SCHEDULE 13D
(Rule 13d-101)
Information to be Included in Statements Filed Pursuant to Rule
13d-1(a) and
Amendments Thereto Filed Pursuant to Rule 13d-2(a)
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Under the Securities Exchange Act of 1934
(Amendment No. _____)*
RightCHOICE Managed Care, Inc., a Delaware corporation
(Name of Issuer)
Common Stock, par value $0.01 per share
(Title of Class of Securities)
76657T102
(CUSIP Number)
The Missouri Foundation For Health
P.O. Box 726
Jefferson City, Missouri 65102-0726
Attention: Charles W. Hatfield, Secretary
(573) 751-5227
(Name, Address and Telephone Number of Person Authorized to
Receive Notices
and Communications)
November 30, 2000
(Date of Event Which Requires Filing of this Statement)
If the filing person has previously filed a statement on
Schedule 13G to report the acquisition that is the subject of
this Schedule 13D, and is filing this schedule because of sections
240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the
following box. [ ]
CUSIP No. 76657T102 13D Page 1 of 24 Pages
1. Names of Reporting Persons/I.R.S. Identification Nos. of
Above Persons (Entities Only).
The Missouri Foundation For Health
IRS Identification No. 43-1880952
2. Check the Appropriate Box if a Member of a Group (a) [ ]
(See Instructions) (b) [ ]
3. SEC Use Only
4. Source of Funds (See Instructions)
OO
5. Check if Disclosure of Legal Proceedings Is Required
Pursuant to Items 2(d) or 2(e) [ ]
6. Citizenship or Place of Organization
Missouri
Number of Shares 7. Sole Voting Power 932,964
Beneficially Owned by Each
Reporting Person With
8. Shared Voting Power Not applicable
9. Sole Dispositive Power 14,962,500
10. Shared Dispositive Power Not applicable
11. Aggregate Amount Beneficially Owned by Each Reporting
Person
14,962,500
12. Check if the Aggregate Amount in Row (11) Excludes Certain Shares [ ]
(See Instructions)
13. Percent of Class Represented by Amount in Row (11)
80.2%
14. Type of Reporting Person (See Instructions)
CO
SCHEDULE 13D
Item 1. Security and Issuer.
Common Stock, par value $0.01 per share
RightCHOICE Managed Care, Inc.
1831 Chestnut Street
St. Louis, Missouri 63103-2275
Item 2. Identity and Background.
(a)-(c):
Name: The Missouri Foundation
For Health
State of Incorporation: Missouri
Principal Business: to serve the needs of
insured and underinsured
Missourians in
RightCHOICE Managed Care,
Inc.'s service area
Address (principal P.O. Box 726
business and principal Jefferson City, Missouri
office) 65102-0726
(d) Criminal Proceedings: Not applicable
(e) Civil Proceedings: Not applicable
Item 3. Source and Amount of Funds or Other Consideration.
The Missouri Foundation For Health (the "Foundation")
received the shares of RightCHOICE Managed Care, Inc., a
Delaware corporation ("New RightCHOICE"), reported
hereunder pursuant to the reorganization (the
"Reorganization") of RightCHOICE Managed Care, Inc., a
Missouri corporation ("Old RightCHOICE"). Old
RightCHOICE reorganized pursuant to that certain
Agreement and Plan of Reorganization, dated as of
March 14, 2000 (the "Reorganization Agreement"), by and
among Blue Cross and Blue Shield of Missouri ("BCBSMo"),
Old RightCHOICE, the Foundation and New RightCHOICE. The
parties entered into the Reorganization Agreement
pursuant to the Amended and Restated Settlement
Agreement, dated January 6, 2000 (the "Settlement
Agreement"), by and among the Attorney General of the
State of Missouri, the Missouri Department of Insurance,
BCBSMo and Old RightCHOICE. The Settlement Agreement
resolved litigation between BCBSMo and Old RightCHOICE
and the State of Missouri over BCBSMo's operation of Old
RightCHOICE following BCBSMo's 1994 reorganization.
As part of the Reorganization, Old RightCHOICE merged
with and into New RightCHOICE (the "Merger"). At the
time of the Merger, the Foundation owned the only
outstanding share of New RightCHOICE common stock. In
the Merger, (i) each share of Old RightCHOICE class A
common stock was converted into one share of New
RightCHOICE common stock, (ii) each share of Old
RightCHOICE class B common stock was cancelled and (iii)
the one outstanding share of New RightCHOICE common stock
was converted into 14,962,500 shares of New RightCHOICE
common stock.
As a result of the Reorganization, the Foundation
received 14,962,500 shares of New RightCHOICE common
stock, representing 80.2% of the voting power of New
RightCHOICE (which is the same ownership interest, but a
decreased voting interest, that BCBSMo had in Old
RightCHOICE immediately prior to the Reorganization).
Item 4. Purpose of Transaction.
The shares of New RightCHOICE common stock were acquired
by the Foundation pursuant to the Settlement Agreement and
related Reorganization Agreement referred to in Item 3, above.
The information included in Item 3, above, is incorporated by
reference in this Item 4.
(a) The Foundation is required to sell a portion of its
shares of New RightCHOICE common stock over time
under the terms of the Voting Trust and Divestiture
Agreement, dated as of November 30, 2000 (the
"Voting Trust Agreement"), by and among New
RightCHOICE, the Foundation and Wilmington Trust
Company, as trustee. The Voting Trust Agreement is
attached hereto as Exhibit 1. The Voting Trust
Agreement is described in Item 6, below, and such
description is incorporated by reference in this
Item 4(a).
(b)-(j) Not applicable.
Item 5. Interest in Securities of the Issuer.
(a) 14,962,500 shares of New RightCHOICE common stock,
which is 80.2% of the outstanding shares in this
class.
(b) Items (7), (8), (9), and (10) on the attached cover
page are incorporated herein by reference.
(c) The Foundation acquired all of the shares reported
hereunder on November 30, 2000 in conjunction with
the consummation of the Reorganization and the
Merger described in Item 3, above.
(d) Pursuant to the Voting Trust Agreement, any stock
dividends paid on the shares of New RightCHOICE
common stock owned by the Foundation held in the
voting trust created thereunder will be subject to
the voting trust as if originally deposited in the
voting trust. The Voting Trust Agreement is
attached hereto as Exhibit 1. The Voting Trust
Agreement is described in Item 6, below, and such
description is incorporated by reference in this
Item 5(d).
(e) Not applicable.
Item 6. Contracts, Arrangements, Understandings or
Relationships With Respect to Securities of the Issuer.
New RightCHOICE and the Foundation entered into three
agreements in connection with the Reorganization -- the
Voting Trust Agreement, the Registration Rights Agreement
and the Indemnification Agreement. These three
agreements are described below and are attached as
Exhibits to this Schedule.
New RightCHOICE's Certificate of Incorporation and Bylaws
also contain provisions that affect the Foundation's
ownership of its shares of New RightCHOICE common stock.
Portions of these documents are summarized below and are
attached as Exhibits to this Schedule.
1. Voting Trust Agreement.
Pursuant to the Voting Trust Agreement, 14,029,536
of the 14,962,500 shares of New RightCHOICE common
stock that the Foundation received in the Merger
were deposited into a voting trust. The Voting
Trust Agreement is attached hereto as Exhibit 1, and
the general description of the Voting Trust
Agreement set forth below is qualified by reference
to the text of the Voting Trust Agreement.
Purpose
The Blue Cross and Blue Shield Association (the
"BCBSA") granted to New RightCHOICE licenses to use
the Blue Cross and Blue Shield names and service
marks following completion of the Reorganization
only if the Foundation deposited its shares of New
RightCHOICE common stock in a voting trust and
agreed to sell those shares within prescribed time
periods.
Deposit of Shares
The Foundation has deposited into the voting
trust 14,029,536 shares of the 14,962,500 shares of
New RightCHOICE common stock that it received in the
Reorganization. The terms of the voting trust
significantly limit the Foundation's voting rights,
and the trustee of the voting trust will vote those
shares in the manner described below. In addition,
the Foundation may dispose of those shares only in a
manner that would not violate the ownership
requirements contained in New RightCHOICE's
Certificate of Incorporation and any other agreement
to which the Foundation will be a party.
Withdrawal of Shares
As described below, the Foundation must sell
its shares of New RightCHOICE common stock within
prescribed periods of time. In order to ensure that
the Foundation is selling shares in a permitted
manner, the Foundation may withdraw shares from the
voting trust only in order to sell such shares and
then only if:
* New RightCHOICE registers the shares in the name of the
purchaser before the Foundation withdraws them from the
voting trust,
* the Foundation does not sell the shares to an affiliate
of the Foundation,
* the Foundation does not sell the shares to a person or
entity that already owns shares of New RightCHOICE common
stock in excess of the ownership limits contained in New
RightCHOICE's Certificate of Incorporation,
* the sale would not result in a person or entity owning
shares of New RightCHOICE common stock in excess of the
ownership limits contained in New RightCHOICE's
Certificate of Incorporation, and
* the Voting Trust Agreement, the Registration Rights
Agreement (described below) and New RightCHOICE's
Certificate of Incorporation and Bylaws permit the sale.
Voting of Shares Held in Voting Trust
In general, the trustee of the voting trust
will vote the shares of New RightCHOICE common stock
owned by the Foundation and held in the voting trust
as directed by the directors of New RightCHOICE,
except that the Foundation will decide how to vote
these shares on a merger or similar business
combination proposal which would result in the then
existing shareholders of New RightCHOICE owning less
than 50.1% of the resulting company.
Specifically, the trustee of the voting trust
will vote all of the Foundation's shares of New
RightCHOICE common stock held in the voting trust in
the following manner:
* if the matter is the election of directors of New
RightCHOICE, the trustee will vote the shares in favor of
each nominee whose nomination has been approved by (1) a
majority of the members of the New RightCHOICE board of
directors who were not nominated at the initiative of the
Foundation or a person or entity owning shares of New
RightCHOICE common stock in excess of the ownership
limits contained in New RightCHOICE's Certificate
of Incorporation, and (2) a majority of the entire New
RightCHOICE board of directors,
* against the removal of any director of New RightCHOICE
unless (1) a majority of the members of the New
RightCHOICE board of directors who were not nominated at
the initiative of the Foundation or a person or entity
owning shares of New RightCHOICE common stock in excess
of the ownership limits contained in New RightCHOICE's
Certificate of Incorporation, and (2) a majority of
the entire New RightCHOICE board of directors,
initiates or consents to the removal action,
* against any change to New RightCHOICE's Certificate of
Incorporation or Bylaws unless (1) a majority of the
members of the New RightCHOICE board of directors who
were not nominated at the initiative of the Foundation
or a person or entity owning shares of New RightCHOICE
common stock in excess of the ownership
limits contained in New RightCHOICE's Certificate of
Incorporation, and (2) a majority of the entire New
RightCHOICE board of directors, initiates or consents to
the action,
* as directed by the Foundation on any proposed business
combination transaction that if consummated would result
in the then existing New RightCHOICE shareholders,
including the Foundation, owning less than 50.1% of the
outstanding voting securities of the resulting entity,
and
* on any other action, in accordance with the
recommendation of the New RightCHOICE board of directors.
In addition, unless (1) a majority of the
members of the New RightCHOICE board of directors
who were not nominated at the initiative of the
Foundation or a person or entity owning shares of
New RightCHOICE common stock in excess of the
ownership limits contained in New RightCHOICE's
Certificate of Incorporation, and (2) a majority of
the entire New RightCHOICE board of directors,
initiates or consents to such action, neither the
Foundation nor the trustee of the voting trust may:
* nominate any candidate to fill any vacancy on the New
RightCHOICE board of directors,
* call any special meeting of New RightCHOICE shareholders,
or
* take any action that would be inconsistent with the
voting requirements contained in the Voting Trust
Agreement.
Standstill
The Voting Trust Agreement provides that the
Foundation may not:
* individually, or as part of a group, acquire the right to
vote or dispose of any shares of New RightCHOICE common stock
or options to purchase shares of New RightCHOICE common stock
other than those shares issued to it in the Reorganization,
unless it receives the shares in a stock split or other similar
transaction,
* enter into any agreement with any person or entity to sell
shares of New RightCHOICE common stock, except in accordance
with the Voting Trust Agreement and the Registration Rights
Agreement,
* sell any of its shares of New RightCHOICE common stock to a
person or entity if the person or entity already owns, or would
own as a result of the sale transaction, New RightCHOICE common
stock in excess of the ownership limit for the person or entity
included in New RightCHOICE's Certificate of Incorporation,
* nominate any candidate to the New RightCHOICE board of
directors, or
* appoint any individual to fill a vacancy on the New
RightCHOICE board of directors.
Divestiture Requirements
The BCBSA requires its for-profit licensees to
have limitations on the ownership of their stock in
order to maintain independence from the control of
any single shareholder or group of shareholders.
The Foundation's ownership of approximately 80% of
the outstanding shares of New RightCHOICE common
stock following completion of the Reorganization
would ordinarily exceed the ownership limitations
required by the BCBSA. The BCBSA waived the
ownership limitations for the Foundation provided
the Foundation satisfies a number of conditions,
including selling the shares of New RightCHOICE
common stock that it owns in the manner and within
the time periods described below.
Three Year Divestiture Deadline
The Foundation must sell its shares of New
RightCHOICE common stock so that it owns less than
50% of the outstanding shares of New RightCHOICE
common stock within three years following completion
of the Reorganization (or November 30, 2003). This
three-year period is extended day for day, up to a
maximum of 365 days, for each day that the
Foundation does not require New RightCHOICE to
register the Foundation's shares of New RightCHOICE
common stock under a demand registration under the
Registration Rights Agreement because New
RightCHOICE had recently effected a registration of
New RightCHOICE common stock.
Five Year Divestiture Deadline
In addition to meeting the three year
divestiture deadline, the Foundation must sell its
shares of New RightCHOICE common stock so that it
owns less than 20% of the outstanding shares of New
RightCHOICE common stock within five years following
completion of the Reorganization (or November 30,
2005). This five-year period is extended day for
day, up to a maximum of 730 days, for each day that
the Foundation does not require New RightCHOICE to
register the Foundation's shares of New RightCHOICE
common stock under a demand registration under the
Registration Rights Agreement because New
RightCHOICE had previously recently effected a
registration of New RightCHOICE common stock.
Extension of Divestiture Deadlines
Extension Sought by the Missouri Foundation For Health
In the event that the Foundation cannot meet
the divestiture deadlines, it may be able to obtain
an extension if it receives BCBSA approval.
Specifically, New RightCHOICE must extend the
divestiture deadlines if:
* the Foundation makes a good faith and reasonable
determination that compliance with the divestiture deadlines
would have a material adverse effect on the Foundation,
* the Foundation advises New RightCHOICE of its determination
and the reasons for the determination and makes a reasonable
request for an extension of the pending divestiture deadline,
and
* New RightCHOICE receives written confirmation from the BCBSA
that the Foundation's request for an extension of the
divestiture deadline would not cause a violation of the
license agreement between New RightCHOICE and the BCBSA.
Extension Sought by New RightCHOICE
Similarly, New RightCHOICE can extend the
divestiture deadline for the Foundation without a
prior request by the Foundation. But again, the
BCBSA must approve the extension. Specifically, New
RightCHOICE will extend the divestiture deadlines
if:
* New RightCHOICE makes a good faith determination that
compliance with the divestiture deadlines would have a material
adverse effect on New RightCHOICE or any of its shareholders,
other than the Foundation, and
* New RightCHOICE receives written confirmation from the BCBSA
that the extension of the divestiture deadline requested by New
RightCHOICE would not cause a violation of the license
agreement between New RightCHOICE and the BCBSA.
Failure to Meet Divestiture Deadlines
If the Foundation fails to meet a divestiture
deadline, New RightCHOICE will arrange for the sale
of those shares of New RightCHOICE common stock that
the Voting Trust Agreement required the Foundation
to sell in a commercially reasonable manner under
the circumstances and pay the proceeds received in
the sale to the Foundation, after deducting the
expenses incurred by New RightCHOICE. The
Foundation will pay the expenses of the sale. Until
sold, the trustee of the voting trust will vote
these shares of New RightCHOICE common stock in the
manner required under the Voting Trust Agreement,
except that the trustee will vote these shares in
the exact proportion New RightCHOICE shareholders
vote all shares of New RightCHOICE common stock not
held in the voting trust on any change of control
proposal approved by New RightCHOICE's board of
directors and submitted to shareholders for
approval.
Dividends
The Foundation is entitled to receive all cash
dividends paid on the shares of New RightCHOICE
common stock held in the voting trust, after the
trustee deducts its fees and expenses. Any stock
dividends paid on the shares of New RightCHOICE
common stock held in the voting trust will be
subject to the voting trust as if originally
deposited in the voting trust.
Termination of Voting Trust and Divestiture
Agreement
The Voting Trust Agreement will terminate once
the trustee receives notice from New RightCHOICE and
the Foundation that the Foundation owns less than 5%
of the outstanding shares of New RightCHOICE common
stock. At that point, the restrictions and deadlines
in the Voting Trust Agreement will no longer apply,
and the Foundation will have satisfied the
divestiture deadlines.
Litigation
In order to further ensure that New RightCHOICE
will remain independent from the Foundation after
the Reorganization, the Foundation may not
participate in litigation against New RightCHOICE
that challenges the ownership limitations and other
provisions required by the BCBSA for its for-profit
licensees. Specifically, the Foundation has agreed
not to join as a party in any litigation that
alleges that:
* a party may not enforce any provisions of the Voting Trust
Agreement or New RightCHOICE's Certificate of Incorporation or
Bylaws in accordance with their terms,
* the New RightCHOICE board of directors should not enforce
the provisions of New RightCHOICE's Certificate of
Incorporation or Bylaws in any particular case or
circumstances, or
* the New RightCHOICE board of directors should approve or
abandon any proposal concerning an extraordinary business
combination involving New RightCHOICE.
The Foundation may, however, participate in any
litigation that alleges that the New RightCHOICE
board of directors should solicit proposals from
third parties or initiate a bidding process for the
acquisition of New RightCHOICE.
Acquisition Proposals
The Voting Trust Agreement provides that the
Foundation may not solicit or encourage inquires or
proposals with respect to, or provide any
confidential information to or have any discussions,
meetings or other communications with, a person
relating to a merger, tender offer or other business
combination, involving New RightCHOICE. However, the
Foundation may:
* have discussions with the counter-party to a business
combination transaction after the New RightCHOICE board of
directors submits the transaction to the New RightCHOICE
shareholders for approval, and
* have discussions with any person or entity concerning the
sale of New RightCHOICE common stock as permitted by the Voting
Trust Agreement and the Registration Rights Agreement.
In addition, under the Voting Trust Agreement,
for so long as the Foundation owns at least 20% of
the outstanding shares of New RightCHOICE common
stock, New RightCHOICE must consult with the
Foundation before soliciting, or upon receiving, a
business combination proposal in which the then
existing New RightCHOICE shareholders including the
Foundation will own less than a majority of the
outstanding shares of the resulting entity. These
requirements apply to any proposal in which the
Foundation may direct the trustee how to vote.
2. Registration Rights Agreement.
Pursuant to the Registration Rights Agreement, dated
as of November 30, 2000, by and between New
RightCHOICE and the Foundation (the "Registration
Rights Agreement"), New RightCHOICE is generally
required to register with the Securities and
Exchange Commission the Foundation's shares of New
RightCHOICE common stock for sale to the public over
a period of time, and New RightCHOICE has the right
to buy the Foundation's shares of New RightCHOICE
common stock in some cases. The Registration Rights
Agreement is attached hereto as Exhibit 2, and the
general description of the Registration Rights
Agreement set forth below is qualified by reference
to the text of the Registration Rights Agreement.
Purpose
The Registration Rights Agreement gives the
Foundation the right to require New RightCHOICE to
register with the Securities and Exchange Commission
the Foundation's shares of New RightCHOICE common
stock for sale so that the Foundation may satisfy
the divestiture deadlines contained in the Voting
Trust Agreement without having to rely on private or
other nonregistered sales. As discussed below, the
Registration Rights Agreement also gives New
RightCHOICE the option to purchase shares of New
RightCHOICE common stock from the Foundation.
Demand Registration Rights
The Registration Rights Agreement gives the
Foundation the right to "demand" that New
RightCHOICE effect a registration with the
Securities and Exchange Commission of some or all of
the shares of New RightCHOICE common stock owned by
the Foundation. This right lasts for as long as the
Foundation owns shares of New RightCHOICE common
stock. However, New RightCHOICE's obligations to
effect a demand registration are subject to the
limitations described below.
Purchase Option
If the Foundation requests a demand
registration, New RightCHOICE has the option to
purchase any or all of the shares of New RightCHOICE
common stock that the Foundation requests
registration of before it must take any action. New
RightCHOICE does not have the option to purchase
less than all of the shares if the market value of
the shares New RightCHOICE elects not to purchase is
less than $30 million. The purchase price per share
for the shares New RightCHOICE elects to purchase
will be the average closing sale price per share of
New RightCHOICE common stock on the New York Stock
Exchange during the ten consecutive trading days
ending on the second trading day immediately
preceding the date the Foundation requests the
demand registration. If New RightCHOICE does not
exercise this option, or if New RightCHOICE does not
purchase all of the shares of New RightCHOICE common
stock that the Foundation requested registration of,
New RightCHOICE must file a registration statement
for those shares of New RightCHOICE common stock and
cause the registration statement to become
effective, subject to the exceptions described
below.
No Obligation to Effect Demand Registration Under
Certain Circumstances
If the Foundation requests a demand
registration and New RightCHOICE does not elect to
exercise its demand purchase option, New RightCHOICE
will still not be required to file a registration
statement for the shares the Foundation desires to
sell if:
* it previously registered shares of New RightCHOICE common
stock at the request of the Foundation at any time during the
immediately preceding 180-day period,
* it previously registered shares of New RightCHOICE common
stock at the request of the Foundation at any time during the
calendar year in which the Foundation made a demand,
* it previously effected a registration of shares of New
RightCHOICE common stock for sale by New RightCHOICE during the
preceding 120 days, other than shares registered pursuant to
acquisitions or dividend reinvestment or similar employee
plans,
* the amount of New RightCHOICE common stock the Foundation
seeks to register has a market value of less than $30 million,
unless the shares are all of the remaining shares of New
RightCHOICE common stock the Foundation owns,
* it determines in good faith that a demand registration would
materially interfere with a previously announced business
combination transaction in which New RightCHOICE intends to
issue shares of New RightCHOICE common stock, or would result
in the premature disclosure of any pending development
involving New RightCHOICE, in which case the agreement does
not require New RightCHOICE to file a demand registration
for a 120-day period.
Failed Demand Registrations
A requested demand registration will not be
deemed to count as a demand registration for
purposes of determining whether and when New
RightCHOICE must effect another demand registration
under the circumstances set forth above if:
* the Securities and Exchange Commission does not declare the
demanded registration effective,
* after becoming effective, any order or requirement of a
regulatory authority or court for reasons not attributable to
the Foundation interferes with the demanded registration and
the demanded registration does not become effective later,
* the parties do not satisfy or waive the closing conditions
specified in the underwriting agreement, if any, due to a
failure on the part of New RightCHOICE, or
* the Foundation decides not to pursue the registration prior
to the filing of a registration statement, provided that it
reimburses New RightCHOICE for all of its out-of-pocket
expenses incurred in connection with the demand registration.
If a registration statement filed as the result
of a demand registration does not become effective
because:
* the Foundation fails to perform its obligations under the
Registration Rights Agreement,
* the Foundation fails to reach an agreement with the
underwriters on price or other customary terms for the
transaction, or
* the Foundation determines to withdraw its demand,
the requested demand registration will count as a
demand registration for purposes of determining
whether and when New RightCHOICE must effect another
demand registration at the Foundation's request,
unless the Foundation reimburses New RightCHOICE for
all of the expenses that it incurred in connection
with the demand registration.
Inclusion of New RightCHOICE Shares
If the Foundation requests a demand
registration and as a result of its request New
RightCHOICE must file a registration statement, New
RightCHOICE may include any number of shares of New
RightCHOICE common stock that it desires to sell
under the registration statement, subject to
possible reduction as described below.
Reduction in Shares Registered in Demand
Registration
If, in a situation where an underwriter
conducts an offering of New RightCHOICE common stock
owned by the Foundation made pursuant to a demand
registration, the lead managing underwriter
concludes that marketing or other factors require a
reduction of the number of shares of New RightCHOICE
common stock that the Foundation can sell in the
offering within a price range acceptable to the
Foundation, and if New RightCHOICE desires to
register any shares of New RightCHOICE common stock
to sell in the offering, then New RightCHOICE must
reduce the number of shares it desires to sell in
the offering until the total number of shares of New
RightCHOICE common stock being sold equals the
number of shares New RightCHOICE common stock that
the parties may sell at a price range acceptable to
the Foundation.
In the event that (1) New RightCHOICE does not
desire to register any shares of New RightCHOICE
common stock to sell in the demand registration
offering, or (2) the reduction in the number of
shares New RightCHOICE would register still does not
result in a total number of shares that the parties
may sell at a price range acceptable to the
Foundation, then the Foundation must reduce the
number of shares of New RightCHOICE common stock
that it desires to sell in the offering.
The sale will constitute a demand registration
for purposes of New RightCHOICE's obligations to
make additional demand registrations only if the
Foundation receives at least $10 million in gross
sale proceeds in the offering.
Piggy-Back Registration Rights
In addition to granting the Foundation the
right to demand registration of its sales of shares,
the Registration Rights Agreement also permits the
Foundation to "piggy-back" on any registrations made
by New RightCHOICE. Specifically, the Registration
Rights Agreement provides that whenever New
RightCHOICE proposes to file a registration
statement for a public offering of shares of New
RightCHOICE common stock, the Foundation has the
right (1) to have any or all of the shares of New
RightCHOICE common stock that it owns included among
the securities New RightCHOICE will register, and
(2) until it owns less than 50% of the issued and
outstanding shares of New RightCHOICE common stock,
to have any or all of its shares of New RightCHOICE
common stock included among the securities New
RightCHOICE will register so that the Foundation is
entitled to receive up to 50% of the proceeds from
the offering.
If the lead managing underwriter for an
offering for which the Foundation requests piggy-
back registration rights determines that marketing
or other factors require a limitation on the number
of shares of New RightCHOICE common stock the
parties can sell in the offering, then New
RightCHOICE will have priority over the Foundation
unless the Foundation owns more than 50% of the
issued and outstanding shares of New RightCHOICE
common stock at the time of the offering and has
elected to exercise its right, as described above,
to sell shares sufficient to receive up to 50% of
the proceeds.
Continuing Option to Purchase Foundation Shares
In addition to the demand purchase option
described above, beginning on the date that the
Foundation owns less than 50% of the outstanding
shares of New RightCHOICE common stock, New
RightCHOICE may purchase from the Foundation any or
all of the shares of New RightCHOICE common stock
owned by the Foundation at a price equal to (1) the
average sale price of New RightCHOICE common stock
on the New York Stock Exchange over a prescribed
period of time, or (2) the sale price received in a
private placement if the Foundation has not yet
exercised its demand or piggy-back registration
rights. If New RightCHOICE purchases shares of New
RightCHOICE common stock from the Foundation
pursuant to this option, it must hold the shares for
forty-five days before reselling them in a public or
private transaction.
Holdback
The Foundation may not sell any shares of New
RightCHOICE common stock that it owns for a ninety-
day period following its receipt of notice from New
RightCHOICE that New RightCHOICE has filed a
registration statement and
* the Foundation's sale of New RightCHOICE common stock would
adversely affect New RightCHOICE's offering, or
* the managing underwriter in the case of an underwritten
offering advises New RightCHOICE that the Foundation's sale of
New RightCHOICE common stock would adversely affect New
RightCHOICE's offering.
New RightCHOICE may not file a registration
statement for New RightCHOICE common stock or
securities convertible into New RightCHOICE common
stock during the thirty-day period commencing on the
effective date of a registration statement filed on
behalf of the Foundation under a demand
registration.
The Registration Rights Agreement provides that
New RightCHOICE will not file a registration
statement with the Securities and Exchange
Commission for a public offering of New RightCHOICE
common stock for the 180-day period after completion
of the Reorganization without the Foundation's
consent, and the Foundation agrees not to
unreasonably withhold its consent. Under the
Reorganization Agreement, New RightCHOICE may
request the Foundation to make a public offering of
its shares of New RightCHOICE common stock within
six months after the parties complete the
Reorganization on terms and conditions mutually
agreeable to the Foundation and New RightCHOICE.
Registration Expenses
New RightCHOICE will pay all registration
expenses in connection with a demand registration or
a piggy-back registration by the Foundation except
for the Foundation's legal fees and any underwriting
discounts or commissions or transfer taxes.
Rule 144
The Registration Rights Agreement provides that
the Foundation may not sell any shares of New
RightCHOICE common stock that it owns pursuant to
Rule 144 under the Securities Act of 1933, as
amended (the "Securities Act") until the Foundation
has sold at least $50 million of New RightCHOICE
common stock to purchasers that are not affiliates
of the Foundation. Thereafter, the Foundation may
sell shares of New RightCHOICE common stock that it
owns pursuant to Rule 144 under the Securities Act
if:
* the intended sale would not be to a person or entity that
already owns shares of New RightCHOICE common stock in excess
of the ownership limit for that person or entity contained in
New RightCHOICE's Certificate of Incorporation,
* the intended sale would not cause a person or entity to own
shares of New RightCHOICE common stock in excess of the
ownership limits for that person or entity contained in New
RightCHOICE's Certificate of Incorporation, and
* the intended sale would not otherwise violate the
Registration Rights Agreement, the Voting Trust Agreement and
New RightCHOICE's Certificate of Incorporation or Bylaws.
Private Sales
If the Foundation desires to sell any or all of
its shares of New RightCHOICE common stock in a
private sale transaction to qualified investors, New
RightCHOICE has the right of first refusal to
purchase the shares of New RightCHOICE common stock
from the Foundation upon the same terms and
conditions as the Foundation proposes to sell the
shares in the private sale.
3. Indemnification Agreement.
Pursuant to the Indemnification Agreement, dated as
of November 30, 2000 (the "Indemnification
Agreement"), by and between New RightCHOICE and the
Foundation, the Foundation has agreed to indemnify
New RightCHOICE if New RightCHOICE becomes subject
to federal income tax as a result of the
Reorganization. The Indemnification Agreement is
attached hereto as Exhibit 3, and the general
description of the Indemnification Agreement set
forth below is qualified by reference to the text of
the Indemnification Agreement.
Income Tax Indemnity
The Indemnification Agreement provides that the
Foundation must indemnify, defend and hold harmless
(1) New RightCHOICE, (2) all subsidiaries and
affiliates of New RightCHOICE and (3) all directors,
officers, agents and employees of New RightCHOICE
and any of its subsidiaries and affiliates from any
tax liabilities and interest and penalties and
professional fees incurred in connection with the
defense of any liabilities they may incur if the
Internal Revenue Service or any other taxing
authority determines that any part of the
Reorganization constitutes a taxable transaction or
results in the recognition of gain under applicable
tax law.
Non-Income Tax Indemnity
In addition to indemnification for tax matters,
the Foundation must indemnify, defend and hold
harmless New RightCHOICE and all of New
RightCHOICE's subsidiaries and affiliates, and each
and every past and present director, officer, agent,
employee and independent contractor of New
RightCHOICE or of any of its subsidiaries and
affiliates from and against:
* any claims that have been or may be asserted:
- in the lawsuit filed as a class action by private parties
challenging the 1994 reorganization of BCBSMo, the related
formation of Old RightCHOICE and other activities on the
grounds that these actions were wrongful to the
subscribers of BCBSMo, or
- both arising out of or related to either (1) BCBSMo's
transfer of its managed care business to Old RightCHOICE,
or (2) the Reorganization, and arising out of or related
to either (a) BCBSMo's status as a mutual benefit or
public benefit corporation, or (b) the ownership of
BCBSMo's assets, and
* any claims or demands asserted by any previous director,
officer, agent employee or independent contractor of BCBSMo, or
any subsidiary of BCBSMo (except for Old RightCHOICE and
subsidiaries of Old RightCHOICE) seeking indemnity from New
RightCHOICE for any matter for which the Foundation is
obligated to provide indemnification.
However, the Foundation is not obligated to
indemnify:
* any past or present director, officer, agent, employee or
independent contractor of New RightCHOICE or of any of its
subsidiaries and affiliates from any conduct that an
appropriate court finally determines to have been knowingly
fraudulent or deliberately dishonest or willful misconduct, or
* law firms, accounting firms and other professionals engaged
by New RightCHOICE as independent contractors against any
claims that have been or may be asserted:
- in the lawsuit filed as a class action by private parties
challenging the 1994 reorganization of BCBSMo, the related
formation of Old RightCHOICE and other activities on the
grounds that these actions were wrongful to the
subscribers of BCBSMo, or
- both arising out of or related to either (1) BCBSMo's
transfer of its managed care business to Old RightCHOICE,
or (2) the Reorganization, and arising out of or related
to either (a) BCBSMo's status as a mutual benefit or
public benefit corporation, or (b) the ownership of
BCBSMo's assets.
Net Worth
In order to ensure that the Foundation will
have assets available to satisfy any of its
indemnification obligations that may arise, the
Indemnification Agreement requires that for six
years following the filing by BCBSMo of its federal
income tax return for the year in which the parties
complete the Reorganization, the Foundation must
maintain a net worth of not less than $85,136,625.
4. Certificate of Incorporation.
As an owner of New RightCHOICE common stock, the
Foundation is subject to the provisions of New
RightCHOICE's Certificate of Incorporation. New
RightCHOICE's Certificate of Incorporation is
attached hereto as Exhibit 4, and the general
description of various provisions of the Certificate
of Incorporation set forth below is qualified by
reference to the text of the Certificate of
Incorporation.
Qualification of Directors
New RightCHOICE's Certificate of Incorporation
provides that no one can become a director of New
RightCHOICE unless he or she is an "independent
director," or immediately after an individual
becomes a director, at least 80% of the directors
would be independent directors. A person will
qualify as an independent director if he or she:
* is not a "major participant,"
* is not nominated to be a director by a major participant,
* has not announced a commitment to a proposal made by a major
participant that has not been approved by a majority of
independent directors and a majority of all directors, and
* has not been determined by a majority of independent
directors and a majority of all directors to have been subject
to any relationship or arrangement which those directors deem
to be likely to interfere with his or her exercise of
independent judgment.
New RightCHOICE's Certificate of Incorporation
defines a "major participant" as:
* the Foundation and any other entity which, in the judgment
of a majority of independent directors and a majority of all
directors, succeeds to the Foundation's position,
* a person or entity who owns shares of New RightCHOICE common
stock in excess of the ownership limitations described below,
* a person or entity that has filed proxy materials with the
Securities and Exchange Commission supporting a candidate for
election to the board of directors in opposition to candidates
approved by a majority of independent directors and a majority
of all directors,
* a person or entity that has taken actions to become a major
participant, or
* a person or entity that is an affiliate or associate of a
major participant.
If, however, (1) a majority of independent
directors and a majority of all directors approve an
acquisition of New RightCHOICE common stock by a
third party, and (2) the acquisition results in a
person or entity becoming a major participant, that
person or entity will not be deemed to be a major
participant if the person or entity:
* makes no other acquisition of New RightCHOICE common stock
that the directors do not approve, and
* takes no action that would make the person or entity a major
participant.
Limitations on Ownership
General
New RightCHOICE's Certificate of Incorporation
contains the following ownership limitations
required by the BCBSA for its for-profit licensees.
Under these ownership limitations:
* no institutional investor may beneficially own 10% or more
of the combined voting power of all outstanding New RightCHOICE
securities,
* no noninstitutional investor may beneficially own 5% or more
of the combined voting power of all outstanding New RightCHOICE
securities, and
* no person or entity may own 20% or more of all outstanding
New RightCHOICE equity securities.
The Certificate of Incorporation defines
"beneficial ownership" to include securities:
* which a person or entity has a direct or indirect beneficial
ownership interest,
* which a person or entity has an option to purchase,
* which a person or entity has the right to vote,
* with respect to which a person or entity would be required
to file a Schedule 13D or Schedule 13G under the Securities
Exchange Act, or
* which any affiliate or associate would beneficially own
under any agreement, arrangement or understanding.
The beneficial ownership provisions include
several exceptions included in the definition of
beneficial ownership in New RightCHOICE's
Certificates of Incorporation.
Violation of Limitations on Ownership
If any person or entity beneficially owns New
RightCHOICE securities in excess of the ownership
limits:
* the person or entity will not receive any rights to the
excess shares, and
* the excess shares will immediately be deemed to be
transferred to a share escrow agent.
A person or entity's beneficial ownership will
not be in excess of the ownership limits if the
person or entity's excess shares do not exceed the
lesser of 1% of the voting power of the capital
stock or 1% of the outstanding stock and the person
or entity disposes of or transfers the excess shares
within fifteen days of becoming aware of the
ownership of excess shares.
Exceptions to Ownership Limits
The ownership limits do not apply to:
* the share of New RightCHOICE common stock issued to the
Foundation upon New RightCHOICE's incorporation,
* the shares of New RightCHOICE common stock that the
Foundation received in the Reorganization, or
* the shares of New RightCHOICE common stock that the
Foundation acquires as a result of a stock dividend, stock
split, conversion, or recapitalization on the shares of New
RightCHOICE common stock originally issued to the Foundation
in the Reorganization.
The ownership limits apply to any shares of New
RightCHOICE common stock that the Foundation
transfers to another person or entity.
5. Bylaws.
As an owner of New RightCHOICE common stock, the
Foundation is subject to the provisions of New
RightCHOICE's Bylaws. New RightCHOICE's Bylaws are
attached hereto as Exhibit 5, and the general
description of various provisions of the Bylaws set
forth below is qualified by reference to the text of
the Bylaws.
Qualified Candidates
New RightCHOICE's Bylaws provide that
shareholders will elect directors by a plurality
vote and that shareholders may only elect "qualified
candidates" to the board of directors. A qualified
candidate is an individual nominated by a majority
of the independent directors and a majority of all
directors, or timely nominated by shareholders, and,
in either event, who is not disqualified from
serving on the board by being a "non-independent
candidate." A non-independent candidate is a
candidate nominated by a majority of the independent
directors and a majority of all directors, or timely
nominated by shareholders, but who does not qualify
as an "independent director" under the Certificate
of Incorporation.
In the event that some, but not all, of the non-
independent candidates for director become eligible
for election to the board of directors because seats
are available for non-independent directors, the non-
independent candidates will be treated as qualified
candidates until shareholders fill all positions
available for non-independent candidates at the
election.
Item 7. Material to be Filed as Exhibits.
1. Voting Trust and Divestiture Agreement, dated as of
November 30, 2000, by and among RightCHOICE Managed Care, Inc., a
Delaware corporation, The Missouri Foundation For Health, a
Missouri nonprofit corporation, and Wilmington Trust Company, a
Delaware banking corporation, as trustee.
2. Registration Rights Agreement, dated as of November 30,
2000, by and between RightCHOICE Managed Care, Inc., a Delaware
corporation, and The Missouri Foundation For Health, a Missouri
nonprofit corporation.
3. Indemnification Agreement, dated as of November 30, 2000, by
and between RightCHOICE Managed Care, Inc., a Delaware
corporation, and The Missouri Foundation For Health, a Missouri
nonprofit corporation.
4. Certificate of Incorporation of RightCHOICE Managed Care,
Inc., a Delaware corporation.
5. Bylaws of RightCHOICE Managed Care, Inc., a Delaware
corporation.
SIGNATURE
After reasonable inquiry and to the best of my knowledge and
belief, I certify that the information set forth in this
statement is true, complete and correct.
December 7, 2000
Date
/s/ Charles W. Hatfield
Signature
Charles W. Hatfield, Secretary
Name and Title
Exhibit 1
VOTING TRUST AND DIVESTITURE AGREEMENT
THIS VOTING TRUST AND DIVESTITURE AGREEMENT (this
"Agreement") is made and entered into as of the 30th day of
November, 2000, by and among RightCHOICE Managed Care, Inc., a
Delaware corporation (the "Company"), The Missouri Foundation For
Health, a Missouri non-profit corporation (the "Beneficiary"),
and Wilmington Trust Company, a Delaware banking corporation, as
trustee (the "Trustee").
RECITALS
A. Pursuant to the terms of that certain Agreement and Plan of
Reorganization (the "Reorganization Agreement"), dated as of
March 14, 2000, by and among Blue Cross and Blue Shield of
Missouri, a Missouri non-profit health services corporation,
RightCHOICE Managed Care, Inc., a Missouri corporation, the
Beneficiary, and the Company, the Beneficiary has acquired,
contemporaneous with the execution of this Agreement, 14,962,500
shares of common stock, par value $.01 per share, of the Company
(the "Common Stock"), representing approximately 80.1% of the
issued and outstanding shares of Common Stock.
B. The Company became a licensee of the Blue Cross and Blue
Shield Association (the "BCBSA") upon consummation of the
transactions contemplated by the Reorganization Agreement,
thereby enabling the Company to use the "Blue Cross" and "Blue
Shield" names and related rights (the "Marks").
C. The Beneficiary wishes for its investment in the Company to
be as valuable as possible for so long as such investment is
maintained and believes that the Company's license to use the
Marks will contribute substantially to the Company's value and
its future prospects.
D. The BCBSA has conditioned the Company's license to continue
to use the Marks upon the Company maintaining certain provisions
set forth in this Agreement and in its Certificate of
Incorporation (as defined below) (the "Basic Protections") which
are intended by the BCBSA to enable the Company to remain
independent of the Beneficiary and any other Person (as defined
below) who may in the future acquire shares of Capital Stock (as
defined below) in excess of the Ownership Limit (as defined
below) applicable to such Person.
E. The Beneficiary has agreed to be bound by the Basic
Protections, including (i) a requirement that the Beneficiary
deposit into the voting trust established by this Agreement (the
"Voting Trust") all of the shares of Capital Stock Beneficially
Owned (as defined below) by the Beneficiary in excess of the
Voting Trust Ownership Limit (as defined below), and (ii) a
requirement that the Beneficiary reduce its Beneficial Ownership
(as defined below) of each class of Capital Stock to less than
fifty percent (50%) of the issued and outstanding shares of each
class of Capital Stock within three (3) years following the
Closing Date (as defined below), subject to possible extension as
provided herein, and reduce its Beneficial Ownership of each
class of Capital Stock to less than twenty percent (20%) of the
issued and outstanding shares of each class of Capital Stock
within five (5) years following the Closing Date, subject to
possible extension as provided herein.
AGREEMENT
In consideration of the foregoing and the mutual covenants
contained herein and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the
parties agree as follows:
ARTICLE I
DEFINITIONS
For purposes of this Agreement, the following terms shall
have the following meanings:
(a) "Acquisition Proposal" means any tender or exchange offer,
proposal for a merger, consolidation or other business
combination involving the Company or any of its subsidiaries or
affiliates or any proposal or offer to acquire in any manner any
equity interest in, or any portion of the assets of, the Company
or any of its subsidiaries or affiliates.
(b) "Agreement" has the meaning set forth in the Preamble
hereof.
(c) "Affiliate," as used with respect to the Beneficiary, has
the meaning ascribed to such term in Rule 12b-2 of the Securities
and Exchange Act of 1934, as amended, and in effect on
November 17, 1993, but shall be deemed to not include the Company
and its subsidiaries.
(d) "BCBSA" has the meaning set forth in Recital B hereof.
(e) "Basic Protections" has the meaning set forth in Recital D
hereof.
(f) "Beneficial Ownership," "Beneficially Own" or "Beneficial
Owner" have the meaning set forth in Section 1 of Article VII of
the Certificate of Incorporation.
(g) "Beneficiary" has the meaning set forth in the Preamble
hereof.
(h) "Blackout Period" has the meaning set forth in Section 1 of
the Registration Rights Agreement.
(i) "Board of Directors" means the Board of Directors of the
Company.
(j) "Bylaws" means the Bylaws of the Company as in effect at the
time that reference is made thereto.
(k) "Capital Stock" has the meaning set forth in Section 1 of
Article VII of the Certificate of Incorporation.
(l) "Certificate of Incorporation" means the Certificate of
Incorporation of the Company as in effect at the time that
reference is made thereto.
(m) "Change of Control Proposal" means any agreement, plan or
proposal involving any merger, consolidation or other business
combination that, if consummated in accordance with its terms,
would result in the holders of the voting Capital Stock of the
Company immediately prior to such merger, consolidation or other
business combination owning less than 50.1% of the outstanding
voting securities of the resulting entity arising out of such
merger, consolidation or other business combination.
(n) "Closing Date" has the meaning provided therefor in the
Reorganization Agreement.
(o) "Company" has the meaning set forth in the Preamble hereof.
(p) "Common Stock" has the meaning set forth in Recital A
hereof.
(q) "Delinquent Shares" means any and all shares of Capital
Stock Beneficially Owned by the Beneficiary in excess of the
number of shares of Capital Stock that the Beneficiary may
Beneficially Own at the Three Year Divestiture Deadline or the
Five Year Divestiture Deadline, as the case may be, or at any
date to which either the Three Year Divestiture Deadline or the
Five Year Divestiture Deadline, as the case may be, may be
extended pursuant to Section 6.03 or Section 6.04 hereof.
(r) "Demand" has the meaning set forth in Section 1 of the
Registration Rights Agreement.
(s) "Five Year Divestiture Deadline" means the fifth anniversary
of the Closing Date, extended day for day, up to a maximum of
seven hundred thirty (730) days, for each day the Company is not
required to file a Registration Statement (i) in response to an
actual Demand pursuant to Section 2(d)(iii) of the Registration
Rights Agreement as a result of the Company having previously
effected a registration of Common Stock, provided that there
shall be no such extension if the Company is not required to file
a Registration Statement pursuant to said Section 2(d)(iii)
because the Company previously effected a registration of Common
Stock wherein the Beneficiary exercised its Share-Rights and
received proceeds from the sale of its shares; or (ii) as a
result of the pendency of any Blackout Period.
(t) "Indemnified Party" has the meaning set forth in
Section 8.06 hereof.
(u) "Independent Board Majority" has the meaning set forth in
Section 4.B.3 of Article IV of the Certificate of Incorporation.
(v) "Marks" has the meaning set forth in Recital B hereof.
(w) "Ownership Limit" has the meaning set forth in Section 1 of
Article VII of the Certificate of Incorporation.
(x) "Person" means any individual, firm, partnership,
corporation (including, without limitation, a business trust),
limited liability company, trust, unincorporated association,
joint stock company, joint venture or other entity, and shall
include any successor (by merger or otherwise) of any such
entity.
(y) "Registration Rights Agreement" means that certain
Registration Rights Agreement, of even date herewith, by and
between the Company and the Beneficiary.
(z) "Registration Statement" has the meaning set forth in
Section 1 of the Registration Rights Agreement.
(aa) "Reorganization Agreement" has the meaning set forth in
Recital A hereof.
(bb) "Share-Rights" has the meaning set forth in Section 1 of the
Registration Rights Agreement.
(cc) "Successor Trustee" has the meaning set forth in
Section 8.04 hereof.
(dd) "Three Year Divestiture Deadline" means the third
anniversary of the Closing Date, extended day for day, up to a
maximum of three hundred sixty five (365) days, for each day the
Company is not required to file a Registration Statement (i) in
response to an actual Demand pursuant to Section 2(d)(iii) of the
Registration Rights Agreement as a result of the Company having
previously effected a registration of Common Stock, provided that
there shall be no such extension if the Company is not required
to file a Registration Statement pursuant to said
Section 2(d)(iii) because the Company previously effected a
registration of Common Stock wherein the Beneficiary exercised
its Share-Rights and received proceeds from the sale of its
shares; or (ii) as a result of the pendency of any Blackout
Period.
(ee) "Trustee" has the meaning set forth in Preamble hereof.
(ff) "Voting Power" has the meaning set forth in Section 1 of
Article VII of the Certificate of Incorporation.
(gg) "Voting Trust" has the meaning set forth in Recital E
hereof.
(hh) "Voting Trust Ownership Limit" means that number of shares
of Capital Stock one share lower than the number of shares of
Capital Stock which would represent five percent (5%) of the
Voting Power of all shares of Capital Stock issued and
outstanding at the time of determination.
ARTICLE II
DEPOSIT OF STOCK
Section 2.01 Delivery of Capital Stock. Beneficiary shall make
such contributions to the Voting Trust of shares of Capital Stock
that Beneficiary may Beneficially Own such that the number of
shares of Capital Stock Beneficially Owned by the Beneficiary
outside of the Voting Trust shall never exceed the Voting Trust
Ownership Limit. The Trustee acknowledges receipt of 14,029,536
shares of Capital Stock acquired by Beneficiary pursuant to the
Reorganization Agreement. The Company shall pay any taxes and
costs imposed upon the transfer of the shares of Capital Stock
Beneficially Owned by the Beneficiary to the Voting Trust at the
time of transfer.
Section 2.02 Certificate Book and Inspection of Agreement. The
Trustee shall keep at the address set forth in Section 10.04
hereof correct books of account of all the Trustee's business and
transactions relating to the Voting Trust, and a book setting
forth the number of shares of Capital Stock held by the Voting
Trust. A duplicate of this Agreement and any extension thereof
shall be filed with the Secretary of the Company and shall be
open to inspection by a stockholder upon the same terms as the
record of stockholders of the Company is open to inspection.
ARTICLE III
BENEFICIARY'S INTEREST IN CAPITAL STOCK
Section 3.01 Retained Interest. Subject to the powers, duties
and rights of the Company and the Trustee set forth herein and
further subject to the terms of this Agreement, the Registration
Rights Agreement, the Certificate of Incorporation and the
Bylaws, the Beneficiary shall retain the entire economic and
beneficial ownership rights in all of the shares of Capital Stock
held in the Voting Trust.
Section 3.02 Withdrawal of Shares from Trust. The Beneficiary
shall not be entitled to withdraw any shares of Capital Stock
from the Voting Trust except to sell its entire Beneficial
Ownership interest in such shares of Capital Stock provided that
(i) such shares of Capital Stock shall be registered in the name
of the purchaser thereof before being withdrawn from the Voting
Trust, (ii) such sale of shares of Capital Stock shall not be to
an Affiliate of the Beneficiary, (iii) such sale of shares of
Capital Stock shall not be made to any Person Beneficially Owning
any shares of Capital Stock in excess of the Ownership Limit
applicable to such Person, (iv) such sale of shares of Capital
Stock shall not result in any Person Beneficially Owning any
shares of Capital Stock in excess of the Ownership Limit
applicable to such Person, and (v) such sale of shares of Capital
Stock shall otherwise be permitted pursuant to this Agreement,
the Registration Rights Agreement, the Certificate of
Incorporation and the Bylaws. The Beneficiary shall not transfer
any of its retained rights or interest in shares of Capital Stock
held in the Voting Trust. Any shares of Capital Stock withdrawn
in accordance with this Section 3.02 shall, upon withdrawal,
cease to be subject to the terms and conditions of this
Agreement.
ARTICLE IV
TRUSTEE'S POWERS AND DUTIES
Section 4.01 Limits on Trustee's Powers. The Trustee shall
have only the powers set forth in this Agreement. It is
expressly understood and agreed by the parties hereto that under
no circumstances shall the Trustee be personally liable for the
payment of any indebtedness or expenses of this Agreement or be
liable for the breach or failure of any obligation,
representation, warranty or covenant made or undertaken by the
Trustee under this Agreement, except as set forth in this
Agreement.
Section 4.02 Right to Vote. With respect to all shares of
Capital Stock held in the Voting Trust, the Trustee shall have
the exclusive and absolute right in respect of such shares of
Capital Stock to vote, assent or consent such shares of Capital
Stock at all times during the term of this Agreement, subject to
Section 4.03 hereof, including, without limitation, the right to
vote at any election of directors and in favor of or in
opposition to any resolution, dissolution, liquidation, merger or
consolidation of the Company, any sale of all or substantially
all of the Company's assets, any issuance or authorization of
securities, or any action of any character whatsoever which may
be presented at any meeting or require the consent of the
stockholders of the Company.
Section 4.03 Voting on Particular Matters. In exercising the
Trustee's powers and duties under this Agreement, the Trustee
shall at all times vote, assent or consent all shares of Capital
Stock held in the Voting Trust as follows:
(a) if the matter concerned is the election of directors of the
Company, the Trustee shall vote, assent or consent the whole
number of shares of Capital Stock held by the Voting Trust in
favor of each nominee to the Board of Directors whose nomination
has been approved by an Independent Board Majority and vote
against any candidate for the Board of Directors for whom no
competing candidate has been nominated or selected by an
Independent Board Majority;
(b) unless such action is initiated by or with the consent of an
Independent Board Majority, the Trustee shall (i) vote against
removal of any director of the Company, (ii) vote against any
alteration, amendment, change or addition to or repeal of the
Bylaws or Certificate of Incorporation, (iii) not nominate any
candidate to fill any vacancy on the Board of Directors, (iv) not
call any special meeting of the stockholders of the Company, and
(v) not take any action by voting shares of Capital Stock held by
the Voting Trust that would be inconsistent with or would have
the effect, directly or indirectly, of defeating or subverting
the voting requirements contained in Section 4.03(a) hereof or
this Section 4.03(b);
(c) to the extent not covered by Section 4.03(a) or
Section 4.03(b) hereof, on any action, proposal or resolution
requiring prior approval of the Board of Directors as a
prerequisite to become effective, the Trustee shall vote in
accordance with the recommendation of the Board of Directors,
provided, however, that on any Change of Control Proposal
approved by the Board of Directors and submitted by the Board of
Directors to the stockholders of the Company for a vote thereon,
the Trustee shall vote on such Change of Control Proposal as
directed by the Beneficiary; and
(d) to the extent not covered by Section 4.03(a) or
Section 4.03(b) hereof, on any action, proposal or resolution not
requiring prior approval of the Board of Directors as a
prerequisite to become effective, the Trustee shall vote in
accordance with the recommendation of the Board of Directors.
Section 4.04 Presence at Meetings. The Trustee shall ensure,
with respect to the shares of Capital Stock held in the Voting
Trust hereunder, that such shares of Capital Stock are counted as
being present for the purposes of any quorum required for
stockholder action of the Company and to vote, assent or consent
as set forth in this Article IV so long as the Trustee has
reasonable notice of the time to vote, assent or consent (and the
Trustee shall be deemed to have reasonable notice if it shall
receive notice within the time periods under the applicable
provisions of the Delaware General Corporation Law).
Section 4.05 Sales. The Trustee shall have no authority to
sell any of the shares of Capital Stock deposited pursuant to the
provisions of this Agreement, unless expressly permitted pursuant
to the terms hereof. Upon the sale of shares of Capital Stock in
accordance with the terms hereof, the Trustee shall deliver or
cause to be delivered certificates representing such shares of
Capital Stock to the Person entitled thereto.
Section 4.06 Contrary Instructions. The Trustee shall have no
obligation whatsoever to follow any instruction of the
Beneficiary if such instruction is contrary to the terms of this
Agreement, unless such contrary instruction shall be agreed to in
writing by the Beneficiary and the Company.
Section 4.07 Execution by Trustee. The Trustee shall execute
all documents as follows:
"By: Wilmington Trust Company, not in its individual
capacity, but solely as Trustee
By: ____________________________."
ARTICLE V
STANDSTILL
Section 5.01 Acquisition of Capital Stock. Throughout the term
of this Agreement, the Beneficiary shall not, directly or
indirectly, (i) individually, or as part of a group, acquire,
offer or propose to acquire, or agree to acquire, by purchase or
otherwise, Beneficial Ownership of any shares of Capital Stock,
or direct or indirect rights or options to acquire (through
purchase, exchange, conversion or otherwise) Beneficial Ownership
of any shares of Capital Stock (except by reason of stock
dividends, stock splits, spinoffs, mergers, recapitalizations,
combinations, conversions, exchanges of shares, or the like), or
(ii) enter into any agreement, arrangement or understanding,
other than for the sale of shares of Capital Stock in accordance
with Section 3.02 hereof and the Registration Rights Agreement,
with any Person, other than the Company, that would have the
effect of increasing such Person's or the Beneficiary's
Beneficial Ownership in any shares of Capital Stock.
Section 5.02 Sale of Capital Stock. Notwithstanding anything
in this Agreement to the contrary, the Beneficiary shall not sell
or otherwise dispose of any shares of Capital Stock to any
Person, whether in a private placement, pursuant to a registered
offering of securities or otherwise, if (i) such Person
Beneficially Owns an amount of Capital Stock in excess of the
Ownership Limit applicable to such Person, or (ii) the effect of
such sale or other disposition would be to cause such Person to
Beneficially Own an amount of Capital Stock which would exceed
the Ownership Limit applicable to such Person.
Section 5.03 Nomination of Directors. The Beneficiary shall
not itself, nor shall it initiate, suggest or otherwise encourage
the Board of Directors or any other Person to, (i) nominate any
individual as a candidate for election to the Board of Directors,
or (ii) appoint any individual to fill any vacancy on the Board
of Directors. The Beneficiary shall not support, endorse or
otherwise encourage the election of any candidate for election to
the Board of Directors other than a candidate or candidates
nominated by an Independent Board Majority.
Section 5.04 Acquisition Proposals. The Beneficiary shall not
solicit or encourage inquiries or proposals with respect to, or
provide any confidential information to, or have any discussions,
meetings or other communications with, any Person relating to an
Acquisition Proposal or a Change of Control Proposal, provided,
however, that the Beneficiary may have discussions with the
counter-party to any Change of Control Proposal after such Change
of Control Proposal shall have been approved by the Board of
Directors and submitted to the stockholders of the Company for a
vote thereon, and provided further, however, that the Beneficiary
may have discussions with any Person concerning the sale or
disposal of shares of Capital Stock Beneficially Owned by the
Beneficiary in accordance with Section 3.02 hereof and the
Registration Rights Agreement.
Section 5.05 Contacts. Subject to Section 5.04 hereof, the
Beneficiary shall not meet or otherwise communicate with any
Person that is seeking to acquire shares of Capital Stock in
excess of the Ownership Limit applicable to such Person to the
extent that such meeting or other communication relates to such
acquisition of shares of Capital Stock or Acquisition Proposal.
The Beneficiary shall promptly advise the Company in writing if
the Beneficiary or any of its representatives shall have received
a communication, contact or inquiry relating to an Acquisition
Proposal and shall promptly advise the Company of all information
available to the Beneficiary concerning such communication,
contact or inquiry relevant to such Acquisition Proposal.
Section 5.06 Litigation. The Beneficiary shall not join as a
party in any litigation, suit or cause of action that alleges
(i) that any of the Basic Protections or any provisions of the
Certificate of Incorporation or Bylaws are not enforceable in
accordance with their terms, (ii) that the Board of Directors
should not enforce the Basic Protections or provisions of the
Certificate of Incorporation or Bylaws in any particular case or
circumstance, or (iii) that the Board of Directors should
approve, adopt, disapprove or abandon any particular Acquisition
Proposal or Change of Control Proposal; provided, however, that
nothing in this Section 5.06 shall prevent the Beneficiary from
joining as a party in any litigation, suit or cause of action
that alleges that the Board of Directors should solicit
Acquisition Proposals or Change of Control Proposals, or initiate
a bidding process seeking proposals to acquire all of the
outstanding stock of the Company.
Section 5.07 Communications. For so long as the Beneficiary
Beneficially Owns twenty percent (20%) or more of the issued and
outstanding shares of Common Stock, the Company shall consult
with the Beneficiary prior to soliciting any Change of Control
Proposal and shall consult with the Beneficiary in the event that
the Company shall receive any Change of Control Proposal.
Beneficiary shall comply with the same confidentiality and non-
disclosure obligations that apply to directors and officers of
the Company with respect to all information obtained by
Beneficiary in connection with any such consultation. Nothing in
this Agreement shall be construed to limit the rights of a
Beneficiary as a shareholder of the Company from communicating
with the Board of Directors of the Company regarding Change of
Control Proposals or, except as otherwise provided in Section
5.03 hereof, any other matter pertaining to the Company. The
Company and the Beneficiary shall keep confidential the contents
of all such communications from the Beneficiary, provided that
either party may disclose the contents of such communications if
required by law.
ARTICLE VI
AGREEMENT TO DIVEST SHARES OF CAPITAL STOCK
Section 6.01 Sale of Beneficiary's Capital Stock by Third
Anniversary. The Beneficiary hereby covenants and agrees that it
shall sell, convey, or otherwise dispose of shares of Capital
Stock (so that the Beneficiary is no longer a Beneficial Owner of
such shares of Capital Stock) so that the Beneficiary
Beneficially Owns less than fifty percent (50%) of the issued and
outstanding shares of each class of Capital Stock on or prior to
the Three Year Divestiture Deadline. Any such disposition shall
comply with the terms of this Agreement, the Registration Rights
Agreement, the Certificate of Incorporation and the Bylaws.
Section 6.02 Sale of Beneficiary's Capital Stock by Fifth
Anniversary. The Beneficiary hereby covenants and agrees that it
shall sell, convey or otherwise dispose of shares of Capital
Stock (so that the Beneficiary is no longer a Beneficial Owner of
such shares of Capital Stock) so that the Beneficiary
Beneficially Owns less than twenty percent (20%) of the issued
and outstanding shares of each class of Capital Stock on or prior
to the Five Year Divestiture Deadline. Any such disposition
shall comply with the terms of this Agreement, the Registration
Rights Agreement, the Certificate of Incorporation and the
Bylaws.
Section 6.03 Extension of Divestiture Deadlines Sought by
Beneficiary. Notwithstanding Section 6.01 or Section 6.02
hereof, the Company shall extend the Three Year Divestiture
Deadline or the Five Year Divestiture Deadline, as the case may
be, if (i) the Beneficiary makes a good faith and reasonable
determination (and provides the reasons therefor) that compliance
with Section 6.01 or Section 6.02 hereof, as the case may be,
would have a material adverse affect on the Beneficiary, (ii) the
Beneficiary advises the Company of such determination (and
provides the reasons therefor) and makes a reasonable request for
an extension of the Three Year Divestiture Deadline or the Five
Year Divestiture Deadline, as the case may be, and (iii) the
Company receives written confirmation from the BCBSA that the
extension of the Three Year Divestiture Deadline or the Five Year
Divestiture Deadline, as the case may be, requested by the
Beneficiary would not cause a violation of the license agreements
governing the Company's use of the Marks. The Company shall not
oppose the Beneficiary's request for an extension of the Three
Year Divestiture Deadline or the Five Year Divestiture Deadline,
as the case may be, and shall take reasonable steps, as
reasonably requested by the Beneficiary, to assist the
Beneficiary in its efforts to obtain an extension of the Three
Year Divestiture Deadline or the Five Year Divestiture Deadline,
as the case may be; provided that the Company shall have no
obligation to, among other things, incur any fees or expenses for
its own account in connection with such assistance. The
Beneficiary acknowledges that, notwithstanding the scope or
degree of assistance provided by the Company, the BCBSA shall
have the sole and absolute authority and discretion to determine
whether to consent to an extension of the Three Year Divestiture
or the Five Year Divestiture Deadline, as the case may be, but
shall have no obligation to grant such consent, and that in no
event shall the Company have any liability to the Beneficiary or
any other Person in the event that the BCBSA shall determine to
deny any such extension request.
Section 6.04 Extension of Divestiture Deadlines Sought by
Company. Notwithstanding Section 6.01 or Section 6.02 hereof,
the Company shall extend the Three Year Divestiture Deadline or
the Five Year Divestiture Deadline, as the case may be, if (i)
the Company makes a good faith determination that compliance with
Section 6.01 or Section 6.02 hereof, as the case may be, would
have an adverse affect on the Company, or any of its stockholders
other than the Beneficiary, and (ii) the Company receives written
confirmation from BCBSA that the extension of the Three Year
Divestiture Deadline or the Five Year Divestiture Deadline, as
the case may be, requested by the Company would not cause a
violation of the license agreement governing the Company's use of
the Marks. The Beneficiary and the Company acknowledge that the
BCBSA shall have the sole and absolute authority and discretion
to determine whether to consent to an extension of the Three Year
Divestiture or the Five Year Divestiture Deadline, as the case
may be, but shall have no obligation to grant such consent, and
that in no event shall the Company have any liability to the
Beneficiary or any other Person in the event that the BCBSA shall
determine to deny any such extension request.
Section 6.05 Failure to Meet Divestiture Deadlines. In the
event that the Beneficiary shall fail to meet either the Three
Year Divestiture Deadline or the Five Year Divestiture Deadline,
as the case may be, and an extension thereof shall not have been
granted pursuant to Section 6.03 or Section 6.04 hereof, or shall
fail to meet any extended Three Year Divestiture Deadline or Five
Year Divestiture Deadline, as the case may be, that may have been
granted pursuant to Section 6.03 or Section 6.04 hereof, then the
Company shall arrange for the sale of the Delinquent Shares in a
manner and at such time or times as shall be commercially
reasonable under the circumstances (giving effect to, among other
things, market conditions and related matters) and, subject to
the foregoing, the Company shall have no liability to the
Beneficiary or any other Person on the grounds that the Company
failed to take actions which could have produced higher proceeds
for the sale of the Delinquent Shares. In either such case, the
Beneficiary shall promptly take all action reasonably requested
by the Company in order to facilitate the sale of the Delinquent
Shares, and the Company shall be entitled to receive customary
representations and warranties from the Beneficiary regarding the
Delinquent Shares (including representations regarding good title
to such shares, free and clear of all liens, claims, security
interests and other encumbrances). Until sold, the Delinquent
Shares shall be voted by the Trustee in the manner required by
Section 4.03 of this Agreement, provided however, that on any
Change of Control Proposal approved by the Board of Directors and
submitted by the Board of Directors to the stockholders of the
Company for a vote thereon, the Trustee shall vote the Delinquent
Shares in the exact proportion as all shares of Capital Stock not
held in the Voting Trust shall have been voted upon such Change
of Control Proposal. Upon the sale of the Delinquent Shares, the
Trustee shall deliver the shares to the purchaser thereof as
directed by the Company, and all proceeds from such sale, less
all expenses incurred by the Company, shall be distributed to the
Beneficiary as soon as practicable.
ARTICLE VII
DIVIDENDS AND DISTRIBUTIONS
Section 7.01 Cash. The Beneficiary shall be entitled to
receive payments equal to the amount of cash dividends, if any,
collected or received by the Trustee or its successor upon the
number of shares of Capital Stock held in the Voting Trust,
subject to deduction in respect of expenses, charges or fees
pursuant to Section 8.02 or 8.03 hereof. The Trustee and the
Company shall arrange for the direct payment by the Company of
all or a portion (as provided in the preceding sentence) of such
cash dividends to the Beneficiary.
Section 7.02 Stock. In the event that the Trustee shall
receive, as a dividend or other distribution upon any shares of
Capital Stock held by the Trustee under this Agreement, any
shares of stock or securities convertible into stock of the
Company, the Trustee shall hold the same and said shares shall be
subject to all of the terms and conditions of this Agreement to
the same extent as if originally deposited hereunder.
Section 7.03 Other Distributions. In the event that, at any
time during the term of this Agreement, the Trustee shall receive
or collect any monies through a distribution by the Company to
its stockholders, other than in payment of cash dividends, or
shall receive any property (other than shares of Capital Stock or
securities convertible into Capital Stock) through a distribution
by the Company to its stockholders, the Trustee shall distribute
the same to the Beneficiary, subject to deduction in respect of
expenses, charges or fees pursuant to Section 8.02 or 8.03
hereof.
ARTICLE VIII
THE TRUSTEE
Section 8.01 Use of Proxies. The Trustee may vote, assent or
consent with respect to all shares of Capital Stock held in the
Voting Trust in person or by such person or persons as it may
from time to time select as its proxy, provided that the Trustee
shall at all times do so in conformity with the provisions of
Section 4.03 hereof.
Section 8.02 Expenses. The Trustee is expressly authorized to
incur and pay such reasonable expenses and charges, to employ and
pay such agents, attorneys and counsel, and to incur and pay such
other charges and expenses as the Trustee may deem reasonably
necessary and proper for administering this Agreement. The
Beneficiary and the Company shall reimburse the Trustee equally
for any such expense and charges, and any such expenses or
charges may be deducted from the cash dividends or other monies
received by the Trustee on the shares of Capital Stock deposited
hereunder, to the extent unreimbursed by the Beneficiary.
Section 8.03 Compensation. The Beneficiary and the Company
shall compensate the Trustee equally for its services as Trustee
hereunder as provided in the Trustees' fee schedule, attached
hereto as Exhibit A, and any such fees may be deducted from the
cash dividends or other monies received by Trustee on the shares
of Capital Stock deposited in the Voting Trust, to the extent
otherwise unpaid by the Beneficiary.
Section 8.04 Successor Trustee. The Trustee may resign after
giving thirty (30) days' advance written notice of its
resignation to the Company and the Beneficiary, provided that
such resignation shall not become effective until a reasonably
competent alternate (the "Successor Trustee") shall have become
bound by this Agreement. The Company may in addition terminate
the Trustee after giving thirty (30) days' advance written notice
thereof to the Trustee, provided that such termination of the
Trustee shall not become effective until a Successor Trustee
shall have become bound by this Agreement. If the Trustee shall
resign or be so terminated by the Company, the Trustee shall be
replaced by a Successor Trustee. The Successor Trustee shall be
designated by the Company. The Successor Trustee shall enjoy all
the rights, powers, interests and immunities of the Trustee
originally designated and shall agree in writing to be bound by
this Agreement.
Section 8.05 Qualifications of Trustee. Throughout the term of
the Voting Trust, the Trustee or Successor Trustee, as the case
may be, must satisfy each of the following qualifications:
(i) the Trustee or Successor Trustee, as the case may be, must be
an institution duly authorized to act as such a Trustee or
Successor Trustee under the laws of the State of Delaware;
(ii) the Trustee or Successor Trustee, as the case may be, must,
either on an individual basis or on a consolidated basis together
with its subsidiaries and affiliates, have minimum stockholders'
equity of $500,000,000; (iii) the Trustee or Successor Trustee,
as the case may be, must not own for its own account more than
one percent (1%) of the issued and outstanding securities of
either the Company or the Beneficiary; and (iv) no director or
officer of the Trustee or any Successor Trustee, as the case may
be, may serve as a director or officer of the Company or the
Beneficiary (and no director or officer of the Company or the
Beneficiary shall serve as a director or officer of the Trustee
or Successor Trustee, as the case may be). In the event that the
Trustee or Successor Trustee, as the case may be, shall fail to
meet any of the conditions set forth in this Section 8.05, the
Company shall replace the Trustee or the Successor Trustee, as
the case may be, as provided in Section 8.04 hereof.
Section 8.06 Trustee's Liability. The Trustee shall not be
liable for any act or omission undertaken in connection with its
powers and duties under this Agreement, except for any willful
misconduct or gross negligence by Trustee. No Successor Trustee
shall be liable for actions or omissions of the Trustee or any
other Successor Trustee. The Trustee shall not be liable in
acting on any notice, request, consent, certificate, instruction,
or other paper or document or signature reasonably believed by it
to be genuine and to have been signed by the proper party. The
Trustee may consult with legal counsel (reasonably competent for
the purpose) and any act or omission undertaken by it in good
faith in accordance with the opinion of such legal counsel shall
not result in any liabilities of the Trustee. The Beneficiary
covenants and agrees to indemnify and hold harmless the Trustee
and its affiliates, directors, officers, employees, agents and
advisors (each an "Indemnified Party"), without duplication, from
and against any and all claims, damages, losses, liability,
obligations, actions, suits, costs, disbursements and expenses
(including without limitation reasonable fees and expenses of
counsel) incurred by any Indemnified Party, in any way relating
to or arising out of or in connection with or by reason of the
preparation for a defense of any investigation, litigation or
proceeding arising out of this Agreement or the shares of Capital
Stock held pursuant to this Agreement, the administration of this
Agreement or the action or inaction of the Trustee hereunder;
except to the extent such claim, damage, loss, liability,
obligation, action, suit, cost, disbursement or expense results
from such Indemnified Parties' gross negligence or willful
misconduct. The indemnity set forth in this Section 8.06 shall
be in addition to any other obligation or liabilities of the
Beneficiary hereunder or at common law or otherwise and shall
survive the termination of this Agreement.
ARTICLE IX
TERMINATION
Section 9.01 Termination. This Agreement shall terminate upon
the joint written notice by the Beneficiary and the Company to
the Trustee that the Beneficiary Beneficially Owns less than five
percent (5%) of the issued and outstanding shares of Common Stock
and less than five percent (5%) of the issued and outstanding
shares of every other class of Capital Stock. Otherwise, the
Voting Trust is hereby expressly declared to be and shall be
irrevocable.
Section 9.02 Delivery of Stock Certificate(s). As soon as
practicable after the termination of this Agreement, the Trustee
shall deliver to the Beneficiary stock certificate(s), with the
appropriate legend as provided in the Certificate of
Incorporation, representing the number of shares of Capital Stock
Beneficially Owned by the Beneficiary at the date of termination,
if any, held by the Voting Trust and upon payment by the
Beneficiary of any and all taxes and other expenses relating to
the transfer or delivery of such certificates.
ARTICLE X
MISCELLANEOUS
Section 10.01 Ownership; Authority. The Beneficiary
represents, warrants and covenants to the Company that (i) as of
the effective date of this Agreement, the Beneficiary is the
Beneficial Owner of 14,962,500 shares of Common Stock, (ii) the
Beneficiary does not Beneficially Own any shares of Capital Stock
other than 14,962,500 shares of Common Stock, and (iii) the
Beneficiary has full power and authority to make, enter into and
carry out the terms of this Agreement.
Section 10.02 Merger, Consolidation, Sale of Assets. If
the Company shall merge into or consolidate with another
corporation or corporations, or if all or substantially all of
the assets of the Company are transferred to another corporation,
the shares of which are issued to stockholders of the Company in
connection with such merger, consolidation or transfer, then the
terms "RightCHOICE Managed Care, Inc." or the "Company" shall be
construed, so long as the Marks continue to be licensed by such
entity from BCBSA, to include such successor corporation, and the
Trustee shall receive and hold under this Agreement any shares of
such successor corporation received by it on account of its
ownership as Trustee of shares of Capital Stock held by it
hereunder prior to such merger, consolidation or transfer.
Section 10.03 Successors. This Agreement shall bind and
inure to the benefit of the Trustee and each and all of its
respective heirs, executors, administrators, successors and
assigns. Notwithstanding any provision of this Agreement, the
provisions of this Agreement shall not be binding on any
transferee or purchaser from the Beneficiary (other than a Person
who is an Affiliate of the Beneficiary and except that any and
all shares of Capital Stock sold in violation of this Agreement,
the Registration Rights Agreement, the Certificate of
Incorporation or the Bylaws shall remain subject to this
Agreement). In case at any time the Trustee shall resign and no
Successor Trustee shall have been appointed within thirty (30)
days after notice of such resignation has been filed and mailed
as required by Section 8.04 hereof, the resigning Trustee may
forthwith apply to a court of competent jurisdiction for the
appointment of a Successor Trustee. Such court may thereupon,
after such notice, if any, as it may deem proper and appropriate,
appoint a Successor Trustee.
Section 10.04 Notices. All notices, consents, requests,
demands and other communications hereunder shall be in writing,
and shall be deemed to have been duly given or made: (i) when
delivered in person; (ii) three (3) days after deposited in the
United States mail, first class postage prepaid; (iii) in the
case of telegraph or overnight courier services, one (1) business
day after delivery to the telegraph company or overnight courier
service with payment provided; or (iv) in the case of telex or
telecopy or fax, when sent, verification received; in each case
addressed as follows:
if to the Company:
John A. O'Rourke
Chairman, President and Chief Executive Officer
RightCHOICE Managed Care, Inc.
1831 Chestnut Street
St. Louis, Missouri 63103
Fax: (314) 923-8958
with a copy to:
John J. Riffle, Esq.
Lewis, Rice & Fingersh, L.C.
500 North Broadway, Suite 2000
St. Louis, Missouri 63102
Fax: (314) 444-7788
if to the Beneficiary:
P. O. Box 726
Jefferson City, Missouri 65102-0726
Attention: Chairman
with a copy to:
Jeremiah (Jay) Nixon
c/o Paul C. Wilson, Esq.
Assistant Attorney General
221 West High
Jefferson City, Missouri 65101
if to the Trustee:
RightCHOICE Voting Trust
c/o Wilmington Trust Company, Trustee
Attention: Corporate Trust Administration
1100 N. Market Street
Wilmington, DE 19890
with a copy to:
Glenn C. Kenton, Esq.
c/o Richards , Layton & Finger
One Rodney Sq., 2nd Floor
Wilmington, DE 19801
Section 10.05 Governing Law. This Agreement shall be
governed by and construed in accordance with the laws of the
State of Delaware, without reference to conflicts of laws
principles.
Section 10.06 Attorneys' Fees. In the event of any suit or
other proceeding between the Company and the Beneficiary with
respect to any of the transactions contemplated hereby or the
subject matter hereof, the prevailing party shall, in addition to
such other relief as the court may award, be entitled to recover
reasonable attorneys' fees, expenses and costs of investigation,
all as actually incurred, including, without limitation,
attorneys' fees, costs and expenses of investigation incurred in
appellate proceedings or in any action or participation in, or in
connection with, any case or proceeding under Chapters 7, 11 and
13 of the United States Bankruptcy Code or any successor thereto.
Section 10.07 Fair Construction. This Agreement is the
product of negotiation and shall be deemed to have been drafted
by all of the parties. It shall be construed in accordance with
the fair meaning of its terms and its language shall not be
strictly construed against, nor shall ambiguities be resolved
against, any particular party.
Section 10.08 Entire Agreement. This Agreement contains
the entire agreement between the parties hereto regarding the
subject matter hereof, and may not be amended, altered or
modified except by a writing signed by the parties hereto. This
Agreement supersedes all prior agreements, representations,
warranties, statements, promises, information, arrangements and
understandings, whether oral or written, express or implied, with
respect to the subject matter hereof, all of which are
specifically integrated into this Agreement. No party hereto
shall be bound by or charged with any oral or written agreements,
representations, warranties, statements, promises, information,
arrangements or understandings, express or implied, not
specifically set forth herein; and the parties hereto further
acknowledge and agree that in entering into this Agreement they
have not in any way relied and will not rely in any way on any of
the foregoing not specifically set forth herein.
Section 10.09 Counterparts. This Agreement may be executed
in two (2) or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one (1) and
the same instrument.
[signatures appear on next page]
IN WITNESS WHEREOF, the parties have executed this Agreement
on the day and year first above written.
RIGHTCHOICE MANAGED CARE, INC., a
Delaware corporation
By: /s/ John A. O'Rourke
Name: John A. O'Rourke
Title: President
THE MISSOURI FOUNDATION FOR HEALTH,
a Missouri corporation
By: /s/ Paul C. Wilson
Name: Paul C. Wilson
Title: Chairman
WILMINGTON TRUST COMPANY, a
Delaware corporation
By: /s/ Donald G. MacKelcan
Name: Donald G. MacKelcan
Title: Vice President
EXHIBIT A
Trustee Fee Schedule
FEE AGREEMENT
This Fee Agreement (this "Agreement") is made as of
November 28, 2000, by and between Wilmington Trust Company,
a Delaware banking corporation ("Wilmington Trust"), and
RightCHOICE Managed Care, Inc., a Delaware corporation (the
"Company").
W I T N E S S E T H
WHEREAS, pursuant to a Voting Trust and Divestiture
Agreement, dated as of November 30, 2000 (the "Trust
Agreement"), by and among Wilmington Trust, the Company and
The Missouri Foundation For Health, Wilmington Trust will act
as Trustee of the Voting Trust created by a Voting Trust and
Divestiture Agreement by and among RightCHOICE Managed Care,
Inc., The Missouri Foundation For Health and Wilmington Trust
Company, dated as of November 30, 2000 (the "Trust");
WHEREAS, pursuant to the Trust Agreement,
Wilmington Trust is entitled to compensation for its services
as Trustee of the Trust;
WHEREAS, Wilmington Trust and the Company desire to
set forth with greater particularity the specific agreement
as to the compensation owing to Wilmington Trust pursuant to
the Trust Agreement;
NOW, THEREFORE, for good and valuable considera
tion, the parties hereto hereby agree as follows.
1. The compensation due and owing to Wilmington
Trust pursuant to Section 8.03 of the Trust Agreement shall
be as follows:
a. Initial Fee: $7,500.00
b. Annual Administration Fee: $10,000.00
c. Closing Attendance Fee: (ONLY IF INCURRED) $1,000.00
(The Closing Attendance fee includes travel expenses for one
officer's attendance at closing in New York City or
Washington D.C. for up to two days; to the extent that more
than two days' attendance is necessary, there will be an
additional fee of $500.00 per day. Should it be required to
send two officers, there will be a $500.00 fee for the second
officer's attendance. Hotel accommodations are not included
in the Closing Attendance Fee. The Closing Attendance Fee for
one officer's attendance at closing in other cities is
$750.00 per day plus travel expenses and hotel
accommodations; to the extent that more than two days
attendance is necessary there will be an additional fee of
$500.00 per day, plus hotel accommodations.)
d. Transaction Fees: (ONLY IF INCURRED)
Purchase, sale, withdrawal,
maturities, calls and puts of
domestic securities: $15.00
Physical delivery of
domestic securities: $50.00
Purchase of Eurodollar
certificate of deposit: $65.00
Principal amortizing securities
(per pool/per month): $10.00
Wire charge (per transfer):
Outgoing: $25.00
Incoming: $10.00
(Transfers made by associate banks may result in additional
wire charges.)
e. Transfer or Re-Registration Fee:
(ONLY IF INCURRED) $1,000.00
f. Termination Fee: Not to exceed $5,000.00
(Wilmington Trust reserves the right to charge a fee relating
to the termination of the Trust and the final distribution of
the property held by the Trust, such fee to be determined at
the time of termination.)
2. In the event of a substantive change in the
nature of the Owner Trustee's duties, and in any event after
the expiration of three years from the closing date,
Wilmington Trust reserves the right to adjust its fees, but
only with the consent of the Company.
3. Wilmington Trust requires that the Initial
Fee, the first year's Annual Administration Fee and the
Closing Attendance Fee be paid on the closing date by wire
transfer per the following wire transfer instructions:
Wilmington Trust Company
Wilmington, Delaware
ABA No. 031100092
For credit to the account of
Corporate Trust Administration - Income Account
Account No. 9974-0 (Income)
Attn: Irene Lennon
Reference: Trustee Fees and Expenses
Transaction Name: RightChoice Managed Care, Inc.
Voting Trust and Divestiture
Agreement
Thereafter, the Annual Administration Fee is due and payable
annually in advance on each anniversary of the Closing Date
(as defined in the Trust Agreement). Transaction Fees are
due and payable annually in arrears. Charges remaining
unpaid after the due date will incur a late interest charge
of 1.5% per month, 18% per annum. Outside counsel's fees and
expenses are due and payable upon receipt of an invoice
therefor. All fees are nonrefundable and will not be pro
rated in the event of an early termination of the Trust. In
the event that the transaction does not close, Wilmington
Trust reserves the right to be paid its initial fee and
outside counsel's fees and expenses.
4. Out of pocket expenses (including outside
counsel's fees and expenses in connection with the closing
and in connection with any post-closing matters) are
additional and are billed separately.
5. This Agreement may be executed by the parties
hereto in separate counterparts, each of which when so
executed and delivered shall be an original, but all of such
counterparts shall together constitute but one and the same
Agreement.
6. Invoices should be sent to the individual and
Company at its address set forth below, or at such other
address as such party shall hereafter furnish in writing:
RightCHOICE Managed Care, Inc.
1831 Chestnut Street
St. Louis, Missouri 63103-2275
Attn: Angela F. Braly, General Counsel
Ph: 314-923-4444
Fax: (314) 923-8958
E-mail: [email protected]
7. No waiver, modification or amendment of this
Agreement shall be valid unless executed in writing by the
parties hereto.
8. This Agreement shall be governed by and
construed in accordance with the laws of the State of
Delaware, without regard to conflicts of laws principles.
[signature page follows]
IN WITNESS WHEREOF, the parties hereto have caused
this Agreement to be executed by their duly authorized
officers effective as of the day first above written.
WILMINGTON TRUST COMPANY
By: /s/W. Chris Sponenberg
Name: W. Chris Sponenberg
Title: Assistant Vice President
RIGHTCHOICE MANAGED CARE, INC.
By: /s/ Angela F. Braly
Name: Angela F. Braly
Title: Executive Vice
President, General
Counsel & Corporate Secretary
Exhibit 2
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement"), dated
as of November 30, 2000, is made and entered into by and between
RightCHOICE Managed Care, Inc., a Delaware corporation (the
"Company"), and The Missouri Foundation For Health, a Missouri
non-profit corporation (the "Foundation").
RECITALS
A. Pursuant to the terms of a certain Agreement and Plan of
Reorganization (the "Reorganization Agreement"), dated as of
March 14, 2000, by and among Blue Cross and Blue Shield of
Missouri, a Missouri non-profit health services corporation,
RightCHOICE Managed Care, Inc., a Missouri corporation, the
Foundation and the Company, the Foundation has acquired,
contemporaneous with the execution of this Agreement, 14,962,500
shares of common stock, par value $.01 per share, of the Company
(the "Common Stock"), representing approximately 80.1% of the
issued and outstanding shares of Common Stock.
B. The Company has agreed to provide certain registration
rights to the Foundation with respect to the shares of Common
Stock owned by the Foundation, subject to the terms and
conditions contained in this Agreement.
AGREEMENT
In consideration of the foregoing and the mutual covenants
and agreements contained in this Agreement, the Company and the
Foundation agree as follows:
Section 1. Definitions. For purposes of this Agreement, the
following terms shall have the following meanings:
(a) "Affiliate", as used with respect to the Foundation, has the
meaning ascribed to such term in Rule 12b-2 of the Exchange Act,
and in effect on November 17, 1993, but shall be deemed to not
include the Company and its subsidiaries.
(b) "Agreement" has the meaning set forth in the Preamble
hereof.
(c) "Beneficially Own" has the meaning set forth in Section 1 of
Article VII of the Certificate of Incorporation.
(d) "Blackout Period" has the meaning specified in Section 6
hereof.
(e) "Business Day" means a day other than a Saturday, Sunday or
other day on which commercial banks are authorized to close under
the laws of the State of Missouri and the United States of
America.
(f) "Bylaws" means the Bylaws of the Company as in effect at the
time that reference is made thereto.
(g) "Certificate of Incorporation" means the Certificate of
Incorporation of the Company as in effect at the time that
reference is made thereto.
(h) "Closing Date" has the meaning provided therefor in the
Reorganization Agreement.
(i) "Common Stock" has the meaning set forth in Recital A
hereof.
(j) "Company" has the meaning set forth in the Preamble hereof.
(k) "Continuing Option" has the meaning specified in Section
4(a) hereof.
(l) "Continuing Option Notice" has the meaning specified in
Section 4(a) hereof.
(m) "Continuing Option Price" has the meaning specified in
Section 4(a) hereof.
(n) "Continuing Option Securities" has the meaning specified in
Section 4(a) hereof.
(o) "Current Market Value" means the product of the number of
Registrable Securities at issue multiplied by the closing sale
price of a share of Common Stock on the NYSE on the date that the
Current Market Value is to be determined.
(p) "Demand" has the meaning specified in Section 2(a) hereof.
(q) "Demand Option" has the meaning specified in Section 2(b)
hereof.
(r) "Demand Option Notice" has the meaning specified in
Section 2(b) hereof.
(s) "Demand Option Securities" has the meaning specified in
Section 2(b) hereof.
(t) "Demand Registration" has the meaning specified in
Section 2(a) hereof.
(u) "Effective Period" means the period commencing on the date
of this Agreement and ending on the first date on which there
shall no longer exist any Registrable Securities.
(v) "Excess Shares" has the meaning set forth in Section 1 of
Article VII of the Certificate of Incorporation.
(w) "Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the SEC thereunder, all
as the same shall be in effect at the time that reference is made
thereto.
(x) "Foundation" has the meaning set forth in the Preamble
hereof.
(y) "Initial Continuing Option Exercise Date" means the first
date on which the Foundation holds less than fifty percent (50%)
of the issued and outstanding shares of Common Stock.
(z) "Inspectors" has the meaning specified in Section 8(k)
hereof.
(aa) "NASD" means the National Association of Securities
Dealers, Inc.
(bb) "NYSE" means the New York Stock Exchange, Inc.
(cc) "Ownership Limit" has the meaning set forth in Section 1 of
Article VII of the Certificate of Incorporation.
(dd) "Person" means any individual, firm, partnership,
corporation (including, without limitation, a business trust),
limited liability company, joint stock company, trust,
unincorporated association, joint venture or other entity, and
shall include any successor (by merger or otherwise) of any such
entity.
(ee) "Piggy-Back Request" has the meaning set forth in
Section 3(c) hereof.
(ff) "Piggy-Back Rights" has the meaning set forth in
Section 3(b) hereof.
(gg) "Private Placement Notice" has the meaning specified in
Section 11 hereof.
(hh) "Private Placement Option" has the meaning specified in
Section 11 hereof.
(ii) "Private Placement Option Notice" has the meaning specified
in Section 11 hereof.
(jj) "Private Placement Securities" has the meaning specified in
Section 11 hereof.
(kk) "Prospectus" means the prospectus included in any
Registration Statement, as amended or supplemented by any
prospectus supplement, with respect to the terms of the offering
of any portion of the Registrable Securities covered by any
Registration Statement and by all other amendments and
supplements to the prospectus, including post-effective
amendments and all material incorporated by reference in such
prospectus.
(ll) "Records" has the meaning specified in Section 8(k) hereof.
(mm) "Registrable Securities" means any and all of (i) the shares
of Common Stock held by the Foundation as of the date of this
Agreement, and (ii) any securities issuable or issued or
distributed in respect of any of the securities identified in
clause (i) by way of stock dividend or stock split or in
connection with a combination of shares, recapitalization,
reorganization, merger, consolidation or otherwise. Registrable
Securities shall cease to be Registrable Securities when and to
the extent that (i) they shall have been transferred, sold,
distributed or otherwise disposed of by the Foundation (whether
pursuant to an underwritten public offering, a private placement
transaction, Rule 144 or otherwise), (ii) they shall have ceased
to be outstanding, or (iii) they shall have become Delinquent
Shares (as defined in the Voting Trust and Divestiture
Agreement).
(nn) "Registration Expenses" means any and all reasonable
expenses incident to performance of or compliance with this
Agreement, including, without limitation, (i) all SEC, NASD and
securities exchange registration and filing fees, (ii) all fees
and expenses of complying with state securities or "blue sky"
laws (including fees and disbursements of counsel for any
underwriters in connection with blue sky qualifications of the
Registrable Securities), (iii) all processing, printing, copying,
messenger and delivery expenses, (iv) all fees and expenses
incurred in connection with the listing of the Registrable
Securities on any securities exchange pursuant to Section 8(h)
hereof, (v) all fees and disbursements of counsel for the Company
and of its independent public accountants, and (vi) the
reasonable fees and expenses of any special experts retained in
connection with a registration under this Agreement, but
excluding (A) any underwriting discounts and commissions and
transfer taxes relating to the sale or disposition of Registrable
Securities pursuant to a Registration Statement, and (B) any
fees, expenses or disbursements of counsel and other advisers to
the Foundation.
(oo) "Registration Statement" means any registration statement
(including a Shelf Registration) of the Company referred to in
Sections 2 or 3 hereof, including any Prospectus, amendments and
supplements to any such registration statement, including post-
effective amendments, and all exhibits and all material
incorporated by reference in any such registration statement.
(pp) "Reorganization Agreement" has the meaning set forth in
Recital A hereof.
(qq) "Rule 144" means Rule 144 under the Securities Act, 17
C.F.R. 230.144, or any similar or successor rules or
regulations hereafter adopted by the SEC.
(rr) "SEC" means the United States Securities and Exchange
Commission and any successor federal agency having similar
powers.
(ss) "Securities Act" means the Securities Act of 1933, as
amended, and the rules and regulations of the SEC thereunder, all
as the same shall be in effect at the time that reference is made
thereto.
(tt) "Share-Rights" has the meaning specified in Section 3(b)
hereof.
(uu) "Shelf Registration" means a "shelf" registration statement
on an appropriate form pursuant to Rule 415 under the Securities
Act (or any successor rule that may be adopted by the SEC).
(vv) "Underwritten Offering" means an offering in which
securities of the Company are sold to an underwriter for
reoffering to the public pursuant to an effective Registration
Statement under the Securities Act.
(ww) "Voting Trust and Divestiture Agreement" means that certain
Voting Trust and Divestiture Agreement, of even date herewith, by
and among the Company, the Foundation and the trustee named
therein.
Section 2. Demand Registration Rights.
(a) Throughout the Effective Period, the Foundation may, at any
time from and after the Closing Date and subject to the terms
hereof, request the Company in writing (each, a "Demand") to
effect a registration with the SEC under and in accordance with
the provisions of the Securities Act of all or part of the
Registrable Securities (a "Demand Registration"). The Demand
shall specify the aggregate number of shares of Registrable
Securities requested to be so registered. Any request received
by the Company from the Foundation as provided in this Section
2(a) shall be deemed to be a "Demand" for purposes of this
Agreement unless the Company shall have notified the Foundation
in writing, prior to its receipt of such request from the
Foundation, of its intention to register securities with the SEC,
in which case the request from the Foundation shall be governed
by Section 3 hereof, not this Section 2.
(b) Following its receipt of a Demand, the Company shall have
the right, but not the obligation (the "Demand Option"),
exercisable by providing written notice thereof (the "Demand
Option Notice") to the Foundation within fifteen (15) days, to
purchase all or (subject to the penultimate sentence of this
Section 2(b)) any portion of the Registrable Securities that are
the subject of such Demand (the "Demand Option Securities") at a
cash price per share equal to the average closing sale price per
share of the Common Stock on the NYSE during the ten (10)
consecutive trading days ending on the second (2nd) trading day
immediately preceding the date of the Demand. The Demand Option
Notice shall state the number of Demand Option Securities that
the Company shall purchase pursuant to the Demand Option, the
aggregate purchase price therefor, and the closing date of the
Company's purchase of the Demand Option Securities, which shall
take place no later than thirty (30) days after the date of the
Demand Option Notice. The Company shall pay for the Demand
Option Securities that it shall purchase pursuant to the Demand
Option at the closing thereof by wire transfer of immediately
available funds to a bank account designated by the Foundation.
At such closing, the Foundation shall deliver or cause to be
delivered to the Company the certificate or certificates
representing the number of Demand Option Securities purchased by
the Company as specified in the Demand Option Notice, free and
clear of all liens, claims, security interests and other
encumbrances. The Company shall be entitled to receive customary
representations and warranties from the Foundation regarding such
sale of Demand Option Securities (including representations
regarding good title to such shares, free and clear of all liens,
claims, security interests and other encumbrances).
Notwithstanding anything in this Section 2(b) to the contrary,
unless the Foundation shall consent thereto, the Company shall
not have the right to purchase less than all of the Demand Option
Securities pursuant to a Demand Option if the Current Market
Value (determined as of the date of the original Demand by the
Foundation) of the Demand Option Securities that the Company
shall have elected not to purchase shall be less than Thirty
Million Dollars ($30,000,000). In the event that the Company
shall purchase all of the Demand Option Securities in accordance
with this Section 2(b), then the requested Demand Registration
related thereto shall not be deemed to count as a Demand
Registration described in Section 2(d)(i) or Section 2(d)(ii)
hereof.
(c) If the Company does not elect to exercise the Demand Option,
or elects to purchase less than all of the Demand Option
Securities, the Company shall use its best efforts to file a
Registration Statement for the Registrable Securities, or
remainder thereof, identified in such Demand as soon as
practicable and to cause such Registration Statement to become
effective.
(d) Notwithstanding anything in this Agreement to the contrary,
the Company shall not be required to file a Registration
Statement for the Registrable Securities identified in a Demand:
(i) if the Company shall have previously effected a Demand
Registration at any time during the immediately preceding one
hundred eighty (180) day period;
(ii) if the Company shall have previously effected a Demand
Registration at any time during the calendar year in which the
Demand was received;
(iii) if the Company shall have previously effected a
registration of Common Stock to be issued and sold by the Company
at any time during the immediately preceding one hundred twenty
(120) day period (other than a registration on Form S-4, Form S-8
or Form S-3 (with respect to dividend reinvestment plans and
similar plans) or any successor forms thereto);
(iv) if the number of Registrable Securities identified in the
Demand shall have a Current Market Value (determined as of the
date of such Demand) of less than Thirty Million Dollars
($30,000,000), unless such Registrable Securities identified in
the Demand constitute all remaining Registrable Securities; or
(v) during the pendency of any Blackout Period.
(e) The Company shall be permitted to satisfy its obligations
under this Section 2 by amending (to the extent permitted by
applicable law) any Shelf Registration previously filed by the
Company under the Securities Act so that such Shelf Registration
(as amended) shall permit the disposition (in accordance with the
intended methods of disposition specified as aforesaid) of all of
the Registrable Securities for which a Demand shall have been
made. If the Company shall so amend a previously filed Shelf
Registration, it shall be deemed to have effected one (1) Demand
Registration.
(f) A requested Demand Registration shall not be deemed to count
as a Demand Registration described in Section 2(d)(i) or
Section 2(d)(ii) hereof if: (i) such registration has not been
declared effective by the SEC or does not become effective in
accordance with the Securities Act, (ii) after becoming
effective, such registration is materially interfered with by any
stop order, injunction or similar order or requirement of the SEC
or other governmental agency or court for any reason not
attributable to the Foundation and does not thereafter become
effective, (iii) the conditions to closing specified in the
underwriting agreement, if any, entered into in connection with
such Demand Registration are not satisfied or waived due to a
failure on the part of the Company, or (iv) the Foundation shall
have withdrawn its Demand or otherwise determined not to pursue
such registration prior to the filing of the Registration
Statement with the SEC for such Demand, provided that the
Foundation shall have reimbursed the Company for all of its out-
of-pocket expenses incurred in connection with such Demand.
(g) Should a Registration Statement filed pursuant to a Demand
not become effective due to the failure of the Foundation to
perform its obligations under this Agreement or the inability of
the Foundation to reach agreement with the underwriter(s) on
price or other customary terms for such transaction, or in the
event the Foundation determines to withdraw or does not pursue a
request for registration pursuant to a Demand (in each of the
foregoing cases, provided that at such time the Company shall be
in compliance in all material respects with its obligations under
this Agreement), then such registration shall be deemed to count
as a Demand Registration described in Section 2(d)(i) and
Section 2(d)(ii) hereof, unless the Foundation shall have
reimbursed the Company for all of its Registration Expenses
incurred in connection with such demand.
(h) The Company shall have the right, but not the obligation, to
include any securities to be issued and sold by the Company in
any Registration Statement (including a Shelf Registration
referred to in Section 2(e) hereof) filed pursuant to a Demand
without the prior consent of the Foundation.
(i) If the lead managing underwriter (selected by the Company as
provided in Section 5 hereof) of an Underwritten Offering made
pursuant to a Demand shall advise the Company in writing (with a
copy to the Foundation) that marketing or other factors require a
limitation on the number of shares of Common Stock which can be
sold in such offering within a price range acceptable to the
Foundation, then (i) if the Company shall have elected to include
any securities to be issued and sold by the Company in such
Registration Statement pursuant to Section 2(h) hereof, then the
Company shall reduce the number of securities the Company shall
intend to issue and sell pursuant to such Registration Statement
such that the total number of securities being sold by the
Foundation and the Company shall be equal to the number which can
be sold in such offering within a price range acceptable to the
Foundation, and (ii) if the Company shall not have elected to
include any securities in such Registration Statement pursuant to
Section 2(h) hereof or if the reduction referred to in the
previous clause (i) shall not be sufficient, then,
notwithstanding Section 2(d)(iv) hereof, the Foundation shall
reduce the number of Registrable Securities requested to be
included in such offering to the number that the lead managing
underwriter advises can be sold in such offering within such
price range and such Demand shall count as a Demand Registration
described in Section 2(d)(i) or Section 2(d)(ii) hereof, provided
that at least $10,000,000 in gross sale proceeds shall have been
received by the Foundation pursuant to such offering, otherwise
such requested Demand Registration shall not be deemed to count
as a Demand Registration described in Section 2(d)(i) or
Section 2(d)(ii) hereof (provided that the Foundation shall have
reimbursed the Company for all of its out-of-pocket expenses
incurred in the preparation, filing and processing of the
Registration Statement).
Section 3. Piggy-Back Registration Rights.
(a) The Company shall not file a Registration Statement relating
to the public offering of Common Stock for sale for cash for its
own account for a period of one hundred eighty (180) days
following the Closing Date without the prior written consent of
the Foundation, which consent shall not be unreasonably withheld.
(b) Whenever the Company shall propose to file a Registration
Statement under the Securities Act relating to the public
offering of Common Stock for sale for cash for its own account,
the Company shall give written notice to the Foundation at least
fifteen (15) Business Days prior to the anticipated filing
thereof, specifying the approximate date on which the Company
proposes to file such Registration Statement and the intended
method of distribution in connection therewith, and advising the
Foundation of the Foundation's right to have any or all of the
Registrable Securities then held by the Foundation included among
the securities to be covered by such Registration Statement (the
"Piggy-Back Rights") and the Foundation's right, until such time
as the Foundation holds less than fifty percent (50%) of the
issued and outstanding shares of Common Stock, to have any or all
of the Registrable Securities then held by the Foundation
included among the securities to be covered by such Registration
Statement such that the Foundation shall be entitled to receive,
at its option, up to fifty percent (50%) of the proceeds from the
sale of shares of Common Stock to the public (the "Share-
Rights").
(c) Subject to Section 3(d) and Section 3(e) hereof, in the
event that the Foundation has and shall elect to utilize its
Piggy-Back Rights or Share-Rights, the Company shall include in
the Registration Statement the Registrable Securities identified
by the Foundation in a written request (the "Piggy-Back Request")
given to the Company not later than ten (10) Business Days prior
to the proposed filing date of the Registration Statement. The
Registrable Securities identified in the Piggy-Back Request shall
be included in the Registration Statement on the same terms and
conditions as the other shares of Common Stock included in the
Registration Statement.
(d) Notwithstanding anything in this Agreement to the contrary,
the Foundation shall not have Piggy-Back Rights or Share-Rights
with respect to (i) a Registration Statement on Form S-4 or Form
S-8 or Form S-3 (with respect to dividend reinvestment plans and
similar plans) or any successor forms thereto, (ii) a
Registration Statement filed in connection with an exchange offer
or an offering of securities solely to existing stockholders or
employees of the Company, (iii) a Registration Statement filed in
connection with an offering by the Company of securities
convertible into or exchangeable for Common Stock, (iv) a
Registration Statement filed in connection with the
redistribution of shares of Common Stock held by the Foundation
in excess of the Ownership Limit pursuant to Article VI of the
Voting Trust and Divestiture Agreement, or (v) a Registration
Statement filed in connection with a private placement of
securities of the Company (whether for cash or in connection with
an acquisition by the Company or one of its subsidiaries).
(e) If the lead managing underwriter selected by the Company for
an Underwritten Offering for which Piggy-Back Rights are
requested determines that marketing or other factors require a
limitation on the number of shares of Common Stock to be offered
and sold in such offering, then (i) such underwriter shall
provide written notice thereof to each of the Company and the
Foundation, and (ii) there shall be included in the offering,
first, all shares of Common Stock proposed by the Company to be
sold for its account (or such lesser amount as shall equal the
maximum number determined by the lead managing underwriter as
aforesaid) and, second, only that number of Registrable
Securities requested to be included in such Registration
Statement by the Foundation that such lead managing underwriter
reasonably and in good faith believes will not substantially
interfere with (including, without limitation, adversely affect
the pricing of) the offering of all the shares of Common Stock
that the Company desires to sell for its own account.
(f) Nothing contained in this Section 3 shall create any
liability on the part of the Company to the Foundation if the
Company for any reason should decide not to file a Registration
Statement for which Piggy-Back Rights or Share-Rights are
available or to withdraw such Registration Statement subsequent
to its filing, regardless of any action whatsoever that the
Foundation may have taken, whether as a result of the issuance by
the Company of any notice hereunder or otherwise.
(g) A request made by the Foundation pursuant to its Piggy-Back
Rights or Share-Rights to include Registrable Securities in a
Registration Statement shall not be deemed to be a Demand
Registration described in Section 2(d)(i) or Section 2(d)(ii)
hereof.
Section 4. Continuing Option.
(a) At any time and from time to time after the Initial
Continuing Option Exercise Date and thereafter during the
Effective Period, the Company shall have the right, but not the
obligation (the "Continuing Option"), exercisable by providing
written notice thereof (the "Continuing Option Notice") to the
Foundation, to purchase from the Foundation all or any portion of
the Registrable Securities (the "Continuing Option Securities")
at a cash price per share equal to the Continuing Option Price
(as defined below in this Section 4(a)). The Continuing Option
Notice shall state the number of Continuing Option Securities
that the Company shall purchase pursuant to the Continuing
Option, the aggregate purchase price therefor, and the closing
date of the Company's purchase of the Continuing Option
Securities, which shall take place within thirty (30) days of the
date of the Continuing Option Notice. The Company shall pay for
the Continuing Option Securities that it shall purchase pursuant
to the Continuing Option at the closing thereof by wire transfer
of immediately available funds to a bank account designated by
the Foundation. At such closing, the Foundation shall deliver to
the Company a certificate or certificates representing the number
of Continuing Option Securities purchased by the Company as
specified in the Continuing Option Notice, free and clear of all
liens, claims, security interests and other encumbrances. The
Company shall be entitled to receive customary representations
and warranties from the Foundation regarding such sale of
Continuing Option Securities (including representations regarding
good title to such shares, free and clear of all liens, claims,
security interests and other encumbrances). The term "Continuing
Option Price", as used herein, shall mean (i) prior to the
consummation of a Demand Registration or an offering pursuant to
a Piggy-Back Request, the greater of "A", "B" or "C", and (ii)
from and after the consummation of a Demand Registration or an
offering pursuant to a Piggy-Back Request, the greater of "A", or
"B", where, for purposes of the foregoing clauses (i) and (ii),
"A" shall mean the average closing sale price per share of Common
Stock on the NYSE during the ten (10) consecutive trading days
ending on the date that the Continuing Option Notice with respect
to such Continuing Option shall have been provided, "B" shall
mean the average closing sale price per share of Common Stock on
the NYSE during the ten (10) consecutive trading days ending on
the forty-fifth (45th) day prior to the date that the Continuing
Option Notice with respect to such Continuing Option shall have
been provided, and "C" shall equal the price per share received
by the Foundation in its most recent sale of Private Placement
Securities pursuant to Section 11 hereof (regardless of whether
such Private Placement Securities shall have been sold to
qualified investors or to the Company).
(b) If the Company shall purchase Continuing Option Securities
pursuant to Section 4(a) hereof, it shall not, for a period of
forty-five (45) days thereafter, sell shares of Common Stock for
cash in public or private transactions (except that the Company
shall be permitted, during such period, to issue Common Stock
pursuant to benefit, stock option and dividend reinvestment plans
for its directors, officers, employees and shareholders).
Section 5. Selection of Underwriters.
(a) In connection with any Underwritten Offering made pursuant
to a Demand, the Company shall have the right to select the lead
managing underwriter and any other managing underwriter to
administer the Underwritten Offering, so long as each such
underwriter shall be reasonably satisfactory to the Foundation.
Each underwriter selected by the Company shall be deemed
reasonably satisfactory to the Foundation unless the Foundation
sends a written notice of objection to the Company within five
(5) Business Days following receipt of written notice from the
Company of the selection of the underwriter.
(b) The Foundation acknowledges and agrees that Salomon Smith
Barney shall be reasonably satisfactory to the Foundation to
serve as a managing underwriter for any Underwritten Offering
made pursuant to a Demand.
Section 6. Blackout Periods. If the Company determines in
good faith that the registration and distribution of Registrable
Securities (or the use of the Registration Statement or related
Prospectus) resulting from a Demand received from the Foundation
would (i) materially and adversely interfere with any previously
announced business combination transaction involving the Company
pursuant to which the Company would issue, in connection with
such transaction, shares of Common Stock to some or all of the
equity owners of the counter-party to such business combination
transaction, or (ii) result in the premature disclosure of any
pending financing, acquisition, corporate reorganization or any
other corporate development involving the Company or any of its
subsidiaries, and, in either such event, the Company shall
promptly give the Foundation written notice of such
determination, then the Company shall be entitled to (x) postpone
the filing of the Registration Statement otherwise required to be
prepared and filed by the Company pursuant to Section 2 hereof,
or (y) elect that the effective Registration Statement not be
used, in either case for a reasonable period of time, but not to
exceed one hundred twenty (120) days after the date that the
Demand was made (a "Blackout Period"). Any such written notice
shall contain a general statement of the reasons for such
postponement or restriction on use and an estimate of the
anticipated delay. The Company shall promptly notify the
Foundation of the expiration or earlier termination of such
Blackout Period.
Section 7. Holdback.
(a) If (i) during the Effective Period, the Company shall file a
Registration Statement (other than a registration on Form S-4,
Form S-8 or Form S-3 (with respect to dividend reinvestment plans
and similar plans) or any successor forms thereto) with respect
to any shares of its capital stock, and (ii) upon reasonable
prior notice (A) the Company (in the case of a non-underwritten
offering pursuant to such Registration Statement) advises the
Foundation in writing that a sale or distribution of Registrable
Securities would adversely affect such offering, or (B) the
managing underwriter or underwriters (in the case of an
Underwritten Offering) advise the Company in writing (in which
case the Company shall notify the Foundation) that a sale or
distribution of Registrable Securities would adversely impact
such offering, then the Foundation shall, to the extent not
inconsistent with applicable law, refrain from effecting any sale
or distribution of Registrable Securities, including sales
pursuant to Rule 144, during the period commencing on the date of
such notice and continuing until the ninetieth (90th) day after
the effective date of such Registration Statement.
(b) During the thirty (30) day period commencing on the
effective date of a Registration Statement filed by the Company
on behalf of the Foundation in connection with an Underwritten
Offering pursuant to a Demand, the Company shall not effect
(except pursuant to registrations on Form S-4 or Form S-8 or Form
S-3 (with respect to dividend reinvestment plans and similar
plans) or any successor forms thereto and except pursuant to
Section 2(h) hereof) any public sale or distribution of Common
Stock or of preferred stock or securities convertible into or
exercisable for Common Stock.
Section 8. Registration Procedures. If and whenever the
Company shall be required to use its best efforts to effect or
cause the registration of any Registrable Securities under the
Securities Act as provided in this Agreement, the Company shall
and, with respect to Sections 8(m) and 8(n), the Foundation
shall:
(a) prepare and file with the SEC a Registration Statement with
respect to such Registrable Securities on any form for which the
Company then qualifies or that counsel for the Company shall deem
appropriate, and which form shall be available for the sale of
the Registrable Securities in accordance with the intended
methods of distribution thereof, and use its best efforts to
cause such Registration Statement to become and remain effective;
(b) prepare and file with the SEC amendments and post-effective
amendments to such Registration Statement and such amendments and
supplements to the Prospectus used in connection therewith as may
be necessary to maintain the effectiveness of such registration
or as may be required by the rules, regulations or instructions
applicable to the registration form utilized by the Company or by
the Securities Act for a Shelf Registration or otherwise
necessary to keep such Registration Statement effective for at
least ninety (90) days and cause the Prospectus as so
supplemented to be filed pursuant to Rule 424 under the
Securities Act, and to otherwise comply with the provisions of
the Securities Act with respect to the disposition of all
securities covered by such Registration Statement until the
earlier of (x) such 90th day or (y) such time as all Registrable
Securities covered by such Registration Statement shall have
ceased to be Registrable Securities (it being understood that the
Company at its option may determine to maintain such
effectiveness for a longer period, whether pursuant to a Shelf
Registration or otherwise); provided, however, that a reasonable
time before filing a Registration Statement or Prospectus, or any
amendments or supplements thereto (other than reports required to
be filed by it under the Exchange Act), the Company shall furnish
to the Foundation, the managing underwriter and their respective
counsel for review and comment, copies of all documents proposed
to be filed;
(c) furnish to the Foundation and to any underwriter in
connection with an Underwritten Offering such number of conformed
copies of such Registration Statement and of each amendment and
post-effective amendment thereto (in each case including all
exhibits) and such number of copies of any Prospectus or
Prospectus supplement and such other documents as the Foundation
or underwriter may reasonably request in order to facilitate the
disposition of the Registrable Securities by the Foundation or
underwriter (the Company hereby consenting to the use (subject to
the limitations set forth in Section 8(n) hereof) of the
Prospectus or any amendment or supplement thereto in connection
with such disposition);
(d) use its best efforts to register or qualify such Registrable
Securities covered by such Registration Statement under such
other securities or "blue sky" laws of such jurisdictions as the
Foundation shall reasonably request, except that the Company
shall not for any such purpose be required to qualify generally
to do business as a foreign corporation in any jurisdiction
where, but for the requirements of this Section 8(d), it would
not be obligated to be so qualified, to subject itself to
taxation in any such jurisdiction, or to consent to general
service of process in any such jurisdiction;
(e) notify the Foundation, at any time when a Prospectus
relating thereto is required to be delivered under the Securities
Act within the appropriate period mentioned in Section 8(b)
hereof, of the Company's becoming aware that the Prospectus
included in such Registration Statement, as then in effect,
includes an untrue statement of a material fact or omits to state
a material fact required to be stated therein or necessary to
make the statements therein not misleading in light of the
circumstances then existing, and, at the request of the
Foundation, prepare and furnish to the Foundation a reasonable
number of copies of an amendment or supplement to such
Registration Statement or related Prospectus as may be necessary
so that, as thereafter delivered to the purchasers of such
Registrable Securities, such Prospectus shall not include an
untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the
statements therein not misleading in light of the circumstances
then existing;
(f) notify the Foundation at any time:
(1) when the Prospectus or any Prospectus supplement or post-
effective amendment has been filed, and, with respect to the
Registration Statement or any post-effective amendment, when the
same has become effective;
(2) of any request by the SEC for amendments or supplements to
the Registration Statement or the Prospectus or for additional
information;
(3) of the issuance by the SEC of any stop order suspending the
effectiveness of the Registration Statement or any order
preventing the use of a related Prospectus, or the initiation (or
any overt threats) of any proceedings for such purposes;
(4) of the receipt by the Company of any written notification of
the suspension of the qualification of any of the Registrable
Securities for sale in any jurisdiction or the initiation (or
overt threats) of any proceeding for that purpose; and
(5) if at any time the representations and warranties of the
Company contemplated by paragraph (i) below cease to be true and
correct in all material respects;
(g) otherwise use its best efforts to comply with all applicable
rules and regulations of the SEC, and make available to its
security holders an earnings statement that shall satisfy the
provisions of Section 11(a) of the Securities Act, provided that
the Company shall be deemed to have complied with this Section
8(g) if it shall have complied with Rule 158 under the Securities
Act;
(h) use its best efforts to cause all such Registrable
Securities to be listed on the NYSE, The Nasdaq Stock Market or
any other national securities exchange or automated quotation
system on which the class of Registrable Securities being
registered is then listed, if such Registrable Securities are not
already so listed and if such listing is then permitted under the
rules of such exchange, and to provide a transfer agent and
registrar for such Registrable Securities covered by such
Registration Statement no later than the effective date of such
Registration Statement;
(i) enter into agreements (including an underwriting agreement
in the form customarily entered into by the Company in a
comparable Underwritten Offering) and take all other appropriate
and all commercially reasonable actions in order to expedite or
facilitate the disposition of such Registrable Securities and in
such connection, whether or not an underwriting agreement shall
be entered into and whether or not the registration shall be an
underwritten registration:
(i) make such representations and warranties to the Foundation
and the underwriters, if any, in form, substance and scope as are
customarily made by the Company to underwriters in comparable
Underwritten Offerings;
(ii) obtain opinions of counsel to the Company and updates
thereof (which counsel and opinions shall be reasonably
satisfactory (in form, scope and substance) to the managing
underwriters, if any, and the Foundation) addressed to the
Foundation and the underwriters covering the matters customarily
covered in opinions requested in comparable Underwritten
Offerings by the Company;
(iii) obtain "comfort letters" and updates thereof from the
Company's independent certified public accountants addressed to
the Foundation and the underwriters, if any, such letters to be
in customary form and covering matters of the type customarily
covered in "comfort letters" by independent accountants in
connection with comparable underwritten offerings on such date or
dates as may be reasonably requested by the managing underwriter;
(iv) provide the indemnification in accordance with the
provisions and procedures of Section 11 hereof to all parties to
be indemnified pursuant to such Section 11; and
(v) deliver such documents and certificates as may be reasonably
requested by the Foundation and the managing underwriters, if
any, to evidence compliance with clause (f) above and with any
customary conditions contained in the underwriting agreement or
other agreement entered into by the Company:
(j) cooperate with the Foundation and the managing underwriter
or underwriters to facilitate, to the extent reasonable under the
circumstances, the timely preparation and delivery of
certificates representing the securities to be sold under such
Registration Statement, and enable such securities to be in such
denominations and registered in such names as the managing
underwriter or underwriters, if any, or the Foundation may
request and/or in a form eligible for deposit with the Depository
Trust Company;
(k) make available to the Foundation, any underwriter
participating in any disposition pursuant to such Registration
Statement, and any attorney, accountant or other agent retained
by the Foundation or underwriter (collectively, the
"Inspectors"), reasonable access to appropriate officers of the
Company and the Company's subsidiaries to ask questions and to
obtain information reasonably requested by such Inspector and all
financial and other records and other information, pertinent
corporate documents and properties of any of the Company and its
subsidiaries and affiliates (collectively, the "Records"), as
shall be reasonably necessary to enable them to exercise their
due diligence responsibility; provided, however, that the Records
that the Company determines, in good faith, to be confidential
and which it notifies the Inspectors in writing are confidential
shall not be disclosed to any Inspector unless such Inspector
signs a confidentiality agreement reasonably satisfactory to the
Company or either (i) the disclosure of such Records is necessary
to avoid or correct a misstatement or omission of a material fact
in such Registration Statement, or (ii) the release of such
Records is ordered pursuant to a subpoena or other order from a
court of competent jurisdiction; provided, further, that any
decision regarding the disclosure of information pursuant to
subclause (i) shall be made only after consultation with counsel
for the applicable Inspectors; and provided, further, that the
Foundation agrees that it shall, promptly after learning that
disclosure of such Records is sought in a court having
jurisdiction, give notice to the Company and allow the Company,
at the Company's expense, to undertake appropriate action to
prevent disclosure of such Records;
(l) in the event of the issuance of any stop order suspending
the effectiveness of the Registration Statement or of any order
suspending or preventing the use of any related Prospectus or
suspending the qualification of any Registrable Securities
included in the Registration Statement for sale in any
jurisdiction, the Company shall use all commercially reasonable
efforts promptly to obtain its withdrawal;
(m) the Foundation shall furnish the Company with such
information regarding the Foundation and pertinent to the
disclosure requirements relating to the registration and the
distribution of such securities as the Company may from time to
time reasonably request in writing; and
(n) the Foundation shall, upon receipt of any notice from the
Company of the happening of any event of the kind described in
Section 8(e) hereof, forthwith discontinue disposition of
Registrable Securities pursuant to the Prospectus or Registration
Statement covering such Registrable Securities until the
Foundation shall have received copies of the supplemented or
amended Prospectus contemplated by Section 8(e) hereof, and, if
so directed by the Company, the Foundation shall deliver to the
Company (at the Company's expense) all copies, other than
permanent file copies then in the Foundation's possession, of the
Prospectus covering such Registrable Securities current at the
time of receipt of such notice.
Section 9. Registration Expenses. Except as otherwise
provided herein, in connection with all registrations of
Registrable Securities made pursuant to a Demand Registration,
Piggy-Back Rights or Share-Rights, the Company shall pay all
Registration Expenses.
Section 10. Rule 144. The Company shall take such measures
and file such information, documents and reports as shall be
required by the SEC as a condition to the availability of
Rule 144. The Foundation shall not be permitted to sell any
Registrable Securities pursuant to Rule 144 until such time as
the Foundation shall have sold Registrable Securities to non-
Affiliates of the Foundation and shall have received in exchange
therefor aggregate proceeds of at least Fifty Million Dollars
($50,000,000). Thereafter, the Foundation shall not be permitted
to sell any Registrable Securities pursuant to Rule 144 if
(i) such sale shall be to any Person that Beneficially Owns any
shares of Common Stock in excess of the Ownership Limit
applicable to such Person; (ii) such sale shall cause any Person
to Beneficially Own any shares of Common Stock in excess of the
Ownership Limit applicable to such Person; or (iii) such sale
would violate the terms of this Agreement, the Voting Trust and
Divestiture Agreement, the Certificate of Incorporation or the
Bylaws.
Section 11. Private Placements. Subject to the terms of this
Agreement, the Voting Trust and Divestiture Agreement, the
Certificate of Incorporation, the Bylaws and the right of first
refusal in favor of the Company described below in this
Section 11, the Foundation shall have the right at all times to
sell shares of Registrable Securities in one or more private
placements (the "Private Placement Securities") to qualified
investors provided that the Foundation provides written notice to
the Company at least forty-five (45) Business Days prior to
making any such proposed private placement advising the Company
of the terms and conditions of such proposed private placement
(the "Private Placement Notice"), and provided further that the
consummation of such proposed private placement would not cause
any Person to Beneficially Own any shares of Common Stock in
excess of the Ownership Limit applicable to such Person. The
Private Placement Notice shall contain the identity of the
proposed private placement purchaser, the price at which the
Private Placement Securities shall be sold to the proposed
private placement purchaser, the number of Private Placement
Securities to be sold to the proposed private placement
purchaser, and all other material terms and conditions of the
proposed private placement. Following its receipt of the Private
Placement Notice, the Company shall have the right, but not the
obligation (the "Private Placement Option"), exercisable by
providing written notice thereof (the "Private Placement Option
Notice") to the Foundation within thirty (30) Business Days, to
purchase all (but not less than all) of the Private Placement
Securities on the same terms and conditions contained in the
Private Placement Notice. The Private Placement Option Notice
shall state the number of Private Placement Securities that the
Company shall purchase pursuant to the Private Placement Option,
the aggregate purchase price therefor, and the closing date of
the Company's purchase of the Private Placement Securities, which
shall take place no later than sixty (60) days after the date of
the Private Placement Option Notice. The Company shall pay for
the Private Placement Securities that it shall purchase pursuant
to the Private Placement Option at the closing thereof by wire
transfer of immediately available funds to a bank account
designated by the Foundation. At such closing, the Foundation
shall deliver to the Company a certificate or certificates
representing the number of Private Placement Securities, free and
clear of all liens, claims, security interests and other
encumbrances. The Company shall be entitled to receive customary
representations and warranties from the Foundation regarding such
sale of Private Placement Securities (including representations
regarding good title to such shares free and clear of all liens,
claims, security interests and other encumbrances). If the
Company shall elect not to exercise the Private Placement Option,
the Foundation may sell the Private Placement Securities
identified in the Private Placement Notice at the time and
subject to all of the terms and the conditions contained in the
Private Placement Notice.
Section 12. Covenants of Foundation. The Foundation hereby
covenants and agrees that it shall not sell any Registrable
Securities in violation of the Securities Act and this Agreement,
the Voting Trust and Divestiture Agreement, the Certificate of
Incorporation and the Bylaws.
Section 13. Indemnification; Contribution.
(a) The Company shall indemnify and hold harmless the
Foundation, its officers and directors, and any agent or
investment adviser thereof against all losses, claims, damages,
liabilities and expenses (including reasonable attorneys' fees
and expenses) incurred by such party pursuant to any actual or
threatened action, suit, proceeding or investigation arising out
of or based upon (i) any untrue or alleged untrue statement of
material fact contained in any Registration Statement, any
Prospectus or preliminary Prospectus, or any amendment or
supplement to any of the foregoing, or (ii) any omission or
alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein (in
the case of a Prospectus or a preliminary Prospectus, in light of
the circumstances then existing) not misleading, except in each
case insofar as the same arise out of or are based upon, any such
untrue statement or omission made in reliance on and in
conformity with information with respect to the Foundation
furnished to the Company by the Foundation or its counsel
expressly for use therein. In connection with an Underwritten
Offering, the Company shall indemnify the underwriters thereof,
their officers, directors and agents and each Person who controls
such underwriters (within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act) to the same
extent as provided above with respect to the indemnification of
the Foundation. Notwithstanding the foregoing provisions of this
Section 11(a), the Company shall not be liable to the Foundation,
any Person who participates as an underwriter in the offering or
sale of Registrable Securities or any other Person, if any, who
controls any such underwriter (within the meaning of Section 15
of the Securities Act or Section 20 of the Exchange Act), under
this Section 11 for any such loss, claim, damage, liability (or
action or proceeding in respect thereof) or expense that arises
out of an untrue statement or alleged untrue statement or
omission or alleged omission in the preliminary Prospectus if the
Foundation, or other Person on behalf of the Foundation, failed
to send or deliver a copy of a final Prospectus to the Person
asserting the claim prior to the written confirmation of the sale
of the Registrable Securities to such Person and such statement
or omission was corrected in such final Prospectus and the
Company had previously and timely furnished sufficient copies
thereof to the Foundation in accordance with this Agreement.
(b) In connection with any registration of Registrable
Securities pursuant to this Agreement, the Foundation shall
furnish to the Company and any underwriter in writing such
information, including the name, address and the amount of
Registrable Securities held by the Foundation, as the Company or
any underwriter reasonably requests for use in the Registration
Statement relating to such registration or the related Prospectus
and agrees to indemnify and hold harmless the Company, any
underwriter, each such party's officers and directors and each
Person who controls each such party (within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange
Act), and any agent or investment adviser thereof against all
losses, claims, damages, liabilities and expenses (including
reasonable attorneys' fees and expenses) incurred by each such
party pursuant to any actual or threatened action, suit,
proceeding or investigation arising out of or based upon (i) any
untrue or alleged untrue statement of material fact contained in
any Registration Statement, any Prospectus or preliminary
Prospectus, or any amendment or supplement to any of the
foregoing, or (ii) any omission or alleged omission to state
therein a material fact required to be stated therein or
necessary to make the statements therein (in the case of a
Prospectus or a preliminary Prospectus, in light of the
circumstances then existing) not misleading, but only to the
extent that any such untrue statement or omission is made in
reliance on and in conformity with information with respect to
the Foundation furnished to the Company or any underwriter by the
Foundation or its counsel specifically for inclusion therein.
Notwithstanding the foregoing provisions of this Section 13(b),
the Foundation shall not be liable to the Company, any
underwriter, each such parties' officers or directors, any other
Person who controls any such party (within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange
Act), or any agent or investment advisor thereof, if the
Foundation had provided information curing any untrue statement
or omission in time reasonably sufficient to prevent the
inclusion of such untrue statement or omission in the
Registration Statement.
(c) Any Person entitled to indemnification hereunder agrees to
give prompt written notice to the indemnifying party after the
receipt by such indemnified party of any written notice of the
commencement of any action, suit, proceeding or investigation or
threat thereof made in writing for which such indemnified party
may claim indemnification or contribution pursuant to this
Section 11 (provided that failure to give such notification shall
not affect the obligations of the indemnifying party pursuant to
this Section 11 except to the extent the indemnifying party shall
have been actually prejudiced as a result of such failure). In
case any such action shall be brought against any indemnified
party and it shall notify the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to
participate therein and, to the extent that it shall wish,
jointly with any other indemnifying party similarly notified, to
assume the defense thereof, with counsel reasonably satisfactory
to such indemnified party (who shall not, except with the consent
of the indemnified party, be counsel to the indemnifying party),
and after notice from the indemnifying party to such indemnified
party of its election so to assume the defense thereof, the
indemnifying party shall not be liable to such indemnified party
under this Section 11 for any legal expenses of other counsel or
any other expenses, in each case subsequently incurred by such
indemnified party, in connection with the defense thereof other
than reasonable costs of investigation. Notwithstanding the
foregoing, if (i) the indemnifying party shall not have employed
counsel reasonably satisfactory to such indemnified party to take
charge of the defense of such action within a reasonable time
after notice of commencement of such action (so long as such
failure to employ counsel is not the result of an unreasonable
determination by such indemnified party that counsel selected
pursuant to the immediately preceding sentence is unsatisfactory)
or if the indemnifying party shall not have demonstrated to the
reasonable satisfaction of the indemnified party its ability to
finance such defense, or (ii) the actual or potential defendants
in, or targets of, any such action include both the indemnifying
party and such indemnified party and such indemnified party shall
have reasonably concluded that there may be legal defenses
available to it which are different from or additional to those
available to the indemnifying party which, if the indemnifying
party and such indemnified party were to be represented by the
same counsel, could result in a conflict of interest for such
counsel or materially prejudice the prosecution of the defenses
available to such indemnified party, then such indemnified party
shall have the right to employ separate counsel, in which case
the fees and expenses of one counsel or firm of counsel (plus one
local or regulatory counsel or firm of counsel) selected by a
majority in interest of the indemnified parties shall be borne by
the indemnifying party and the fees and expenses of all other
counsel retained by the indemnified parties shall be paid by the
indemnified parties. No indemnified party shall consent to entry
of any judgment or enter into any settlement without the consent
(which consent, in the case of an action, suit, claim or
proceeding exclusively seeking monetary relief, shall not be
unreasonably withheld) of each indemnifying party.
(d) If the indemnification from the indemnifying party provided
for in this Section 11 is unavailable to an indemnified party
hereunder in respect of any losses, claims, damages, liabilities
or expenses referred to therein, then the indemnifying party, in
lieu of indemnifying such indemnified party, shall contribute to
the amount paid or payable by such indemnified party as a result
of such losses, claims, damages, liabilities and expenses in such
proportion as is appropriate to reflect the relative fault of the
indemnifying party and indemnified party in connection with the
actions which resulted in such losses, claims, damages,
liabilities and expenses, as well as any other relevant equitable
considerations. The relative fault of such indemnifying party
and indemnified party shall be determined by reference to, among
other things, whether any action in question, including any
untrue or alleged untrue statement of a material fact or omission
or alleged omission to state a material fact, has been made by,
or relates to information supplied by, such indemnifying party or
indemnified party, and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such
action. The amount paid or payable by a party as a result of the
losses, claims, damages, liabilities and expenses referred to
above shall be deemed to include, subject to the limitations set
forth in Section 11(c) hereof, any legal and other fees and
expenses reasonably incurred by such indemnified party in
connection with any investigation or proceeding. The parties
hereto agree that it would not be just and equitable if
contribution pursuant to this Section 11(d) were determined by
pro rata allocation or by any other method of allocation which
does not take account of the equitable considerations referred to
above in this Section 11(d). Notwithstanding the provisions of
this Section 11(d), no underwriter shall be required to
contribute any amount in excess of the amount by which the total
price at which the Registrable Securities underwritten by it and
distributed to the public were offered to the public exceeds the
amount of any damages which such underwriter has otherwise been
required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission and the Foundation
shall not be required to contribute any amount in excess of the
amount by which the total price at which the Registrable
Securities of the Foundation were offered to the public exceeds
the amount of any damages which the Foundation has otherwise been
required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No Person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f)
of the Securities Act) shall be entitled to contribution from any
Person who was not guilty of such fraudulent misrepresentation.
If indemnification is available under this Section 11, the
indemnifying parties shall indemnify each indemnified party to
the fullest extent provided in Section 11(a) or (b) hereof, as
the case may be, without regard to the relative fault of such
indemnifying parties or indemnified party or any other equitable
consideration provided for in this Section 11(d).
(e) The provisions of this Section 11 shall be in addition to
any liability which any party may have to any other party and
shall survive any termination of this Agreement. The
indemnification provided by this Section 11 shall remain in full
force and effect irrespective of any investigation made by or on
behalf of an indemnified party, so long as such indemnified party
is not guilty of acting in a fraudulent, reckless or grossly
negligent manner.
Section 14. Participation in Underwritten Offerings. The
Foundation may not participate in any Underwritten Offering
hereunder unless the Foundation (a) in the case of a registration
pursuant to Section 3 hereof, agrees to sell the Foundation's
securities on the basis provided in any underwriting arrangements
approved by the Company in its reasonable discretion, and
(b) completes and executes all questionnaires, powers of
attorney, indemnities, underwriting agreements and other
documents reasonably required under the terms of such
underwriting arrangements.
Section 15. Injunctions. Each party acknowledges and agrees
that irreparable damage would occur in the event that any of the
provisions of this Agreement were not performed in accordance
with its specific terms or were otherwise breached. Therefore,
each party shall be entitled to an injunction or injunctions to
prevent breaches of the provisions of this Agreement and to
enforce specifically the terms and provisions hereof in any court
having jurisdiction, such remedy being in addition to any other
remedy to which such party may be entitled at law or in equity.
Section 16. Amendments and Waivers. No amendment,
modification, supplement, termination, consent or waiver of any
provision of this Agreement, nor consent to any departure
herefrom, shall in any event be effective unless the same is in
writing and is signed by the party against whom enforcement of
the same is sought. Any waiver of any provision of this
Agreement and any consent to any departure from the terms of any
provision of this Agreement shall be effective only in the
specific instance and for the specific purpose for which given.
Section 17. Notices. All notices, consents, requests, demands
and other communications hereunder must be in writing, and shall
be deemed to have been duly given or made: (i) when delivered in
person; (ii) three (3) days after deposited in the United States
mail, first class postage prepaid; (iii) in the case of telegraph
or overnight courier services, one (1) Business Day after
delivery to the telegraph company or overnight courier service
with payment provided; or (iv) in the case of telex or telecopy
or fax, when sent, verification received; in each case addressed
as follows:
if to the Company:
John A. O'Rourke
Chairman, President and Chief Executive Officer
RightCHOICE Managed Care, Inc.
1831 Chestnut Street
St. Louis, Missouri 63103
Fax: (314) 923-8958
with copy to:
John J. Riffle, Esq.
Lewis, Rice & Fingersh, L.C.
500 North Broadway, Suite 2000
St. Louis, Missouri 63102
Fax: (314) 444-7788
if to the Foundation:
P.O. Box 726
Jefferson City, Missouri 65102-0726
Attention: Chairman
with copy to:
Jeremiah (Jay) Nixon
c/o Paul C. Wilson, Esq.
Assistant Attorney General
221 West High
Jefferson City, Missouri 65101
Section 18. Successors and Assigns. This Agreement shall
inure to the benefit of and be binding upon the successors of
each of the parties. This Agreement and the provisions of this
Agreement that are for the benefit of the Foundation shall not be
assignable by the Foundation to any Person and any such purported
assignment shall be null and void.
Section 19. Counterparts. This Agreement may be executed in
one (1) or more counterparts, all of which shall be considered
one (1) and the same agreement and shall become effective when
one (1) or more counterparts have been signed by each of the
parties and delivered to the other parties.
Section 20. Descriptive Headings. The descriptive headings
used herein are inserted for convenience of reference only and
are not intended to be part of or to affect the meaning or
interpretation of this Agreement.
Section 21. Governing Law. This Agreement and the rights and
obligations of the parties hereunder shall be governed by and
construed in accordance with the laws of the State of Delaware,
without regard to choice or conflict of laws rules.
Section 22. Severability. In the event that any one or more
of the provisions contained herein, or the application thereof in
any circumstances, shall be held invalid, illegal or
unenforceable in any respect for any reason, the validity,
legality and enforceability of any such provision in every other
respect and of the remaining provisions contained herein shall
not be in any way impaired thereby, it being intended that all
remaining provisions contained herein shall not be in any way
impaired thereby.
Section 23. Entire Agreement. This Agreement, including any
exhibits or attachments referred to herein, is intended by the
parties as a final expression and a complete and exclusive
statement of the agreement and understanding of the parties
hereto in respect of the subject matter hereof. There are no
restrictions, promises, warranties or undertakings with respect
to the subject matter hereof, other than those set forth or
referred to herein. This Agreement supersedes all prior
agreements and understandings between the parties with respect to
such subject matter.
Section 24. Further Actions; Best Efforts. The Foundation
shall use its best efforts to take or cause to be taken all
appropriate action and to do or cause to be done all things
reasonably necessary, proper or advisable under applicable law
and regulations to assist the Company in the performance of its
obligations hereunder, including, without limitation, the
preparation and filing of any Registration Statements pursuant to
any Demand.
Section 25. Fair Construction. This Agreement is the product
of negotiation and shall be deemed to have been drafted by all of
the parties. It shall be construed in accordance with the fair
meaning of its terms and its language shall not be strictly
construed against, nor shall ambiguities be resolved against, any
particular party.
[signatures appear on next page]
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first set forth above.
RIGHTCHOICE MANAGED CARE, INC.,
a Delaware corporation
By: /s/ John A. O'Rourke
Name: John A. O'Rourke
Title: President
THE MISSOURI FOUNDATION FOR HEALTH,
a Missouri nonprofit corporation
By: /s/ Paul C. Wilson
Name: Paul C. Wilson
Title: Chairman
Exhibit 3
INDEMNIFICATION AGREEMENT
THIS INDEMNIFICATION AGREEMENT (this "Agreement") is made
and entered into this 30th day of November, 2000, by and between
RightCHOICE Managed Care, Inc., a Delaware corporation and the
successor by merger to Blue Cross and Blue Shield of Missouri
(the "Company"), and The Missouri Foundation For Health, a
Missouri non-profit corporation (the "Foundation").
RECITALS
A. In 1994, Blue Cross and Blue Shield of Missouri, a
Missouri non-profit health services corporation ("BCBSMo")
consummated a series of transactions (the "1994 Reorganization")
pursuant to which certain assets and liabilities of BCBSMo were
transferred to a newly formed for-profit subsidiary, RightCHOICE
Managed Care, Inc., a Missouri corporation ("Old RIT"), and a
minority interest in Old RIT was sold to the public.
B. Pursuant to the terms of a certain Agreement and Plan
of Reorganization (the "Reorganization Agreement"), dated as of
March 14, 2000, by and among BCBSMo, Old RIT, the Foundation and
the Company, the Foundation has acquired, contemporaneous with
the execution of this Agreement, 14,962,500 shares of common
stock, par value $.01 per share, of the Company, representing
approximately 80.1% of the issued and outstanding shares of
common stock of the Company.
C. In contemplation of the transactions provided for under
the Reorganization Agreement, BCBSMo (or the appropriate party)
has received a tax opinion letter from PricewaterhouseCoopers LLP
dated June 14, 2000 and reaffirmed November 30, 2000, that, among
other things, (i) gain or loss will not be recognized by BCBSMo,
Old RIT, HALIC (as defined in the Reorganization Agreement), the
Company, the Foundation or the public shareholders of both Old
RIT and the Company for federal income tax purposes pursuant to
the Transfer and Assumption Transaction, 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 Internal Revenue Code of 1986, as
amended (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 (as defined
in the Reorganization Agreement) 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, the Company 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 Old RIT, the
Company, the shareholders of both Old RIT and the Company or the
Foundation for federal income tax purposes, and (v) no gain will
be recognized by BCBSMo, New BCBSMo, Old RIT, the Company, the
shareholders of any of the foregoing entities, or the Foundation
under Section 337(b)(2) or (d) of the Code. The various
transactions contemplated by the Reorganization Agreement are
hereinafter referred to collectively as the "Current
Reorganization."
D. In contemplation of the transactions provided for under
the Reorganization Agreement, BCBSMo (or the appropriate party)
has requested a private letter ruling (the "IRS Ruling") from the
Internal Revenue Service (the "IRS"), that, among other things,
(i) for federal income tax purposes, the Current Reorganization
will be characterized as if it occurred as follows: (a) Charter
Conversion Transaction, (b) Reincorporation Merger Transaction,
(c) RIT/New RIT Merger Transaction, and (d) Transfer and
Assumption Transaction as if directly between Company and HALIC;
(ii) the Charter Conversion Transaction will constitute a
reorganization under Section 368(a)(1)(E) of the Code and no gain
or loss will be recognized by BCBSMo, New BCBSMo or the
Foundation for federal income tax purposes, (iii) the Transfer
and Assumption Transaction will qualify as an exchange under
Section 351 of the Code and gain or loss will not be recognized
by the Company or HALIC for federal income tax purposes, and
(iv) no gain or loss will be recognized by BCBSMo pursuant to
Section 337(b)(2) or (d) of the Code.
E. In order to induce Old RIT and the Company to enter
into the Reorganization Agreement and agree to succeed to certain
liabilities of BCBSMo as a result of the Current Reorganization,
the Foundation has agreed to enter into this Agreement to provide
indemnification to certain entities and individuals against
liabilities that the parties have determined should be assumed by
the Foundation as the successor to and beneficiary of the
principal assets of BCBSMo, including certain tax liabilities
that may arise as a result of the consummation of the Current
Reorganization.
AGREEMENT
In consideration of the foregoing and the covenants and
agreements set forth herein and in the Reorganization Agreement,
and intending to be legally bound, the parties hereto agree as
follows:
Section 1. Definitions. For purposes of this Agreement, the
following terms shall have the following meanings:
(a) "1994 Reorganization" has the meaning specified in Recital A
hereof.
(b) "BCBSMo" has the meaning set forth in the Preamble hereof.
(c) "Charter Conversion Transaction" has the meaning provided
therefor in the Reorganization Agreement.
(d) "Company" has the meaning set forth in the Preamble hereof.
(e) "Conversion Claims" means all claims, demands, rights,
liabilities, damages, losses, and causes of action, direct or
indirect, or derivative, individual or representative, of every
nature and description whatsoever, that have been asserted or may
in the future be asserted (i) in the Sarkis Litigation, or
(ii) both arising out of or relating to either the 1994
Reorganization or the Current Reorganization, and arising out of
or relating to either the status of BCBSMo as a mutual benefit or
public benefit corporation under Missouri law or the ownership,
beneficial ownership, or rights to the assets, surplus or equity
of BCBSMo or any subsidiary or affiliate of BCBSMo.
(f) "Current Reorganization" has the meaning specified in
Recital C hereof.
(g) "Current Reorganization Claims" means any and all claims,
demands, rights, liabilities, damages, losses, and causes of
action, direct or indirect, or derivative, individual or
representative, of every nature and description whatsoever,
arising out of or relating to the Current Reorganization.
(h) "Foundation" has the meaning set forth in the Preamble
hereof.
(i) "Income Tax Indemnified Parties" means the Company, all of
its subsidiaries and affiliates, and all of the directors,
officers, agents and employees of the Company, or any of its
subsidiaries or affiliates.
(j) "Indemnified Parties" means each and every Income Tax
Indemnified Party, Section 3(a) Indemnified Party and
Section 3(c) Indemnified Party.
(k) "IRS Ruling" has the meaning set forth in Recital C hereof.
(l) "Old RIT" has the meaning set forth in Recital A hereof.
(m) "Reincorporation Merger Transaction" as the meaning provided
therefor in the Reorganization Agreement.
(n) "Reorganization Agreement" has the meaning set forth in
Recital B hereof.
(o) "RIT/New RIT Merger Transaction" has the meaning provided
therefor in the Reorganization Agreement.
(p) "Sarkis Litigation" means, collectively, the private
putative class action pending in the Circuit Court for the City
of St. Louis styled Anthony J. Sarkis, Sr., and James Hacking v.
Roy R. Heimberger, et al., No. 962-00938, and the action pending
in the Circuit Court of Cole County styled Blue Cross and Blue
Shield of Missouri v. Jeremiah W. "Jay" Nixon, Cause No. CV197-
1558CC.
(q) "Section 3 Indemnified Parties" means, collectively, the
Section 3(a) Indemnified Parties and the Section 3(c) Indemnified
Parties.
(r) "Section 3(a) Indemnified Parties" means each and every past
and present director, officer, agent, employee and independent
contractor of BCBSMo or of any subsidiary of BCBSMo. For
purposes of this definition, Old RIT and its subsidiaries shall
not be deemed subsidiaries of BCBSMo.
(s) "Section 3(c) Indemnified Parties" means the Company, all of
its subsidiaries and affiliates, and each and every past and
present director, officer, agent, employee and independent
contractor of the Company or of any of its subsidiaries or
affiliates.
(t) "Transfer and Assumption Transaction" has the meaning
provided therefor in the Reorganization Agreement.
Section 2. Income Tax Indemnity.
(a) The Foundation shall unconditionally, irrevocably and
absolutely indemnify, defend and hold harmless the Income Tax
Indemnified Parties from and against the net amount of Federal,
state and local income tax liabilities (together with any
penalties, interest, fines, additions to tax, costs and expenses,
including attorneys' and other professional fees incurred in
connection with the defense, settlement or compromise thereof),
including those tax liabilities, if any, resulting from the
receipt of indemnity payments by the Company pursuant to this
Agreement (the "Tax Indemnification Amount"), incurred by any of
the Income Tax Indemnified Parties, as a result of a
determination by the IRS or other appropriate state or local
authority that the Transfer and Assumption Transaction, the
Charter Conversion Transaction, the Reincorporation Merger
Transaction, or the RIT/New RIT Merger Transaction constitutes a
taxable transaction and/or result in the recognition of gain for
Federal income tax purposes under any section of the Code,
including under section 337(d) of the Code (each of such
transactions is referred to herein as a "Tax Indemnification
Transaction"), or for state or local income tax purposes under
any comparable provisions of state or local income tax laws. The
Tax Indemnification Amount shall be calculated as if the Tax
Indemnification Transaction(s) which cause(s) a Tax
Indemnification Amount to be incurred by an Income Tax
Indemnified Party creates the only item of taxable income
(determined without deduction for expenses incurred in the year
in issue) of the Income Tax Indemnified Party for the year in
issue and is taxable at the highest maximum applicable rate. The
Tax Indemnification Amount shall not be reduced by carryovers
from prior years of credits, net operating losses or similar tax
benefits. Notwithstanding the foregoing, the Foundation shall
have no obligation to indemnify any of the Income Tax Indemnified
Parties as set forth in this Section 2(a) if in connection with
the imposition of tax liability under any section of the Code,
including under section 337(d) of the Code, or under state or
local tax laws, it is determined that such imposition is a result
of the Reorganization not being consummated in accordance with
the terms of the Reorganization Agreement.
(b) An Income Tax Indemnified Party shall promptly notify the
Foundation in writing of any assertion by the IRS or any
appropriate state or local authority of a tax liability for which
such Income Tax Indemnified Party may be indemnified under this
Agreement (provided that failure to give such notification shall
not affect the obligations of the Foundation pursuant to this
Section 2 except to the extent the Foundation shall have been
actually prejudiced as a result of such failure), and the
Foundation shall have the opportunity, at the Foundation's sole
expense, to participate jointly with the Income Tax Indemnified
Party in contesting or settling any such asserted tax liability.
The Foundation shall have thirty days following the receipt of
such notice from an Income Tax Indemnified Party to notify the
Income Tax Indemnified Party of its election to participate in
contesting or settling the tax liability. If the Foundation
shall elect to participate as provided in the preceding sentence,
no decision (procedural or substantive) shall be made unless and
until discussions have been held between the Income Tax
Indemnified Party and the Foundation regarding same; provided,
however, the Income Tax Indemnified Party shall have the primary
responsibility for determining the manner in which the tax
liability shall be contested or settled. Each proposed
settlement that the Income Tax Indemnified Party desires to
accept and that could result in a payment by the Foundation under
this Section 2 shall be submitted to the Foundation by the Income
Tax Indemnified Party for the Foundation's prior approval. The
Foundation shall have ten days following the date of submission
of a proposed settlement to approve or disapprove of such
settlement. If no approval or disapproval shall have been
received by the Income Tax Indemnified Party within such ten day
period, then the Foundation shall be deemed to have approved the
proposed settlement. The settlement or payment of any claim which
would result in a payment by the Foundation under this Section 2
without the Foundation's prior approval as set forth in this
Section 2(b) shall constitute a waiver of the right to indemnity.
The Foundation shall not unreasonably withhold its approval of
any settlement proposal.
(c) If the Foundation does not approve a proposed settlement
submitted to it by an Income Tax Indemnified Party, the
representatives of the Income Tax Indemnified Party and the
Foundation having first-hand knowledge of the dispute(s) shall
endeavor to resolve the dispute through good faith discussions,
such discussions to take place in a timely fashion so as not to
permit the proposed settlement to expire. If the good faith
discussions to take place pursuant to the preceding sentence of
this Section 2(c) do not produce an agreement within fifteen (15)
days of the date the proposed settlement is disapproved or deemed
disapproved, the matter may be submitted to binding arbitration
by written request of either the Income Tax Indemnified Party or
the Foundation, as provided herein. All arbitrations will be
conducted in St. Louis, Missouri, or at another location mutually
approved by the parties, pursuant to the Commercial Arbitration
Rules of the American Arbitration Association, except as
otherwise provided herein. The arbitrator will be the then
current president of the St. Louis Chapter of the American
Institute of Certified Public Accountants or his/her designee and
the decision of the arbitrator shall be final and binding on all
parties thereto. All arbitrations will be undertaken pursuant to
the Federal Arbitration Act, where applicable, and the decision
of the arbitrator is enforceable in any court of competent
jurisdiction. The arbitrator is directed by this Agreement to
conduct the hearing and render a decision within a time period so
as not to permit the proposed settlement under dispute to expire.
Each party will pay its own fees and expenses in connection with
the arbitration and the nonprevailing party shall pay the fees
and expenses of the arbitrator.
Section 3. Nontax Indemnity.
(a) Subject to the limitations in Section 3(b) below, the
Foundation shall unconditionally, irrevocably and absolutely
indemnify, defend and hold harmless the Section 3(a) Indemnified
Parties from and against (i) Current Reorganization Claims
whenever they accrue to the same extent that BCBSMo was required
to provide indemnity against such Claims to the Section 3(a)
Indemnified Parties under its Articles of Incorporation and
Bylaws as in effect on April 20, 1998, and (ii) Conversion
Claims. The foregoing indemnity shall include all attorneys'
fees and costs incurred in defending or responding to any claim
covered by the indemnity.
(b) The obligations of the Foundation to provide indemnity to
the Section 3(a) Indemnified Parties under Section 3(a) above
shall be limited as follows:
(i) The Foundation shall have no obligation to indemnify any of
the Section 3(a) Indemnified Parties under this Agreement from or
on account of any conduct that shall be finally adjudged by a
court of competent jurisdiction to have been knowingly fraudulent
or deliberately dishonest or willful misconduct;
(ii) The Foundation shall have no obligation under this Agreement
to indemnify Section 3(a) Indemnified Parties against claims
asserted against them by the Company; and
(iii) The Foundation shall have no obligation under this
Agreement to indemnify lawyers, accountants, or other
professionals engaged as independent contractors against claims
arising out of opinions rendered or advice given by them in
connection with the Current Reorganization.
(c) The Foundation shall unconditionally, irrevocably and
absolutely indemnify, defend and hold harmless the Section 3(c)
Indemnified Parties from and against (i) Conversion Claims, and
(ii) any claim or demand asserted by any of the Section 3(a)
Indemnified Parties seeking indemnity from any Section 3(c)
Indemnified Party for any of the matters for which the Foundation
is obligated to provide such indemnity under Section 3(a) above.
(d) The obligations of the Foundation to provide indemnity to
the Section 3(c) Indemnified Parties under Section 3(c) above
shall be limited as follows:
(i) the Foundation shall have no obligation to indemnify any of
the Section 3(c) Indemnified Parties under this Agreement from or
on account of any conduct that shall be finally adjudged by a
court of competent jurisdiction to have been knowingly fraudulent
or deliberately dishonest or willful misconduct; and
(ii) the Foundation shall have no obligation under this Agreement
to indemnify lawyers, accountants, or other professionals engaged
as independent contractors against Conversion Claims.
(e) Any Section 3 Indemnified Party entitled to indemnification
under this Section 3 agrees to give prompt written notice to the
Foundation after the receipt by such Section 3 Indemnified Party
of any written notice of the commencement of any action, suit,
proceeding or investigation or threat thereof made in writing for
which such Section 3 Indemnified Party may claim indemnification
or contribution pursuant to this Section 3 (provided that failure
to give such notification shall not affect the obligations of the
Foundation pursuant to this Section 3 except to the extent the
Foundation shall have been actually prejudiced as a result of
such failure). In case any such action shall be brought against
any Section 3 Indemnified Party and it shall notify the
Foundation of the commencement thereof, the Foundation shall be
entitled to participate therein and, to the extent that it shall
wish, jointly with any other indemnifying party similarly
notified, to assume the defense thereof, with counsel reasonably
satisfactory to such Section 3 Indemnified Party (who shall not,
except with the consent of the Section 3 Indemnified Party be
counsel to the Foundation), and after notice from the Foundation
to such Section 3 Indemnified Party of its election so to assume
the defense thereof, the Foundation shall not be liable to such
Section 3 Indemnified Party under this Section 3 for any legal
expenses of other counsel or any other expenses, in each case
subsequently incurred by such Section 3 Indemnified Party, in
connection with the defense thereof other than reasonable costs
of investigation. Notwithstanding the foregoing, if (i) the
Foundation shall not have employed counsel reasonably
satisfactory to such Section 3 Indemnified Party to take charge
of the defense of such action within a reasonable time after
notice of commencement of such action (so long as such failure to
employ counsel is not the result of an unreasonable determination
by such Section 3 Indemnified Party that counsel selected
pursuant to the immediately preceding sentence is
unsatisfactory), (ii) the actual or potential defendants in, or
targets of, any such action include both the Foundation and such
Section 3 Indemnified Party and such Section 3 Indemnified Party
shall have reasonably concluded that there may be legal defenses
available to it which are different from or additional to those
available to the Foundation which, if the Foundation and such
Section 3 Indemnified Party were to be represented by the same
counsel, could result in a conflict of interest for such counsel
or materially prejudice the prosecution of the defenses available
to such Section 3 Indemnified Party, or (iii) the Foundation is
unable to demonstrate to the reasonable satisfaction of the
Section 3(a) Indemnified Party that it has sufficient financial
resources to fund the defense, then such Section 3 Indemnified
Party shall have the right to employ separate counsel reasonably
satisfactory to the Foundation, in which case the fees and
expenses of one counsel or firm of counsel (plus one local or
regulatory counsel or firm of counsel) selected by a majority in
interest of the Section 3 Indemnified Parties shall be borne by
the Foundation and the fees and expenses of all other counsel
retained by the Section 3 Indemnified Party shall be paid by the
Section 3 Indemnified Party. No Section 3 Indemnified Party
shall consent to entry of any judgment or enter into any
settlement without the consent (which consent, in the case of an
action, suit, claim or proceeding exclusively seeking monetary
relief, shall not be unreasonably withheld) of the Foundation.
(f) In determining the amount of the obligations of the
Foundation to a Section 3 Indemnified Party under this Section 3,
net amounts paid to or recovered by a Section 3 Indemnified Party
under third party insurance policies (excluding self-insurance),
shall reduce the amount payable by the Foundation to such
Section 3 Indemnified Party under this Section 3 (and the
Section 3 Indemnified Parties shall use reasonable efforts to
file and support claims therefor short of litigation), as shall
the actual net tax effect of damages and other amounts paid by a
Section 3 Indemnified Party seeking indemnity therefor on the tax
liability of the Section 3 Indemnified Party. Notwithstanding
anything to the contrary contained in the charter documents of
the Company, the Reorganization Agreement, or any other agreement
to which the Company is a party, the Foundation acknowledges and
agrees that, as between the Company and the Foundation, the
Company shall have no obligation, directly or indirectly, to
indemnify any of the Section 3 Indemnified Parties against any of
the matters for which Section 3 Indemnified Parties shall be
entitled to seek indemnity from the Foundation hereunder, and any
amounts which the Company shall be obligated to pay in such
regard (either directly or indirectly through its subsidiaries)
shall be reimbursed to the Company by the Foundation pursuant to
the indemnification obligations of the Foundation hereunder. The
Foundation further agrees that it shall not have any right to
recover from the Company or any other Section 3 Indemnified Party
for any amounts paid under this Section 3, and shall not file any
claim against the Company or any other Section 3 Indemnified
Party seeking to recover any amounts properly paid under this
Section 3.
Section 4. D&O Liability Insurance. Under the Reorganization
Agreement, the Company is required, for a period of six years
following the closing of the Reorganization, to cause to be
maintained in effect the current policies of directors' and
officers' liability insurance maintained by BCBSMo (provided that
the Company may substitute therefor comparable coverage from
companies reasonably acceptable to the Foundation) as in effect
on April 20, 1998 covering the persons who are at that time
covered by such insurance policies with respect to acts and
omissions occurring prior to and including the closing of the
Current Reorganization. The Foundation shall reimburse the
Company promptly upon request for the premiums paid by the
Company to maintain such policies during such six year period.
Such policies shall require the insurer to notify the Foundation
at least thirty (30) days prior to cancellation. The Foundation
shall have the right, but not the obligation, to pay the premiums
necessary to maintain such policies in force and effect if the
Company fails to do so, in which event the Company shall
reimburse the Foundation promptly upon request for any penalties
or interest attributable to the late premium payment. In the
event the Company fails to maintain policies of directors' and
officers' liability insurance as required under this Section 4,
the Foundation shall have no obligation to provide indemnity
against damages or losses that would have been covered by such
insurance policies if they were maintained in force and effect.
Section 5. Net Worth. The Foundation shall maintain a net
worth (computed in accordance with generally accepted accounting
practices, applied on a consistent basis, except that the
Company's common stock shares shall be valued at the end of each
calendar quarter on the basis of the average closing price on the
New York Stock Exchange for the last ten trading days of the
calendar quarter) of not less than $85,136,625 for the six years
following the filing of the BCBSMo Federal Income Tax Return for
the year in which the Current Reorganization shall have been
consummated. With the prior written consent of the Company, the
Foundation may secure its obligations hereunder through one or
more alternative means that may be proposed by the Foundation
from time to time. The Company shall not unreasonably withhold
its consent to any proposed alternative that leaves the Company
in no worse position to enforce the obligations of the Foundation
hereunder than a minimum net worth covenant.
Section 6. Further Agreements. Until this Agreement
terminates as provided in Section 7 hereof, the Foundation shall
(i) maintain its status as a tax-exempt organization under
section 501(c)(4) of the Code, and (ii) not take any action or
refrain from taking any action that would cause it to qualify as
a "private foundation" as defined under section 509(a) of the
Code. No party to this Agreement shall take any position
inconsistent with the IRS Ruling.
Section 7. Termination. This Agreement shall automatically
terminate on the date on which the last to expire of the
applicable statutes of limitations relating to the matters for
which the Foundation has agreed to indemnify any Indemnified
Party under Sections 2 and 3 of this Agreement (including the
period during which any applicable statute of limitations may
toll or be extended in the event a controversy arises to which an
indemnity relates) shall have expired.
Section 8. No Setoff. No payment required to be made
pursuant to this Agreement shall be subject to any right of
setoff, counterclaim, defense, abatement, suspension, deferment
or reduction on an unrelated claim, provided that the Foundation
may setoff against amounts due hereunder the amount of any
undisputed claim against the payee and the amount of any claim
against the payee that has been reduced to a final judgment.
Section 9. Amendments. Neither this Agreement nor any term
hereof may be changed, waived, discharged or terminated orally or
in writing, except that any term of this Agreement may be amended
by a writing signed by each of the parties hereto, and the
observance of any such term may be waived (either generally or in
a particular instance and either retroactively or prospectively)
by a writing signed by the party against whom such waiver is to
be asserted.
Section 10. Notices. All notices and other communications
provided for or permitted hereunder shall be made in accordance
with the notice provisions of the Reorganization Agreement.
Section 11. Successors and Assigns. This Agreement (or any
right or obligation hereunder) may not be assigned by any party
without the prior written consent of the other party, except that
the Company may assign its rights and obligations under this
Agreement, whether by a writing or operation of law, to a
successor to all or substantially all of its business without
such consent, in which event this Agreement shall inure to the
benefit of, and be binding upon, the successor.
Section 12. Governing Law. This Agreement shall be governed
by and construed in accordance with the laws of the State of
Missouri applicable to agreements made and to be performed wholly
within such state.
Section 13. Waiver, Remedies. No delay on the part of any
party hereto or any Indemnified Party in exercising any right,
power or privilege hereunder shall operate as a waiver thereof,
nor shall any waiver on the part of any party hereto or any
Indemnified Party of any right, power or privilege hereunder
operate as a waiver of any other right, power, or privilege
hereunder, nor shall any single or partial exercise of any right,
power or privilege hereunder, preclude any other or further
exercise thereof or the exercise of any other right, power or
privilege hereunder. The waiver or consent (whether express or
implied) by any party or any Indemnified Party of the breach of
any term or condition of this Agreement shall not prejudice any
remedy of any other party or any Indemnified Party in respect of
any continuing or other breach of the terms and conditions
hereof, and shall not be construed as a bar to any right or
remedy which any party would otherwise have on any future
occasion under this Agreement.
Section 14. Attorneys' Fees. In any action or proceeding
brought to enforce any provision of this Agreement, or where any
provision hereof shall have been validly asserted as a defense,
the successful party shall be entitled to recover reasonable
attorneys' fees and costs in addition to any other available
remedy.
Section 15. Severability. In the event that any one or more
of the provisions contained herein, or the application thereof in
any circumstances, shall be held invalid, illegal or
unenforceable in any respect for any reason, the validity,
legality and enforceability of any such provision in every other
respect and of the remaining provisions hereof shall not be in
any way impaired or affected, it being intended that all other
rights and privileges shall be enforceable to the fullest extent
permitted by law.
Section 16. Third Party Beneficiary. The Indemnified Parties
other than the Company are third party beneficiaries of this
Agreement, and have the right to enforce the provisions of this
Agreement directly against the Foundation.
[signatures appear on next page]
THIS AGREEMENT CONTAINS A BINDING ARBITRATION PROVISION
WHICH MAY BE ENFORCED BY THE PARTIES HERETO.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.
RIGHTCHOICE MANAGED CARE, INC.
By: /s/ John A. O'Rourke
Name: John A. O'Rourke
Title: President
THE MISSOURI FOUNDATION FOR HEALTH
By: /s/ Paul C. Wilson
Name: Paul C. Wilson
Title: Chairman
Exhibit 4
CERTIFICATE OF INCORPORATION
OF
RIGHTCHOICE MANAGED CARE, INC.
The undersigned, being a natural person, for the purpose of
organizing a corporation under the General Corporation Law of the
State of Delaware, hereby certifies that:
ARTICLE I
NAME
The name of the corporation is RightCHOICE Managed Care,
Inc. (the "Corporation").
ARTICLE II
PURPOSE
The nature of the business or purposes to be conducted or
promoted by the Corporation is to engage in any lawful act or
activity for which corporations may be organized under the
General Corporation Law of Delaware, as from time to time amended
(the "DGCL").
ARTICLE III
AUTHORIZED CAPITAL STOCK
SECTION 1. The total number of shares of all classes of
stock which the Corporation shall have authority to issue is two
hundred fifty million (250,000,000) shares consisting of (a) two
hundred twenty-five million (225,000,000) shares of common stock,
$.01 par value per share (the "Common Stock"), and (b) twenty-
five million (25,000,000) shares of preferred stock, $.01 par
value per share (the "Preferred Stock").
SECTION 2. The powers, designations, rights, preferences,
privileges and restrictions of the Common Stock and the Preferred
Stock are as follows:
A. Common Stock.
1. General. The Common Stock shall have such
rights (i) as are provided by the DGCL and as are customarily
attendant to shares of common stock, and (ii) the rights set
forth below in this Paragraph A.
2. Dividends. Subject to any other provisions
of this Certificate of Incorporation, holders of Common Stock
shall be entitled to receive, to the extent permitted by law,
such dividends and other distributions in cash, stock or property
of the Corporation as may be declared thereon from time to time
by the Board of Directors of the Corporation out of assets or
funds of the Corporation legally available therefor.
3. Voting. At every meeting of the stockholders
of the Corporation, each holder of Common Stock shall be entitled
to one (1) vote in person or by proxy for each share of Common
Stock standing in his or her name on the transfer books of the
Corporation.
B. Preferred Stock. Shares of Preferred Stock may be
issued in one or more series as determined from time to time by
the Board of Directors of the Corporation. All shares of any one
series of Preferred Stock shall be identical, except as to the
dates of issue and the dates from which dividends on shares of
the series issued on different dates shall cumulate, if dividends
on the shares of such series are cumulative. Authority is hereby
expressly granted to the Board of Directors of the Corporation to
authorize the issuance of one or more series of Preferred Stock,
and to fix by one or more resolutions providing for the issuance
of each such series the voting powers, designations, preferences
and relative, participating, optional, redemption, conversion,
exchange or other special rights, qualifications, limitations or
restrictions of such series, and the number of shares in such
series, to the full extent now or hereafter permitted by law.
ARTICLE IV
BOARD OF DIRECTORS
AND STOCKHOLDER MEETINGS
SECTION 1. Except as may be otherwise specifically
provided by the DGCL, all powers of management, direction and
control of the Corporation shall be, and hereby are, vested in
the Board of Directors of the Corporation.
SECTION 2. A majority of the whole Board of Directors of
the Corporation shall constitute a quorum for the transaction of
business and, except as otherwise provided in this Certificate of
Incorporation or the Bylaws of the Corporation, the vote of a
majority of the directors present at a meeting at which a quorum
is then present shall be the act of the Board of Directors of the
Corporation. The term "whole Board of Directors of the
Corporation," as used in this Certificate of Incorporation, means
the total number of directors which the Corporation would have as
of the date of such determination if the Board of Directors of
the Corporation had no vacancies.
SECTION 3. The Board of Directors of the Corporation shall
consist of no less than 3 or more than 21 directors, the exact
number of directors to be determined in accordance with the
Bylaws of the Corporation. The directors shall be divided into
three classes, designated Class I, Class II and Class III. Each
class shall consist, as nearly as may be possible, of one-third
of the total number of directors constituting the whole Board of
Directors of the Corporation. At each annual meeting of
stockholders beginning in 2001, successors to the class of
directors whose term expires at that annual meeting shall be
elected for a three-year term. If the number of directors is
changed, any increase or decrease shall be apportioned among the
classes so as to maintain the number of directors in each class
as nearly equal as possible, but in no case shall a decrease in
the number of directors shorten the term of any incumbent
director. A director shall hold office until the annual meeting
for the year in which his or her term shall expire and until his
or her successor shall be elected and shall qualify, subject,
however, to prior death, resignation, retirement,
disqualification or removal from office.
SECTION 4.
A. Qualifications. No person shall be elected or
appointed to the Board of Directors of the Corporation unless
either (i) such person would qualify as an Independent Director
(as defined in Paragraph B.1 of this Section 4 of Article IV), or
(ii) immediately after giving effect to such election or
appointment, at least 80% of the members of the whole Board of
Directors of the Corporation would qualify as Independent
Directors.
B. Definitions.
1. "Independent Director" means any person who,
during the entirety of any term of service on the Board of
Directors of the Corporation, satisfies each of the following
conditions: (i) he or she shall have affirmed in writing that,
at the time of his or her election or appointment for such term,
he or she was Independent (as defined in Paragraph B.2 of this
Section 4 of Article IV), and (ii) he or she shall have agreed to
serve only in the capacity of an Independent Director for such
term.
2. "Independent" means a person who, at any
given time, (i) shall not be a Major Participant (as defined in
Paragraph B.4 of this Section 4 of Article IV), (ii) shall not
have been nominated to the Board of Directors of the Corporation
at the initiative of a Major Participant, (iii) shall not have
announced a commitment to any proposal made by a Major
Participant that has not been approved by an Independent Board
Majority (as defined in Paragraph B.3 of this Section 4 of
Article IV), and (iv) shall not have been determined by an
Independent Board Majority to have been subject to any
relationship, arrangement or circumstance (including any
relationship with a Major Participant) which, in the judgment of
such Independent Board Majority, is reasonably possible or likely
to interfere to an extent deemed unacceptable by such Independent
Board Majority with his or her exercise of independent judgment
as a director.
3. "Independent Board Majority" means a group of
directors comprised of (i) a majority of all directors who
qualify as Independent Directors at the time of such
determination, and (ii) a majority of all directors at the time
of such determination.
4. "Major Participant" means: (i) the
Foundation (as defined in Section 1 of Article VII hereof) or a
Person (as defined in Section 1 of Article VII hereof) who shall,
in the judgment of an Independent Board Majority, succeed to the
position held by the Foundation, (ii) a Person who, except as
provided in the next sentence, is an Excess Owner (as defined in
Section 1 of Article VII hereof), (iii) a Person that has filed
proxy materials with the SEC (as defined in Section 1 of
Article VII hereof) supporting a candidate for election to the
Board of Directors of the Corporation in opposition to candidates
approved by an Independent Board Majority, (iv) a Person that has
made a proposal, made a filing with the SEC or taken other
actions in which such Person indicates that such Person may seek
to become a Major Participant or which in the judgment of an
Independent Board Majority indicates that it is reasonably
possible or likely that such Person will seek to become a Major
Participant, or (v) such Person is an affiliate or associate (as
defined in Section 1 of Article VII hereof) of a Major
Participant. Notwithstanding the foregoing, in the event that an
Independent Board Majority shall have approved an acquisition of
outstanding Capital Stock (as defined in Section 1 of Article VII
hereof) of the Corporation, prior to the time such acquisition
shall occur, which would otherwise render a Person a Major
Participant and such Person (a) shall not have made any
subsequent acquisition of outstanding Capital Stock of the
Corporation not approved by an Independent Board Majority and (b)
shall not have subsequently taken any of the actions specified in
the preceding sentence without the prior approval of an
Independent Board Majority, then such Person shall not be deemed
a Major Participant; provided that the Foundation shall always be
deemed a Major Participant notwithstanding any approval of any
acquisition of Capital Stock of the Corporation or any other
development or fact of any kind. In the event there shall be any
question as to whether a particular Person is a Major
Participant, the determination of an Independent Board Majority
shall be binding upon all parties concerned.
SECTION 5. Each election of directors shall be by plurality
vote except that an individual shall not be elected to the Board
of Directors of the Corporation if such election is prohibited by
Section 4 of this Article IV or the individual does not meet the
qualifications which may be required by the Bylaws of the
Corporation as constituted at the time of such election. The
Board of Directors of the Corporation shall have the right to
adopt Bylaw provisions to implement and apply the provisions in
the preceding sentence and to achieve the outcome prescribed and
intended thereby. The election of directors need not be by
ballot unless the Bylaws of the Corporation shall so require.
SECTION 6. Any newly created directorships resulting from
any increase in the number of directors or from the removal,
resignation or death of a director may be filled only by the
affirmative vote of an Independent Board Majority and any
directors so chosen shall hold office until the next election of
the class for which such directors shall have been chosen and
until their successors shall be elected and qualified or until
their respective earlier resignation, removal or death.
SECTION 7. Stockholders of the Corporation shall have no
right to remove any director or the whole Board of Directors of
the Corporation unless such removal is for Cause (as defined
below in this Section 7 of Article IV) and unless the holders of
at least seventy-five percent (75%) of the issued and outstanding
shares of Common Stock then entitled to vote at an election of
directors shall have voted in favor of such removal for Cause
(notwithstanding the fact that some lesser percentage may be
specified by the DGCL). "Cause," as used in this Section 7,
means conviction of a felony or a finding by a court of competent
jurisdiction of liability for gross negligence, or willful
misconduct, in the performance of the director's duty to the
Corporation in a matter of substantial importance to the
Corporation, where such adjudication is no longer subject to
direct appeal.
SECTION 8. Whenever the holders of any series of Preferred
Stock issued by the Corporation or of any other securities of the
Corporation shall have the right, voting separately by series, to
elect directors at an annual or special meeting of stockholders,
the election, term of office, filling of vacancies and other
features of such directorships shall be governed by the terms of
this Certificate of Incorporation then applicable thereto.
SECTION 9. Meetings of the stockholders of the Corporation
for any purpose or purposes may be held within or without the
State of Delaware, as the Bylaws of the Corporation may provide.
SECTION 10. No action required or permitted to be taken at
any annual or special meeting of stockholders of the Corporation
may be taken by written consent without a meeting of such
stockholders.
SECTION 11. Subject to the rights, if any, of the holders
of Preferred Stock or any series thereof, special meetings of the
stockholders of the Corporation for any purpose or purposes may
be called at any time only by the Chairman of the Board of the
Corporation, the Chief Executive Officer of the Corporation, the
President of the Corporation, or an Independent Board Majority.
Special meetings of the stockholders of the Corporation may not
be called by any other person or persons or in any other manner.
ARTICLE V
INDEMNIFICATION
SECTION 1. The Corporation shall indemnify any person who
was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative, by
reason of the fact that he or she is or was a director or an
officer of the Corporation, or is or was a director or an officer
of the Corporation and is or was serving at the request of the
Corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other
enterprise, against expenses (including, but not limited to,
attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by him or her in connection with
such action, suit or proceeding to the fullest extent and in the
manner set forth in and permitted by the DGCL and other
applicable law, as from time to time in effect. To the maximum
extent permitted by the DGCL, the Corporation shall advance
expenses (including attorneys' fees) incurred by any person
indemnified hereunder in defending any civil, criminal,
administrative or investigative action, suit or proceeding upon
an undertaking by or on behalf of such person to repay such
amount if it shall ultimately be determined that he or she is not
entitled to be indemnified by the Corporation. Such rights of
indemnification and advancement of expenses shall not be deemed
to be exclusive of any other rights to which such director or
officer may be entitled apart from the foregoing provisions. The
foregoing provisions of this Section 1 of Article V shall be
deemed to be a contract between the Corporation and each director
and officer who serves in such capacity at any time while this
Section 1 of Article V and the relevant provisions of the DGCL
and other applicable law, if any, are in effect, and any repeal
or modification thereof shall not affect any rights or
obligations then existing, with respect to any state of facts
then or theretofore existing, or any action, suit or proceeding
theretofore or thereafter brought or threatened based in whole or
in part upon any such state of facts.
SECTION 2. The Corporation may indemnify any person who was
or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative, by
reason of the fact that he or she is or was an employee or agent
of the Corporation, or is or was serving at the request of the
Corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other
enterprise, against expenses (including, but not limited to,
attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by him or her in connection with
such action, suit or proceeding to the extent and in the manner
set forth in and permitted by the DGCL and other applicable law
as from time to time in effect. Such right of indemnification
shall not be deemed to be exclusive of any other rights to which
any such person may be entitled apart from the foregoing
provisions.
ARTICLE VI
LIABILITY FOR BREACH OF FIDUCIARY DUTY
A director of the Corporation shall not be personally liable
to the Corporation or its stockholders for monetary damages for
breach of fiduciary duty as a director, except for liability
(i) for any breach of his or her duty of loyalty to the
Corporation or its stockholders, (ii) for acts or omissions not
in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) under Section 174 of the DGCL, or
(iv) for any transaction from which he or she derived any
improper personal benefit. In no event shall any director be
deemed to breach any fiduciary duty or other obligation owed to
any stockholders of the Corporation or any other person by reason
of (i) his or her failure to vote for (or by reason of such
director's vote against) any proposal or course of action that in
such director's judgment would breach any requirement imposed by
the Blue Cross and Blue Shield Association (or its then
successor) (the "BCBSA") or could lead to termination of any
license granted by the BCBSA to the Corporation or any subsidiary
or affiliate of the Corporation, or (ii) his or her decision to
vote in favor of any proposal or course of action that in such
director's judgment is necessary to prevent a breach of any
requirement imposed by the BCBSA or could prevent termination of
any license granted by the BCBSA to the Corporation or any
subsidiary or affiliate of the Corporation. If the DGCL is
hereafter amended to authorize, with the approval of a
corporation's stockholders, further reductions in the liability
of a corporation's directors for breach of fiduciary duty, then a
director of the Corporation shall not be liable for any such
breach to the fullest extent permitted by the DGCL as so amended.
Any repeal or modification of the foregoing provisions of this
Article VI by the stockholders of the Corporation shall not
adversely affect any right or protection of a director of the
Corporation existing at the time of such repeal or modification.
ARTICLE VII
RESTRICTION ON TRANSFER
SECTION 1. The following definitions shall apply with
respect to this Article VII:
(a) "affiliate" and "associate" have the respective
meanings ascribed to such terms in Rule 12b-2 of the General
Rules and Regulations under the Exchange Act.
(b) a Person shall be deemed to "Beneficially Own," be the
"Beneficial Owner" of or have "Beneficial Ownership" of any
Capital Stock:
(1) in which such Person shall then have a direct or
indirect beneficial ownership interest;
(2) in which such Person shall have the right to
acquire any direct or indirect beneficial ownership interest
pursuant to any option or other agreement (either immediately or
after the passage of time or the occurrence of any contingency);
(3) which such Person shall have the right to vote;
(4) in which such Person shall hold any other interest
which would count in determining whether such Person would be
required to file a Schedule 13D or Schedule 13G under
Regulation 13D-G under the Exchange Act; or
(5) which shall be Beneficially Owned (under the
concepts provided in the preceding clauses) by any affiliate or
associate of the particular Person or by any other Person with
whom the particular Person or any such affiliate or associate has
any agreement, arrangement or understanding (other than customary
agreements with and between underwriters and selling group
members with respect to a bona fide public offering of securities
and other than pursuant to the Registration Rights Agreement);
provided, however, that
(6) a Person shall not be deemed to Beneficially Own,
be the Beneficial Owner of, or have Beneficial Ownership of
Capital Stock by reason of possessing the right to vote if
(i) such right arises solely from a revocable proxy or consent
given to such Person in response to a public proxy or consent
solicitation made pursuant to, and in accordance with, the
applicable rules and regulations promulgated under the Exchange
Act, and (ii) such Person is not the Excess Owner of any Excess
Shares, is not named as holding a beneficial ownership interest
in any Capital Stock in any filing on Schedule 13D or
Schedule 13G, and is not an affiliate or associate of any such
Excess Owner or named Person;
(7) a member of a national securities exchange or a
registered depositary shall not be deemed to Beneficially Own, be
the Beneficial Owner of or have Beneficial Ownership of Capital
Stock held directly or indirectly by it on behalf of another
Person (and not for its own account) solely because such member
or depositary is the record holder of such Capital Stock, and (in
the case of such member), pursuant to the rules of such exchange,
such member may direct the vote of such Capital Stock without
instruction on matters which are uncontested and do not affect
substantially the rights or privileges of the holders of the
Capital Stock to be voted, but is otherwise precluded by the
rules of such exchange from voting such Capital Stock without
instruction on either contested matters or matters that may
affect substantially the rights or the privileges of the holders
of such Capital Stock to be voted;
(8) a Person who in the ordinary course of business is
a pledgee of Capital Stock under a written pledge agreement shall
not be deemed to Beneficially Own, be the Beneficial Owner of or
have Beneficial Ownership of such pledged Capital Stock solely by
reason of such pledge until the pledgee has taken all formal
steps which are necessary to declare a default or has otherwise
acquired the power to vote or to direct to vote such pledged
Capital Stock, provided that:
(A) the pledge agreement is bona fide and was not
entered into with the purpose nor with the effect of changing or
influencing the control of the Corporation, nor in connection
with any transaction having such purpose or effect, including any
transaction subject to Rule 13d-3(b) promulgated under the
Exchange Act; and
(B) the pledge agreement does not grant to the
pledgee the right to vote or to direct the vote of the pledged
securities prior to the time the pledgee has taken all formal
steps which are necessary to declare a default;
(9) a Person engaged in business as an underwriter or
a placement agent for securities who enters into an agreement to
acquire or acquires Capital Stock solely by reason of its
participation in good faith and in the ordinary course of its
business in the capacity of underwriter or placement agent in any
underwriting or agent representation registered under the
Securities Act, as a bona fide private placement, a resale under
Rule 144A promulgated under the Securities Act, or in any foreign
or other offering exempt from the registration requirements under
the Securities Act shall not be deemed to Beneficially Own, be
the Beneficial Owner of or have Beneficial Ownership of such
securities until the expiration of forty (40) days after the date
of such acquisition so long as (i) such Person does not vote such
Capital Stock during such period, and (ii) such participation is
not with the purpose or with the effect of changing or
influencing control of the Corporation, nor in connection with or
facilitating any transaction having such purpose or effect,
including any transaction subject to Rule 13d-3(b) promulgated
under the Exchange Act;
(10) if the Corporation shall sell shares in a
transaction not involving any public offering, then each
purchaser in such offering shall be deemed to obtain Beneficial
Ownership in such offering of the shares purchased by such
purchaser, but no particular purchaser shall be deemed to
Beneficially Own or have acquired Beneficial Ownership or be the
Beneficial Owner in such offering of shares purchased by any
other purchaser solely by reason of the fact that all such
purchasers are parties to customary agreements relating to the
purchase of equity securities directly from the Corporation in a
transaction not involving a public offering, provided that:
(A) all the purchasers are persons specified in
Rule 13d-l(b)(l)(ii) promulgated under the Exchange Act;
(B) the purchase is in the ordinary course of
each purchaser's business and not with the purpose nor with the
effect of changing or influencing control of the Corporation, nor
in connection with or as a participant in any transaction having
such purpose or effect, including any transaction subject to
Rule 13d-3(b) promulgated under the Exchange Act;
(C) there is no agreement among or between any
purchasers to act together with respect to the Corporation or its
securities except for the purpose of facilitating the specific
purchase involved; and
(D) the only actions among or between any
purchasers with respect to the Corporation or its securities
subsequent to the closing date of the nonpublic offering are
those which are necessary to conclude ministerial matters
directly related to the completion of the offer or sale of the
securities sold in such offering;
(11) the Share Escrow Agent shall not be deemed to be
the Beneficial Owner of any Excess Share held by such Share
Escrow Agent pursuant to an Excess Share Escrow Agreement, nor
shall any such Excess Shares be aggregated with any other shares
of Capital Stock held by affiliates or associates of such Share
Escrow Agent; and
(12) a Person shall not be deemed to Beneficially Own,
be the Beneficial Owner of, or have Beneficial Ownership of
Capital Stock by reason of the fact that such Person shall have
entered into an agreement with the Corporation pursuant to which
such Person, or its associates or affiliates, shall, upon
consummation of the transaction described in such agreement,
acquire, directly or indirectly, all of the Capital Stock of the
Corporation (by means of a merger, consolidation, stock purchase
or otherwise), provided that:
(A) such agreement shall have been approved by an
Independent Board Majority prior to the execution thereof by the
Corporation;
(B) neither such Person nor its associates or
affiliates shall have been the Excess Owner of any Excess Shares
immediately prior to the execution of such agreement;
(C) the consummation of the transaction described
in such agreement shall be subject to the approval of the holders
of Capital Stock of the Corporation entitled to vote thereon
under the DGCL or pursuant to other applicable law or the rules
of the New York Stock Exchange, Inc. or any other national
securities exchange or automated quotation system on which any of
the Capital Stock shall then be listed or quoted; and
(D) neither such Person nor its associates or
affiliates shall have made any acquisition of Capital Stock after
the execution of such agreement other than pursuant to the terms
of such agreement.
Anything herein to the contrary notwithstanding, a Person shall
continue to be deemed to Beneficially Own, be the Beneficial
Owner of, and have Beneficial Ownership of, such Person's Excess
Shares which shall have been conveyed, or shall be deemed to have
been conveyed, to the Share Escrow Agent in accordance with this
Article VII until such time as such Excess Shares shall have been
sold by the Share Escrow Agent as provided in this Article VII.
(c) "BCBSA" has the meaning set forth in Article VI hereof.
(d) "Capital Stock" means shares (or any basic unit) of any
class or series of any equity security, voting or non-voting,
common or preferred, which the Corporation may at any time issue
or be authorized to issue.
(e) "Common Stock" has the meaning set forth in Section 1
of Article III hereof.
(f) "Excess Owner" means a Person who Beneficially Owns
Excess Shares.
(g) "Excess Shares" means (i) with respect to any
Institutional Investor, all the shares of Capital Stock
Beneficially Owned by such Institutional Investor in excess of
the Institutional Investor Ownership Limit, (ii) with respect to
any Noninstitutional Investor, all the shares of Capital Stock
Beneficially Owned by such Noninstitutional Investor in excess of
the Noninstitutional Investor Ownership Limit, and (iii) with
respect to any Person, all the shares of Capital Stock
Beneficially Owned by such Person in excess of the General
Ownership Limit; provided, however, that in the event the Excess
Shares with respect to such Person results from the Beneficial
Ownership of Capital Stock of such Person being aggregated with
the Beneficial Ownership of Capital Stock of any other Person,
then the number of Excess Shares with respect to such Person
shall be allocated pro rata in proportion to each Person's total
Beneficial Ownership (as calculated without giving effect to this
Article VII). All Excess Shares shall be deemed to be issued and
outstanding shares of Capital Stock even when subject to or held
pursuant to this Article VII.
(h) "Exchange Act" means the Securities Exchange Act of
1934, as amended or supplemented and any other federal law which
the BCBSA shall reasonably judge to have replaced or supplemented
the coverage of the Exchange Act.
(i) "Foundation" means The Missouri Foundation For Health,
a Missouri nonprofit corporation.
(j) "General Ownership Limit" means (i) that number of
shares of Common Stock one share lower than the number of shares
of Common Stock which would represent 20% of all shares of Common
Stock issued and outstanding at the time of determination, or
(ii) any combination of shares of Capital Stock in any series or
class that represents 20% of the ownership interest in the
Corporation at the time of determination; provided, however, that
the General Ownership Limit may be revised from time to time
pursuant to Section 15 of this Article VII. Unless an
Independent Board Majority otherwise determines pursuant to the
authority granted in Section 15 of this Article VII, the manner
in which shares in different classes or series of Capital Stock
shall be counted to determine the ownership interest represented
by any particular combination of those shares of Capital Stock
pursuant to clause (ii) above shall be the same manner prescribed
by the BCBSA under the License Agreements. So long as Common
Stock (carrying identical voting rights per share) shall be the
only class of Capital Stock issued by the Corporation, the
General Ownership Limit shall be irrelevant for purposes of this
Article VII because the Institutional Investor Ownership Limit
shall exclusively determine whether any shares of Common Stock
owned by any Institutional Investor constitute Excess Shares and
the Noninstitutional Investor Ownership Limit shall exclusively
determine whether any shares of Common Stock owned by any
Noninstitutional Investor constitute Excess Shares. If, however,
the Corporation were to issue a series of Preferred Stock or
other class of Capital Stock other than Common Stock, then (i)
shares Beneficially Owned by an Institutional Investor in excess
of either the Institutional Investor Ownership Limit or the
General Ownership Limit would constitute Excess Shares, and (ii)
shares Beneficially Owned by a Noninstitutional Investor in
excess of either the Noninstitutional Investor Ownership Limit or
the General Ownership Limit would constitute Excess Shares.
(k) "Institutional Investor" means any Person that is an
entity or group identified in Rule 13d-1(b)(1)(ii) under the
Exchange Act as constituted on June 1, 1997, provided that every
filing made by such Person with the SEC under Regulation 13D-G
(or any successor Regulation) under the Exchange Act with respect
to such Person's Beneficial Ownership of Capital Stock by such
Person shall have contained a certification identical to the one
required by Item 10 of Schedule 13G constituted on June 1, 1997,
or such other affirmation as shall be approved by the BCBSA and
the Board of Directors.
(l) "Institutional Investor Ownership Limit" means that
number of shares of Capital Stock one share lower than the number
of shares of Capital Stock which would represent 10% of the
Voting Power of all shares of Capital Stock issued and
outstanding at the time of determination; provided, however, that
the Institutional Investor Ownership Limit may be revised from
time to time pursuant to Section 15 of this Article VII.
(m) "License Agreements" means the license agreements as
constituted from time to time between the Corporation or any of
its subsidiaries or affiliates and the BCBSA, including any and
all addenda thereto, with respect to, among other things, the
"Blue Cross" and "Blue Shield" names and marks.
(n) "Noninstitutional Investor" means any Person that is
not an Institutional Investor.
(o) "Noninstitutional Investor Ownership Limit" means that
number of shares of Capital Stock one share lower than the number
of shares of Capital Stock which would represent 5% of the Voting
Power of all shares of Capital Stock issued and outstanding at
the time of determination; provided, however, that the
Noninstitutional Investor Ownership Limit may be revised from
time to time pursuant to Section 15 of this Article VII.
(p) "Ownership Limit" means each of the General Ownership
Limit, the Institutional Investor Ownership Limit and the
Noninstitutional Investor Ownership Limit, as each may be revised
from time to time pursuant to Section 15 of this Article VII.
(q) "Permitted Transferee" means a Person whose acquisition
of Capital Stock will not violate any Ownership Limit applicable
to such Person.
(r) "Person" means any individual, firm, partnership,
corporation, limited liability company, trust, association, joint
venture or other entity, and shall include any successor (by
merger or otherwise) or of any such entity.
(s) "Registration Rights Agreement" means that certain
Registration Rights Agreement, between the Corporation and the
Foundation, referred to in the Agreement and Plan of
Reorganization described in Section 14 of this Article VII.
(t) "Schedule 13D" means a report on Schedule 13D under
Regulation 13D-G under the Exchange Act and any report which may
be required in the future under any requirements which the BCBSA
shall reasonably judge to have any of the purposes served by
Schedule 13D.
(u) "Schedule 13G" means a report on Schedule 13G under
Regulation 13D-G under the Exchange Act and any report which may
be required in the future under any requirements which the BCBSA
shall reasonably judge to have any of the purposes served by
Schedule 13G.
(v) "SEC" means the United States Securities and Exchange
Commission and any successor federal agency having similar
powers.
(w) "Securities Act" means the Securities Act of 1933, as
amended or supplemented, and any other federal law which the
BCBSA shall reasonably judge to have replaced or supplemented the
coverage of the Securities Act.
(x) "Share Escrow Agent" means the Person appointed by the
Corporation to act as escrow agent with respect to the Excess
Shares.
(y) "Transfer" means any of the following which would
affect the Beneficial Ownership of Capital Stock: (a) any direct
or indirect sale, transfer, gift, hypothecation, pledge,
assignment, devise or other disposition of Capital Stock
(including (i) the granting of any option or entering into any
agreement for the sale, transfer or other disposition of Capital
Stock, or (ii) the sale, transfer, assignment or other
disposition of any securities or rights convertible into or
exchangeable for Capital Stock), whether voluntary or
involuntary, whether of record, constructively or beneficially
and whether by operation of law or otherwise, and (b) any other
transaction or event, including without limitation a merger,
consolidation, or acquisition of any Person, the expiration of a
voting trust which is not renewed, or the aggregation of the
Capital Stock Beneficially Owned by one Person with the Capital
Stock Beneficially Owned by any other Person.
(z) "Voting Power" means the voting power attributable to
the shares of Capital Stock issued and outstanding at the time of
determination and shall be equal to the number of all votes which
could be cast in any election of any director which could be
accounted for by all shares of Capital Stock issued and
outstanding at the time of determination. If, in connection with
an election for any particular position on the Board of Directors
of the Corporation, shares in different classes or series are
entitled to be voted together for purposes of such election, then
in determining the number of "all votes which could be cast" in
the election for that particular position for purposes of the
preceding sentence, the number shall be equal to the number of
votes which could be cast in the election for that particular
position if all shares entitled to be voted in such election
(regardless of series or class) were in fact voted in such
election. For any particular Person, the Voting Power of such
Person shall be equal to the quotient, expressed as a percentage,
of the number of votes that may be cast with respect to shares of
Capital Stock Beneficially Owned by such Person (including, for
these purposes, any Excess Shares Beneficially Owned by such
Person and held and/or voted by the Escrow Share Agent) divided
by the total number of votes that could be cast by all
stockholders of the Corporation (including such particular
Person) based upon the issued and outstanding shares of Capital
Stock at the time of determination. If the Corporation shall
issue any series or class of shares for which positions on the
Board of Directors of the Corporation are reserved or shall
otherwise issue shares which have voting rights which can arise
or vary based upon terms governing that class or series, then the
percentage of the voting power represented by the shares of
Capital Stock Beneficially Owned by any particular Person shall
be the highest percentage of the total votes which could be
accounted for by those shares in any election of any director.
(aa) "Voting Trust Divestiture Agreement" means that certain
Voting Trust and Divestiture Agreement by and between the
Corporation and the Foundation and the trustee named therein,
referred to in the Agreement and Plan or Reorganization described
in Section 14 of this Article VII.
SECTION 2.
(a) No Institutional Investor shall Beneficially Own shares
of Capital Stock in excess of the Institutional Investor
Ownership Limit. No Noninstitutional Investor shall Beneficially
Own shares of Capital Stock in excess of the Noninstitutional
Investor Ownership Limit. No Person shall Beneficially Own
shares of Capital Stock in excess of the General Ownership Limit.
(b) The occurrence of any Transfer which would cause any
Person to Beneficially Own Capital Stock in excess of any
Ownership Limit applicable to such Person shall have the
following legal consequences: (i) such Person shall receive no
rights to the Excess Shares resulting from such Transfer (other
than as specified in this Article VII), and (ii) the Excess
Shares resulting from such Transfer immediately shall be deemed
to be conveyed to the Share Escrow Agent.
(c) Notwithstanding the foregoing, a Person's Beneficial
Ownership of Capital Stock shall not be deemed to exceed any
Ownership Limit applicable to such Person if (A) the Excess
Shares with respect to such Person do not exceed the lesser of 1%
of the Voting Power of the Capital Stock or 1% of the ownership
interest in the Corporation, and (B) within fifteen (15) days of
the time when such Person becomes aware of the existence of such
Excess Shares such Person transfers or otherwise disposes of
sufficient shares of Capital Stock so that such Person's
Beneficial Ownership of Capital Stock shall not exceed any
Ownership Limit.
SECTION 3. Any Excess Owner who acquires or attempts to
acquire shares of Capital Stock in violation of Section 2 of this
Article VII, or any Excess Owner who is a transferee such that
any shares of Capital Stock are deemed Excess Shares, shall
immediately give written notice to the Corporation of such event
and shall provide to the Corporation such other information as
the Corporation may request.
SECTION 4. The Corporation shall have the right to take
such actions as it deems necessary to give effect to the transfer
of Excess Shares to the Share Escrow Agent, including refusing to
give effect to the Transfer or any subsequent Transfer of Excess
Shares by the Excess Owner on the books of the Corporation.
Excess Shares so held or deemed held by the Share Escrow Agent
shall be issued and outstanding shares of Capital Stock. An
Excess Owner shall have no rights in such Excess Shares except as
expressly provided in this Article VII and the administration of
the Excess Shares escrow shall be governed by the terms of an
Excess Share Escrow Agreement to be entered into between the
Corporation and the Share Escrow Agent and having such terms as
the Corporation shall deem appropriate.
SECTION 5. The Share Escrow Agent, as record holder of
Excess Shares, shall be entitled to receive all dividends and
distributions as may be declared by the Board of Directors of the
Corporation with respect to Excess Shares (the "Excess Share
Dividends") and shall hold the Excess Share Dividends until
disbursed in accordance with the provisions of Section 9 of this
Article VII. In the event an Excess Owner receives any Excess
Share Dividends (including without limitation Excess Share
Dividends received prior to the time the Corporation determines
that Excess Shares exist with respect to such Excess Owner) such
Excess Owner shall repay such Excess Share Dividends to the Share
Escrow Agent or the Corporation. The Corporation shall take all
measures that it determines reasonably necessary to recover the
amount of any Excess Share Dividends paid to an Excess Owner,
including, if necessary, withholding any portion of future
dividends or distributions payable on shares of Capital Stock
Beneficially Owned by any Excess Owner (including future
dividends on distributions on shares of Capital Stock which fall
below the Ownership Limit as well as on Excess Shares), and, as
soon as practicable following the Corporation's receipt or
withholding thereof, shall pay over to the Share Escrow Agent the
dividends so received or withheld, as the case may be.
SECTION 6. In the event of any voluntary or involuntary
liquidation, dissolution, or winding up of, or any distribution
of the assets of, the Corporation, the Share Escrow Agent shall
be entitled to receive, ratably with each other holder of Capital
Stock of the same class or series, that portion of the assets of
the Corporation that shall be available for distribution to the
holders of such class or series of Capital Stock. The Share
Escrow Agent shall distribute to the Excess Owner the amounts
received upon such liquidation, dissolution or winding up or
distribution in accordance with the provisions of Section 9 of
this Article VII.
SECTION 7. The Share Escrow Agent shall be entitled to vote
all Excess Shares. The Share Escrow Agent shall vote, consent,
or assent Excess Shares as follows:
(a) to vote in favor of each nominee to the Board of
Directors of the Corporation whose nomination has been approved
by an Independent Board Majority and to vote against any
candidate for the Board of Directors of the Corporation for whom
no competing candidate has been nominated or selected by an
Independent Board Majority;
(b) unless such action is initiated by or with the consent
of the Board of Directors of the Corporation, (i) to vote against
removal of any director of the Corporation, (ii) to vote against
any alteration, amendment, change or addition to or repeal
(collectively, "Change") of the Bylaws or this Certificate of
Incorporation, (iii) not to nominate any candidate to fill any
vacancy of the Board of Directors of the Corporation, (iv) not to
call any special meeting of the stockholders of the Corporation,
and (v) not take any action by voting such Excess Shares that
would be inconsistent with or would have the effect, directly or
indirectly, of defeating or subverting the voting requirements
contained in Section 7(a) of this Article VII or this
Section 7(b) of Article VII;
(c) to the extent not covered by clauses (a) and (b) above,
on any action, proposal or resolution requiring the approval of
the Board of Directors of the Corporation as a prerequisite to
entitle the stockholders of the Corporation to vote thereon and
as a prerequisite to become effective, to vote in the same
proportion as all other votes represented by shares of Capital
Stock are cast with respect to such action, proposal or
resolution; and
(d) to the extent not covered by clauses (a), (b) and (c)
above, to vote as recommended by the Board of Directors of the
Corporation.
SECTION 8.
(a) The Share Escrow Agent shall hold all Excess Shares
until such time as they are sold in accordance with this
Section 8 of Article VII.
(b) The Share Escrow Agent shall sell or cause the sale of
Excess Shares at such time or times and on such terms as shall be
determined by the Corporation. The Share Escrow Agent shall have
the right to take such actions as the Corporation shall deem
appropriate to ensure that sales of Excess Shares shall be made
only to Permitted Transferees.
(c) The Share Escrow Agent shall have the power to convey
to the purchaser of any Excess Shares sold by the Share Escrow
Agent ownership of such Excess Shares free of any interest of the
Excess Owner of those Excess Shares and free of any other adverse
interest arising through the Excess Owner. The Share Escrow
Agent shall be authorized to execute any and all documents
sufficient to transfer title to any Permitted Transferee.
(d) Upon acquisition by any Permitted Transferee of any
Excess Shares sold by the Share Escrow Agent or the Excess Owner,
such shares shall upon such sale cease to be Excess Shares and
shall become regular shares of Capital Stock in the class or
series to which such Excess Shares otherwise belong, and the
purchaser of such shares shall acquire such shares free of any
claims of the Share Escrow Agent or the Excess Owner.
(e) To the extent permitted by the DGCL or other applicable
law, neither the Corporation, the Share Escrow Agent nor anyone
else shall have any liability to the Excess Owner or anyone else
by reason of any action or inaction the Corporation or the Share
Escrow Agent or any director, officer or agent of the Corporation
shall take which any of them shall in good faith believe to be
within the scope of their authority under this Article VII or by
reason of any decision as to when or how to sell any Excess
Shares or by reason of any other action or inaction in connection
with the activities permitted under this Article VII which does
not constitute gross negligence or willful misconduct. Without
limiting by implication the scope of the preceding sentence, to
the extent permitted by law, neither the Share Escrow Agent nor
the Corporation nor any director, officer or agent of the
Corporation (a) shall have any liability on grounds that any of
them failed to take actions which would or could have produced
higher proceeds for any of the Excess Shares or by reason of the
manner or timing for any disposition of any Excess Shares, and
(b) shall be deemed to be a fiduciary or agent of any Excess
Owner.
SECTION 9. The proceeds from the sale of the Excess Shares
and any Excess Share Dividends shall be distributed as follows:
(i) first, to the Share Escrow Agent for any costs and expenses
incurred in respect of its administration of the Excess Shares
that have not theretofore been reimbursed by the Corporation;
(ii) second, to the Corporation for all costs and expenses
incurred by the Corporation in connection with the appointment of
the Share Escrow Agent, the payment of fees to the Share Escrow
Agent with respect to the services provided by the Share Escrow
Agent in respect of the escrow and for any other direct or
indirect and out of pocket expenses incurred by the Corporation
in connection with the Excess Shares, including any litigation
costs and expenses, and all funds expended by the Corporation to
reimburse the Share Escrow Agent for costs and expenses incurred
by the Share Escrow Agent in respect of its administration of the
Excess Shares and for all fees, disbursements and expenses
incurred by the Share Escrow Agent in connection with the sale of
the Excess Shares; and (iii) third, the remainder thereof (as the
case may be) to the Excess Owner; provided, however, if the
Corporation shall have any questions as to whether any security
interest or other interest adverse to the Excess Owner shall have
existed with respect to any Excess Shares, neither the Share
Escrow Agent, the Corporation nor anyone else shall have the
obligation to disburse proceeds for those shares until the Share
Escrow Agent shall be provided with such evidence as the
Corporation shall deem necessary to determine the parties who
shall be entitled to such proceeds.
SECTION 10. Each certificate for Capital Stock shall bear
the following legend:
"The shares of stock represented by this
certificate are subject to restrictions on ownership
and transfer. All capitalized terms in this legend
have the meanings ascribed to them in the Corporation's
Certificate of Incorporation, as the same may be
amended from time to time, a copy of which, including
the restrictions on ownership and transfer, shall be
sent without charge to each stockholder who so
requests. No Person shall Beneficially Own shares of
Capital Stock in excess of any Ownership Limit
applicable to such Person. Subject to certain limited
specific exemptions, (i) Beneficial Ownership of that
number of shares of Capital Stock by an Institutional
Investor which would represent 10% or more of the
Voting Power would exceed the Institutional Investor
Ownership Limit, (ii) Beneficial Ownership of that
number of shares of Capital Stock by a Noninstitutional
Investor which would represent 5% or more of the Voting
Power would exceed the Noninstitutional Investor
Ownership Limit, and (iii) Beneficial Ownership of (a)
20% or more of the issued and outstanding shares of
Common Stock or (b) any combination of shares in any
series or class of Capital Stock that represents 20% or
more of the ownership interest in the Corporation
(determined as provided in the Corporation's
Certificate of Incorporation) would exceed the General
Ownership Limit. Any Person who attempts to
Beneficially Own shares of Capital Stock in violation
of this limitation must immediately notify the
Corporation. Upon the occurrence of any event that
would cause any Person to exceed any Ownership Limit
applicable to such Person (including without limitation
the expiration of a voting trust that entitled such
Person to an exemption from any Ownership Limit
applicable to such Person), all shares of Capital Stock
Beneficially Owned by such Person in excess of any
Ownership Limit applicable to such Person shall
automatically be deemed Excess Shares and shall be
transferred immediately to the Share Escrow Agent and
shall be subject to the provisions of the Corporation's
Certificate of Incorporation. The foregoing summary of
the restrictions on ownership and transfer is qualified
in its entirety by reference to the Corporation's
Certificate of Incorporation."
The legend may be amended from time to time to reflect amendments
to this Certificate of Incorporation, or revisions to the
Ownership Limits in accordance with Section 15 of this
Article VII.
SECTION 11. Subject to Section 12 of this Article VII,
nothing contained in this Article VII or in any other provision
of this Certificate of Incorporation shall limit the authority of
the Corporation to take such other action as it deems necessary
or advisable to protect the Corporation and the interests of its
stockholders.
SECTION 12. Nothing contained in this Certificate of
Incorporation shall preclude the settlement of any transactions
entered into through the facilities of the New York Stock
Exchange, Inc. or any other exchange or through the means of any
automated quotation system now or hereafter in effect.
SECTION 13. Except in the case of manifest error, any
interpretation of this Article VII by the Board of Directors of
the Corporation shall be conclusive and binding; provided,
however, that in making any such interpretation, the Board of
Directors of the Corporation shall consider, wherever relevant,
the Corporation's obligations to the BCBSA.
SECTION 14. This Article VII shall not be applicable with
respect to any shares of Capital Stock owned by the Foundation
which were (i) issued by the Corporation to the Foundation upon
the incorporation of the Corporation, or (ii) issued by the
Corporation to the Foundation pursuant to that certain Agreement
and Plan of Reorganization, dated as of March 14, 2000, among the
Corporation, Blue Cross and Blue Shield of Missouri, RightCHOICE
Managed Care, Inc., a Missouri corporation, and the Foundation
(such shares of Capital Stock being referred to as "Exchange
Shares"), or (iii) acquired by the Foundation with respect to
Exchange Shares as a result of a stock dividend, stock split,
conversion, recapitalization, exchange of shares or the like, so
long as such shares of Capital Stock shall be Beneficially Owned
by the Foundation or by a trustee for the account of the
Foundation and subject to the terms of the Voting Trust and
Divestiture Agreement. Upon the Transfer of any Beneficial
Ownership interest in any Exchange Shares (and such other shares
of Capital Stock received by the Foundation or by a trustee for
the account of the Foundation as a result of a stock dividend,
stock split, conversion, recapitalization, exchange of shares or
the like relating to such Exchange Shares) from the Foundation or
trustee thereof or the voting trust established by the Voting
Trust and Divestiture Agreement to any transferee, those shares
of Capital Stock shall become fully subject to this Article VII
from and at all times after such transfer.
SECTION 15. An Independent Board Majority shall have the
right to revise the definition of one or more Ownership Limits to
change the percentage ownership of Capital Stock under such
Ownership Limit to conform the definition to a change to the
terms of the License Agreements or as required or permitted by
the BCBSA. In the event the Corporation issues any series or
class of Capital Stock other than Common Stock, then an
Independent Board Majority shall have the power to determine the
manner in which each class or series of Capital Stock shall be
counted for purposes of determining each Ownership Limit. Any
such revision to the definition of any Ownership Limit shall not
be deemed a Change to this Certificate of Incorporation, and
shall not require stockholder approval under Article XII hereof;
provided, however, that no such revision shall be effective until
such time as the Corporation shall have notified the stockholders
of such revision in such manner as it shall deem appropriate
under the circumstances (provided that notification of any such
revision by means of a filing by the Corporation describing such
revision with the SEC under the Exchange Act or with the
Secretary of State of the State of Delaware under the DGCL shall
be deemed appropriate notice under all circumstances).
ARTICLE VIII
BYLAWS
SECTION 1. The Bylaws shall govern the management and
affairs of the Corporation, the rights and powers of the
directors, officers, employees and stockholders of the
Corporation in accordance with its terms and shall govern the
rights of all persons concerned relating in any way to the
Corporation except that if any provision in the Bylaws shall be
irreconcilably inconsistent with any provision in this
Certificate of Incorporation, the provision in this Certificate
of Incorporation shall control.
SECTION 2. The Board of Directors of the Corporation shall
have the power to amend or replace the Bylaws of the Corporation
by the vote of a majority of the whole Board of Directors of the
Corporation, except that the approval of an Independent Board
Majority shall be required to amend or replace any provision of
the Bylaws of the Corporation which, pursuant to the terms
thereof, may now or hereafter require the approval of an
Independent Board Majority. The stockholders of the Corporation
shall not have the power to Change (as defined in Section 7 of
Article VII hereof) the Bylaws of the Corporation unless such
Change shall be approved by the holders of at least seventy-five
percent (75%) of the then issued and outstanding shares of Common
Stock entitled to vote thereon.
ARTICLE IX
NO PREFERENTIAL RIGHTS
No stockholder of the Corporation shall, by reason of his,
her or its holding shares of any class or series, have any
preemptive or preferential rights to purchase or subscribe to any
shares of Capital Stock of the Corporation now or hereafter to be
authorized, or any notes, debentures, bonds or other securities
convertible into or carrying options or warrants to purchase
shares of any class now or hereafter to be authorized (whether or
not the issuance of any such shares or such notes, debentures,
bonds or other securities would adversely affect the dividend or
voting rights of such stockholder) other than such rights, if
any, as the Board of Directors of the Corporation in its
discretion from time to time may grant and at such price as the
Board of Directors of the Corporation may fix; and the Board of
Directors of the Corporation may issue shares of Capital Stock of
the Corporation or any notes, debentures, bonds or other
securities, convertible into or carrying options or warrants to
purchase shares of Capital Stock without offering any such shares
of Capital Stock, either in whole or in part, to the existing
stockholders.
ARTICLE X
NO CUMULATIVE VOTING
There shall be no cumulative voting by stockholders of any
class or series of Capital Stock in the election of directors of
the Corporation.
ARTICLE XI
BOOKS AND RECORDS
The books and records of the Corporation may be kept
(subject to any provision contained in the DGCL or other
applicable law) at such place or places as may be designated from
time to time by the Board of Directors of the Corporation or in
the Bylaws of the Corporation.
ARTICLE XII
RIGHT TO AMEND CERTIFICATE OF INCORPORATION
The Corporation reserves the right to Change (as defined in
Section 7 of Article VII hereof) any provision contained in this
Certificate of Incorporation, in the manner now or hereafter
prescribed by the DGCL or other applicable law and this
Certificate of Incorporation, and all rights conferred upon
stockholders herein are granted subject to this reservation;
provided, however, that notwithstanding anything contained in
this Certificate of Incorporation to the contrary, (a) the
approval of an Independent Board Majority shall be required for
the Board of Directors to approve and authorize any Change to
Sections 1, 3, 4, 5, 6, 7, 10 and 11 of Article IV, Article V,
Article VI, Article VII, Article VIII, Article X or this
Article XII, and (b) the affirmative vote of the holders of at
least seventy-five percent (75%) of the then issued and
outstanding shares of Common Stock entitled to vote thereon shall
be required to Change Sections 1, 3, 4, 5, 6, 7, 10, and 11 of
Article IV, Article V, Article VI, Article VII, Article VIII,
Article X and this Article XII (the "Supermajority Stockholder
Vote"); and provided further, however, that (i) the Supermajority
Stockholder Vote shall become ineffective and shall be of no
further force and effect with respect to a Change to Article VII
hereof in the event that each and every License Agreement to
which the Corporation shall be subject shall have been
terminated; and (ii) the Supermajority Stockholder Vote shall not
apply to (1) any Change to Article VII to conform Article VII
hereof to a change to the terms of any License Agreement, (2) any
Change to Article VII hereof required or permitted by the BCBSA
(whether or not constituting a change to the terms of any License
Agreement), or (3) any Change to Article VII hereof approved by
an Independent Board Majority in connection with a proposal to
acquire (by means of a merger, consolidation or otherwise) all of
the outstanding Capital Stock of the Corporation. The
affirmative vote of the holders of at least the percentage of the
issued and outstanding Capital Stock entitled to vote thereon
required by the DGCL or other applicable law shall be required to
Change any provisions of this Certificate of Incorporation that
shall not require the Supermajority Stockholder Vote under this
Article XII.
ARTICLE XIII
REGISTERED AGENT
The address of the registered office of the corporation in
the state of Delaware is 1013 Centre Road, Wilmington, Delaware
19805 in the County of New Castle. The name of its registered
agent at such address is Corporation Service Company.
ARTICLE XIV
COMPROMISE
Whenever a compromise or arrangement is proposed between the
Corporation and its creditors or any class of them and/or between
the Corporation and its stockholders or any class of them, any
court of equitable jurisdiction within the State of Delaware may,
on the application in a summary way of the Corporation or of any
creditor or stockholder thereof or on the application of any
receiver or receivers appointed for the Corporation under 291
of Title 8 of the Delaware Code or on the application of trustees
in dissolution or of any receiver or receivers appointed for the
Corporation under 279 of Title 8 of the Delaware Code under a
meeting of the creditors or class of creditors, and/or of the
stockholders or class of stockholders of the Corporation, as the
case may be, to be summoned in such manner as the said court
directs. If a majority in number representing three fourths
(3/4) in value of the creditors or class of creditors, and/or of
the stockholders or class of stockholders of the Corporation, as
the case may be, agree to any compromise or arrangement and to
any reorganization of the Corporation as consequence of such
compromise or arrangement, the said compromise or arrangement and
the said reorganization shall, if sanctioned by the court to
which the said application has been made, be binding on all the
creditors or class of creditors, and/or on all the stockholders
or class of stockholders, of the Corporation, as the case may be,
and also on the Corporation.
ARTICLE XV
INCORPORATOR
The name and mailing address of the incorporator is as
follows:
John A. O'Rourke
1831 Chestnut Street
St. Louis, Missouri 63103
IN WITNESS WHEREOF, the undersigned duly executed this
Certificate of Incorporation on this 3rd day of February, 2000.
/s/ John A. O'Rourke
John A. O'Rourke, Incorporator
Exhibit 5
BYLAWS
OF
RIGHTCHOICE MANAGED CARE, INC.
TABLE OF CONTENTS
Page
ARTICLE I - OFFICES AND RECORDS 1
ARTICLE II - SHAREHOLDERS 1
ARTICLE III - BOARD OF DIRECTORS 6
ARTICLE IV - OFFICERS 15
ARTICLE V - INDEMNIFICATION 19
ARTICLE VI - STOCK 21
ARTICLE VII - CORPORATE FINANCE 22
ARTICLE VIII - GENERAL PROVISIONS 23
ARTICLE I - OFFICES AND RECORDS
Section 1.1 Registered Office and Registered Agent. The
location of the registered office and the name of the registered
agent of the Corporation in the State of Delaware shall be as
stated in the Certificate of Incorporation of the Corporation (as
the same may be further amended and/or restated) (the
"Certificate of Incorporation") or as shall be determined from
time to time by the Board of Directors and on file in the
appropriate office of the State of Delaware pursuant to
applicable provisions of law. Unless otherwise permitted by law,
the address of the registered office of the Corporation and the
address of the business office of the registered agent shall be
identical.
Section 1.2 Corporate Offices. The Corporation may have such
corporate offices anywhere within or without the State of
Delaware as the Board of Directors from time to time may
determine or the business of the Corporation may require.
Section 1.3 Books and Records. The Corporation shall keep
correct and complete books and records of account, including the
amount of its assets and liabilities, minutes of its proceedings
of its stockholders and Board of Directors (and any committee
having the authority of the Board of Directors) and the names and
places of residence of its officers. The Corporation shall keep
at its registered office or principal place of business in the
State of Missouri, or at the office of its transfer agent in the
State of Missouri, if any, books and records in which shall be
recorded the number of shares subscribed, the names of the owners
of the shares, the numbers owned by them respectively, the amount
of shares paid, and by whom, and the transfer of such shares with
the date of transfer.
Section 1.4 Inspection of Records. A stockholder may, upon
written demand under oath stating the proper purpose thereof,
inspect the records of the Corporation, pursuant to any statutory
or other legal right, during the usual and customary hours of
business and in such manner as will not unduly interfere with the
regular conduct of the business of the Corporation. A
stockholder may delegate such stockholder's right of inspection
to a certified or public accountant on the condition, to be
enforced at the option of the Corporation, that the stockholder
and accountant agree with the Corporation to furnish to the
Corporation promptly a true and correct copy of each report with
respect to such inspection made by such accountant. No
stockholder shall use, permit to be used or acquiesce in the use
by others of any information so obtained to the detriment
competitively of the Corporation, nor shall such stockholder
furnish or permit to be furnished any information so obtained to
any competitor or prospective competitor of the Corporation. The
Corporation as a condition precedent to any stockholder's
inspection of the records of the Corporation may require the
stockholder to indemnify the Corporation, in such manner and for
such amount as may be determined by the Board of Directors,
against any loss or damage which may be suffered by it arising
out of or resulting from any unauthorized disclosure made or
permitted to be made by such stockholder of information obtained
in the course of such inspection.
ARTICLE II - SHAREHOLDERS
Section 2.1 Place of Meetings. Meetings of stockholders shall
be held at any place within or outside the State of Delaware
designated by the Board of Directors. In the absence of any such
designation by the Board of Directors, stockholders' meetings
shall be held at the principal place of business of the
Corporation.
Section 2.2 Annual Meetings. An annual meeting of the
stockholders of the Corporation for the election of directors
shall be held on the second Tuesday in May of each year, if not a
legal holiday, and if a legal holiday, then on the next business
day following, at 10:00 a.m., or at such other date and time as
shall be designated from time to time by the Board of Directors
and stated in the notice of the meeting, at which the
stockholders entitled to vote thereon shall elect directors to
serve until expiration of their respective term of office as
specified in Section 3 of Article IV of the Certificate of
Incorporation and until their respective successors are duly
elected and qualified, or until their respective earlier
resignation, removal or death, and shall transact such other
business as may properly come before the meeting as provided
herein.
Section 2.3 Special Meetings. Special meetings of
stockholders may be called only by the Chairman of the Board, the
Chief Executive Officer, the President, or an Independent Board
Majority (as defined in Section 4.B.3 of Article IV of the
Certificate of Incorporation). The Chairman of the Board, the
Chief Executive Officer, the President, or an Independent Board
Majority, as the case may be, shall have the right to determine
the business to be transacted at any special meeting and no issue
or matter may be acted upon by any stockholders at any special
meeting unless such issue or matter has been approved by the
Board of Directors for vote by stockholders at such meeting.
Section 2.4 Notice; Waiver of Notice; Affidavit of Notice.
(a) Written or printed notice of each meeting of the
stockholders, whether annual or special, stating the place, day
and hour of the meeting and, in case of a special meeting, the
purpose or purposes thereof and that no other business may be
transacted, and, in the case of an annual meeting, those matters
which the Board of Directors, at the time of giving the notice,
intends to present for action by the stockholders, shall be
delivered or given to each stockholder entitled to vote at such
meeting, as determined in accordance with Section 2.8 of these
Bylaws, not less than ten (10) days or more than sixty (60) days
before the date of the meeting, either personally or by mail, by
or at the direction of the President, the Secretary, or the
officer or persons calling the meeting pursuant to Section 2.3 of
these Bylaws, unless, as to a particular matter, other or further
notice is required by the General Corporation Law of the State of
Delaware (the "DGCL") or other applicable law, in which case such
other or further notice shall be given.
(b) Any notice to a stockholder of a stockholders' meeting
sent by mail shall be deemed to be delivered when deposited in
the United States mail with postage thereon prepaid and addressed
to the stockholder at such stockholder's address as it appears on
the records of the Corporation.
(c) Whenever any notice is required to be given to any
stockholder under the provisions of these Bylaws, or of the
Certificate of Incorporation or of the DGCL or other applicable
law, a written waiver thereof, signed by the stockholder entitled
to such notice, whether before or after the time stated therein,
shall be deemed equivalent to the giving of such notice.
(d) To the extent provided by the DGCL or other applicable
law, attendance of a stockholder at any meeting shall constitute
a waiver of notice of such meeting except where a stockholder
attends a meeting for the express purpose of objecting to the
transaction of any business because the meeting is not lawfully
called or convened.
(e) An affidavit of the mailing or other means of giving
any notice of any stockholders' meeting shall be executed by the
Secretary, the Assistant Secretary, or any transfer agent of the
Corporation giving the notice, and shall be filed and maintained
in the minute book of the Corporation.
Section 2.5 Presiding Officials. Every meeting of the
stockholders, for whatever purpose, shall be convened by the
President, the Secretary or the officer or any of the persons who
called the meeting pursuant to Section 2.3 of these Bylaws. The
meeting shall be presided over by the officers specified in
Sections 4.7, 4.8 and 4.9 of these Bylaws as provided therein.
Section 2.6 Quorum; Adjournment. Unless otherwise provided by
the DGCL or other applicable law, the Certificate of
Incorporation or these Bylaws, the constitution of a quorum at
any meeting of the stockholders shall require a majority of the
outstanding shares of the Corporation's capital stock entitled to
vote at such meeting, represented in person or by proxy;
provided, however, that in the event that less than a quorum is
represented at a meeting, the shares so represented, by a
majority vote, shall have the right successively to adjourn the
meeting, without notice to any stockholder not present at the
meeting, to a specified date no later than 90 days after such
adjournment. In all matters, every decision of a majority of the
outstanding shares then entitled to vote on the subject matter
and represented in person or by proxy at a meeting at which a
quorum is present shall be valid as an act of the stockholders,
unless a larger vote is required by the DGCL or other applicable
law, by the Certificate of Incorporation or by these Bylaws;
provided, however, that if there are two or more classes of stock
entitled to vote as separate classes, then in the case of each
such class, the holders of a majority (or such higher proportion
as may be required by the DGCL or other applicable law or the
Certificate of Incorporation or these Bylaws) of the shares of
each such class must be voted affirmatively to approve any matter
requiring such separate class vote. Shares represented by a
proxy which directs that the shares be voted to abstain or to
withhold a vote on a matter shall be deemed to be represented at
the meeting as to such matter. At any subsequent session of an
adjourned meeting at which a quorum is present in person or by
proxy, any business may be transacted which could have been
transacted at the initial session of the meeting if a quorum had
been present.
Section 2.7 Proxies. Every person entitled to vote for
directors or on any other matter shall have the right to do so
either in person or by one or more agents authorized by a written
proxy signed by the person and filed with the Secretary of the
Corporation. A proxy shall be deemed signed if the stockholder's
name is placed on the proxy (whether by manual signature,
typewriting, telegraphic transmission, or otherwise) by the
stockholder or the stockholder's attorney-in-fact. A validly
executed proxy which does not state that it is irrevocable shall
continue in full force and effect unless (i) revoked by the
person executing it, before the vote pursuant to that proxy, by a
writing delivered to the Corporation stating that the proxy is
revoked, or by a subsequent proxy executed by, or attendance at
the meeting and voting in person by, the person executing the
proxy; or (ii) written notice of the death or incapacity of the
maker of that proxy is received by the Corporation before the
vote pursuant to that proxy is counted; provided, however, that
no proxy shall be valid after the expiration of three (3) years
from the date of the proxy, unless otherwise provided in the
proxy. The revocability of a proxy that states on its face that
it is irrevocable shall be governed by the provisions of Section
212 of the DGCL.
Section 2.8 Voting.
(a) Each stockholder shall have the number of votes
provided in the Certificate of Incorporation for each share of
stock entitled to vote under the provisions of the Certificate of
Incorporation and registered in such stockholder's name on the
books of the Corporation.
(b) Cumulative voting is not permitted with respect to the
election of directors, and thus no stockholder entitled to vote
in the election of directors shall have the right to cast as many
votes in the aggregate as shall equal the number of votes held by
the stockholder in the Corporation, multiplied by the number of
directors to be elected at the election, for one candidate, or
distribute them among two or more candidates.
(c) In order that the Corporation may determine the
stockholders entitled to notice of or to vote at any meeting of
stockholders or any adjournment thereof, or entitled to receive
payment of any dividend or other distribution or allotment of any
rights, or entitled to exercise any rights in respect of any
change, conversion or exchange of shares or for the purpose of
any other lawful action, the Board of Directors may fix, in
advance, a record date, which shall not be more than sixty (60)
days nor less than ten (10) days before the date of such meeting,
nor more than sixty (60) days prior to any other action. A
determination of stockholders of record entitled to notice of, or
to vote at, a meeting of stockholders shall apply to any
adjournment of the meeting; provided, however, that the Board of
Directors may fix a new record date for the adjourned meeting.
(d) If the Board of Directors does not close the transfer
books or set a record date for the determination of its
stockholders entitled to notice of, or to vote at, a meeting of
stockholders in accordance with Section 2.8(d) of these Bylaws,
only those persons who are stockholders of record at the close of
business on the day preceding the next day on which notice of
such meeting is given, or, if notice is waived, at the close of
business on the day next preceding the day on which such meeting
is held, shall be entitled to notice of, and to vote at, such
meeting and any adjournment of such meeting; except that, if
prior to such meeting written waivers of notice of such meeting
are signed and delivered to the Corporation by all of the
stockholders of record at the time such meeting is convened, only
those persons who are stockholders of record at the time such
meeting is convened shall be entitled to vote at such meeting and
any adjournment thereof.
Section 2.9 Stockholders' Lists. A complete list of the
stockholders entitled to vote at each meeting of the
stockholders, arranged in alphabetical order, with the address of
and the number of voting shares of each class owned of record by
each stockholder of record as of the date determined pursuant to
Sections 2.8(d) or (e) of these Bylaws as the case may be, shall
be prepared by the officer of the Corporation having charge of
the stock transfer books of the Corporation, and shall, for a
period of ten (10) days prior to the meeting, be kept on file at
a place within the city where the meeting is to be held and shall
at any time during the usual hours for business be subject to
inspection by any stockholder. Such list or a duplicate thereof
shall also be produced and kept open at the time and place of the
meeting and shall be subject to the inspection of any stockholder
during the whole time of the meeting. The original share ledger
or transfer book, or a duplicate thereof kept in the State of
Missouri, shall be prima facie evidence as to who are the
stockholders entitled to examine such list, share ledger or
transfer book or to vote at any meeting of stockholders.
Section 2.10 Conduct of Stockholder Meetings. The date and
time of the opening and the closing of the polls for each matter
upon which the stockholders will vote at a meeting shall be
announced at the meeting by the person presiding over the
meeting. The Board of Directors of the Corporation may, to the
extent not prohibited by the DGCL or other applicable law, adopt
by resolution such rules and regulations for the conduct of the
meetings or any meeting of stockholders as it shall deem
appropriate. Except to the extent inconsistent with such rules
and regulations, the Chairman of the meeting may prescribe such
rules, regulations and procedures and do all such acts as, in the
judgment of such Chairman, are appropriate for the proper conduct
of the meeting. Such rules, regulations or procedures, whether
adopted by the Board of Directors or prescribed by the Chairman
of the meeting, may, to the extent not prohibited by the DGCL or
other applicable law, include, without limitation, the following:
(i) the establishment of an agenda for the meeting; (ii) the
maintenance of order at the meeting; (iii) limitations on
attendance at or participation in the meeting to stockholders of
record of the Corporation, their duly authorized proxies and such
other persons as shall be determined; (iv) restrictions on entry
to the meeting after a specified time; (v) limitation on the time
allotted to questions or comments by participants; (vi) a
determination of whether the proponent of any proposal is
entitled to obtain a vote by stockholders on that proposal at
that meeting under the standards prescribed in these Bylaws and
such other standards as the Chairman of the meeting shall
determine to be applicable; (vii) the taking and counting of
votes at such meetings; and (viii) the resolution of any other
questions which may be raised at such meeting. Unless otherwise
determined by the Board of Directors or the Chairman of the
meeting, meetings of stockholders shall not be required to be
held in accordance with any rules of parliamentary procedure.
Section 2.11 Stockholder Action By Written Consent without a
Meeting. No action required or permitted to be taken at any
annual or special meeting of stockholders of the Corporation may
be taken by written consent without a meeting of such
stockholders.
Section 2.12 Inspectors of Election. Before any meeting of
stockholders, the Board of Directors shall appoint a person
(other than nominees for office, directors or stockholders) to
act as inspectors of election at the meeting or its adjournment.
If any person appointed as inspector fails to appear or fails or
refuses to act, the Chairman of the meeting shall appoint a
person to fill such vacancy. The inspector shall: (a) determine
the number of shares outstanding and the voting power of each,
the shares represented at the meeting, the existence of a quorum,
and the authenticity, validity, and effect of proxies;
(b) receive votes or ballots; (c) hear and determine all
challenges and questions in any way arising in connection with
the right to vote; (d) count and tabulate all votes;
(e) determine when the polls shall close; (f) determine the
result; and (g) do any other acts that may be proper to conduct
the election or vote with fairness to all stockholders.
Section 2.13 Stockholder Proposals.
(a) Stockholders shall be entitled to submit proposals to
be voted upon by stockholders at an annual meeting of the
Corporation provided that they comply with the procedures set
forth in this Section 2.13. Only those proposals which satisfy
all requirements specified in this Section 2.13 shall be deemed
"Qualified Stockholder Proposals."
(b) In order for a proposal to constitute a "Qualified
Stockholder Proposal," all of the following requirements must be
satisfied:
(1) The proposal must be made for submission at an
annual meeting of stockholders;
(2) The proposal must be a proper subject for
stockholder action. The Board of Directors shall be
entitled to determine that any proposal which the
stockholder is not entitled to have included in the
Corporation's proxy statement for the annual meeting under
the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and the regulations issued by the
Securities and Exchange Commission (which are collectively
referred to herein as the "SEC Proxy Rules") is not a proper
subject for stockholder action;
(3) The proposal must be made by a stockholder who
shall be the record holder on the record date for such
annual meeting and at that meeting of shares entitled to be
voted for the proposal (a "Proposing Stockholder");
(4) The Proposing Stockholder must deliver a written
notice identifying such proposal to the office of the
Corporation's Corporate Secretary at the Corporation's
principal place of business which provides the information
required by these Bylaws which is timely under the standards
given in Section 3.5(e)(4) of these Bylaws;
(5) Such Proposing Stockholder's proposal notice
shall: (i) contain a description of the proposal, the
reasons for the proposal and any material interest in such
proposal by the Proposing Stockholder or the beneficial
owner of the stockholder's record shares; (ii) contain an
affirmation by the Proposing Stockholder that the
stockholder satisfies the requirements specified in this
Section 2.13 for presentation of such proposal; and (iii) as
to the Proposing Stockholder and the beneficial owner, if
any, on whose behalf the proposal is made (x) the name and
address of such Proposing Stockholder, as they appear on the
Corporation's books, and of such beneficial owner and the
telephone number at which each may be contacted during
normal business hours through the time for which the meeting
is scheduled, and (y) the class and number of shares of the
Corporation which are owned beneficially and of record by
such Proposing Stockholder and such beneficial owner; and
(6) The Proposing Stockholder and the beneficial owner
shall provide such other information as any officer of the
Corporation shall reasonably deem relevant within such time
limits as any officer of the Corporation shall reasonably
impose for such information.
(c) Nothing in these Bylaws shall be deemed to prohibit a
stockholder from including any proposals in the Corporation's
proxy statement to the extent such inclusion shall be required by
the SEC Proxy Rules or to lessen any obligation by any
stockholder to comply with the SEC Proxy Rules; provided,
however, that neither the fact that a stockholder's nominee
qualifies as a Qualified Candidate (as defined in Section 3.5 of
these Bylaws) nor the fact that a Proposing Stockholder's
proposal qualifies as a Qualified Stockholder Proposal under this
Section 2.13 shall obligate the Corporation to endorse that
candidate or proposal or (except to the extent required by the
SEC Proxy Rules) to provide a means to vote on that proposal on
proxy cards solicited by the Corporation or to include
information about that proposal in the Corporation's proxy
statement. To the extent this Section 2.13 shall be deemed by
the Board of Directors or the Securities and Exchange Commission,
or adjudged by a court of competent jurisdiction, to be
inconsistent with the rights of stockholders to request inclusion
of a proposal in the Corporation's proxy statement pursuant to
the SEC Proxy Rules, the SEC Proxy Rules shall prevail.
ARTICLE III - BOARD OF DIRECTORS
Section 3.1 General Powers. The business and affairs of the
Corporation shall be managed by or under the direction of the
Board of Directors. In addition to the powers and authorities
expressly conferred upon it by these Bylaws, the Board of
Directors may exercise all such powers of the Corporation and do
all such lawful acts and things as are not directed or required
to be exercised or done exclusively by the stockholders by the
DGCL or other applicable law or by the Certificate of
Incorporation or by these Bylaws.
Section 3.2 Number of Directors. Until otherwise determined
by the Board of Directors acting pursuant to Section 3.4 of these
Bylaws, the number of positions on the Board of Directors shall
be three (3).
Section 3.3 Division of the Board of Directors into Classes.
The Board of Directors shall be divided into three classes in
accordance with the Certificate of Incorporation. The positions
within each class shall be the same in number as reasonably
practicable. Directors within a given class shall be designated
as the "Class of [Year]," with the entry for "Year" being the
year in which the next triennial election for directors in that
class is scheduled to occur.
Section 3.4 Board of Directors' Power to Alter the Number of
Directors and the Size of Classes. The Board of Directors shall
have the power (within the limitations prescribed by the
Certificate of Incorporation) by a resolution adopted by an
Independent Board Majority at the time of such adoption to alter
at any time and from time to time (i) the total number of
directorship positions on the Board of Directors, and (ii) the
number of directorship positions in any of the three classes of
directors established by the Certificate of Incorporation.
Except as otherwise expressly provided in the Certificate of
Incorporation, from the adoption of any particular resolution in
the manner provided in the preceding sentence until the adoption
in the manner prescribed by the preceding sentence of any
subsequent resolution altering the results of the particular
resolution, (i) the total number of directorship positions on the
Board of Directors shall be equal to the number specified in the
particular resolution, and (ii) the number of directorship
positions in each of the three classes of directors established
by the Certificate of Incorporation shall be the number
established in the particular resolution.
Section 3.5 Election of Directors by Stockholders.
(a) Qualified Candidates (as defined below in this
Section 3.5) for election as directors at any meeting of the
stockholders of the Corporation shall be elected by plurality
vote. (Under plurality voting, if five positions on the Board of
Directors were up for election at any particular stockholders'
meeting, then the five Qualified Candidates who receive more
votes than any other Qualified Candidates shall be deemed elected
at that meeting. It shall not, therefore, be necessary for
election to the Board of Directors that a candidate receive a
majority of the votes comprising the quorum for the meeting so
long as the individual receives a number of votes sufficient for
election under the terms hereof.)
(b) Only Qualified Candidates may be elected to the Board
of Directors at any particular stockholders' meeting. Votes cast
in favor of an individual who is not a Qualified Candidate shall
not be effective to elect that individual to the Board of
Directors regardless of whether (i) that individual receives a
greater number of votes than Qualified Candidates who are elected
to the Board of Directors under the preceding provisions of this
Section 3.5, or (ii) no other individual receives any votes at
that meeting.
(c) An individual shall be deemed a "Qualified Candidate"
for election to the Board of Directors at any particular
stockholders' meeting if that individual (i) shall have been
nominated for election by the affirmative vote of an Independent
Board Majority or shall have been nominated for election in a
manner which satisfies all of the requirements specified in
Section 3.5(e) hereof, and (ii) is not disqualified under the
provisions of Section 3.5(d) hereof.
(d) The term "Non-Independent Candidate," as used with
respect to any particular election of directors, means an
individual who satisfies the conditions of clause (i) of
Section 3.5(c) hereof but who does not qualify as an "Independent
Director" as defined in Section 4.B.1 of Article IV of the
Certificate of Incorporation. In the event that, in any
particular election of directors, some but not all of the Non-
Independent Candidates for director at such election may be
eligible for election to the Board of Directors pursuant to
Section 4.A of Article IV of the Certificate of Incorporation,
then the Non-Independent Candidates shall be treated as Qualified
Candidates until all positions available for Non-Independent
Candidates at such election pursuant to Section 4.A of Article IV
of the Certificate of Incorporation shall have been elected in
the manner set forth in this Section 3.5. The remaining Non-
Independent Candidates shall, in accordance with Section 3.5(b),
be deemed to not be Qualified Candidates.
(e) An individual who is not nominated for election by the
affirmative vote of an Independent Board Majority, and who would
otherwise qualify as a Qualified Candidate as provided in
Sections 3.5(c) and 3.5(d) hereof, shall be a Qualified Candidate
if all of the following requirements are satisfied:
(1) The nomination must be made for an election to be
held at an annual meeting of stockholders or a special
meeting of stockholders in which the Board of Directors has
determined that candidates will be elected by the issued and
outstanding shares of the Corporation's common stock to one
or more positions on the Board of Directors;
(2) The individual must be nominated by a stockholder
who shall be the record owner on the record date for such
meeting and at that meeting of shares entitled to be voted
at that meeting for the election of directors (a "Nominating
Stockholder");
(3) The Nominating Stockholder must deliver a timely
written nomination notice to the office the Corporation's
Corporate Secretary at the Corporation's principal place of
business which provides the information required by this
Section 3.5(e);
(4) To be timely for an annual meeting, a Nominating
Stockholder's notice must be actually delivered to the
Corporate Secretary at the Corporation's principal place of
business not later than the close of business on the 60th
day nor earlier than the close of business on the 90th day
prior to the first anniversary of the preceding year's
annual meeting; provided, however, that: (i) if the date of
the annual meeting is more than 30 days before or more than
60 days after such anniversary date, notice by the
stockholder to be timely must be so delivered not earlier
than the close of business on the 90th day prior to such
annual meeting and not later than the close of business on
the later of the 60th day prior to such annual meeting or
the 10th day following the day on which public announcement
of the date of such meeting is first made by the
Corporation, and (ii) if the number of directors to be
elected to the Board of Directors is increased and there is
no public announcement by the Corporation naming all of the
nominees for director or specifying the size of the
increased Board of Directors at least 70 days prior to the
first anniversary of the preceding year's annual meeting, a
Nominating Stockholder's nominating notice required by this
Section 3.5(e) shall also be considered timely, but only
with respect to nominees for any new positions created by
such increase, if (x) the Nominating Stockholder shall have
nominated candidates in accordance with the requirements in
this Section 3.5(e) for all Board of Directors positions not
covered by such increase, and (y) the nomination notice for
candidates to fill the expanded positions shall be actually
delivered to the Corporate Secretary at the Corporation's
principal place of business not later than the close of
business on the 10th day following the day on which such
public announcement is first made by the Corporation;
(5) If the election is to be held at a special
stockholders' meeting, a Nominating Stockholder's nominating
notice required by this Section 3.5(e) shall be considered
timely for such meeting if it shall be actually delivered to
the Corporate Secretary at the Corporation's principal place
of business not later than the close of business on the 10th
day following the day on which the Corporation shall first
publicly announce the date of the special meeting and that a
vote by stockholders shall be taken at such meeting to elect
one or more directors;
(6) In no event shall the public announcement of an
adjournment of an annual meeting commence a new time period
for the giving of a Nominating Stockholder's notice as
described above. "Public Announcement" means, for these
purposes, disclosure in a press release reported by the Dow
Jones News Service, Associated Press or comparable national
news service or in a document publicly filed by the
Corporation with the Securities and Exchange Commission
pursuant to Section 13, 14 or 15(d) of the Exchange Act.
(7) Such Nominating Stockholder's nomination notice
shall: (i) set forth as to each person whom the Nominating
Stockholder proposes to nominate for election or reelection
as a director all information relating to such person that
is required to be disclosed in solicitations of proxies for
election of directors in an election contest, or is
otherwise required, in each case pursuant to Regulation 14A
under the Exchange Act, and Rule 14a-11 thereunder; (ii) be
accompanied by each nominee's written consent to being named
in the proxy statement as a nominee and to serving as a
director if elected; (iii) set forth the name and address of
the stockholder giving the notice and the beneficial owner
of the shares owned of record by the beneficial owner, and
the telephone number at which the Corporation will be able
to contact the stockholder, the beneficial owner and each
nominee during usual business hours during the period
through the meeting at which the nomination is to take
place; and (iv) set forth the class and number of shares of
the Corporation which are owned beneficially and of record
by such Nominating Stockholder and such beneficial owner;
(8) The Nominating Stockholder, the beneficial owner
and each nominee shall provide such other information as any
officer of the Corporation shall reasonably deem relevant
within such time limits as any officer of the Corporation
shall reasonably impose for such information.
Section 3.6 Vacancies. Neither the provisions of Section 3.5
nor any other provision set forth herein shall diminish the right
granted to the Directors to elect individuals to fill any vacancy
which shall occur for any reason as provided in the Certificate
of Incorporation.
Section 3.7 Meetings of the Newly Elected Board of Directors.
The members of each newly elected Board of Directors (i) shall
meet at such time and place, either within or without the State
of Delaware, as shall be provided for by resolution of the
stockholders at the annual meeting, and no notice of such meeting
shall be necessary to the newly elected directors in order
legally to constitute the meeting, provided a quorum shall be
present, or (ii) if not so provided for by resolution of the
stockholders, or if a quorum shall not be present, may meet at
such time and place as shall be consented to in writing by a
majority of the newly elected directors, provided that written or
printed notice of such meeting shall be given to each of the
other directors in the same manner as provided in these Bylaws
with respect to the giving of notice for special meetings of the
Board of Directors, except that it shall not be necessary to
state the purpose of the meeting in such notice, or
(iii) regardless of whether or not the time and place of such
meeting shall be provided for by resolution of the stockholders
at the annual meeting, may meet at such time and place as shall
be consented to in writing by all of the newly elected directors.
Each director of the Corporation, upon such director's election,
shall qualify by accepting the office of director, and such
director's attendance at, or written approval of the minutes of,
any meeting of the Board of Directors subsequent to such
director's election shall constitute such director's acceptance
of such office; or such director may execute such acceptance by a
separate writing, which shall be placed in the minute book.
Section 3.8 Notice of Meeting; Waiver of Notice.
(a) Regular Meetings. Regular meetings of the Board of
Directors may be held without notice at such times and places
either within or without the State of Delaware as shall from time
to time be fixed by resolution adopted by the whole Board of
Directors (as defined in Section 2 of Article IV of the
Certificate of Incorporation). Any business may be transacted at
a regular meeting.
(b) Special Meetings.
(i) Except as otherwise required by the DGCL or other
applicable law and subject to the rights of the holders of
Preferred Stock or any series thereof, special meetings of
the Board of Directors may be called at any time by the
Chairman of the Board, the President or the Board of
Directors pursuant to a resolution approved by a majority of
the whole Board of Directors and shall be called by the
Secretary on the written request of any of the foregoing.
The place may be within or without the State of Delaware as
designated in the notice.
(ii) Written or printed notice of each special meeting
of the Board of Directors, stating the place, day and hour
of the meeting and the purpose or purposes thereof, shall be
mailed to each director at least three (3) days before the
day on which the meeting is to be held, or shall be
delivered to such director personally or sent to such
director by telegram or facsimile at least two (2) days
before the day on which the meeting is to be held. If
mailed, such notice shall be deemed to be delivered when it
is deposited in the United States mail with postage thereon
prepaid, addressed to the director at such director's
residence or usual place of business. If given by telegraph,
such notice shall be deemed to be delivered when it is
delivered to the telegraph company. If given by facsimile,
such notice shall be deemed delivered upon receipt of
verification. The notice may be given by any person having
authority to call the meeting.
(iii) "Notice" and "call" with respect to such
meetings shall be deemed to be synonymous.
(c) Waiver of Notice. Whenever any notice is required to
be given to any director under the provisions of the DGCL or
other applicable law, the Certificate of Incorporation or these
Bylaws, a waiver thereof in writing signed by such director,
whether before or after the time stated therein, shall be deemed
equivalent to the giving of such notice. Attendance of a
director at any meeting shall constitute a waiver of notice of
the meeting except where a director attends such meeting for the
express purpose of objecting to the transaction of any business
because the meeting is not lawfully called or convened. Neither
the business to be transacted at, nor the purpose of, any regular
meeting of the Board of Directors need be specified in the notice
or waiver of notice of the meeting.
Section 3.9 Meetings by Conference Telephone or Similar
Communications Equipment. Unless otherwise prohibited by the
DGCL or other applicable law, the Certificate of Incorporation or
these Bylaws, members of the Board of Directors of the
Corporation, or any committee designated by the Board of
Directors, may participate in a meeting of the Board of Directors
or committee by means of conference telephone or similar
communications equipment whereby all persons participating in the
meeting can hear each other, and participation in a meeting in
such manner shall constitute presence in person at the meeting.
Section 3.10 Action Without a Meeting. Any action which is
required to be or may be taken at a meeting of the directors, or
of the executive committee or any other committee of the
directors, may be taken without a meeting if consents in writing,
setting forth the action so taken, are signed by all of the
members of the Board of Directors or of the committee as the case
may be. The consents shall have the same force and effect as a
unanimous vote at a meeting duly held. The Secretary shall file
such consents with the minutes of the meetings of the Board of
Directors or of the committee as the case may be.
Section 3.11 Quorum and Voting. At all meetings of the Board
of Directors, a majority of the whole Board of Directors shall,
unless a greater number as to any particular matter is required
by the DGCL or other applicable law, the Certificate of
Incorporation or these Bylaws, constitute a quorum for the
transaction of business. The act of a majority of the directors
present at any meeting of the Board of Directors at which a
quorum is present shall be the act of the Board of Directors,
subject to the provisions of Section 144 of the DGCL (as to
approval of contracts or transactions in which a director has a
direct or indirect material financial interest), Section 141 of
the DGCL (as to appointment of committees), and Section 145 of
the DGCL (as to indemnification of directors), and unless the act
of a greater number is required by the DGCL or other applicable
law, the Certificate of Incorporation or these Bylaws.
Section 3.12 Committees.
(a) The Board of Directors may, by resolution or
resolutions adopted by a majority of the whole Board of
Directors, designate two or more directors of the Corporation to
constitute one or more committees (including, without limitation,
an executive committee). Each such committee, to the extent
provided in such resolution or resolutions, shall have and may
exercise all of the authority of the Board of Directors in the
management of the Corporation; provided, however, that the
designation of each such committee and the delegation thereto of
authority shall not operate to relieve the Board of Directors, or
any member thereof, of any responsibility imposed upon it or such
member by law.
(b) Each such committee shall keep regular minutes of its
proceedings, which minutes shall be recorded in the minute book
of the Corporation. The Secretary or an Assistant Secretary of
the Corporation may act as Secretary for each such committee if
the committee so requests.
Section 3.13 Audit Committee.
(a) The Board of Directors at the annual or any regular or
special meeting of the directors shall, by resolution adopted by
a majority of the whole Board of Directors, designate and elect
two or more directors to constitute an Audit Committee and
appoint one of the directors so designated as the chairman of the
Audit Committee. Membership on the Audit Committee shall be
restricted to those directors who are independent of the
management of the Corporation and are free from any relationship
that, in the opinion of the Board of Directors, would interfere
with the exercise of independent judgment as a member of the
committee. Vacancies in the Audit Committee may be filled by the
Board of Directors at any meeting thereof. Each member of the
Audit Committee shall hold office until such Audit Committee
member's successor has been duly elected and qualified, or until
such Audit Committee member's resignation or removal from the
Audit Committee by the Board of Directors, or until such Audit
Committee member otherwise ceases to be a director. Any member
of the Audit Committee may be removed from the Audit Committee by
resolution adopted by a majority of the whole Board of Directors.
The compensation, if any, of members of the Audit Committee shall
be established by resolution of the Board of Directors.
(b) The Audit Committee shall be responsible for:
recommending to the Board of Directors the appointment or
discharge of independent auditors; reviewing with the management
and the independent auditors the terms of engagement of
independent auditors, including the fees, scope and timing of the
audit and any other services rendered by the independent
auditors; reviewing with the independent auditors and management
the Corporation's policies and procedures with respect to
internal auditing, accounting and financial controls; reviewing
with the management the independent statements; audit results and
reports and the recommendation made by any of the auditors with
respect to changes in accounting procedures and internal
controls; reviewing the results of studies of the Corporation's
system of internal accounting controls; and performing any other
duties or functions deemed appropriate by the Board of Directors.
The Audit Committee shall have the powers and rights necessary or
desirable to fulfill these responsibilities, including the power
and right to consult with legal counsel and to rely upon the
opinion of legal counsel. The Audit Committee is authorized to
communicate directly with the Corporation's financial officers
and employees, internal auditors and independent auditors as it
deems desirable and to have the internal auditors or independent
auditors perform any additional procedures as it deems
appropriate.
(c) All actions of the Audit Committee shall be reported to
the Board of Directors at the next meeting of the Board of
Directors. The minute books of the Audit Committee shall at all
times be open to the inspection of any director.
(d) The Audit Committee shall meet at the call of its
chairman or of any two members of the Audit Committee (or if
there shall be only one other member, then at the call of that
member). A majority of the Audit Committee shall constitute a
quorum for the transaction of business (or if there shall only be
two members, then both must be present), and the act of a
majority of those present at any meeting at which a quorum is
present (or if there shall be only two members, then they must
act unanimously) shall constitute the act of the Audit Committee.
Section 3.14 Compensation Committee.
(a) The Board of Directors at the annual or any regular or
special meeting shall, by resolution adopted by a majority of the
whole Board of Directors, designate and elect two or more
directors to constitute a Compensation Committee. Membership on
the Compensation Committee shall be restricted to disinterested
persons which for this purpose shall mean any director who,
during the time such director is a member of the Compensation
Committee is not eligible, and has not at any time within one
year prior thereto been eligible, for selection to participate
(other than in a manner as to which the Compensation Committee
has no discretion) in any of the compensation plans administered
by the Compensation Committee. Vacancies in the Compensation
Committee may be filled by the Board of Directors at any meeting.
Each member of the Compensation Committee shall hold office until
such Compensation Committee member's successor has been duly
elected and qualified, or until such Compensation Committee
member's resignation or removal from the Compensation Committee
by the Board of Directors, or until such Compensation Committee
member otherwise ceases to be a director or a disinterested
person. Any member of the Compensation Committee may be removed
by resolution adopted by a majority of the whole Board of
Directors. The compensation, if any, of the members of the
Compensation Committee shall be established by resolution of the
Board of Directors.
(b) The Compensation Committee shall, from time to time,
recommend to the Board of Directors the compensation and benefits
of the executive officers of the Corporation. The Compensation
Committee shall have the power and authority vested in the Board
of Directors by any benefit plan of the Corporation. The
Compensation Committee shall also make recommendations to the
Board of Directors with regard to the compensation of the Board
of Directors and its committees, with the exception of the
Compensation Committee.
(c) All actions of the Compensation Committee shall be
reported to the Board of Directors at the next meeting of the
Board of Directors. The minute books or the Compensation
Committee shall at all times be open to the inspection of any
director
(d) The Compensation Committee shall meet at the call of
the chairman of the Compensation Committee or of any two members
of the Compensation Committee (or if there shall be only one
other member, then at the call of that member). A majority of the
Compensation Committee shall constitute a quorum for the
transaction of business (or if there shall be only two members,
then both must be present), and the act of a majority of those
present at any meeting at which a quorum is present (or if there
shall be only two members, then they must act unanimously) shall
be the act of the Compensation Committee.
Section 3.15 Nominating Committee.
(a) The Board of Directors at the annual or any regular or
special meeting of the directors shall, by resolution adopted by
a majority of the whole Board of Directors, designate and elect
two or more directors to constitute a Nominating Committee and
appoint one of the directors so designated as the chairman of the
Nominating Committee. Membership on the Nominating Committee
shall be restricted to Independent Directors (as defined in
Section 4.B.1 of Article IV of the Certificate of Incorporation).
Vacancies in the Nominating Committee may be filled by the Board
of Directors at any meeting thereof. Each member of the
Nominating Committee shall hold office until such Nominating
Committee member's successor has been duly elected and qualified,
or until such Nominating Committee member's resignation or
removal from the Nominating Committee by the Board of Directors,
or until such Nominating Committee member otherwise ceases to be
a director. Any member of the Nominating Committee may be
removed from the Nominating Committee by resolution adopted by a
majority of the whole Board of Directors. The compensation, if
any, of members of the Nominating Committee shall be established
by resolution of the Board of Directors.
(b) The Nominating Committee shall be responsible for:
recommending to the Board of Directors a slate of directors to be
presented for election by stockholders at each annual meeting of
the stockholders of the Corporation and any other duties or
functions deemed appropriate by the Board of Directors. The
Nominating Committee shall have the powers and rights necessary
or desirable to fulfill these responsibilities, including the
power and right to consult with legal counsel and to rely upon
the opinion of legal counsel.
(c) All actions of the Nominating Committee shall be
reported to the Board of Directors at the next meeting of the
Board of Directors. The minute books of the Nominating Committee
shall at all times be open to the inspection of any director.
(d) The Nominating Committee shall meet at the call of its
chairman or of any two members of the Nominating Committee (or if
there shall be only one other member, then at the call of that
member). A majority of the Nominating Committee shall constitute
a quorum for the transaction of business (or if there shall be
only two members, then both must be present), and the act of a
majority of those present at any meeting at which a quorum is
present (or if there shall be only two members, then they must
act unanimously) shall be the act of the Nominating Committee.
Section 3.16 Alternate Committee Members. The Board of
Directors, by resolution adopted by a majority of the whole Board
of Directors, may designate one or more additional directors as
alternate members of any committee to replace any absent or
disqualified member at any meeting of that committee, and at any
time may change the membership of any committee or amend or
rescind the resolution designating the committee. In the absence
or disqualification of a member or alternate member of a
committee, the member or members thereof present at any meeting
and not disqualified from voting, whether or not the member or
members constitute a quorum, may unanimously appoint another
director to act at the meeting in the place of any such absent or
disqualified member, provided that the director so appointed
meets any qualifications stated in these Bylaws or the resolution
designating the committee or any amendment thereto.
Section 3.17 Committee Procedures. Unless otherwise provided
in these Bylaws or in the resolution designating any committee,
any committee may fix its rules or procedures and fix the time
and place of its meetings and specify what notice of meetings, if
any, shall be given.
Section 3.18 Limitation of Committee Powers. Notwithstanding
any other provision of these Bylaws, no committee of the Board of
Directors shall have the power or authority of the Board of
Directors with respect to (i) amending the Certificate of
Incorporation, (ii) approving any action which under the DGCL or
other applicable law, also requires stockholders' approval or
approval of the outstanding shares, (iii) approving or
recommending to the stockholders a dissolution of the Corporation
or a revocation of a dissolution, (iv) amending these Bylaws,
(v) declaring a dividend or making any other distribution to the
stockholders, (vi) authorizing the issuance of stock otherwise
than pursuant to (the grant or exercise of a stock option under
employee stock options of the Corporation or in connection with a
public offering of securities registered under the Securities Act
of 1933, (vii) filling vacancies on the Board of Directors or any
committee thereof, or (viii) amending or repealing any resolution
of the Board of Directors.
Section 3.19 Compensation of Directors and Committee Members.
Directors and members of all committees shall not receive any
stated salary for their services as such, unless authorized by
resolution of the Board of Directors. By resolution of the Board
of Directors a fixed sum and expenses of attendance, if any, also
may be allowed for attendance at each regular or special meeting
of the Board of Directors or any committee. Nothing herein
contained shall be construed to preclude any director or
committee member from serving the Corporation in any other
capacity and receiving compensation therefor.
Section 3.20 Resignations. Any director may resign at any time
upon written notice to the Corporation. Such resignation shall
take effect at the time specified therein or, if no time is
specified therein, upon receipt thereof by the Corporation, and,
unless otherwise specified therein, the acceptance of such
resignation by the Corporation shall not be necessary to make
such resignation effective.
Section 3.21 Removal of Directors. Directors may be removed
only in the manner provided in the Certificate of Incorporation.
Section 3.22 Stakeholder Interests. The Board of Directors
shall have the authority to make its decisions based on a long
term perspective and in doing so shall be entitled to make
decisions which may produce short term outcomes less favorable
than alternatives which may be available to the Corporation or
its stockholders. The Board of Directors, in making its
decisions, shall be entitled to consider the interests of
stakeholders in the Company other than stockholders, including
employees, areas in which the Corporation maintains operations,
creditors, and other persons who in the Board of Directors' sole
judgment have a legitimate stake in the Board of Directors'
decision. The Board of Directors shall have discretion to
determine how to balance any interests of stockholders and other
stakeholders in arriving at any decision.
ARTICLE IV - OFFICERS
Section 4.1 Designations.
(a) The officers of the Corporation shall be a Chairman of
the Board, a Vice Chairman of the Board, a President, one or more
Executive Vice Presidents, one or more Vice Presidents, a
Secretary, a Treasurer, one or more Assistant Secretaries and one
or more Assistant Treasurers. The Board of Directors shall elect
a Chairman of the Board, a Vice Chairman of the Board, a
President, a Treasurer and a Secretary at its first meeting after
each annual meeting of the stockholders. The Board of Directors
then, or from time to time, may also elect one or more of the
other prescribed officers as it shall deem advisable, but need
not elect any officers other than a Chairman of the Board, a Vice
Chairman of the Board, a President, a Treasurer and a Secretary.
The Board of Directors may, if it desires, elect or appoint
additional officers and may further identify or describe any one
or more of the officers of the Corporation.
(b) The Chairman and the Vice Chairman of the Board shall
be chosen from among the Board of Directors, but the other
officers of the Corporation need not be members of the Board of
Directors. Any two or more offices may be held by the same
person.
(c) An officer shall be deemed qualified when such person
enters upon the duties of the office to which such person has
been elected or appointed and furnishes any bond required by the
Board of Directors; but the Board of Directors may also require
such person's written acceptance and promise faithfully to
discharge the duties of such office.
Section 4.2 Term of Office. Each officer of the Corporation
shall hold such person's office at the pleasure of the Board of
Directors or for such other period as the Board of Directors may
specify at the time of such person's election or appointment, or
until such person's resignation, removal by the Board of
Directors or death, whichever first occurs. In any event, each
officer of the Corporation who is not reelected or reappointed at
the annual election of officers by the Board of Directors next
succeeding such person's election or appointment shall be deemed
to have been removed by the Board of Directors, unless the Board
of Directors provides otherwise at the time of such person's
election or appointment.
Section 4.3 Other Agents. The Board of Directors from time to
time may appoint such other agents for the Corporation as the
Board of Directors shall deem necessary or advisable, each of
whom shall serve at the pleasure of the Board of Directors or for
such period as the Board of Directors may specify and shall
exercise such powers, have such titles and perform such duties as
shall be determined from time to time by the Board of Directors
or by an officer empowered by the Board of Directors to make such
determinations.
Section 4.4 Removal. Any officer or agent elected or
appointed by the Board of Directors, and any employee, may be
removed or discharged by the Board of Directors whenever in its
judgment the best interests of the Corporation would be served
thereby, but such removal or discharge shall be without prejudice
to the contract rights, if any, of the person so removed or
discharged.
Section 4.5 Salaries and Compensation. Salaries and
compensation of all elected officers of the Corporation shall be
fixed, increased or decreased by the Board of Directors, but this
power, except as to the salary or compensation of the Chairman of
the Board and the President, may, unless prohibited by law, be
delegated by the Board of Directors to the Chairman of the Board,
the President or a committee. Salaries and compensation of all
appointed officers, agents and employees of the Corporation may
be fixed, increased and decreased by the Board of Directors, but
until action is taken with respect thereof by the Board of
Directors, the same may be fixed, increased or decreased by the
President or by such other officer or officers as may be
empowered by the Board of Directors to do so.
Section 4.6 Delegation of Authority to Hire, Discharge and
Designate Duties. The Board of Directors from time to time may
delegate to the Chairman of the Board, the President or other
officer or executive employees of the Corporation, authority to
hire and discharge and to fix and modify the duties and salary or
other compensation of employees of the Corporation under the
jurisdiction of such person, and the Board of Directors may
delegate to such officer or executive employee similar authority
with respect to obtaining and retaining for the Corporation the
services of attorneys, accountants and other experts.
Section 4.7 Chairman of the Board. If a Chairman of the Board
is elected, such Chairman of the Board shall preside at all
meetings of the stockholders and directors at which such Chairman
of the Board may be present and shall perform such other duties
and have such other powers, responsibilities and authority as may
be prescribed elsewhere in these Bylaws. The Board of Directors
may delegate such other powers, responsibilities and authority
and assign such additional duties to the Chairman of the Board,
other than those conferred by law exclusively upon the President
or other officer, as the Board of Directors may from time to time
determine, and, to the extent permissible by law, the Board of
Directors may designate the Chairman of the Board as the chief
executive officer of the Corporation with all of the duties,
powers, responsibilities and authority otherwise conferred upon
the President of the Corporation under Section 4.8 of these
Bylaws, or the Board of Directors may from time to time divide
the duties, powers, responsibilities and authority for the
general control and management of the Corporation's business and
affairs between the Chairman of the Board and the President. If
the Chairman of the Board is designated as the chief executive
officer of the Corporation or to have the powers of the chief
executive officer coextensively with the President, notice
thereof shall be given to the extent and in the manner as may be
required by law.
Section 4.8 President.
(a) Unless the Board of Directors otherwise provides, the
President shall be the chief executive officer of the Corporation
with such general executive duties, powers, responsibilities and
authority of supervision and management as are usually vested in
the office of the Chief Executive Officer of a corporation, and
such President shall carry into effect all directions and
resolutions of the Board of Directors. In the absence of the
Chairman of the Board, or if there is no Chairman of the Board,
the President shall preside at all meetings of the stockholders
and the Board of Directors.
(b) The President may execute all bonds, notes, debentures,
mortgages and other contracts requiring the seal of the
Corporation, may cause the seal to be affixed thereof, and may
execute all other instruments, for and in the name of the
Corporation.
(c) Unless the Board of Directors otherwise provides, the
President, or any person designated in writing by the President,
shall have full power and authority on behalf of the Corporation
to (i) attend and to vote or take action at any meeting of the
holders of securities of corporations in which the Corporation
may hold securities, and at such meeting shall possess and may
exercise any and all rights and powers incident to being a holder
of such securities, and (ii) execute and deliver waivers of
notice and proxies for and in the name of this Corporation with
respect to securities of any such corporation held by this
Corporation.
(d) The President shall, unless the Board of Directors
otherwise provides, be an ex officio member of all standing
committees.
(e) The President shall perform such other duties and have
such other powers, responsibilities and authority as may be
prescribed elsewhere in these Bylaws or from time to time by the
Board of Directors.
(f) If a Chairman of the Board is elected and designated as
the chief executive officer of the Corporation, as provided in
Section 4.7 of these Bylaws, the President shall perform such
duties and have such powers, responsibilities and authority as
may be specifically delegated to the President by the Board of
Directors or are conferred by law exclusively upon the President
and, in the absence or disability of the Chairman of the Board or
in the event of the Chairman of the Board's inability or refusal
to act, the President shall perform the duties and exercise the
powers of the Chairman of the Board.
Section 4.9 Executive Vice Presidents and Vice Presidents. In
the absence or disability of the President, or in the event of
the President's inability or refusal to act, any Executive Vice
President or Vice President may perform the duties and exercise
the powers of the President, including presiding at meetings of
the stockholders of the Corporation and meetings of the Board of
Directors in the absence of the Chairman of the Board, until the
Board of Directors otherwise provides. Executive Vice Presidents
and Vice Presidents shall perform such other duties and have such
other powers, responsibilities and authority as the Board of
Directors may from time to time prescribe.
Section 4.10 Secretary and Assistant Secretaries.
(a) The Secretary shall attend all meetings of the Board of
Directors and, except as otherwise provided for in Section 2.5 of
these Bylaws, all meetings of the stockholders. The Secretary
shall prepare minutes of all proceedings at such meetings and
shall preserve them in a minute book of the Corporation. The
Secretary shall perform similar duties for each standing or
temporary committee when requested by the Board of Directors or
such committee.
(b) The Secretary shall see that all books, records, lists
and information, or duplicates, required to be maintained at the
registered or other office of the Corporation in the State of
Missouri, or elsewhere, are so maintained.
(c) The Secretary shall keep in safe custody the seal of
the Corporation, and shall have authority to affix the seal of
the Corporation to any instrument requiring a corporate seal and,
when so affixed, the Secretary may attest the seal by the
Secretary's signature.
(d) The Secretary shall have the general duties, powers,
responsibilities and authority of a secretary of a corporation
and shall perform such other duties and have such other powers,
responsibilities and authority as may be prescribed elsewhere in
these Bylaws or from time to time by the Board of Directors or
the chief executive officer of the Corporation, under whose
direct supervision the secretary shall be.
(e) In the absence or disability of the Secretary or in the
event of the Secretary's inability or refusal to act, any
Assistant Secretary may perform the duties and exercise the
powers of the Secretary until the Board of Directors otherwise
provides. Assistant Secretaries shall perform such other duties
and have such other powers, responsibilities and authority as the
Board of Directors may from time to time prescribe.
Section 4.11 Treasurer and Assistant Treasurers.
(a) The Treasurer shall have responsibility for the
safekeeping of the funds and securities of the Corporation, shall
keep or cause to be kept full and accurate accounts of receipts
and disbursements in books belonging to the Corporation and shall
keep or cause to be kept all other books of account and
accounting records of the Corporation. The Treasurer shall
deposit or cause to be deposited all moneys and other valuable
effects in the name and to the credit of the Corporation in such
depositories as may be designated by the Board of Directors or by
any officer of the Corporation to whom such authority has been
granted by the Board of Directors.
(b) The Treasurer shall disburse, or permit to be
disbursed, the funds of the Corporation as may be ordered, or
authorized generally, by the Board of Directors, and shall render
to the chief executive officer of the Corporation and the
directors, whenever they may require, an account of all
transactions as treasurer and of those under the Treasurer's
jurisdiction, and of the financial condition of the Corporation.
(c) The Treasurer shall have the general duties, powers,
responsibilities and authority of a treasurer of a corporation
and shall, unless otherwise provided by the Board of Directors,
be the chief financial and accounting officer of the Corporation.
The Treasurer shall perform such other duties and shall have such
other powers, responsibilities and authority as may be prescribed
elsewhere in these Bylaws or from time to time by the Board of
Directors.
(d) If required by the Board of Directors, the Treasurer
shall give the Corporation a bond in a sum and with one or more
sureties satisfactory to the Board of Directors for the faithful
performance of the duties of the Treasurer's office and for the
restoration to the Corporation, in the case of the Treasurer's
death, resignation, retirement or removal from office, of all
books, papers, vouchers, money and other property of whatever
kind in the Treasurer's possession or under the Treasurer's
control which belong to the Corporation.
(e) In the absence or disability of the Treasurer or in the
event of the Treasurer's inability or refusal to act, any
Assistant Treasurer may perform the duties and exercise the
powers of the Treasurer until the Board of Directors otherwise
provides. Assistant Treasurers shall perform such other duties
and have such other powers, responsibilities and authority as the
Board of Directors may from time to time prescribe.
Section 4.12 Duties of Officers May Be Delegated. If any
officer of the Corporation is absent or unable to act, or for any
other reason that the Board of Directors may deem sufficient, the
Board of Directors may delegate, for the time being, some or all
of the functions, duties, powers, responsibilities and authority
of any officer to any other officer, or to any other agent or
employee of the Corporation or other responsible person, provided
a majority of the whole Board of Directors concurs.
ARTICLE V - INDEMNIFICATION
Section 5.1 Indemnification of Directors and Officers. The
Corporation shall be required, to the maximum extent permitted by
the DGCL and the Certificate of Incorporation, to indemnify each
of its directors and officers and any director or officer who is
or was serving at the request of the Corporation as a director,
officer, employee, or agent of another corporation, partnership,
joint venture, trust, limited liability company or other
enterprise against expenses, judgments, fines, settlements, and
other amounts actually and reasonably incurred in connection with
any proceeding arising by reason of the fact that any such person
is or was a director or an officer of the Corporation or is or
was serving at the request of the Corporation as a director,
officer, employee, or agent of another corporation, partnership,
joint venture, trust, limited liability company or other
enterprise.
Section 5.2 Indemnification of Other Agents. The Corporation
may, in its absolute discretion, up to the maximum extent
permitted by the DGCL and the Certificate of Incorporation,
indemnify each person who is not required to be indemnified under
Section 5.1 against expenses, judgments, fines, settlements, and
other amounts actually and reasonably incurred in connection with
any proceeding arising by reason of the fact that any such person
is or was an employee or agent of the Corporation or is or was
serving at the request of the Corporation as a director, officer,
employee, or agent of another corporation, partnership, joint
venture, trust, limited liability company or other enterprise.
Section 5.3 Indemnification of Fiduciaries. The Corporation
shall indemnify any director, officer, employee, or other agent
of the Corporation against expenses, judgments, fines,
settlements, and other amounts actually and reasonably incurred
in connection with any proceeding arising by reason of the fact
that any such person is or was a trustee, investment manager, or
other fiduciary under any employee benefit plan of the
Corporation. The provisions of this Section 5.3 shall be deemed
to constitute a contract between the Corporation and any such
indemnified person, or for the benefit of any such indemnified
person.
Section 5.4 Advances of Expenses. To the extent permitted by
the DGCL and the Certificate of Incorporation, expenses incurred
in defending any proceeding in the case described in Section 5.1
of these Bylaws shall be advanced by the Corporation prior to the
final disposition of such proceeding upon receipt of any
undertaking by or on behalf of such person to repay such amount
if it shall be determined ultimately that he or she is not
entitled to be indemnified by the Corporation.
Section 5.5 Non-Exclusivity. The indemnification and the
advancement of expenses provided by this Article V shall not be
exclusive of any other rights to which those seeking
indemnification or advancement of expenses may be entitled under
any statute, the Certificate of Incorporation, these Bylaws or
any agreement, vote of stockholders or disinterested directors,
policy of insurance or otherwise, both as to action in their
official capacity and as to action in another capacity while
holding their respective offices, and shall not limit in any way
any right which the Corporation may have to provide additional
indemnification with respect to the same or different persons or
classes of persons. The indemnification and advancement of
expenses provided by this Article V shall continue as to a person
who has ceased to serve in a capacity that entitles such person
to indemnity under this Article V (an "Indemnifiable Capacity")
and shall inure to the benefit of the heirs, executors and
administrators of such a person.
Section 5.6 Insurance. Upon resolution passed by the Board of
Directors, the Corporation may purchase and maintain insurance on
behalf of any person who is or was serving in an Indemnifiable
Capacity against any liability asserted against such person and
incurred by such person in any such capacity, or arising out of
such person's status as such, whether or not the Corporation
would have the power to indemnify such person against such
liability under the provisions of this Article V. Notwithstanding
anything in this Article V to the contrary: (i) the Corporation
shall not be obligated to indemnify any person serving in an
Indemnifiable Capacity for any amounts which have been paid
directly to such person by any insurance maintained by the
Corporation; and (ii) any indemnification provided pursuant to
this Article V (A) shall not be used as a source of contribution
to, or as a substitute for, or as a basis for recoupment of any
payments pursuant to, any indemnification obligation or insurance
coverage which is available from any Other Enterprise, and
(B) shall become operative, and payments shall be required to be
made thereunder, only in the event and to the extent that the
amounts in question have not been fully paid by any
indemnification obligation or insurance coverage which is
available from any Other Enterprise.
Section 5.7 Vesting of Rights. The rights granted or created
hereby shall be vested in each person entitled to indemnification
hereunder as a bargained-for contractual condition of such
person's serving or having served in an Indemnifiable Capacity
and, while this Article V may be amended or repealed, no such
amendment or repeal shall release, terminate or adversely affect
the rights of such person under this Article V with respect to
any act taken or the failure to take any act by such person prior
to such amendment or repeal or with respect to any action, suit
or proceeding with respect to such act or failure to act filed
after such amendment or repeal.
Section 5.8 Severability. If any provision of this Article V
or the application of any such provision to any person or
circumstance is held invalid, illegal or unenforceable for any
reason whatsoever, the remaining provisions of this Article V and
the application of such provision to other persons or
circumstances shall not be affected thereby and, to the fullest
extent possible, the court finding such provision invalid,
illegal or unenforceable shall modify and construe the provision
so as to render it valid and enforceable as against all persons
or entities and to give the maximum possible protection to
persons subject to indemnification hereby within the bounds of
validity, legality and enforceability. Without limiting the
generality of the foregoing, if any person who is or was serving
in an Indemnifiable Capacity is entitled under any provision of
this Article V to indemnification by the Corporation for some or
a portion of the judgments, amounts paid in settlement,
attorneys' fees, ERISA excise taxes or penalties, fines or other
expenses actually and reasonably incurred by any such person in
connection with any threatened, pending or completed action, suit
or proceeding (including, without limitation, the investigation,
defense, settlement or appeal of such action, suit or
proceeding), whether civil, criminal, administrative,
investigative or appellate, but not, however, for all of the
total amount thereof, the Corporation shall nevertheless
indemnify such person for the portion thereof to which such
person is entitled.
ARTICLE VI - STOCK
Section 6.1 Payment for Shares of Stock. The Corporation
shall not issue shares of stock of the Corporation except for
money paid, labor done or property actually received or in
consideration of valid bona fide antecedent debts. No note or
obligation given by any stockholder, whether secured by deed of
trust, mortgage or otherwise, shall be considered as payment of
any part or any share or shares, and no loan of money for the
purpose of such payment shall be made by the Corporation.
Section 6.2 Certificates Representing Shares of Stock. The
certificates representing shares of stock of the Corporation
shall be issued in numerical order and shall be in such form as
may be prescribed by the Board of Directors in conformity with
the Certificate of Incorporation, the DGCL or other applicable
law. The issuance of shares shall be entered in the stock books
of the Corporation as they are issued. Such entries shall show
the name and address of the person, firm, partnership,
corporation or association to whom each certificate is issued.
Each certificate shall have printed, typed or written thereon the
name or the person, firm, partnership, corporation or association
to whom it is issued and the number of shares represented
thereby. It shall be signed by the President, an Executive Vice
President or a Vice President and by the Secretary, an Assistant
Secretary, the Treasurer or an Assistant Treasurer of the
Corporation, and sealed with the seal of the Corporation. Any or
all signatures on such certificate may be facsimiles and the seal
may be facsimile, engraved or printed. In case any such officer,
transfer agent or registrar who has signed or whose facsimile
signature has been placed upon any such certificate shall have
ceased to be such officer, transfer agent or registrar before
such certificate is issued, such certificate may nevertheless be
issued by the Corporation with the same effect as if such person
were such officer, transfer agent or registrar at the date of
issue.
Section 6.3 Transfers of Shares - Transfer Agent - Registrar.
Transfers of shares of stock shall be made on the stock record or
transfer books of the Corporation only by the person named in the
stock certificate, or by such stockholder's attorney lawfully
constituted in writing, and upon surrender of the certificate
therefor. The stock record book and other transfer records shall
be in the possession of the Secretary or of a transfer agent for
the Corporation. The Corporation, by resolution of the Board of
Directors, may from time to time appoint a transfer agent and, if
desired, a registrar, under such arrangements and upon such terms
and conditions as the Board of Directors deems advisable, but
until and unless the Board of Directors appoints some other
person, firm or corporation as its transfer agent (and upon the
revocation of any such appointment, thereafter until a new
appointment is similarly made) the Secretary of the Corporation
shall be the transfer agent of the Corporation without the
necessity of any formal action of the Board of Directors, and the
Secretary, or any person designated by the Secretary, shall
perform all of the duties of such transfer agent.
Section 6.4 Closing of Transfer Books. The Board of Directors
shall have power to close the stock transfer books of the
Corporation for a period not exceeding sixty (60) days preceding
the date of any meeting of the stockholders, or the date of
payment of any dividend, or the date for the allotment of rights,
or the date when any change or conversion or exchange of shares
shall go into effect; provided, however, that in lieu of closing
the stock transfer books, the Board of Directors may fix in
advance a date, not exceeding sixty (60) days preceding the date
of any meeting of stockholders, or the date for the payment of
any dividend, or the date for the allotment of rights, or the
date when any change or conversion or exchange of shares shall go
into effect, as a record date for the determination of the
stockholders entitled to notice of, and to vote at, any such
meeting and any adjournment thereof, or entitled to receive
payment of any such dividend, or entitled to any such allotment
of rights, or entitled to exercise the rights in respect of any
such change, conversion or exchange of shares. In such case only
the stockholders who are stockholders of record on the date of
closing of the transfer books or on the record date so fixed
shall be entitled to notice of, and to vote at, such meeting, and
any adjournment thereof, or to receive payment of such dividend,
or to receive such allotment of rights, or to exercise such
rights, as the case may be, notwithstanding any transfer of any
shares on the books of the Corporation after such date of closing
of the transfer books or such record date fixed as aforesaid.
Section 6.5 Lost or Destroyed Certificates. In case of the
loss or destruction of any certificate for shares of stock of the
Corporation, another may be issued in its place upon proof of
such loss or destruction and upon the giving of a satisfactory
bond of indemnity to the Corporation and the transfer agent and
registrar, if any, in such sum as the Board of Directors may
provide; provided, however, that a new certificate may be issued
without requiring a bond when in the judgment of the Board of
Directors it is proper to do so.
Section 6.6 Regulations. The Board of Directors shall have
power and authority to make all such rules and regulations as it
may deem expedient concerning the issue, transfer, conversion and
registration of certificates for shares of stock of the
Corporation, not inconsistent with the DGCL and other applicable
law, the Certificate of Incorporation or these Bylaws.
ARTICLE VII - CORPORATE FINANCE
Section 7.1 Fixing of Capital - Transfers of Surplus. Except
as may be specifically otherwise provided in the Certificate of
Incorporation, the Board of Directors is expressly empowered to
exercise all authority conferred upon it or the Corporation by
any law or statute, and in conformity therewith, relative to:
(a) determining what part of the consideration received for
shares of the Corporation shall be stated capital; (b) increasing
or decreasing stated capital; (c) transferring surplus to stated
capital; (d) transferring stated capital to surplus;
(e) determining the consideration to be received by the
Corporation for its shares; and (f) determining all similar or
related matters; provided, however, that any concurrent action or
consent by or of the Corporation and its stockholders, required
to be taken or given pursuant to the DGCL and other applicable
law, shall be duly taken or given in connection therewith.
Section 7.2 Dividend.
(a) Dividends on the outstanding shares of the Corporation,
subject to the provisions of the Certificate of Incorporation and
the DGCL and other applicable law, may be declared by the Board
of Directors at any meeting. Dividends may be paid in cash,
property or shares of the Corporation's stock.
(b) Liquidating dividends or dividends representing a
distribution of paid-in surplus or a return of capital shall be
made only when and in the manner permitted by law.
(c) A member of the Board of Directors shall be fully
protected in relying in good faith upon the books of account of
the Corporation or statements prepared by any of the
Corporation's officials as to the value and amount of the assets,
liabilities and earnings of the Corporation, or any facts
pertinent to the existence and amount of surplus or other funds
from which dividends might properly be declared and paid.
Section 7.3 Creation of Reserves. Before the payment of any
dividend, there may be set aside out of any funds of the
Corporation available for dividends such sum or sums as the Board
of Directors from time to time deems proper as a reserve fund or
funds to meet contingencies or for equalizing dividends,
repairing or maintaining any property of the Corporation or any
other purpose deemed by the Board of Directors to be conducive to
the interests of the Corporation, and the Board of Directors may
abolish any such reserve in the manner in which it was created.
ARTICLE VIII - GENERAL PROVISIONS
Section 8.1 Fiscal Year. The Board of Directors shall have
power to fix and from time to time change the fiscal year of the
Corporation. In the absence of action by the Board of Directors,
the fiscal year of the Corporation shall end each year on the
date which the Corporation treated as the close of its first
fiscal year, until such time, if any, as the fiscal year shall be
changed by the Board of Directors.
Section 8.2 Corporate Seal. The corporate seal shall have
inscribed thereon the name of the Corporation and the words:
"Corporate Seal - Delaware." The corporate seal may be used by
causing it, or a facsimile thereof, to be impressed or affixed or
in any manner reproduced. As provided in Section 4.10(c) of these
Bylaws, the Secretary of the Corporation shall have the authority
to affix and attest the corporate seal. The Board of Directors
may give general authority to any other officer of the
Corporation to affix the corporate seal and, when so affixed, to
attest the seal by such officer's signature.
Section 8.3 Depositories. The moneys of the Corporation shall
be deposited in the name of the Corporation in such bank or banks
or other depositories as the Board of Directors shall designate,
and shall be drawn out only by check or draft signed by persons
designated by resolution adopted by the Board of Directors.
Notwithstanding the foregoing, the Board of Directors may by
resolution authorize an officer or officers of the Corporation to
designate any bank or banks or other depositories in which moneys
of the Corporation may be deposited, and to designate the persons
who may sign checks or drafts on any particular account or
accounts of the Corporation, whether created by direct
designation of the Board of Directors or by an authorized officer
or officers as aforesaid.
Section 8.4 Amendments of the Bylaws.
(a) The Board of Directors shall have the power to amend
these Bylaws by the vote of a majority of the directors present
at a meeting at which a quorum is then present except that any
amendment to Sections 2.3, 2.8(b), 2.11, 2.13, 3.3, 3.5, 8.4 or
8.5 or Article V of these Bylaws shall require the approval of an
Independent Board Majority.
(b) The holders of the Corporation's capital stock shall
not have the power to amend or replace these Bylaws in whole or
in part unless such amendment or replacement shall be approved by
the holders of at least seventy-five percent (75%) of the issued
and outstanding shares of Common Stock of the Corporation.
Section 8.5 Inconsistent Provisions. The Board of Directors
shall have the authority to interpret these Bylaws and to resolve
any question or issue which may arise under these Bylaws.
Whenever possible, each provision of these Bylaws shall be
interpreted in such manner as to be valid and enforceable under
applicable law and the provision of the Certificate of
Incorporation, but if any provision of these Bylaws shall be held
to be prohibited by or unenforceable under or to be in
irreconcilable conflict with applicable law or the Certificate of
Incorporation, (i) such provision shall be applied to accomplish
the objectives of the provision as originally written to the
fullest extent permitted by law, and (ii) all other provisions of
these Bylaws shall remain in full force and effect.
