Exhibit 10.11
SHARE ESCROW AGENT AGREEMENT
THIS SHARE ESCROW AGENT AGREEMENT (this "Agreement") is made
and entered into as of November 30, 2000 by and among RightCHOICE
Managed Care, Inc., a Delaware corporation ("RightCHOICE"), and
U.S. Trust Company, National Association, as share escrow agent
(the "Share Escrow Agent").
RECITALS
A. RightCHOICE's Certificate of Incorporation (the
"Certificate") restricts the ability of any Person to
Beneficially Own shares of Capital Stock in excess of the
Ownership Limit.
B. Any Transfer that, if effective, would result in a violation
of the Ownership Limit will also result in the creation of Excess
Shares pursuant to the Certificate.
C. RightCHOICE desires to provide for the escrow of Excess
Shares in accordance with the Certificate.
D. The Share Escrow Agent has agreed to act as share escrow
agent for RightCHOICE in connection with the Excess Shares.
AGREEMENT
In consideration of the foregoing, and other good and
valuable consideration, the parties agree as follows:
1. Capitalized Terms. All capitalized terms used but not
defined herein have their respective meanings as set forth in the
Certificate.
2. Excess Shares Escrow. If RightCHOICE at any time determines
that a Transfer has taken place such that a Person Beneficially
Owns shares of Capital Stock in excess of the Ownership Limit, or
that an Excess Owner intends to acquire or has attempted to
acquire Beneficial Ownership of any shares of Capital Stock in
excess of the Ownership Limits, RightCHOICE shall 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 RightCHOICE. Excess
Shares so held or deemed held by the Share Escrow Agent shall be
issued and outstanding shares of Capital Stock.
3. Excess Dividends Escrow. The Share Escrow Agent, as record
holder of all Excess Shares, is entitled to receive all Excess
Share Dividends as may be declared by the Board of Directors of
RightCHOICE and shall hold all Excess Share Dividends until
disbursed in accordance with the provisions of Section 7. The
Share Escrow Agent also agrees to hold in escrow, subject to the
provisions of this Agreement, any amounts it receives from
RightCHOICE or any Excess Owner in respect of Excess Share
Dividends.
4. Liquidation of RightCHOICE. In the event of any voluntary or
involuntary liquidation, dissolution or winding up of, or any
distribution of the assets of, RightCHOICE, 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 RightCHOICE that is 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 7.
5. Voting of Excess Shares. The Share Escrow Agent shall be
entitled to vote all Excess Shares. The Share Escrow Agent shall
vote, consent or assent the Excess Shares as follows:
(a) to vote in favor of each nominee to the Board of Directors
of RightCHOICE whose nomination has been approved by an
Independent Board Majority and to vote against any candidate for
the Board of Directors of RightCHOICE 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 RightCHOICE, (i) to vote against
removal of any director of RightCHOICE, (ii) to vote against any
Change of the Bylaws of RightCHOICE or the Certificate, (iii) not
to nominate any candidate to fill any vacancy of the Board of
Directors of RightCHOICE, (iv) not to call any special meeting of
the stockholders of RightCHOICE, 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 5(a) of
this Agreement or this Section 5(b);
(c) to the extent not covered by Section 5(a) or Section 5(b)
hereof, on any action, proposal or resolution requiring the
approval of the Board of Directors of RightCHOICE as a
prerequisite to entitle the stockholders of RightCHOICE 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 Section 5(a), Section 5(b) or
Section 5(c) hereof, to vote as recommended by the Board of
Directors of RightCHOICE.
RightCHOICE shall provide the Share Escrow Agent with the
information necessary for the Share Escrow Agent to determine how
to vote the Excess Shares pursuant to this Section 5. If any
calculation of votes under Section 5(c) hereof would require a
fractional vote, the Share Escrow Agent shall vote the next lower
number of whole Excess Shares. At such shareholders' meeting
RightCHOICE shall inform the Share Escrow Agent of how the other
shares of Capital Stock were cast for purpose of determining how
the Share Escrow Agent shall vote the Excess Shares. The Share
Escrow Agent shall use all reasonable commercial efforts to
ensure, with respect to the Excess Shares, that such Excess
Shares are counted as being present for the purpose of any quorum
required for shareholder action of RightCHOICE and to vote as set
forth above, provided, that it receives reasonable prior written
notice from RightCHOICE of any such opportunities to vote the
Excess Shares. For purposes hereof, written notice given to the
Share Escrow Agent with respect to voting of Excess Shares in
accordance with applicable state and federal laws, as well as the
Certificate and Bylaws of RightCHOICE, shall be deemed
reasonable.
6. Sales of Excess Shares. 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 RightCHOICE and provided by
RightCHOICE to the Share Escrow Agent in writing. The Share
Escrow Agent shall have the right to take such actions as
RightCHOICE shall deem appropriate to ensure that sales of Excess
Shares shall be made only to Permitted Transferees. 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 the
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. 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
sales cease to be Excess Shares and shall become regular shares
of Capital Stock in the class to which 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.
7. Distributions From Excess Shares Sold. The proceeds from
the sale of the Excess Shares to a Permitted Transferee and any
Excess Share Dividends shall be distributed as follows: (a)
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 RightCHOICE;
(b) second, to RightCHOICE for all costs and expenses incurred by
RightCHOICE 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 RightCHOICE in connection with
the Excess Shares, including any litigation costs and expenses,
and all funds expended by RightCHOICE 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 (c) third, the remainder thereof (as the case may be) to the
Excess Owner; provided, however, if RightCHOICE 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, RightCHOICE
nor anyone else shall have the obligation to disburse proceeds
for those shares until the Share Escrow Agent is provided with
such evidence as RightCHOICE shall deem necessary to determine
the parties who shall be entitled to such proceeds.
8. Escrow Account. The Share Escrow Agent shall maintain an
escrow account designated as RightCHOICE Managed Care, Inc.--
Share Escrow Account (the "Escrow Account"). The Share Escrow
Agent shall deposit all checks and other payments received from
RightCHOICE, Excess Owners or other Persons pursuant to this
Agreement into the Escrow Account.
9. Deposit of Funds.
(a) RightCHOICE will direct each Permitted Transferee to make
payment by (i) delivery to the Share Escrow Agent of a personal,
certified or official bank check, and made payable to "U.S. Trust
Company, N.A. for RightCHOICE Managed Care, Inc. -- Share Escrow
Account" or (ii) a bank wire transfer to the Escrow Account
pursuant to instructions to be agreed to by the parties.
(b) The Share Escrow Agent will promptly notify RightCHOICE of
the deposit of any funds into the Escrow Account.
10. Termination Date. Subject to the rights of the Share Escrow
Agent under Sections 13 and 21, which shall continue beyond the
termination of this Agreement, this Agreement shall terminate
upon RightCHOICE's delivery of a written notice to the Share
Escrow Agent to such effect.
11. Investment of Escrow Property. The Share Escrow Agent shall
promptly invest any escrowed proceeds in shares of a money market
mutual fund or other collective investment fund registered under
the Investment Company Act of 1940, as amended, whose shares are
registered under the Securities Act of 1933, as amended, and
having a rating of AAA by Standard & Poor's or Moody's Investor
Service. The Share Escrow Agent and its affiliates may act as
agent, principal sponsor, or depositary, with respect to any such
investment. The Share Escrow Agent shall in no event be liable
for any loss resulting from the performance of any funds invested
pursuant to this Section 11. Interest on proceeds invested
pursuant to this Section 11 shall accrue from the date of
investment of such proceeds until the termination of such
investment pursuant to the terms hereof and shall be paid as set
forth in Section 7 and shall be taxable to the Excess Owner. The
Share Escrow Agent shall not have any obligations with respect to
any tax obligations that may arise under this Section 11.
12. Collections. The Share Escrow Agent shall be under no duty
or responsibility to enforce collection of any checks or other
instruments delivered to the Share Escrow Agent hereunder. The
Share Escrow Agent shall promptly notify RightCHOICE if any check
or instrument received from any Permitted Transferee shall be
dishonored, not accepted or paid, or otherwise uncollectible. The
Share Escrow Agent may recover any costs or expenses incurred in
connection with such transaction from the applicable Permitted
Transferee or RightCHOICE.
13. Fees. The Share Escrow Agent shall provide all
administrative and reporting services contemplated by this
Agreement. The Share Escrow Agent's fees and expenses shall be as
set forth on Exhibit A or as otherwise provided herein or
therein. RightCHOICE shall pay such fees and expenses upon
execution of this Agreement, or as otherwise provided in
Exhibit A. The Share Escrow Agent shall send RightCHOICE a final
invoice after closing of the escrow covering all out-of-pocket
expenses or any other extraordinary services rendered.
14. Consultation with Counsel. The Share Escrow Agent may
consult with legal counsel, at the expense of RightCHOICE (which
expenses shall be reasonable), in the event of any dispute or
question as to the consideration of the foregoing instructions or
the Share Escrow Agent's duties hereunder, and the Share Escrow
Agent shall incur no liability and shall be fully protected in
acting in good faith in accordance with the opinion or advice of
such counsel.
15. Notices. All notices, communications and instructions
required or desired to be given hereunder shall be in writing
(including facsimile) and shall be given to such party, addressed
to it, at its address and facsimile number set forth below or to
such other address or facsimile number as such party may have
furnished to the other parties in the manner for giving notices
hereunder. Each such notice, communication or instruction shall
be effective (i) if given by mail, five days after such
communication is deposited in the mails with first-class postage
prepaid addressed as aforesaid, (ii) if sent by facsimile to the
facsimile number set forth below, when such facsimile is
transmitted and its receipt is acknowledged, or (iii) if given by
any other means, when delivered at the address specified below,
If to RightCHOICE, to: Angela F. Braly, Esq.
Executive Vice President and General Counsel
RightCHOICE Managed Care, Inc.
1831 Chestnut Street
St. Louis, Missouri 63103
Telephone No.: (314) 923-4444
Facsimile No.: (314) 923-8958
If to the Share Escrow Agent, to: U.S. Trust Company, N.A.
515 South Flower Street, Suite 2700
Los Angeles, California 90071
Attention: Sandra Leess
Telephone No.: (213) 861-5000
Facsimile No.: (213) 488-1370
16. Limited Duties.
(a) The duties and responsibilities of the Share Escrow Agent
shall be limited to those expressly set forth in this Agreement;
provided, however, that this Agreement may be amended at any time
or times by an instrument in writing signed by all the then
parties in interest.
(b) The Share Escrow Agent is authorized, in its sole
discretion, to disregard any and all notices or instructions
given by any Person except only such notices or instructions
provided by RightCHOICE or as otherwise hereinabove provided or
an order or process of any court entered or issued with or
without jurisdiction. If any property subject hereto is at any
time attached, garnished or levied upon under any court order or
in case any order, judgment or decree which the Share Escrow
Agent is advised by legal counsel of its own choosing is binding
upon it, and further, if the Share Escrow Agent complies with any
such order, writ, judgment or decree it shall not be liable to
RightCHOICE or to any other Person by reason of such compliance
even though such order, writ, judgment or decree may be
subsequently reversed, modified, annulled, set aside or vacated.
(b) The Share Escrow Agent shall not be responsible for the
sufficiency or accuracy of the form, execution, validity or
genuineness of documents, or securities now or hereafter
deposited hereunder, or of an endorsement thereon, or for any
lack of endorsement thereon, for any description therein, nor
shall the Share Escrow Agent be responsible or liable in any
respect on account of the authority or rights of the Persons
executing or delivering or purporting to execute or deliver any
such document, security or endorsement.
(c) The Share Escrow Agent shall not be responsible in any
manner whatsoever for the recitals made herein. It is the
intention of the parties hereto that the Share Escrow Agent shall
not be required to use or advance its own funds or otherwise
incur personal financial liability in the performance of any of
its duties or the exercise of any rights and powers hereunder.
(d) The Share Escrow Agent is not a party to, nor is it bound by
nor need it give consideration to the terms or provisions of, any
other agreement or undertaking between RightCHOICE and other
Persons, and the Share Escrow Agent is to give consideration only
to the terms and provisions of this Agreement and, to the extent
referred to herein, the Certificate. The Share Escrow Agent's
only duties hereunder are to safeguard the Excess Shares and any
monies held in escrow, to vote such shares as provided herein and
to dispose of and deliver the same in accordance with this
Agreement and, to the extent referred to herein, the Certificate.
If the Share Escrow Agent is called upon by the terms of this
Agreement to determine the occurrence of any event or
contingency, the Share Escrow Agent shall be obligated in making
such determination, only to exercise reasonable care and
diligence, and, in the event of error in making such
determination, the Share Escrow Agent shall be liable only for
its own intentional misconduct or grossly negligent conduct, and
it shall, accordingly, not incur any such liability with respect
to any action taken or omitted in good faith upon advice of its
counsel given in respect to any questions relating to the duties
and responsibilities of the Share Escrow Agent under this
Agreement. In determining the occurrence of any such event or
contingency, the Share Escrow Agent may request from RightCHOICE
or any other Person such additional evidence as the Share Escrow
Agent in its sole discretion may deem necessary to determine any
fact relating to the occurrence of such event or contingency and,
in this connection, may inquire and consult with its counsel and,
among others, with RightCHOICE at any time, and the Share Escrow
Agent shall not be liable for any damages resulting from its
reasonable delay in acting hereunder pending its examination of
the additional evidence requested by it.
(e) In the event of any disagreement between the parties to this
Agreement, or between any of them and any other Person, resulting
in adverse claims or demands being made in connection with the
matters covered by this Agreement, or in the event that the Share
Escrow Agent, in good faith, be in doubt as to what action it
should take hereunder, the Share Escrow Agent may at its option,
refuse to comply with any claims or demands on it, or refuse to
take any other action hereunder, so long as such disagreement
continues or such doubt exists, and in any such event, the Share
Escrow Agent shall not be or become liable in any manner to any
Person for its failure or refusal to act, and the Share Escrow
Agent shall be entitled to continue to refrain from acting until:
(i) the rights of all interested parties shall have been fully
and finally adjudicated by a court of competent jurisdiction; or
(ii) all differences shall have been adjudged and all doubt
resolved by agreement among all of the interested Persons, and
the Share Escrow Agent shall have been notified thereof in
writing signed by all such Persons. Notwithstanding the
preceding sentence, the Share Escrow Agent may in its discretion
obey the order, judgment, decree or levy of any court, whether
with or without jurisdiction, or of any agency of the United
States or any political subdivision thereof, and the Share Escrow
Agent is hereby authorized to obey such orders, judgments,
decrees or levies. The rights of the Share Escrow Agent under
this subsection are cumulative of all other rights which it has
by law or otherwise.
(f) Should any controversy arise between the parties hereto with
respect to this Agreement or with respect to the right of
RightCHOICE to receive the Excess Shares or any monies held in
escrow, the Share Escrow Agent shall have the right to institute
a bill of interpleader in any court of competent jurisdiction to
determine the rights of the parties. Should a bill of
interpleader be instituted, or should the Share Escrow Agent
become involved in litigation in any manner whatsoever on account
of this Agreement for the deposits made hereunder, RightCHOICE
hereby binds and obligates itself, its successors and assigns, to
pay the Share Escrow Agent, in addition to any charges made
hereunder for acting as Share Escrow Agent, reasonable attorneys'
fees incurred by the Share Escrow Agent, and any other reasonable
disbursements, expenses, losses, costs and damages in connection
with and resulting from such litigation, except in the case where
losses or damages result from the Share Escrow Agent's
intentional misconduct or gross negligence.
(g) Without in any way limiting any other provision of this
Agreement, it is understood and agreed that the Share Escrow
Agent shall be under no duty or obligation to give any notice,
except as expressly provided herein.
(h) The Share Escrow Agent shall not be liable for any error in
judgment or any act or steps taken or permitted to be taken in
good faith, or for anything it may do or refrain from doing in
connection herewith, except for its own intentional misconduct or
grossly negligent conduct.
(i) In no event shall the Share Escrow Agent be liable for
special, indirect or consequential loss or damage of any kind
whatsoever (including but not limited to lost profits), even if
the Share Escrow Agent has been advised of the likelihood of such
loss or damage and regardless of the form of action, except for
consequential loss or damage arising out of the Share Escrow
Agent's own intentional misconduct or grossly negligent conduct.
17. Records. The Share Escrow Agent shall maintain accurate
records of all transactions hereunder. Promptly after the
termination of the Escrow Account, or as may reasonably be
requested by RightCHOICE from time to time before such
termination, the Share Escrow Agent shall provide RightCHOICE
with a complete copy of such records, certified by the Share
Escrow Agent to be a complete and accurate account of all such
transactions. The authorized representatives of RightCHOICE shall
also have access to such books and records at all reasonable
times during normal business hours upon reasonable notice to the
Share Escrow Agent.
18. Governing Law; Binding. This Agreement is being made in, is
governed by and is intended to be construed according to the laws
of the State of Delaware. It shall inure to and be binding upon
the parties hereto, their successors and assigns.
19. Severability. In case any one or more of the provisions
contained in this Agreement shall for any reason be held to be
invalid, illegal or unenforceable in any respect, such
invalidity, illegality or unenforceability shall not affect any
other provisions of this Agreement, but this Agreement shall be
construed as if such invalid, illegal or unenforceable provision
had never been contained herein.
20. Time. Whenever under the terms of this Agreement the
performance date of any provision hereof shall fall on a day
which is not a legal banking day, and upon which the Share Escrow
Agent is not open for business, the performance thereof on the
next succeeding business day of the Share Escrow Agent shall be
deemed to be in full compliance.
21. Indemnification. The Share Escrow Agent shall be indemnified
and held harmless by RightCHOICE, from and against any expenses,
including reasonable counsel fees and disbursements, or loss
suffered by the Share Escrow Agent in connection with any claim
or demand, which, in any way, directly or indirectly, arises out
of or relates to this Agreement or the services of the Share
Escrow Agent hereunder except in the case of gross negligence or
intentional misconduct under this Agreement by the Share Escrow
Agent. Promptly after the receipt by the Share Escrow Agent of
notice of any demand or claim or the commencement of any action,
suit or proceeding, the Share Escrow Agent shall notify
RightCHOICE in writing.
22. Successors. The Share Escrow Agent may be merged or
consolidated with or into any entity or transfer all or
substantially all of its assets to any entity, in which case, any
entity resulting from any merger or consolidation or any entity
succeeding to the business of the Share Escrow Agent, shall be
successor of the Share Escrow Agent hereunder without the
execution or filing of any paper or further act by any of the
parties hereto. In case at any time the Share Escrow Agent or its
legal successor or successors should become unable, through
operation of law or otherwise, to act as Share Escrow Agent, or
if its properties and affairs shall be taken under the control of
any court or administrative body because of insolvency or
bankruptcy or for any other reason, a vacancy shall forthwith and
ipso facto exist in the office of the Share Escrow Agent, a
successor Share Escrow Agent shall be appointed by RightCHOICE.
RightCHOICE may be merged or consolidated with or into any entity
or transfer all or substantially all of its assets to any entity,
in which case, any entity resulting from any merger or
consolidation or any entity succeeding to the business of
RightCHOICE, shall be successor of RightCHOICE hereunder without
the execution or filing of any paper or further act by any of the
parties hereto.
23. Resignation. The Share Escrow Agent may resign at any time
upon thirty (30) days' prior written notice to RightCHOICE,
whereupon RightCHOICE shall appoint a substitute Share Escrow
Agent and the Share Escrow Agent shall deliver the Excess Shares
and monies held in escrow to any designated substitute Share
Escrow Agent selected by RightCHOICE. If RightCHOICE does not
designate a substitute Share Escrow Agent within ten (10) days,
the Share Escrow Agent may, in its sole discretion, institute a
bill of interpleader as contemplated herein or otherwise submit
appropriate pleadings. Notwithstanding the immediately preceding
sentence, until a substitute Share Escrow Agent has been named
and accepts its appointment or until another disposition of the
Excess Shares and monies held in the Escrow Account has been
agreed upon by all the parties hereto, the Share Escrow Agent
shall be discharged of all of its duties and obligations
hereunder except to hold such Excess Shares and monies in escrow.
24. Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original and all
of which shall constitute but one and the same instrument.
25. No Fiduciary Duty to Purported Holders. The Share Escrow
Agent shall not be deemed to be a fiduciary or agent of any
Purported Holder or other Person other than RightCHOICE.
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next page]
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their respective duly authorized
officers, as of the date first above written.
RIGHTCHOICE MANAGED CARE, INC.
By: /s/ John A. O'Rourke
Name: John A. O'Rourke
Title: President
U.S. TRUST COMPANY, NATIONAL
ASSOCIATION
By: /s/ Sandra H. Leess
Name: Sandra H. Leess
Title: Senior Vice President
EXHIBIT A
ACCEPTANCE FEE $500
For review and complete analysis of the escrow agreement and
amendments thereto, meetings and conferences with all parties,
execution of documents, and opening of required accounts.
ADMINISTRATIVE FEE $2,500
For normal administrative functions as specified in the
agreement, including maintenance of administrative records and
custody of shares. Any extraordinary services will be charges
based on our appraisal of the services rendered.
OTHER CHARGES
Stock Transactions $.25 cents per share
($275 minimum)
Purchase, sales, maturity or redemption of securities $35.00
Wire transfers $25 per wire transfer
Out-of-pocket expenses and disbursements At Cost
Includes expenses incurred on the issuer's behalf such
as postage, telephone, insurance, express mail and
messenger charges, travel expenses to attend the
closing or other meetings, etc.
Tax preparation fee $500.00 per year
Charges for any services not specifically covered in this
schedule will be billed commensurate with the services rendered.
This schedule reflects charges which are not in effect for our
normal and regular services and are minimal only, subject to
modification where unusual conditions or requirements prevail,
and does not include counsel fees or expenses and disbursements,
which will be billed at cost, if applicable. The fees of our
counsel shall be due and payable whether or not the transaction
closes.
