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)
Angela F. Braly, Esq.
Executive Vice President, General Counsel and Secretary
RightCHOICE Managed Care, Inc.
1831 Chestnut Street
St. Louis, Missouri 63103
(314) 923-4444
(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 14 Pages
1. Names of Reporting Persons.
Board of Directors of RightCHOICE Managed Care, Inc., but
not in each director's individual capacity.
I.R.S. Identification Nos. of Above Persons (Entities Only)
Not applicable.
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)
Not applicable. See Item 3.
5. Check if Disclosure of Legal Proceedings Is Required
Pursuant to Items 2(d) or 2(e) [ ]
6. Citizenship or Place of Organization
U.S.A.
Number of Shares 7. Sole Voting Power Not applicable.
Beneficially Owned by Each
Reporting Person With
8. Shared Voting Power 14,029,536
9. Sole Dispositive Power Not applicable.
10. Shared Dispositive Power Not applicable.
11. Aggregate Amount Beneficially Owned by Each Reporting
Person
14,029,536
12. Check if the Aggregate Amount in Row (11) Excludes Certain
Shares [ ]
(See Instructions)
13. Percent of Class Represented by Amount in Row (11)
75.2%
14. Type of Reporting Person (See Instructions)
OO
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) The Board of Directors of RightCHOICE Managed Care,
Inc., but not in each member's individual capacity.
(b) 1831 Chestnut Street, St. Louis, Missouri 63103.
(c) Not applicable.
(d) Not applicable.
(e) Not applicable.
(f) Each member of the New RightCHOICE board of
directors is a citizen of the United States.
Item 3. Source and Amount of Funds or Other Consideration.
On November 30, 2000, RightCHOICE Managed Care, Inc., a
Missouri corporation ("Old RightCHOICE"), completed its
reorganization (the "Reorganization") 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 Missouri Foundation For Health (the
"Foundation") and RightCHOICE Managed Care, Inc., a
Delaware corporation ("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"). 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 (which was owned by
the Foundation) 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 approximately 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).
In conjunction with the Reorganization, New RightCHOICE
and the Foundation entered into a 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.
Pursuant to the Voting Trust Agreement, 14,029,536 of the
14,962,500 shares of New RightCHOICE common stock (the
"Trust Shares") that the Foundation received in the
Merger were deposited into a voting trust. The New
RightCHOICE board of directors will direct the trustee of
the voting trust how to vote the Trust Shares, except the
Foundation will direct the trustee how to vote the Trust
Shares in the case of a proposed business combination
transaction involving New RightCHOICE in which the then
existing New RightCHOICE shareholders would own less than
50.1% of the shares of the resulting company. The
information included in Item 6, below, is incorporated by
reference in this Item 3.
Item 4. Purpose of Transaction.
The New RightCHOICE board of directors acquired the power
to direct the vote of the Trust Shares pursuant to the
Voting Trust Agreement referred to in Item 3, above. The
information included in Item 3, above, is incorporated by
reference in this Item 4.
(a)-(j) Not applicable.
Item 5. Interest in Securities of the Issuer.
(a) The Board of Directors of New RightCHOICE, but not
in each director's individual capacity, beneficially
owns 14,029,536 shares of New RightCHOICE common
stock, which is 75.2% of the outstanding shares in
this class. The Board of Directors of New
RightCHOICE, but not in each director's individual
capacity, is deemed to beneficially own the shares
of New RightCHOICE common stock held in voting trust
under the Voting Trust Agreement because the Board
will direct the voting of the shares on certain
matters submitted to a vote of stockholders. The
amount shown does not include shares beneficially
owned by a director in the director's individual
capacity.
(b) Items (7), (8), (9), and (10) on the attached cover
pages are incorporated herein by reference.
(c) The Board of Directors of New RightCHOICE, but not
in each director's individual capacity, has not
engaged in any transactions in the class of
securities reported. 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
(which was owned by the Foundation) was converted
into 14,962,500 shares of New RightCHOICE common
stock. 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. See Item 3, above, and Item 6, below.
(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 2. 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.
As part of the Reorganization, New RightCHOICE and the
Foundation entered into the Voting Trust Agreement
pursuant to which the New RightCHOICE board of directors
acquired the power to direct the vote of the Trust
Shares. The Voting Trust Agreement is described below
and is attached as an Exhibit to this Schedule.
Background
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 2, 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, dated as of November 30, 2000, by and between New
RightCHOICE and the Foundation (the "Registration Rights
Agreement") 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.
Item 7. Material to be Filed as Exhibits.
1. Agreement and Plan of Reorganization, dated as of March 14,
2000, by and among Blue Cross and Blue Shield of Missouri, a
Missouri nonprofit health services corporation, RightCHOICE
Managed Care, Inc., a Missouri corporation, The Missouri
Foundation For Health, a Missouri nonprofit public benefit
corporation, and RightCHOICE Managed Care, Inc., a Delaware
corporation (incorporated by reference to Exhibit 2 of
RightCHOICE Managed Care, Inc.'s Registration Statement on Form S-
4 (File No. 333-34750)).
2. 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.
3. Joint Filing Agreement.
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 11, 2000
Date
/s/ John O'Rourke
Signature
John A. O'Rourke
Chairman and Chief Executive Officer
Name and Title
Exhibit 2
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 3
JOINT FILING AGREEMENT
The undersigned each hereby agree that the Schedule 13D
filed herewith, relating to the common stock, par value $1.00 per
share, of RightCHOICE Managed Care, Inc. a Delaware corporation
("RightCHOICE"), is filed on behalf of each of the undersigned in
their respective capacities as directors of RightCHOICE.
/s/ John O'Rourke Dated: December 11, 2000
John A. O'Rourke
/s/ William H. T. Bush Dated: December 11, 2000
William H. T. Bush
/s/ Earle H. Harbison, Jr. Dated: December 11, 2000
Earle H. Harbison, Jr.
/s/ Robert B. Porter Dated: December 11, 2000
Robert B. Porter, Ph.D
/s/ William J. Schicker Dated: December 11, 2000
William J. Schicker
/s/ Gloria W. White Dated: December 11, 2000
Gloria W. White
