2.1. Only Blue Cross and Blue Shield Plans or
their wholly-owned affiliates are authorized to perform the
functions set forth in this Agreement. However, no such Plan or
affiliate may perform such functions without the express written
authority of the Association acting on behalf of all
Participating Plans. Execution of this Agreement by the
Association constitutes such authority with respect to the
undersigned Plan or affiliate.
6.2.2. The rights and duties of the Plan set forth
in this Agreement may not be delegated, assigned or transferred
by the Plan in any manner whatsoever without the express written
approval of the Association acting on behalf of all Participating
Plans.
7. Definitions
Terms used in this Agreement shall have the same meaning
that they have in the Contract. The term "Board of Managers"
refers to the Standing Committee of the Board of Directors of the
Association which has been assigned the responsibility delegated
to the Association by this Agreement, or the successor to said
Committee, and the term "Service Charge", as used hereafter in
this Agreement, refers to the sum of other Service Charge and the
interest income earned on the Service Charge.
8. Integration
This Agreement, together with its Schedule A and Exhibit A
to the Contract with OPM, constitutes the entire agreement
between the parties with respect to the underwriting and
administration of benefits under the FEP. This Agreement is
subject to the terms of a validly executed and effective License
Agreement(s) pertaining to the Plan's right to use the Blue Cross
or Blue Shield licensed xxxx(s) and name(s) (hereafter, "License
Agreement(s)") and shall be construed in accordance with such
terms.
9. Amendment of Agreement
9.1. This Agreement may be amended by the mutual agreement
of the parties.
9.2. The Agreement may be amended by the following process:
9.2.1. The Association or the Plan, with the
approval of the Board of Managers, may propose an amendment for
adoption by all Participating Plans.
9.2.2. The Association shall notify all
Participating Plans, by first class mail, when it has received
executed amendments from three-fourths of the Participating
Plans.
9.2.3. If the Association fails to obtain such
executed amendments within three months from the date of the
proposal, the Association shall notify all Participating Plans,
by first class mail, that the proposal has been recalled.
9.2.4. Upon receipt of executed amendments from
three-fourths of the Participating Plans before a recall
specified in Section 9.2.3, the amendment will become effective
with respect to the Plan, if it did not execute the amendment,
unless the Plan notifies the Association in writing, within 30
days of receipt of the mailing of the notice referenced in
Section 9.2.2, that it elects to not be bound by the amendment.
9.2.5. The effective date of the amendment with
respect to the Plan, if it has executed the amendment or has not
given timely notice of its election to not be bound by the
amendment as required by Section 9.2.4, will be the first day of
the second month following the mailing of the notice referred to
in Section 9.2.2.
9.2.6. This Agreement will terminate with respect to
the Plan pursuant to Section 10.3 of this Agreement if the Plan
elects not to be bound by an amendment adopted pursuant this
Section 9.2.
10. Termination of Agreement
10.1. This Agreement may be terminated without cause by
either party to this Agreement by giving notice to the other
party at least 120 days prior to the last day of the then current
contract term of the FEP Contract between the Association and the
Office of Personnel Management. Termination pursuant to this
Section 10.1 will not affect the rights or obligations of either
party that have accrued under this Agreement or the Contract,
including the provisions of the Contract relating to terminated
costs.
10.2. The Association may terminate this Agreement if
the Plan's license(s) to use the Blue Cross or Blue Shield
licensed xxxx(s) and name(s) is terminated with full legal force
and effect. In the event the Agreement is terminated pursuant to
this paragraph, the Association will issue a Notice of
Termination to the Plan specifying the termination date which
shall be no earlier than the effective date of the termination of
the Plan's License Agreement(s).
10.3. If the Plan elects, pursuant to Section 9.2.4, to
not be bound by an amendment made pursuant to Section 9.2, this
Agreement will terminate. In the event this Agreement is
terminated pursuant to this Section 10.3, the Association will
issue a Notice of Termination to the Plan specifying the
termination date which shall be no earlier than the last day
prior to the effective date of the amendment as specified in
Section 9.2.5.
10.4. The parties understand that it may be necessary
for the Plan to continue to perform obligations undertaken under
the this Agreement and the Contract with OPM following the
effective date of termination of this Agreement. In those
circumstances -
10.4.1. The Plan will implement procedures, as
directed by the Association, to close down its operations
pursuant to this Agreement. During the period of closing down
operations, the provisions of this Agreement will continue to
apply.
10.4.2. During the period of performance subsequent
to the effective date of termination, the Plan will continue to
perform the functions specified in this Agreement except as
directed by the Association. The Association will fund the
continuing operations of the Plan in accordance with the terms of
this Agreement.
10.4.3. The Plan will cooperate fully with the
Association in the transfer of its functions under this Agreement
to another organization specified by the Association.
10.5. Termination of this Agreement automatically will
terminate the power of attorney given to the Association by the
Plan, and referred to as Exhibit A to the Contract with OPM, as
of the effective date of the termination of this Agreement.
11. Appeals
The Plan may appeal to the Board of Managers if it disagrees
with the Association's decision with respect to a matter that the
Association is authorized to decide under the terms of the
Agreement, and it may appeal to the Board of Directors if it
disagrees with the Board of Managers' decision on appeal. This
provision does not affect the rights of the parties, under the
License Agreement(s), with respect to disputes resolution.
12. Partnership Not Intended
Nothing in this Agreement is intended, or shall be deemed,
to constitute a partnership or joint venture between the parties
or among the Plan and other Participating Plans.
13. Law Governing and Severability
This Agreement shall be governed by the laws of the state of
Illinois, both as to interpretation and performance. If any
provision of this Agreement is held invalid or unenforceable, the
invalidity or unenforceability shall not affect any other
provisions of this Agreement, and the rights and obligations of
the parties shall be construed and enforced as if the Agreement
did not contain the particular provision held to be invalid.
14. Notices
Notices made pursuant to this Agreement shall be sent by
first class mail, postage prepaid, to the address of the party
specified below on the signature page of this Agreement, unless
written notice of a change of address has been provided.
15. Force Majeure
Neither party shall be liable for damages due to delay or
failure to perform any obligation under this Agreement if such
delay or failure results directly or indirectly from
circumstances beyond the control of such party. Such
circumstances shall include, but shall not be limited to, acts of
God, acts of war, civil commotions, riots, strikes, lockouts,
acts of the government in either its sovereign or contractual
capacity, perturbation in telecommunications transmissions,
inability to obtain suitable equipment or components, accident,
fire, water damage, flood, earthquake, or other natural
catastrophe.
This Agreement may be executed in counterparts and [shall be
effective as of the day of , 199 ]
[this amendment and restatement of the Original Agreement shall
become effective as of ].
BLUE CROSS AND BLUE SHIELD HEALTHY ALLIANCE LIFE INSURANCE
ASSOCIATION COMPANY
By: By:
Print Name: Print Name:
Title: Vice President Title:
Federal Employee Program
Address: Address:
Date: Date:
EXHIBIT A - AGREEMENT
AGREEMENT made this day of , 199 by
and between Blue Cross and Blue Shield Association, a not-for-
profit corporation, authorized and existing under the laws of the
State of Illinois (hereinafter called the "Association") and
Healthy Alliance Life Insurance Company, a corporation,
authorized and existing under the laws of the State of Missouri
(hereinafter called the "Plan").
WHEREAS, Title 5, Chapter 89 of the United States Code
contemplates the provision of health benefit xxxxxx one
Government-wide Service Benefit Plan, and
WHEREAS, the Plan is engaged in providing health care
benefits to subscribers.
NOW, THEREFORE in consideration of the execution of this
agreement by Blue Cross and Blue Shield Plans, other than the
undersigned, and in further consideration of the undertakings set
forth in this Exhibit,
IT IS AGREED AS FOLLOWS:
ARTICLE I
The Association is hereby authorized and directed by the
undersigned Plan to execute on behalf of the Plan the necessary
documents, including any amendments thereof, with the United
States Office of Personnel Management (hereinafter called
"Agency") to furnish health benefits through the undersigned Plan
and other similar Plans as provided by the Government-wide
Service Benefit Plan, to those employees and annuitants,
including their dependents, if any, enrolled under the Contract
between the Association and the Agency.
ARTICLE II
In accordance with the authority herein granted, the Association
is authorized to receive, on behalf of the undersigned Plan,
subscription charges paid by the Agency in accordance with the
terms of the contract.
ARTICLE III
The mutual obligations undertaken by the Association and the Plan
under this agreement shall be a matter of separate agreement
between the parties of this agreement.
ARTICLE IV
The Association may delegate its authority under this agreement,
but said delegations shall not relieve the Association of its
obligations under this agreement.
ARTICLE V
This agreement may be canceled by either party giving to the
other party written notice at least 120 days prior to the last
day of the then current contract term of the Contract between the
Agency and the Association.
ARTICLE VI
This agreement supersedes any prior agreement authorizing the
Blue Cross and Blue Shield Association to act for the Plan in
connection with furnishing benefits under the Government-wide
Service Benefit Plan.
IN WITNESS WHEREOF, the parties hereto have executed this
agreement the day and year aforesaid:
BLUE CROSS AND BLUE SHIELD HEALTHY ALLIANCE LIFE INSURANCE
ASSOCIATION COMPANY
By By
(Typed or Printed)
Name Name
(Signature) (Signature)
Title Senior Vice President Title
Federal Employee Program
Date Date
SCHEDULE A - BENEFITS
PLAN PARTICIPATION AGREEMENT
The Association and the Plan agree, pursuant to Section 5 of
the Agreement, that the Plan shall provide (except as set forth
in Section 2.1. of the Agreement), for the period beginning
January 1, 1995, and continuing until this Schedule is amended or
the Agreement is terminated, the following FEP benefits, as
described in the FEP Administrative Manual, for the counties of
Adair, Audrain, Barry, Barton, Bollinger, Boone, Butler,
Callaway, Camden, Cape Girardeau, Carter, Cedar, Xxxxxxxx,
Xxxxxxxxx, Clark, Cole, Cooper, Crawford, Dade, Dallas, Xxxx,
Xxxxxxx, Dunklin, Franklin, Gasconade, Xxxxxx, Hickory, Howard,
Howell, Iron, Jasper, Jefferson, Knox, Laclede, Lawrence, Lewis,
Lincoln, Linn, Macon, Madison, Maries, Xxxxxx, McDonald, Miller,
Mississippi, Moniteau, Monroe, Montgomery, Morgan, New Madrid,
Newton, Oregon, Osage, Ozark, Pemiscot, Perry, Xxxxxx., Pike,
Polk, Pulaski, Putnam, Ralls, Randolph, Reynolds, Ripley, Saint
Xxxxxxx, Sainte Xxxxxxxxx, Saint Francois, Saint Louis, Saint
Louis City, Xxxxxxxx, Scotland, Scott, Shannon, Shelby, Stoddard,
Stone, Sullivan, Taney, Texas, Warren, Washington, Wayne,
Webster, and Xxxxxx in the State of Missouri.
HIGH OPTION
(A) Benefits for institutional inpatient and outpatient services
rendered by and payable to institutions located within the Plan's
service area.
(B) Benefits for professional inpatient and outpatient services
rendered by and payable to professionals located within the
Plan's service area.
(C) Benefits for institutional and professional inpatient
services rendered by institutional and professional providers
located within the Plan's service area that are payable to
subscribers.
(D) Benefits for institutional and professional outpatient, and
other health care services payable to subscribers residing in the
Plan's service area or rendered by providers located within the
Plan's service area.
STANDARD OPTION
(A) Benefits for institutional inpatient and outpatient services
rendered by and payable to institutions located within the Plan's
service area.
(B) Benefits for dental services rendered by and payable to
professional dental providers located within the Plan's service
area.
(C) Benefits for professional inpatient and outpatient services
rendered by and payable to professionals located within the
Plan's service area.
(D) Benefits for institutional and professional inpatient
services rendered by institutional and professional providers
located within the Plan's service area that are payable to
subscribers.
(E) Benefits for institutional and professional outpatient,
dental, and other health care services payable to subscribers
residing in the Plan's service area or rendered by providers
located within the Plan's service area.
BLUE CROSS AND BLUE SHIELD HEALTHY ALLIANCE LIFE INSURANCE
ASSOCIATION COMPANY
By By
(Printed or Typed)
Name Name
(Signature)
Title Vice President Title
Federal Employee Program
Date Date
EXHIBIT E
POLICYHOLDER NOTICE
It is intended that the attached Policyholder Notice will be
distributed at least [ ] days prior to the Closing Date
(Letterhead of Blue Cross and Blue Shield of Missouri)
(HIPAA AND ASSUMPTION REINSURANCE NOTICE)
[ DATE ]
NOTICE OF TRANSFER
IMPORTANT: This notice affects your contract rights.
Please read it carefully.
Subject to regulatory approval, Blue Cross and Blue Shield of
Missouri will be reorganizing and will ultimately merge with an
affiliated company, RightCHOICE Managed Care, Inc., which does
business in Missouri as Alliance Blue Cross Blue Shield
("Alliance Blue Cross Blue Shield").
Because of this upcoming change, Blue Cross and Blue Shield of
Missouri will be transferring all of its insurance business to
Healthy Alliance Life Insurance Company ("Healthy Alliance"), a
subsidiary of Alliance Blue Cross Blue Shield. Healthy Alliance
currently underwrites most health coverage administered by
Alliance Blue Cross Blue Shield. Healthy Alliance is licensed to
write this coverage in Missouri and has agreed to replace Blue
Cross and Blue Shield of Missouri as the underwriter of your
health coverage.
Your benefits will not change because of this legal change.
Transfer of Policy
You will become a part of the Alliance Blue Cross Blue Shield
family, with Healthy Alliance Life Insurance Company as the
underwriter of your coverage, on the date Blue Cross and Blue
Shield of Missouri reorganizes. The transfer of your policy and
the coverage it provides to you is expected to be effective on or
about . [We may contact you again closer to the
time this change becomes effective.]1
The Director of the Missouri Department of Insurance, pursuant to
Section 375.1294 of the Missouri Revised Statutes, [and 42 U.S.C.
300gg-12(c)(2)(A)(i) and 300gg-42(c)(2)(A)(i) of the Health
Insurance Portability and Accountability Act of 1996] requires
Blue Cross and Blue Shield of Missouri to send this notice [that
all group and individual health coverage will be transferred].
Alliance Blue Cross Blue Shield and Healthy Alliance's principal
place of business is 0000 Xxxxxxxx Xxxxxx, Xx. Xxxxx, Xxxxxxxx
00000-0000. The main telephone number is 1-800-[xxx-xxxx]. But
if you have any questions, please call the client services
benefit/claim inquiry telephone number on the back of your member
identification card.
_______________________________
1 Bracketed information denotes optional wording.
If you contact Healthy Alliance, you will be sent certain
information regarding Healthy Alliance. The information that you
will receive is as follows: (1) ratings for the last [up to five]
years from [two] nationally recognized insurance rating
service[s]; (2) balance sheets for the previous three years and
as of a date no later than 90 days prior to the current date; and
(3) a copy of the management's discussion and analysis that was
filed as a supplement to the previous year's annual statement.
You can obtain additional information concerning Alliance Blue
Cross Blue Shield and Healthy Alliance by calling us or by
contacting your state insurance director at Missouri Department
of Insurance, X.X. Xxx 000, Xxxxxxxxx Xxxx, XX 00000-0000. The
Missouri Department of Insurance's telephone number is 1-800-726-
7390.
Your Rights
Section 375.1294 of the Missouri Revised Statutes governs this
transfer of coverage. Under this statute, you are deemed to have
consented to this transfer. The Director of the Missouri
Department of Insurance has determined that this transfer is in
your best interest. You do not need to take any action.
Effect of Transfer
When this transfer becomes effective, you will become a part of
the Alliance Blue Cross Blue Shield family and Healthy Alliance
will be the underwriter of your coverage. Healthy Alliance will
be responsible for providing your benefits and for all other
obligations under your coverage.
With respect to Healthy Alliance, all premium payments should be
made in care of Alliance Blue Cross Blue Shield, unless otherwise
instructed by Healthy Alliance. Claims will continue to be filed
as they are now. If there is any change in the telephone numbers
you call concerning health coverage, we will notify you of the
change.
If this transfer of coverage does not occur for any reason, Blue
Cross and Blue Shield of Missouri will not transfer your policy.
If you have any questions regarding this notice, please call the
client services benefit/claims inquiry telephone number on the
back of your member identification card.
PLEASE RETAIN THIS NOTICE WITH YOUR POLICY
AND OTHER COVERAGE MATERIALS.
EXHIBIT F - CERTIFICATE OF ASSUMPTION
Healthy Alliance Life Insurance Company
0000 Xxxxxxxx Xxxxxx
Xx. Xxxxx, Xxxxxxxx 00000-0000
CERTIFICATE OF ASSUMPTION
Blue Cross Policy No.:
Healthy Alliance Policy No.:
Healthy Alliance Life Insurance Company ("Healthy Alliance")
and Blue Cross and Blue Shield of Missouri ("Blue Cross"), 0000
Xxxxxxxx Xxxxxx, Xx. Xxxxx, Xxxxxxxx 00000-0000, have entered
into an Agreement to be effective as of
_________________________. As of this date, Healthy Alliance is
assuming all liabilities, duties and obligations for the policy
referenced above which would otherwise be the liabilities, duties
and obligations of Blue Cross. The policy must be in force,
according to its terms, on such date for assumption to take
place. Assumption, once effected, shall be total and complete.
It shall extend to every benefit, term and condition as well as
every offset and defense of the policy. From and after the
effective date of the Agreement, all references in the policy to
Blue Cross are hereby changed to Healthy Alliance. You have no
further or future claims against Blue Cross under the policy. A
copy of the Agreement is on file with the Missouri Department of
Insurance. As of the Agreement effective date, this Certificate
forms and becomes a part of the policy and should be attached to
the policy issued to you by Blue Cross.
On and after the Agreement effective date, please reference
the assigned Healthy Alliance policy number in all correspondence
and claims for benefits in order to receive the most prompt
service possible. The Healthy Alliance policy number is shown
above.
Due to the nature of the transfer and applicable law, you
are deemed to have consented to this transfer and, consequently,
no action is required on your part to effect the transfer.
Except as otherwise set forth herein, all of your rights
under the policy remain unchanged.
Healthy Alliance welcomes you to its family of insureds. We
look forward to serving you in the years ahead.
HEALTHY ALLIANCE LIFE INSURANCE COMPANY
By:
Xxxx X. X'Xxxxxx
President and Chief
Executive Officer
PLEASE ATTACH THIS CERTIFICATE TO YOUR POLICY
EXHIBIT C
FORM OF
ARTICLES OF INCORPORATION
SECRETARY OF STATE
STATE OF MISSOURI
X.X. XXX 000
XXXXXXXXX XXXX, XXXXXXXX 00000
The undersigned natural person of the age of 18 years or
more, for the purpose of forming a corporation under the laws of
the State of Missouri, hereby adopts the following Articles of
Incorporation pursuant to Section 351.055 of The General and
Business Corporation Law of Missouri:
ARTICLE ONE
The name of the Corporation is Blue Cross and Blue Shield of
Missouri, Inc.
ARTICLE TWO
The address of the Corporation's initial registered office
in the State of Missouri is:
0000 Xxxxxxxx Xxxxxx
Xx. Xxxxx, Xxxxxxxx 00000
The name and address of the corporation's initial registered
agent in Missouri is:
ARTICLE THREE
(A) The aggregate number, class and par value, if any, of
shares which the corporation has authority to issue are as
follows:
Aggregate
Number Class Par Value
3,000,000 Common $.01
(B) The preferences, qualifications, limitations,
restrictions and special or relative rights, including
convertible rights, if any, in respect to the shares of each
class are as follows: N/A
ARTICLE FOUR
No holder of shares of stock of the corporation is entitled
as such as a matter of right to subscribe for or purchase any
part of any new or additional issue of stock, or securities
convertible into stock, of any class whatsoever, whether now or
hereafter authorized, and whether issued for cash, property,
services, by way of dividends, or otherwise.
ARTICLE FIVE
The name and place of residence of each incorporator is as
follows:
ARTICLE SIX
The number of directors to constitute the first board of
directors is one (1). The member of the first Board of Directors
shall be:
ARTICLE SEVEN
The duration of the Corporation is perpetual.
ARTICLE EIGHT
The Corporation is formed for the following purposes:
to engage in any lawful business as provided by The General
and Business Corporation Law of Missouri.
ARTICLE NINE
The power to alter, amend or repeal the bylaws of the
corporation is vested in the Corporation's board of directors.
IN WITNESS WHEREOF, these Articles of Incorporation have
been executed this _____ day of ______________, 199__.
___________________________________
, Sole Incorporator
STATE OF MISSOURI )
) ss.
CITY OF ST. LOUIS )
I, __________________________, a notary public, do hereby
certify that on the ______ day of _______________, 199___,
personally appeared before me , who being by
me first duly sworn, declared that he is the person who signed
the foregoing document as incorporator, and that the statements
therein contained are true.
___________________________________
Notary Public
(Notarial Seal)
EXHIBIT D
FORM OF
BYLAWS OF
BLUE CROSS AND BLUE SHIELD OF MISSOURI, INC.
ARTICLE I
OFFICES
The principal office of the Corporation is to be located at
0000 Xxxxxxxx Xxxxxx, Xx. Xxxxx, Xxxxxxxx 00000. The
Corporation may also have offices and branch offices at such
other places within and without the State of Missouri as the
board of directors of the Corporation may from time to time
designate and the business of the Corporation may require.
ARTICLE II
SHAREHOLDERS
2.1 Place of Meeting. Any annual or special meeting of the
shareholders of the Corporation is to be held at such place
within or without the State of Missouri as may be designated by
the board of directors or executive committee of the Corporation
or in a waiver of notice executed by all shareholders of the
Corporation entitled to vote at such meeting. If there is a
failure to designate a place for such meetings, the same is to be
held at the principal place of business of the Corporation.
2.2 Meetings. The annual meeting of the Corporation's
shareholders is to be held each year on the first Tuesday of
March at the hour of 10:00 A.M., for the purpose of electing
directors and for the transaction of such other business as may
come before the meeting. Special meetings of the shareholders
may be called at any time by the Corporation's president or any
member of the board of directors, or by the holders of not less
than one-fifth of all the outstanding shares of the Corporation
entitled to vote at such meeting.
2.3 Quorum of Outstanding Shares. A majority of the
outstanding shares of the Corporation entitled to vote at any
meeting of the Corporation's shareholders represented in person
or by proxy at such meeting constitutes a quorum of shareholders
of the Corporation. In no event may a quorum consist of less
than a majority of the outstanding shares of the Corporation
entitled to vote. Less than such quorum has the right
successively to adjourn the meeting to a specified date not
longer than 90 days after such adjournment, and no notice need be
given of such adjournment to shareholders of the Corporation not
present at the meeting. Every decision of a majority of such
quorum is valid as a corporate act of the Corporation.
2.4 Notice of Shareholders' Meetings. Written or printed
notice of each meeting of shareholders stating the place, day and
hour of the meeting and, in case of a special meeting, the
purpose or purposes for which the meeting is called, must be
delivered or given not less than 10 nor more than 70 days before
the date of the meeting, either personally or by mail. Notice of
an annual meeting of the Corporation's shareholders is to be
given by the secretary of the Corporation. Notice of a special
meeting of the Corporation's shareholders is to be given by the
secretary of the Corporation or the person calling the meeting.
Any notice of a shareholders' meeting sent by mail is deemed
delivered when deposited in the United States mail, with postage
thereon prepaid, addressed to each shareholder at his address as
it appears on the records of the Corporation. Attendance of a
shareholder at any meeting constitutes a waiver of notice of such
meeting except where a shareholder attends a meeting for the
express purpose of objecting to the transaction of any business
because the meeting is not lawfully called or convened.
2.5 Waiver of Notice. Any notice required by these Bylaws
may be waived by the persons entitled thereto by signing a waiver
of notice before or after the time of such meeting and such
waiver is equivalent to the giving of such notice.
2.6 Closing of Transfer Books or Fixing of Record Date.
The board of directors of the Corporation has the power to close
the transfer books of the Corporation for a period not exceeding
70 days preceding the date of any meeting of shareholders or the
date of payment of any dividend or the date for the allotment of
rights or the date when any change or conversion or exchange of
shares goes into effect. However, in lieu of closing the stock
transfer books, the board of directors may fix in advance a date,
not exceeding 70 days preceding the dates of the aforenamed
occurrences, as a record date for the determination of the
shareholders entitled to notice of, and to vote at, any such
meeting and any adjournment thereof, or entitled to receive
payment of any such dividend or to any such allotment of rights,
or to exercise the rights in respect of any such change,
conversion or exchange of shares. In such case, such
shareholders, and only such shareholders as are shareholders of
the Corporation of record on the date of closing the transfer
books or on the record date so fixed, are entitled to notice of,
and to vote at, such meeting and any adjournment thereof, or to
receive payment of such dividend, or to receive such allotment of
rights, or to exercise such rights, as the case may be,
notwithstanding any transfer of any shares on the books of the
Corporation after such date of closing of the transfer books or
such record date so fixed. If the board of directors does not
close the transfer books or set a record date for the
determination of the shareholders entitled to notice of, and to
vote at, a meeting of shareholders, only the shareholders who are
shareholders of record at the close of business on the 20th day
preceding the date of the meeting are entitled to notice of, and
to vote at, the meeting and any adjournment of the meeting.
However, if prior to the meeting written waivers of notice of the
meeting are signed and delivered to the Corporation by all of the
shareholders of record at the time the meeting is convened, only
the shareholders who are shareholders of record at the time the
meeting is convened are entitled to vote at the meeting and any
adjournment of the meeting.
2.7 List of Voters. A complete list of all shareholders
entitled to vote at any annual and special meeting of the
Corporation's shareholders is to be compiled at least ten days
before such meeting by the officer or agent having charge of the
transfer books for shares of stock of the Corporation. Such list
is to be compiled in alphabetical order with the address and the
number of shares held by each shareholder. The list must be kept
on file in the registered office of the Corporation for a period
of at least ten days prior to such meeting and must be open to
inspection by any stockholder for such period during usual
business hours. Such list must also be present and kept open at
the time and place of such meeting and is subject to the
inspection of any shareholder during such meeting. The original
share ledger or transfer book, or a duplicate thereof kept in
Missouri, is prima facie evidence as to who are the shareholders
of the Corporation entitled to examine such list or share ledger
or transfer book, or to vote at any meeting of shareholders.
Failure to comply with the requirements of this section does not
affect the validity of any action taken at such meeting.
2.8 Proxies. A shareholder may, at any annual or special
meeting, vote either in person or by proxy executed in writing by
the shareholder or his duly authorized attorney in fact. Such
proxy must be filed with the secretary of the Corporation before
or at the time of the meeting. No proxy is valid after 11 months
from the date of execution unless otherwise provided in the
proxy.
2.9 Voting of Shares. Each outstanding share of stock
having voting rights, except as provided in Section 2.11, is
entitled to one vote upon each matter submitted to a vote at any
meeting of the shareholders of the Corporation.
2.10 Voting of Shares of Certain Holders.
(a) Shares of stock in the name of another
corporation, foreign or domestic, are to be voted by such
officer, agent or proxy as the bylaws of such corporation may
prescribe, or in the absence of such provision, as the board of
directors of such corporation may determine.
(b) Shares of stock in the name of a deceased person
are to be voted by his executor or administrator in person or by
proxy.
(c) Shares of stock in the name of a guardian, curator
or trustee are to be voted by such fiduciary either in person or
by proxy provided the books of the Corporation show the stock to
be in the name of such fiduciary in such capacity.
(d) Shares of stock in the name of a receiver are to
be voted by such receiver, and shares held by, or in the control
of, a receiver are to be voted by such receiver without the
transfer thereof into his name, if such voting authority is
contained in an appropriate order of the court by which such
receiver was appointed.
(e) Shares of stock which have been pledged are to be
voted by the pledgor until the shares of stock have been
transferred into the name of the pledgee, and thereafter, the
pledgee is entitled to vote the shares so transferred.
2.11 Cumulative Voting. Cumulative voting shall not apply
to election of directors.
2.12 Informal Action by Shareholders. Any action required
by The General and Business Corporation Law of Missouri to be
taken at a meeting of the shareholders of the Corporation, or any
action which may be taken at a meeting of the shareholders, may
be taken without a meeting if all of the shareholders entitled to
vote with respect to the subject matter thereof sign written
consents that set forth the action so taken. Such consents have
the same force and effect as a unanimous vote of the shareholders
at a meeting duly held, and may be stated as such in any
certificate or document filed with the Secretary of State of the
State of Missouri or any other state in the United States of
America. The Corporation's secretary is to file such consents
with the minutes of the meetings of the shareholders of the
Corporation.
2.13 Rules of Meetings. The chairman of the board of
directors of the Corporation is to preside at all meetings of the
shareholders, or, in his absence, the president of the
Corporation is to preside. If neither the chairman of the board
nor the president are available, the party who called the meeting
is to preside. To the extent not inconsistent with these Bylaws,
the Robert's Rules of Order govern all meetings of the
Corporation's shareholders.
2.14 Tele-Participation in Meetings. Shareholders may
participate in a meeting of the shareholders of the Corporation
by means of a conference telephone or similar communications
equipment whereby all persons participating in the meeting can
hear each other. Participation in a meeting in this manner
constitutes presence in person at the meeting.
ARTICLE III
BOARD OF DIRECTORS
3.1 General Powers. The business, property and affairs of
the Corporation is to be controlled and managed by its board of
directors.
3.2 Number, Election, Duration and Vacancies. The initial
number of directors of the Corporation is designated in the
Articles of Incorporation. Thereafter, the number of directors
may be changed by the Corporation's shareholders in a special or
annual meeting. At the first annual meeting of shareholders and
at each annual meeting thereafter, the shareholders entitled to
vote are to elect directors to hold office until the next annual
meeting, except as herein provided. Each director is to hold
office for the term for which he is elected or until his
successor has been elected and qualified. In case of the death
or resignation or disqualification of one or more of the
directors, a majority of the remaining directors are to fill such
vacancy or vacancies until the successor or successors are
elected at the next annual meeting of the shareholders. A
director elected to fill a vacancy is to serve as such until the
next annual meeting of the shareholders, except as herein
provided.
3.3 Quorum. A majority of the board of directors of the
Corporation constitutes a quorum for the transaction of business
at a meeting of the board of directors, and the act of the
majority of such quorum present at any such meeting is the act of
the board of directors.
3.4 Meetings. The annual meeting of the board of directors
is to be held at the same place as the annual meeting of the
shareholders of the Corporation and immediately following such
meeting. In the event of adjournment of such annual meeting of
the board of directors because a quorum is not present or
otherwise, such meeting may be held, without further notice, at
any place within or without the State of Missouri as may be
designated by the directors adjourning such meeting, provided a
quorum is then present at such next meeting, but in no event may
such meeting be conducted later than 30 days after the annual
meeting of shareholders. All other meetings of the board of
directors are to be held at the principal place of business of
the Corporation or at such other place within or without the
State of Missouri as may be designated by the board of directors
or by the executive committee in absence of such designation by
the board of directors. Regular meetings of the board of
directors may be held without notice at such time and place as
may be determined by the board of directors. Special meetings of
the board of directors may be held at any time upon the call of
the president, vice president or other officer of the Corporation
or the call of any director.
3.5 Notice. Notice of any special meeting of the board of
directors must be given at least two days prior thereto in
writing delivered personally or mailed to each director. Notice
given by mail is deemed to be delivered one day after deposited
in the United States mail in a sealed envelope so addressed with
postage thereon prepaid. Notice to a director may be waived by
executing a written waiver thereof or by attendance at any
meeting except where a director attends a meeting for the express
purpose of objecting to the transaction of any business because
the meeting was not lawfully called or convened. Notice or
waiver of notice of any regular or special meeting of the board
of directors may but need not state the business to be transacted
nor the purpose thereof, except as otherwise required by these
Bylaws.
3.6 Compensation. Directors, as such, are not to receive a
stated salary for their services, but, by resolution of the board
of directors, may be allowed a fixed sum and expenses of
attendance, if any, for attendance at any meeting of the board of
directors. Nothing contained herein precludes a director from
serving the Corporation in any other capacity and receiving
compensation therefor.
3.7 Presumption of Assent. A director of the Corporation
is presumed to have assented to the action taken on any corporate
matter at a board of directors meeting at which he is present,
unless his dissent is entered in the minutes of the meeting or
unless he forwards such dissent by registered mail to the
secretary of the Corporation immediately after the adjournment of
the meeting. A director who voted in favor of such action may
not so dissent.
3.8 Action by Unanimous Consent of Directors. In
accordance with Section 351.340 of The General and Business
Corporation Law of Missouri, if all the directors severally or
collectively consent in writing to any action taken or to be
taken by the directors, such consents have the same force and
effect as a unanimous vote of the directors at a meeting duly
held, and may be stated as such in any certificate or document
filed with the Secretary of State of the State of Missouri or any
other state in the United States of America. The secretary of
the Corporation is to file such consents with the minutes of the
meetings of the board of directors. Formal meetings of the
directors need not be held where the action of all the directors
are consented to in writing.
3.9 Resignation or Disqualification.
(a) A director may resign at any time for any reason.
Any such resignation must be in writing and must be delivered to
the chairman of the board, the president or the secretary of the
Corporation. A resignation is effective upon such delivery.
(b) A director may be removed with or without cause
only by a vote of the shareholders of the Corporation. Such
director, if he is to be removed for cause, must be made fully
aware of the allegations lodged against him and given an
opportunity to defend his actions if he so chooses. The removal
procedure is to be conducted at a special meeting of the
shareholders called for such purpose. The director may be
removed only upon the vote of a majority of the shareholders
present (either in person or by proxy) at such meeting, provided
there is a quorum; provided, however, that no director may be
removed if the votes cast against his removal would be sufficient
to elect him pursuant to Section 2.11.
3.9 Rules of Meetings. The chairman of the board of
directors is to preside at all meetings of the board of
directors, or, in his absence, the president of the corporation
is to preside. If neither the chairman of the board nor the
president is available or able to preside, the party who called
the meeting is to preside. To the extent not inconsistent with
these Bylaws, the Robert's Rules of Order govern all meetings of
the Corporation's board of directors. Except as permitted by
Section 351.327 of The General and Business Corporation Law of
Missouri, no director's vote is to be counted in determining a
majority of votes if such director is not "disinterested."
3.10 Tele-Participation in Meetings. Directors may
participate in a meeting of the board of directors by means of a
conference telephone or similar communications equipment whereby
all persons participating in the meeting can hear each other.
Participation in a meeting in this manner constitutes presence in
person at the meeting.
ARTICLE IV
COMMITTEES
4.1 Executive Committee. An executive committee of two or
more directors may be created by a majority vote of the entire
board of directors to serve at the pleasure of the board, and one
of such directors is to be designated to act as chairman thereof.
The board of directors is to fill the vacancies on the committee.
Between meetings of the board of directors, the executive
committee, if it is created, possesses and may exercise any and
all powers of the board of directors in the management of the
business and affairs of the Corporation to the extent authorized
by resolution adopted by a majority vote of the entire board of
directors. The executive committee is to keep a complete record
of its activities and regularly report them to the board of
directors at every meeting thereof. All actions taken by the
executive committee are subject to revision, alteration or change
by the board of directors, provided that rights of third persons
may not be affected thereby.
4.2 Meetings of the Executive Committee. A majority of the
executive committee constitutes a quorum for the transaction of
business. The executive committee may determine the time and
place for its meetings, the notice necessary therefor and its
rules of procedure.
4.3 Other Committees. The board of directors, by
resolution, may provide for such other committees as it deems
necessary or desirable to serve at its pleasure and to have such
powers and perform such functions as may be assigned to them.
ARTICLE V
OFFICERS
5.1 Executive Officers. Executive officers of the
Corporation are the president and a secretary, and, if so elected
by the board of directors, a chairman, one or more vice
presidents, a treasurer, assistant secretaries and assistant
treasurers. The president is to be selected from the board of
directors.
5.2 Election and Term. The president and secretary are to
be elected at the first meeting of the board of directors
following the annual meeting of the shareholders, and hold office
at the pleasure of the board of directors until their successors
are elected or until they are removed as provided herein. A vice
president, chairman, assistant secretaries, treasurer and
assistant treasurers may be elected by the board of directors at
any meeting thereof to hold office at the pleasure of the board
of directors. If more than one vice president should be elected,
the board of directors at the time of the election is to
determine the seniority of each of the vice presidents.
5.3 Removal. An officer of the Corporation elected by the
board of directors may be removed with or without cause at any
time only by a vote of the board of directors. The officer may
be removed only upon the vote of a majority of the directors
present at such meeting, provided there is a quorum. However, if
the officer to be removed is a director, he may not vote on his
removal. Such removal is without prejudice to the contract
rights, if any, of such officer.
5.4 Vacancies. A vacancy in any office caused by the
death, resignation or removal of the officer or otherwise may but
need not be filled by the board of directors for the unexpired
term.
5.5 Compensation. The board of directors is to determine
the compensation to be received by the officers of the
Corporation and agents appointed by the board of directors.
5.6 Bond. The board of directors, by resolution, may
require the officers and agents of the Corporation, or any of
them, to give bond to the Corporation, in sufficient amount and
with sufficient surety, to secure the faithful performance of
their duties and to comply with such other conditions as the
board of directors may from time to time require.
5.7 Resignation. An officer of the Corporation may resign
at any time for any reason. Any such resignation must be in
writing and be delivered to the chairman of the board, the
president or the secretary of the Corporation. A resignation is
effective upon such delivery.
ARTICLE VI
DUTIES OF OFFICERS
6.1 Chairman. The chairman of the board of directors, if
one is elected, is to preside at all meetings of the board of
directors and has and is to perform such other duties as from
time to time may be assigned to him by the board of directors.
6.2 The President. The president is to supervise and
control the business, property and affairs of the Corporation,
subject to the authority hereinabove given to the board of
directors, and is to preside at all meetings of the shareholders
and of the board of directors in the absence of the chairman of
the board. The president is to perform all duties incident to
his office, including executing all certificates for shares of
stock of the Corporation, deeds, mortgages, bonds, contracts or
other instruments, except where the execution thereof is
expressly delegated by the board of directors or the Bylaws to
another officer or agent of the Corporation, or is required by
law to be otherwise executed.
6.3 Vice Presidents. The vice presidents, if elected, are
to perform the duties and exercise the powers delegated to them
by the board of directors or the president of the Corporation.
In the absence of the president, the vice presidents in order of
their seniority are to perform the duties and exercise the powers
of the president.
6.4 The Secretary. The secretary is to attend all meetings
of the shareholders, board of directors, and executive committee,
and is to record votes and keep minutes of such meetings in one
or more books provided for that purpose. In addition, in the
absence of the president, the secretary is to perform the duties
and exercise the powers of the president if no vice president is
elected. He is to give all notices in the manner required by
these Bylaws or by law. He is the custodian of the corporate
records and corporate seal and, when authorized by the board of
directors, executive committee, president or vice president, is
to affix the seal to any document or instrument of the
Corporation requiring the Corporation's seal. He has general
charge of the stock transfer books of the Corporation and is to
keep a list of the post office addresses of each shareholder. He
is, in general, to perform all duties incident to the office of
secretary and perform such other duties as may be required by the
board of directors, executive committee or the president, under
whose supervision he is. If the secretary is absent from any
meeting, the board of directors or executive committee may select
any of their number, or any assistant secretary, to act as
temporary secretary.
6.5 Treasurer. The treasurer, if elected, and if no
treasurer is elected, then the secretary, has control and custody
of the funds and securities of the Corporation. He is to keep
and maintain in books and records of the Corporation accurate
accounts of receipts and disbursements, and he is to deposit all
monies and valuable effects of the Corporation in the name of the
Corporation in such depositories as the board of directors or
executive committee or president may designate. He is to make
disbursements of the funds and securities of the Corporation upon
order of the board of directors or executive committee and obtain
proper vouchers therefor. He is to report to the board of
directors and executive committee, at all meetings thereof,
concerning the financial condition of the Corporation and the
performance of his duties as treasurer. In general, he is to
perform all duties incident to the office of treasurer. He is,
upon request of the board of directors or executive committee, to
furnish a bond for the faithful performance of his duties in such
amount and with such surety as either of them may require.
6.6 Assistant Officers. Any assistant secretaries or
assistant treasurers elected by the board of directors have such
authority and are to perform such duties as the board of
directors may, from time to time, prescribe.
6.7 Subordinate Officers. The board of directors may elect
such subordinate officers as it deems necessary or desirable to
serve for such period and have such authority and perform such
duties as the board of directors may authorize.
ARTICLE VII
CERTIFICATES FOR SHARES AND THEIR TRANSFER
7.1 Certificates for Shares. The board of directors is to
prescribe the form of the certificate of stock of the
Corporation. The certificate is to be signed by the president or
vice president and by the secretary, treasurer or assistant
secretary or assistant treasurer, is to be sealed with the seal
of the Corporation and is to be numbered consecutively. The name
of the owner of the certificate, the number of shares of stock
represented thereby, and the date of issue are to be recorded on
the books of the Corporation. Certificates of stock surrendered
to the Corporation for transfer are to be canceled, and new
certificates of stock representing the transferred shares issued.
New stock certificates may be issued to replace lost, destroyed
or mutilated certificates upon such terms and with such security
to the Corporation as the board of directors may require.
7.2 Transfer of Shares. Shares of stock of the Corporation
may be transferred on the books of the Corporation by the
delivery of the certificates representing such shares to the
Corporation for cancellation, and with an assignment in writing
on the back of the certificate executed by the person named in
the certificates as the owner thereof, or by a written power of
attorney executed for such purpose by such person. The person
registered on the books of the Corporation as the owner of shares
of stock of the Corporation is deemed the owner thereof and is
entitled to all rights of ownership with respect to such shares.
7.3 Transfer Books. Transfer books are to be maintained
under the direction of the secretary, showing the ownership and
transfer of all certificates of stock issued by the Corporation.
ARTICLE VIII
FISCAL YEAR
The fiscal year of the Corporation is to be established from
time to time by resolution of the board of directors of the
Corporation.
ARTICLE IX
SEAL
The seal of the Corporation is to be in the form of a
circle, and is to have inscribed thereon the name of the
Corporation and the words "Corporate Seal" and "Missouri". The
form of the seal of the Corporation may be changed from time to
time by resolution of the board of directors.
ARTICLE X
CONTRACTS, LOANS, CHECKS AND DEPOSITS
10.1 Contracts. The board of directors may authorize
any officer or officers, agent or agents, to enter into any
contract or execute and deliver any instrument in the name of or
on behalf of the Corporation as the board determines, and such
authority may be general or confined to specific instances.
10.2 Loans. No loans may be contracted on behalf of the
Corporation and no evidences of indebtedness may be issued in the
Corporation's name unless authorized by a resolution of the board
of directors. Such authority may be general or confined to
specific instances.
10.3 Checks, Drafts, Etc. All checks, drafts or other
orders for the payment of money, notes or other evidences of
indebtedness issued in the name of the Corporation are to be
signed by such officer or officers, agent or agents of the
Corporation and in such manner as from time to time may be
determined by resolution of the board of directors.
10.4 Deposits. All funds of the Corporation not otherwise
employed are to be deposited from time to time to the credit of
the Corporation in such banks, trust companies or other
depositories as the board of directors may select.
ARTICLE XI
WAIVER OF NOTICE
Whenever any notice is required to be given pursuant to
these Bylaws, the articles of incorporation of the Corporation,
or the corporate laws of the State of Missouri, a written waiver
thereof signed by the person or persons entitled thereto, whether
before or after the time stated therein, satisfies such
requirement of notice.
ARTICLE XII
INDEMNIFICATION OF OFFICERS AND DIRECTORS
AGAINST LIABILITIES AND EXPENSES IN ACTION
12.1 Indemnification with Respect to Third Party Actions.
The Corporation is to indemnify any person who was or is a party
or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal,
administrative or investigative (other than an action by or in
the right of this Corporation) by reason of the fact that he is
or was a director, officer, employee or agent of the Corporation,
or is or was serving at the request of the Corporation as a
director, officer, employee, partner, trustee or agent of another
corporation, partnership, joint venture, trust or other
enterprise, against expenses (including attorneys' fees),
judgments, fines, taxes and amounts paid in settlement actually
and reasonably incurred by him in connection with such action,
suit or proceeding if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests
of the Corporation, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was
unlawful. The termination of any action, suit or proceeding by
judgment, order, settlement, conviction, or upon a plea of nolo
contendere or its equivalent, does not, of itself, create a
presumption that the person did not act in good faith and in a
manner which he reasonably believed to be in or not opposed to
the best interests of the Corporation, and, with respect to any
criminal action or proceeding, had reasonable cause to believe
that his conduct was unlawful.
12.2 Indemnification with Respect to Actions by or in the
Right of the Corporation. The Corporation is to indemnify any
person who was or is a party or is threatened to be made a party
to any threatened, pending or completed action or suit by or in
the right of the Corporation to procure a judgment in its favor
by reason of the fact that he is or was a director, officer,
employee or agent of the Corporation, or is or was serving at the
request of the Corporation as a director, officer, employee,
partner, trustee or agent of another corporation, partnership,
joint venture, trust or other enterprise against expenses
(including attorneys' fees), judgments, fines, taxes and amounts
paid in settlement actually and reasonably incurred by him in
connection with such action, suit or proceeding if he acted in
good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the Corporation. However, no
indemnification is to be made in respect of any claim, issue or
matter as to which such person has been adjudged to be liable for
gross negligence or willful misconduct in the performance of his
duty to the Corporation unless and only to the extent that the
court in which such action or suit was brought determines upon
application that, despite the adjudication of liability but in
view of all the circumstances of the case, such person is fairly
and reasonably entitled to indemnity for such expenses which the
court deems proper. Any indemnification under this Section 12.2
(unless ordered by a court) is to be made by the Corporation only
as authorized in the specific case upon a determination that
indemnification of the director, officer, employee, partner,
trustee or agent is proper in the circumstances because he has
met the applicable standard of conduct set forth in this
Section 12.2. Such determination is to be made (a) by the board
of directors by a majority vote of a quorum consisting of
directors who were not parties to such action, suit or
proceeding, or (b) if such a quorum is not obtainable, or, even
if obtainable a quorum of disinterested directors so directs, by
independent legal counsel in a written opinion, or (c) by the
stockholders.
12.3 Payment of Expenses in Advance of Disposition of
Action. Expenses incurred in defending any actual or threatened
civil or criminal action, suit or proceeding may be paid by the
Corporation in advance of the final disposition of such action,
suit or proceeding as authorized by the board of directors in the
specific case upon receipt of an undertaking by or on behalf of
the director, officer, employee, partner, trustee or agent to
repay such amount if it is ultimately determined that he is not
entitled to be indemnified by the Corporation as authorized in
this Article.
12.4 Indemnification Provided in This Article Non-Exclusive.
The indemnification provided by this Article is not exclusive of
any other rights to which those seeking indemnification may be
entitled under any bylaw, agreement, vote of stockholders or
disinterested directors or otherwise, both as to action in his
official capacity while holding such office, and continues as to
a person who has ceased to be a director, officer, employee,
partner, trustee or agent and inures to the benefit of the heirs,
executors and administrators of such a person.
12.5 Definition of "Corporation". For the purposes of this
Article, references to the "Corporation" include all constituent
corporations absorbed in a consolidation or merger as well as the
resulting or surviving corporation so that any person who is or
was a director, officer, employee, partner, trustee or agent of
such a constituent corporation or is or was serving at the
request of such constituent corporation as a director, officer,
employee, partner, trustee or agent of another corporation,
partnership, joint venture, trust or other enterprise stands in
the same position under the provisions of this Article with
respect to the resulting or surviving corporation in the same
capacity.
12.6 Saving Clause. In the event any provision of this
Article is held invalid by any court of competent jurisdiction,
such holding does not invalidate any other provision of this
Article, and any other provisions of this Article is to be
construed as if such invalid provision had not been contained in
this Article.
ARTICLE XIII
AMENDMENTS
These Bylaws may be amended or repealed and new Bylaws may
be adopted by a vote of the majority of shares represented in
person or by proxy and entitled to vote at any annual meeting of
shareholders without notice or at any special meeting of
shareholders with notice setting forth the terms of the proposed
Bylaws, amendment, or repeal. The board of directors also has
the power to make, alter, amend or repeal these Bylaws to the
extent that such power may be vested in the board of directors by
the articles of incorporation of the Corporation.
EXHIBIT E
INTERCOMPANY LIABILITIES
[To be provided by RIT and BCBSMo prior to signing date]
EXHIBIT F
FORM OF
CERTIFICATE OF INCORPORATION
OF
RIGHTCHOICE MANAGED CARE, INC.
The undersigned, being a natural person, for the purpose of
organizing a corporation under the General Corporation Law of the
State of Delaware, hereby certifies that:
ARTICLE I NAME
The name of the corporation is RightCHOICE Managed
Care, Inc. (the "Corporation").
ARTICLE II PURPOSE
The nature of the business or purposes to be conducted
or promoted by the Corporation is to engage in any lawful act or
activity for which corporations may be organized under the
General Corporation Law of Delaware, as from time to time amended
(the "DGCL").
ARTICLE III
AUTHORIZED CAPITAL STOCK
SECTION 1. The total number of shares of all classes
of stock which the Corporation shall have authority to issue is
__________ [to be determined by RIT prior to the filing of this
Certificate of Incorporation] million (_______) shares consisting
of (a) __________ [to be determined by RIT prior to the filing of
this Certificate of Incorporation] million (________) shares of
common stock, $______ [to be determined by RIT prior to the
filing of this Certificate of Incorporation] par value per share
(the "Common Stock"), and (b) ________ [to be determined by RIT
prior to the filing of this Certificate of Incorporation] million
(________) shares of preferred stock, $________ [to be determined
by RIT prior to the filing of this Certificate of Incorporation]
par value per share (the "Preferred Stock").
SECTION 2. The powers, designations, rights,
preferences, privileges and restrictions of the Common Stock and
the Preferred Stock are as follows:
A. Common Stock.
1. General. The Common Stock shall have such rights
(i) as are provided by the DGCL and as are customarily attendant
to shares of common stock, and (ii) the rights set forth below in
this Paragraph A.
2. Dividends. Subject to any other provisions of this
Certificate of Incorporation, holders of Common Stock shall be
entitled to receive, to the extent permitted by law, such
dividends and other distributions in cash, stock or property of
the Corporation as may be declared thereon from time to time by
the Board of Directors of the Corporation out of assets or funds
of the Corporation legally available therefor.
3. Voting. At every meeting of the stockholders of the
Corporation, each holder of Common Stock shall be entitled to one
(1) vote in person or by proxy for each share of Common Stock
standing in his or her name on the transfer books of the
Corporation.
B. Preferred Stock. Shares of Preferred Stock may be
issued in one or more series as determined from time to time by
the Board of Directors of the Corporation. All shares of any one
series of Preferred Stock shall be identical, except as to the
dates of issue and the dates from which dividends on shares of
the series issued on different dates shall cumulate, if dividends
on the shares of such series are cumulative. Authority is hereby
expressly granted to the Board of Directors of the Corporation to
authorize the issuance of one or more series of Preferred Stock,
and to fix by one or more resolutions providing for the issuance
of each such series the voting powers, designations, preferences
and relative, participating, optional, redemption, conversion,
exchange or other special rights, qualifications, limitations or
restrictions of such series, and the number of shares in such
series, to the full extent now or hereafter permitted by law.
ARTICLE IV
BOARD OF DIRECTORS
AND STOCKHOLDER MEETINGS
SECTION 1. Except as may be otherwise specifically
provided by the DGCL, all powers of management, direction and
control of the Corporation shall be, and hereby are, vested in
the Board of Directors of the Corporation.
SECTION 2. A majority of the whole Board of Directors
of the Corporation shall constitute a quorum for the transaction
of business and, except as otherwise provided in this Certificate
of Incorporation or the Bylaws of the Corporation, the vote of a
majority of the directors present at a meeting at which a quorum
is then present shall be the act of the Board of Directors of the
Corporation. The term "whole Board of Directors of the
Corporation," as used in this Certificate of Incorporation, means
the total number of directors which the Corporation would have as
of the date of such determination if the Board of Directors of
the Corporation had no vacancies.
SECTION 3. The Board of Directors of the Corporation
shall consist of no less than 3 nor more than ____ [to be
determined by RIT prior to the filing of this Certificate of
Incorporation] directors, the exact number of directors to be
determined in accordance with the Bylaws of the Corporation. The
directors shall be divided into three classes, designated
Class I, Class II and Class III. Each class shall consist, as
nearly as may be possible, of one-third of the total number of
directors constituting the whole Board of Directors of the
Corporation. [name(s)] [to be determined by Foundation with the
prior approval of BCBSMo] [is/are] hereby named as the Class I
directors to hold office for a term expiring at the annual
meeting of stockholders in 200_ and until [his/their]
[respective] successor[s] are duly elected and qualified or until
[his/their] earlier resignation or removal; [name(s)] [to be
determined by Foundation with the prior approval of BCBSMo]
[is/are] hereby named as the Class II directors to hold office
for a term expiring at the annual meeting of stockholders in 200_
and until [his/their] [respective] successor[s] are duly elected
and qualified or until [his/their] earlier resignation or
removal; and [name(s)] [to be determined by Foundation with the
prior approval of BCBSMo] are hereby named as the Class III
directors to hold office for a term expiring at the annual
meeting of stockholders in 200_ and until [his/their]
[respective] successor[s] are duly elected and qualified or until
[his/their] earlier resignation or removal. At each annual
meeting of stockholders beginning in 200_, successors to the
class of directors whose term expires at that annual meeting
shall be elected for a three-year term. If the number of
directors is changed, any increase or decrease shall be
apportioned among the classes so as to maintain the number of
directors in each class as nearly equal as possible, but in no
case shall a decrease in the number of directors shorten the term
of any incumbent director. A director shall hold office until
the annual meeting for the year in which his or her term shall
expire and until his or her successor shall be elected and shall
qualify, subject, however, to prior death, resignation,
retirement, disqualification or removal from office.
SECTION 4.
A. Qualifications. No person shall be elected or
appointed to the Board of Directors of the Corporation unless
either (i) such person would qualify as an Independent Director
(as defined in Paragraph B.1 of this Section 4 of Article IV), or
(ii) immediately after giving effect to such election or
appointment, at least 80% of the members of the whole Board of
Directors of the Corporation would qualify as Independent
Directors.
B. Definitions.
1. "Independent Director" means any person who, during the
entirety of any term of service on the Board of Directors of the
Corporation, satisfies each of the following conditions: (i) he
or she shall have affirmed in writing that, at the time of his or
her election or appointment for such term, he or she was
Independent (as defined in Paragraph B.2 of this Section 4 of
Article IV), and (ii) he or she shall have agreed to serve only
in the capacity of an Independent Director for such term.
2. "Independent" means a person who, at any given time,
(i) shall not be a Major Participant (as defined in Paragraph B.4
of this Section 4 of Article IV), (ii) shall not have been
nominated to the Board of Directors of the Corporation at the
initiative of a Major Participant, (iii) shall not have announced
a commitment to any proposal made by a Major Participant that has
not been approved by an Independent Board Majority (as defined in
Paragraph B.3 of this Section 4 of Article IV), and (iv) shall
not have been determined by an Independent Board Majority to have
been subject to any relationship, arrangement or circumstance
(including any relationship with a Major Participant) which, in
the judgment of such Independent Board Majority, is reasonably
possible or likely to interfere to an extent deemed unacceptable
by such Independent Board Majority with his or her exercise of
independent judgment as a director.
3. "Independent Board Majority" means a group of directors
comprised of (i) a majority of all directors who qualify as
Independent Directors at the time of such determination, and
(ii) a majority of all directors at the time of such
determination.
4. "Major Participant" means: (i) the Foundation (as
defined in Section 1 of Article VII hereof) or a Person (as
defined in Section 1 of Article VII hereof) who shall, in the
judgment of an Independent Board Majority, succeed to the
position held by the Foundation, (ii) a Person who, except as
provided in the next sentence, is an Excess Owner (as defined in
Section 1 of Article VII hereof), (iii) a Person that has filed
proxy materials with the SEC (as defined in Section 1 of
Article VII hereof) supporting a candidate for election to the
Board of Directors of the Corporation in opposition to candidates
approved by an Independent Board Majority, (iv) a Person that has
made a proposal, made a filing with the SEC or taken other
actions in which such Person indicates that such Person may seek
to become a Major Participant or which in the judgment of an
Independent Board Majority indicates that it is reasonably
possible or likely that such Person will seek to become a Major
Participant, or (v) such Person is an affiliate or associate (as
defined in Section 1 of Article VII hereof) of a Major
Participant. Notwithstanding the foregoing, in the event that an
Independent Board Majority shall have approved an acquisition of
outstanding Capital Stock (as defined in Section 1 of Article VII
hereof) of the Corporation, prior to the time such acquisition
shall occur, which would otherwise render a Person a Major
Participant and such Person (a) shall not have made any
subsequent acquisition of outstanding Capital Stock of the
Corporation not approved by an Independent Board Majority and (b)
shall not have subsequently taken any of the actions specified in
the preceding sentence without the prior approval of an
Independent Board Majority, then such Person shall not be deemed
a Major Participant; provided that the Foundation shall always be
deemed a Major Participant notwithstanding any approval of any
acquisition of Capital Stock of the Corporation or any other
development or fact of any kind. In the event there shall be any
question as to whether a particular Person is a Major
Participant, the determination of an Independent Board Majority
shall be binding upon all parties concerned.
SECTION 5. Each election of directors shall be by
plurality vote except that an individual shall not be elected to
the Board of Directors of the Corporation if such election is
prohibited by Section 4 of this Article IV or the individual does
not meet the qualifications which may be required by the Bylaws
of the Corporation as constituted at the time of such election.
The Board of Directors of the Corporation shall have the right to
adopt Bylaw provisions to implement and apply the provisions in
the preceding sentence and to achieve the outcome prescribed and
intended thereby. The election of directors need not be by
ballot unless the Bylaws of the Corporation shall so require.
SECTION 6. Any newly created directorships resulting
from any increase in the number of directors or from the removal,
resignation or death of a director may be filled only by the
affirmative vote of an Independent Board Majority and any
directors so chosen shall hold office until the next election of
the class for which such directors shall have been chosen and
until their successors shall be elected and qualified or until
their respective earlier resignation, removal or death.
SECTION 7. Stockholders of the Corporation shall have
no right to remove any director or the whole Board of Directors
of the Corporation unless such removal is for Cause (as defined
below in this Section 7 of Article IV) and unless the holders of
at least seventy-five percent (75%) of the issued and outstanding
shares of Common Stock then entitled to vote at an election of
directors shall have voted in favor of such removal for Cause
(notwithstanding the fact that some lesser percentage may be
specified by the DGCL). "Cause," as used in this Section 7,
means conviction of a felony or a finding by a court of competent
jurisdiction of liability for gross negligence, or willful
misconduct, in the performance of the director's duty to the
Corporation in a matter of substantial importance to the
Corporation, where such adjudication is no longer subject to
direct appeal.
SECTION 8. Whenever the holders of any series of
Preferred Stock issued by the Corporation or of any other
securities of the Corporation shall have the right, voting
separately by series, to elect directors at an annual or special
meeting of stockholders, the election, term of office, filling of
vacancies and other features of such directorships shall be
governed by the terms of this Certificate of Incorporation then
applicable thereto.
SECTION 9. Meetings of the stockholders of the
Corporation for any purpose or purposes may be held within or
without the State of Delaware, as the Bylaws of the Corporation
may provide.
SECTION 10. No action required or permitted to be
taken at any annual or special meeting of stockholders of the
Corporation may be taken by written consent without a meeting of
such stockholders.
SECTION 11. Subject to the rights, if any, of the
holders of Preferred Stock or any series thereof, special
meetings of the stockholders of the Corporation for any purpose
or purposes may be called at any time only by the Chairman of the
Board of the Corporation, the Chief Executive Officer of the
Corporation, the President of the Corporation, or an Independent
Board Majority. Special meetings of the stockholders of the
Corporation may not be called by any other person or persons or
in any other manner.
ARTICLE V
INDEMNIFICATION
SECTION 1. The Corporation shall indemnify any person
who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative, by
reason of the fact that he or she is or was a director or an
officer of the Corporation, or is or was a director or an officer
of the Corporation and is or was serving at the request of the
Corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other
enterprise, against expenses (including, but not limited to,
attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by him or her in connection with
such action, suit or proceeding to the fullest extent and in the
manner set forth in and permitted by the DGCL and other
applicable law, as from time to time in effect. To the maximum
extent permitted by the DGCL, the Corporation shall advance
expenses (including attorneys' fees) incurred by any person
indemnified hereunder in defending any civil, criminal,
administrative or investigative action, suit or proceeding upon
an undertaking by or on behalf of such person to repay such
amount if it shall ultimately be determined that he or she is not
entitled to be indemnified by the Corporation. Such rights of
indemnification and advancement of expenses shall not be deemed
to be exclusive of any other rights to which such director or
officer may be entitled apart from the foregoing provisions. The
foregoing provisions of this Section 1 of Article V shall be
deemed to be a contract between the Corporation and each director
and officer who serves in such capacity at any time while this
Section 1 of Article V and the relevant provisions of the DGCL
and other applicable law, if any, are in effect, and any repeal
or modification thereof shall not affect any rights or
obligations then existing, with respect to any state of facts
then or theretofore existing, or any action, suit or proceeding
theretofore or thereafter brought or threatened based in whole or
in part upon any such state of facts.
SECTION 2. The Corporation may indemnify any person
who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative, by
reason of the fact that he or she is or was an employee or agent
of the Corporation, or is or was serving at the request of the
Corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other
enterprise, against expenses (including, but not limited to,
attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by him or her in connection with
such action, suit or proceeding to the extent and in the manner
set forth in and permitted by the DGCL and other applicable law
as from time to time in effect. Such right of indemnification
shall not be deemed to be exclusive of any other rights to which
any such person may be entitled apart from the foregoing
provisions.
ARTICLE VI
LIABILITY FOR BREACH OF FIDUCIARY DUTY
A director of the Corporation shall not be personally
liable to the Corporation or its stockholders for monetary
damages for breach of fiduciary duty as a director, except for
liability (i) for any breach of his or her duty of loyalty to the
Corporation or its stockholders, (ii) for acts or omissions not
in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) under Section 174 of the DGCL, or
(iv) for any transaction from which he or she derived any
improper personal benefit. In no event shall any director be
deemed to breach any fiduciary duty or other obligation owed to
any stockholders of the Corporation or any other person by reason
of (i) his or her failure to vote for (or by reason of such
director's vote against) any proposal or course of action that in
such director's judgment would breach any requirement imposed by
the Blue Cross and Blue Shield Association (or its then
successor) (the "BCBSA") or could lead to termination of any
license granted by the BCBSA to the Corporation or any subsidiary
or affiliate of the Corporation, or (ii) his or her decision to
vote in favor of any proposal or course of action that in such
director's judgment is necessary to prevent a breach of any
requirement imposed by the BCBSA or could prevent termination of
any license granted by the BCBSA to the Corporation or any
subsidiary or affiliate of the Corporation. If the DGCL is
hereafter amended to authorize, with the approval of a
corporation's stockholders, further reductions in the liability
of a corporation's directors for breach of fiduciary duty, then a
director of the Corporation shall not be liable for any such
breach to the fullest extent permitted by the DGCL as so amended.
Any repeal or modification of the foregoing provisions of this
Article VI by the stockholders of the Corporation shall not
adversely affect any right or protection of a director of the
Corporation existing at the time of such repeal or modification.
ARTICLE VII
RESTRICTION ON TRANSFER
SECTION 1. The following definitions shall apply
with respect to this Article VII:
(a) "affiliate" and "associate" have the respective
meanings ascribed to such terms in Rule 12b-2 of the General
Rules and Regulations under the Exchange Act.
(b) a Person shall be deemed to "Beneficially Own," be
the "Beneficial Owner" of or have "Beneficial Ownership" of any
Capital Stock:
(1) in which such Person shall then have a direct
or indirect beneficial ownership interest;
(2) in which such Person shall have the right to
acquire any direct or indirect beneficial ownership interest
pursuant to any option or other agreement (either immediately or
after the passage of time or the occurrence of any contingency);
(3) which such Person shall have the right to
vote;
(4) in which such Person shall hold any other
interest which would count in determining whether such Person
would be required to file a Schedule 13D or Schedule 13G under
Regulation 13D-G under the Exchange Act; or
(5) which shall be Beneficially Owned (under the
concepts provided in the preceding clauses) by any affiliate or
associate of the particular Person or by any other Person with
whom the particular Person or any such affiliate or associate has
any agreement, arrangement or understanding (other than customary
agreements with and between underwriters and selling group
members with respect to a bona fide public offering of securities
and other than pursuant to the Registration Rights Agreement);
provided, however, that
(6) a Person shall not be deemed to Beneficially
Own, be the Beneficial Owner of, or have Beneficial Ownership of
Capital Stock by reason of possessing the right to vote if
(i) such right arises solely from a revocable proxy or consent
given to such Person in response to a public proxy or consent
solicitation made pursuant to, and in accordance with, the
applicable rules and regulations promulgated under the Exchange
Act, and (ii) such Person is not the Excess Owner of any Excess
Shares, is not named as holding a beneficial ownership interest
in any Capital Stock in any filing on Schedule 13D or
Schedule 13G, and is not an affiliate or associate of any such
Excess Owner or named Person;
(7) a member of a national securities exchange or
a registered depositary shall not be deemed to Beneficially Own,
be the Beneficial Owner of or have Beneficial Ownership of
Capital Stock held directly or indirectly by it on behalf of
another Person (and not for its own account) solely because such
member or depositary is the record holder of such Capital Stock,
and (in the case of such member), pursuant to the rules of such
exchange, such member may direct the vote of such Capital Stock
without instruction on matters which are uncontested and do not
affect substantially the rights or privileges of the holders of
the Capital Stock to be voted, but is otherwise precluded by the
rules of such exchange from voting such Capital Stock without
instruction on either contested matters or matters that may
affect substantially the rights or the privileges of the holders
of such Capital Stock to be voted;
(8) a Person who in the ordinary course of
business is a pledgee of Capital Stock under a written pledge
agreement shall not be deemed to Beneficially Own, be the
Beneficial Owner of or have Beneficial Ownership of such pledged
Capital Stock solely by reason of such pledge until the pledgee
has taken all formal steps which are necessary to declare a
default or has otherwise acquired the power to vote or to direct
to vote such pledged Capital Stock, provided that:
(A) the pledge agreement is bona fide and
was not entered into with the purpose nor with the effect of
changing or influencing the control of the Corporation, nor in
connection with any transaction having such purpose or effect,
including any transaction subject to Rule 13d-3(b) promulgated
under the Exchange Act; and
(B) the pledge agreement does not grant to
the pledgee the right to vote or to direct the vote of the
pledged securities prior to the time the pledgee has taken all
formal steps which are necessary to declare a default;
(9) a Person engaged in business as an
underwriter or a placement agent for securities who enters into
an agreement to acquire or acquires Capital Stock solely by
reason of its participation in good faith and in the ordinary
course of its business in the capacity of underwriter or
placement agent in any underwriting or agent representation
registered under the Securities Act, as a bona fide private
placement, a resale under Rule 144A promulgated under the
Securities Act, or in any foreign or other offering exempt from
the registration requirements under the Securities Act shall not
be deemed to Beneficially Own, be the Beneficial Owner of or have
Beneficial Ownership of such securities until the expiration of
forty (40) days after the date of such acquisition so long as
(i) such Person does not vote such Capital Stock during such
period, and (ii) such participation is not with the purpose or
with the effect of changing or influencing control of the
Corporation, nor in connection with or facilitating any
transaction having such purpose or effect, including any
transaction subject to Rule 13d-3(b) promulgated under the
Exchange Act;
(10) if the Corporation shall sell shares in a
transaction not involving any public offering, then each
purchaser in such offering shall be deemed to obtain Beneficial
Ownership in such offering of the shares purchased by such
purchaser, but no particular purchaser shall be deemed to
Beneficially Own or have acquired Beneficial Ownership or be the
Beneficial Owner in such offering of shares purchased by any
other purchaser solely by reason of the fact that all such
purchasers are parties to customary agreements relating to the
purchase of equity securities directly from the Corporation in a
transaction not involving a public offering, provided that:
(A) all the purchasers are persons specified
in Rule 13d-l(b)(l)(ii) promulgated under the Exchange Act;
(B) the purchase is in the ordinary course
of each purchaser's business and not with the purpose nor with
the effect of changing or influencing control of the Corporation,
nor in connection with or as a participant in any transaction
having such purpose or effect, including any transaction subject
to Rule 13d-3(b) promulgated under the Exchange Act;
(C) there is no agreement among or between
any purchasers to act together with respect to the Corporation or
its securities except for the purpose of facilitating the
specific purchase involved; and
(D) the only actions among or between any
purchasers with respect to the Corporation or its securities
subsequent to the closing date of the nonpublic offering are
those which are necessary to conclude ministerial matters
directly related to the completion of the offer or sale of the
securities sold in such offering;
(11) the Share Escrow Agent shall not be deemed to
be the Beneficial Owner of any Excess Share held by such Share
Escrow Agent pursuant to an Excess Share Escrow Agreement, nor
shall any such Excess Shares be aggregated with any other shares
of Capital Stock held by affiliates or associates of such Share
Escrow Agent; and
(12) a Person shall not be deemed to Beneficially
Own, be the Beneficial Owner of, or have Beneficial Ownership of
Capital Stock by reason of the fact that such Person shall have
entered into an agreement with the Corporation pursuant to which
such Person, or its associates or affiliates, shall, upon
consummation of the transaction described in such agreement,
acquire, directly or indirectly, all of the Capital Stock of the
Corporation (by means of a merger, consolidation, stock purchase
or otherwise), provided that:
(A) such agreement shall have been approved
by an Independent Board Majority prior to the execution thereof
by the Corporation;
(B) neither such Person nor its associates
or affiliates shall have been the Excess Owner of any Excess
Shares immediately prior to the execution of such agreement;
(C) the consummation of the transaction
described in such agreement shall be subject to the approval of
the holders of Capital Stock of the Corporation entitled to vote
thereon under the DGCL or pursuant to other applicable law or the
rules of the New York Stock Exchange, Inc. or any other national
securities exchange or automated quotation system on which any of
the Capital Stock shall then be listed or quoted; and
(D) neither such Person nor its associates
or affiliates shall have made any acquisition of Capital Stock
after the execution of such agreement other than pursuant to the
terms of such agreement.
Anything herein to the contrary notwithstanding, a Person
shall continue to be deemed to Beneficially Own, be the
Beneficial Owner of, and have Beneficial Ownership of, such
Person's Excess Shares which shall have been conveyed, or shall
be deemed to have been conveyed, to the Share Escrow Agent in
accordance with this Article VII until such time as such Excess
Shares shall have been sold by the Share Escrow Agent as provided
in this Article VII.
(c) "BCBSA" has the meaning set forth in Article VI
hereof.
(d) "Capital Stock" means shares (or any basic unit)
of any class or series of any equity security, voting or non-
voting, common or preferred, which the Corporation may at any
time issue or be authorized to issue.
(e) "Common Stock" has the meaning set forth in
Section 1 of Article III hereof.
(f) "Excess Owner" means a Person who Beneficially
Owns Excess Shares.
(g) "Excess Shares" means (i) with respect to any
Institutional Investor, all the shares of Capital Stock
Beneficially Owned by such Institutional Investor in excess of
the Institutional Investor Ownership Limit, (ii) with respect to
any Noninstitutional Investor, all the shares of Capital Stock
Beneficially Owned by such Noninstitutional Investor in excess of
the Noninstitutional Investor Ownership Limit, and (iii) with
respect to any Person, all the shares of Capital Stock
Beneficially Owned by such Person in excess of the General
Ownership Limit; provided, however, that in the event the Excess
Shares with respect to such Person results from the Beneficial
Ownership of Capital Stock of such Person being aggregated with
the Beneficial Ownership of Capital Stock of any other Person,
then the number of Excess Shares with respect to such Person
shall be allocated pro rata in proportion to each Person's total
Beneficial Ownership (as calculated without giving effect to this
Article VII). All Excess Shares shall be deemed to be issued and
outstanding shares of Capital Stock even when subject to or held
pursuant to this Article VII.
(h) "Exchange Act" means the Securities Exchange Act
of 1934, as amended or supplemented and any other federal law
which the BCBSA shall reasonably judge to have replaced or
supplemented the coverage of the Exchange Act.
(i) "Foundation" means The Missouri Foundation For
Health, a Missouri nonprofit corporation.
(j) "General Ownership Limit" means (i) that number of
shares of Common Stock one share lower than the number of shares
of Common Stock which would represent 20% of all shares of Common
Stock issued and outstanding at the time of determination, or
(ii) any combination of shares of Capital Stock in any series or
class that represents 20% of the ownership interest in the
Corporation at the time of determination; provided, however, that
the General Ownership Limit may be revised from time to time
pursuant to Section 15 of this Article VII. Unless an
Independent Board Majority otherwise determines pursuant to the
authority granted in Section 15 of this Article VII, the manner
in which shares in different classes or series of Capital Stock
shall be counted to determine the ownership interest represented
by any particular combination of those shares of Capital Stock
pursuant to clause (ii) above shall be the same manner prescribed
by the BCBSA under the License Agreements. So long as Common
Stock (carrying identical voting rights per share) shall be the
only class of Capital Stock issued by the Corporation, the
General Ownership Limit shall be irrelevant for purposes of this
Article VII because the Institutional Investor Ownership Limit
shall exclusively determine whether any shares of Common Stock
owned by any Institutional Investor constitute Excess Shares and
the Noninstitutional Investor Ownership Limit shall exclusively
determine whether any shares of Common Stock owned by any
Noninstitutional Investor constitute Excess Shares. If, however,
the Corporation were to issue a series of Preferred Stock or
other class of Capital Stock other than Common Stock, then (i)
shares Beneficially Owned by an Institutional Investor in excess
of either the Institutional Investor Ownership Limit or the
General Ownership Limit would constitute Excess Shares, and (ii)
shares Beneficially Owned by a Noninstitutional Investor in
excess of either the Noninstitutional Investor Ownership Limit or
the General Ownership Limit would constitute Excess Shares.
(k) "Institutional Investor" means any Person that is
an entity or group identified in Rule 13d-1(b)(1)(ii) under the
Exchange Act as constituted on June 1, 1997, provided that every
filing made by such Person with the SEC under Regulation 13D-G
(or any successor Regulation) under the Exchange Act with respect
to such Person's Beneficial Ownership of Capital Stock by such
Person shall have contained a certification identical to the one
required by Item 10 of Schedule 13G constituted on June 1, 1997,
or such other affirmation as shall be approved by the BCBSA and
the Board of Directors.
(l) "Institutional Investor Ownership Limit" means
that number of shares of Capital Stock one share lower than the
number of shares of Capital Stock which would represent 10% of
the Voting Power of all shares of Capital Stock issued and
outstanding at the time of determination; provided, however, that
the Institutional Investor Ownership Limit may be revised from
time to time pursuant to Section 15 of this Article VII.
(m) "License Agreements" means the license agreements
as constituted from time to time between the Corporation or any
of its subsidiaries or affiliates and the BCBSA, including any
and all addenda thereto, with respect to, among other things, the
"Blue Cross" and "Blue Shield" names and marks.
(n) "Noninstitutional Investor" means any Person that
is not an Institutional Investor.
(o) "Noninstitutional Investor Ownership Limit" means
that number of shares of Capital Stock one share lower than the
number of shares of Capital Stock which would represent 5% of the
Voting Power of all shares of Capital Stock issued and
outstanding at the time of determination; provided, however, that
the Noninstitutional Investor Ownership Limit may be revised from
time to time pursuant to Section 15 of this Article VII.
(p) "Ownership Limit" means each of the General
Ownership Limit, the Institutional Investor Ownership Limit and
the Noninstitutional Investor Ownership Limit, as each may be
revised from time to time pursuant to Section 15 of this
Article VII.
(q) "Permitted Transferee" means a Person whose
acquisition of Capital Stock will not violate any Ownership Limit
applicable to such Person.
(r) "Person" means any individual, firm, partnership,
corporation, limited liability company, trust, association, joint
venture or other entity, and shall include any successor (by
merger or otherwise) or of any such entity.
(s) "Registration Rights Agreement" means that certain
Registration Rights Agreement, between the Corporation and the
Foundation, referred to in the Agreement and Plan of
Reorganization described in Section 14 of this Article VII.
(t) "Schedule 13D" means a report on Schedule 13D
under Regulation 13D-G under the Exchange Act and any report
which may be required in the future under any requirements which
the BCBSA shall reasonably judge to have any of the purposes
served by Schedule 13D.
(u) "Schedule 13G" means a report on Schedule 13G
under Regulation 13D-G under the Exchange Act and any report
which may be required in the future under any requirements which
the BCBSA shall reasonably judge to have any of the purposes
served by Schedule 13G.
(v) "SEC" means the United States Securities and
Exchange Commission and any successor federal agency having
similar powers.
(w) "Securities Act" means the Securities Act of 1933,
as amended or supplemented, and any other federal law which the
BCBSA shall reasonably judge to have replaced or supplemented the
coverage of the Securities Act.
(x) "Share Escrow Agent" means the Person appointed by
the Corporation to act as escrow agent with respect to the Excess
Shares.
(y) "Transfer" means any of the following which would
affect the Beneficial Ownership of Capital Stock: (a) any direct
or indirect sale, transfer, gift, hypothecation, pledge,
assignment, devise or other disposition of Capital Stock
(including (i) the granting of any option or entering into any
agreement for the sale, transfer or other disposition of Capital
Stock, or (ii) the sale, transfer, assignment or other
disposition of any securities or rights convertible into or
exchangeable for Capital Stock), whether voluntary or
involuntary, whether of record, constructively or beneficially
and whether by operation of law or otherwise, and (b) any other
transaction or event, including without limitation a merger,
consolidation, or acquisition of any Person, the expiration of a
voting trust which is not renewed, or the aggregation of the
Capital Stock Beneficially Owned by one Person with the Capital
Stock Beneficially Owned by any other Person.
(z) "Voting Power" means the voting power attributable
to the shares of Capital Stock issued and outstanding at the time
of determination and shall be equal to the number of all votes
which could be cast in any election of any director which could
be accounted for by all shares of Capital Stock issued and
outstanding at the time of determination. If, in connection with
an election for any particular position on the Board of Directors
of the Corporation, shares in different classes or series are
entitled to be voted together for purposes of such election, then
in determining the number of "all votes which could be cast" in
the election for that particular position for purposes of the
preceding sentence, the number shall be equal to the number of
votes which could be cast in the election for that particular
position if all shares entitled to be voted in such election
(regardless of series or class) were in fact voted in such
election. For any particular Person, the Voting Power of such
Person shall be equal to the quotient, expressed as a percentage,
of the number of votes that may be cast with respect to shares of
Capital Stock Beneficially Owned by such Person (including, for
these purposes, any Excess Shares Beneficially Owned by such
Person and held and/or voted by the Escrow Share Agent) divided
by the total number of votes that could be cast by all
stockholders of the Corporation (including such particular
Person) based upon the issued and outstanding shares of Capital
Stock at the time of determination. If the Corporation shall
issue any series or class of shares for which positions on the
Board of Directors of the Corporation are reserved or shall
otherwise issue shares which have voting rights which can arise
or vary based upon terms governing that class or series, then the
percentage of the voting power represented by the shares of
Capital Stock Beneficially Owned by any particular Person shall
be the highest percentage of the total votes which could be
accounted for by those shares in any election of any director.
(aa) "Voting Trust Divestiture Agreement" means that
certain Voting Trust and Divestiture Agreement by and between the
Corporation and the Foundation and the trustee named therein,
referred to in the Agreement and Plan or Reorganization described
in Section 14 of this Article VII.
SECTION 2.
(a) No Institutional Investor shall Beneficially Own
shares of Capital Stock in excess of the Institutional Investor
Ownership Limit. No Noninstitutional Investor shall Beneficially
Own shares of Capital Stock in excess of the Noninstitutional
Investor Ownership Limit. No Person shall Beneficially Own
shares of Capital Stock in excess of the General Ownership Limit.
(b) The occurrence of any Transfer which would cause
any Person to Beneficially Own Capital Stock in excess of any
Ownership Limit applicable to such Person shall have the
following legal consequences: (i) such Person shall receive no
rights to the Excess Shares resulting from such Transfer (other
than as specified in this Article VII), and (ii) the Excess
Shares resulting from such Transfer immediately shall be deemed
to be conveyed to the Share Escrow Agent.
(c) Notwithstanding the foregoing, a Person's
Beneficial Ownership of Capital Stock shall not be deemed to
exceed any Ownership Limit applicable to such Person if (A) the
Excess Shares with respect to such Person do not exceed the
lesser of 1% of the Voting Power of the Capital Stock or 1% of
the ownership interest in the Corporation, and (B) within fifteen
(15) days of the time when such Person becomes aware of the
existence of such Excess Shares such Person transfers or
otherwise disposes of sufficient shares of Capital Stock so that
such Person's Beneficial Ownership of Capital Stock shall not
exceed any Ownership Limit.
SECTION 3. Any Excess Owner who acquires or attempts
to acquire shares of Capital Stock in violation of Section 2 of
this Article VII, or any Excess Owner who is a transferee such
that any shares of Capital Stock are deemed Excess Shares, shall
immediately give written notice to the Corporation of such event
and shall provide to the Corporation such other information as
the Corporation may request.
SECTION 4. The Corporation shall have the right to
take such actions as it deems necessary to give effect to the
transfer of Excess Shares to the Share Escrow Agent, including
refusing to give effect to the Transfer or any subsequent
Transfer of Excess Shares by the Excess Owner on the books of the
Corporation. Excess Shares so held or deemed held by the Share
Escrow Agent shall be issued and outstanding shares of Capital
Stock. An Excess Owner shall have no rights in such Excess
Shares except as expressly provided in this Article VII and the
administration of the Excess Shares escrow shall be governed by
the terms of an Excess Share Escrow Agreement to be entered into
between the Corporation and the Share Escrow Agent and having
such terms as the Corporation shall deem appropriate.
SECTION 5. The Share Escrow Agent, as record holder of
Excess Shares, shall be entitled to receive all dividends and
distributions as may be declared by the Board of Directors of the
Corporation with respect to Excess Shares (the "Excess Share
Dividends") and shall hold the Excess Share Dividends until
disbursed in accordance with the provisions of Section 9 of this
Article VII. In the event an Excess Owner receives any Excess
Share Dividends (including without limitation Excess Share
Dividends received prior to the time the Corporation determines
that Excess Shares exist with respect to such Excess Owner) such
Excess Owner shall repay such Excess Share Dividends to the Share
Escrow Agent or the Corporation. The Corporation shall take all
measures that it determines reasonably necessary to recover the
amount of any Excess Share Dividends paid to an Excess Owner,
including, if necessary, withholding any portion of future
dividends or distributions payable on shares of Capital Stock
Beneficially Owned by any Excess Owner (including future
dividends on distributions on shares of Capital Stock which fall
below the Ownership Limit as well as on Excess Shares), and, as
soon as practicable following the Corporation's receipt or
withholding thereof, shall pay over to the Share Escrow Agent the
dividends so received or withheld, as the case may be.
SECTION 6. In the event of any voluntary or
involuntary liquidation, dissolution, or winding up of, or any
distribution of the assets of, the Corporation, the Share Escrow
Agent shall be entitled to receive, ratably with each other
holder of Capital Stock of the same class or series, that portion
of the assets of the Corporation that shall be available for
distribution to the holders of such class or series of Capital
Stock. The Share Escrow Agent shall distribute to the Excess
Owner the amounts received upon such liquidation, dissolution or
winding up or distribution in accordance with the provisions of
Section 9 of this Article VII.
SECTION 7. The Share Escrow Agent shall be entitled to
vote all Excess Shares. The Share Escrow Agent shall vote,
consent, or assent Excess Shares as follows:
(a) to vote in favor of each nominee to the Board of
Directors of the Corporation whose nomination has been approved
by an Independent Board Majority and to vote against any
candidate for the Board of Directors of the Corporation for whom
no competing candidate has been nominated or selected by an
Independent Board Majority;
(b) unless such action is initiated by or with the
consent of the Board of Directors of the Corporation, (i) to vote
against removal of any director of the Corporation, (ii) to vote
against any alteration, amendment, change or addition to or
repeal (collectively, "Change") of the Bylaws or this Certificate
of Incorporation, (iii) not to nominate any candidate to fill any
vacancy of the Board of Directors of the Corporation, (iv) not to
call any special meeting of the stockholders of the Corporation,
and (v) not take any action by voting such Excess Shares that
would be inconsistent with or would have the effect, directly or
indirectly, of defeating or subverting the voting requirements
contained in Section 7(a) of this Article VII or this
Section 7(b) of Article VII;
(c) to the extent not covered by clauses (a) and (b)
above, on any action, proposal or resolution requiring the
approval of the Board of Directors of the Corporation as a
prerequisite to entitle the stockholders of the Corporation to
vote thereon and as a prerequisite to become effective, to vote
in the same proportion as all other votes represented by shares
of Capital Stock are cast with respect to such action, proposal
or resolution; and
(d) to the extent not covered by clauses (a), (b) and
(c) above, to vote as recommended by the Board of Directors of
the Corporation.
SECTION 8.
(a) The Share Escrow Agent shall hold all Excess
Shares until such time as they are sold in accordance with this
Section 8 of Article VII.
(b) The Share Escrow Agent shall sell or cause the
sale of Excess Shares at such time or times and on such terms as
shall be determined by the Corporation. The Share Escrow Agent
shall have the right to take such actions as the Corporation
shall deem appropriate to ensure that sales of Excess Shares
shall be made only to Permitted Transferees.
(c) The Share Escrow Agent shall have the power to
convey to the purchaser of any Excess Shares sold by the Share
Escrow Agent ownership of such Excess Shares free of any interest
of the Excess Owner of those Excess Shares and free of any other
adverse interest arising through the Excess Owner. The Share
Escrow Agent shall be authorized to execute any and all documents
sufficient to transfer title to any Permitted Transferee.
(d) Upon acquisition by any Permitted Transferee of
any Excess Shares sold by the Share Escrow Agent or the Excess
Owner, such shares shall upon such sale cease to be Excess Shares
and shall become regular shares of Capital Stock in the class or
series to which such Excess Shares otherwise belong, and the
purchaser of such shares shall acquire such shares free of any
claims of the Share Escrow Agent or the Excess Owner.
(e) To the extent permitted by the DGCL or other
applicable law, neither the Corporation, the Share Escrow Agent
nor anyone else shall have any liability to the Excess Owner or
anyone else by reason of any action or inaction the Corporation
or the Share Escrow Agent or any director, officer or agent of
the Corporation shall take which any of them shall in good faith
believe to be within the scope of their authority under this
Article VII or by reason of any decision as to when or how to
sell any Excess Shares or by reason of any other action or
inaction in connection with the activities permitted under this
Article VII which does not constitute gross negligence or willful
misconduct. Without limiting by implication the scope of the
preceding sentence, to the extent permitted by law, neither the
Share Escrow Agent nor the Corporation nor any director, officer
or agent of the Corporation (a) shall have any liability on
grounds that any of them failed to take actions which would or
could have produced higher proceeds for any of the Excess Shares
or by reason of the manner or timing for any disposition of any
Excess Shares, and (b) shall be deemed to be a fiduciary or agent
of any Excess Owner.
SECTION 9. The proceeds from the sale of the Excess
Shares and any Excess Share Dividends shall be distributed as
follows: (i) first, to the Share Escrow Agent for any costs and
expenses incurred in respect of its administration of the Excess
Shares that have not theretofore been reimbursed by the
Corporation; (ii) second, to the Corporation for all costs and
expenses incurred by the Corporation in connection with the
appointment of the Share Escrow Agent, the payment of fees to the
Share Escrow Agent with respect to the services provided by the
Share Escrow Agent in respect of the escrow and for any other
direct or indirect and out of pocket expenses incurred by the
Corporation in connection with the Excess Shares, including any
litigation costs and expenses, and all funds expended by the
Corporation to reimburse the Share Escrow Agent for costs and
expenses incurred by the Share Escrow Agent in respect of its
administration of the Excess Shares and for all fees,
disbursements and expenses incurred by the Share Escrow Agent in
connection with the sale of the Excess Shares; and (iii) third,
the remainder thereof (as the case may be) to the Excess Owner;
provided, however, if the Corporation shall have any questions as
to whether any security interest or other interest adverse to the
Excess Owner shall have existed with respect to any Excess
Shares, neither the Share Escrow Agent, the Corporation nor
anyone else shall have the obligation to disburse proceeds for
those shares until the Share Escrow Agent shall be provided with
such evidence as the Corporation shall deem necessary to
determine the parties who shall be entitled to such proceeds.
SECTION 10. Each certificate for Capital Stock shall
bear the following legend:
"The shares of stock represented by this certificate are
subject to restrictions on ownership and transfer. All
capitalized terms in this legend have the meanings ascribed to
them in the Corporation's Certificate of Incorporation, as the
same may be amended from time to time, a copy of which, including
the restrictions on ownership and transfer, shall be sent without
charge to each stockholder who so requests. No Person shall
Beneficially Own shares of Capital Stock in excess of any
Ownership Limit applicable to such Person. Subject to certain
limited specific exemptions, (i) Beneficial Ownership of that
number of shares of Capital Stock by an Institutional Investor
which would represent 10% or more of the Voting Power would
exceed the Institutional Investor Ownership Limit,
(ii) Beneficial Ownership of that number of shares of Capital
Stock by a Noninstitutional Investor which would represent 5% or
more of the Voting Power would exceed the Noninstitutional
Investor Ownership Limit, and (iii) Beneficial Ownership of (a)
20% or more of the issued and outstanding shares of Common Stock
or (b) any combination of shares in any series or class of
Capital Stock that represents 20% or more of the ownership
interest in the Corporation (determined as provided in the
Corporation's Certificate of Incorporation) would exceed the
General Ownership Limit. Any Person who attempts to Beneficially
Own shares of Capital Stock in violation of this limitation must
immediately notify the Corporation. Upon the occurrence of any
event that would cause any Person to exceed any Ownership Limit
applicable to such Person (including without limitation the
expiration of a voting trust that entitled such Person to an
exemption from any Ownership Limit applicable to such Person),
all shares of Capital Stock Beneficially Owned by such Person in
excess of any Ownership Limit applicable to such Person shall
automatically be deemed Excess Shares and shall be transferred
immediately to the Share Escrow Agent and shall be subject to the
provisions of the Corporation's Certificate of Incorporation.
The foregoing summary of the restrictions on ownership and
transfer is qualified in its entirety by reference to the
Corporation's Certificate of Incorporation."
The legend may be amended from time to time to reflect
amendments to this Certificate of Incorporation, or revisions to
the Ownership Limits in accordance with Section 15 of this
Article VII.
SECTION 11. Subject to Section 12 of this Article VII,
nothing contained in this Article VII or in any other provision
of this Certificate of Incorporation shall limit the authority of
the Corporation to take such other action as it deems necessary
or advisable to protect the Corporation and the interests of its
stockholders.
SECTION 12. Nothing contained in this Certificate of
Incorporation shall preclude the settlement of any transactions
entered into through the facilities of the New York Stock
Exchange, Inc. or any other exchange or through the means of any
automated quotation system now or hereafter in effect.
SECTION 13. Except in the case of manifest error, any
interpretation of this Article VII by the Board of Directors of
the Corporation shall be conclusive and binding; provided,
however, that in making any such interpretation, the Board of
Directors of the Corporation shall consider, wherever relevant,
the Corporation's obligations to the BCBSA.
SECTION 14. This Article VII shall not be applicable with
respect to any shares of Capital Stock owned by the Foundation
which were (i) issued by the Corporation to the Foundation upon
the incorporation of the Corporation, or (ii) issued by the
Corporation to the Foundation pursuant to that certain Agreement
and Plan of Reorganization, dated as of __________ ____, 199___
[date to be completed prior to filing this Certificate of
Incorporation], among the Corporation, Blue Cross and Blue Shield
of Missouri, RightCHOICE Managed Care, Inc., a Missouri
corporation, and the Foundation (such shares of Capital Stock
being referred to as "Exchange Shares"), or (iii) acquired by the
Foundation with respect to Exchange Shares as a result of a stock
dividend, stock split, conversion, recapitalization, exchange of
shares or the like, so long as such shares of Capital Stock shall
be Beneficially Owned by the Foundation or by a trustee for the
account of the Foundation and subject to the terms of the Voting
Trust and Divestiture Agreement. Upon the Transfer of any
Beneficial Ownership interest in any Exchange Shares (and such
other shares of Capital Stock received by the Foundation or by a
trustee for the account of the Foundation as a result of a stock
dividend, stock split, conversion, recapitalization, exchange of
shares or the like relating to such Exchange Shares) from the
Foundation or trustee thereof or the voting trust established by
the Voting Trust and Divestiture Agreement to any transferee,
those shares of Capital Stock shall become fully subject to this
Article VII from and at all times after such transfer.
SECTION 15. An Independent Board Majority shall have the
right to revise the definition of one or more Ownership Limits to
change the percentage ownership of Capital Stock under such
Ownership Limit to conform the definition to a change to the
terms of the License Agreements or as required or permitted by
the BCBSA. In the event the Corporation issues any series or
class of Capital Stock other than Common Stock, then an
Independent Board Majority shall have the power to determine the
manner in which each class or series of Capital Stock shall be
counted for purposes of determining each Ownership Limit. Any
such revision to the definition of any Ownership Limit shall not
be deemed a Change to this Certificate of Incorporation, and
shall not require stockholder approval under Article XII hereof;
provided, however, that no such revision shall be effective until
such time as the Corporation shall have notified the stockholders
of such revision in such manner as it shall deem appropriate
under the circumstances (provided that notification of any such
revision by means of a filing by the Corporation describing such
revision with the SEC under the Exchange Act or with the
Secretary of State of the State of Delaware under the DGCL shall
be deemed appropriate notice under all circumstances).
ARTICLE VIII
BYLAWS
SECTION 1. The Bylaws shall govern the management and
affairs of the Corporation, the rights and powers of the
directors, officers, employees and stockholders of the
Corporation in accordance with its terms and shall govern the
rights of all persons concerned relating in any way to the
Corporation except that if any provision in the Bylaws shall be
irreconcilably inconsistent with any provision in this
Certificate of Incorporation, the provision in this Certificate
of Incorporation shall control.
SECTION 2. The Board of Directors of the Corporation
shall have the power to amend or replace the Bylaws of the
Corporation by the vote of a majority of the whole Board of
Directors of the Corporation, except that the approval of an
Independent Board Majority shall be required to amend or replace
any provision of the Bylaws of the Corporation which, pursuant to
the terms thereof, may now or hereafter require the approval of
an Independent Board Majority. The stockholders of the
Corporation shall not have the power to Change (as defined in
Section 7 of Article VII hereof) the Bylaws of the Corporation
unless such Change shall be approved by the holders of at least
seventy-five percent (75%) of the then issued and outstanding
shares of Common Stock entitled to vote thereon.
ARTICLE IX
NO PREFERENTIAL RIGHTS
No stockholder of the Corporation shall, by reason of
his, her or its holding shares of any class or series, have any
preemptive or preferential rights to purchase or subscribe to any
shares of Capital Stock of the Corporation now or hereafter to be
authorized, or any notes, debentures, bonds or other securities
convertible into or carrying options or warrants to purchase
shares of any class now or hereafter to be authorized (whether or
not the issuance of any such shares or such notes, debentures,
bonds or other securities would adversely affect the dividend or
voting rights of such stockholder) other than such rights, if
any, as the Board of Directors of the Corporation in its
discretion from time to time may grant and at such price as the
Board of Directors of the Corporation may fix; and the Board of
Directors of the Corporation may issue shares of Capital Stock of
the Corporation or any notes, debentures, bonds or other
securities, convertible into or carrying options or warrants to
purchase shares of Capital Stock without offering any such shares
of Capital Stock, either in whole or in part, to the existing
stockholders.
ARTICLE X
NO CUMULATIVE VOTING
There shall be no cumulative voting by stockholders of
any class or series of Capital Stock in the election of directors
of the Corporation.
ARTICLE XI
BOOKS AND RECORDS
The books and records of the Corporation may be kept
(subject to any provision contained in the DGCL or other
applicable law) at such place or places as may be designated from
time to time by the Board of Directors of the Corporation or in
the Bylaws of the Corporation.
ARTICLE XII
RIGHT TO AMEND CERTIFICATE OF INCORPORATION
The Corporation reserves the right to Change (as defined in
Section 7 of Article VII hereof) any provision contained in this
Certificate of Incorporation, in the manner now or hereafter
prescribed by the DGCL or other applicable law and this
Certificate of Incorporation, and all rights conferred upon
stockholders herein are granted subject to this reservation;
provided, however, that notwithstanding anything contained in
this Certificate of Incorporation to the contrary, (a) the
approval of an Independent Board Majority shall be required for
the Board of Directors to approve and authorize any Change to
Sections 1, 3, 4, 5, 6, 7, 10 and 11 of Article IV, Article V,
Article VI, Article VII, Article VIII, Article X or this
Article XII, and (b) the affirmative vote of the holders of at
least seventy-five percent (75%) of the then issued and
outstanding shares of Common Stock entitled to vote thereon shall
be required to Change Sections 1, 3, 4, 5, 6, 7, 10, and 11 of
Article IV, Article V, Article VI, Article VII, Article VIII,
Article X and this Article XII (the "Supermajority Stockholder
Vote"); and provided further, however, that (i) the Supermajority
Stockholder Vote shall become ineffective and shall be of no
further force and effect with respect to a Change to Article VII
hereof in the event that each and every License Agreement to
which the Corporation shall be subject shall have been
terminated; and (ii) the Supermajority Stockholder Vote shall not
apply to (1) any Change to Article VII to conform Article VII
hereof to a change to the terms of any License Agreement, (2) any
Change to Article VII hereof required or permitted by the BCBSA
(whether or not constituting a change to the terms of any License
Agreement), or (3) any Change to Article VII hereof approved by
an Independent Board Majority in connection with a proposal to
acquire (by means of a merger, consolidation or otherwise) all of
the outstanding Capital Stock of the Corporation. The
affirmative vote of the holders of at least the percentage of the
issued and outstanding Capital Stock entitled to vote thereon
required by the DGCL or other applicable law shall be required to
Change any provisions of this Certificate of Incorporation that
shall not require the Supermajority Stockholder Vote under this
Article XII.
ARTICLE XIII
REGISTERED AGENT
The address of the registered office of the corporation
in the state of Delaware is
______________________________________________________. The name
of its registered agent at such address is
___________________________.
ARTICLE XIV
COMPROMISE
Whenever a compromise or arrangement is proposed
between the Corporation and its creditors or any class of them
and/or between the Corporation and its stockholders or any class
of them, any court of equitable jurisdiction within the State of
Delaware may, on the application in a summary way of the
Corporation or of any creditor or stockholder thereof or on the
application of any receiver or receivers appointed for the
Corporation under 291 of Title 8 of the Delaware Code or on the
application of trustees in dissolution or of any receiver or
receivers appointed for the Corporation under 279 of Title 8 of
the Delaware Code under a meeting of the creditors or class of
creditors, and/or of the stockholders or class of stockholders of
the Corporation, as the case may be, to be summoned in such
manner as the said court directs. If a majority in number
representing three fourths (3/4) in value of the creditors or
class of creditors, and/or of the stockholders or class of
stockholders of the Corporation, as the case may be, agree to any
compromise or arrangement and to any reorganization of the
Corporation as consequence of such compromise or arrangement, the
said compromise or arrangement and the said reorganization shall,
if sanctioned by the court to which the said application has been
made, be binding on all the creditors or class of creditors,
and/or on all the stockholders or class of stockholders, of the
Corporation, as the case may be, and also on the Corporation.
IN WITNESS WHEREOF, the undersigned duly executed this
Certificate of Incorporation on this ____ day of ________, 199__.
Incorporator
EXHIBIT G
FORM OF
BYLAWS
OF
RIGHTCHOICE MANAGED CARE, INC.
TABLE OF CONTENTS
Page
ARTICLE I - OFFICES AND RECORDS 1
ARTICLE II - SHAREHOLDERS 1
ARTICLE III - BOARD OF DIRECTORS 6
ARTICLE IV - OFFICERS 15
ARTICLE V - INDEMNIFICATION 19
ARTICLE VI - STOCK 21
ARTICLE VII - CORPORATE FINANCE 22
ARTICLE VIII - GENERAL PROVISIONS 23
ARTICLE I - OFFICES AND RECORDS
Section 1.1 Registered Office and Registered Agent. The
location of the registered office and the name of the registered
agent of the Corporation in the State of Delaware shall be as
stated in the Certificate of Incorporation of the Corporation (as
the same may be further amended and/or restated) (the
"Certificate of Incorporation") or as shall be determined from
time to time by the Board of Directors and on file in the
appropriate office of the State of Delaware pursuant to
applicable provisions of law. Unless otherwise permitted by law,
the address of the registered office of the Corporation and the
address of the business office of the registered agent shall be
identical.
Section 1.2 Corporate Offices. The Corporation may have such
corporate offices anywhere within or without the State of
Delaware as the Board of Directors from time to time may
determine or the business of the Corporation may require.
Section 1.3 Books and Records. The Corporation shall keep
correct and complete books and records of account, including the
amount of its assets and liabilities, minutes of its proceedings
of its stockholders and Board of Directors (and any committee
having the authority of the Board of Directors) and the names and
places of residence of its officers. The Corporation shall keep
at its registered office or principal place of business in the
State of Missouri, or at the office of its transfer agent in the
State of Missouri, if any, books and records in which shall be
recorded the number of shares subscribed, the names of the owners
of the shares, the numbers owned by them respectively, the amount
of shares paid, and by whom, and the transfer of such shares with
the date of transfer.
Section 1.4 Inspection of Records. A stockholder may, upon
written demand under oath stating the proper purpose thereof,
inspect the records of the Corporation, pursuant to any statutory
or other legal right, during the usual and customary hours of
business and in such manner as will not unduly interfere with the
regular conduct of the business of the Corporation. A
stockholder may delegate such stockholder's right of inspection
to a certified or public accountant on the condition, to be
enforced at the option of the Corporation, that the stockholder
and accountant agree with the Corporation to furnish to the
Corporation promptly a true and correct copy of each report with
respect to such inspection made by such accountant. No
stockholder shall use, permit to be used or acquiesce in the use
by others of any information so obtained to the detriment
competitively of the Corporation, nor shall such stockholder
furnish or permit to be furnished any information so obtained to
any competitor or prospective competitor of the Corporation. The
Corporation as a condition precedent to any stockholder's
inspection of the records of the Corporation may require the
stockholder to indemnify the Corporation, in such manner and for
such amount as may be determined by the Board of Directors,
against any loss or damage which may be suffered by it arising
out of or resulting from any unauthorized disclosure made or
permitted to be made by such stockholder of information obtained
in the course of such inspection.
ARTICLE II - SHAREHOLDERS
Section 2.1 Place of Meetings. Meetings of stockholders shall
be held at any place within or outside the State of Delaware
designated by the Board of Directors. In the absence of any such
designation by the Board of Directors, stockholders' meetings
shall be held at the principal place of business of the
Corporation.
Section 2.2 Annual Meetings. An annual meeting of the
stockholders of the Corporation for the election of directors
shall be held on the second Tuesday in May of each year, if not a
legal holiday, and if a legal holiday, then on the next business
day following, at 10:00 a.m., or at such other date and time as
shall be designated from time to time by the Board of Directors
and stated in the notice of the meeting, at which the
stockholders entitled to vote thereon shall elect directors to
serve until expiration of their respective term of office as
specified in Section 3 of Article IV of the Certificate of
Incorporation and until their respective successors are duly
elected and qualified, or until their respective earlier
resignation, removal or death, and shall transact such other
business as may properly come before the meeting as provided
herein.
Section 2.3 Special Meetings. Special meetings of
stockholders may be called only by the Chairman of the Board, the
Chief Executive Officer, the President, or an Independent Board
Majority (as defined in Section 4.B.3 of Article IV of the
Certificate of Incorporation). The Chairman of the Board, the
Chief Executive Officer, the President, or an Independent Board
Majority, as the case may be, shall have the right to determine
the business to be transacted at any special meeting and no issue
or matter may be acted upon by any stockholders at any special
meeting unless such issue or matter has been approved by the
Board of Directors for vote by stockholders at such meeting.
Section 2.4 Notice; Waiver of Notice; Affidavit of Notice.
(a) Written or printed notice of each meeting of the
stockholders, whether annual or special, stating the place, day
and hour of the meeting and, in case of a special meeting, the
purpose or purposes thereof and that no other business may be
transacted, and, in the case of an annual meeting, those matters
which the Board of Directors, at the time of giving the notice,
intends to present for action by the stockholders, shall be
delivered or given to each stockholder entitled to vote at such
meeting, as determined in accordance with Section 2.8 of these
Bylaws, not less than ten (10) days or more than sixty (60) days
before the date of the meeting, either personally or by mail, by
or at the direction of the President, the Secretary, or the
officer or persons calling the meeting pursuant to Section 2.3 of
these Bylaws, unless, as to a particular matter, other or further
notice is required by the General Corporation Law of the State of
Delaware (the "DGCL") or other applicable law, in which case such
other or further notice shall be given.
(b) Any notice to a stockholder of a stockholders' meeting
sent by mail shall be deemed to be delivered when deposited in
the United States mail with postage thereon prepaid and addressed
to the stockholder at such stockholder's address as it appears on
the records of the Corporation.
(c) Whenever any notice is required to be given to any
stockholder under the provisions of these Bylaws, or of the
Certificate of Incorporation or of the DGCL or other applicable
law, a written waiver thereof, signed by the stockholder entitled
to such notice, whether before or after the time stated therein,
shall be deemed equivalent to the giving of such notice.
(d) To the extent provided by the DGCL or other applicable
law, attendance of a stockholder at any meeting shall constitute
a waiver of notice of such meeting except where a stockholder
attends a meeting for the express purpose of objecting to the
transaction of any business because the meeting is not lawfully
called or convened.
(e) An affidavit of the mailing or other means of giving
any notice of any stockholders' meeting shall be executed by the
Secretary, the Assistant Secretary, or any transfer agent of the
Corporation giving the notice, and shall be filed and maintained
in the minute book of the Corporation.
Section 2.5 Presiding Officials. Every meeting of the
stockholders, for whatever purpose, shall be convened by the
President, the Secretary or the officer or any of the persons who
called the meeting pursuant to Section 2.3 of these Bylaws. The
meeting shall be presided over by the officers specified in
Sections 4.7, 4.8 and 4.9 of these Bylaws as provided therein.
Section 2.6 Quorum; Adjournment. Unless otherwise provided by
the DGCL or other applicable law, the Certificate of
Incorporation or these Bylaws, the constitution of a quorum at
any meeting of the stockholders shall require a majority of the
outstanding shares of the Corporation's capital stock entitled to
vote at such meeting, represented in person or by proxy;
provided, however, that in the event that less than a quorum is
represented at a meeting, the shares so represented, by a
majority vote, shall have the right successively to adjourn the
meeting, without notice to any stockholder not present at the
meeting, to a specified date no later than 90 days after such
adjournment. In all matters, every decision of a majority of the
outstanding shares then entitled to vote on the subject matter
and represented in person or by proxy at a meeting at which a
quorum is present shall be valid as an act of the stockholders,
unless a larger vote is required by the DGCL or other applicable
law, by the Certificate of Incorporation or by these Bylaws;
provided, however, that if there are two or more classes of stock
entitled to vote as separate classes, then in the case of each
such class, the holders of a majority (or such higher proportion
as may be required by the DGCL or other applicable law or the
Certificate of Incorporation or these Bylaws) of the shares of
each such class must be voted affirmatively to approve any matter
requiring such separate class vote. Shares represented by a
proxy which directs that the shares be voted to abstain or to
withhold a vote on a matter shall be deemed to be represented at
the meeting as to such matter. At any subsequent session of an
adjourned meeting at which a quorum is present in person or by
proxy, any business may be transacted which could have been
transacted at the initial session of the meeting if a quorum had
been present.
Section 2.7 Proxies. Every person entitled to vote for
directors or on any other matter shall have the right to do so
either in person or by one or more agents authorized by a written
proxy signed by the person and filed with the Secretary of the
Corporation. A proxy shall be deemed signed if the stockholder's
name is placed on the proxy (whether by manual signature,
typewriting, telegraphic transmission, or otherwise) by the
stockholder or the stockholder's attorney-in-fact. A validly
executed proxy which does not state that it is irrevocable shall
continue in full force and effect unless (i) revoked by the
person executing it, before the vote pursuant to that proxy, by a
writing delivered to the Corporation stating that the proxy is
revoked, or by a subsequent proxy executed by, or attendance at
the meeting and voting in person by, the person executing the
proxy; or (ii) written notice of the death or incapacity of the
maker of that proxy is received by the Corporation before the
vote pursuant to that proxy is counted; provided, however, that
no proxy shall be valid after the expiration of three (3) years
from the date of the proxy, unless otherwise provided in the
proxy. The revocability of a proxy that states on its face that
it is irrevocable shall be governed by the provisions of Section
212 of the DGCL.
Section 2.8 Voting.
(a) Each stockholder shall have the number of votes
provided in the Certificate of Incorporation for each share of
stock entitled to vote under the provisions of the Certificate of
Incorporation and registered in such stockholder's name on the
books of the Corporation.
(b) Cumulative voting is not permitted with respect to the
election of directors, and thus no stockholder entitled to vote
in the election of directors shall have the right to cast as many
votes in the aggregate as shall equal the number of votes held by
the stockholder in the Corporation, multiplied by the number of
directors to be elected at the election, for one candidate, or
distribute them among two or more candidates.
(c) In order that the Corporation may determine the
stockholders entitled to notice of or to vote at any meeting of
stockholders or any adjournment thereof, or entitled to receive
payment of any dividend or other distribution or allotment of any
rights, or entitled to exercise any rights in respect of any
change, conversion or exchange of shares or for the purpose of
any other lawful action, the Board of Directors may fix, in
advance, a record date, which shall not be more than sixty (60)
days nor less than ten (10) days before the date of such meeting,
nor more than sixty (60) days prior to any other action. A
determination of stockholders of record entitled to notice of, or
to vote at, a meeting of stockholders shall apply to any
adjournment of the meeting; provided, however, that the Board of
Directors may fix a new record date for the adjourned meeting.
(d) If the Board of Directors does not close the transfer
books or set a record date for the determination of its
stockholders entitled to notice of, or to vote at, a meeting of
stockholders in accordance with Section 2.8(d) of these Bylaws,
only those persons who are stockholders of record at the close of
business on the day preceding the next day on which notice of
such meeting is given, or, if notice is waived, at the close of
business on the day next preceding the day on which such meeting
is held, shall be entitled to notice of, and to vote at, such
meeting and any adjournment of such meeting; except that, if
prior to such meeting written waivers of notice of such meeting
are signed and delivered to the Corporation by all of the
stockholders of record at the time such meeting is convened, only
those persons who are stockholders of record at the time such
meeting is convened shall be entitled to vote at such meeting and
any adjournment thereof.
Section 2.9 Stockholders' Lists. A complete list of the
stockholders entitled to vote at each meeting of the
stockholders, arranged in alphabetical order, with the address of
and the number of voting shares of each class owned of record by
each stockholder of record as of the date determined pursuant to
Sections 2.8(d) or (e) of these Bylaws as the case may be, shall
be prepared by the officer of the Corporation having charge of
the stock transfer books of the Corporation, and shall, for a
period of ten (10) days prior to the meeting, be kept on file at
a place within the city where the meeting is to be held and shall
at any time during the usual hours for business be subject to
inspection by any stockholder. Such list or a duplicate thereof
shall also be produced and kept open at the time and place of the
meeting and shall be subject to the inspection of any stockholder
during the whole time of the meeting. The original share ledger
or transfer book, or a duplicate thereof kept in the State of
Missouri, shall be prima facie evidence as to who are the
stockholders entitled to examine such list, share ledger or
transfer book or to vote at any meeting of stockholders.
Section 2.10 Conduct of Stockholder Meetings. The date and
time of the opening and the closing of the polls for each matter
upon which the stockholders will vote at a meeting shall be
announced at the meeting by the person presiding over the
meeting. The Board of Directors of the Corporation may, to the
extent not prohibited by the DGCL or other applicable law, adopt
by resolution such rules and regulations for the conduct of the
meetings or any meeting of stockholders as it shall deem
appropriate. Except to the extent inconsistent with such rules
and regulations, the Chairman of the meeting may prescribe such
rules, regulations and procedures and do all such acts as, in the
judgment of such Chairman, are appropriate for the proper conduct
of the meeting. Such rules, regulations or procedures, whether
adopted by the Board of Directors or prescribed by the Chairman
of the meeting, may, to the extent not prohibited by the DGCL or
other applicable law, include, without limitation, the following:
(i) the establishment of an agenda for the meeting; (ii) the
maintenance of order at the meeting; (iii) limitations on
attendance at or participation in the meeting to stockholders of
record of the Corporation, their duly authorized proxies and such
other persons as shall be determined; (iv) restrictions on entry
to the meeting after a specified time; (v) limitation on the time
allotted to questions or comments by participants; (vi) a
determination of whether the proponent of any proposal is
entitled to obtain a vote by stockholders on that proposal at
that meeting under the standards prescribed in these Bylaws and
such other standards as the Chairman of the meeting shall
determine to be applicable; (vii) the taking and counting of
votes at such meetings; and (viii) the resolution of any other
questions which may be raised at such meeting. Unless otherwise
determined by the Board of Directors or the Chairman of the
meeting, meetings of stockholders shall not be required to be
held in accordance with any rules of parliamentary procedure.
Section 2.11 Stockholder Action By Written Consent without a
Meeting. No action required or permitted to be taken at any
annual or special meeting of stockholders of the Corporation may
be taken by written consent without a meeting of such
stockholders.
Section 2.12 Inspectors of Election. Before any meeting of
stockholders, the Board of Directors shall appoint a person
(other than nominees for office, directors or stockholders) to
act as inspectors of election at the meeting or its adjournment.
If any person appointed as inspector fails to appear or fails or
refuses to act, the Chairman of the meeting shall appoint a
person to fill such vacancy. The inspector shall: (a) determine
the number of shares outstanding and the voting power of each,
the shares represented at the meeting, the existence of a quorum,
and the authenticity, validity, and effect of proxies;
(b) receive votes or ballots; (c) hear and determine all
challenges and questions in any way arising in connection with
the right to vote; (d) count and tabulate all votes;
(e) determine when the polls shall close; (f) determine the
result; and (g) do any other acts that may be proper to conduct
the election or vote with fairness to all stockholders.
Section 2.13 Stockholder Proposals.
(a) Stockholders shall be entitled to submit proposals to be
voted upon by stockholders at an annual meeting of the
Corporation provided that they comply with the procedures set
forth in this Section 2.13. Only those proposals which satisfy
all requirements specified in this Section 2.13 shall be deemed
"Qualified Stockholder Proposals."
(b) In order for a proposal to constitute a "Qualified
Stockholder Proposal," all of the following requirements must be
satisfied:
(1) The proposal must be made for submission at an annual
meeting of stockholders;
(2) The proposal must be a proper subject for stockholder
action. The Board of Directors shall be entitled to determine
that any proposal which the stockholder is not entitled to have
included in the Corporation's proxy statement for the annual
meeting under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), and the regulations issued by the
Securities and Exchange Commission (which are collectively
referred to herein as the "SEC Proxy Rules") is not a proper
subject for stockholder action;
(3) The proposal must be made by a stockholder who shall be the
record holder on the record date for such annual meeting and at
that meeting of shares entitled to be voted for the proposal (a
"Proposing Stockholder");
(4) The Proposing Stockholder must deliver a written notice
identifying such proposal to the office of the Corporation's
Corporate Secretary at the Corporation's principal place of
business which provides the information required by these Bylaws
which is timely under the standards given in Section 3.5(e)(4) of
these Bylaws;
(5) Such Proposing Stockholder's proposal notice shall:
(i) contain a description of the proposal, the reasons for the
proposal and any material interest in such proposal by the
Proposing Stockholder or the beneficial owner of the
stockholder's record shares; (ii) contain an affirmation by the
Proposing Stockholder that the stockholder satisfies the
requirements specified in this Section 2.13 for presentation of
such proposal; and (iii) as to the Proposing Stockholder and the
beneficial owner, if any, on whose behalf the proposal is made
(x) the name and address of such Proposing Stockholder, as they
appear on the Corporation's books, and of such beneficial owner
and the telephone number at which each may be contacted during
normal business hours through the time for which the meeting is
scheduled, and (y) the class and number of shares of the
Corporation which are owned beneficially and of record by such
Proposing Stockholder and such beneficial owner; and
(6) The Proposing Stockholder and the beneficial owner shall
provide such other information as any officer of the Corporation
shall reasonably deem relevant within such time limits as any
officer of the Corporation shall reasonably impose for such
information.
(c) Nothing in these Bylaws shall be deemed to prohibit a
stockholder from including any proposals in the Corporation's
proxy statement to the extent such inclusion shall be required by
the SEC Proxy Rules or to lessen any obligation by any
stockholder to comply with the SEC Proxy Rules; provided,
however, that neither the fact that a stockholder's nominee
qualifies as a Qualified Candidate (as defined in Section 3.5 of
these Bylaws) nor the fact that a Proposing Stockholder's
proposal qualifies as a Qualified Stockholder Proposal under this
Section 2.13 shall obligate the Corporation to endorse that
candidate or proposal or (except to the extent required by the
SEC Proxy Rules) to provide a means to vote on that proposal on
proxy cards solicited by the Corporation or to include
information about that proposal in the Corporation's proxy
statement. To the extent this Section 2.13 shall be deemed by
the Board of Directors or the Securities and Exchange Commission,
or adjudged by a court of competent jurisdiction, to be
inconsistent with the rights of stockholders to request inclusion
of a proposal in the Corporation's proxy statement pursuant to
the SEC Proxy Rules, the SEC Proxy Rules shall prevail.
ARTICLE III - BOARD OF DIRECTORS
Section 3.1 General Powers. The business and affairs of the
Corporation shall be managed by or under the direction of the
Board of Directors. In addition to the powers and authorities
expressly conferred upon it by these Bylaws, the Board of
Directors may exercise all such powers of the Corporation and do
all such lawful acts and things as are not directed or required
to be exercised or done exclusively by the stockholders by the
DGCL or other applicable law or by the Certificate of
Incorporation or by these Bylaws.
Section 3.2 Number of Directors. Until otherwise determined
by the Board of Directors acting pursuant to Section 3.4 of these
Bylaws, the number of positions on the Board of Directors shall
be three (3).
Section 3.3 Division of the Board of Directors into Classes.
The Board of Directors shall be divided into three classes in
accordance with the Certificate of Incorporation. The positions
within each class shall be the same in number as reasonably
practicable. Directors within a given class shall be designated
as the "Class of [Year]," with the entry for "Year" being the
year in which the next triennial election for directors in that
class is scheduled to occur.
Section 3.4 Board of Directors' Power to Alter the Number of
Directors and the Size of Classes. The Board of Directors shall
have the power (within the limitations prescribed by the
Certificate of Incorporation) by a resolution adopted by an
Independent Board Majority at the time of such adoption to alter
at any time and from time to time (i) the total number of
directorship positions on the Board of Directors, and (ii) the
number of directorship positions in any of the three classes of
directors established by the Certificate of Incorporation.
Except as otherwise expressly provided in the Certificate of
Incorporation, from the adoption of any particular resolution in
the manner provided in the preceding sentence until the adoption
in the manner prescribed by the preceding sentence of any
subsequent resolution altering the results of the particular
resolution, (i) the total number of directorship positions on the
Board of Directors shall be equal to the number specified in the
particular resolution, and (ii) the number of directorship
positions in each of the three classes of directors established
by the Certificate of Incorporation shall be the number
established in the particular resolution.
Section 3.5 Election of Directors by Stockholders.
(a) Qualified Candidates (as defined below in this Section 3.5)
for election as directors at any meeting of the stockholders of
the Corporation shall be elected by plurality vote. (Under
plurality voting, if five positions on the Board of Directors
were up for election at any particular stockholders' meeting,
then the five Qualified Candidates who receive more votes than
any other Qualified Candidates shall be deemed elected at that
meeting. It shall not, therefore, be necessary for election to
the Board of Directors that a candidate receive a majority of the
votes comprising the quorum for the meeting so long as the
individual receives a number of votes sufficient for election
under the terms hereof.)
(b) Only Qualified Candidates may be elected to the Board of
Directors at any particular stockholders' meeting. Votes cast in
favor of an individual who is not a Qualified Candidate shall not
be effective to elect that individual to the Board of Directors
regardless of whether (i) that individual receives a greater
number of votes than Qualified Candidates who are elected to the
Board of Directors under the preceding provisions of this
Section 3.5, or (ii) no other individual receives any votes at
that meeting.
(c) An individual shall be deemed a "Qualified Candidate" for
election to the Board of Directors at any particular
stockholders' meeting if that individual (i) shall have been
nominated for election by the affirmative vote of an Independent
Board Majority or shall have been nominated for election in a
manner which satisfies all of the requirements specified in
Section 3.5(e) hereof, and (ii) is not disqualified under the
provisions of Section 3.5(d) hereof.
(d) The term "Non-Independent Candidate," as used with respect
to any particular election of directors, means an individual who
satisfies the conditions of clause (i) of Section 3.5(c) hereof
but who does not qualify as an "Independent Director" as defined
in Section 4.B.1 of Article IV of the Certificate of
Incorporation. In the event that, in any particular election of
directors, some but not all of the Non-Independent Candidates for
director at such election may be eligible for election to the
Board of Directors pursuant to Section 4.A of Article IV of the
Certificate of Incorporation, then the Non-Independent Candidates
shall be treated as Qualified Candidates until all positions
available for Non-Independent Candidates at such election
pursuant to Section 4.A of Article IV of the Certificate of
Incorporation shall have been elected in the manner set forth in
this Section 3.5. The remaining Non-Independent Candidates
shall, in accordance with Section 3.5(b), be deemed to not be
Qualified Candidates.
(e) An individual who is not nominated for election by the
affirmative vote of an Independent Board Majority, and who would
otherwise qualify as a Qualified Candidate as provided in
Sections 3.5(c) and 3.5(d) hereof, shall be a Qualified Candidate
if all of the following requirements are satisfied:
(1) The nomination must be made for an election to be held at an
annual meeting of stockholders or a special meeting of
stockholders in which the Board of Directors has determined that
candidates will be elected by the issued and outstanding shares
of the Corporation's common stock to one or more positions on the
Board of Directors;
(2) The individual must be nominated by a stockholder who shall
be the record owner on the record date for such meeting and at
that meeting of shares entitled to be voted at that meeting for
the election of directors (a "Nominating Stockholder");
(3) The Nominating Stockholder must deliver a timely written
nomination notice to the office the Corporation's Corporate
Secretary at the Corporation's principal place of business which
provides the information required by this Section 3.5(e);
(4) To be timely for an annual meeting, a Nominating
Stockholder's notice must be actually delivered to the Corporate
Secretary at the Corporation's principal place of business not
later than the close of business on the 60th day nor earlier than
the close of business on the 90th day prior to the first
anniversary of the preceding year's annual meeting; provided,
however, that: (i) if the date of the annual meeting is more
than 30 days before or more than 60 days after such anniversary
date, notice by the stockholder to be timely must be so delivered
not earlier than the close of business on the 90th day prior to
such annual meeting and not later than the close of business on
the later of the 60th day prior to such annual meeting or the
10th day following the day on which public announcement of the
date of such meeting is first made by the Corporation, and
(ii) if the number of directors to be elected to the Board of
Directors is increased and there is no public announcement by the
Corporation naming all of the nominees for director or specifying
the size of the increased Board of Directors at least 70 days
prior to the first anniversary of the preceding year's annual
meeting, a Nominating Stockholder's nominating notice required by
this Section 3.5(e) shall also be considered timely, but only
with respect to nominees for any new positions created by such
increase, if (x) the Nominating Stockholder shall have nominated
candidates in accordance with the requirements in this
Section 3.5(e) for all Board of Directors positions not covered
by such increase, and (y) the nomination notice for candidates to
fill the expanded positions shall be actually delivered to the
Corporate Secretary at the Corporation's principal place of
business not later than the close of business on the 10th day
following the day on which such public announcement is first made
by the Corporation;
(5) If the election is to be held at a special stockholders'
meeting, a Nominating Stockholder's nominating notice required by
this Section 3.5(e) shall be considered timely for such meeting
if it shall be actually delivered to the Corporate Secretary at
the Corporation's principal place of business not later than the
close of business on the 10th day following the day on which the
Corporation shall first publicly announce the date of the special
meeting and that a vote by stockholders shall be taken at such
meeting to elect one or more directors;
(6) In no event shall the public announcement of an adjournment
of an annual meeting commence a new time period for the giving of
a Nominating Stockholder's notice as described above. "Public
Announcement" means, for these purposes, disclosure in a press
release reported by the Dow Xxxxx News Service, Associated Press
or comparable national news service or in a document publicly
filed by the Corporation with the Securities and Exchange
Commission pursuant to Section 13, 14 or 15(d) of the Exchange
Act.
(7) Such Nominating Stockholder's nomination notice shall:
(i) set forth as to each person whom the Nominating Stockholder
proposes to nominate for election or reelection as a director all
information relating to such person that is required to be
disclosed in solicitations of proxies for election of directors
in an election contest, or is otherwise required, in each case
pursuant to Regulation 14A under the Exchange Act, and
Rule 14a-11 thereunder; (ii) be accompanied by each nominee's
written consent to being named in the proxy statement as a
nominee and to serving as a director if elected; (iii) set forth
the name and address of the stockholder giving the notice and the
beneficial owner of the shares owned of record by the beneficial
owner, and the telephone number at which the Corporation will be
able to contact the stockholder, the beneficial owner and each
nominee during usual business hours during the period through the
meeting at which the nomination is to take place; and (iv) set
forth the class and number of shares of the Corporation which are
owned beneficially and of record by such Nominating Stockholder
and such beneficial owner;
(8) The Nominating Stockholder, the beneficial owner and each
nominee shall provide such other information as any officer of
the Corporation shall reasonably deem relevant within such time
limits as any officer of the Corporation shall reasonably impose
for such information.
Section 3.6 Vacancies. Neither the provisions of Section 3.5
nor any other provision set forth herein shall diminish the right
granted to the Directors to elect individuals to fill any vacancy
which shall occur for any reason as provided in the Certificate
of Incorporation.
Section 3.7 Meetings of the Newly Elected Board of Directors.
The members of each newly elected Board of Directors (i) shall
meet at such time and place, either within or without the State
of Delaware, as shall be provided for by resolution of the
stockholders at the annual meeting, and no notice of such meeting
shall be necessary to the newly elected directors in order
legally to constitute the meeting, provided a quorum shall be
present, or (ii) if not so provided for by resolution of the
stockholders, or if a quorum shall not be present, may meet at
such time and place as shall be consented to in writing by a
majority of the newly elected directors, provided that written or
printed notice of such meeting shall be given to each of the
other directors in the same manner as provided in these Bylaws
with respect to the giving of notice for special meetings of the
Board of Directors, except that it shall not be necessary to
state the purpose of the meeting in such notice, or
(iii) regardless of whether or not the time and place of such
meeting shall be provided for by resolution of the stockholders
at the annual meeting, may meet at such time and place as shall
be consented to in writing by all of the newly elected directors.
Each director of the Corporation, upon such director's election,
shall qualify by accepting the office of director, and such
director's attendance at, or written approval of the minutes of,
any meeting of the Board of Directors subsequent to such
director's election shall constitute such director's acceptance
of such office; or such director may execute such acceptance by a
separate writing, which shall be placed in the minute book.
Section 3.8 Notice of Meeting; Waiver of Notice.
(a) Regular Meetings. Regular meetings of the Board of
Directors may be held without notice at such times and places
either within or without the State of Delaware as shall from time
to time be fixed by resolution adopted by the whole Board of
Directors (as defined in Section 2 of Article IV of the
Certificate of Incorporation). Any business may be transacted at
a regular meeting.
(b) Special Meetings.
(i) Except as otherwise required by the DGCL or other
applicable law and subject to the rights of the holders of
Preferred Stock or any series thereof, special meetings of the
Board of Directors may be called at any time by the Chairman of
the Board, the President or the Board of Directors pursuant to a
resolution approved by a majority of the whole Board of Directors
and shall be called by the Secretary on the written request of
any of the foregoing. The place may be within or without the
State of Delaware as designated in the notice.
(ii) Written or printed notice of each special meeting of
the Board of Directors, stating the place, day and hour of the
meeting and the purpose or purposes thereof, shall be mailed to
each director at least three (3) days before the day on which the
meeting is to be held, or shall be delivered to such director
personally or sent to such director by telegram or facsimile at
least two (2) days before the day on which the meeting is to be
held. If mailed, such notice shall be deemed to be delivered
when it is deposited in the United States mail with postage
thereon prepaid, addressed to the director at such director's
residence or usual place of business. If given by telegraph, such
notice shall be deemed to be delivered when it is delivered to
the telegraph company. If given by facsimile, such notice shall
be deemed delivered upon receipt of verification. The notice may
be given by any person having authority to call the meeting.
(iii) "Notice" and "call" with respect to such meetings
shall be deemed to be synonymous.
(c) Waiver of Notice. Whenever any notice is required to
be given to any director under the provisions of the DGCL or
other applicable law, the Certificate of Incorporation or these
Bylaws, a waiver thereof in writing signed by such director,
whether before or after the time stated therein, shall be deemed
equivalent to the giving of such notice. Attendance of a
director at any meeting shall constitute a waiver of notice of
the meeting except where a director attends such meeting for the
express purpose of objecting to the transaction of any business
because the meeting is not lawfully called or convened. Neither
the business to be transacted at, nor the purpose of, any regular
meeting of the Board of Directors need be specified in the notice
or waiver of notice of the meeting.
Section 3.9 Meetings by Conference Telephone or Similar
Communications Equipment. Unless otherwise prohibited by the
DGCL or other applicable law, the Certificate of Incorporation or
these Bylaws, members of the Board of Directors of the
Corporation, or any committee designated by the Board of
Directors, may participate in a meeting of the Board of Directors
or committee by means of conference telephone or similar
communications equipment whereby all persons participating in the
meeting can hear each other, and participation in a meeting in
such manner shall constitute presence in person at the meeting.
Section 3.10 Action Without a Meeting. Any action which is
required to be or may be taken at a meeting of the directors, or
of the executive committee or any other committee of the
directors, may be taken without a meeting if consents in writing,
setting forth the action so taken, are signed by all of the
members of the Board of Directors or of the committee as the case
may be. The consents shall have the same force and effect as a
unanimous vote at a meeting duly held. The Secretary shall file
such consents with the minutes of the meetings of the Board of
Directors or of the committee as the case may be.
Section 3.11 Quorum and Voting. At all meetings of the Board
of Directors, a majority of the whole Board of Directors shall,
unless a greater number as to any particular matter is required
by the DGCL or other applicable law, the Certificate of
Incorporation or these Bylaws, constitute a quorum for the
transaction of business. The act of a majority of the directors
present at any meeting of the Board of Directors at which a
quorum is present shall be the act of the Board of Directors,
subject to the provisions of Section 144 of the DGCL (as to
approval of contracts or transactions in which a director has a
direct or indirect material financial interest), Section 141 of
the DGCL (as to appointment of committees), and Section 145 of
the DGCL (as to indemnification of directors), and unless the act
of a greater number is required by the DGCL or other applicable
law, the Certificate of Incorporation or these Bylaws.
Section 3.12 Committees.
(a) The Board of Directors may, by resolution or
resolutions adopted by a majority of the whole Board of
Directors, designate two or more directors of the Corporation to
constitute one or more committees (including, without limitation,
an executive committee). Each such committee, to the extent
provided in such resolution or resolutions, shall have and may
exercise all of the authority of the Board of Directors in the
management of the Corporation; provided, however, that the
designation of each such committee and the delegation thereto of
authority shall not operate to relieve the Board of Directors, or
any member thereof, of any responsibility imposed upon it or such
member by law.
(b) Each such committee shall keep regular minutes of its
proceedings, which minutes shall be recorded in the minute book
of the Corporation. The Secretary or an Assistant Secretary of
the Corporation may act as Secretary for each such committee if
the committee so requests.
Section 3.13 Audit Committee.
(a) The Board of Directors at the annual or any regular or
special meeting of the directors shall, by resolution adopted by
a majority of the whole Board of Directors, designate and elect
two or more directors to constitute an Audit Committee and
appoint one of the directors so designated as the chairman of the
Audit Committee. Membership on the Audit Committee shall be
restricted to those directors who are independent of the
management of the Corporation and are free from any relationship
that, in the opinion of the Board of Directors, would interfere
with the exercise of independent judgment as a member of the
committee. Vacancies in the Audit Committee may be filled by the
Board of Directors at any meeting thereof. Each member of the
Audit Committee shall hold office until such Audit Committee
member's successor has been duly elected and qualified, or until
such Audit Committee member's resignation or removal from the
Audit Committee by the Board of Directors, or until such Audit
Committee member otherwise ceases to be a director. Any member
of the Audit Committee may be removed from the Audit Committee by
resolution adopted by a majority of the whole Board of Directors.
The compensation, if any, of members of the Audit Committee shall
be established by resolution of the Board of Directors.
(b) The Audit Committee shall be responsible for: recommending
to the Board of Directors the appointment or discharge of
independent auditors; reviewing with the management and the
independent auditors the terms of engagement of independent
auditors, including the fees, scope and timing of the audit and
any other services rendered by the independent auditors;
reviewing with the independent auditors and management the
Corporation's policies and procedures with respect to internal
auditing, accounting and financial controls; reviewing with the
management the independent statements; audit results and reports
and the recommendation made by any of the auditors with respect
to changes in accounting procedures and internal controls;
reviewing the results of studies of the Corporation's system of
internal accounting controls; and performing any other duties or
functions deemed appropriate by the Board of Directors. The Audit
Committee shall have the powers and rights necessary or desirable
to fulfill these responsibilities, including the power and right
to consult with legal counsel and to rely upon the opinion of
legal counsel. The Audit Committee is authorized to communicate
directly with the Corporation's financial officers and employees,
internal auditors and independent auditors as it deems desirable
and to have the internal auditors or independent auditors perform
any additional procedures as it deems appropriate.
(c) All actions of the Audit Committee shall be reported to
the Board of Directors at the next meeting of the Board of
Directors. The minute books of the Audit Committee shall at all
times be open to the inspection of any director.
(d) The Audit Committee shall meet at the call of its
chairman or of any two members of the Audit Committee (or if
there shall be only one other member, then at the call of that
member). A majority of the Audit Committee shall constitute a
quorum for the transaction of business (or if there shall only be
two members, then both must be present), and the act of a
majority of those present at any meeting at which a quorum is
present (or if there shall be only two members, then they must
act unanimously) shall constitute the act of the Audit Committee.
Section 3.14 Compensation Committee.
(a) The Board of Directors at the annual or any regular or
special meeting shall, by resolution adopted by a majority of the
whole Board of Directors, designate and elect two or more
directors to constitute a Compensation Committee. Membership on
the Compensation Committee shall be restricted to disinterested
persons which for this purpose shall mean any director who,
during the time such director is a member of the Compensation
Committee is not eligible, and has not at any time within one
year prior thereto been eligible, for selection to participate
(other than in a manner as to which the Compensation Committee
has no discretion) in any of the compensation plans administered
by the Compensation Committee. Vacancies in the Compensation
Committee may be filled by the Board of Directors at any meeting.
Each member of the Compensation Committee shall hold office until
such Compensation Committee member's successor has been duly
elected and qualified, or until such Compensation Committee
member's resignation or removal from the Compensation Committee
by the Board of Directors, or until such Compensation Committee
member otherwise ceases to be a director or a disinterested
person. Any member of the Compensation Committee may be removed
by resolution adopted by a majority of the whole Board of
Directors. The compensation, if any, of the members of the
Compensation Committee shall be established by resolution of the
Board of Directors.
(b) The Compensation Committee shall, from time to time,
recommend to the Board of Directors the compensation and benefits
of the executive officers of the Corporation. The Compensation
Committee shall have the power and authority vested in the Board
of Directors by any benefit plan of the Corporation. The
Compensation Committee shall also make recommendations to the
Board of Directors with regard to the compensation of the Board
of Directors and its committees, with the exception of the
Compensation Committee.
(c) All actions of the Compensation Committee shall be
reported to the Board of Directors at the next meeting of the
Board of Directors. The minute books or the Compensation
Committee shall at all times be open to the inspection of any
director.
(d) The Compensation Committee shall meet at the call of
the chairman of the Compensation Committee or of any two members
of the Compensation Committee (or if there shall be only one
other member, then at the call of that member). A majority of the
Compensation Committee shall constitute a quorum for the
transaction of business (or if there shall be only two members,
then both must be present), and the act of a majority of those
present at any meeting at which a quorum is present (or if there
shall be only two members, then they must act unanimously) shall
be the act of the Compensation Committee.
Section 3.15 Nominating Committee.
(a) The Board of Directors at the annual or any regular or
special meeting of the directors shall, by resolution adopted by
a majority of the whole Board of Directors, designate and elect
two or more directors to constitute a Nominating Committee and
appoint one of the directors so designated as the chairman of the
Nominating Committee. Membership on the Nominating Committee
shall be restricted to Independent Directors (as defined in
Section 4.B.1 of Article IV of the Certificate of Incorporation).
Vacancies in the Nominating Committee may be filled by the Board
of Directors at any meeting thereof. Each member of the
Nominating Committee shall hold office until such Nominating
Committee member's successor has been duly elected and qualified,
or until such Nominating Committee member's resignation or
removal from the Nominating Committee by the Board of Directors,
or until such Nominating Committee member otherwise ceases to be
a director. Any member of the Nominating Committee may be
removed from the Nominating Committee by resolution adopted by a
majority of the whole Board of Directors. The compensation, if
any, of members of the Nominating Committee shall be established
by resolution of the Board of Directors.
(b) The Nominating Committee shall be responsible for:
recommending to the Board of Directors a slate of directors to be
presented for election by stockholders at each annual meeting of
the stockholders of the Corporation and any other duties or
functions deemed appropriate by the Board of Directors. The
Nominating Committee shall have the powers and rights necessary
or desirable to fulfill these responsibilities, including the
power and right to consult with legal counsel and to rely upon
the opinion of legal counsel.
(c) All actions of the Nominating Committee shall be
reported to the Board of Directors at the next meeting of the
Board of Directors. The minute books of the Nominating Committee
shall at all times be open to the inspection of any director.
(d) The Nominating Committee shall meet at the call of its
chairman or of any two members of the Nominating Committee (or if
there shall be only one other member, then at the call of that
member). A majority of the Nominating Committee shall constitute
a quorum for the transaction of business (or if there shall be
only two members, then both must be present), and the act of a
majority of those present at any meeting at which a quorum is
present (or if there shall be only two members, then they must
act unanimously) shall be the act of the Nominating Committee.
Section 3.16 Alternate Committee Members. The Board of
Directors, by resolution adopted by a majority of the whole Board
of Directors, may designate one or more additional directors as
alternate members of any committee to replace any absent or
disqualified member at any meeting of that committee, and at any
time may change the membership of any committee or amend or
rescind the resolution designating the committee. In the absence
or disqualification of a member or alternate member of a
committee, the member or members thereof present at any meeting
and not disqualified from voting, whether or not the member or
members constitute a quorum, may unanimously appoint another
director to act at the meeting in the place of any such absent or
disqualified member, provided that the director so appointed
meets any qualifications stated in these Bylaws or the resolution
designating the committee or any amendment thereto.
Section 3.17 Committee Procedures. Unless otherwise provided
in these Bylaws or in the resolution designating any committee,
any committee may fix its rules or procedures and fix the time
and place of its meetings and specify what notice of meetings, if
any, shall be given.
Section 3.18 Limitation of Committee Powers. Notwithstanding
any other provision of these Bylaws, no committee of the Board of
Directors shall have the power or authority of the Board of
Directors with respect to (i) amending the Certificate of
Incorporation, (ii) approving any action which under the DGCL or
other applicable law, also requires stockholders' approval or
approval of the outstanding shares, (iii) approving or
recommending to the stockholders a dissolution of the Corporation
or a revocation of a dissolution, (iv) amending these Bylaws,
(v) declaring a dividend or making any other distribution to the
stockholders, (vi) authorizing the issuance of stock otherwise
than pursuant to (the grant or exercise of a stock option under
employee stock options of the Corporation or in connection with a
public offering of securities registered under the Securities Act
of 1933, (vii) filling vacancies on the Board of Directors or any
committee thereof, or (viii) amending or repealing any resolution
of the Board of Directors.
Section 3.19 Compensation of Directors and Committee Members.
Directors and members of all committees shall not receive any
stated salary for their services as such, unless authorized by
resolution of the Board of Directors. By resolution of the Board
of Directors a fixed sum and expenses of attendance, if any, also
may be allowed for attendance at each regular or special meeting
of the Board of Directors or any committee. Nothing herein
contained shall be construed to preclude any director or
committee member from serving the Corporation in any other
capacity and receiving compensation therefor.
Section 3.20 Resignations. Any director may resign at any time
upon written notice to the Corporation. Such resignation shall
take effect at the time specified therein or, if no time is
specified therein, upon receipt thereof by the Corporation, and,
unless otherwise specified therein, the acceptance of such
resignation by the Corporation shall not be necessary to make
such resignation effective.
Section 3.21 Removal of Directors. Directors may be removed
only in the manner provided in the Certificate of Incorporation.
Section 3.22 Stakeholder Interests. The Board of Directors
shall have the authority to make its decisions based on a long
term perspective and in doing so shall be entitled to make
decisions which may produce short term outcomes less favorable
than alternatives which may be available to the Corporation or
its stockholders. The Board of Directors, in making its
decisions, shall be entitled to consider the interests of
stakeholders in the Company other than stockholders, including
employees, areas in which the Corporation maintains operations,
creditors, and other persons who in the Board of Directors' sole
judgment have a legitimate stake in the Board of Directors'
decision. The Board of Directors shall have discretion to
determine how to balance any interests of stockholders and other
stakeholders in arriving at any decision.
ARTICLE IV - OFFICERS
Section 4.1 Designations.
(a) The officers of the Corporation shall be a Chairman of
the Board, a Vice Chairman of the Board, a President, one or more
Executive Vice Presidents, one or more Vice Presidents, a
Secretary, a Treasurer, one or more Assistant Secretaries and one
or more Assistant Treasurers. The Board of Directors shall elect
a Chairman of the Board, a Vice Chairman of the Board, a
President, a Treasurer and a Secretary at its first meeting after
each annual meeting of the stockholders. The Board of Directors
then, or from time to time, may also elect one or more of the
other prescribed officers as it shall deem advisable, but need
not elect any officers other than a Chairman of the Board, a Vice
Chairman of the Board, a President, a Treasurer and a Secretary.
The Board of Directors may, if it desires, elect or appoint
additional officers and may further identify or describe any one
or more of the officers of the Corporation.
(b) The Chairman and the Vice Chairman of the Board shall
be chosen from among the Board of Directors, but the other
officers of the Corporation need not be members of the Board of
Directors. Any two or more offices may be held by the same
person.
(c) An officer shall be deemed qualified when such person
enters upon the duties of the office to which such person has
been elected or appointed and furnishes any bond required by the
Board of Directors; but the Board of Directors may also require
such person's written acceptance and promise faithfully to
discharge the duties of such office.
Section 4.2 Term of Office. Each officer of the Corporation
shall hold such person's office at the pleasure of the Board of
Directors or for such other period as the Board of Directors may
specify at the time of such person's election or appointment, or
until such person's resignation, removal by the Board of
Directors or death, whichever first occurs. In any event, each
officer of the Corporation who is not reelected or reappointed at
the annual election of officers by the Board of Directors next
succeeding such person's election or appointment shall be deemed
to have been removed by the Board of Directors, unless the Board
of Directors provides otherwise at the time of such person's
election or appointment.
Section 4.3 Other Agents. The Board of Directors from time to
time may appoint such other agents for the Corporation as the
Board of Directors shall deem necessary or advisable, each of
whom shall serve at the pleasure of the Board of Directors or for
such period as the Board of Directors may specify and shall
exercise such powers, have such titles and perform such duties as
shall be determined from time to time by the Board of Directors
or by an officer empowered by the Board of Directors to make such
determinations.
Section 4.4 Removal. Any officer or agent elected or
appointed by the Board of Directors, and any employee, may be
removed or discharged by the Board of Directors whenever in its
judgment the best interests of the Corporation would be served
thereby, but such removal or discharge shall be without prejudice
to the contract rights, if any, of the person so removed or
discharged.
Section 4.5 Salaries and Compensation. Salaries and
compensation of all elected officers of the Corporation shall be
fixed, increased or decreased by the Board of Directors, but this
power, except as to the salary or compensation of the Chairman of
the Board and the President, may, unless prohibited by law, be
delegated by the Board of Directors to the Chairman of the Board,
the President or a committee. Salaries and compensation of all
appointed officers, agents and employees of the Corporation may
be fixed, increased and decreased by the Board of Directors, but
until action is taken with respect thereof by the Board of
Directors, the same may be fixed, increased or decreased by the
President or by such other officer or officers as may be
empowered by the Board of Directors to do so.
Section 4.6 Delegation of Authority to Hire, Discharge and
Designate Duties. The Board of Directors from time to time may
delegate to the Chairman of the Board, the President or other
officer or executive employees of the Corporation, authority to
hire and discharge and to fix and modify the duties and salary or
other compensation of employees of the Corporation under the
jurisdiction of such person, and the Board of Directors may
delegate to such officer or executive employee similar authority
with respect to obtaining and retaining for the Corporation the
services of attorneys, accountants and other experts.
Section 4.7 Chairman of the Board. If a Chairman of the Board
is elected, such Chairman of the Board shall preside at all
meetings of the stockholders and directors at which such Chairman
of the Board may be present and shall perform such other duties
and have such other powers, responsibilities and authority as may
be prescribed elsewhere in these Bylaws. The Board of Directors
may delegate such other powers, responsibilities and authority
and assign such additional duties to the Chairman of the Board,
other than those conferred by law exclusively upon the President
or other officer, as the Board of Directors may from time to time
determine, and, to the extent permissible by law, the Board of
Directors may designate the Chairman of the Board as the chief
executive officer of the Corporation with all of the duties,
powers, responsibilities and authority otherwise conferred upon
the President of the Corporation under Section 4.8 of these
Bylaws, or the Board of Directors may from time to time divide
the duties, powers, responsibilities and authority for the
general control and management of the Corporation's business and
affairs between the Chairman of the Board and the President. If
the Chairman of the Board is designated as the chief executive
officer of the Corporation or to have the powers of the chief
executive officer coextensively with the President, notice
thereof shall be given to the extent and in the manner as may be
required by law.
Section 4.8 President.
(a) Unless the Board of Directors otherwise provides, the
President shall be the chief executive officer of the Corporation
with such general executive duties, powers, responsibilities and
authority of supervision and management as are usually vested in
the office of the Chief Executive Officer of a corporation, and
such President shall carry into effect all directions and
resolutions of the Board of Directors. In the absence of the
Chairman of the Board, or if there is no Chairman of the Board,
the President shall preside at all meetings of the stockholders
and the Board of Directors.
(b) The President may execute all bonds, notes, debentures,
mortgages and other contracts requiring the seal of the
Corporation, may cause the seal to be affixed thereof, and may
execute all other instruments, for and in the name of the
Corporation.
(c) Unless the Board of Directors otherwise provides, the
President, or any person designated in writing by the President,
shall have full power and authority on behalf of the Corporation
to (i) attend and to vote or take action at any meeting of the
holders of securities of corporations in which the Corporation
may hold securities, and at such meeting shall possess and may
exercise any and all rights and powers incident to being a holder
of such securities, and (ii) execute and deliver waivers of
notice and proxies for and in the name of this Corporation with
respect to securities of any such corporation held by this
Corporation.
(d) The President shall, unless the Board of Directors
otherwise provides, be an ex officio member of all standing
committees.
(e) The President shall perform such other duties and have
such other powers, responsibilities and authority as may be
prescribed elsewhere in these Bylaws or from time to time by the
Board of Directors.
(f) If a Chairman of the Board is elected and designated as
the chief executive officer of the Corporation, as provided in
Section 4.7 of these Bylaws, the President shall perform such
duties and have such powers, responsibilities and authority as
may be specifically delegated to the President by the Board of
Directors or are conferred by law exclusively upon the President
and, in the absence or disability of the Chairman of the Board or
in the event of the Chairman of the Board's inability or refusal
to act, the President shall perform the duties and exercise the
powers of the Chairman of the Board.
Section 4.9 Executive Vice Presidents and Vice Presidents. In
the absence or disability of the President, or in the event of
the President's inability or refusal to act, any Executive Vice
President or Vice President may perform the duties and exercise
the powers of the President, including presiding at meetings of
the stockholders of the Corporation and meetings of the Board of
Directors in the absence of the Chairman of the Board, until the
Board of Directors otherwise provides. Executive Vice Presidents
and Vice Presidents shall perform such other duties and have such
other powers, responsibilities and authority as the Board of
Directors may from time to time prescribe.
Section 4.10 Secretary and Assistant Secretaries.
(a) The Secretary shall attend all meetings of the Board of
Directors and, except as otherwise provided for in Section 2.5 of
these Bylaws, all meetings of the stockholders. The Secretary
shall prepare minutes of all proceedings at such meetings and
shall preserve them in a minute book of the Corporation. The
Secretary shall perform similar duties for each standing or
temporary committee when requested by the Board of Directors or
such committee.
(b) The Secretary shall see that all books, records, lists
and information, or duplicates, required to be maintained at the
registered or other office of the Corporation in the State of
Missouri, or elsewhere, are so maintained.
(c) The Secretary shall keep in safe custody the seal of
the Corporation, and shall have authority to affix the seal of
the Corporation to any instrument requiring a corporate seal and,
when so affixed, the Secretary may attest the seal by the
Secretary's signature.
(d) The Secretary shall have the general duties, powers,
responsibilities and authority of a secretary of a corporation
and shall perform such other duties and have such other powers,
responsibilities and authority as may be prescribed elsewhere in
these Bylaws or from time to time by the Board of Directors or
the chief executive officer of the Corporation, under whose
direct supervision the secretary shall be.
(e) In the absence or disability of the Secretary or in the
event of the Secretary's inability or refusal to act, any
Assistant Secretary may perform the duties and exercise the
powers of the Secretary until the Board of Directors otherwise
provides. Assistant Secretaries shall perform such other duties
and have such other powers, responsibilities and authority as the
Board of Directors may from time to time prescribe.
Section 4.11 Treasurer and Assistant Treasurers.
(a) The Treasurer shall have responsibility for the
safekeeping of the funds and securities of the Corporation, shall
keep or cause to be kept full and accurate accounts of receipts
and disbursements in books belonging to the Corporation and shall
keep or cause to be kept all other books of account and
accounting records of the Corporation. The Treasurer shall
deposit or cause to be deposited all moneys and other valuable
effects in the name and to the credit of the Corporation in such
depositories as may be designated by the Board of Directors or by
any officer of the Corporation to whom such authority has been
granted by the Board of Directors.
(b) The Treasurer shall disburse, or permit to be
disbursed, the funds of the Corporation as may be ordered, or
authorized generally, by the Board of Directors, and shall render
to the chief executive officer of the Corporation and the
directors, whenever they may require, an account of all
transactions as treasurer and of those under the Treasurer's
jurisdiction, and of the financial condition of the Corporation.
(c) The Treasurer shall have the general duties, powers,
responsibilities and authority of a treasurer of a corporation
and shall, unless otherwise provided by the Board of Directors,
be the chief financial and accounting officer of the Corporation.
The Treasurer shall perform such other duties and shall have such
other powers, responsibilities and authority as may be prescribed
elsewhere in these Bylaws or from time to time by the Board of
Directors.
(d) If required by the Board of Directors, the Treasurer
shall give the Corporation a bond in a sum and with one or more
sureties satisfactory to the Board of Directors for the faithful
performance of the duties of the Treasurer's office and for the
restoration to the Corporation, in the case of the Treasurer's
death, resignation, retirement or removal from office, of all
books, papers, vouchers, money and other property of whatever
kind in the Treasurer's possession or under the Treasurer's
control which belong to the Corporation.
(e) In the absence or disability of the Treasurer or in the
event of the Treasurer's inability or refusal to act, any
Assistant Treasurer may perform the duties and exercise the
powers of the Treasurer until the Board of Directors otherwise
provides. Assistant Treasurers shall perform such other duties
and have such other powers, responsibilities and authority as the
Board of Directors may from time to time prescribe.
Section 4.12 Duties of Officers May Be Delegated. If any
officer of the Corporation is absent or unable to act, or for any
other reason that the Board of Directors may deem sufficient, the
Board of Directors may delegate, for the time being, some or all
of the functions, duties, powers, responsibilities and authority
of any officer to any other officer, or to any other agent or
employee of the Corporation or other responsible person, provided
a majority of the whole Board of Directors concurs.
ARTICLE V - INDEMNIFICATION
Section 5.1 Indemnification of Directors and Officers. The
Corporation shall be required, to the maximum extent permitted by
the DGCL and the Certificate of Incorporation, to indemnify each
of its directors and officers and any director or officer who is
or was serving at the request of the Corporation as a director,
officer, employee, or agent of another corporation, partnership,
joint venture, trust, limited liability company or other
enterprise against expenses, judgments, fines, settlements, and
other amounts actually and reasonably incurred in connection with
any proceeding arising by reason of the fact that any such person
is or was a director or an officer of the Corporation or is or
was serving at the request of the Corporation as a director,
officer, employee, or agent of another corporation, partnership,
joint venture, trust, limited liability company or other
enterprise.
Section 5.2 Indemnification of Other Agents. The Corporation
may, in its absolute discretion, up to the maximum extent
permitted by the DGCL and the Certificate of Incorporation,
indemnify each person who is not required to be indemnified under
Section 5.1 against expenses, judgments, fines, settlements, and
other amounts actually and reasonably incurred in connection with
any proceeding arising by reason of the fact that any such person
is or was an employee or agent of the Corporation or is or was
serving at the request of the Corporation as a director, officer,
employee, or agent of another corporation, partnership, joint
venture, trust, limited liability company or other enterprise.
Section 5.3 Indemnification of Fiduciaries. The Corporation
shall indemnify any director, officer, employee, or other agent
of the Corporation against expenses, judgments, fines,
settlements, and other amounts actually and reasonably incurred
in connection with any proceeding arising by reason of the fact
that any such person is or was a trustee, investment manager, or
other fiduciary under any employee benefit plan of the
Corporation. The provisions of this Section 5.3 shall be deemed
to constitute a contract between the Corporation and any such
indemnified person, or for the benefit of any such indemnified
person.
Section 5.4 Advances of Expenses. To the extent permitted by
the DGCL and the Certificate of Incorporation, expenses incurred
in defending any proceeding in the case described in Section 5.1
of these Bylaws shall be advanced by the Corporation prior to the
final disposition of such proceeding upon receipt of any
undertaking by or on behalf of such person to repay such amount
if it shall be determined ultimately that he or she is not
entitled to be indemnified by the Corporation.
Section 5.5 Non-Exclusivity. The indemnification and the
advancement of expenses provided by this Article V shall not be
exclusive of any other rights to which those seeking
indemnification or advancement of expenses may be entitled under
any statute, the Certificate of Incorporation, these Bylaws or
any agreement, vote of stockholders or disinterested directors,
policy of insurance or otherwise, both as to action in their
official capacity and as to action in another capacity while
holding their respective offices, and shall not limit in any way
any right which the Corporation may have to provide additional
indemnification with respect to the same or different persons or
classes of persons. The indemnification and advancement of
expenses provided by this Article V shall continue as to a person
who has ceased to serve in a capacity that entitles such person
to indemnity under this Article V (an "Indemnifiable Capacity")
and shall inure to the benefit of the heirs, executors and
administrators of such a person.
Section 5.6 Insurance. Upon resolution passed by the Board of
Directors, the Corporation may purchase and maintain insurance on
behalf of any person who is or was serving in an Indemnifiable
Capacity against any liability asserted against such person and
incurred by such person in any such capacity, or arising out of
such person's status as such, whether or not the Corporation
would have the power to indemnify such person against such
liability under the provisions of this Article V. Notwithstanding
anything in this Article V to the contrary: (i) the Corporation
shall not be obligated to indemnify any person serving in an
Indemnifiable Capacity for any amounts which have been paid
directly to such person by any insurance maintained by the
Corporation; and (ii) any indemnification provided pursuant to
this Article V (A) shall not be used as a source of contribution
to, or as a substitute for, or as a basis for recoupment of any
payments pursuant to, any indemnification obligation or insurance
coverage which is available from any Other Enterprise, and
(B) shall become operative, and payments shall be required to be
made thereunder, only in the event and to the extent that the
amounts in question have not been fully paid by any
indemnification obligation or insurance coverage which is
available from any Other Enterprise.
Section 5.7 Vesting of Rights. The rights granted or created
hereby shall be vested in each person entitled to indemnification
hereunder as a bargained-for contractual condition of such
person's serving or having served in an Indemnifiable Capacity
and, while this Article V may be amended or repealed, no such
amendment or repeal shall release, terminate or adversely affect
the rights of such person under this Article V with respect to
any act taken or the failure to take any act by such person prior
to such amendment or repeal or with respect to any action, suit
or proceeding with respect to such act or failure to act filed
after such amendment or repeal.
Section 5.8 Severability. If any provision of this Article V
or the application of any such provision to any person or
circumstance is held invalid, illegal or unenforceable for any
reason whatsoever, the remaining provisions of this Article V and
the application of such provision to other persons or
circumstances shall not be affected thereby and, to the fullest
extent possible, the court finding such provision invalid,
illegal or unenforceable shall modify and construe the provision
so as to render it valid and enforceable as against all persons
or entities and to give the maximum possible protection to
persons subject to indemnification hereby within the bounds of
validity, legality and enforceability. Without limiting the
generality of the foregoing, if any person who is or was serving
in an Indemnifiable Capacity is entitled under any provision of
this Article V to indemnification by the Corporation for some or
a portion of the judgments, amounts paid in settlement,
attorneys' fees, ERISA excise taxes or penalties, fines or other
expenses actually and reasonably incurred by any such person in
connection with any threatened, pending or completed action, suit
or proceeding (including, without limitation, the investigation,
defense, settlement or appeal of such action, suit or
proceeding), whether civil, criminal, administrative,
investigative or appellate, but not, however, for all of the
total amount thereof, the Corporation shall nevertheless
indemnify such person for the portion thereof to which such
person is entitled.
ARTICLE VI - STOCK
Section 6.1 Payment for Shares of Stock. The Corporation
shall not issue shares of stock of the Corporation except for
money paid, labor done or property actually received or in
consideration of valid bona fide antecedent debts. No note or
obligation given by any stockholder, whether secured by deed of
trust, mortgage or otherwise, shall be considered as payment of
any part or any share or shares, and no loan of money for the
purpose of such payment shall be made by the Corporation.
Section 6.2 Certificates Representing Shares of Stock. The
certificates representing shares of stock of the Corporation
shall be issued in numerical order and shall be in such form as
may be prescribed by the Board of Directors in conformity with
the Certificate of Incorporation, the DGCL or other applicable
law. The issuance of shares shall be entered in the stock books
of the Corporation as they are issued. Such entries shall show
the name and address of the person, firm, partnership,
corporation or association to whom each certificate is issued.
Each certificate shall have printed, typed or written thereon the
name or the person, firm, partnership, corporation or association
to whom it is issued and the number of shares represented
thereby. It shall be signed by the President, an Executive Vice
President or a Vice President and by the Secretary, an Assistant
Secretary, the Treasurer or an Assistant Treasurer of the
Corporation, and sealed with the seal of the Corporation. Any or
all signatures on such certificate may be facsimiles and the seal
may be facsimile, engraved or printed. In case any such officer,
transfer agent or registrar who has signed or whose facsimile
signature has been placed upon any such certificate shall have
ceased to be such officer, transfer agent or registrar before
such certificate is issued, such certificate may nevertheless be
issued by the Corporation with the same effect as if such person
were such officer, transfer agent or registrar at the date of
issue.
Section 6.3 Transfers of Shares - Transfer Agent - Registrar.
Transfers of shares of stock shall be made on the stock record or
transfer books of the Corporation only by the person named in the
stock certificate, or by such stockholder's attorney lawfully
constituted in writing, and upon surrender of the certificate
therefor. The stock record book and other transfer records shall
be in the possession of the Secretary or of a transfer agent for
the Corporation. The Corporation, by resolution of the Board of
Directors, may from time to time appoint a transfer agent and, if
desired, a registrar, under such arrangements and upon such terms
and conditions as the Board of Directors deems advisable, but
until and unless the Board of Directors appoints some other
person, firm or corporation as its transfer agent (and upon the
revocation of any such appointment, thereafter until a new
appointment is similarly made) the Secretary of the Corporation
shall be the transfer agent of the Corporation without the
necessity of any formal action of the Board of Directors, and the
Secretary, or any person designated by the Secretary, shall
perform all of the duties of such transfer agent.
Section 6.4 Closing of Transfer Books. The Board of Directors
shall have power to close the stock transfer books of the
Corporation for a period not exceeding sixty (60) days preceding
the date of any meeting of the stockholders, or the date of
payment of any dividend, or the date for the allotment of rights,
or the date when any change or conversion or exchange of shares
shall go into effect; provided, however, that in lieu of closing
the stock transfer books, the Board of Directors may fix in
advance a date, not exceeding sixty (60) days preceding the date
of any meeting of stockholders, or the date for the payment of
any dividend, or the date for the allotment of rights, or the
date when any change or conversion or exchange of shares shall go
into effect, as a record date for the determination of the
stockholders entitled to notice of, and to vote at, any such
meeting and any adjournment thereof, or entitled to receive
payment of any such dividend, or entitled to any such allotment
of rights, or entitled to exercise the rights in respect of any
such change, conversion or exchange of shares. In such case only
the stockholders who are stockholders of record on the date of
closing of the transfer books or on the record date so fixed
shall be entitled to notice of, and to vote at, such meeting, and
any adjournment thereof, or to receive payment of such dividend,
or to receive such allotment of rights, or to exercise such
rights, as the case may be, notwithstanding any transfer of any
shares on the books of the Corporation after such date of closing
of the transfer books or such record date fixed as aforesaid.
Section 6.5 Lost or Destroyed Certificates. In case of the
loss or destruction of any certificate for shares of stock of the
Corporation, another may be issued in its place upon proof of
such loss or destruction and upon the giving of a satisfactory
bond of indemnity to the Corporation and the transfer agent and
registrar, if any, in such sum as the Board of Directors may
provide; provided, however, that a new certificate may be issued
without requiring a bond when in the judgment of the Board of
Directors it is proper to do so.
Section 6.6 Regulations. The Board of Directors shall have
power and authority to make all such rules and regulations as it
may deem expedient concerning the issue, transfer, conversion and
registration of certificates for shares of stock of the
Corporation, not inconsistent with the DGCL and other applicable
law, the Certificate of Incorporation or these Bylaws.
ARTICLE VII - CORPORATE FINANCE
Section 7.1 Fixing of Capital - Transfers of Surplus. Except
as may be specifically otherwise provided in the Certificate of
Incorporation, the Board of Directors is expressly empowered to
exercise all authority conferred upon it or the Corporation by
any law or statute, and in conformity therewith, relative to:
(a) determining what part of the consideration received for
shares of the Corporation shall be stated capital; (b) increasing
or decreasing stated capital; (c) transferring surplus to stated
capital; (d) transferring stated capital to surplus;
(e) determining the consideration to be received by the
Corporation for its shares; and (f) determining all similar or
related matters; provided, however, that any concurrent action or
consent by or of the Corporation and its stockholders, required
to be taken or given pursuant to the DGCL and other applicable
law, shall be duly taken or given in connection therewith.
Section 7.2 Dividend.
(a) Dividends on the outstanding shares of the Corporation,
subject to the provisions of the Certificate of Incorporation and
the DGCL and other applicable law, may be declared by the Board
of Directors at any meeting. Dividends may be paid in cash,
property or shares of the Corporation's stock.
(b) Liquidating dividends or dividends representing a
distribution of paid-in surplus or a return of capital shall be
made only when and in the manner permitted by law.
(c) A member of the Board of Directors shall be fully
protected in relying in good faith upon the books of account of
the Corporation or statements prepared by any of the
Corporation's officials as to the value and amount of the assets,
liabilities and earnings of the Corporation, or any facts
pertinent to the existence and amount of surplus or other funds
from which dividends might properly be declared and paid.
Section 7.3 Creation of Reserves. Before the payment of any
dividend, there may be set aside out of any funds of the
Corporation available for dividends such sum or sums as the Board
of Directors from time to time deems proper as a reserve fund or
funds to meet contingencies or for equalizing dividends,
repairing or maintaining any property of the Corporation or any
other purpose deemed by the Board of Directors to be conducive to
the interests of the Corporation, and the Board of Directors may
abolish any such reserve in the manner in which it was created.
ARTICLE VIII - GENERAL PROVISIONS
Section 8.1 Fiscal Year. The Board of Directors shall have
power to fix and from time to time change the fiscal year of the
Corporation. In the absence of action by the Board of Directors,
the fiscal year of the Corporation shall end each year on the
date which the Corporation treated as the close of its first
fiscal year, until such time, if any, as the fiscal year shall be
changed by the Board of Directors.
Section 8.2 Corporate Seal. The corporate seal shall have
inscribed thereon the name of the Corporation and the words:
"Corporate Seal - Delaware." The corporate seal may be used by
causing it, or a facsimile thereof, to be impressed or affixed or
in any manner reproduced. As provided in Section 4.10(c) of these
Bylaws, the Secretary of the Corporation shall have the authority
to affix and attest the corporate seal. The Board of Directors
may give general authority to any other officer of the
Corporation to affix the corporate seal and, when so affixed, to
attest the seal by such officer's signature.
Section 8.3 Depositories. The moneys of the Corporation shall
be deposited in the name of the Corporation in such bank or banks
or other depositories as the Board of Directors shall designate,
and shall be drawn out only by check or draft signed by persons
designated by resolution adopted by the Board of Directors.
Notwithstanding the foregoing, the Board of Directors may by
resolution authorize an officer or officers of the Corporation to
designate any bank or banks or other depositories in which moneys
of the Corporation may be deposited, and to designate the persons
who may sign checks or drafts on any particular account or
accounts of the Corporation, whether created by direct
designation of the Board of Directors or by an authorized officer
or officers as aforesaid.
Section 8.4 Amendments of the Bylaws.
(a) The Board of Directors shall have the power to amend
these Bylaws by the vote of a majority of the directors present
at a meeting at which a quorum is then present except that any
amendment to Sections 2.3, 2.8(b), 2.11, 2.13, 3.3, 3.5, 8.4 or
8.5 or Article V of these Bylaws shall require the approval of an
Independent Board Majority.
(b) The holders of the Corporation's capital stock shall
not have the power to amend or replace these Bylaws in whole or
in part unless such amendment or replacement shall be approved by
the holders of at least seventy-five percent (75%) of the issued
and outstanding shares of Common Stock of the Corporation.
Section 8.5 Inconsistent Provisions. The Board of Directors
shall have the authority to interpret these Bylaws and to resolve
any question or issue which may arise under these Bylaws.
Whenever possible, each provision of these Bylaws shall be
interpreted in such manner as to be valid and enforceable under
applicable law and the provision of the Certificate of
Incorporation, but if any provision of these Bylaws shall be held
to be prohibited by or unenforceable under or to be in
irreconcilable conflict with applicable law or the Certificate of
Incorporation, (i) such provision shall be applied to accomplish
the objectives of the provision as originally written to the
fullest extent permitted by law, and (ii) all other provisions of
these Bylaws shall remain in full force and effect.
EXHIBIT H
FORM OF
FOUNDATION REINCORPORATION MERGER RESOLUTION
FOR NEW RIT
RESOLVED, That the Agreement and Plan of
Reorganization, dated _________ __, 199__, by and among
Blue Cross and Blue Shield of Missouri, a Missouri
nonprofit health services corporation, RightCHOICE
Managed Care, Inc., a Missouri corporation, The
Missouri Foundation For Health, a Missouri nonprofit
public benefit corporation, and RightCHOICE Managed
Care, Inc., a Delaware corporation (the "Agreement"),
and all of the transactions contemplated thereby,
including, without limitation, the Reincorporation
Merger Transaction (as defined in the Agreement) be,
and hereby are, ratified, approved, confirmed and
adopted.
FORM OF
FOUNDATION REINCORPORATION MERGER RESOLUTION
FOR NEW BCBSMO
RESOLVED, That the Agreement and Plan of
Reorganization, dated _________ __, 199__, by and among
Blue Cross and Blue Shield of Missouri, a Missouri
nonprofit health services corporation, RightCHOICE
Managed Care, Inc., a Missouri corporation, The
Missouri Foundation For Health, a Missouri nonprofit
public benefit corporation, and the RightCHOICE Managed
Care, Inc., a Delaware corporation (the "Agreement"),
and all of the transactions contemplated thereby,
including, without limitation, the Reincorporation
Merger Transaction (as defined in the Agreement) be,
and hereby are, ratified, approved, confirmed and
adopted.
EXHIBIT I
FORM OF
FOUNDATION RIT/NEW RIT MERGER RESOLUTION
RESOLVED, That the Agreement and Plan of
Reorganization, dated _________ __, 199__, by and among
Blue Cross and Blue Shield of Missouri, a Missouri
nonprofit health services corporation, RightCHOICE
Managed Care, Inc., a Missouri corporation, The
Missouri Foundation For Health, a Missouri nonprofit
public benefit corporation, and RightCHOICE Managed
Care, Inc., a Delaware corporation (the "Agreement"),
and all of the transactions contemplated thereby,
including, without limitation, the RIT/New RIT Merger
Transaction (as defined in the Agreement) be, and
hereby are, ratified, approved, confirmed and adopted.
EXHIBIT J
FORM OF
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement"), dated
as of ______________, 199__, is made and entered into by and
between RightCHOICE Managed Care, Inc., a Delaware corporation
(the "Company"), and The Missouri Foundation For Health, a
Missouri non-profit corporation (the "Foundation").
RECITALS
A. Pursuant to the terms of a certain Agreement and Plan of
Reorganization (the "Reorganization Agreement"), dated as of
_______, 199_, [to be determined upon signing Reorganization
Agreement] by and among Blue Cross and Blue Shield of Missouri, a
Missouri non-profit health services corporation, RightCHOICE
Managed Care, Inc., a Missouri corporation, the Foundation and
the Company, the Foundation has acquired, contemporaneous with
the execution of this Agreement, 14,962,500 shares of common
stock, par value $___ per share [to be determined by RIT prior to
signing Reorganization Agreement], of the Company (the "Common
Stock"), representing approximately 80.1% of the issued and
outstanding shares of Common Stock.
B. The Company has agreed to provide certain registration
rights to the Foundation with respect to the shares of Common
Stock owned by the Foundation, subject to the terms and
conditions contained in this Agreement.
AGREEMENT
In consideration of the foregoing and the mutual covenants
and agreements contained in this Agreement, the Company and the
Foundation agree as follows:
Section 1. Definitions. For purposes of this Agreement,
the following terms shall have the following meanings:
(a) "Affiliate", as used with respect to the Foundation,
has the meaning ascribed to such term in Rule 12b-2 of the
Exchange Act, and in effect on November 17, 1993, but shall be
deemed to not include the Company and its subsidiaries.
(b) "Agreement" has the meaning set forth in the Preamble
hereof.
(c) "Beneficially Own" has the meaning set forth in
Section 1 of Article VII of the Certificate of Incorporation.
(d) "Blackout Period" has the meaning specified in
Section 6 hereof.
(e) "Business Day" means a day other than a Saturday,
Sunday or other day on which commercial banks are authorized to
close under the laws of the State of Missouri and the United
States of America.
(f) "Bylaws" means the Bylaws of the Company as in effect
at the time that reference is made thereto.
(g) "Certificate of Incorporation" means the Certificate
of Incorporation of the Company as in effect at the time that
reference is made thereto.
(h) "Closing Date" has the meaning provided therefor in the
Reorganization Agreement.
(i) "Common Stock" has the meaning set forth in Recital A
hereof.
(j) "Company" has the meaning set forth in the Preamble
hereof.
(k) "Continuing Option" has the meaning specified in
Section 4(a) hereof.
(l) "Continuing Option Notice" has the meaning specified in
Section 4(a) hereof.
(m) "Continuing Option Price" has the meaning specified in
Section 4(a) hereof.
(n) "Continuing Option Securities" has the meaning
specified in Section 4(a) hereof.
(o) "Current Market Value" means the product of the number
of Registrable Securities at issue multiplied by the closing sale
price of a share of Common Stock on the NYSE on the date that the
Current Market Value is to be determined.
(p) "Demand" has the meaning specified in Section 2(a)
hereof.
(q) "Demand Option" has the meaning specified in
Section 2(b) hereof.
(r) "Demand Option Notice" has the meaning specified in
Section 2(b) hereof.
(s) "Demand Option Securities" has the meaning specified in
Section 2(b) hereof.
(t) "Demand Registration" has the meaning specified in
Section 2(a) hereof.
(u) "Effective Period" means the period commencing on the
date of this Agreement and ending on the first date on which
there shall no longer exist any Registrable Securities.
(v) "Excess Shares" has the meaning set forth in Section 1
of Article VII of the Certificate of Incorporation.
(w) "Exchange Act" means the Securities Exchange Act of
1934, as amended, and the rules and regulations of the SEC
thereunder, all as the same shall be in effect at the time that
reference is made thereto.
(x) "Foundation" has the meaning set forth in the Preamble
hereof.
(y) "Initial Continuing Option Exercise Date" has the
meaning specified in Section 4(a) hereof.
(z) "Inspectors" has the meaning specified in Section 8(k)
hereof.
(aa) "NASD" means the National Association of Securities
Dealers, Inc.
(bb) "NYSE" means the New York Stock Exchange, Inc.
(cc) "Ownership Limit" has the meaning set forth in
Section 1 of Article VII of the Certificate of Incorporation.
(dd) "Person" means any individual, firm, partnership,
corporation (including, without limitation, a business trust),
limited liability company, joint stock company, trust,
unincorporated association, joint venture or other entity, and
shall include any successor (by merger or otherwise) of any such
entity.
(ee) "Piggy-Back Request" has the meaning set forth in
Section 3(b) hereof.
(ff) "Piggy-Back Rights" has the meaning set forth in
Section 3(a) hereof.
(gg) "Private Placement Notice" has the meaning specified in
Section 11 hereof.
(hh) "Private Placement Option" has the meaning specified in
Section 11 hereof.
(ii) "Private Placement Option Notice" has the meaning
specified in Section 11 hereof.
(jj) "Private Placement Securities" has the meaning
specified in Section 11 hereof.
(kk) "Prospectus" means the prospectus included in any
Registration Statement, as amended or supplemented by any
prospectus supplement, with respect to the terms of the offering
of any portion of the Registrable Securities covered by any
Registration Statement and by all other amendments and
supplements to the prospectus, including post-effective
amendments and all material incorporated by reference in such
prospectus.
(ll) "Records" has the meaning specified in Section 8(k)
hereof.
(mm) "Registrable Securities" means any and all of (i) the
shares of Common Stock held by the Foundation as of the date of
this Agreement, and (ii) any securities issuable or issued or
distributed in respect of any of the securities identified in
clause (i) by way of stock dividend or stock split or in
connection with a combination of shares, recapitalization,
reorganization, merger, consolidation or otherwise. Registrable
Securities shall cease to be Registrable Securities when and to
the extent that (i) they shall have been transferred, sold,
distributed or otherwise disposed of by the Foundation (whether
pursuant to an underwritten public offering, a private placement
transaction, Rule 144 or otherwise), (ii) they shall have ceased
to be outstanding, or (iii) they shall have become Delinquent
Shares (as defined in the Voting Trust and Divestiture
Agreement).
(nn) "Registration Expenses" means any and all reasonable
expenses incident to performance of or compliance with this
Agreement, including, without limitation, (i) all SEC, NASD and
securities exchange registration and filing fees, (ii) all fees
and expenses of complying with state securities or "blue sky"
laws (including fees and disbursements of counsel for any
underwriters in connection with blue sky qualifications of the
Registrable Securities), (iii) all processing, printing, copying,
messenger and delivery expenses, (iv) all fees and expenses
incurred in connection with the listing of the Registrable
Securities on any securities exchange pursuant to Section 8(h)
hereof, (v) all fees and disbursements of counsel for the Company
and of its independent public accountants, and (vi) the
reasonable fees and expenses of any special experts retained in
connection with a registration under this Agreement, but
excluding (A) any underwriting discounts and commissions and
transfer taxes relating to the sale or disposition of Registrable
Securities pursuant to a Registration Statement, and (B) any
fees, expenses or disbursements of counsel and other advisers to
the Foundation.
(oo) "Registration Statement" means any registration
statement (including a Shelf Registration) of the Company
referred to in Sections 2 or 3 hereof, including any Prospectus,
amendments and supplements to any such registration statement,
including post-effective amendments, and all exhibits and all
material incorporated by reference in any such registration
statement.
(pp) "Reorganization Agreement" has the meaning set forth in
Recital A hereof.
(qq) "Rule 144" means Rule 144 under the Securities Act, 17
C.F.R. 230.144, or any similar or successor rules or
regulations hereafter adopted by the SEC.
(rr) "SEC" means the United States Securities and Exchange
Commission and any successor federal agency having similar
powers.
(ss) "Securities Act" means the Securities Act of 1933, as
amended, and the rules and regulations of the SEC thereunder, all
as the same shall be in effect at the time that reference is made
thereto.
(tt) "Shelf Registration" means a "shelf" registration
statement on an appropriate form pursuant to Rule 415 under the
Securities Act (or any successor rule that may be adopted by the
SEC).
(uu) "Underwritten Offering" means an offering in which
securities of the Company are sold to an underwriter for
reoffering to the public pursuant to an effective Registration
Statement under the Securities Act.
(vv) "Voting Trust and Divestiture Agreement" means that
certain Voting Trust and Divestiture Agreement, of even date
herewith, by and among the Company, the Foundation and the
trustee named therein.
Section 2. Demand Registration Rights.
(a) Throughout the Effective Period, the Foundation may, at
any time from and after the Closing Date and subject to the terms
hereof, request the Company in writing (each, a "Demand") to
effect a registration with the SEC under and in accordance with
the provisions of the Securities Act of all or part of the
Registrable Securities (a "Demand Registration"). The Demand
shall specify the aggregate number of shares of Registrable
Securities requested to be so registered. Any request received
by the Company from the Foundation as provided in this Section
2(a) shall be deemed to be a "Demand" for purposes of this
Agreement unless the Company shall have notified the Foundation
in writing, prior to its receipt of such request from the
Foundation, of its intention to register securities with the SEC,
in which case the request from the Foundation shall be governed
by Section 3 hereof, not this Section 2.
(b) Following its receipt of a Demand, the Company shall
have the right, but not the obligation (the "Demand Option"),
exercisable by providing written notice thereof (the "Demand
Option Notice") to the Foundation within thirty (30) Business
Days, to purchase all or (subject to the penultimate sentence of
this Section 2(b)) any portion of the Registrable Securities that
are the subject of such Demand (the "Demand Option Securities")
at a cash price per share equal to ninety-seven percent (97%) of
the average closing sale price per share of the Common Stock on
the NYSE during the ten (10) consecutive trading days ending on
the second (2nd) trading day immediately preceding the date of
the Demand (with such three percent (3%) discount equal to one-
half (1/2) of the agreed upon per share amount of underwriting
discounts, commissions and other expenses that the Foundation
would have incurred in connection with the Demand Registration of
such Demand Option Securities). The Demand Option Notice shall
state the number of Demand Option Securities that the Company
shall purchase pursuant to the Demand Option, the aggregate
purchase price therefor, and the closing date of the Company's
purchase of the Demand Option Securities, which shall take place
no later than sixty (60) days after the date of the Demand Option
Notice. The Company shall pay for the Demand Option Securities
that it shall purchase pursuant to the Demand Option at the
closing thereof by wire transfer of immediately available funds
to a bank account designated by the Foundation. At such closing,
the Foundation shall deliver or cause to be delivered to the
Company the certificate or certificates representing the number
of Demand Option Securities purchased by the Company as specified
in the Demand Option Notice, free and clear of all liens, claims,
security interests and other encumbrances. The Company shall be
entitled to receive customary representations and warranties from
the Foundation regarding such sale of Demand Option Securities
(including representations regarding good title to such shares,
free and clear of all liens, claims, security interests and other
encumbrances). Notwithstanding anything in this Section 2(b) to
the contrary, unless the Foundation shall consent thereto, the
Company shall not have the right to purchase less than all of the
Demand Option Securities pursuant to a Demand Option if the
Current Market Value (determined as of the date of the original
Demand by the Foundation) of the Demand Option Securities that
the Company shall have elected not to purchase shall be less than
Thirty Million Dollars ($30,000,000). In the event that the
Company shall purchase all of the Demand Option Shares in
accordance with this Section 2(b), then the requested Demand
Registration related thereto shall not be deemed to count as one
(1) of the three (3) Demand Registrations described in
Section 2(d)(i) hereof.
(c) If the Company does not elect to exercise the Demand
Option, or elects to purchase less than all of the Demand Option
Securities, the Company shall use its best efforts to file a
Registration Statement for the Registrable Securities, or
remainder thereof, identified in such Demand as soon as
practicable.
(d) Notwithstanding anything in this Agreement to the
contrary, the Company shall not be required to file a
Registration Statement for the Registrable Securities identified
in a Demand:
(i) if the Company shall have previously effected three (3)
Demand Registrations (provided that, for purposes of this
Agreement, any registration of Registrable Securities completed
in connection with the consummation of any of the transactions
contemplated by the Reorganization Agreement shall constitute a
Demand Registration);
(ii) if the Company shall have previously effected a Demand
Registration at any time during the immediately preceding twelve
(12) month period;
(iii) if the Company shall have previously effected a
registration of Common Stock to be issued and sold by the Company
at any time during the immediately preceding nine (9) month
period (other than a registration on Form X-0, Xxxx X-0 or Form
S-3 (with respect to dividend reinvestment plans and similar
plans) or any successor forms thereto);
(iv) if the number of Registrable Securities identified in
the Demand shall have a Current Market Value (determined as of
the date of such Demand) of less than Thirty Million Dollars
($30,000,000), unless such Registrable Securities identified in
the Demand constitute all remaining Registrable Securities; or
(v) during the pendency of any Blackout Period.
(e) The Company shall be permitted to satisfy its
obligations under this Section 2 by amending (to the extent
permitted by applicable law) any Shelf Registration previously
filed by the Company under the Securities Act so that such Shelf
Registration (as amended) shall permit the disposition (in
accordance with the intended methods of disposition specified as
aforesaid) of all of the Registrable Securities for which a
Demand shall have been made. If the Company shall so amend a
previously filed Shelf Registration, it shall be deemed to have
effected one (1) Demand Registration.
(f) A requested Demand Registration shall not be deemed to
count as one (1) of the three (3) Demand Registrations described
in Section 2(d)(i) hereof if: (i) such registration has not been
declared effective by the SEC or does not become effective in
accordance with the Securities Act, (ii) after becoming
effective, such registration is materially interfered with by any
stop order, injunction or similar order or requirement of the SEC
or other governmental agency or court for any reason not
attributable to the Foundation and does not thereafter become
effective, (iii) the conditions to closing specified in the
underwriting agreement, if any, entered into in connection with
such Demand Registration are not satisfied or waived due to a
failure on the part of the Company, or (iv) the Foundation shall
have withdrawn its Demand or otherwise determined not to pursue
such registration prior to the filing of the Registration
Statement with the SEC for such Demand, provided that the
Foundation shall have reimbursed the Company for all of its out-
of-pocket expenses incurred in connection with such Demand.
(g) Should a Registration Statement filed pursuant to a
Demand not become effective due to the failure of the Foundation
to perform its obligations under this Agreement or the inability
of the Foundation to reach agreement with the underwriter(s) on
price or other customary terms for such transaction, or in the
event the Foundation determines to withdraw or does not pursue a
request for registration pursuant to a Demand (in each of the
foregoing cases, provided that at such time the Company shall be
in compliance in all material respects with its obligations under
this Agreement), then (subject to the last sentence of this
Section 2(g)) such registration shall be deemed to count as one
(1) of the three (3) Demand Registrations described in
Section 2(d)(i) hereof, and the Foundation shall not be obligated
to reimburse the Company for any of its out-of-pocket expenses
incurred in the preparation, filing and processing of the
Registration Statement. Notwithstanding anything to the contrary
in this Section 2(g), if (i) a Registration Statement filed
pursuant to a Demand shall not become effective due to the
failure of the Foundation to reach agreement with the
underwriter(s) on the offering price for such transaction, and
(ii) the Current Market Value of the Registrable Securities
included in such Demand determined on the date that the
Foundation and the underwriter(s) shall have failed to reach
agreement on the offering price for such transaction shall be
less than or equal to seventy-five percent (75%) of the Current
Market Value of the Registrable Securities included in such
Demand determined on the date that the Foundation shall have made
such Demand to the Company, then such requested Demand
Registration shall not be deemed to count as one (1) of the three
(3) Demand Registrations described in Section 2(d)(i) hereof
(provided that the Foundation shall have reimbursed the Company
for all of its out-of-pocket expenses incurred in the
preparation, filing and processing of the Registration
Statement).
(h) The Company shall have the right, but not the
obligation, to include any securities to be issued and sold by
the Company in any Registration Statement (including a Shelf
Registration referred to in Section 2(e) hereof) filed pursuant
to a Demand without the prior consent of the Foundation.
(i) If the lead managing underwriter (selected by the
Company as provided in Section 5 hereof) of an Underwritten
Offering made pursuant to a Demand shall advise the Company in
writing (with a copy to the Foundation) that marketing or other
factors require a limitation on the number of shares of Common
Stock which can be sold in such offering within a price range
acceptable to the Foundation, then (i) if the Company shall have
elected to include any securities to be issued and sold by the
Company in such Registration Statement pursuant to Section 2(h)
hereof, then the Company shall reduce the number of securities
the Company shall intend to issue and sell pursuant to such
Registration Statement such that the total number of securities
being sold by the Foundation and the Company shall be equal to
the number which can be sold in such offering within a price
range acceptable to the Foundation, and (ii) if the Company shall
not have elected to include any securities in such Registration
Statement pursuant to Section 2(h) hereof or if the reduction
referred to in the previous clause (i) shall not be sufficient,
then, notwithstanding Section 2(d)(iv) hereof, the Foundation
shall reduce the number of Registrable Securities requested to be
included in such offering to the number that the lead managing
underwriter advises can be sold in such offering within such
price range and such Demand shall count as one (1) of the three
(3) Demand Registrations described in Section 2(d)(i) hereof,
provided that at least $10,000,000 in gross sale proceeds shall
have been received by the Foundation pursuant to such offering,
otherwise such requested Demand Registration shall not be deemed
to count as one (1) of the three (3) Demand Registrations
described in Section 2(d)(i) hereof (provided that the Foundation
shall have reimbursed the Company for all of its out-of-pocket
expenses incurred in the preparation, filing and processing of
the Registration Statement).
Section 3. Piggy-Back Registration Rights.
(a) Whenever the Company shall propose to file a
Registration Statement under the Securities Act relating to the
public offering of Common Stock for sale for cash for its own
account, the Company shall give written notice to the Foundation
at least fifteen (15) Business Days prior to the anticipated
filing thereof, specifying the approximate date on which the
Company proposes to file such Registration Statement and the
intended method of distribution in connection therewith, and
advising the Foundation of the Foundation's right (the "Piggy-
Back Rights") to have any or all of the Registrable Securities
then held by the Foundation included among the securities to be
covered by such Registration Statement.
(b) Subject to Section 3(c) and Section 3(d) hereof, in the
event that the Foundation has and shall elect to utilize its
Piggy-Back Rights, the Company shall include in the Registration
Statement the Registrable Securities identified by the Foundation
in a written request (the "Piggy-Back Request") given to the
Company not later than ten (10) Business Days prior to the
proposed filing date of the Registration Statement. The
Registrable Securities identified in the Piggy-Back Request shall
be included in the Registration Statement on the same terms and
conditions as the other shares of Common Stock included in the
Registration Statement.
(c) Notwithstanding anything in this Agreement to the
contrary, the Foundation shall not have Piggy-Back Rights with
respect to (i) a Registration Statement on Form S-4 or Form S-8
or Form S-3 (with respect to dividend reinvestment plans and
similar plans) or any successor forms thereto, (ii) a
Registration Statement filed in connection with an exchange offer
or an offering of securities solely to existing stockholders or
employees of the Company, (iii) a Registration Statement filed in
connection with an offering by the Company of securities
convertible into or exchangeable for Common Stock, (iv) a
Registration Statement filed in connection with the
redistribution of shares of Common Stock held by the Foundation
in excess of the Ownership Limit pursuant to Article VI of the
Voting Trust and Divestiture Agreement, or (v) a Registration
Statement filed in connection with a private placement of
securities of the Company (whether for cash or in connection with
an acquisition by the Company or one of its subsidiaries).
(d) If the lead managing underwriter selected by the
Company for an Underwritten Offering for which Piggy-Back Rights
are requested determines that marketing or other factors require
a limitation on the number of shares of Common Stock to be
offered and sold in such offering, then (i) such underwriter
shall provide written notice thereof to each of the Company and
the Foundation, and (ii) there shall be included in the offering,
first, all shares of Common Stock proposed by the Company to be
sold for its account (or such lesser amount as shall equal the
maximum number determined by the lead managing underwriter as
aforesaid) and, second, only that number of Registrable
Securities requested to be included in such Registration
Statement by the Foundation that such lead managing underwriter
reasonably and in good faith believes will not substantially
interfere with (including, without limitation, adversely affect
the pricing of) the offering of all the shares of Common Stock
that the Company desires to sell for its own account.
(e) Nothing contained in this Section 3 shall create any
liability on the part of the Company to the Foundation if the
Company for any reason should decide not to file a Registration
Statement for which Piggy-Back Rights are available or to
withdraw such Registration Statement subsequent to its filing,
regardless of any action whatsoever that the Foundation may have
taken, whether as a result of the issuance by the Company of any
notice hereunder or otherwise.
(f) A request made by the Foundation pursuant to its Piggy-
Back Rights to include Registrable Securities in a Registration
Statement shall not be deemed to be one (1) of the three (3)
Demand Registrations described in Section 2(d)(i) hereof.
Section 4. Continuing Option.
(a) At any time and from time to time after the Initial
Continuing Option Exercise Date (as defined below in this Section
4(a)) and thereafter during the Effective Period, the Company
shall have the right, but not the obligation (the "Continuing
Option"), exercisable by providing written notice thereof (the
"Continuing Option Notice") to the Foundation, to purchase from
the Foundation all or any portion of the Registrable Securities
(the "Continuing Option Securities") at a cash price per share
equal to the Continuing Option Price (as defined below in this
Section 4(a)). The Continuing Option Notice shall state the
number of Continuing Option Securities that the Company shall
purchase pursuant to the Continuing Option, the aggregate
purchase price therefor, and the closing date of the Company's
purchase of the Continuing Option Securities, which shall take
place within sixty (60) days of the date of the Continuing Option
Notice. The Company shall pay for the Continuing Option
Securities that it shall purchase pursuant to the Continuing
Option at the closing thereof by wire transfer of immediately
available funds to a bank account designated by the Foundation.
At such closing, the Foundation shall deliver to the Company a
certificate or certificates representing the number of Continuing
Option Securities purchased by the Company as specified in the
Continuing Option Notice, free and clear of all liens, claims,
security interests and other encumbrances. The Company shall be
entitled to receive customary representations and warranties from
the Foundation regarding such sale of Continuing Option
Securities (including representations regarding good title to
such shares, free and clear of all liens, claims, security
interests and other encumbrances). The term "Initial Continuing
Option Exercise Date", as used herein, shall mean the earlier to
occur of (i) the consummation of a Demand Registration or an
offering pursuant to a Piggy-Back Request resulting in gross sale
proceeds to the Foundation of at least Ten Million Dollars
($10,000,000), (ii) the consummation of a private placement
transaction by the Foundation resulting in gross sale proceeds to
the Foundation of at least Ten Million Dollars ($10,000,000), or
(iii) the purchase by the Company of Private Placement Securities
resulting in gross sale proceeds to the Foundation of at least
Ten Million Dollars ($10,000,000). The term "Continuing Option
Price", as used herein, shall mean (i) prior to the consummation
of a Demand Registration or an offering pursuant to a Piggy-Back
Request, the greater of "A", "B" or "C", and (ii) from and after
the consummation of a Demand Registration or an offering pursuant
to a Piggy-Back Request, the greater of "A", or "B", where, for
purposes of the foregoing clauses (i) and (ii), "A" shall mean
the average closing sale price per share of Common Stock on the
NYSE during the ten (10) consecutive trading days ending on the
date that the Continuing Option Notice with respect to such
Continuing Option shall have been provided, "B" shall mean the
average closing sale price per share of Common Stock on the NYSE
during the ten (10) consecutive trading days ending on the forty-
fifth (45th) day prior to the date that the Continuing Option
Notice with respect to such Continuing Option shall have been
provided, and "C" shall equal the price per share received by the
Foundation in its most recent sale of Private Placement
Securities pursuant to Section 11 hereof (regardless of whether
such Private Placement Securities shall have been sold to
qualified investors or to the Company).
(b) If the Company shall purchase Continuing Option
Securities pursuant to Section 4(a) hereof, it shall not, for a
period of forty-five (45) days thereafter, sell shares of Common
Stock for cash in public or private transactions (except that the
Company shall be permitted, during such period, to issue Common
Stock pursuant to benefit, stock option and dividend reinvestment
plans for its directors, officers, employees and shareholders).
Section 5. Selection of Underwriters.
(a) In connection with any Underwritten Offering made
pursuant to a Demand, the Company shall have the right to select
the lead managing underwriter and any other managing underwriter
to administer the Underwritten Offering, so long as each such
underwriter shall be reasonably satisfactory to the Foundation.
Each underwriter selected by the Company shall be deemed
reasonably satisfactory to the Foundation unless the Foundation
sends a written notice of objection to the Company within five
(5) Business Days following receipt of written notice from the
Company of the selection of the underwriter.
(b) The Foundation acknowledges and agrees that Xxxxxxx
Xxxxx Xxxxxx shall be reasonably satisfactory to the Foundation
to serve as a managing underwriter for any Underwritten Offering
made pursuant to a Demand.
Section 6. Blackout Periods. If the Company determines
in good faith that the registration and distribution of
Registrable Securities (or the use of the Registration Statement
or related Prospectus) resulting from a Demand received from the
Foundation would (i) materially and adversely interfere with any
previously announced business combination transaction involving
the Company pursuant to which the Company would issue, in
connection with such transaction, shares of Common Stock to some
or all of the equity owners of the counter-party to such business
combination transaction, or (ii) result in the premature
disclosure of any pending financing, acquisition, corporate
reorganization or any other corporate development involving the
Company or any of its subsidiaries, and, in either such event,
the Company shall promptly give the Foundation written notice of
such determination, then the Company shall be entitled to
(x) postpone the filing of the Registration Statement otherwise
required to be prepared and filed by the Company pursuant to
Section 2 hereof, or (y) elect that the effective Registration
Statement not be used, in either case for a reasonable period of
time, but not to exceed 180 days after the date that the Demand
was made (a "Blackout Period"). Any such written notice shall
contain a general statement of the reasons for such postponement
or restriction on use and an estimate of the anticipated delay.
The Company shall promptly notify the Foundation of the
expiration or earlier termination of such Blackout Period.
Section 7. Holdback.
(a) If (i) during the Effective Period, the Company shall
file a Registration Statement (other than a registration on Form
X-0, Xxxx X-0 or Form S-3 (with respect to dividend reinvestment
plans and similar plans) or any successor forms thereto) with
respect to any shares of its capital stock, and (ii) upon
reasonable prior notice (A) the Company (in the case of a non-
underwritten offering pursuant to such Registration Statement)
advises the Foundation in writing that a sale or distribution of
Registrable Securities would adversely affect such offering, or
(B) the managing underwriter or underwriters (in the case of an
Underwritten Offering) advise the Company in writing (in which
case the Company shall notify the Foundation) that a sale or
distribution of Registrable Securities would adversely impact
such offering, then the Foundation shall, to the extent not
inconsistent with applicable law, refrain from effecting any sale
or distribution of Registrable Securities, including sales
pursuant to Rule 144, during the period commencing on the date of
such notice and continuing until the ninetieth (90th) day after
the effective date of such Registration Statement.
(b) During the thirty (30) day period commencing on the
effective date of a Registration Statement filed by the Company
on behalf of the Foundation in connection with an Underwritten
Offering pursuant to a Demand, the Company shall not effect
(except pursuant to registrations on Form S-4 or Form S-8 or Form
S-3 (with respect to dividend reinvestment plans and similar
plans) or any successor forms thereto and except pursuant to
Section 2(h) hereof) any public sale or distribution of Common
Stock or of preferred stock or securities convertible into or
exercisable for Common Stock.
Section 8. Registration Procedures. If and whenever the
Company shall be required to use its best efforts to effect or
cause the registration of any Registrable Securities under the
Securities Act as provided in this Agreement, the Company shall
and, with respect to Sections 8(m) and 8(n), the Foundation
shall:
(a) prepare and file with the SEC a Registration Statement
with respect to such Registrable Securities on any form for which
the Company then qualifies or that counsel for the Company shall
deem appropriate, and which form shall be available for the sale
of the Registrable Securities in accordance with the intended
methods of distribution thereof, and use its best efforts to
cause such Registration Statement to become and remain effective;
(b) prepare and file with the SEC amendments and post-
effective amendments to such Registration Statement and such
amendments and supplements to the Prospectus used in connection
therewith as may be necessary to maintain the effectiveness of
such registration or as may be required by the rules, regulations
or instructions applicable to the registration form utilized by
the Company or by the Securities Act for a Shelf Registration or
otherwise necessary to keep such Registration Statement effective
for at least ninety (90) days and cause the Prospectus as so
supplemented to be filed pursuant to Rule 424 under the
Securities Act, and to otherwise comply with the provisions of
the Securities Act with respect to the disposition of all
securities covered by such Registration Statement until the
earlier of (x) such 90th day or (y) such time as all Registrable
Securities covered by such Registration Statement shall have
ceased to be Registrable Securities (it being understood that the
Company at its option may determine to maintain such
effectiveness for a longer period, whether pursuant to a Shelf
Registration or otherwise); provided, however, that a reasonable
time before filing a Registration Statement or Prospectus, or any
amendments or supplements thereto (other than reports required to
be filed by it under the Exchange Act), the Company shall furnish
to the Foundation, the managing underwriter and their respective
counsel for review and comment, copies of all documents proposed
to be filed;
(c) furnish to the Foundation and to any underwriter in
connection with an Underwritten Offering such number of conformed
copies of such Registration Statement and of each amendment and
post-effective amendment thereto (in each case including all
exhibits) and such number of copies of any Prospectus or
Prospectus supplement and such other documents as the Foundation
or underwriter may reasonably request in order to facilitate the
disposition of the Registrable Securities by the Foundation or
underwriter (the Company hereby consenting to the use (subject to
the limitations set forth in Section 8(n) hereof) of the
Prospectus or any amendment or supplement thereto in connection
with such disposition);
(d) use its best efforts to register or qualify such
Registrable Securities covered by such Registration Statement
under such other securities or "blue sky" laws of such
jurisdictions as the Foundation shall reasonably request, except
that the Company shall not for any such purpose be required to
qualify generally to do business as a foreign corporation in any
jurisdiction where, but for the requirements of this
Section 8(d), it would not be obligated to be so qualified, to
subject itself to taxation in any such jurisdiction, or to
consent to general service of process in any such jurisdiction;
(e) notify the Foundation, at any time when a Prospectus
relating thereto is required to be delivered under the Securities
Act within the appropriate period mentioned in Section 8(b)
hereof, of the Company's becoming aware that the Prospectus
included in such Registration Statement, as then in effect,
includes an untrue statement of a material fact or omits to state
a material fact required to be stated therein or necessary to
make the statements therein not misleading in light of the
circumstances then existing, and, at the request of the
Foundation, prepare and furnish to the Foundation a reasonable
number of copies of an amendment or supplement to such
Registration Statement or related Prospectus as may be necessary
so that, as thereafter delivered to the purchasers of such
Registrable Securities, such Prospectus shall not include an
untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the
statements therein not misleading in light of the circumstances
then existing;
(f) notify the Foundation at any time:
(1) when the Prospectus or any Prospectus supplement or
post-effective amendment has been filed, and, with respect to the
Registration Statement or any post-effective amendment, when the
same has become effective;
(2) of any request by the SEC for amendments or supplements
to the Registration Statement or the Prospectus or for additional
information;
(3) of the issuance by the SEC of any stop order suspending
the effectiveness of the Registration Statement or any order
preventing the use of a related Prospectus, or the initiation (or
any overt threats) of any proceedings for such purposes;
(4) of the receipt by the Company of any written
notification of the suspension of the qualification of any of the
Registrable Securities for sale in any jurisdiction or the
initiation (or overt threats) of any proceeding for that purpose;
and
(5) if at any time the representations and warranties of
the Company contemplated by paragraph (i) below cease to be true
and correct in all material respects;
(g) otherwise use its best efforts to comply with all
applicable rules and regulations of the SEC, and make available
to its security holders an earnings statement that shall satisfy
the provisions of Section 11(a) of the Securities Act, provided
that the Company shall be deemed to have complied with this
Section 8(g) if it shall have complied with Rule 158 under the
Securities Act;
(h) use its best efforts to cause all such Registrable
Securities to be listed on the NYSE, The Nasdaq Stock Market or
any other national securities exchange or automated quotation
system on which the class of Registrable Securities being
registered is then listed, if such Registrable Securities are not
already so listed and if such listing is then permitted under the
rules of such exchange, and to provide a transfer agent and
registrar for such Registrable Securities covered by such
Registration Statement no later than the effective date of such
Registration Statement;
(i) enter into agreements (including an underwriting
agreement in the form customarily entered into by the Company in
a comparable Underwritten Offering) and take all other
appropriate and all commercially reasonable actions in order to
expedite or facilitate the disposition of such Registrable
Securities and in such connection, whether or not an underwriting
agreement shall be entered into and whether or not the
registration shall be an underwritten registration:
(i) make such representations and warranties to the
Foundation and the underwriters, if any, in form, substance and
scope as are customarily made by the Company to underwriters in
comparable Underwritten Offerings;
(ii) obtain opinions of counsel to the Company and updates
thereof (which counsel and opinions shall be reasonably
satisfactory (in form, scope and substance) to the managing
underwriters, if any, and the Foundation) addressed to the
Foundation and the underwriters covering the matters customarily
covered in opinions requested in comparable Underwritten
Offerings by the Company;
(iii) obtain "comfort letters" and updates thereof from
the Company's independent certified public accountants addressed
to the Foundation and the underwriters, if any, such letters to
be in customary form and covering matters of the type customarily
covered in "comfort letters" by independent accountants in
connection with comparable underwritten offerings on such date or
dates as may be reasonably requested by the managing underwriter;
(iv) provide the indemnification in accordance with the
provisions and procedures of Section 11 hereof to all parties to
be indemnified pursuant to such Section 11; and
(v) deliver such documents and certificates as may be
reasonably requested by the Foundation and the managing
underwriters, if any, to evidence compliance with clause (f)
above and with any customary conditions contained in the
underwriting agreement or other agreement entered into by the
Company:
(j) cooperate with the Foundation and the managing
underwriter or underwriters to facilitate, to the extent
reasonable under the circumstances, the timely preparation and
delivery of certificates representing the securities to be sold
under such Registration Statement, and enable such securities to
be in such denominations and registered in such names as the
managing underwriter or underwriters, if any, or the Foundation
may request and/or in a form eligible for deposit with the
Depository Trust Company;
(k) make available to the Foundation, any underwriter
participating in any disposition pursuant to such Registration
Statement, and any attorney, accountant or other agent retained
by the Foundation or underwriter (collectively, the
"Inspectors"), reasonable access to appropriate officers of the
Company and the Company's subsidiaries to ask questions and to
obtain information reasonably requested by such Inspector and all
financial and other records and other information, pertinent
corporate documents and properties of any of the Company and its
subsidiaries and affiliates (collectively, the "Records"), as
shall be reasonably necessary to enable them to exercise their
due diligence responsibility; provided, however, that the Records
that the Company determines, in good faith, to be confidential
and which it notifies the Inspectors in writing are confidential
shall not be disclosed to any Inspector unless such Inspector
signs a confidentiality agreement reasonably satisfactory to the
Company or either (i) the disclosure of such Records is necessary
to avoid or correct a misstatement or omission of a material fact
in such Registration Statement, or (ii) the release of such
Records is ordered pursuant to a subpoena or other order from a
court of competent jurisdiction; provided, further, that any
decision regarding the disclosure of information pursuant to
subclause (i) shall be made only after consultation with counsel
for the applicable Inspectors; and provided, further, that the
Foundation agrees that it shall, promptly after learning that
disclosure of such Records is sought in a court having
jurisdiction, give notice to the Company and allow the Company,
at the Company's expense, to undertake appropriate action to
prevent disclosure of such Records;
(l) in the event of the issuance of any stop order
suspending the effectiveness of the Registration Statement or of
any order suspending or preventing the use of any related
Prospectus or suspending the qualification of any Registrable
Securities included in the Registration Statement for sale in any
jurisdiction, the Company shall use all commercially reasonable
efforts promptly to obtain its withdrawal;
(m) the Foundation shall furnish the Company with such
information regarding the Foundation and pertinent to the
disclosure requirements relating to the registration and the
distribution of such securities as the Company may from time to
time reasonably request in writing; and
(n) the Foundation shall, upon receipt of any notice from
the Company of the happening of any event of the kind described
in Section 8(e) hereof, forthwith discontinue disposition of
Registrable Securities pursuant to the Prospectus or Registration
Statement covering such Registrable Securities until the
Foundation shall have received copies of the supplemented or
amended Prospectus contemplated by Section 8(e) hereof, and, if
so directed by the Company, the Foundation shall deliver to the
Company (at the Company's expense) all copies, other than
permanent file copies then in the Foundation's possession, of the
Prospectus covering such Registrable Securities current at the
time of receipt of such notice.
Section 9. Registration Expenses. Except as otherwise
provided herein, in connection with all registrations of
Registrable Securities made pursuant to a Demand Registration or
Piggy-Back Rights, the Company shall pay all Registration
Expenses.
Section 10. Rule 144. The Company shall take such
measures and file such information, documents and reports as
shall be required by the SEC as a condition to the availability
of Rule 144. The Foundation shall not be permitted to sell any
Registrable Securities pursuant to Rule 144 until such time as
the Foundation shall have sold Registrable Securities to non-
Affiliates of the Foundation and shall have received in exchange
therefor aggregate proceeds of at least Fifty Million Dollars
($50,000,000). Thereafter, the Foundation shall not be permitted
to sell any Registrable Securities pursuant to Rule 144 if
(i) such sale shall be to any Person that Beneficially Owns any
shares of Common Stock in excess of the Ownership Limit
applicable to such Person; (ii) such sale shall cause any Person
to Beneficially Own any shares of Common Stock in excess of the
Ownership Limit applicable to such Person; or (iii) such sale
would violate the terms of this Agreement, the Voting Trust and
Divestiture Agreement, the Certificate of Incorporation or the
Bylaws.
Section 11. Private Placements. Subject to the terms of
this Agreement, the Voting Trust and Divestiture Agreement, the
Certificate of Incorporation, the Bylaws and the right of first
refusal in favor of the Company described below in this
Section 11, the Foundation shall have the right at all times to
sell shares of Registrable Securities in one or more private
placements (the "Private Placement Securities") to qualified
investors provided that the Foundation provides written notice to
the Company at least forty-five (45) Business Days prior to
making any such proposed private placement advising the Company
of the terms and conditions of such proposed private placement
(the "Private Placement Notice"), and provided further that the
consummation of such proposed private placement would not cause
any Person to Beneficially Own any shares of Common Stock in
excess of the Ownership Limit applicable to such Person. The
Private Placement Notice shall contain the identity of the
proposed private placement purchaser, the price at which the
Private Placement Securities shall be sold to the proposed
private placement purchaser, the number of Private Placement
Securities to be sold to the proposed private placement
purchaser, and all other material terms and conditions of the
proposed private placement. Following its receipt of the Private
Placement Notice, the Company shall have the right, but not the
obligation (the "Private Placement Option"), exercisable by
providing written notice thereof (the "Private Placement Option
Notice") to the Foundation within thirty (30) Business Days, to
purchase all (but not less than all) of the Private Placement
Securities on the same terms and conditions contained in the
Private Placement Notice. The Private Placement Option Notice
shall state the number of Private Placement Securities that the
Company shall purchase pursuant to the Private Placement Option,
the aggregate purchase price therefor, and the closing date of
the Company's purchase of the Private Placement Securities, which
shall take place no later than sixty (60) days after the date of
the Private Placement Option Notice. The Company shall pay for
the Private Placement Securities that it shall purchase pursuant
to the Private Placement Option at the closing thereof by wire
transfer of immediately available funds to a bank account
designated by the Foundation. At such closing, the Foundation
shall deliver to the Company a certificate or certificates
representing the number of Private Placement Securities, free and
clear of all liens, claims, security interests and other
encumbrances. The Company shall be entitled to receive customary
representations and warranties from the Foundation regarding such
sale of Private Placement Securities (including representations
regarding good title to such shares free and clear of all liens,
claims, security interests and other encumbrances). If the
Company shall elect not to exercise the Private Placement Option,
the Foundation may sell the Private Placement Securities
identified in the Private Placement Notice at the time and
subject to all of the terms and the conditions contained in the
Private Placement Notice.
Section 12. Covenants of Foundation. The Foundation
hereby covenants and agrees that it shall not sell any
Registrable Securities in violation of the Securities Act and
this Agreement, the Voting Trust and Divestiture Agreement, the
Certificate of Incorporation and the Bylaws.
Section 13. Indemnification; Contribution.
(a) The Company shall indemnify and hold harmless the
Foundation, its officers and directors, and any agent or
investment adviser thereof against all losses, claims, damages,
liabilities and expenses (including reasonable attorneys' fees
and expenses) incurred by such party pursuant to any actual or
threatened action, suit, proceeding or investigation arising out
of or based upon (i) any untrue or alleged untrue statement of
material fact contained in any Registration Statement, any
Prospectus or preliminary Prospectus, or any amendment or
supplement to any of the foregoing, or (ii) any omission or
alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein (in
the case of a Prospectus or a preliminary Prospectus, in light of
the circumstances then existing) not misleading, except in each
case insofar as the same arise out of or are based upon, any such
untrue statement or omission made in reliance on and in
conformity with information with respect to the Foundation
furnished to the Company by the Foundation or its counsel
expressly for use therein. In connection with an Underwritten
Offering, the Company shall indemnify the underwriters thereof,
their officers, directors and agents and each Person who controls
such underwriters (within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act) to the same
extent as provided above with respect to the indemnification of
the Foundation. Notwithstanding the foregoing provisions of this
Section 11(a), the Company shall not be liable to the Foundation,
any Person who participates as an underwriter in the offering or
sale of Registrable Securities or any other Person, if any, who
controls any such underwriter (within the meaning of Section 15
of the Securities Act or Section 20 of the Exchange Act), under
this Section 11 for any such loss, claim, damage, liability (or
action or proceeding in respect thereof) or expense that arises
out of an untrue statement or alleged untrue statement or
omission or alleged omission in the preliminary Prospectus if the
Foundation, or other Person on behalf of the Foundation, failed
to send or deliver a copy of a final Prospectus to the Person
asserting the claim prior to the written confirmation of the sale
of the Registrable Securities to such Person and such statement
or omission was corrected in such final Prospectus and the
Company had previously and timely furnished sufficient copies
thereof to the Foundation in accordance with this Agreement.
(b) In connection with any registration of Registrable
Securities pursuant to this Agreement, the Foundation shall
furnish to the Company and any underwriter in writing such
information, including the name, address and the amount of
Registrable Securities held by the Foundation, as the Company or
any underwriter reasonably requests for use in the Registration
Statement relating to such registration or the related Prospectus
and agrees to indemnify and hold harmless the Company, any
underwriter, each such party's officers and directors and each
Person who controls each such party (within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange
Act), and any agent or investment adviser thereof against all
losses, claims, damages, liabilities and expenses (including
reasonable attorneys' fees and expenses) incurred by each such
party pursuant to any actual or threatened action, suit,
proceeding or investigation arising out of or based upon (i) any
untrue or alleged untrue statement of material fact contained in
any Registration Statement, any Prospectus or preliminary
Prospectus, or any amendment or supplement to any of the
foregoing, or (ii) any omission or alleged omission to state
therein a material fact required to be stated therein or
necessary to make the statements therein (in the case of a
Prospectus or a preliminary Prospectus, in light of the
circumstances then existing) not misleading, but only to the
extent that any such untrue statement or omission is made in
reliance on and in conformity with information with respect to
the Foundation furnished to the Company or any underwriter by the
Foundation or its counsel specifically for inclusion therein.
Notwithstanding the foregoing provisions of this Section 13(b),
the Foundation shall not be liable to the Company, any
underwriter, each such parties' officers or directors, any other
Person who controls any such party (within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange
Act), or any agent or investment advisor thereof, if the
Foundation had provided information curing any untrue statement
or omission in time reasonably sufficient to prevent the
inclusion of such untrue statement or omission in the
Registration Statement.
(c) Any Person entitled to indemnification hereunder agrees
to give prompt written notice to the indemnifying party after the
receipt by such indemnified party of any written notice of the
commencement of any action, suit, proceeding or investigation or
threat thereof made in writing for which such indemnified party
may claim indemnification or contribution pursuant to this
Section 11 (provided that failure to give such notification shall
not affect the obligations of the indemnifying party pursuant to
this Section 11 except to the extent the indemnifying party shall
have been actually prejudiced as a result of such failure). In
case any such action shall be brought against any indemnified
party and it shall notify the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to
participate therein and, to the extent that it shall wish,
jointly with any other indemnifying party similarly notified, to
assume the defense thereof, with counsel reasonably satisfactory
to such indemnified party (who shall not, except with the consent
of the indemnified party, be counsel to the indemnifying party),
and after notice from the indemnifying party to such indemnified
party of its election so to assume the defense thereof, the
indemnifying party shall not be liable to such indemnified party
under this Section 11 for any legal expenses of other counsel or
any other expenses, in each case subsequently incurred by such
indemnified party, in connection with the defense thereof other
than reasonable costs of investigation. Notwithstanding the
foregoing, if (i) the indemnifying party shall not have employed
counsel reasonably satisfactory to such indemnified party to take
charge of the defense of such action within a reasonable time
after notice of commencement of such action (so long as such
failure to employ counsel is not the result of an unreasonable
determination by such indemnified party that counsel selected
pursuant to the immediately preceding sentence is unsatisfactory)
or if the indemnifying party shall not have demonstrated to the
reasonable satisfaction of the indemnified party its ability to
finance such defense, or (ii) the actual or potential defendants
in, or targets of, any such action include both the indemnifying
party and such indemnified party and such indemnified party shall
have reasonably concluded that there may be legal defenses
available to it which are different from or additional to those
available to the indemnifying party which, if the indemnifying
party and such indemnified party were to be represented by the
same counsel, could result in a conflict of interest for such
counsel or materially prejudice the prosecution of the defenses
available to such indemnified party, then such indemnified party
shall have the right to employ separate counsel, in which case
the fees and expenses of one counsel or firm of counsel (plus one
local or regulatory counsel or firm of counsel) selected by a
majority in interest of the indemnified parties shall be borne by
the indemnifying party and the fees and expenses of all other
counsel retained by the indemnified parties shall be paid by the
indemnified parties. No indemnified party shall consent to entry
of any judgment or enter into any settlement without the consent
(which consent, in the case of an action, suit, claim or
proceeding exclusively seeking monetary relief, shall not be
unreasonably withheld) of each indemnifying party.
(d) If the indemnification from the indemnifying party
provided for in this Section 11 is unavailable to an indemnified
party hereunder in respect of any losses, claims, damages,
liabilities or expenses referred to therein, then the
indemnifying party, in lieu of indemnifying such indemnified
party, shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages,
liabilities and expenses in such proportion as is appropriate to
reflect the relative fault of the indemnifying party and
indemnified party in connection with the actions which resulted
in such losses, claims, damages, liabilities and expenses, as
well as any other relevant equitable considerations. The
relative fault of such indemnifying party and indemnified party
shall be determined by reference to, among other things, whether
any action in question, including any untrue or alleged untrue
statement of a material fact or omission or alleged omission to
state a material fact, has been made by, or relates to
information supplied by, such indemnifying party or indemnified
party, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such action.
The amount paid or payable by a party as a result of the losses,
claims, damages, liabilities and expenses referred to above shall
be deemed to include, subject to the limitations set forth in
Section 11(c) hereof, any legal and other fees and expenses
reasonably incurred by such indemnified party in connection with
any investigation or proceeding. The parties hereto agree that
it would not be just and equitable if contribution pursuant to
this Section 11(d) were determined by pro rata allocation or by
any other method of allocation which does not take account of the
equitable considerations referred to above in this Section 11(d).
Notwithstanding the provisions of this Section 11(d), no
underwriter shall be required to contribute any amount in excess
of the amount by which the total price at which the Registrable
Securities underwritten by it and distributed to the public were
offered to the public exceeds the amount of any damages which
such underwriter has otherwise been required to pay by reason of
such untrue or alleged untrue statement or omission or alleged
omission and the Foundation shall not be required to contribute
any amount in excess of the amount by which the total price at
which the Registrable Securities of the Foundation were offered
to the public exceeds the amount of any damages which the
Foundation has otherwise been required to pay by reason of such
untrue or alleged untrue statement or omission or alleged
omission. No Person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall
be entitled to contribution from any Person who was not guilty of
such fraudulent misrepresentation. If indemnification is
available under this Section 11, the indemnifying parties shall
indemnify each indemnified party to the fullest extent provided
in Section 11(a) or (b) hereof, as the case may be, without
regard to the relative fault of such indemnifying parties or
indemnified party or any other equitable consideration provided
for in this Section 11(d).
(e) The provisions of this Section 11 shall be in addition
to any liability which any party may have to any other party and
shall survive any termination of this Agreement. The
indemnification provided by this Section 11 shall remain in full
force and effect irrespective of any investigation made by or on
behalf of an indemnified party, so long as such indemnified party
is not guilty of acting in a fraudulent, reckless or grossly
negligent manner.
Section 14. Participation in Underwritten Offerings. The
Foundation may not participate in any Underwritten Offering
hereunder unless the Foundation (a) in the case of a registration
pursuant to Section 3 hereof, agrees to sell the Foundation's
securities on the basis provided in any underwriting arrangements
approved by the Company in its reasonable discretion, and
(b) completes and executes all questionnaires, powers of
attorney, indemnities, underwriting agreements and other
documents reasonably required under the terms of such
underwriting arrangements.
Section 15. Injunctions. Each party acknowledges and
agrees that irreparable damage would occur in the event that any
of the provisions of this Agreement were not performed in
accordance with its specific terms or were otherwise breached.
Therefore, each party shall be entitled to an injunction or
injunctions to prevent breaches of the provisions of this
Agreement and to enforce specifically the terms and provisions
hereof in any court having jurisdiction, such remedy being in
addition to any other remedy to which such party may be entitled
at law or in equity.
Section 16. Amendments and Waivers. No amendment,
modification, supplement, termination, consent or waiver of any
provision of this Agreement, nor consent to any departure
herefrom, shall in any event be effective unless the same is in
writing and is signed by the party against whom enforcement of
the same is sought. Any waiver of any provision of this
Agreement and any consent to any departure from the terms of any
provision of this Agreement shall be effective only in the
specific instance and for the specific purpose for which given.
Section 17. Notices. All notices, consents, requests,
demands and other communications hereunder must be in writing,
and shall be deemed to have been duly given or made: (i) when
delivered in person; (ii) three (3) days after deposited in the
United States mail, first class postage prepaid; (iii) in the
case of telegraph or overnight courier services, one (1) Business
Day after delivery to the telegraph company or overnight courier
service with payment provided; or (iv) in the case of telex or
telecopy or fax, when sent, verification received; in each case
addressed as follows:
if to the Company:
Xxxx X. X'Xxxxxx
Chairman, President and Chief Executive Officer
RightCHOICE Managed Care, Inc.
0000 Xxxxxxxx Xxxxxx
Xx. Xxxxx, Xxxxxxxx 00000
Fax: (000) 000-0000
with copy to:
Xxxx X. Xxxxxx, Esq.
Xxxxx, Rice & Xxxxxxxx, X.X.
000 Xxxxx Xxxxxxxx, Xxxxx 0000
Xx. Xxxxx, Xxxxxxxx 00000
Fax: (000) 000-0000
if to the Foundation: [to be determined by Foundation
prior to signing]
______________________
______________________
______________________
with copy to: [to be determined by Foundation prior to
signing]
______________________
______________________
______________________
Section 18. Successors and Assigns. This Agreement shall
inure to the benefit of and be binding upon the successors of
each of the parties. This Agreement and the provisions of this
Agreement that are for the benefit of the Foundation shall not be
assignable by the Foundation to any Person and any such purported
assignment shall be null and void.
Section 19. Counterparts. This Agreement may be executed
in one (1) or more counterparts, all of which shall be considered
one (1) and the same agreement and shall become effective when
one (1) or more counterparts have been signed by each of the
parties and delivered to the other parties.
Section 20. 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.
Section 21. Governing Law. This Agreement and the rights
and obligations of the parties hereunder shall be governed by and
construed in accordance with the laws of the State of Delaware,
without regard to choice or conflict of laws rules.
Section 22. Severability. In the event that any one or
more of the provisions contained herein, or the application
thereof in any circumstances, shall be held invalid, illegal or
unenforceable in any respect for any reason, the validity,
legality and enforceability of any such provision in every other
respect and of the remaining provisions contained herein shall
not be in any way impaired thereby, it being intended that all
remaining provisions contained herein shall not be in any way
impaired thereby.
Section 23. Entire Agreement. This Agreement, including
any exhibits or attachments referred to herein, is intended by
the parties as a final expression and a complete and exclusive
statement of the agreement and understanding of the parties
hereto in respect of the subject matter hereof. There are no
restrictions, promises, warranties or undertakings with respect
to the subject matter hereof, other than those set forth or
referred to herein. This Agreement supersedes all prior
agreements and understandings between the parties with respect to
such subject matter.
Section 24. Further Actions; Best Efforts. The
Foundation shall use its best efforts to take or cause to be
taken all appropriate action and to do or cause to be done all
things reasonably necessary, proper or advisable under applicable
law and regulations to assist the Company in the performance of
its obligations hereunder, including, without limitation, the
preparation and filing of any Registration Statements pursuant to
any Demand.
Section 25. Fair Construction. This Agreement is the
product of negotiation and shall be deemed to have been drafted
by all of the parties. It shall be construed in accordance with
the fair meaning of its terms and its language shall not be
strictly construed against, nor shall ambiguities be resolved
against, any particular party.
[signatures appear on next page]
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first set forth above.
RIGHTCHOICE MANAGED CARE, INC.,
a Delaware corporation
By:
Name:
Title:
THE MISSOURI FOUNDATION FOR HEALTH,
a Missouri nonprofit corporation
By:
Name:
Title:
EXHIBIT K
FORM OF
INDEMNIFICATION AGREEMENT
THIS INDEMNIFICATION AGREEMENT (this "Agreement") is made
and entered into this ___day of _______, 199___, by and between
RightCHOICE Managed Care, Inc., a Delaware corporation and the
successor by merger to Blue Cross and Blue Shield of Missouri
(the "Company"), and The Missouri Foundation For Health, a
Missouri non-profit corporation (the "Foundation").
RECITALS
A. In 1994, Blue Cross and Blue Shield of Missouri, a
Missouri non-profit health services corporation ("BCBSMo")
consummated a series of transactions (the "1994 Reorganization")
pursuant to which certain assets and liabilities of BCBSMo were
transferred to a newly formed for-profit subsidiary, RightCHOICE
Managed Care, Inc., a Missouri corporation ("Old RIT"), and a
minority interest in Old RIT was sold to the public.
B. Pursuant to the terms of a certain Agreement and Plan of
Reorganization (the "Reorganization Agreement"), dated as of
________, 199___, by and among BCBSMo, Old RIT, the Foundation
and the Company, the Foundation has acquired, contemporaneous
with the execution of this Agreement, 14,962,500 shares of common
stock, par value $___ per share, of the Company, representing
approximately 80.1% of the issued and outstanding shares of
common stock of the Company.
C. In contemplation of the transactions provided for under the
Reorganization Agreement, BCBSMo [received] [requested] a private
letter ruling from the Internal Revenue Service (the "IRS"),
dated _________, 199___ (the "IRS Ruling"), that, among other
things, (i) the Transfer and Assumption Transaction (as defined
in the Reorganization Agreement) shall constitute a tax-free
transfer to a controlled corporation within the meaning of
Section 351 of the Internal Revenue Code of 1986, as amended (the
"Code") and no gain or loss shall be recognized by BCBSMo for
federal income tax purposes; (ii) the Charter Conversion
Transaction (as defined in the Reorganization Agreement) shall
constitute a tax free reorganization under Section 368(a)(1)(E)
of the Code and shall not result in the recognition of gain or
loss by BCBSMo for federal income tax purposes; (iii) the
Reincorporation Merger Transaction (as defined in the
Reorganization Agreement) shall qualify as a tax-free
reorganization under Section 368(a)(1)(F) of the Code and no gain
or loss shall be recognized by New BCBSMo (as defined in the
Reorganization Agreement) or the Company for federal income tax
purposes; (iv) the RIT/New RIT Merger Transaction (as defined in
the Reorganization Agreement) shall qualify as both a liquidation
under Sections 332 and 337 of the Code and a reorganization under
Section 368(a)(1)(A) of the Code and no gain or loss shall be
recognized by Old RIT, the Company or their shareholders for
federal income tax purposes; and (v) no gain or loss shall be
recognized by any party under section 337(d) of the Code. The
various transactions contemplated by the Reorganization Agreement
are hereinafter referred to collectively as the "Current
Reorganization."
D. In order to induce Old RIT and the Company to enter into the
Reorganization Agreement and agree to succeed to certain
liabilities of BCBSMo as a result of the Current Reorganization,
the Foundation has agreed to enter into this Agreement to provide
indemnification to certain entities and individuals against
liabilities that the parties have determined should be assumed by
the Foundation as the successor to and beneficiary of the
principal assets of BCBSMo, including certain tax liabilities
that may arise as a result of the consummation of the Current
Reorganization.
AGREEMENT
In consideration of the foregoing and the covenants and
agreements set forth herein and in the Reorganization Agreement,
and intending to be legally bound, the parties hereto agree as
follows:
Section 1. Definitions. For purposes of this Agreement,
the following terms shall have the following meanings:
(a) "1994 Reorganization" has the meaning specified in
Recital A hereof.
(b) "BCBSMo" has the meaning set forth in the Preamble
hereof.
(c) "Charter Conversion Transaction" has the meaning
provided therefor in the Reorganization Agreement.
(d) "Company" has the meaning set forth in the
Preamble hereof.
(e) "Conversion Claims" means all claims, demands, rights,
liabilities, damages, losses, and causes of action, direct or
indirect, or derivative, individual or representative, of every
nature and description whatsoever, that have been asserted or may
in the future be asserted (i) in the Xxxxxx Litigation, or
(ii) both arising out of or relating to either the 1994
Reorganization or the Current Reorganization, and arising out of
or relating to either the status of BCBSMo as a mutual benefit or
public benefit corporation under Missouri law or the ownership,
beneficial ownership, or rights to the assets, surplus or equity
of BCBSMo or any subsidiary or affiliate of BCBSMo.
(f) "Current Reorganization" has the meaning specified in
Recital C hereof.
(g) "Current Reorganization Claims" means any and all
claims, demands, rights, liabilities, damages, losses, and causes
of action, direct or indirect, or derivative, individual or
representative, of every nature and description whatsoever,
arising out of or relating to the Current Reorganization.
(h) "Foundation" has the meaning set forth in the Preamble
hereof.
(i) "Income Tax Indemnified Parties" means the
Company, all of its subsidiaries and affiliates, and all of the
directors, officers, agents and employees of the Company, or any
of its subsidiaries or affiliates.
(j) "Indemnified Parties" means each and every Income
Tax Indemnified Party, Section 3(a) Indemnified Party and Section
3(c) Indemnified Party.
(k) "IRS Ruling" has the meaning set forth in Recital
C hereof.
(l) "Old RIT" has the meaning set forth in Recital A
hereof.
(m) "Reincorporation Merger Transaction" as the
meaning provided therefor in the Reorganization Agreement.
(n) "Reorganization Agreement" has the meaning set
forth in Recital B hereof.
(o) "RIT/New RIT Merger Transaction" has the meaning
provided therefor in the Reorganization Agreement.
(p) "Xxxxxx Litigation" means, collectively, the private
putative class action pending in the Circuit Court for the City
of St. Louis styled Xxxxxxx X. Xxxxxx, Xx., and Xxxxx Xxxxxxx v.
Xxx X. Xxxxxxxxxx, et al., No. 962-00938, and the action pending
in the Circuit Court of Xxxx County styled Blue Cross and Blue
Shield of Missouri v. Xxxxxxxx X. "Xxx" Xxxxx, Cause No. CV197-
1558CC.
(q) "Section 3 Indemnified Parties" means, collectively,
the Section 3(a) Indemnified Parties and the Section 3(c)
Indemnified Parties.
(r) "Section 3(a) Indemnified Parties" means each and
every past and present director, officer, agent, employee and
independent contractor of BCBSMo or of any subsidiary of BCBSMo.
For purposes of this definition, Old RIT and its subsidiaries
shall not be deemed subsidiaries of BCBSMo.
(s) "Section 3(c) Indemnified Parties" means the Company,
all of its subsidiaries and affiliates, and each and every past
and present director, officer, agent, employee and independent
contractor of the Company or of any of its subsidiaries or
affiliates.
(t) "Transfer and Assumption Transaction" has the meaning
provided therefor in the Reorganization Agreement.
Section 2. Income Tax Indemnity.
(a) The Foundation shall unconditionally, irrevocably and
absolutely indemnify, defend and hold harmless the Income Tax
Indemnified Parties from and against the net amount of Federal,
state and local income tax liabilities (together with any
penalties, interest, fines, additions to tax, costs and expenses,
including attorneys' and other professional fees incurred in
connection with the defense, settlement or compromise thereof),
including those tax liabilities, if any, resulting from the
receipt of indemnity payments by the Company pursuant to this
Agreement (the "Tax Indemnification Amount"), incurred by any of
the Income Tax Indemnified Parties, as a result of a
determination by the IRS or other appropriate state or local
authority that the Transfer and Assumption Transaction, the
Charter Conversion Transaction, the Reincorporation Merger
Transaction, or the RIT/New RIT Merger Transaction constitutes a
taxable transaction for Federal income tax purposes under any
section of the Code, including under section 337(d) of the Code
(each of such transactions is referred to herein as a "Tax
Indemnification Transaction"), or for state or local income tax
purposes under any comparable provisions of state or local income
tax laws. The Tax Indemnification Amount shall be calculated as
if the Tax Indemnification Transaction(s) which cause(s) a Tax
Indemnification Amount to be incurred by an Income Tax
Indemnified Party creates the only item of taxable income
(determined without deduction for expenses incurred in the year
in issue) of the Income Tax Indemnified Party for the year in
issue and is taxable at the highest maximum applicable rate. The
Tax Indemnification Amount shall not be reduced by carryovers
from prior years of credits, net operating losses or similar tax
benefits. Notwithstanding the foregoing, the Foundation shall
have no obligation to indemnify any of the Income Tax Indemnified
Parties as set forth in this Section 2(a) if in connection with
the imposition of tax liability under any section of the Code,
including under section 337(d) of the Code, or under state or
local tax laws, it is determined that such imposition is a result
of the Reorganization not being consummated in accordance with
the terms of the Reorganization Agreement.
(b) An Income Tax Indemnified Party shall promptly notify the
Foundation in writing of any assertion by the IRS or any
appropriate state or local authority of a tax liability for which
such Income Tax Indemnified Party may be indemnified under this
Agreement (provided that failure to give such notification shall
not affect the obligations of the Foundation pursuant to this
Section 2 except to the extent the Foundation shall have been
actually prejudiced as a result of such failure), and the
Foundation shall have the opportunity, at the Foundation's sole
expense, to participate jointly with the Income Tax Indemnified
Party in contesting or settling any such asserted tax liability.
The Foundation shall have thirty days following the receipt of
such notice from an Income Tax Indemnified Party to notify the
Income Tax Indemnified Party of its election to participate in
contesting or settling the tax liability. If the Foundation
shall elect to participate as provided in the preceding sentence,
no decision (procedural or substantive) shall be made unless and
until discussions have been held between the Income Tax
Indemnified Party and the Foundation regarding same; provided,
however, the Income Tax Indemnified Party shall have the primary
responsibility for determining the manner in which the tax
liability shall be contested or settled. Each proposed
settlement that the Income Tax Indemnified Party desires to
accept and that could result in a payment by the Foundation under
this Section 2 shall be submitted to the Foundation by the Income
Tax Indemnified Party for the Foundation's prior approval. The
Foundation shall have ten days following the date of submission
of a proposed settlement to approve or disapprove of such
settlement. If no approval or disapproval shall have been
received by the Income Tax Indemnified Party within such ten day
period, then the Foundation shall be deemed to have approved the
proposed settlement. The settlement or payment of any claim which
would result in a payment by the Foundation under this Section 2
without the Foundation's prior approval as set forth in this
Section 2(b) shall constitute a waiver of the right to indemnity.
The Foundation shall not unreasonably withhold its approval of
any settlement proposal.
(c) If the Foundation does not approve a proposed settlement
submitted to it by an Income Tax Indemnified Party, the
representatives of the Income Tax Indemnified Party and the
Foundation having first-hand knowledge of the dispute(s) shall
endeavor to resolve the dispute through good faith discussions,
such discussions to take place in a timely fashion so as not to
permit the proposed settlement to expire. If the good faith
discussions to take place pursuant to the preceding sentence of
this Section 2(c) do not produce an agreement within fifteen (15)
days of the date the proposed settlement is disapproved or deemed
disapproved, the matter may be submitted to binding arbitration
by written request of either the Income Tax Indemnified Party or
the Foundation, as provided herein. All arbitrations will be
conducted in St. Louis, Missouri, or at another location mutually
approved by the parties, pursuant to the Commercial Arbitration
Rules of the American Arbitration Association, except as
otherwise provided herein. The arbitrator will be the then
current president of the St. Louis Chapter of the American
Institute of Certified Public Accountants or his/her designee and
the decision of the arbitrator shall be final and binding on all
parties thereto. All arbitrations will be undertaken pursuant to
the Federal Arbitration Act, where applicable, and the decision
of the arbitrator is enforceable in any court of competent
jurisdiction. The arbitrator is directed by this Agreement to
conduct the hearing and render a decision within a time period so
as not to permit the proposed settlement under dispute to expire.
Each party will pay its own fees and expenses in connection with
the arbitration and the nonprevailing party shall pay the fees
and expenses of the arbitrator.
Section 3. Nontax Indemnity.
(a) Subject to the limitations in Section 3(b) below, the
Foundation shall unconditionally, irrevocably and absolutely
indemnify, defend and hold harmless the Section 3(a) Indemnified
Parties from and against (i) Current Reorganization Claims
whenever they accrue to the same extent that BCBSMo was required
to provide indemnity against such Claims to the Section 3(a)
Indemnified Parties under its Articles of Incorporation and
Bylaws as in effect on April 20, 1998, and (ii) Conversion
Claims. The foregoing indemnity shall include all attorneys'
fees and costs incurred in defending or responding to any claim
covered by the indemnity.
(b) The obligations of the Foundation to provide indemnity to
the Section 3(a) Indemnified Parties under Section 3(a) above
shall be limited as follows:
(i) The Foundation shall have no obligation to indemnify
any of the Section 3(a) Indemnified Parties under this Agreement
from or on account of any conduct that shall be finally adjudged
by a court of competent jurisdiction to have been knowingly
fraudulent or deliberately dishonest or willful misconduct;
(ii) The Foundation shall have no obligation under this
Agreement to indemnify Section 3(a) Indemnified Parties against
claims asserted against them by the Company; and
(iii) The Foundation shall have no obligation under this
Agreement to indemnify lawyers, accountants, or other
professionals engaged as independent contractors against claims
arising out of opinions rendered or advice given by them in
connection with the Current Reorganization.
(c) The Foundation shall unconditionally, irrevocably and
absolutely indemnify, defend and hold harmless the Section 3(c)
Indemnified Parties from and against (i) Conversion Claims, and
(ii) any claim or demand asserted by any of the Section 3(a)
Indemnified Parties seeking indemnity from any Section 3(c)
Indemnified Party for any of the matters for which the Foundation
is obligated to provide such indemnity under Section 3(a) above.
(d) The obligations of the Foundation to provide indemnity to
the Section 3(c) Indemnified Parties under Section 3(c) above
shall be limited as follows:
(i) the Foundation shall have no obligation to indemnify any of
the Section 3(c) Indemnified Parties under this Agreement from or
on account of any conduct that shall be finally adjudged by a
court of competent jurisdiction to have been knowingly fraudulent
or deliberately dishonest or willful misconduct; and
(ii) the Foundation shall have no obligation under this Agreement
to indemnify lawyers, accountants, or other professionals engaged
as independent contractors against Conversion Claims.
(e) Any Section 3 Indemnified Party entitled to indemnification
under this Section 3 agrees to give prompt written notice to the
Foundation after the receipt by such Section 3 Indemnified Party
of any written notice of the commencement of any action, suit,
proceeding or investigation or threat thereof made in writing for
which such Section 3 Indemnified Party may claim indemnification
or contribution pursuant to this Section 3 (provided that failure
to give such notification shall not affect the obligations of the
Foundation pursuant to this Section 3 except to the extent the
Foundation shall have been actually prejudiced as a result of
such failure). In case any such action shall be brought against
any Section 3 Indemnified Party and it shall notify the
Foundation of the commencement thereof, the Foundation shall be
entitled to participate therein and, to the extent that it shall
wish, jointly with any other indemnifying party similarly
notified, to assume the defense thereof, with counsel reasonably
satisfactory to such Section 3 Indemnified Party (who shall not,
except with the consent of the Section 3 Indemnified Party be
counsel to the Foundation), and after notice from the Foundation
to such Section 3 Indemnified Party of its election so to assume
the defense thereof, the Foundation shall not be liable to such
Section 3 Indemnified Party under this Section 3 for any legal
expenses of other counsel or any other expenses, in each case
subsequently incurred by such Section 3 Indemnified Party, in
connection with the defense thereof other than reasonable costs
of investigation. Notwithstanding the foregoing, if (i) the
Foundation shall not have employed counsel reasonably
satisfactory to such Section 3 Indemnified Party to take charge
of the defense of such action within a reasonable time after
notice of commencement of such action (so long as such failure to
employ counsel is not the result of an unreasonable determination
by such Section 3 Indemnified Party that counsel selected
pursuant to the immediately preceding sentence is
unsatisfactory), (ii) the actual or potential defendants in, or
targets of, any such action include both the Foundation and such
Section 3 Indemnified Party and such Section 3 Indemnified Party
shall have reasonably concluded that there may be legal defenses
available to it which are different from or additional to those
available to the Foundation which, if the Foundation and such
Section 3 Indemnified Party were to be represented by the same
counsel, could result in a conflict of interest for such counsel
or materially prejudice the prosecution of the defenses available
to such Section 3 Indemnified Party, or (iii) the Foundation is
unable to demonstrate to the reasonable satisfaction of the
Section 3(a) Indemnified Party that it has sufficient financial
resources to fund the defense, then such Section 3 Indemnified
Party shall have the right to employ separate counsel reasonably
satisfactory to the Foundation, in which case the fees and
expenses of one counsel or firm of counsel (plus one local or
regulatory counsel or firm of counsel) selected by a majority in
interest of the Section 3 Indemnified Parties shall be borne by
the Foundation and the fees and expenses of all other counsel
retained by the Section 3 Indemnified Party shall be paid by the
Section 3 Indemnified Party. No Section 3 Indemnified Party
shall consent to entry of any judgment or enter into any
settlement without the consent (which consent, in the case of an
action, suit, claim or proceeding exclusively seeking monetary
relief, shall not be unreasonably withheld) of the Foundation.
(f) In determining the amount of the obligations of the
Foundation to a Section 3 Indemnified Party under this Section 3,
net amounts paid to or recovered by a Section 3 Indemnified Party
under third party insurance policies (excluding self-insurance),
shall reduce the amount payable by the Foundation to such Section
3 Indemnified Party under this Section 3 (and the Section 3
Indemnified Parties shall use reasonable efforts to file and
support claims therefor short of litigation), as shall the actual
net tax effect of damages and other amounts paid by a Section 3
Indemnified Party seeking indemnity therefor on the tax liability
of the Section 3 Indemnified Party. Notwithstanding anything to
the contrary contained in the charter documents of the Company,
the Reorganization Agreement, or any other agreement to which the
Company is a party, the Foundation acknowledges and agrees that,
as between the Company and the Foundation, the Company shall have
no obligation, directly or indirectly, to indemnify any of the
Section 3 Indemnified Parties against any of the matters for
which Section 3 Indemnified Parties shall be entitled to seek
indemnity from the Foundation hereunder, and any amounts which
the Company shall be obligated to pay in such regard (either
directly or indirectly through its subsidiaries) shall be
reimbursed to the Company by the Foundation pursuant to the
indemnification obligations of the Foundation hereunder. The
Foundation further agrees that it shall not have any right to
recover from the Company or any other Section 3 Indemnified Party
for any amounts paid under this Section 3, and shall not file any
claim against the Company or any other Section 3 Indemnified
Party seeking to recover any amounts properly paid under this
Section 3.
Section 4. D&O Liability Insurance. Under the
Reorganization Agreement, the Company is required, for a period
of six years following the closing of the Reorganization, to
cause to be maintained in effect the current policies of
directors' and officers' liability insurance maintained by BCBSMo
(provided that the Company may substitute therefor comparable
coverage from companies reasonably acceptable to the Foundation)
as in effect on April 20, 1998 covering the persons who are at
that time covered by such insurance policies with respect to acts
and omissions occurring prior to and including the closing of the
Current Reorganization. The Foundation shall reimburse the
Company promptly upon request for the premiums paid by the
Company to maintain such policies during such six year period.
Such policies shall require the insurer to notify the Foundation
at least thirty (30) days prior to cancellation. The Foundation
shall have the right, but not the obligation, to pay the premiums
necessary to maintain such policies in force and effect if the
Company fails to do so, in which event the Company shall
reimburse the Foundation promptly upon request for any penalties
or interest attributable to the late premium payment. In the
event the Company fails to maintain policies of directors' and
officers' liability insurance as required under this Section 4,
the Foundation shall have no obligation to provide indemnity
against damages or losses that would have been covered by such
insurance policies if they were maintained in force and effect.
Section 5. Net Worth. The Foundation shall maintain a net worth
(computed in accordance with generally accepted accounting
practices, applied on a consistent basis, except that the
Company's common stock shares shall be valued at the end of each
calendar quarter on the basis of the average closing price on the
New York Stock Exchange for the last ten trading days of the
calendar quarter) of not less than $[insert estimated potential
tax liability based upon difference between tax basis of RIT
stock owned by BCBSMo and market price on date Reorganization
closes] for the six years following the filing of the BCBSMo
Federal Income Tax Return for the year in which the Current
Reorganization shall have been consummated. With the prior
written consent of the Company, the Foundation may secure its
obligations hereunder through one or more alternative means that
may be proposed by the Foundation from time to time. The Company
shall not unreasonably withhold its consent to any proposed
alternative that leaves the Company in no worse position to
enforce the obligations of the Foundation hereunder than a
minimum net worth covenant.
Section 6. Further Agreements. Until this Agreement terminates
as provided in Section 7 hereof, the Foundation shall
(i) maintain its status as a tax-exempt organization under
section 501(c)(4) of the Code, and (ii) not take any action or
refrain from taking any action that would cause it to qualify as
a "private foundation" as defined under section 509(a) of the
Code. No party to this Agreement shall take any position
inconsistent with the IRS Ruling.
Section 7. Termination. This Agreement shall automatically
terminate on the date on which the last to expire of the
applicable statutes of limitations relating to the matters for
which the Foundation has agreed to indemnify any Indemnified
Party under Sections 2 and 3 of this Agreement (including the
period during which any applicable statute of limitations may
toll or be extended in the event a controversy arises to which an
indemnity relates) shall have expired.
Section 8. No Setoff. No payment required to be made pursuant
to this Agreement shall be subject to any right of setoff,
counterclaim, defense, abatement, suspension, deferment or
reduction on an unrelated claim, provided that the Foundation may
setoff against amounts due hereunder the amount of any undisputed
claim against the payee and the amount of any claim against the
payee that has been reduced to a final judgment.
Section 9. Amendments. Neither this Agreement nor any term
hereof may be changed, waived, discharged or terminated orally or
in writing, except that any term of this Agreement may be amended
by a writing signed by each of the parties hereto, and the
observance of any such term may be waived (either generally or in
a particular instance and either retroactively or prospectively)
by a writing signed by the party against whom such waiver is to
be asserted.
Section 10. Notices. All notices and other communications
provided for or permitted hereunder shall be made in accordance
with the notice provisions of the Reorganization Agreement.
Section 11. Successors and Assigns. This Agreement (or any
right or obligation hereunder) may not be assigned by any party
without the prior written consent of the other party, except that
the Company may assign its rights and obligations under this
Agreement, whether by a writing or operation of law, to a
successor to all or substantially all of its business without
such consent, in which event this Agreement shall inure to the
benefit of, and be binding upon, the successor.
Section 12. Governing Law. This Agreement shall be governed by
and construed in accordance with the laws of the State of
Missouri applicable to agreements made and to be performed wholly
within such state.
Section 13. Waiver, Remedies. No delay on the part of any party
hereto or any Indemnified Party in exercising any right, power or
privilege hereunder shall operate as a waiver thereof, nor shall
any waiver on the part of any party hereto or any Indemnified
Party of any right, power or privilege hereunder operate as a
waiver of any other right, power, or privilege hereunder, nor
shall any single or partial exercise of any right, power or
privilege hereunder, preclude any other or further exercise
thereof or the exercise of any other right, power or privilege
hereunder. The waiver or consent (whether express or implied) by
any party or any Indemnified Party of the breach of any term or
condition of this Agreement shall not prejudice any remedy of any
other party or any Indemnified Party in respect of any continuing
or other breach of the terms and conditions hereof, and shall not
be construed as a bar to any right or remedy which any party
would otherwise have on any future occasion under this Agreement.
Section 14. Attorneys' Fees. In any action or proceeding
brought to enforce any provision of this Agreement, or where any
provision hereof shall have been validly asserted as a defense,
the successful party shall be entitled to recover reasonable
attorneys' fees and costs in addition to any other available
remedy.
Section 15. Severability. In the event that any one or more of
the provisions contained herein, or the application thereof in
any circumstances, shall be held invalid, illegal or
unenforceable in any respect for any reason, the validity,
legality and enforceability of any such provision in every other
respect and of the remaining provisions hereof shall not be in
any way impaired or affected, it being intended that all other
rights and privileges shall be enforceable to the fullest extent
permitted by law.
Section 16. Third Party Beneficiary. The Indemnified Parties
other than the Company are third party beneficiaries of this
Agreement, and have the right to enforce the provisions of this
Agreement directly against the Foundation.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.
RIGHTCHOICE MANAGED CARE, INC.
By:
Name:
Title:
THE MISSOURI FOUNDATION FOR HEALTH
By:
Name:
Title:
EXHIBIT L
FORM OF
VOTING TRUST AND DIVESTITURE AGREEMENT
THIS VOTING TRUST AND DIVESTITURE AGREEMENT (this
"Agreement") is made and entered into as of the ___ day of
______, 199__, by and among RightCHOICE Managed Care, Inc., a
Delaware corporation (the "Company"), The Missouri Foundation For
Health, a Missouri non-profit corporation (the "Beneficiary"),
and _________________________, [to be determined by RIT prior to
signing] a ______________ corporation, as trustee (the
"Trustee").
RECITALS
A. Pursuant to the terms of that certain Agreement and
Plan of Reorganization (the "Reorganization Agreement"), dated as
of ___________, 199_ [to be determined upon signing
Reorganization Agreement], by and among Blue Cross and Blue
Shield of Missouri, a Missouri non-profit health services
corporation, RightCHOICE Managed Care, Inc., a Missouri
corporation, the Beneficiary, and the Company, the Beneficiary
has acquired, contemporaneous with the execution of this
Agreement, 14,962,500 shares of common stock, par value $____ per
share [to be determined by RIT prior to signing Reorganization
Agreement], of the Company (the "Common Stock"), representing
approximately 80.1% of the issued and outstanding shares of
Common Stock.
B. The Company became a licensee of the Blue Cross and
Blue Shield Association (the "BCBSA") upon consummation of the
transactions contemplated by the Reorganization Agreement,
thereby enabling the Company to use the "Blue Cross" and "Blue
Shield" names and related rights (the "Marks").
C. The Beneficiary wishes for its investment in the
Company to be as valuable as possible for so long as such
investment is maintained and believes that the Company's license
to use the Marks will contribute substantially to the Company's
value and its future prospects.
D. The BCBSA has conditioned the Company's license to
continue to use the Marks upon the Company maintaining certain
provisions set forth in this Agreement and in its Certificate of
Incorporation (as defined below) (the "Basic Protections") which
are intended by the BCBSA to enable the Company to remain
independent of the Beneficiary and any other Person (as defined
below) who may in the future acquire shares of Capital Stock (as
defined below) in excess of the Ownership Limit (as defined
below) applicable to such Person.
E. The Beneficiary has agreed to be bound by the Basic
Protections, including (i) a requirement that the Beneficiary
deposit into the voting trust established by this Agreement (the
"Voting Trust") all of the shares of Capital Stock Beneficially
Owned (as defined below) by the Beneficiary, and (ii) a
requirement that the Beneficiary reduce its Beneficial Ownership
(as defined below) of each class of Capital Stock to less than
fifty percent (50%) of the issued and outstanding shares of each
class of Capital Stock within three (3) years following the
Closing Date (as defined below) and reduce its Beneficial
Ownership of each class of Capital Stock to less than twenty
percent (20%) of the issued and outstanding shares of each class
of Capital Stock within five (5) years following the Closing
Date.
AGREEMENT
In consideration of the foregoing and the mutual covenants
contained herein and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the
parties agree as follows:
ARTICLE I
DEFINITIONS
For purposes of this Agreement, the following terms
shall have the following meanings:
(a) "Acquisition Proposal" means any tender or exchange
offer, proposal for a merger, consolidation or other business
combination involving the Company or any of its subsidiaries or
affiliates or any proposal or offer to acquire in any manner any
equity interest in, or any portion of the assets of, the Company
or any of its subsidiaries or affiliates.
(b) "Agreement" has the meaning set forth in the Preamble
hereof.
(c) "Affiliate," as used with respect to the Beneficiary,
has the meaning ascribed to such term in Rule 12b-2 of the
Securities and Exchange Act of 1934, as amended, and in effect on
November 17, 1993, but shall be deemed to not include the Company
and its subsidiaries.
(d) "BCBSA" has the meaning set forth in Recital B hereof.
(e) "Basic Protections" has the meaning set forth in
Recital D hereof
.
(f) "Beneficial Ownership", "Beneficially Own" or
"Beneficial Owner" have the meaning set forth in Section 1 of
Article VII of the Certificate of Incorporation.
(g) "Beneficiary" has the meaning set forth in the Preamble
hereof.
(h) "Board of Directors" means the Board of Directors of
the Company.
(i) "Bylaws" means the Bylaws of the Company as in effect
at the time that reference is made thereto.
(j) "Capital Stock" has the meaning set forth in Section 1
of Article VII of the Certificate of Incorporation.
(k) "Certificate of Incorporation" means the Certificate of
Incorporation of the Company as in effect at the time that
reference is made thereto.
(l) "Change of Control Proposal" means any agreement, plan
or proposal involving any merger, consolidation or other business
combination that, if consummated in accordance with its terms,
would result in the holders of the voting Capital Stock of the
Company immediately prior to such merger, consolidation or other
business combination owning less than 50.1% of the outstanding
voting securities of the resulting entity arising out of such
merger, consolidation or other business combination.
(m) "Closing Date" has the meaning provided therefor in the
Reorganization Agreement.
(n) "Company" has the meaning set forth in the Preamble
hereof.
(o) "Common Stock" has the meaning set forth in Recital A
hereof.
(p) "Delinquent Shares" means any and all shares of Capital
Stock Beneficially Owned by the Beneficiary in excess of the
number of shares of Capital Stock that the Beneficiary may
Beneficially Own at the Three Year Divestiture Deadline or the
Five Year Divestiture Deadline, as the case may be, or at any
date to which either the Three Year Divestiture Deadline or the
Five Year Divestiture Deadline, as the case may be, may be
extended pursuant to Section 6.03 or Section 6.04 hereof.
(q) "Five Year Divestiture Deadline" has the meaning set
forth in Section 6.02 hereof.
(r) "Indemnified Party" has the meaning set forth in
Section 8.06 hereof.
(s) "Independent Board Majority" has the meaning set forth
in Section 4.B.3 of Article IV of the Certificate of
Incorporation.
(t) "Marks" has the meaning set forth in Recital B hereof.
(u) "Ownership Limit" has the meaning set forth in
Section 1 of Article VII of the Certificate of Incorporation.
(v) "Person" means any individual, firm, partnership,
corporation (including, without limitation, a business trust),
limited liability company, trust, unincorporated association,
joint stock company, joint venture or other entity, and shall
include any successor (by merger or otherwise) of any such
entity.
(w) "Registration Rights Agreement" means that certain
Registration Rights Agreement, of even date herewith, by and
between the Company and the Beneficiary.
(x) "Reorganization Agreement" has the meaning set forth in
Recital A hereof.
(y) "Successor Trustee" has the meaning set forth in
Section 8.04 hereof.
(z) "Three Year Divestiture Deadline" has the meaning set
forth in Section 6.01 hereof.
(aa) "Trustee" has the meaning set forth in Preamble hereof.
(bb) "Voting Trust" has the meaning set forth in Recital E
hereof.
ARTICLE II
DEPOSIT OF STOCK
Section 2.01 Delivery of Capital Stock. Pursuant to the
Reorganization Agreement, all shares of Capital Stock
Beneficially Owned by the Beneficiary as of the Closing Date have
been transferred to the Voting Trust. The Beneficiary shall
transfer any shares of Capital Stock that it shall Beneficially
Own after the Closing Date to the Voting Trust. The Company
shall pay any taxes and costs imposed upon the transfer of the
shares of Capital Stock Beneficially Owned by the Beneficiary to
the Voting Trust at the time of transfer.
Section 2.02 Certificate Book and Inspection of Agreement.
The Trustee shall keep at the address set forth in Section 10.04
hereof correct books of account of all the Trustee's business and
transactions relating to the Voting Trust, and a book setting
forth the number of shares of Capital Stock held by the Voting
Trust. A duplicate of this Agreement and any extension thereof
shall be filed with the Secretary of the Company and shall be
open to inspection by a stockholder upon the same terms as the
record of stockholders of the Company is open to inspection.
ARTICLE III
BENEFICIARY'S INTEREST IN CAPITAL STOCK
Section 3.01 Retained Interest. Subject to the powers,
duties and rights of the Company and the Trustee set forth herein
and further subject to the terms of this Agreement, the
Registration Rights Agreement, the Certificate of Incorporation
and the Bylaws, the Beneficiary shall retain the entire economic
and beneficial ownership rights in all of the shares of Capital
Stock held in the Voting Trust.
Section 3.02 Withdrawal of Shares from Trust. The
Beneficiary shall not be entitled to withdraw any shares of
Capital Stock from the Voting Trust except to sell its entire
Beneficial Ownership interest in such shares of Capital Stock
provided that (i) such shares of Capital Stock shall be
registered in the name of the purchaser thereof before being
withdrawn from the Voting Trust, (ii) such sale of shares of
Capital Stock shall not be to an Affiliate of the Beneficiary,
(iii) such sale of shares of Capital Stock shall not be made to
any Person Beneficially Owning any shares of Capital Stock in
excess of the Ownership Limit applicable to such Person,
(iv) such sale of shares of Capital Stock shall not result in
any Person Beneficially Owning any shares of Capital Stock in
excess of the Ownership Limit applicable to such Person, and
(v) such sale of shares of Capital Stock shall otherwise be
permitted pursuant to this Agreement, the Registration Rights
Agreement, the Certificate of Incorporation and the Bylaws. The
Beneficiary shall not transfer any of its retained rights or
interest in shares of Capital Stock held in the Voting Trust.
Any shares of Capital Stock withdrawn in accordance with this
Section 3.02 shall, upon withdrawal, cease to be subject to the
terms and conditions of this Agreement.
ARTICLE IV
TRUSTEE'S POWERS AND DUTIES
Section 4.01 Limits on Trustee's Powers. The Trustee
shall have only the powers set forth in this Agreement. It is
expressly understood and agreed by the parties hereto that under
no circumstances shall the Trustee be personally liable for the
payment of any indebtedness or expenses of this Agreement or be
liable for the breach or failure of any obligation,
representation, warranty or covenant made or undertaken by the
Trustee under this Agreement, except as set forth in this
Agreement.
Section 4.02 Right to Vote. With respect to all shares of
Capital Stock held in the Voting Trust, the Trustee shall have
the exclusive and absolute right in respect of such shares of
Capital Stock to vote, assent or consent such shares of Capital
Stock at all times during the term of this Agreement, subject to
Section 4.03 hereof, including, without limitation, the right to
vote at any election of directors and in favor of or in
opposition to any resolution, dissolution, liquidation, merger or
consolidation of the Company, any sale of all or substantially
all of the Company's assets, any issuance or authorization of
securities, or any action of any character whatsoever which may
be presented at any meeting or require the consent of the
stockholders of the Company.
Section 4.03 Voting on Particular Matters. In exercising
the Trustee's powers and duties under this Agreement, the Trustee
shall at all times vote, assent or consent all shares of Capital
Stock held in the Voting Trust as follows:
(a) if the matter concerned is the election of directors of
the Company, the Trustee shall vote, assent or consent the whole
number of shares of Capital Stock held by the Voting Trust in
favor of each nominee to the Board of Directors whose nomination
has been approved by an Independent Board Majority and vote
against any candidate for the Board of Directors for whom no
competing candidate has been nominated or selected by an
Independent Board Majority;
(b) unless such action is initiated by or with the consent
of an Independent Board Majority, the Trustee shall (i) vote
against removal of any director of the Company, (ii) vote against
any alteration, amendment, change or addition to or repeal of the
Bylaws or Certificate of Incorporation, (iii) not nominate any
candidate to fill any vacancy on the Board of Directors, (iv) not
call any special meeting of the stockholders of the Company, and
(v) not take any action by voting shares of Capital Stock held by
the Voting Trust that would be inconsistent with or would have
the effect, directly or indirectly, of defeating or subverting
the voting requirements contained in Section 4.03(a) hereof or
this Section 4.03(b);
(c) to the extent not covered by Section 4.03(a) or
Section 4.03(b) hereof, on any action, proposal or resolution
requiring prior approval of the Board of Directors as a
prerequisite to become effective, the Trustee shall vote in
accordance with the recommendation of the Board of Directors,
provided, however, that on any Change of Control Proposal
approved by the Board of Directors and submitted by the Board of
Directors to the stockholders of the Company for a vote thereon,
the Trustee shall vote on such Change of Control Proposal as
directed by the Beneficiary; and
(d) to the extent not covered by Section 4.03(a) or
Section 4.03(b) hereof, on any action, proposal or resolution not
requiring prior approval of the Board of Directors as a
prerequisite to become effective, the Trustee shall vote in
accordance with the recommendation of the Board of Directors.
Section 4.04 Presence at Meetings. The Trustee shall
ensure, with respect to the shares of Capital Stock held in the
Voting Trust hereunder, that such shares of Capital Stock are
counted as being present for the purposes of any quorum required
for stockholder action of the Company and to vote, assent or
consent as set forth in this Article IV so long as the Trustee
has reasonable notice of the time to vote, assent or consent (and
the Trustee shall be deemed to have reasonable notice if it shall
receive notice within the time periods under the applicable
provisions of the Delaware General Corporation Law).
Section 4.05 Sales. The Trustee shall have no authority
to sell any of the shares of Capital Stock deposited pursuant to
the provisions of this Agreement, unless expressly permitted
pursuant to the terms hereof. Upon the sale of shares of Capital
Stock in accordance with the terms hereof, the Trustee shall
deliver or cause to be delivered certificates representing such
shares of Capital Stock to the Person entitled thereto.
Section 4.06 Contrary Instructions. The Trustee shall
have no obligation whatsoever to follow any instruction of the
Beneficiary if such instruction is contrary to the terms of this
Agreement, unless such contrary instruction shall be agreed to in
writing by the Beneficiary and the Company.
Section 4.07 Execution by Trustee. The Trustee shall
execute all documents as follows:
"By: ________________________, not in its individual
capacity, but solely as Trustee
By: ________________________." [to be provided by
Trustee prior to signing]
ARTICLE V
STANDSTILL
Section 5.01 Acquisition of Capital Stock. Throughout the
term of this Agreement, the Beneficiary shall not, directly or
indirectly, (i) individually, or as part of a group, acquire,
offer or propose to acquire, or agree to acquire, by purchase or
otherwise, Beneficial Ownership of any shares of Capital Stock,
or direct or indirect rights or options to acquire (through
purchase, exchange, conversion or otherwise) Beneficial Ownership
of any shares of Capital Stock (except by reason of stock
dividends, stock splits, spinoffs, mergers, recapitalizations,
combinations, conversions, exchanges of shares, or the like), or
(ii) enter into any agreement, arrangement or understanding,
other than for the sale of shares of Capital Stock in accordance
with Section 3.02 hereof and the Registration Rights Agreement,
with any Person, other than the Company, that would have the
effect of increasing such Person's or the Beneficiary's
Beneficial Ownership in any shares of Capital Stock.
Section 5.02 Sale of Capital Stock. Notwithstanding
anything in this Agreement to the contrary, the Beneficiary shall
not sell or otherwise dispose of any shares of Capital Stock to
any Person, whether in a private placement, pursuant to a
registered offering of securities or otherwise, if (i) such
Person Beneficially Owns an amount of Capital Stock in excess of
the Ownership Limit applicable to such Person, or (ii) the effect
of such sale or other disposition would be to cause such Person
to Beneficially Own an amount of Capital Stock which would exceed
the Ownership Limit applicable to such Person.
Section 5.03 Nomination of Directors. The Beneficiary
shall not itself, nor shall it initiate, suggest or otherwise
encourage the Board of Directors or any other Person to,
(i) nominate any individual as a candidate for election to the
Board of Directors, or (ii) appoint any individual to fill any
vacancy on the Board of Directors. The Beneficiary shall not
support, endorse or otherwise encourage the election of any
candidate for election to the Board of Directors other than a
candidate or candidates nominated by an Independent Board
Majority.
Section 5.04 Acquisition Proposals. The Beneficiary shall
not solicit or encourage inquiries or proposals with respect to,
or provide any confidential information to, or have any
discussions, meetings or other communications with, any Person
relating to an Acquisition Proposal or a Change of Control
Proposal, provided, however, that the Beneficiary may have
discussions with the counter-party to any Change of Control
Proposal after such Change of Control Proposal shall have been
approved by the Board of Directors and submitted to the
stockholders of the Company for a vote thereon, and provided
further, however, that the Beneficiary may have discussions with
any Person concerning the sale or disposal of shares of Capital
Stock Beneficially Owned by the Beneficiary in accordance with
Section 3.02 hereof and the Registration Rights Agreement. The
Beneficiary shall not itself, nor shall it initiate, suggest or
otherwise encourage any other Person to, request the Board of
Directors to consider, support or seek any Acquisition Proposal
or Change of Control Proposal or take any action designed,
intended or likely to result in an Acquisition Proposal or Change
of Control Proposal being entered into or consummated.
Section 5.05 Contacts. Subject to Section 5.04 hereof,
the Beneficiary shall not meet or otherwise communicate with any
Person that is seeking to acquire shares of Capital Stock in
excess of the Ownership Limit applicable to such Person to the
extent that such meeting or other communication relates to such
acquisition of shares of Capital Stock or Acquisition Proposal.
The Beneficiary shall promptly advise the Company in writing if
the Beneficiary or any of its representatives shall have received
a communication, contact or inquiry relating to an Acquisition
Proposal and shall promptly advise the Company of all information
available to the Beneficiary concerning such communication,
contact or inquiry relevant to such Acquisition Proposal.
Section 5.06 Litigation. The Beneficiary shall not join
as a party in any litigation, suit or cause of action that
alleges (i) that any of the Basic Protections or any provisions
of the Certificate of Incorporation or Bylaws are not enforceable
in accordance with their terms, (ii) that the Board of Directors
should not enforce the Basic Protections or provisions of the
Certificate of Incorporation or Bylaws in any particular case or
circumstance, or (iii) that the Board of Directors should
approve, adopt, disapprove or abandon any Acquisition Proposal or
Change of Control Proposal.
ARTICLE VI
AGREEMENT TO DIVEST SHARES OF CAPITAL STOCK
Section 6.01 Sale of Beneficiary's Capital Stock by Third
Anniversary. The Beneficiary hereby covenants and agrees that it
shall sell, convey, or otherwise dispose of shares of Capital
Stock (so that the Beneficiary is no longer a Beneficial Owner of
such shares of Capital Stock) so that the Beneficiary
Beneficially Owns less than fifty percent (50%) of the issued and
outstanding shares of each class of Capital Stock on or prior to
the third anniversary of the Closing Date (the "Three Year
Divestiture Deadline"). Any such disposition shall comply with
the terms of this Agreement, the Registration Rights Agreement,
the Certificate of Incorporation and the Bylaws.
Section 6.02 Sale of Beneficiary's Capital Stock by Fifth
Anniversary. The Beneficiary hereby covenants and agrees that it
shall sell, convey or otherwise dispose of shares of Capital
Stock (so that the Beneficiary is no longer a Beneficial Owner of
such shares of Capital Stock) so that the Beneficiary
Beneficially Owns less than twenty percent (20%) of the issued
and outstanding shares of each class of Capital Stock on or prior
to the fifth anniversary of the Closing Date (the "Five Year
Divestiture Deadline"). Any such disposition shall comply with
the terms of this Agreement, the Registration Rights Agreement,
the Certificate of Incorporation and the Bylaws.
Section 6.03 Extension of Divestiture Deadlines Sought by
Beneficiary. Notwithstanding Section 6.01 or Section 6.02
hereof, the Company shall extend the Three Year Divestiture
Deadline or the Five Year Divestiture Deadline, as the case may
be, if (i) the Beneficiary makes a good faith and reasonable
determination (and provides the reasons therefor) that compliance
with Section 6.01 or Section 6.02 hereof, as the case may be,
would have a material adverse affect on the Beneficiary, (ii) the
Beneficiary advises the Company of such determination (and
provides the reasons therefor) and makes a reasonable request for
an extension of the Three Year Divestiture Deadline or the Five
Year Divestiture Deadline, as the case may be, and (iii) the
Company receives written confirmation from the BCBSA that the
extension of the Three Year Divestiture Deadline or the Five Year
Divestiture Deadline, as the case may be, requested by the
Beneficiary would not cause a violation of the license agreements
governing the Company's use of the Marks. The Company shall not
oppose the Beneficiary's request for an extension of the Three
Year Divestiture Deadline or the Five Year Divestiture Deadline,
as the case may be, and shall take reasonable steps, as
reasonably requested by the Beneficiary, to assist the
Beneficiary in its efforts to obtain an extension of the Three
Year Divestiture Deadline or the Five Year Divestiture Deadline,
as the case may be; provided that the Company shall have no
obligation to, among other things, incur any fees or expenses for
its own account in connection with such assistance. The
Beneficiary acknowledges that, notwithstanding the scope or
degree of assistance provided by the Company, the BCBSA shall
have the sole and absolute authority and discretion to determine
whether to consent to an extension of the Three Year Divestiture
or the Five Year Divestiture Deadline, as the case may be, but
shall have no obligation to grant such consent, and that in no
event shall the Company have any liability to the Beneficiary or
any other Person in the event that the BCBSA shall determine to
deny any such extension request.
Section 6.04 Extension of Divestiture Deadlines Sought by
Company. Notwithstanding Section 6.01 or Section 6.02 hereof,
the Company shall extend the Three Year Divestiture Deadline or
the Five Year Divestiture Deadline, as the case may be, if
(i) the Company makes a good faith determination that compliance
with Section 6.01 or Section 6.02 hereof, as the case may be,
would have an adverse affect on the Company, or any of its
stockholders other than the Beneficiary, and (ii) the Company
receives written confirmation from BCBSA that the extension of
the Three Year Divestiture Deadline or the Five Year Divestiture
Deadline, as the case may be, requested by the Company would not
cause a violation of the license agreement governing the
Company's use of the Marks. The Beneficiary and the Company
acknowledge that the BCBSA shall have the sole and absolute
authority and discretion to determine whether to consent to an
extension of the Three Year Divestiture or the Five Year
Divestiture Deadline, as the case may be, but shall have no
obligation to grant such consent, and that in no event shall the
Company have any liability to the Beneficiary or any other Person
in the event that the BCBSA shall determine to deny any such
extension request.
Section 6.05 Failure to Meet Divestiture Deadlines. In
the event that the Beneficiary shall fail to meet either the
Three Year Divestiture Deadline or the Five Year Divestiture
Deadline, as the case may be, and an extension thereof shall not
have been granted pursuant to Section 6.03 or Section 6.04
hereof, or shall fail to meet any extended Three Year Divestiture
Deadline or Five Year Divestiture Deadline, as the case may be,
that may have been granted pursuant to Section 6.03 or Section
6.04 hereof, then the Company shall arrange for the sale of the
Delinquent Shares in a manner and at such time or times as shall
be commercially reasonable under the circumstances (giving effect
to, among other things, market conditions and related matters)
and, subject to the foregoing, the Company shall have no
liability to the Beneficiary or any other Person on the grounds
that the Company failed to take actions which could have produced
higher proceeds for the sale of the Delinquent Shares. In either
such case, the Beneficiary shall promptly take all action
reasonably requested by the Company in order to facilitate the
sale of the Delinquent Shares, and the Company shall be entitled
to receive customary representations and warranties from the
Beneficiary regarding the Delinquent Shares (including
representations regarding good title to such shares, free and
clear of all liens, claims, security interests and other
encumbrances). Until sold, the Delinquent Shares shall be voted
by the Trustee in the manner required by Section 4.03 of this
Agreement, provided however, that on any Change of Control
Proposal approved by the Board of Directors and submitted by the
Board of Directors to the stockholders of the Company for a vote
thereon, the Trustee shall vote the Delinquent Shares in the
exact proportion as all shares of Capital Stock not held in the
Voting Trust shall have been voted upon such Change of Control
Proposal. Upon the sale of the Delinquent Shares, the Trustee
shall deliver the shares to the purchaser thereof as directed by
the Company, and all proceeds from such sale, less all expenses
incurred by the Company, shall be distributed to the Beneficiary
as soon as practicable.
ARTICLE VII
DIVIDENDS AND DISTRIBUTIONS
Section 7.01 Cash. The Beneficiary shall be entitled to
receive payments equal to the amount of cash dividends, if any,
collected or received by the Trustee or its successor upon the
number of shares of Capital Stock held in the Voting Trust,
subject to deduction in respect of expenses, charges or fees
pursuant to Section 8.02 or 8.03 hereof. The Trustee and the
Company shall arrange for the direct payment by the Company of
all or a portion (as provided in the preceding sentence) of such
cash dividends to the Beneficiary.
Section 7.02 Stock. In the event that the Trustee shall
receive, as a dividend or other distribution upon any shares of
Capital Stock held by the Trustee under this Agreement, any
shares of stock or securities convertible into stock of the
Company, the Trustee shall hold the same and said shares shall be
subject to all of the terms and conditions of this Agreement to
the same extent as if originally deposited hereunder.
Section 7.03 Other Distributions. In the event that, at
any time during the term of this Agreement, the Trustee shall
receive or collect any monies through a distribution by the
Company to its stockholders, other than in payment of cash
dividends, or shall receive any property (other than shares of
Capital Stock or securities convertible into Capital Stock)
through a distribution by the Company to its stockholders, the
Trustee shall distribute the same to the Beneficiary, subject to
deduction in respect of expenses, charges or fees pursuant to
Section 8.02 or 8.03 hereof.
ARTICLE VIII
THE TRUSTEE
Section 8.01 Use of Proxies. The Trustee may vote, assent
or consent with respect to all shares of Capital Stock held in
the Voting Trust in person or by such person or persons as it may
from time to time select as its proxy, provided that the Trustee
shall at all times do so in conformity with the provisions of
Section 4.03 hereof.
Section 8.02 Expenses. The Trustee is expressly
authorized to incur and pay such reasonable expenses and charges,
to employ and pay such agents, attorneys and counsel, and to
incur and pay such other charges and expenses as the Trustee may
deem reasonably necessary and proper for administering this
Agreement. The Beneficiary and the Company shall reimburse the
Trustee equally for any such expense and charges, and any such
expenses or charges may be deducted from the cash dividends or
other monies received by the Trustee on the shares of Capital
Stock deposited hereunder, to the extent unreimbursed by the
Beneficiary.
Section 8.03 Compensation. The Beneficiary and the
Company shall compensate the Trustee equally for its services as
Trustee hereunder as provided in the Trustees' fee schedule,
attached hereto as Exhibit A, and any such fees may be deducted
from the cash dividends or other monies received by Trustee on
the shares of Capital Stock deposited in the Voting Trust, to the
extent otherwise unpaid by the Beneficiary.
Section 8.04 Successor Trustee. The Trustee may resign
after giving thirty (30) days' advance written notice of its
resignation to the Company and the Beneficiary, provided that
such resignation shall not become effective until a reasonably
competent alternate (the "Successor Trustee") shall have become
bound by this Agreement. The Company may in addition terminate
the Trustee after giving thirty (30) days' advance written notice
thereof to the Trustee, provided that such termination of the
Trustee shall not become effective until a Successor Trustee
shall have become bound by this Agreement. If the Trustee shall
resign or be so terminated by the Company, the Trustee shall be
replaced by a Successor Trustee. The Successor Trustee shall be
designated by the Company. The Successor Trustee shall enjoy all
the rights, powers, interests and immunities of the Trustee
originally designated and shall agree in writing to be bound by
this Agreement.
Section 8.05 Qualifications of Trustee. Throughout the
term of the Voting Trust, the Trustee or Successor Trustee, as
the case may be, must satisfy each of the following
qualifications: (i) the Trustee or Successor Trustee, as the
case may be, must be an institution duly authorized to act as
such a Trustee or Successor Trustee under the laws of the State
of Delaware; (ii) the Trustee or Successor Trustee, as the case
may be, must, either on an individual basis or on a consolidated
basis together with its subsidiaries and affiliates, have minimum
stockholders' equity of $500,000,000; (iii) the Trustee or
Successor Trustee, as the case may be, must not own for its own
account more than one percent (1%) of the issued and outstanding
securities of either the Company or the Beneficiary; and (iv) no
director or officer of the Trustee or any Successor Trustee, as
the case may be, may serve as a director or officer of the
Company or the Beneficiary (and no director or officer of the
Company or the Beneficiary shall serve as a director or officer
of the Trustee or Successor Trustee, as the case may be). In the
event that the Trustee or Successor Trustee, as the case may be,
shall fail to meet any of the conditions set forth in this
Section 8.05, the Company shall replace the Trustee or the
Successor Trustee, as the case may be, as provided in
Section 8.04 hereof.
Section 8.06 Trustee's Liability. The Trustee shall not
be liable for any act or omission undertaken in connection with
its powers and duties under this Agreement, except for any
willful misconduct or gross negligence by Trustee. No Successor
Trustee shall be liable for actions or omissions of the Trustee
or any other Successor Trustee. The Trustee shall not be liable
in acting on any notice, request, consent, certificate,
instruction, or other paper or document or signature reasonably
believed by it to be genuine and to have been signed by the
proper party. The Trustee may consult with legal counsel
(reasonably competent for the purpose) and any act or omission
undertaken by it in good faith in accordance with the opinion of
such legal counsel shall not result in any liabilities of the
Trustee. The Beneficiary covenants and agrees to indemnify and
hold harmless the Trustee and its affiliates, directors,
officers, employees, agents and advisors (each an "Indemnified
Party"), without duplication, from and against any and all
claims, damages, losses, liability, obligations, actions, suits,
costs, disbursements and expenses (including without limitation
reasonable fees and expenses of counsel) incurred by any
Indemnified Party, in any way relating to or arising out of or in
connection with or by reason of the preparation for a defense of
any investigation, litigation or proceeding arising out of this
Agreement or the shares of Capital Stock held pursuant to this
Agreement, the administration of this Agreement or the action or
inaction of the Trustee hereunder; except to the extent such
claim, damage, loss, liability, obligation, action, suit, cost,
disbursement or expense results from such Indemnified Parties'
gross negligence or willful misconduct. The indemnity set forth
in this Section 8.06 shall be in addition to any other obligation
or liabilities of the Beneficiary hereunder or at common law or
otherwise and shall survive the termination of this Agreement.
ARTICLE IX
TERMINATION
Section 9.01 Termination. This Agreement shall terminate
upon the joint written notice by the Beneficiary and the Company
to the Trustee that the Beneficiary Beneficially Owns less than
five percent (5%) of the issued and outstanding shares of Common
Stock and less than five percent (5%) of the issued and
outstanding shares of every other class of Capital Stock.
Otherwise, the Voting Trust is hereby expressly declared to be
and shall be irrevocable.
Section 9.02 Delivery of Stock Certificate(s). As soon as
practicable after the termination of this Agreement, the Trustee
shall deliver to the Beneficiary stock certificate(s), with the
appropriate legend as provided in the Certificate of
Incorporation, representing the number of shares of Capital Stock
Beneficially Owned by the Beneficiary at the date of termination,
if any, held by the Voting Trust and upon payment by the
Beneficiary of any and all taxes and other expenses relating to
the transfer or delivery of such certificates.
ARTICLE X
MISCELLANEOUS
Section 10.01 Ownership; Authority. The Beneficiary
represents, warrants and covenants to the Company that (i) as of
the effective date of this Agreement, the Beneficiary is the
Beneficial Owner of 14,962,500 shares of Common Stock, (ii) the
Beneficiary does not Beneficially Own any shares of Capital Stock
other than 14,962,500 shares of Common Stock, and (iii) the
Beneficiary has full power and authority to make, enter into and
carry out the terms of this Agreement.
Section 10.02 Merger, Consolidation, Sale of Assets. If
the Company shall merge into or consolidate with another
corporation or corporations, or if all or substantially all of
the assets of the Company are transferred to another corporation,
the shares of which are issued to stockholders of the Company in
connection with such merger, consolidation or transfer, then the
terms "RightCHOICE Managed Care, Inc." or the "Company" shall be
construed, so long as the Marks continue to be licensed by such
entity from BCBSA, to include such successor corporation, and the
Trustee shall receive and hold under this Agreement any shares of
such successor corporation received by it on account of its
ownership as Trustee of shares of Capital Stock held by it
hereunder prior to such merger, consolidation or transfer.
Section 10.03 Successors. This Agreement shall bind and
inure to the benefit of the Trustee and each and all of its
respective heirs, executors, administrators, successors and
assigns. Notwithstanding any provision of this Agreement, the
provisions of this Agreement shall not be binding on any
transferee or purchaser from the Beneficiary (other than a Person
who is an Affiliate of the Beneficiary and except that any and
all shares of Capital Stock sold in violation of this Agreement,
the Registration Rights Agreement, the Certificate of
Incorporation or the Bylaws shall remain subject to this
Agreement). In case at any time the Trustee shall resign and no
Successor Trustee shall have been appointed within thirty (30)
days after notice of such resignation has been filed and mailed
as required by Section 8.04 hereof, the resigning Trustee may
forthwith apply to a court of competent jurisdiction for the
appointment of a Successor Trustee. Such court may thereupon,
after such notice, if any, as it may deem proper and appropriate,
appoint a Successor Trustee.
Section 10.04 Notices. All notices, consents, requests,
demands and other communications hereunder shall be in writing,
and shall be deemed to have been duly given or made: (i) when
delivered in person; (ii) three (3) days after deposited in the
United States mail, first class postage prepaid; (iii) in the
case of telegraph or overnight courier services, one (1) business
day after delivery to the telegraph company or overnight courier
service with payment provided; or (iv) in the case of telex or
telecopy or fax, when sent, verification received; in each case
addressed as follows:
if to the Company:
Xxxx X. X'Xxxxxx
Chairman, President and Chief Executive
Officer
RightCHOICE Managed Care, Inc.
0000 Xxxxxxxx Xxxxxx
Xx. Xxxxx, Xxxxxxxx 00000
Fax: (000) 000-0000
with a copy to:
Xxxx X. Xxxxxx, Esq.
Xxxxx, Rice & Xxxxxxxx, X.X.
000 Xxxxx Xxxxxxxx, Xxxxx 0000
Xx. Xxxxx, Xxxxxxxx 00000
Fax: (000) 000-0000
if to the Beneficiary: [to be determined by Foundation prior to signing]
with a copy to: [to be determined by Foundation prior to signing]
if to the Trustee: [to be determined by Trustee prior to signing]
with a copy to: [to be determined by Trustee prior to signing]
Section 10.05 Governing Law. This Agreement shall be
governed by and construed in accordance with the laws of the
State of Delaware, without reference to conflicts of laws
principles.
Section 10.06 Attorneys' Fees. In the event of any suit or
other proceeding between the Company and the Beneficiary with
respect to any of the transactions contemplated hereby or the
subject matter hereof, the prevailing party shall, in addition to
such other relief as the court may award, be entitled to recover
reasonable attorneys' fees, expenses and costs of investigation,
all as actually incurred, including, without limitation,
attorneys' fees, costs and expenses of investigation incurred in
appellate proceedings or in any action or participation in, or in
connection with, any case or proceeding under Chapters 7, 11 and
13 of the United States Bankruptcy Code or any successor thereto.
Section 10.07 Fair Construction. This Agreement is the
product of negotiation and shall be deemed to have been drafted
by all of the parties. It shall be construed in accordance with
the fair meaning of its terms and its language shall not be
strictly construed against, nor shall ambiguities be resolved
against, any particular party.
Section 10.08 Entire Agreement. This Agreement contains
the entire agreement between the parties hereto regarding the
subject matter hereof, and may not be amended, altered or
modified except by a writing signed by the parties hereto. This
Agreement supersedes all prior agreements, representations,
warranties, statements, promises, information, arrangements and
understandings, whether oral or written, express or implied, with
respect to the subject matter hereof, all of which are
specifically integrated into this Agreement. No party hereto
shall be bound by or charged with any oral or written agreements,
representations, warranties, statements, promises, information,
arrangements or understandings, express or implied, not
specifically set forth herein; and the parties hereto further
acknowledge and agree that in entering into this Agreement they
have not in any way relied and will not rely in any way on any of
the foregoing not specifically set forth herein.
Section 10.09 Counterparts. This Agreement may be executed
in two (2) or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one (1) and
the same instrument.
[signatures appear on next page]
IN WITNESS WHEREOF, the parties have executed this Agreement
on the day and year first above written.
RIGHTCHOICE MANAGED CARE, INC., a
Delaware corporation
By:
Name:
Title:
THE MISSOURI FOUNDATION FOR HEALTH,
a Missouri corporation
By:
Name:
Title:
[TRUSTEE]
By:
Name:
Title:
EXHIBIT A
Trustee Fee Schedule
EXHIBIT F
List of Known Claims as of April 20, 1998
A. Issues raised in Financial Exams completed September 30,
1997 for the following companies:
Blue Cross Blue Shield of Missouri
HealthLink
BlueCHOICE d/b/a HMO Missouri
Health Alliance Life Insurance Company
B. HealthLink Certification of Compliance with Small Group
Reform Act for 1997 Reporting of non-compliance with certain
rating restrictions
C. Possible violations of Chapter 407 (The Unfair Merchandizing
Practices Act), for undue delays in payments to providers in
certain HMO and PPO products.
EXHIBIT G
List of Claims Prepared by Blue Cross and Blue Shield of Missouri
Xxxxxxx X. Xxxxxx, et al. V. BCBSMo, et al.
Circuit Court City of St. Louis, No. 962-00938
Date Served: 3/25/96
Type of Case: Subscriber Class Action
BCBSMo v. Xxx Xxxxxx, Missouri DOI, Xxx Xxxxx
Circuit Court Xxxx County, No. CV196-619CC
Date Served: 5/13/96
Type of Case: Petition for Declaratory Judgment
BCBSMo x. Xxxxx
Circuit Court of Xxxx County, No. CV197-1558CC
Dated Filed: 11/6/97
Type of Case: Declaratory Judgment MBC/PBC
