Exhibit 2.2
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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 MARCH 14, 2000
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TABLE OF CONTENTS
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ARTICLE I TERMS OF REORGANIZATION; CLOSING........................................... 3
Section 1.01. Sequence of Transactions.................................. 3
Section 1.02. Transfer and Assumption Transaction....................... 3
(a) Assumption Reinsurance Agreement.................... 3
(b) Regulatory Approvals................................ 3
(c) Consummation of Transaction......................... 4
(d) Tax Consequences.................................... 4
Section 1.03. Charter Conversion Transaction............................ 4
(a) Filing of Articles of Incorporation; Bylaws......... 4
(b) Effective Time...................................... 4
(c) Issuance of Stock................................... 4
(d) Regulatory Approvals................................ 4
(e) Directors and Officers.............................. 4
(f) Consummation of Transaction......................... 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................................... 5
(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................................. 6
(b) Effective Time...................................... 7
(c) Conversion of Shares................................ 7
(d) Treasury Shares..................................... 7
(e) Dissenters' Rights.................................. 7
(f) Effects of Merger................................... 7
(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.................................. 9
(7) Lost, Stolen or Destroyed Certificates........ 9
(k) Stock Transfer Books................................10
(l) Tax Consequences....................................10
(m) Consummation of Transaction.........................10
i
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...........................................11
Section 2.02. Representations and Warranties of RIT....................12
(a) Corporate Existence and Power......................12
(b) Authorization; No Defaults.........................12
(c) Capitalization.....................................12
(d) Financial Information..............................13
(e) Reports............................................13
(f) Absence of Changes.................................13
(g) Undisclosed Liabilities............................14
Section 2.03. Representations and Warranties of BCBSMo.................14
(a) Authorization; No Defaults.........................14
(b) Capitalization.....................................14
(c) Financial Information..............................14
(d) Reports............................................15
(e) Absence of Changes.................................15
(f) Undisclosed Liabilities............................15
Section 2.04. Representations and Warranties of New RIT................15
(a) Corporate Existence and Power......................15
(b) Authorization; No Defaults.........................15
(c) Capitalization.....................................16
Section 2.05. Representations and Warranties of the Foundation.........16
(a) Corporate Existence and Power......................16
(b) Authorization; No Defaults.........................16
ARTICLE III COVENANTS................................................................17
Section 3.01. Pre-Closing Covenants of RIT.............................17
(a) Submission to Shareholders.........................17
(b) Consummation of Reorganization.....................17
(c) Consents and Approvals.............................17
Section 3.02. Pre-Closing Covenants of BCBSMo..........................17
(a) Agreement to Vote in Favor.........................17
(b) Consummation of Reorganization.....................17
(c) Consents and Approvals.............................18
Section 3.03. Pre-Closing Covenants of New RIT.........................18
(a) Other Actions......................................18
(b) Consummation of Reorganization.....................18
(c) Plans of Merger....................................18
Section 3.04. Pre-Closing Covenants of Foundation......................18
(a) No Sale or Transfer................................18
(b) Agreements to Vote in Favor........................18
(1) Reincorporation Merger Transaction...........18
(2) RIT/New RIT Merger Transaction...............19
(c) Consummation of Reorganization.....................19
(d) Tax Opinion........................................19
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Section 3.05. Proxy Statement/Prospectus; Registration Statement.......19
Section 3.06. Public Announcements.....................................19
Section 3.07. Registration Rights Agreement............................19
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............................20
Section 3.12. Accountants' Letters.....................................20
Section 3.13. Foundation Governance....................................21
Section 3.14. Due Diligence............................................21
Section 3.15. Payment to Foundation....................................21
ARTICLE IV CONDITIONS PRECEDENT TO REORGANIZATION...................................21
Section 4.01. Conditions to Reorganization.............................21
(a) Injunction........................................21
(b) Regulatory and Shareholder Approval...............21
(c) Effective Registration Statement..................21
(d) Tax Determination.................................22
(e) NYSE Listing......................................22
(f) Resolution of Xxxxxx Litigation...................22
Section 4.02. Conditions to Obligations of BCBSMo......................22
(a) Representations and Warranties....................22
(b) Compliance with Agreements........................22
(c) Delivery of Documents.............................22
(d) Other Consents....................................22
(e) Comfort Letter....................................22
(f) Favorable Ruling..................................23
(g) Tax Opinions......................................23
(h) BCBSMo Board Legal Opinion........................23
(i) Resolution of Pending Litigation..................24
(j) Legal Opinions....................................24
(k) Confirmation From Attorney General and DOI........24
Section 4.03. Conditions to Obligations of RIT.........................24
(a) Representations and Warranties....................24
(b) Compliance with Agreements........................24
(c) Delivery of Documents.............................25
(d) Other Consents....................................25
(e) Comfort Letter....................................25
(f) Favorable Ruling..................................25
(g) Tax Opinions......................................25
(h) Association Approval..............................25
(i) Opinion of Financial Advisor to RIT...............26
(j) Confirmation From Attorney General and DOI........26
(k) Bank Approval.....................................26
(l) Legal Opinions....................................26
Section 4.04. Conditions to Obligations of New RIT.....................26
(a) Representations and Warranties....................26
(b) Compliance with Agreements........................26
(c) Delivery of Documents.............................26
(d) Comfort Letter....................................27
(e) Legal Opinions....................................27
Section 4.05. Conditions to Obligations of Foundation..................27
(a) Representations and Warranties....................27
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(b) Compliance with Agreements.........................27
(c) Delivery of Documents..............................27
(d) Other Consents.....................................27
(e) Comfort Letter.....................................27
(f) Favorable Ruling...................................27
(g) Tax Opinions.......................................28
(h) Legal Opinions.....................................28
ARTICLE V TERMINATION..............................................................28
ARTICLE VI GENERAL PROVISIONS.......................................................29
Section 6.01. Fees and Expenses........................................29
Section 6.02. Nonsurvival of Representations, Warranties and
Agreements...............................................29
Section 6.03. Notices..................................................29
Section 6.04. Amendment................................................30
Section 6.05. Waiver...................................................30
Section 6.06. Entire Agreement.........................................30
Section 6.07. Parties in Interest......................................30
Section 6.08. Governing Law............................................30
Section 6.09. Counterparts.............................................30
Section 6.10. Recitals.................................................30
Section 6.11. Fair Construction........................................30
Section 6.12. Headings and Captions....................................30
Section 6.13. Assignment...............................................31
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LIST OF EXHIBITS
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Exhibit Description
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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.
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INDEX OF DEFINED TERMS
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DEFINED TERM LOCATION
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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)
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DEFINED TERM LOCATION
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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
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DEFINED TERM LOCATION
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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
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AGREEMENT AND PLAN OF REORGANIZATION
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THIS AGREEMENT AND PLAN OF REORGANIZATION (this "Agreement"), dated as of
March 14, 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
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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 3,710,653 shares of Class A Common Stock (the "RIT
Class A Stock") and 14,962,500 shares of Class B Common Stock (the "RIT Class B
Stock;" together with the RIT Class A Stock, the "RIT Stock"). Each share of RIT
Class A Stock has one vote per share, and each share of RIT Class B Stock has
ten votes per share. The issued and outstanding shares of RIT Class B Stock,
representing approximately 80.1% of the issued and outstanding shares of RIT
Stock and approximately 97.6% of the voting power of the issued and outstanding
shares of RIT Stock, are owned by BCBSMo. The issued and outstanding shares of
RIT Class A Stock, representing approximately 19.9% of the issued and
outstanding shares of RIT Stock and approximately 2.4% of the voting power of
the issued and outstanding shares of RIT Stock, are listed for trading on the
New York Stock Exchange, Inc. (the "NYSE").
D. RIT and BCBSMo 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 January 6, 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 $.01 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
2
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
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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
3
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
4
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 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
5
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
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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
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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 directly to the trustee designated by the Voting
Trust and Divestiture Agreement (as defined in Section 3.09 hereof) that number
of shares of New RIT Stock issuable in exchange for the outstanding share of New
RIT Stock pursuant to Section 1.05(c) hereof as is necessary to comply with
Section 2.01 of the Voting Trust and Divestiture Agreement, 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
8
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.
9
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 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
10
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
11
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 December 31, 1999, there were outstanding: (i)
3,710,653 shares of RIT Class A Stock; (ii) 14,962,500 shares of RIT Class B
Stock; and (iii) no shares of RIT Preferred Stock. 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 December 31, 1999, RIT has outstanding stock
options representing the right to acquire not more than 972,583 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, and related consolidated
statements of income, changes in shareholders' equity and cash flows for the
three (3) years ended December 31, 1998, together with the notes thereto,
included in RIT's Annual Report on Form 10-K for the year ended December 31,
1998, 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, 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).
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(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, 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, 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
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
13
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, and related consolidated
statements of income for the three (3) years ended December 31, 1998, 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, 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, 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 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
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
14
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 225,000,000 shares of New RIT Stock and 25,000,000 shares of preferred stock,
par value $.01 per share. 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
15
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.
16
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.
17
(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 PricewaterhouseCoopers LLP as provided in Section 4.05(g)
hereof, the Foundation shall use its best efforts to obtain the opinion of such
other tax professionals as are selected by the Foundation and 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
18
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
19
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
20
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
21
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 6, 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;
22
(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;
23
(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
24
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:
25
(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 such other tax professionals
as are selected by the Foundation in accordance with Section 3.04(d) hereof 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
26
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.
27
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: Xxxx X. Xxxxxx, Esq.,
Assistant Attorney General, 000 Xxxx Xxxx Xxxxxx, Xxxxxxxxx Xxxx, Xxxxxxxx
00000, with a copy to: Xxxx Xxxxxx, Esq., General Counsel, Missouri Department
of Insurance, 000 Xxxx Xxxx Xxxxxx, Xxxxx 000, Xxxxxxxxx Xxxx, Xxxxxxxx 00000;
(b) if to New RIT: Xxxx X. X'Xxxxxx, Chairman, 0000 Xxxxxxxx Xxxxxx, Xx. Xxxxx,
Xxxxxxxx 00000-0000, Fax (000) 000-0000; with a copy to: Xxxxxx Xxxx Xxxxx,
Esq., Secretary, 0000 Xxxxxxxx Xxxxxx, Xx. Xxxxx, Xxxxxxxx 00000-0000, Fax (314)
000-0000; (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
28
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]
29
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
/s/ Xxxx X. X'Xxxxxx
-------------------------------------------------
Xxxx X. X'Xxxxxx, President
RIGHTCHOICE MANAGED CARE, INC.,
a Missouri corporation
/s/ Xxxx X. X'Xxxxxx
-------------------------------------------------
Xxxx X. X'Xxxxxx, President and Chief Executive
Officer
THE MISSOURI FOUNDATION FOR HEALTH, a Missouri
nonprofit public benefit corporation
/s/ Xxxx X. Xxxxxx
-------------------------------------------------
Name: Xxxx X. Xxxxxx
--------------------------------------------
Title: Chairman
-------------------------------------------
RIGHTCHOICE MANAGED CARE, INC.,
a Delaware corporation
/s/ Xxxx X. X'Xxxxxx
-------------------------------------------------
Xxxx X. X'Xxxxxx, Chairman
30
