Exhibit 8
[LETTERHEAD OF PRICEWATERHOUSECOOPERS LLP]
June 14, 2000
Xx. Xxxx X. X'Xxxxxx
President & CEO
Blue Cross Blue Shield of Missouri
0000 Xxxxxxxx Xxxxxx
Xx. Xxxxx, XX 00000
Xx. Xxxx X. X'Xxxxxx
Xxxxxxxx, President & CEO
RightCHOICE Managed Care, Inc.
0000 Xxxxxxxx Xxxxxx
Xx. Xxxxx, XX 00000
The Missouri Foundation For Health
c/o Xx. Xxxx X. Xxxxxx, Chairperson
000 Xxxx Xxxx Xxxxxx
Xxxxxxxxx Xxxx, XX 00000
Subject: BCBSMo Settlement Agreement and Plan of Reorganization
Ladies and Gentlemen:
You have requested the opinion of PricewaterhouseCoopers, LLP ("PwC") regarding
certain material United States federal income tax consequences of a series of
transactions that will be consummated pursuant to the Amended and Restated
Settlement Agreement dated January 6, 2000 (the "Settlement Agreement"), by and
among, the Attorney General of the State of Missouri, The Missouri Department of
Insurance, Blue Cross and Blue Shield of Missouri, a Missouri nonprofit public
benefit corporation ("BCBSMo") and RightCHOICE Managed Care, Inc., a Missouri
corporation ("RIT"), and the Agreement and Plan of Reorganization (the "Plan")
dated as of March 14, 2000, signed in connection with the Settlement Agreement
by and among BCBSMo, RIT, The Missouri Foundation For Health, a Missouri
nonprofit public benefit corporation (the "Foundation"), and RightCHOICE Managed
Care, Inc., a Delaware corporation ("New RIT").
Blue Cross Blue Shield of Missouri
RightCHOICE Managed Care, Inc.
The Missouri Foundation For Health
June 14, 2000
Section I of this letter (the "Tax Opinion Letter") contains the facts and
assumptions upon which the opinions are based. Section II of this Tax Opinion
Letter contains PwC's opinions. Section III of the Tax Opinion Letter contains
limitations on the opinions. All capitalized terms, unless otherwise specified,
have the meanings assigned to them in the Settlement Agreement and Plan.
I. FACTS & ASSUMPTIONS
BCBSMo is a Missouri nonprofit non-stock public benefit health services
corporation. RIT is a Missouri general business corporation. In 1994, BCBSMo
transferred assets and liabilities to RIT in exchange for stock in RIT, and a
minority interest in RIT was sold by RIT in a public stock offering.
RIT has two classes of stock outstanding: Class A voting common stock and Class
B super-voting common stock. BCBSMo owns all of the outstanding Class B stock,
representing approximately 80.1% of the value and 97.6% of the vote of RIT
stock. The outstanding Class A stock represents approximately 19.9% of the
value and 2.4% of the vote of all outstanding RIT stock and is held
predominantly by shareholders other than BCBSMo (the "RIT Public Shareholders").
RIT owns all the outstanding stock of Healthy Alliance Life Insurance Co., a
Missouri corporation ("HALIC").
BCBSMo filed a lawsuit against the Missouri Attorney General and the Director of
the Missouri Department of Insurance to obtain a judicial declaration that the
1994 reorganization was lawful and asking for an injunction preventing the
Missouri Department of Insurance from refusing to renew BCBSMo's certificate of
authority to engage in the health insurance business or taking any other action
against it to force it into paying a "toll charge" or "charitable asset
assessment" or any other fee as a result of the 1994 reorganization./1/ The
Attorney General and the Director contested BCBSMo's assertion and filed answers
and counterclaims.
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/1/ Blue Cross and Blue Shield of Missouri vs. Xxx Xxxxxx, in his official
capacity as the Director of the Missouri Department of Insurance, and the
Missouri Department of Insurance, and Xxxxxxxx X. (Xxx) Xxxxx, in his official
capacity as the Attorney General of the State of Missouri, in the Circuit Court
of Xxxx County, Missouri, Case No. CV196-619CC, Division 1.
(2)
Blue Cross Blue Shield of Missouri
RightCHOICE Managed Care, Inc.
The Missouri Foundation For Health
June 14, 2000
The parties agreed to settle the lawsuit. The terms of the settlement are set
forth in the Settlement Agreement. Pursuant to the Settlement Agreement, the
following transactions have been or will be consummated:
1. Transfer and Assumption Transaction: BCBSMo shall transfer certain
assets, liabilities, contracts, and agreements to HALIC with an aggregate
value equal to the sum of (i) 100% of the estimated policy liabilities, and
(ii) an amount, if any, necessary for HALIC to meet reserve requirements.
2. Charter Conversion Transaction: BCBSMo shall amend its Articles of
Incorporation to convert from a Missouri nonprofit non-stock public benefit
corporation to a Missouri for-profit stock corporation ("New BCBSMo"). In the
Charter Conversion Transaction, New BCBSMo will issue one share of stock to
the Foundation, which then shall be the sole shareholder of New BCBSMo. On
February 4, 2000, the Missouri Attorney General and Missouri Department of
Insurance caused the Foundation to be created as a new Missouri not-for-profit
public benefit corporation. On March 14, 2000, the Foundation incorporated
New RIT in Delaware, and New RIT issued one share of stock to the Foundation
(the "Prime New RIT Share"), which is, and at all times prior to the
Reorganization (defined below) will remain, the sole shareholder of New RIT.
The Foundation has applied to the Internal Revenue Service ("IRS") for a
determination that it is exempt from federal income tax as a social welfare
organization under Section 501(c)(4)./2/
3. Reincorporation Merger Transaction: New BCBSMo shall be reincorporated
under the corporate laws of the State of Delaware by means of a merger of New
BCBSMo with and into New RIT in accordance with Missouri and Delaware
corporate law, with New RIT surviving (still as a wholly-owned subsidiary of
the Foundation). In the Reincorporation Merger Transaction, the Prime New RIT
Share owned by the Foundation shall remain issued and outstanding, and the
share of New BCBSMo stock owned by the Foundation will be canceled. New
BCBSMo's directors and officers will resign, and New RIT's directors and
officers will continue. The Foundation waives any right it may have to
dissent to this merger.
-----------
/2/ All Section references are to the Internal Revenue Code of 1986, as amended
(the "Code").
(3)
Blue Cross Blue Shield of Missouri
RightCHOICE Managed Care, Inc.
The Missouri Foundation For Health
June 14, 2000
4. RIT/New RIT Merger Transaction: RIT shall merge upstream into New RIT in
accordance with Missouri and Delaware corporate law, with New RIT surviving.
Each outstanding share of RIT Class A stock, other than shares for which
dissenter's rights have been perfected, will be converted into one share of
New RIT common stock. All outstanding RIT Class B stock, and any RIT stock
held as treasury shares, will be cancelled. The Prime New RIT Share held by
the Foundation will be converted into the right to receive a number of shares
of New RIT stock equal to the number of RIT Class B shares outstanding prior
to the merger. As a result, New RIT will not issue to any party either
fractional shares of New RIT stock, or cash in lieu of fractional shares of
New RIT stock. Outstanding options for RIT Class A stock will be converted
into options for an equal number of shares of New RIT stock. Under the Plan,
the Foundation will have the right to receive the New RIT stock issued in the
RIT/New RIT Merger Transaction. The Foundation has authorized and directed New
RIT to issue all but 4.99% of the shares of New RIT stock issuable in exchange
for the one outstanding share of New RIT stock held by the Foundation directly
to the trustee of a voting trust (the "Voting Trust") as designated by the
Voting Trust and Divestiture Agreement (in the form attached as Exhibit L to
the Plan) to be signed at Closing.
5. Disposition of the Foundation's Interest in New RIT: Pursuant to the
terms of the Plan, all but 4.99% of the shares of New RIT owned by the
Foundation will be transferred to the Voting Trust, and all of the shares of
New RIT held by the Foundation and the Voting Trust will be liquidated
pursuant to the Voting Trust and Divestiture Agreement with the proceeds
applied to the purposes stated in the Foundation's charter documents. After
the Reorganization (as defined below), New RIT 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. The Board of Directors of the Foundation independently will decide
whether to accept or reject any offer to acquire the stock of New RIT. No
member of the Board of Directors of the Foundation will be an officer, agent,
employee, director, or independent contractor of New RIT, or any governmental
authority.
(4)
Blue Cross Blue Shield of Missouri
RightCHOICE Managed Care, Inc.
The Missouri Foundation For Health
June 14, 2000
6. Payment for Public Purpose: On the Closing Date, but prior to and
separate from the implementation of the Reorganization (as defined below),
BCBSMo will pay to the Foundation the amount of $12,780,000 in partial
satisfaction of claims by various parties that BCBSMo has a public purpose
obligation, which amount is to be used by the Foundation to carry out its
stated purpose.
7. Payment in Satisfaction of Obligations. After consummation of the
Reorganization (as defined below), New RIT will pay to the Foundation $175,000
in partial satisfaction of any obligation of BCBSMo under the Charter
Conversion Transaction.
The Transfer and Assumption Transaction, Charter Conversion Transaction,
Reincorporation Merger Transaction, and RIT/New RIT Merger Transaction are
collectively referred to as the "Reorganization."
In rendering the PwC opinions in Section II, below, PwC has assumed the
following material facts and conclusions:
(i) The Reorganization will be consummated in accordance with the Plan
(including satisfaction of all material covenants and conditions to the
obligations of the parties without amendment or waiver thereof in any
respect prior to the Closing, except the waiver of the following
conditions precedent to the Reorganization, as described in Article IV of
the Plan, shall not be considered material for purposes of this
assumption: 4.01(e) NYSE Listing; 4.02(e) Comfort Letter; 4.03(e) Comfort
Letter; 4.04(d) Comfort Letter; 4.05(e) Comfort Letter; 4.02(f) Favorable
Ruling; 4.03(f) Favorable Ruling; and 4.05(f) Favorable Ruling).
(ii) Each of BCBSMo, New BCBSMo, RIT, New RIT, the Foundation, and XXXXX will
comply with all necessary reporting obligations with respect to the
Reorganization required under the Code, and the Treasury regulations
promulgated thereunder (the "Regulations").
(iii) The Plan and all other documents and instruments referred to therein are
valid and binding in accordance with their terms.
(5)
Blue Cross Blue Shield of Missouri
RightCHOICE Managed Care, Inc.
The Missouri Foundation For Health
June 14, 2000
(iv) All statements and representations in the representation letters to PwC
from BCBSMo and RIT dated June 14, 2000 and from the Foundation dated
June 14, 2000, are true and correct.
(v) The value of the assets, contracts, and agreements transferred by BCBSMo
to HALIC in the Transfer and Assumption Transaction (net of liabilities
assumed by HALIC in that transaction) is zero.
(vi) At the time of the Charter Conversion Transaction, the Foundation will
have received from the IRS a determination letter that it is a tax exempt
entity under Section 501(c)(4).
(vii) BCBSMo is a nonprofit public benefit corporation, and for Missouri law
purposes, will be the same legal entity before and immediately after the
Charter Conversion Transaction.
(viii) The Foundation will not sell New RIT stock "in connection with" the
Reincorporation Merger Transaction to any "related person" as those terms
are defined in Treas. Reg. Section 1.368-1(e)(2) and (3).
(ix) The Voting Trust was formed for, and its activities will be limited to,
the exercise of the voting power of the New RIT stock transferred to it,
and the Voting Trust will not be taxable as an association.
(x) The RIT Public Shareholders did not participate in the negotiation of
either the Settlement Agreement or the Plan.
(xi) The Payment for Public Purpose is independent from, and does not
represent consideration in, the Reorganization.
(6)
Blue Cross Blue Shield of Missouri
RightCHOICE Managed Care, Inc.
The Missouri Foundation For Health
June 14, 2000
II. OPINION
Based upon and subject to the foregoing material facts and assumptions, as well
as the limitations set forth below, our opinions, under presently applicable
United States federal income tax law, are as follows:
1. BCBSMo, RIT, HALIC, New RIT, the Foundation, the current RIT Public
Shareholders, and the recipients of New RIT common stock in the RIT/New RIT
Merger Transaction will not recognize gain or loss pursuant to the Transfer
and Assumption Transaction, except that BCBSMo could recognize gain to the
extent its basis in any asset transferred differs from its fair value on the
date of transfer. However, the gain would be deferred. Section 1.1502-13 of
the Regulations.
The foregoing opinion contains a qualification and is also based upon a crucial
assumption. The crucial assumption is (v) above.
If Assumption (v) is Correct
If assumption (v) is correct, no gain or loss will be recognized by the RIT
Public Shareholders pursuant to the Transfer and Assumption Transaction, and
BCBSMo will recognize gain pursuant to the Transfer and Assumption Transaction
only if (i) the basis of any asset transferred differs from its fair market
value on the date of transfer and (ii) the transfer does not qualify as (a) an
exchange under Section 351 or (b) a capital contribution which is treated as
tax-free to the contributing shareholder.
With regard to Section 351, because BCBSMo receives no stock from RIT or HALIC
and because BCBSMo does not own all of the stock of RIT, the IRS could argue
that Section 351 does not apply. BCBSMo could argue that Section 351 applies
because (S) 1.1502-34 of the Regulations generally allows stock ownership of all
members of a consolidated group to be included when determining whether the
control requirement of Section 351 is met./3/ However, because there is no
authority applying (S) 1.1502-34 of the Regulations in the present context,
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/3/ Rev. Rul. 89-46, 1989-1 C.B. 272 (which provides that, under certain
circumstances, a transfer of assets between members of a consolidated group can
qualify under Section 351 even though no shares of the transferee corporation
are issued in the exchange).
(7)
Blue Cross Blue Shield of Missouri
RightCHOICE Managed Care, Inc.
The Missouri Foundation For Health
June 14, 2000
we are unable to issue an opinion with regard to whether Section 351 will apply.
Nevertheless, even if BCBSMo is deemed to recognize gain because its basis in
any asset transferred differs from its fair value on the date of transfer in the
Transfer and Assumption Transaction, under (S) 1.1502-13 of the Regulations,
recognition of such gain would be deferred until the occurrence of certain
events such as BCBSMo (or its successor, New RIT), HALIC or the transferred
assets leaving the consolidated return group.
If Section 351 does not apply, it may be argued that no taxable gain should be
recognized by BCBSMo because the Transfer and Assumption Transaction should be
treated as a contribution to capital which would be tax free to the contributing
shareholder and the transferee corporation./4/ The argument would be that the
contribution of assets and liabilities by BCBSMo to HALIC should be
characterized as a series of contributions to capital. The first contribution
would be a contribution from BCBSMo to RIT. The second capital contribution
would be from RIT to HALIC. This second deemed capital contribution would be
from a parent to its wholly owned subsidiary and no gain or loss would be
recognized by RIT or HALIC. Again, because BCBSMo does not own all of the stock
of RIT, and because there is no authority applying the capital contribution
analysis in this context, we are unable to issue an opinion with regard to
whether the transaction will be treated as a tax-free contribution to capital.
As stated above, if BCBSMo is deemed to recognize gain in the Transfer and
Assumption Transaction, it will be deferred.
If the Assumption (v) is Incorrect and the Value of the Transferred Assets
Exceeds Liabilities Transferred
If the Assumption (v) is incorrect and the value of the transferred assets
exceeds liabilities transferred, then the IRS could argue that Section 351 does
not apply because BCBSMo does not own all of the stock of RIT, and therefore
BCBSMo should have received additional shares of RIT or shares of HALIC to
reflect the transfer.
If assumption (v) is incorrect and Section 351 does not apply, it may be argued
that no taxable gain or income should be recognized by BCBSMo or the RIT Public
Shareholders because the Transfer and Assumption Transaction should be treated
as a contribution to capital which
-----------
/4/ CIR x. Xxxx, 483 U.S. 89 (1987); Section 118.
(8)
Blue Cross Blue Shield of Missouri
RightCHOICE Managed Care, Inc.
The Missouri Foundation For Health
June 14, 2000
would be tax free to the contributing shareholder and the transferee
corporation, for the same reasons set forth above. As a result of the first
contribution described above, the RIT Public Shareholders could be treated by
the IRS as receiving an increase in value of their ownership interest in RIT.
However, if the capital contribution was in the ordinary course of business, not
bargained for by the RIT Public Shareholders, and not mutual consideration to
the RIT Public Shareholders of any kind, it could be concluded that no gain
should be recognized by the RIT Public Shareholders./5/
If the assumption is incorrect and the Transfer and Assumption Transaction is
not treated as a contribution to capital which is tax free to BCBSMo and the RIT
Public Shareholders, as discussed in the immediately preceding paragraph, then
even if Section 351 does apply to the Transfer and Assumption Transaction,
BCBSMo and the RIT Public Shareholders may recognize taxable gain or income.
When stock issued (or deemed issued) in a Section 351 transaction is received by
shareholders in disproportion to their interests, the entire transaction is
given a tax effect in accordance with its true nature./6/ In the instant
transaction, the IRS may attempt to recharacterize the transaction as a
contribution from BCBSMo to HALIC in return for stock of HALIC in a transaction
qualifying under Section 351, but in order to account for BCBSMo's less than
100% ownership interest in RIT, it could treat the stock that is deemed
transferred from HALIC to BCBSMo as being transferred to the RIT Public
Shareholders by BCBSMo in proportion to their 19.9% ownership interest in RIT.
Such a deemed transfer could be treated as a gift (which would not result in
income tax), or as compensation or an amount paid to satisfy an obligation,
either of which would result in taxable income or gain to the RIT Public
Shareholders and BCBSMo./7/ However, because the RIT Class A stock is publicly
traded, and if (i) the RIT Public Shareholders did not participate in the
negotiation of either the Settlement Agreement or the Plan and (ii) the RIT
Public Shareholders did not receive mutual consideration of any kind for any
increased value in the RIT Class A shares,
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/5/ CIR x. Xxxx, 483 U.S. 89 (1987); Treas. Reg. 1.351-1(b)(1). See PLR 9836004
(Sept. 4, 1998). PLRs are not precedential authority but indicate how the IRS
has treated another transaction with similar facts.
/6/ Treas. Reg. 1.351-1(b)(1).
/7/ BCBSMo would recognized taxable gain if the value of the RIT or HALIC stock
transferred (or deemed transferred) to the RIT Class A shareholders exceeds
BCBSMo's basis in that stock.
(9)
Blue Cross Blue Shield of Missouri
RightCHOICE Managed Care, Inc.
The Missouri Foundation For Health
June 14, 2000
the parties could argue that the Transfer and Assumption Transaction should not
be taxable./8/ Again, we are unable to opine as to whether this argument would
prevail.
2. The Charter Conversion Transaction should be treated as a recapitalization
under Section 368(a)(1)(E).
3. The Foundation should not recognize gain or loss in the Charter Conversion
Transaction. Section 354.
4. Neither BCBSMo nor New BCBSMo will recognize gain or loss in the Charter
Conversion Transaction. Section 1032.
5. The Reincorporation Merger Transaction will qualify as a reorganization
under Section 368(a).
6. New BCBSMo, New RIT, and the Foundation will not recognize gain or loss in
the Reincorporation Merger Transaction. Sections 361, 1032 and 354.
7. The tax basis of the New BCBSMo assets received by New RIT in the
Reincorporation Merger Transaction will be the same as the tax basis of
those assets in the hands of New BCBSMo. Section 362(b).
8. The holding period of the New BCBSMo assets received by New RIT in the
Reincorporation Merger Transaction will include the holding period for those
assets in the hands of New BCBSMo. Section 1223(2).
9. The RIT/New RIT Merger Transaction will qualify as a reorganization under
Section 368(a) and also will be a liquidation under Sections 332 and 337.
10. RIT will not recognize gain or loss on the transfer of all of its assets and
liabilities to New RIT in the RIT/New RIT Merger Transaction. Sections
337(a), 357(a), and 361(a).
11. No gain or loss will be recognized by New RIT on the receipt of property
distributed in complete liquidation of RIT in the RIT/New RIT Merger
Transaction. Sections 332(a) and 1032.
-----------
/8/ See Treas. Reg. Section 1.351-1(b)(1); Rev. Rul. 76-454, 1976-2 C.B. 102
(non-pro rata Section 351 exchange); Rev. Rul. 73-233, 1973-1 C.B. 179 (majority
shareholder contributed shares to the corporation to induce the minority
shareholders to participate in the merger); Rev. Rul. 79-10, 1979-1 C.B. 140
(non-pro rata liquidation).
(10)
Blue Cross Blue Shield of Missouri
RightCHOICE Managed Care, Inc.
The Missouri Foundation For Health
June 14, 2000
12. The shareholders of RIT Class A stock will not recognize gain or loss upon
the exchange of RIT Class A stock solely for New RIT stock in the RIT/New
RIT Merger Transaction. Section 354(a).
13. The aggregate tax basis of the New RIT stock received by the shareholders
of the RIT Class A stock in the RIT/New RIT Merger Transaction will equal
the aggregate basis of the respective RIT Class A stock exchanged therefor,
reduced by any amount allocable to any fractional share interest, if any,
for which cash is received. Section 358.
14. Provided that the RIT Class A stock is held by a holder as a capital asset
at the RIT/New RIT Merger Effective Time, the holding period of the New RIT
stock received by the holder of the RIT Class A stock in the RIT/New RIT
Merger Transaction will include the holding period of the RIT Class A
stock. Section 1223.
15. The Foundation will not recognize gain or loss in the RIT/New RIT Merger
Transaction.
16. The aggregate tax basis of the New RIT stock received by the Foundation in
the RIT/New RIT Merger Transaction will equal the aggregate basis of the
Prime New RIT Share exchanged therefor. Section 358.
17. Provided that the Prime New RIT Share is held by the Foundation as a
capital asset at the RIT/New RIT Merger Effective Time, the holding period
of the New RIT stock received by the Foundation in the RIT/New RIT Merger
Transaction will include the holding period of the Prime New RIT Share.
Section 1223.
18. No gain or loss will be recognized pursuant to Section 337(b)(2) or Section
337(d) by BCBSMo, New BCBSMo, RIT, New RIT, the shareholders of any of the
foregoing entities, or the Foundation in the Reorganization.
19. The tax basis of the RIT assets received by New RIT in the RIT/New RIT
Merger Transaction will be the same as the tax basis of those assets in the
hands of RIT. Section 362(b).
20. The holding period of the RIT assets received by New RIT in the RIT/New RIT
Merger Transaction will include the holding period for those assets in the
hands of RIT. Section 1223(2).
(11)
Blue Cross Blue Shield of Missouri
RightCHOICE Managed Care, Inc.
The Missouri Foundation For Health
June 14, 2000
III. LIMITATIONS
1. In rendering our opinions, we have considered applicable provisions of
the Code, the Regulations, pertinent judicial authorities, rulings of the IRS
and such other tax authorities in effect as of the date of this letter as we
considered relevant. It should be noted that such tax authorities are subject
to change at any time and, in some circumstances, with retroactive affect. A
material change in any of the authorities upon which our opinion is based could
adversely affect our opinions. PwC assumes no obligation to update or modify
the Tax Opinion Letter to reflect any developments that occur after the date of
the Tax Opinion Letter.
2. The opinions set forth in Section II are based on the accuracy and
completeness of the representation letters of BCBSMo and RIT dated June 14, 2000
and the Foundation dated June 14, 2000, attached hereto as Exhibits A, and B, as
well as the information, documents, facts and assumptions that we have included
or referenced in the Tax Opinion Letter.
3. The opinions set forth in Section II are not binding on the IRS or the
courts, and there can be no assurance that the IRS or a court of competent
jurisdiction will not disagree with such opinions.
4. In connection with the opinions set forth in Section II, PwC read
copies or originals, certified or otherwise identified, of such documents and
records as it has deemed necessary or appropriate for purposes of the opinions
set forth in Section II, including the following:
a. The Settlement Agreement
b. Articles of Incorporation of The Missouri Foundation For Health, a
Missouri nonprofit public benefit corporation, as filed with the
Missouri Secretary of State on January 6, 2000.
c. Bylaws of The Missouri Foundation For Health, a Missouri nonprofit
public benefit corporation, as adopted by the board of the Foundation
on March 13, 2000.
(12)
Blue Cross Blue Shield of Missouri
RightCHOICE Managed Care, Inc.
The Missouri Foundation For Health
June 14, 2000
d. Form of Articles of Incorporation of New BCBSMo attached as Exhibit C
to the Plan.
e. Certificate of Incorporation of New RIT filed with the Secretary of
State of Delaware on March 14, 2000.
f. Bylaws of New RIT as adopted by the Board of New RIT on March 14,
2000.
g. The Plan.
h. Assumption Reinsurance Agreement between BCBSMo and HALIC dated March
14, 2000.
i. List of Policy Types attached as Exhibit A to the Assumption
Reinsurance Agreement.
j. Form of Novation Agreement attached as Exhibit B to the Assumption
Reinsurance Agreement.
k. Form of Plan Participation Agreement - BCBSMo attached as Exhibit C to
the Assumption Reinsurance Agreement.
l. Form of Plan Participation Agreement - HALIC attached as Exhibit D to
the Assumption Reinsurance Agreement.
m. Form of Policyholder Notice attached as Exhibit E to the Assumption
Reinsurance Agreement.
n. Form of Certificate of Assumption attached as Exhibit F to the
Assumption Reinsurance Agreement.
o. Form of Assignment and Assumption Agreement attached as Exhibit G to
the Assumption Reinsurance Agreement.
p. Form of Bylaws of New BCBSMo attached as Exhibit D to the Plan.
q. Intercompany Liabilities attached as Exhibit E to the Plan.
r. Form of Foundation Reincorporation Merger Resolution for New RIT
attached as Exhibit H to the Plan.
(13)
Blue Cross Blue Shield of Missouri
RightCHOICE Managed Care, Inc.
The Missouri Foundation For Health
June 14, 2000
s. Form of Foundation Reincorporation Merger Resolution for New BCBSMo
attached as Exhibit H to the Plan.
t. Form of Foundation RIT/New RIT Merger Resolution attached as Exhibit I
to the Plan.
u. Form of Registration Rights Agreement by and between New RIT and the
Foundation attached as Exhibit J to the Plan.
v. Form of Indemnification Agreement by and between New RIT and the
Foundation attached as Exhibit K to the Plan.
w. Form of Voting Trust and Divestiture Agreement by and among New RIT,
the Foundation, and a to be named trustee, attached as Exhibit L to
the Plan.
x. The Registration Statement on Form S-4 of New RIT (which includes the
proxy statement of RIT and prospectus of New RIT) filed with the
Securities and Exchange Commission on April 14, 2000.
y. Letter from the Attorney General of Missouri to PricewaterhouseCoopers
LLP dated June 14, 2000.
PwC has assumed (without independent verification) that all signatures on all
documents presented to it are genuine, that all documents submitted to it as
originals are accurate originals thereof, that all information submitted to it
was accurate and complete, and that all persons executing and delivering
originals or copies of documents examined by it were competent to execute and
deliver such documents.
5. PwC is expressing its opinions only as to the matters expressly set
forth in Section II. No opinion should be inferred as to any other matters.
Specifically, no opinion is offered about the tax treatment of the Payment for
Public Purpose pursuant to which BCBSMo will pay to the Foundation the amount of
$12,780,000 in partial satisfaction of claims by various parties, the $175,000
payment by New RIT in partial satisfaction of any obligation of BCBSMo resulting
from the Charter Conversion Transaction, or the $50,000 payment by BCBSMo to the
Foundation for the reimbursement of Foundation nominating committee expenses.
Also, no opinion is expressed as to the tax consequences of any of the
transactions under any United States state or local tax law, or any non-United
States tax law.
(14)
Blue Cross Blue Shield of Missouri
RightCHOICE Managed Care, Inc.
The Missouri Foundation For Health
June 14, 2000
6. Any inaccuracy in, or breach of, any of the aforementioned statements,
representations, and assumptions, could adversely affect our opinion. No ruling
has been (or will be) sought from the IRS by BCBSMo, New BCBSMo, RIT, New RIT,
the Foundation, HALIC or any of their affiliates as to the United States federal
income tax consequences of any aspect of the Plan, except BCBSMo has sought a
ruling from the IRS regarding (i) whether the Transfer and Assumption
Transaction qualifies as a tax-free transaction, and (ii) whether the Charter
Conversion Transaction qualifies as a reorganization defined under Section
368(a).
PwC hereby consents to the filing of this Tax Opinion Letter as an exhibit to
the Registration Statement and to the reference to this Tax Opinion Letter in
the Prospectus/Proxy Statement that forms a part of the Registration Statement.
Very truly yours,
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Enclosures
(15)
