EXHIBIT 99(a)
AMENDED AND RESTATED SETTLEMENT AGREEMENT
1. Parties. The parties (collectively, the "Parties" and
individually, a "Party") to this Amended and Restated 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 Xxxxx 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.
This Agreement amends, restates and supersedes in its entirety
that certain Settlement Agreement between the Parties dated
September 20, 1998, and all amendments thereto.
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; and
(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. 81172, in the
Supreme Court of Missouri (on transfer from Appeal WD 53798, in
the Missouri Court of Appeals, Western District) (collectively,
the "Purposes Litigation Appeal").
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; and
(f) 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. Payment for Public Purpose. On the Closing Date (as defined
in Paragraph 8 below), but prior to and separate from the
implementation of the Reorganization Agreement (as defined
below), Blue Cross Blue Shield shall pay to the Foundation the
amount of $12,780,000 in partial satisfaction of claims by
various parties, including the Attorney General, Department of
Insurance and amici curiae, that Blue Cross Blue Shield has a
public purpose obligation, which amount is to be used by the
Foundation (as defined below) to carry out its stated purposes.
5. Reorganization Agreement. As partial consideration for
their mutual undertakings in this Agreement, promptly following
the dismissal of the Purposes Litigation and Purposes Litigation
Appeal in accordance with paragraph 7 hereof:
(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.
6. [This paragraph is intentionally left blank.]
7. Disposition of Litigation. In further consideration of
their mutual undertakings in this Agreement and the Reorganization
Agreement, the Parties shall dispose of certain pending litigation
as follows:
(a) Immediately upon execution of this Agreement, the Parties
who are litigants in the Purposes Litigation shall file in the
Circuit Court of Xxxx County a Joint Notice of Dismissal (in the
form attached hereto as Exhibit F) of all pending claims in the
Purposes Litigation;
(b) At such later time on or before February 8, 2000 as is
agreed to by the Parties, those Parties who are litigants in the
Purposes Litigation Appeal shall file a joint motion in the
Supreme Court of Missouri in the form attached hereto as
Exhibit F for dismissal of all appeals pending in the Purposes
Litigation Appeal;
(c) No Party shall take any step to prosecute any claim that is
now asserted in the Purposes Litigation or the Purposes
Litigation Appeal so long as this Agreement remains in force and
effect; provided, however, that the undertaking of the Department
of Insurance under this subparagraph is subject to the
limitations of X.X.Xx. section 374.217 (1994) if those limitations
are applicable to that undertaking; and
(d) On the Closing Date, if there remains pending any claims in
the Purposes Litigation or the Purposes Litigation Appeal that
have not already been dismissed, the Parties will stipulate to
the dismissal with prejudice of such claims.
8. 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 date (referred to
herein as the "Closing Date") after which all of the conditions
precedent to the Reorganization are satisfied or waived and on
which the Reorganization is consummated. Blue Cross Blue Shield
and RightCHOICE will not consummate the Reorganization unless and
until they receive written notice from the Attorney General and
Director of the Department of Insurance that the Xxxxxx
litigation and legal opinion conditions precedent in Sections
4.01(f) and 4.05(h)(iii), respectively, of the Reorganization
Agreement have been satisfied or waived.
(a) Subject to the exceptions contained in subparagraph 8(e),
the Attorney General and Department of Insurance on behalf of
themselves, their offices, and the State of Missouri
(collectively, "the Paragraph 8 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 8 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 8(e),
the Paragraph 8 Releasors release the Paragraph 8 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.
(c) Subject to the exceptions contained in subparagraph 8(e),
the Paragraph 8 Releasors release the Paragraph 8 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 8(e),
the Paragraph 8 Releasors release the Paragraph 8 Releasees from
any and all claims, causes of action, judgments, claims,
disputes, investigations, audits or complaints listed on
Exhibit G attached hereto.
(e) Claims in the following classes are excluded from the
releases given in this paragraph 8:
(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 8 Releasees in connection with the consummation
of the Reorganization.
9. 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 9(d),
Blue Cross Blue Shield and RightCHOICE, and their respective
affiliated corporations, successors and assigns (collectively,
"the Paragraph 9 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 9
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 9(d),
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.
(c) Subject to the exceptions contained in subparagraph 9(d),
the Paragraph 9 Releasors release the Paragraph 9 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 9:
(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 9 Releasees in connection with the consummation
of the Reorganization.
10. 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 G and as described in
Paragraph 8(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. Blue Cross Blue Shield
represents and warrants to the Attorney General and the
Department of Insurance that, except as described on the list
attached hereto as Exhibit H, it had no knowledge as of September
20, 1998, 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.
11. 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 the
Closing Date has not occurred on or before December 31, 2000.
(c) This Agreement may be terminated at any time by written
agreement signed by all Parties.
(d) If any Party breaches its obligations under Paragraph 18(k)
hereof, and fails to cure such breach within thirty (30) days
after written notice from any other Party (the "Notifying Party")
describing the alleged breach (or fails to undertake to cure
within such thirty (30) day period and to diligently pursue to
completion such cure as cannot reasonably be completed within the
thirty (30) day time period), the Notifying Party may terminate
this Agreement by giving written notice to all other Parties.
(e) If this Agreement terminates pursuant to subparagraph (a),
or is terminated pursuant to subparagraph (b), subparagraph (c),
or subparagraph (d), the Agreement shall thereafter be void and
have no force or effect.
12. 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, if any, 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.
13. 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 13.
14. 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.
15. 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.
16. 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.
17. Nominating Committee Expenses. The Attorney General and
Department of Insurance will review, approve and then submit to
Blue Cross Blue Shield for payment, in an amount not to exceed
$50,000 in the aggregate, the reasonable and necessary costs
incurred in connection with the search for qualified candidates
to serve on the Foundation Board to be conducted by the
Nominating Committee, and Blue Cross Blue Shield shall pay such
amounts.
18. 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. Xxxxxx, Esq.
Xxxxxxxxxxxx, Xxxxxx & Xxxx, P.C.
2000 Equitable Building
00 Xxxxx Xxxxxxxx
Xx. Xxxxx, Xxxxxxxx 00000-0000
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:
Xxxxx X. 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 Blue Cross
Blue Shield 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 8, (2) acts or omissions occurring prior to April 20,
1998 that are not covered by the releases described in
Paragraph 8, and (3) claims described in Paragraph 8(e) of this
Agreement.
[Remainder of page intentionally left blank]
Executed this 6th day of January, 2000.
/s/ Xxxxxxxx X. Xxxxx
Xxxxxxxx X. (Xxx) Xxxxx
Attorney General of Missouri
Missouri Department of Insurance
By: /s/ Xxxxx X. Xxxxxx
Xxxxx 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 Joint Notice of Dismissal and Joint Motion to Dismiss
Exhibit G List of Known Claims as of April 20, 1998
Exhibit H 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)
(Amended and Restated on January 6, 2000)
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, provided that such restriction shall
not be construed to prohibit the Corporation from
interacting with, reporting to, educating, or advising the
General Assembly with respect to matters within the purposes
and expertise of the Foundation.
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), provided that the Corporation shall
in no way be precluded from interacting with, reporting to,
educating, or advising the General Assembly with respect to
matters within the purposes and expertise of the Foundation.
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 20, 1998, as
Amended and Restated on January 6, 2000, among Xxxxxxxx X.
("Xxx") Xxxxx, Attorney General of the State of Missouri,
the Missouri Department of Insurance and Xxxxx 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. Xxxxxx
0000 Xx Xxxxxx Xxxxx
Xxxxxxxxx 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 _____________, 2000.
Incorporator
STATE OF MISSOURI )
) SS.
COUNTY OF XXXX )
On this day of _________________, 2000 before me,
__________________, a Notary Public, in and for the State of
Missouri, personally appeared Xxxx X. Xxxxxx, 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)
(Amended and Restated on January 6, 2000)
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 sections
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 ______, 2000, 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 Director of the Department of
Insurance and 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. These appointments
shall be made from a slate of thirty-five (35)
nominees, each of whom shall be qualified to serve as a
Director, that will be provided by the Nominating
Committee pursuant to Section 5.1.5. Either the
Governor or the Attorney General may reject names from
the slate due to a conflict of interest or as being
unqualified to serve as Directors under Section 4.2.4,
and the Nominating Committee shall replace those names
on the slate with new, qualified nominees. 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 5.1.6, 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,
education, and/or experience 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 Foundations'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 Nominating Committee. There shall be a
Nominating Committee which shall consist of 13 persons
appointed by the Governor and the Attorney General of
the Sate of Missouri, acting jointly, in consultation
with representatives of the American Association of
Retired Persons (Missouri Chapter), the League of Women
Voters of Missouri, the Missouri Association for Social
Welfare, the Missouri Consumer Health Care WATCH
Coalition, and the Reform Organization of Welfare.
Following the appointment of the Nominating Committee,
the members thereof shall, with all deliberate speed,
produce a slate of 35 persons, each of whom must be
qualified to serve as Directors of the Corporation
under Section 4.2.4 and none of whom may be members of
the Nominating Committee, which slate shall be
delivered to both the Governor and the Attorney
General. Names rejected by either the Governor or the
Attorney General due to conflict of interest or as
unqualified to serve under Section 4.2.4 shall be
replaced on the slate by the Nominating Committee with
new, qualified nominees. The Nominating Committee
shall elect from its members a Chairperson, and the
Committee shall act by majority vote. The Committee is
authorized to take such actions and engage the services
of such professionals as it deems reasonable and
necessary to accomplish its nominating mission.
Expenses of the Committee are to be reported to the
Attorney General and the Director of the Department of
Insurance for their review and submission to Blue Cross
and Blue Shield of Missouri for payment. Unnecessary
or unreasonable expenses, in the view of the Director
of the Department of Insurance and the Attorney
General, and all expenses which exceed an overall cap
of $50,000, will not be submitted for payment. Once
the initial 15 Directors have been appointed and have
taken office, the Nominating Committee shall dissolve
and its members shall become the initial members of the
Community Advisory Committee.
5.1.6 Community Advisory Committee. There
shall be a Community Advisory Committee which shall
consist of not less than thirteen (13) persons, none of
whom may be members of the Board. The initial members
of the Community Advisory Committee shall be the
members of the Nominating Committee. 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, including members appointed to fill
vacancies, 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. The
Community Advisory Committee shall be responsible for
(1) advising the Board on no less than an 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
Foundation, 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;
(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.
[Remainder of this page is intended to be blank]
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.
TABLE OF CONTENTS
ARTICLE 1. DEFINITIONS
1.1 Act 2
1.2 Articles 2
1.3 Board 2
1.4 Bylaws 2
1.5 Code 2
1.6 Corporation 2
1.7 Person 2
1.8 State 2
ARTICLE 2. OFFICES 3
ARTICLE 3. MEMBER OF THE CORPORATION 3
3.1 Membership 3
3.2 Approval of the Board 3
ARTICLE 4. BOARD OF DIRECTORS 3
4.1 General Authority 3
4.2 Number, Appointment, and Tenure 3
4.2.1 Number of Board Members 3
4.2.2 Nomination and Election of Members of the Board 3
4.2.3 Tenure for Members of the Board 4
4.2.4 Qualifications of Directors 5
4.3 Resignations and Removal 6
4.4 Vacancies 6
4.5 Policy of Open Records and Meetings: 7
4.6 Annual and Regular Meetings 7
4.7 Special Meetings 7
4.8 Notice, Waiver 7
4.9 Quorum 8
4.10 Manner of Acting 8
4.10.1 Formal Action by Board 8
4.10.2 Informal Action by the Board 8
4.10.3 Telephonic Meeting 8
4.11 Compensation and Immunity of Members of the Board 8
4.12 Standard of Care 9
ARTICLE 5. COMMITTEES 9
5.1 Standing Committees 9
5.1.1 Executive Committee 9
5.1.2 Audit Committee 9
5.1.3 Investment Committee 10
5.1.4 Program/Grants Committee 10
5.1.5 Nominating Committee 10
5.1.6 Community Advisory Committee 11
5.2 Other Committees 12
5.3 Limitation on Powers of Committees 12
5.4 Meetings and Actions of Committees 13
ARTICLE 6. OFFICERS 13
6.1 Officers 13
6.2 Appointment and Tenure 13
6.3 Resignations and Removal 14
6.4 Duties of the Officers of the Corporation 14
6.4.1 Chairperson 14
6.4.2 Executive Director 14
6.4.3 Secretary 14
6.4.4 Treasurer 14
6.5 Compensation 15
6.6 Surety Bonds 15
ARTICLE 7. CONFLICTS OF INTEREST 15
ARTICLE 8. INDEMNIFICATION 17
8.1 Indemnity 17
8.2 Authorization by the Board 17
8.3 Cooperation of Indemnitee 18
8.4 Advance of Expenses 18
8.5 Non-Exclusivity 18
8.6 Insurance 19
8.7 Additional Indemnification 19
8.8 Set-off 19
8.9 Limitation 19
ARTICLE 9. GRANTS ADMINISTRATION 19
9.1 Purpose of Grants 19
9.2 Exclusive Power Vested in the Board 20
9.3 Refusal; Withdrawal 20
9.4 Accounting Required 20
9.5 Gifts 20
ARTICLE 10. MISCELLANEOUS 20
10.1 Contracts 20
10.2 Checks, Drafts, Etc 20
10.3 Deposits 21
10.4 Books and Records 21
10.5 Annual Financial Report 21
10.6 Fiscal Year 21
10.7 Seal 21
10.8 Notice 21
10.8.1 Effective Date 21
10.8.2 Waiver of Notice 21
10.9 Loans to Officers and Board Members Prohibited 21
10.10 Revocation of Authorizations 21
10.11 Policies 22
10.12 Vote by Presiding Officer 22
10.13 Gender and Number 22
10.14 Articles and Other Headings 22
ARTICLE 11. AMENDMENTS 22
11.1 Proposed Amendments 22
11.2 Amendments to Governance 22
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 __________ ____, 2000
[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 ________, 2000.
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 ____________ ___, 2000
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 4
(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 5
(f) Consummation of Transaction 5
(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 6
(e) Regulatory Approvals 6
(f) Certificate of Incorporation and Bylaws 6
(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 7
(b) Effective Time 7
(c) Conversion of Shares 7
(d) Treasury Shares 7
(e) Dissenters' Rights 7
(f) Effects of Merger 8
(g) Regulatory Approvals 8
(h) Certificate of Incorporation and Bylaws 8
(i) New RIT Directors and Officers 8
(j) Exchange of Certificates 8
(1) Exchange Agent 8
(2) Exchange Procedure for Public Shareholders 8
(3) Exchange Procedure for Foundation 9
(4) Distributions With Respect to Unexchanged Shares 9
(5) Transfers of Ownership 9
(6) No Liability 10
(7) Lost, Stolen or Destroyed Certificates 10
(k) Stock Transfer Books 10
(l) Tax Consequences 10
(m) Consummation of Transaction 10
Section 1.06. Stock Options 10
Section 1.07. Closing; Closing Date 11
ARTICLE II REPRESENTATIONS AND WARRANTIES 11
Section 2.01. Disclosure Schedule; Standard 11
(a) Disclosure Schedule 11
(b) Standard 12
Section 2.02. Representations and Warranties of RIT 12
(a) Corporate Existence and Power 12
(b) Authorization; No Defaults 12
(c) Capitalization 13
(d) Financial Information 13
(e) Reports 13
(f) Absence of Changes 14
(g) Undisclosed Liabilities 14
Section 2.03. Representations and Warranties of BCBSMo 14
(a) Authorization; No Defaults 14
(b) Capitalization 15
(c) Financial Information 15
(d) Reports 15
(e) Absence of Changes 15
(f) Undisclosed Liabilities 15
Section 2.04. Representations and Warranties of New RIT 16
(a) Corporate Existence and Power 16
(b) Authorization; No Defaults 16
(c) Capitalization 16
Section 2.05. Representations and Warranties of the Foundation 16
(a) Corporate Existence and Power 17
(b) Authorization; No Defaults 17
ARTICLE III COVENANTS 17
Section 3.01. Pre-Closing Covenants of RIT 17
(a) Submission to Shareholders 17
(b) Consummation of Reorganization 18
(c) Consents and Approvals 18
Section 3.02. Pre-Closing Covenants of BCBSMo 18
(a) Agreement to Vote in Favor 18
(b) Consummation of Reorganization 18
(c) Consents and Approvals 18
Section 3.03. Pre-Closing Covenants of New RIT 18
(a) Other Actions 18
(b) Consummation of Reorganization 18
(c) Plans of Merger 19
Section 3.04. Pre-Closing Covenants of Foundation 19
(a) No Sale or Transfer 19
(b) Agreements to Vote in Favor 19
(1) Reincorporation Merger Transaction 19
(2) RIT/New RIT Merger Transaction 19
(c) Consummation of Reorganization 19
(d) Tax Opinion 19
Section 3.05.Proxy Statement/Prospectus; Registration Statement 20
Section 3.06. Public Announcements 20
Section 3.07. Registration Rights Agreement 20
Section 3.08. Indemnification Agreement 20
Section 3.09. Voting Trust and Divestiture Agreement 20
Section 3.10. Public Offering 20
Section 3.11. Indemnification and Insurance 21
Section 3.12. Accountants' Letters 21
Section 3.13. Foundation Governance 21
Section 3.14. Due Diligence 21
Section 3.15. Payment to Foundation 22
ARTICLE IV CONDITIONS PRECEDENT TO REORGANIZATION 22
Section 4.01. Conditions to Reorganization 22
(a) Injunction 22
(b) Regulatory and Shareholder Approval 22
(c) Effective Registration Statement 22
(d) Tax Determination 22
(e) NYSE Listing 22
(f) Resolution of Xxxxxx Litigation 22
Section 4.02. Conditions to Obligations of BCBSMo 23
(a) Representations and Warranties 23
(b) Compliance with Agreements 23
(c) Delivery of Documents 23
(d) Other Consents 23
(e) Comfort Letter 23
(f) Favorable Ruling 23
(g) Tax Opinions 24
(h) BCBSMo Board Legal Opinion 24
(i) Resolution of Pending Litigation 24
(j) Legal Opinions 24
(k) Confirmation From Attorney General and DOI 25
Section 4.03. Conditions to Obligations of RIT 25
(a) Representations and Warranties 25
(b) Compliance with Agreements 25
(c) Delivery of Documents 25
(d) Other Consents 25
(e) Comfort Letter 25
(f) Favorable Ruling 26
(g) Tax Opinions 26
(h) Association Approval 26
(i) Opinion of Financial Advisor to RIT 26
(j) Confirmation From Attorney General and DOI 26
(k) Bank Approval 27
(l) Legal Opinions 27
Section 4.04. Conditions to Obligations of New RIT 27
(a) Representations and Warranties 27
(b) Compliance with Agreements 27
(c) Delivery of Documents 27
(d) Comfort Letter 27
(e) Legal Opinions 27
Section 4.05. Conditions to Obligations of Foundation 27
(a) Representations and Warranties 28
(b) Compliance with Agreements 28
(c) Delivery of Documents 28
(d) Other Consents 28
(e) Comfort Letter 28
(f) Favorable Ruling 28
(g) Tax Opinions 28
(h) Legal Opinions 29
ARTICLE V TERMINATION 29
ARTICLE VI GENERAL PROVISIONS 30
Section 6.01. Fees and Expenses 30
Section 6.02. Nonsurvival of Representations,
Warranties and Agreements 30
Section 6.03. Notices 30
Section 6.04. Amendment 30
Section 6.05. Waiver 31
Section 6.06. Entire Agreement 31
Section 6.07. Parties in Interest 31
Section 6.08. Governing Law 31
Section 6.09. Counterparts 31
Section 6.10. Recitals 31
Section 6.11. Fair Construction 31
Section 6.12. Headings and Captions 31
Section 6.13. Assignment 31
LIST OF EXHIBITS
Exhibit Description
A Amended and Restated 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 Litigation 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 ________ ___, 2000, 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 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") [to be updated by RIT based on
signing date] 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 were involved in the following
litigation 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"): 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. Xxx Xxxxxx, Director of the Missouri
Department of Insurance and Xxxxxxxx X. "Xxx" Xxxxx, No. 81172,
in the Supreme Court of Missouri (on transfer from Appeal WD
53798, in the Missouri Court of Appeals, Western District
(collectively, the "Litigation").
E. BCBSMo, RIT, the Attorney General and the DOI have
entered into an Amended and Restated Settlement Agreement, dated
__________, 2000 (the "Settlement Agreement"), to resolve the
Litigation. 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 four 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.
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 [insert number of shares
necessary to comply with Section 2.01 of the Voting Trust and
Divestiture Agreement] shares 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. New RIT shall
issue to the Foundation a certificate or certificates
representing the remaining __________ shares of New RIT Stock
issuable in exchange for the outstanding shares of New RIT Stock
pursuant to Section 1.05(c) hereof.
(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, and (iv) the litigation
styled Blue Cross Blue Shield of Missouri v. Xxxxxxxx X. "Xxx"
Xxxxx, No. CV197-1558CC, pending in the Circuit Court of Xxxx
County, Missouri.
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 _______, 2000, 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
__________, 2000, 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, 1998 and 1997 [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, 1998 [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, 1998 [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, 1999, June 30, 1999 and September 30, 1999[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, six
(6) months and nine (9) 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, 1996, 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, 1998 [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, 1998 [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
September 30, 1999 [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, 1998 and 1997 [to
be updated by BCBSMo based on signing date], and related
consolidated statements of income for the three (3) years ended
December 31, 1998 [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, 1999, June 30, 1999, and
September 30, 1999 [to be updated by BCBSMo based on signing
date], and the related unaudited consolidated income statements
for the three (3) months, six (6) months and nine (9) 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, 1996, 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, 1998 [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, 1998 [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
September 30, 1999 [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, shall 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. 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 3.14. 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 3.15. Payment to Foundation. Immediately following the
Closing, New RIT shall pay One Hundred Seventy-Five Thousand
Dollars ($175,000) to the Foundation 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) 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;
(b) 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(a) 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(b) 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;
(c) 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;
(d) 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;
(e) 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
(f) 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 (or the appropriate party) shall
have received a private letter ruling (the "Favorable Ruling")
from the Internal Revenue Service that (i) gain or loss will not
be recognized by BCBSMo, RIT, HALIC, New RIT, the Foundation or
the public shareholders of both RIT and New RIT for federal
income tax purposes pursuant to the Transfer and Assumption
Transaction; (ii) the Charter Conversion Transaction will
constitute a reorganization under Section 368(a) of the Code and
will not result in the recognition of gain or loss by BCBSMo, New
BCBSMo or the Foundation for federal income tax purposes,
(iii) the Reincorporation Merger Transaction will qualify as a
reorganization under Section 368(a)(1)(F) of the Code and no gain
or loss will be recognized by New BCBSMo or New RIT for federal
income tax purposes, (iv) the RIT/New RIT Merger Transaction will
be 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, the shareholders
of both RIT and New RIT, or the Foundation for federal income tax
purposes, and (v) no gain will be recognized by BCBSMo, New
BCBSMo, RIT, New RIT, the shareholders of any of the foregoing
entities, or the Foundation under Section 337(b)(2) or (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 for any reason
(including but not limited to no request for a private letter
ruling is made or, if made, the request is withdrawn in whole or
in part, or the Internal Revenue Service refuses to rule with
respect to any Favorable Ruling Matter), the Favorable Ruling
Matter(s) not so included shall nonetheless be deemed to be
included in a 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
PricewaterhouseCoopers LLP that (i) gain or loss will not be
recognized by BCBSMo, RIT, HALIC, New RIT, the Foundation or the
public shareholders of both RIT and New RIT for federal income
tax purposes pursuant to the Transfer and Assumption Transaction,
except that BCBSMo could recognize gain to the extent its basis
in any assets transferred differs from the fair market value;
(ii) the Charter Conversion Transaction should be treated as a
recapitalization under Section 368(a)(1)(E) of the Code, should
not result in the recognition of gain or loss by the Foundation,
and will not result in the recognition of gain or loss by BCBSMo
or New BCBSMo for federal income tax purposes, (iii) the
Reincorporation Merger Transaction will qualify as a
reorganization under Section 368(a) of the Code and no gain or
loss will be recognized by New BCBSMo, New RIT or the Foundation
for federal income tax purposes, (iv) the RIT/New RIT Merger
transaction will be both a liquidation under Sections 332 and 337
of the Code and a reorganization under Section 368(a) of the Code
and no gain or loss will be recognized by RIT, New RIT, the
shareholders of both RIT and New RIT or the Foundation for
federal income tax purposes, and (v) no gain will be recognized
by BCBSMo, New BCBSMo, RIT, New RIT, the shareholders of any of
the foregoing entities, or the Foundation under Section 337(b)(2)
or (d) of the Code. Such opinions shall be in form and substance
reasonably satisfactory to BCBSMo and may be based upon
reasonable assumptions and standard representations;
(h) BCBSMo Board Legal Opinion . The Board of Directors of
BCBSMo shall have received, on or before the Closing Date, in
form and substance reasonably satisfactory to such Board, the
reaffirmation of the opinion of Xxxxxxxxxxxx, Xxxxxx & Xxxx, P.C.
dated January ___, 2000, to the effect that (i) authorization and
approval of the Reorganization by the Board of Directors of
BCBSMo is consistent with its fiduciary duties, (ii) the
Reorganization complies with the General Not For Profit
Corporation Act of Missouri, and (iii) the Indemnification
Agreement, when duly executed and delivered by the Foundation and
New RIT, will be the valid and binding obligation of the
Foundation enforceable against the Foundation in accordance with
its terms;
(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 7 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");
(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"); and (iv) the opinion of counsel for
the Foundation to the effect that the Foundation will receive the
shares of New RIT Stock to be issued in the RIT/New RIT Merger
Transaction free and clear of claims that have been asserted or
may in the future be asserted arising out of or relating to the
Reorganization and arising out of or relating to either the
status of BCBSMo as a mutual 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 (the "Foundation Litigation Legal Opinion");
and
(k) Confirmation From Attorney General and DOI. BCBSMo shall
have received written notice from the Attorney General and DOI
that the Xxxxxx litigation condition precedent in Section 4.01(f)
and the legal opinion condition precedent in Section 4.05(h)(iii)
have both either been satisfied or waived.
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 pursuant to Section 4.02(f) hereof, 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 for any reason
(including but not limited to no request for a private letter
ruling is made or, if made, the request is withdrawn in whole or
in part, or the Internal revenue Service refuses to rule with
respect to any Favorable Ruling Matter), 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
PricewaterhouseCoopers LLP that (i) gain or loss will not be
recognized by BCBSMo, RIT, HALIC, New RIT, the Foundation or the
public shareholders of both RIT and New RIT for federal income
tax purposes, pursuant to the Transfer and Assumption
Transaction, except that BCBSMo could recognize gain to the
extent its basis in any assets transferred differs from the fair
market value; (ii) the Charter Conversion Transaction should be
treated as a recapitalization under Section 368(a)(1)(E) of the
Code, should not result in the recognition of gain or loss by the
Foundation, and will not result in the recognition of gain or
loss by BCBSMo or New BCBSMo for federal income tax purposes,
(iii) the Reincorporation Merger Transaction will qualify as a
reorganization under Section 368(a) of the Code and no gain or
loss will be recognized by New BCBSMo, New RIT or the Foundation
for federal income tax purposes, (iv) the RIT/New RIT Merger
transaction will be both a liquidation under Sections 332 and 337
of the Code and a reorganization under Section 368(a) of the Code
and no gain or loss will be recognized by RIT, New RIT, the
shareholders of both RIT and New RIT or the Foundation for
federal income tax purposes, and (v) no gain will be recognized
by BCBSMo, New BCBSMo, RIT, New RIT, the shareholders of any of
the foregoing entities, or the Foundation under Section 337(b)(2)
or (d) of the Code. Such opinions shall be in form and substance
reasonably satisfactory to RIT and may be based upon reasonable
assumptions and standard representations;
(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) Opinion of Financial Advisor to RIT. RIT shall have
received the opinion of RIT's financial advisor, dated the date
of this Agreement, as to the fairness, from a financial point of
view, of the Public Exchange Ratio to the holders of RIT Class A
Stock, and such opinion shall not have been withdrawn or
adversely modified in any material respect as of the date of the
mailing of the Proxy Statement/Prospectus to the shareholders of
RIT in connection with the RIT Shareholders' Meeting;
(j) Confirmation From Attorney General and DOI. RIT shall have
received written notice from the Attorney General and DOI that
the Xxxxxx litigation condition precedent in Section 4.01(f) and
the legal opinion condition precedent in Section 4.05(h)(iii)
have both either been satisfied or waived.
(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; (iii) the
Foundation Legal Opinion; and (iv) the Foundation Litigation
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 pursuant to Section 4.02(f)
hereof, 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 for any
reason (including but not limited to no request for a private
letter ruling is made or, if made, the request is withdrawn in
whole or in part, or the Internal Revenue Service refuses to rule
with respect to any Favorable Ruling Matter), 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 a copy of
opinions of PricewaterhouseCoopers LLP, or if
PricewaterhouseCoopers LLP 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) gain or
loss will not be recognized by BCBSMo, RIT, HALIC, New RIT, the
Foundation or the public shareholders of both RIT and New RIT for
federal income tax purposes, pursuant to the Transfer and
Assumption Transaction, except that BCBSMo could recognize gain
to the extent its basis in any assets transferred differs from
the fair market value; (ii) the Charter Conversion Transaction
should be treated as a recapitalization under Section
368(a)(1)(E) of the Code, should not result in the recognition of
gain or loss by the Foundation, and will not result in the
recognition of gain or loss by BCBSMo or New BCBSMo for federal
income tax purposes; (iii) the Reincorporation Merger Transaction
will qualify as a reorganization under Section 368(a) of the Code
and no gain or loss will be recognized by New BCBSMo, New RIT or
the Foundation for federal income tax purposes; (iv) the RIT/New
RIT Merger transaction will be both a liquidation under
Sections 332 and 337 of the Code and a reorganization under
Section 368(a) of the Code and no gain or loss will be recognized
by RIT, New RIT, the shareholders of both RIT and New RIT or the
Foundation for federal income tax purposes; and (v) no gain will
be recognized by BCBSMo, New BCBSMo, RIT, New RIT, the
shareholders of any of the foregoing entities, or the Foundation
under Section 337(b)(2) or (d) of the Code. Such opinions shall
be in form and substance reasonably satisfactory to the
Foundation and may be based upon reasonable assumptions and
standard representations; and
(h) Legal Opinions. The Foundation shall have received,
addressed to the Foundation and in form and substance reasonably
satisfactory to the Foundation , and the Attorney General and
Department of Insurance in the case of the Foundation Litigation
Legal Opinion (with such qualifications and assumptions as are
customary and reasonable), (i) the RIT Legal Opinion; (ii) the
BCBSMo Legal Opinion; and (iii) the Foundation Litigation 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 December 31, 2000; 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, 3.14 and 3.15 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
AMENDED AND RESTATED SETTLEMENT AGREEMENT
1. Parties. The parties (collectively, the "Parties" and
individually, a "Party") to this Amended and Restated 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 Xxxxx 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.
This Agreement amends, restates and supersedes in its entirety
that certain Settlement Agreement between the Parties dated
September 20, 1998, and all amendments thereto.
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; and
(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. 81172, in the
Supreme Court of Missouri (on transfer from Appeal WD 53798, in
the Missouri Court of Appeals, Western District) (collectively,
the "Purposes Litigation Appeal").
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; and
(f) 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. Payment for Public Purpose. On the Closing Date (as defined
in Paragraph 8 below), but prior to and separate from the
implementation of the Reorganization Agreement (as defined
below), Blue Cross Blue Shield shall pay to the Foundation the
amount of $12,780,000 in partial satisfaction of claims by
various parties, including the Attorney General, Department of
Insurance and amici curiae, that Blue Cross Blue Shield has a
public purpose obligation, which amount is to be used by the
Foundation (as defined below) to carry out its stated purposes.
5. Reorganization Agreement. As partial consideration for
their mutual undertakings in this Agreement, promptly following
the dismissal of the Purposes Litigation and Purposes Litigation
Appeal in accordance with paragraph 7 hereof:
(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.
6. [This paragraph is intentionally left blank.]
7. Disposition of Litigation. In further consideration of
their mutual undertakings in this Agreement and the
Reorganization Agreement, the Parties shall dispose of certain
pending litigation as follows:
(a) Immediately upon execution of this Agreement, the Parties
who are litigants in the Purposes Litigation shall file in the
Circuit Court of Xxxx County a Joint Notice of Dismissal (in the
form attached hereto as Exhibit F) of all pending claims in the
Purposes Litigation;
(b) At such later time on or before February 8, 2000 as is
agreed to by the Parties, those Parties who are litigants in the
Purposes Litigation Appeal shall file a joint motion in the
Supreme Court of Missouri in the form attached hereto as
Exhibit F for dismissal of all appeals pending in the Purposes
Litigation Appeal;
(c) No Party shall take any step to prosecute any claim that is
now asserted in the Purposes Litigation or the Purposes
Litigation Appeal so long as this Agreement remains in force and
effect; provided, however, that the undertaking of the Department
of Insurance under this subparagraph is subject to the
limitations of X.X.Xx. Section 374.217 (1994) if those
limitations are applicable to that undertaking; and
(d) On the Closing Date, if there remains pending any claims in
the Purposes Litigation or the Purposes Litigation Appeal that
have not already been dismissed, the Parties will stipulate to
the dismissal with prejudice of such claims.
8. 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 date (referred to
herein as the "Closing Date") after which all of the conditions
precedent to the Reorganization are satisfied or waived and on
which the Reorganization is consummated. Blue Cross Blue Shield
and RightCHOICE will not consummate the Reorganization unless and
until they receive written notice from the Attorney General and
Director of the Department of Insurance that the Xxxxxx
litigation and legal opinion conditions precedent in Sections
4.01(f) and 4.05(h)(iii), respectively, of the Reorganization
Agreement have been satisfied or waived.
(a) Subject to the exceptions contained in subparagraph 8(e),
the Attorney General and Department of Insurance on behalf of
themselves, their offices, and the State of Missouri
(collectively, "the Paragraph 8 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 8 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 8(e),
the Paragraph 8 Releasors release the Paragraph 8 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.
(c) Subject to the exceptions contained in subparagraph 8(e),
the Paragraph 8 Releasors release the Paragraph 8 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 8(e),
the Paragraph 8 Releasors release the Paragraph 8 Releasees from
any and all claims, causes of action, judgments, claims,
disputes, investigations, audits or complaints listed on
Exhibit G attached hereto.
(e) Claims in the following classes are excluded from the
releases given in this paragraph 8:
(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 8 Releasees in connection with the consummation of the
Reorganization.
9. 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 9(d),
Blue Cross Blue Shield and RightCHOICE, and their respective
affiliated corporations, successors and assigns (collectively,
"the Paragraph 9 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 9
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 9(d),
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.
(c) Subject to the exceptions contained in subparagraph 9(d),
the Paragraph 9 Releasors release the Paragraph 9 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 9:
(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 9 Releasees in connection with the consummation of the
Reorganization.
10. 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 G and as described in
Paragraph 8(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. Blue Cross Blue Shield
represents and warrants to the Attorney General and the
Department of Insurance that, except as described on the list
attached hereto as Exhibit H, it had no knowledge as of September
20, 1998, 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.
11. 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 the
Closing Date has not occurred on or before December 31, 2000.
(c) This Agreement may be terminated at any time by written
agreement signed by all Parties.
(d) If any Party breaches its obligations under Paragraph 18(k)
hereof, and fails to cure such breach within thirty (30) days
after written notice from any other Party (the "Notifying Party")
describing the alleged breach (or fails to undertake to cure
within such thirty (30) day period and to diligently pursue to
completion such cure as cannot reasonably be completed within the
thirty (30) day time period), the Notifying Party may terminate
this Agreement by giving written notice to all other Parties.
(e) If this Agreement terminates pursuant to subparagraph (a),
or is terminated pursuant to subparagraph (b), subparagraph (c),
or subparagraph (d), the Agreement shall thereafter be void and
have no force or effect.
12. 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, if any, 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.
13. 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 13.
14. 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.
15. 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.
16. 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.
17. Nominating Committee Expenses. The Attorney General and
Department of Insurance will review, approve and then submit to
Blue Cross Blue Shield for payment, in an amount not to exceed
$50,000 in the aggregate, the reasonable and necessary costs
incurred in connection with the search for qualified candidates
to serve on the Foundation Board to be conducted by the
Nominating Committee, and Blue Cross Blue Shield shall pay such
amounts.
18. 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. Xxxxxx, Esq.
Xxxxxxxxxxxx, Xxxxxx & Xxxx, P.C.
2000 Equitable Building
00 Xxxxx Xxxxxxxx
Xx. Xxxxx, Xxxxxxxx 00000-0000
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:
Xxxxx X. 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 Blue Cross Blue
Shield 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 8, (2) acts or omissions occurring prior to April 20,
1998 that are not covered by the releases described in
Paragraph 8, and (3) claims described in Paragraph 8(e) of this
Agreement.
[Remainder of page intentionally left blank]
Executed this 6th day of January, 2000.
Xxxxxxxx X. (Xxx) Xxxxx
Attorney General of Missouri
Missouri Department of Insurance
By:
Xxxxx X. Xxxxxx, Director
Director, Missouri Department of Insurance
Blue Cross and Blue Shield of Missouri
By:
Xxxx X. X'Xxxxxx, President
RightCHOICE Managed Care, Inc.
By:
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 Joint Notice of Dismissal and Joint Motion to Dismiss
Exhibit G List of Known Claims as of April 20, 1998
Exhibit H List of Claims Prepared by Blue Cross and Blue Shield of Missouri
EXHIBIT B
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 _______________, 2000
ASSUMPTION REINSURANCE AGREEMENT
THIS ASSUMPTION REINSURANCE AGREEMENT (this "Agreement"),
dated as of ___________, 2000 ("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 , 2000, 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, and Healthy Alliance shall enter
into a written agreement with BCBSMo in substantially the same
form as attached hereto as Exhibit G, 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 G Assignment and Assumption Agreement
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 (1)
Base Major - Small Group Self-Funded (1)
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
(1) But only with respect to the insured portion, if any, of these policies.
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 ___________________, ____
("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 ______________, ___.
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 ________________, ___.
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. section 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 section 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 section 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 section 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 section 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 section 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 ___________ , 2000 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.
1.3. 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 _______________ , 2000
[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 ___________ , 2000 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
_______________________________
[1] Bracketed information denotes optional wording.
EXHIBIT E
POLICYHOLDER NOTICE
[It is intended that the attached Policyholder Notice will be
distributed at least thirty 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.
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.
(1) Bracketed information denotes optional wording.
PLEASE RETAIN THIS NOTICE WITH YOUR POLICY
AND OTHER COVERAGE MATERIALS.
ATTACHMENT TO EXHIBIT E - POLICYHOLDER NOTICE - HEALTHY ALLIANCE
Healthy Alliance Life Insurance Company
Healthy Alliance Life Insurance Company (Healthy Alliance) is a
Missouri life and health insurance company and wholly-owned subsidiary
of RightCHOICE Managed Care, Inc. which does business as "Alliance Blue
Cross Blue Shield." Healthy Alliance offers life and health benefits
and related products and services pursuant to its certificate of
authority issued by the Missouri Department of Insurance. Healthy
Alliance underwrites products offered through Alliance Blue Cross Blue
Shield under the name "Healthy Alliance" and "Alliance." Healthy
Alliance and Alliance Blue Cross Blue Shield also offer some of these
products under the "Blue Cross" and "Blue Shield" names and marks
pursuant to a license agreement with the Blue Cross Blue Shield
Association.
Ratings
Healthy Alliance was assigned the following ratings by A.M. Best
Rating Agency, on the dates indicated below:
1996 1997 1998
05/22/96 A- 09/04/97 B+ 06/08/98 B+
05/12/97 A-
Definitions and explanations for Best's Ratings are published on
their website at xxx.xxxxxx.xxx. Definitions for A- and B+ ratings
effective as of August 23, 1999 follow:
A and A- (Excellent)
Assigned to companies which have, on balance, excellent financial
strength, operating performance and market profile when compared to
the standards established by the A.M. Best Company. These companies,
in our opinion, have a strong ability to meet their ongoing
obligations to policyholders.
B++ and B+ (Very Good)
Assigned to companies which have, on balance, very good financial
strength, operating performance and market profile when compared to
the standards established by the A.M. Best Company. These companies,
in our opinion, have a good ability to meet their ongoing
obligations to policyholders.
Financial Information
Statutory financial information of Healthy Alliance is available by
calling the number referenced below. The following summary information
reflects the Healthy Alliance statutory balance sheet as of
September 30, 1999 and summary of operations for the nine months
ended September 30, 1999:
BALANCE SHEET
Assets
Cash and Investments $152,633,329
Premium and Parent Receivables 76,586,789
Other Assets 8,351,975
Total Assets $237,572,093
Liabilities and Surplus
Claims Reserves $ 65,465,432
Unearned Premium 47,529,786
Accounts Payable and Accrued Expenses 38,181,711
Total Liabilities $151,176,929
Surplus 86,395,164
Total Liabilities and Surplus $237,572,093
SUMMARY OF OPERATIONS
Revenue
Premium Revenue $377,678,061
Interest Income 6,902,094
Other Income 617,780
Total Revenue $385,197,935
Expense
Benefits Paid $298,690,732
Commissions Paid 20,148,520
General and Administrative Expense 56,924,960
Premium Taxes Paid 2,435,031
Federal Income Tax Paid 4,806,267
Total Expenses $383,005,510
Net Income $ 2,192,425
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.
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, (i) all references in the policy
to Blue Cross are hereby changed to Healthy Alliance; (ii) all
references in the policy to a health services corporation are
hereby changed to a life and health insurance company; and (iii)
all references in the policy to a "Board of Trustees" or
"Trustees" are hereby changed to "Board of Directors" or
"Directors" respectively. 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:
PLEASE ATTACH THIS CERTIFICATE TO YOUR POLICY
EXHIBIT G
ASSIGNMENT AND ASSUMPTION AGREEMENT
THIS ASSIGNMENT AND ASSUMPTION AGREEMENT (this "Assignment")
is made and entered into as of this day of
, 2000, by and between Blue Cross and Blue Shield of Missouri
("Assignor") and Healthy Alliance Life Insurance Company
("Assignee").
RECITALS:
A. Assignor and Blue Cross and Blue Shield Association
("Association") entered into that certain Plan Participation
Agreement effective as of January 1, 1995 (the "Plan
Participation Agreement").
B. Assignor desires to assign and Assignee desires to
accept and assume all of Assignor's right, title, interest,
duties and obligations under the Plan Participation Agreement.
AGREEMENT:
NOW, THEREFORE, in consideration of the premises and the
mutual covenants hereinafter set forth, the parties hereto agree
as follows:
1. Assignor hereby assigns, transfers and delivers to
Assignee, all of Assignor's right, title, and interest in and
under the Plan Participation Agreement.
2. Assignee hereby accepts the assignment of Assignor's
right, title and interest in and under the Plan Participation
Agreement, and assumes all of the rights, duties, liabilities and
obligations of Assignor under the Plan Participation Agreement.
Assignee hereby accepts, and agrees to be bound by and subject
to, all of the terms and provisions contained in the Plan
Participation Agreement.
3. The parties hereby acknowledge and agree that in
addition to the execution of this Assignment, the following
documents will be entered into by the parties and the parties
shall take such actions as are necessary to obtain the consent of
and execution by the Association of the following:
(a) a Novation Agreement, which acknowledges the
transfer of Assignor's rights and obligations under the Plan
Participation Agreement to Assignee; and
(b) an Amended and Restated Plan Participation
Agreement, which amends and restates the Plan Participation
Agreement to acknowledge that Assignee is the successor in
interest to Assignor.
4. This Assignment shall inure to the benefit of and be
binding upon the respective parties hereto, and their successors
and assigns.
5. This Assignment shall be governed by and construed in
accordance with the laws of the State of Missouri.
IN WITNESS WHEREOF, the parties hereto have caused this
Assignment to be executed on the day and year first above
written.
"ASSIGNEE" "ASSIGNOR"
HEALTHY ALLIANCE LIFE INSURANCE BLUE CROSS AND BLUE SHIELD
COMPANY OF MISSOURI
By: By:
Print Name: Print Name:
Title: Title:
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 ______________, 2000.
___________________________________
, Sole Incorporator
STATE OF MISSOURI )
) ss.
CITY OF ST. LOUIS )
I, __________________________, a notary public, do hereby
certify that on the ______ day of _______________, 2000,
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 __________ ____, 2000
[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 ________, 2000.
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 _________ __, 2000, 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 _________ __, 2000, 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 _________ __, 2000, 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 ______________, 2000, 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
_______, 2000, [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" means the first
date on which the Foundation holds less than fifty percent (50%)
of the issued and outstanding shares of Common Stock.
(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(c) hereof.
(ff) "Piggy-Back Rights" has the meaning set forth in
Section 3(b) 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) "Share-Rights" has the meaning specified in Section 3(b)
hereof.
(uu) "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).
(vv) "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.
(ww) "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 fifteen (15) 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 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. 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 thirty (30) 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 Securities in accordance
with this Section 2(b), then the requested Demand Registration
related thereto shall not be deemed to count as a Demand
Registration described in Section 2(d)(i) or Section 2(d)(ii)
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 and to cause such Registration Statement to become
effective.
(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 a Demand
Registration at any time during the immediately preceding one
hundred eighty (180) day period;
(ii) if the Company shall have previously effected a Demand
Registration at any time during the calendar year in which the
Demand was received;
(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 one hundred twenty
(120) day 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 a Demand Registration described in Section 2(d)(i) or
Section 2(d)(ii) 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 such registration shall be deemed to count
as a Demand Registration described in Section 2(d)(i) and
Section 2(d)(ii) hereof, unless the Foundation shall have
reimbursed the Company for all of its Registration Expenses
incurred in connection with such demand.
(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 a Demand Registration
described in Section 2(d)(i) or Section 2(d)(ii) 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 a Demand Registration described in Section 2(d)(i) or
Section 2(d)(ii) 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) The Company shall not file a Registration Statement relating
to the public offering of Common Stock for sale for cash for its
own account for a period of one hundred eighty (180) days
following the Closing Date without the prior written consent of
the Foundation, which consent shall not be unreasonably withheld.
(b) 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 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 (the
"Piggy-Back Rights") and the Foundation's right, until such time
as the Foundation holds less than fifty percent (50%) of the
issued and outstanding shares of Common Stock, 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 such that the Foundation shall be entitled to receive,
at its option, up to fifty percent (50%) of the proceeds from the
sale of shares of Common Stock to the public (the "Share-
Rights").
(c) Subject to Section 3(d) and Section 3(e) hereof, in the
event that the Foundation has and shall elect to utilize its
Piggy-Back Rights or Share-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.
(d) Notwithstanding anything in this Agreement to the contrary,
the Foundation shall not have Piggy-Back Rights or Share-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).
(e) 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.
(f) 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 or Share-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.
(g) A request made by the Foundation pursuant to its Piggy-Back
Rights or Share-Rights to include Registrable Securities in a
Registration Statement shall not be deemed to be a Demand
Registration described in Section 2(d)(i) or Section 2(d)(ii)
hereof.
Section 4. Continuing Option.
(a) At any time and from time to time after the Initial
Continuing Option Exercise Date 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 thirty (30) 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 "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 one hundred twenty (120) 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,
Piggy-Back Rights or Share-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 _______, 2000, 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
_____________, 2000, 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 (or the appropriate party)
[received] [requested] a private letter ruling from the Internal
Revenue Service (the "IRS"), dated _________, 2000 (the "IRS
Ruling"), that, among other things, (i) gain or loss will not be
recognized by BCBSMo, Old RIT, HALIC (as defined in the
Reorganization Agreement), the Company, the Foundation or the
public shareholders of both Old RIT and the Company for federal
income tax purposes pursuant to the Transfer and Assumption
Transaction (as defined in the Reorganization Agreement);
(ii) the Charter Conversion Transaction (as defined in the
Reorganization Agreement) will constitute a reorganization under
Section 368(a) of the Internal Revenue Code of 1986, as amended
(the "Code") and will not result in the recognition of gain or
loss by BCBSMo, New BCBSMo (as defined in the Reorganization
Agreement) or the Foundation for federal income tax purposes,
(iii) the Reincorporation Merger Transaction (as defined in the
Reorganization Agreement) will qualify as a reorganization under
Section 368(a)(1)(F) of the Code and no gain or loss will be
recognized by New BCBSMo or the Company for federal income tax
purposes, (iv) the RIT/New RIT Merger Transaction (as defined in
the Reorganization Agreement) will be 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 Old RIT, the Company, the shareholders of both Old
RIT and the Company, or the Foundation for federal income tax
purposes, and (v) no gain will be recognized by BCBSMo, New
BCBSMo, Old RIT, the Company, the shareholders of any of the
foregoing entities, or the Foundation under Section 337(b)(2) or
(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 and/or result in the recognition of gain 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
______, 2000, 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 ___________, 2000 [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 in excess of the
Voting Trust Ownership Limit (as defined below), 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), subject to possible extension as
provided herein, 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, subject to
possible extension as provided herein.
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) "Blackout Period" has the meaning set forth in Section 1 of
the Registration Rights Agreement.
(i) "Board of Directors" means the Board of Directors of the Company.
(j) "Bylaws" means the Bylaws of the Company as in effect at the
time that reference is made thereto.
(k) "Capital Stock" has the meaning set forth in Section 1 of
Article VII of the Certificate of Incorporation.
(l) "Certificate of Incorporation" means the Certificate of
Incorporation of the Company as in effect at the time that
reference is made thereto.
(m) "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.
(n) "Closing Date" has the meaning provided therefor in the
Reorganization Agreement.
(o) "Company" has the meaning set forth in the Preamble hereof.
(p) "Common Stock" has the meaning set forth in Recital A hereof.
(q) "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.
(r) "Demand" has the meaning set forth in Section 1 of the
Registration Rights Agreement.
(s) "Five Year Divestiture Deadline" means the fifth anniversary
of the Closing Date, extended day for day, up to a maximum of
seven hundred thirty (730) days, for each day the Company is not
required to file a Registration Statement (i) in response to an
actual Demand pursuant to Section 2(d)(iii) of the Registration
Rights Agreement as a result of the Company having previously
effected a registration of Common Stock, provided that there
shall be no such extension if the Company is not required to file
a Registration Statement pursuant to said Section 2(d)(iii)
because the Company previously effected a registration of Common
Stock wherein the Beneficiary exercised its Share-Rights and
received proceeds from the sale of its shares; or (ii) as a
result of the pendency of any Blackout Period.
(t) "Indemnified Party" has the meaning set forth in Section
8.06 hereof.
(u) "Independent Board Majority" has the meaning set forth in
Section 4.B.3 of Article IV of the Certificate of Incorporation.
(v) "Marks" has the meaning set forth in Recital B hereof.
(w) "Ownership Limit" has the meaning set forth in Section 1 of
Article VII of the Certificate of Incorporation.
(x) "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.
(y) "Registration Rights Agreement" means that certain
Registration Rights Agreement, of even date herewith, by and
between the Company and the Beneficiary.
(z) "Registration Statement" has the meaning set forth in
Section 1 of the Registration Rights Agreement.
(aa) "Reorganization Agreement" has the meaning set forth in
Recital A hereof.
(bb) "Share-Rights" has the meaning set forth in Section 1 of the
Registration Rights Agreement.
(cc) "Successor Trustee" has the meaning set forth in
Section 8.04 hereof.
(dd) "Three Year Divestiture Deadline" means the third
anniversary of the Closing Date, extended day for day, up to a
maximum of three hundred sixty five (365) days, for each day the
Company is not required to file a Registration Statement (i) in
response to an actual Demand pursuant to Section 2(d)(iii) of the
Registration Rights Agreement as a result of the Company having
previously effected a registration of Common Stock, provided that
there shall be no such extension if the Company is not required
to file a Registration Statement pursuant to said
Section 2(d)(iii) because the Company previously effected a
registration of Common Stock wherein the Beneficiary exercised
its Share-Rights and received proceeds from the sale of its
shares; or (ii) as a result of the pendency of any Blackout
Period.
(ee) "Trustee" has the meaning set forth in Preamble hereof.
(ff) "Voting Power" has the meaning set forth in Section 1 of
Article VII of the Certificate of Incorporation.
(gg) "Voting Trust" has the meaning set forth in Recital E
hereof.
(hh) "Voting Trust Ownership Limit" means that number of shares
of Capital Stock one share lower than the number of shares of
Capital Stock which would represent five percent (5%) of the
Voting Power of all shares of Capital Stock issued and
outstanding at the time of determination.
ARTICLE II
DEPOSIT OF STOCK
Section 2.01 Delivery of Capital Stock. Beneficiary shall make
such contributions to the Voting Trust of shares of Capital Stock
that Beneficiary may Beneficially Own such that the number of
shares of Capital Stock Beneficially Owned by the Beneficiary
outside of the Voting Trust shall never exceed the Voting Trust
Ownership Limit. The Trustee acknowledges receipt of __________
[insert number of shares contributed at closing pursuant to the
Reorganization Agreement] shares of Capital Stock acquired by
Beneficiary pursuant to the Reorganization Agreement. 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.
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 particular Acquisition
Proposal or Change of Control Proposal; provided, however, that
nothing in this Section 5.06 shall prevent the Beneficiary from
joining as a party in any litigation, suit or cause of action
that alleges that the Board of Directors should solicit
Acquisition Proposals or Change of Control Proposals, or initiate
a bidding process seeking proposals to acquire all of the
outstanding stock of the Company.
Section 5.07 Communications. For so long as the Beneficiary
Beneficially Owns twenty percent (20%) or more of the issued and
outstanding shares of Common Stock, the Company shall consult
with the Beneficiary prior to soliciting any Change of Control
Proposal and shall consult with the Beneficiary in the event that
the Company shall receive any Change of Control Proposal.
Beneficiary shall comply with the same confidentiality and non-
disclosure obligations that apply to directors and officers of
the Company with respect to all information obtained by
Beneficiary in connection with any such consultation. Nothing in
this Agreement shall be construed to limit the rights of a
Beneficiary as a shareholder of the Company from communicating
with the Board of Directors of the Company regarding Change of
Control Proposals or, except as otherwise provided in
Section 5.03 hereof, any other matter pertaining to the Company.
The Company and the Beneficiary shall keep confidential the
contents of all such communications from the Beneficiary,
provided that either party may disclose the contents of such
communications if required by law.
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 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 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
IN THE CIRCUIT COURT OF XXXX COUNTY, MISSOURI
BLUE CROSS AND BLUE SHIELD )
OF MISSOURI, )
a Missouri nonprofit corporation, )
)
Plaintiff, )
)
vs. ) Case No. CV196-619CC
) Division 1
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, )
)
Defendants. )
JOINT NOTICE OF DISMISSAL
COME NOW the Attorney General of the State of Missouri,
Blue Cross and Blue Shield of Missouri, Inc. ("Blue Cross"), the
Director of the Missouri Department of Insurance (the Director)
and the Missouri Department of Insurance (individually and with
the Director, the "Department") (collectively, the "Parties"),
pursuant to Rule 67.02, give notice that they (and
each of them) hereby dismiss each and every one of the claims
and/or counterclaims they have brought in this action.
Respectfully submitted,
XXXXX, RICE & XXXXXXXX, X.X.
By /s/ Xxxxxxx X. Xxxxxx
Xxxxxxx X. Xxxxxx, #24757
Xxxx X. Xxxxxx, #30578
000 Xxxxx Xxxxxxxx, Xxxxx 0000
Xx. Xxxxx, Xxxxxxxx 00000
(000) 000-0000
Attorneys for Plaintiff Blue Cross
and Blue Shield of Missouri
XXXXXXXX X. (XXX) XXXXX
Attorney General
/s/ Xxxx X. Xxxxxx
Xxxx X. Xxxxxx, # 40804
Assistant Attorney General
000 Xxxx Xxxx Xxxxxx
Xxxxxxxxx Xxxx, XX 00000
Attorneys for Defendant
Xxxxxxxx X. (Xxx) Xxxxx, Attorney General
XXXXXXX & BLITZ, P.C.
By: /s/ Xxxxx Xxxxxxxx
Xxxxx Xxxxxxxx, #
000 Xxxx Xxxx Xxxxxx, Xxxxx 000
Xxxxxxxxx Xxxx, XX 00000
Attorneys for Defendants Xxx Xxxxxx, Director
of the Missouri Department of Insurance
and the Missouri Department of Insurance
EXHIBIT F
IN THE SUPREME COURT OF MISSOURI
BLUE CROSS AND BLUE SHIELD )
OF MISSOURI, )
Appellant/Cross-Respondent, )
vs. )
)
XXX XXXXXX, et al., ) Case No. 81172
Respondents/Cross-Appellants, )
and )
)
XXXXXXXX X. (XXX) XXXXX, )
Respondent, )
)
BLUE CROSS AND BLUE SHIELD )
OF MISSOURI, )
Appellant, )
vs. )
)
XXX XXXXXX, ) Case No. 82125
Appellant, )
And )
XXXXXXXX X. (XXX) XXXXX, )
Appellant.
JOINT MOTION TO DISMISS
COME NOW the Attorney General of the State of
Missouri, Blue Cross and Blue Shield of Missouri, Inc. ("Blue
Cross"), the Director of the Missouri Department of Insurance
(the Director) and the Missouri Department of Insurance
(individually and with the Director, the "Department")
(collectively, the "Parties"), and move to dismiss the above-
encaptioned consolidated appeals. In support of their
motion, the Parties state:
1. All parties to case Xx. 00000 xxx Xxxx Xx. 00000
have reached agreement to finally settle and resolve their
respective claims in these appeals and in the underlying
action;
2. The Parties have filed a Notice of Dismissal
dismissing each and every one of their claims and/or
counterclaims in the underlying action pending in the Xxxx
County Circuit Court, and the Circuit Court has taken no
action inconsistent with those dismissals;
3. The Parties, therefore, now seek the dismissal of
the appeals in Case Xx. 00000 xxx Xxxx Xx. 00000.
Respectfully submitted,
XXXXX, XXXX & XXXXXXXX, X.X.
By
Xxxxxxx X. Xxxxxx, #24757
Xxxx X. Xxxxxx, # 00000
000 Xxxxx Xxxxxxxx, Xxxxx 0000
Xx. Xxxxx, Xxxxxxxx 00000
(000) 000-0000
Attorneys for Plaintiff Blue Cross
and Blue Shield of Missouri
XXXXXXXX X. (XXX) XXXXX
Attorney General
Xxxx X. Xxxxxx, # 40804
Assistant Attorney General
000 Xxxx Xxxx Xxxxxx
Xxxxxxxxx Xxxx, XX 00000
Attorneys for Defendant
Xxxxxxxx X. (Xxx) Xxxxx, Attorney General
XXXXXXX & BLITZ, P.C.
By:
Xxxxx Xxxxxxxx, #
000 Xxxx Xxxx Xxxxxx, Xxxxx 000
Xxxxxxxxx Xxxx, XX 00000
Attorneys for Defendants Xxx Xxxxxx, Director
of the Missouri Department of Insurance
and the Missouri Department of Insurance
EXHIBIT G
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 H
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
