Exhibit 99(a)
AMENDMENT TO SETTLEMENT AGREEMENT
This Amendment to Settlement Agreement (the "Amendment"),
dated as of March 12, 1999, is made and entered into by and among
Xxxxxxxx X. "Xxx" Xxxxx, Attorney General of the State of
Missouri (the "Attorney General"); the Missouri Department of
Insurance and X.X. XxXxxxxxx, its acting director (referred to
collectively as the "Department of Insurance"); Blue Cross and
Blue Shield of Missouri ("Blue Cross Blue Shield"), a Missouri
not for profit health services corporation; and RightCHOICE
Managed Care, Inc. ("RightCHOICE"), a Missouri for profit general
business corporation (collectively, the "Parties" and
individually, a "Party").
RECITALS
A. On September 20, 1998, the Parties signed a Settlement
Agreement (the "Original Settlement Agreement"), a purpose of
which was to settle certain civil actions including Blue Cross
Blue Shield of Missouri, Plaintiff v. Xxx Xxxxxx, Director of the
Missouri Department of Insurance, and Xxxxxxxx X. "Xxx" Xxxxx,
No. CV196-619CC, which is now pending in the Circuit Court of
Xxxx County, Missouri.
B. By order of the Circuit Court, Xxxxxx X. Xxxxxxx was
appointed as a Special Master to review and evaluate the Original
Settlement Agreement and make recommendations to the Court.
C. In his Report of February 10, 1999, Special Master Xxxxxxx,
after subjecting the Original Settlement Agreement to detailed
scrutiny, expressed certain concerns about the Original
Settlement Agreement, recommended that it not be approved in its
present form, and recommended that the Court withhold a final
ruling on the Original Settlement Agreement to give the parties
and the amici curiae an opportunity to engage in a good faith
effort to address the concerns noted in the Special Master's
Report.
D. The Parties and the amici curiae have met and conferred and
engaged in a good faith effort to address the concerns noted in
the Special Master's Report, most of which were also concerns
expressed by the amici curiae.
E. As a result of these good faith efforts, the Parties have
agreed to amend the Original Settlement Agreement as set forth
herein to address the concerns of the Special Master and the
amici curiae. The Original Settlement Agreement as amended by
this Amendment is hereinafter referred to as the "Amended
Settlement Agreement."
F. All of the concerns expressed by the amici curiae relative
to the Original Settlement Agreement have been addressed by such
amendments, and the amici curiae now fully support and urge
approval of the Amended Settlement Agreement.
G. The Original Settlement Agreement is fair, reasonable
and in the public interest, and the Amended Settlement Agreement
remains fair, reasonable and in the public interest and should be
approved by the Court.
AGREEMENT
In consideration of the foregoing, and the mutual covenants
and agreements contained in this Agreement, the Parties agree to
the following amendments to the Original Settlement Agreement:
1. The Original Settlement Agreement is hereby amended as
follows:
a. A new section shall be added and
designated as Section 4 and shall provide:
4. Payment for Public Purpose. On the
Closing Date (as defined 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
to carry out its stated purposes.
b. Former Sections 4 through 18 shall be
redesignated as Sections 5 through 19 respectively
and former Section 19 shall be redesignated as
Section 21.
c. A new section shall be added and
designated as Section 20 and shall provide:
20. Nominating Committee Expenses.
After all of the Signing Conditions have
been satisfied or waived by the Parties,
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.
2. Exhibit A, Form of Articles of Incorporation of The
Missouri Foundation For Health, is hereby amended as follows:
a. Article IV, Section 4.3, shall be deleted in
its entirety and replaced with the following:
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.
b. Article IV, Section 4.5, shall be amended by
inserting at the very end of that Section the
following phrase: "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."
3. Exhibit B, Form of Bylaws The Missouri Foundation For
Health, is hereby amended as follows:
a. Article 4, Section 4.2.2, shall be deleted in
its entirety and replaced with the following:
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 provided by the Nominating Committee
pursuant to Section 5.1.4. 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.
b. Article 4, Section 4.2.4(b), shall be amended
by deleting the introductory phrase "Each Director
must have expertise and education in one or more
of the following area:" and inserting in its place
the following phrase "Each Director must have
expertise, education, and/or experience in one or
more of the following areas:"
c. A new section shall be added in Article 5,
which shall be designated Section 5.1.5 and shall
provide:
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 State 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 a 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.
d. The former Section 5.1.5 shall be deleted in
its entirety and replaced with the following
redesignated as Section 5.1.6:
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 the 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 a annual
basis as to the efficacy of the Foundation's
programs from the communities' perspectives,
as well as the communities' priorities for
future efforts of the Foundations, and (2)
nominating persons to serve on the Board
subsequent to the appointment of the initial
members of the Post-Closing Board as provided
in Section 4.2.2. The Community Advisory
Committee shall nominate a number of
candidates equal to five (5) times the number
of vacancies to be filled. In arriving at
its nominations, the Community Advisory
Committee shall adhere to the following
process:
(1) The Community Advisory Committee
shall apply the selection criteria set
forth in Section 4.2, and shall not
nominate a candidate who would be unable
to serve pursuant to any other provision
of Section 4.2.
(2) The Community Advisory Committee
shall be guided by a self-assessment of
the skills and experience of the
continuing members of the Board and by
consideration of the skills and
experience needed by the Board to
accomplish the mission and programmatic
objectives of the Corporation.
(3) The Community Advisory Committee
shall conduct a public outreach and
notification process.
(4) With respect to the vacancies to be
filled at each annual meeting of the
Board, the Community Advisory Committee
shall complete its process and shall
present its nominations in writing to
the Board no later than the first
business day of the calendar year in
which such annual meeting is to be held
(or such other date as the Board may
designate).
(5) With respect to any vacancy on the
Board occurring by reason of the death,
resignation or removal of any director,
the Community Advisory Committee shall
complete its process and nominate no
less than five (5) candidates no later
than the date requested by the Board,
which shall be no less than thirty (30)
days after written notification of the
vacancy has been delivered to the Chair
of the Community Advisory Committee.
4. Exhibit J, Form of Registration Rights Agreement, is
hereby amended as follows:
a. Section 1(y) shall be deleted in its entirety and
replaced with the following:
(y) "Initial Continuing Option Exercise
Date" means the first date on which the
Foundation holds less than fifty percent
(50%) of issued and outstanding shares
of Common Stock.
b. Section 1(ee) shall be deleted in its entirety and
replaced with the following:
(ee) "Piggy-Back Request" has the
meaning set forth in Section 3(c)
hereof.
c. Section 1(ff) shall be deleted in its entirety and
replaced with the following:
(ff) "Piggy-Back Rights" has the
meaning set forth in Section 3(b)
hereof.
d. A new section shall be added and designated as
Section 1(tt) and shall provide:
(tt) "Share-Rights" has the meaning
specified in Section 3(b) hereof.
e. Former Sections 1(tt), 1(uu) and 1(vv) shall be
redesignated as Sections 1(uu), 1(vv) and 1(ww),
respectively.
f. The first sentence of Section 2(b) shall be
deleted in its entirety and replaced with the
following:
(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.
g. In the second sentence of Section 2(b), the
reference to "sixty (60) days" shall be deleted
and replaced with "thirty (30) days." As amended,
the second sentence of Section 2(b) shall provide:
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.
h. In the last sentence of Section 2(b), the
reference to "one (1) of the three (3)" Demand
Registrations shall be deleted and the phrase "or
Section 2(d)(ii)" shall be inserted following the
phrase "Section of 2(d)(i)". As amended, the last
sentence of Section 2(b) shall provide:
In the event that the Company shall
purchase all of the Demand Option Shares
in accordance with this Section 2(b),
then the requested Demand Registration
related thereto shall not be deemed to
count as a Demand Registration described
in Section 2(d)(i) or Section 2(d)(ii)
hereof.
i. In Section 2(c), the phrase "and to cause such
Registration Statement to become effective" shall
be added to the end thereof. As amended,
Section 2(c) shall provide:
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.
j. Section 2(d)(i) shall be deleted in its entirety
and replaced with the following:
(i) if the Company shall have
previously effected a Demand
Registration at any time during the
immediately preceding one hundred eighty
(180) day period;
k. Section 2(d)(ii) shall be deleted in its entirety
and replaced with the following:
(ii) if the Company shall have
previously effected a Demand
Registration at any time during the
calendar year in which the Demand was
received;
l. In Section 2(d)(iii), the phrase "nine (9) month
period" shall be deleted and replaced with "one
hundred twenty (120) day period". As amended,
Section 2(d)(iii) shall provide:
(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);
m. In Section 2(f), the phrase "or Section 2(d)(ii)"
shall be inserted after the phrase
"Section 2(d)(i)" and the reference to "one (1) of
the three (3)" Demand Registrations shall be
deleted. As amended, Section 2(f) shall provide:
(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
Registration Expenses incurred in
connection with such Demand.
n. Section 2(g) shall be deleted in its entirety and
replaced with the following:
(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.
o. In Section 2(i), the phrase "or Section 2(d)(ii)"
shall be inserted after the phrase
"Section 2(d)(i)" throughout the Section and the
reference to "one (1) of three (3)" Demand
Registrations shall be deleted throughout the
Section. As amended, Section 2(i) shall provide:
(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 Registration Expenses
incurred in the preparation, filing and
processing of the Registration
Statement).
p. A new section shall be added and designated as
Section 3(a) and shall provide:
(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 prior
written consent of the Foundation, which
consent shall not be unreasonably
withheld.
q. The former Section 3(a) shall be deleted in its
entirety and replaced with the following
redesignated as Section 3(b):
(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 of 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 issuance of shares of
Common Stock to the public (the "Share-
Rights").
r. The former Section 3(b) shall be redesignated as
Section 3(c) and the reference to "Section 3(c)"
therein shall be changed to "Section 3(d)" and the
reference to "Section 3(d)" therein shall be
changed to "Section 3(e)" and the phrase "or Share-
Rights" shall be inserted following the phrase
"Piggy-Back Rights". As amended, Section 3(c)
shall provide:
(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.
s. Former Section 3(c) shall be redesignated as
Section 3(d) and the phrase "or Share-Rights"
shall be inserted following the phrase "Piggy-Back
Rights". As amended, Section 3(d) shall provide:
(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).
t. Former Section 3(d) shall be redesignated as
Section 3(e).
u. Former Section 3(e) shall be redesignated as
Section 3(f) and the phrase "or Share-Rights"
shall be inserted following the phrase "Piggy-Back
Rights". As amended, Section 3(f) shall provide:
(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.
v. Former Section 3(f) shall be redesignated as
Section 3(g) and the phrase "or Share-Rights"
shall be inserted following the phrase "Piggy-Back
Rights" and the phrase "or Section 2(d)(ii)" shall
be inserted following the phrase "Section 2(d)(i)"
and the reference to "one (1) of three (3)" Demand
Registrations shall be deleted. As amended,
Section 3(g) shall provide:
(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.
w. In Section 4(a), the phrase "(as defined below in
this Section 4(a))" shall be deleted and the
phrase "sixty (60) days" shall be deleted and
replaced with "thirty (30) days" and the sixth
sentence of Section 4(a) shall be deleted in its
entirety. As amended, Section 4(a) shall provide:
(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).
x. In Section 6, the phrase "180 days" shall be
deleted and replaced with "one hundred twenty
(120) days". As amended, Section 6 shall provide:
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.
y. In Section 9, the phrase "or Share-Rights" shall
be inserted after the phrase "Piggy-Back Rights"
and the word "or" before the phrase "Piggy-Back
Rights" shall be deleted and replaced with a
comma. As amended, Section 9 shall provide:
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.
5. Exhibit L, Form of Voting Trust and Divestiture
Agreement, is hereby amended as follows:
a. In Recital E, the phrase ", subject to possible
extension as provided herein," shall be added
following the phrase "Closing Date (as defined
below)" and following the phrase "following the
Closing Date" and the phrase "in excess of the
Voting Trust Ownership Limit (as defined below)"
shall be added after the phrase "by the
Beneficiary". As amended, Recital E provides:
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.
b. In Article I, the definition of "Blackout Period"
shall be added as follows:
(h) "Blackout Period" has the meaning
set forth in Section 1 of the
Registration Rights Agreement.
c. In Article I, the definition of "Demand" shall be added as
follows:
(r) "Demand" has the meaning set forth
in Section 1 of the Registration Rights
Agreement.
d. In Article I, the definition of "Five Year
Divestiture Deadline" shall be deleted in its
entirety and replaced with the following:
(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.
e. In Article I, the definition of "Registration Statement"
shall be added as follows:
(z) "Registration Statement" has the
meaning set forth in Section 1 of the
Registration Rights Agreement.
f. In Article I, the definition of "Share-Rights"
shall be added as follows:
(bb) "Share-Rights" has the meaning set
forth in Section 1 of the Registration
Rights Agreement.
g. In Article I, the definition of "Three Year
Divestiture Deadline" shall be deleted in its
entirety and replaced with the following:
(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.
h. In Article I, the definition of "Voting Power"
shall be added as follows:
(ff) "Voting Power" has the meaning set
forth in Section 1 of Article VII of the
Certificate of Incorporation.
i. In Article I, the definition of "Voting Trust
Ownership Limit" shall be added as follows:
(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.
j. In Article I, all sections shall be redesignated
accordingly because of the additional defined
terms.
k. The first and second sentences of Section 2.01
shall be deleted in their entirety and replaced
with the following:
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.
l. The last sentence of Section 5.04 shall be deleted
in its entirety. As amended, Section 5.04 shall
provide:
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.
m. A new section designated as Section 5.07 shall be
added and shall provide:
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 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.
n. In Section 6.01, the phrase "the third anniversary
of the Closing Date" shall be deleted from the end
of the first sentence thereof and the phrase
"Three Year Divestiture Deadline" shall not be in
parenthesis or quotes or underlined therein. As
amended, Section 6.01 provides:
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.
o. In Section 6.02, the phrase "the fifth anniversary
of the Closing Date" shall be deleted from the end
of the first sentence thereof and the phrase "Five
Year Divestiture Deadline" shall not be in
parenthesis and quotes or underlined therein. As
amended, Section 6.02 provides:
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.
6. Exhibit E, Agreement and Plan of Reorganization, is
hereby amended as follows:
a. Section 1.05(j)(3) shall be deleted in its
entirety and replaced with the following:
(3) Exchange Procedure for Foundation. The
Foundation authorizes and directs New RIT to issue
_____ 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 share of New RIT
Stock pursuant to Section 1.05(c) hereof.
b. Section 3.13 shall be deleted in its entirety.
c. In Section 3.16, the phrase "in partial settlement
of the Litigation, and" shall be deleted. As
amended, Section 3.16 provides:
3.16 Payment to Foundation. Immediately
following the Closing, New RIT shall pay One
Hundred Seventy-Five Thousand Dollars
($175,000) to the Foundation in partial
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.
7. If the Amended Settlement Agreement is approved by the
Court, the Original Settlement Agreement and all exhibits thereto
shall be amended and restated in their entirety to reflect the
amendments set forth herein, and such amended and restated
documents shall include such conforming changes as are necessary
or appropriate to properly incorporate the amendments set forth
herein.
8. The Parties agree that this Amendment modifies,
supplements, supersedes and forms a part of the Original
Settlement Agreement. Except as expressly provided herein, the
terms and conditions of the Original Settlement Agreement shall
remain unchanged and in full force and effect. The terms and
conditions of this Amendment shall control over any conflicting
or inconsistent terms and conditions in the Original Settlement
Agreement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the Parties hereto have set forth their
hand and seal as of the date above written.
/s/ Xxx Xxxxx
Xxxxxxxx X. (Xxx) Xxxxx
Attorney General of Missouri
Missouri Department of Insurance
By: /s/ X. X. XxXxxxxxx
X. X. XxXxxxxxx
Acting 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
