Exhibit 10.3
MISSOURI BLUE CROSS/BLUE SHIELD LICENSE ADDENDUM
Blue Cross and Blue Shield Association (the "National
Association") and RightCHOICE Managed Care, Inc. ("RightCHOICE")
have entered into this License Addendum ("this Addendum") as of
November 30, 2000 (the "date hereof").
Whereas: The National Association is an association of
independent members. The National Association licenses to each
member the right to use the "Blue Cross" and/or "Blue Shield"
names under which the member provides health care benefits in the
state or other service area to which the license applies. The
rights licensed by the National Association are herein
collectively called the "Blue Cross/Blue Shield Licensed Rights."
Whereas: Each member's right to continue to use the
Blue Cross/Blue Shield Licensed Rights and to remain a member of
the Association is conditioned upon that member's remaining in
compliance with membership standards and requirements established
by the National Association.
Whereas: It is fundamental to the integrity of the
National Association that each member remain independent of any
control or influence by any particular economic interest or other
special interest which might impair its ability to (i) exercise
independent judgment as to the programs which will best meet the
needs of the communities in the state or area for which it is
responsible or (ii) function as an integral part of a unique
system that depends on cooperative efforts of independent members
to provide Blue Cross/Blue Shield coverage on a nationwide basis.
Whereas: Blue Cross and Blue Shield of Missouri
(which is called the "Old Parent" in this Addendum) has served as
the primary licensee authorized by the National Association to
provide health care benefits in a service area within the State
of Missouri established by licenses granted by the National
Association to the Old Parent (the "Missouri Service Area"). The
Old Parent was originally organized as a nonprofit health
services corporation incorporated in Missouri.
Whereas: The Board of Directors of the Old Parent has
approved a series of related actions (herein collectively called
the "Missouri Reorganization") that are designed, among other
things, to change the member holding the primary license for the
provision of Blue Cross and Blue Shield health care benefits in
the Missouri Service Area to an investor-owned corporation.
Whereas: RightCHOICE has been incorporated in Delaware
for the purpose of taking the place of the Old Parent as the
member primarily licensed to provide health care benefits in the
Missouri Service Area under the Blue Cross/Blue Shield Licensed
Rights after completion of the Missouri Reorganization.
Whereas: Immediately prior to the Missouri
Reorganization, Old Parent owned approximately (and not more
than) 80.5% of the common stock of a for-profit corporation
incorporated in Missouri under the name "RightCHOICE Managed
Care, Inc." ("Old RightCHOICE"). The balance of the common stock
in Old RightCHOICE was owned by other investors (the "RightCHOICE
Public Stockholders") and was publicly traded on the New York
Stock Exchange. Old RightCHOICE operated under the Blue Cross
and Blue Shield names under a controlled affiliate license
granted by the National Association by reason of Old
RightCHOICE's position as a subsidiary controlled by the Old
Parent.
Whereas: The Missouri Reorganization was consummated
on the date hereof and included among other things the following
actions: (i) Old Parent converted into a Missouri for-profit
stock corporation and issued common stock representing complete
ownership of Old Parent to a nonprofit public benefit corporation
incorporated in Missouri in connection with the Missouri
Reorganization which has the name "The Missouri Foundation for
Health" and is called the "Foundation" in this Addendum; (ii) Old
Parent merged into RightCHOICE; and (iii) in a subsequent merger
(the "Consummating Merger") Old RightCHOICE merged into
RightCHOICE. As a result of the Consummating Merger,
approximately (and not less than) 19.5% of the Right Choice
common stock outstanding immediately after the Consummating
Merger was owned by the RightCHOICE Public Stockholders and the
remaining RightCHOICE common stock was owned by the Foundation.
Whereas: The National Association permits a member to
convert to investor-owned status only if the member has in place
safeguards designed to protect the member's independence
including safeguards designed to prevent any institutional
investor from acquiring a 10% or higher voting interest in the
member, to prevent any other investor from acquiring a 5% or
higher voting interest in the member, and to prevent any investor
from acquiring a 20% or higher ownership interest in the member.
The Foundation does not qualify as an institutional investor for
purposes of these requirements.
Whereas: The parties to the Missouri Reorganization
recognized that the Missouri Reorganization would provide the
Foundation with an initial ownership interest in RightCHOICE much
larger than permitted by the National Association's license
requirements applicable to investor-owned members and requested
that the National Association: (i) grant a temporary exemption
from the ownership concentration limit to provide the Foundation
with time to sell its ownership in RightCHOICE to buyers whose
ownership is below the National Association's limits cited in the
preceding paragraph in an orderly manner though a series of
underwritten public offerings or by other appropriate means; (ii)
admit RightCHOICE as a member of the National Association; (iii)
issue RightCHOICE Primary Licenses permitting RightCHOICE to use
the names "Blue Cross" and "Blue Shield" and various other Blue
Cross/Blue Shield Licensed Rights in the Missouri Service Area;
and (iv) issue controlled affiliate licenses to certain
affiliates controlled by RightCHOICE permitting them to utilize
various Blue Cross/Blue Shield Licensed Rights.
Whereas: The National Association agreed to grant the
waiver and take the other actions specified in the preceding
paragraph subject to the following conditions: (i) a package of
safeguards be instituted in RightCHOICE's Charter and Bylaws and
in agreements between RightCHOICE and the Foundation in order
among other things to obtain the Foundation's commitment to sell
down its ownership interest in RightCHOICE by prescribed minimum
amounts by prescribed deadlines and to ensure that RightCHOICE
remains independent of the Foundation during the period the sell
down occurs; (ii) RightCHOICE explicitly agree that the licenses
granted by the National Association to RightCHOICE and its
controlled affiliates will automatically terminate on the terms
specified in this Addendum if RightCHOICE's independence is lost
or jeopardized by the loss of any of the safeguards or by the
failure to observe or enforce any of the safeguards; and (iii)
RightCHOICE provide certain other commitments contained in this
Addendum.
Whereas: The parties have entered into this Addendum
to evidence the waiver granted by the National Association and
the terms subject to which it has been granted.
The parties hereby agree as follows:
1. Waiver. The National Association hereby agrees that
the ownership of RightCHOICE shares by the Foundation in excess
of the number permitted by the RightCHOICE Primary Licenses will
not be deemed to provide grounds for termination of the
RightCHOICE Licenses so long as the conditions specified in Part
2 of this Addendum are satisfied. In order to obtain the waiver
and consent in the preceding sentence, RightCHOICE agrees that
its right to hold and utilize the RightCHOICE Primary Licenses
will at all times be subject to the conditions in Part 2 of this
Addendum and hereby covenants not to take or allow any action (or
to fail to enforce any right or power available to it in any
manner) which could provide grounds for termination of the
RightCHOICE Primary Licenses other than pursuant to clause (d) of
paragraph 10 of the RightCHOICE Primary Licenses.
2. Triggering Events.
2.1 Selldown Commitments: A Triggering Event shall be
deemed to have occurred if without the written consent of the
National Association the Foundation shall Beneficially Own common
stock representing:
(a) more than 80.5% of the outstanding common
stock at any time from and including the date hereof to but not
including the "Three Year Divestiture Deadline", or
(b) 50% or more of the outstanding common stock
at any time from and including the "Three Year Divestiture
Deadline" to but not including the "Five Year Divestiture
Deadline", or
(c) 20% or more of the outstanding common stock
at any time on or after the "Five Year Divestiture Deadline".
The terms "Three Year Divestiture Deadline" and "Five Year
Divestiture Deadline" have the respective meanings set forth in
the Voting Trust and Divestiture Agreement dated the date hereof
among the Foundation, Wilmington Trust Company and RightCHOICE
(herein called the "Voting Trust Agreement") as such terms are
defined therein on the date hereof and without giving effect to
any amendment or supplement to the Voting Trust Agreement.
The term "Selldown Completion Date" shall be deemed to occur
for purposes of this Addendum when the Foundation reduces its
Beneficial Ownership of RightCHOICE common stock to less than 5%
of the outstanding common stock provided that if prior to the
Selldown Completion Date RightCHOICE shall issue any equity
security other than common stock, then the Selldown Completion
Date shall occur when the Foundation reduces its Beneficial
Ownership of RightCHOICE shares to (i) less than 5% of the
outstanding common stock and (ii) less than levels of ownership
of RightCHOICE shares that (but for this Addendum) could provide
a basis for the termination of the RightCHOICE Primary Licenses
as then constituted.
2.2 Standstill Commitment. A Triggering Event shall
be deemed to have occurred if without the written consent of the
National Association the Foundation shall at any time prior to
the Selldown Completion Date become Beneficial Owner of any
RightCHOICE shares except for (i) the common stock issuable to
the Foundation in the Missouri Reorganization and (ii) common
stock issued to the Foundation in connection with stock
dividends, stock splits, recapitalizations and other events in
which the Foundation receives the same consideration per common
share owned prior to such event as every other holder of common
stock and in which the voting power and percentage ownership
interest represented by the Foundation Shares does not increase.
The term "Foundation Shares" whenever it is used in this Addendum
designates and includes all RightCHOICE shares Beneficially Owned
by the Foundation at the time as of which the term shall be
applied.
2.3 Voting Trust. A Triggering Event shall be deemed
to have occurred if at any time prior to the Selldown Completion
Date without the written consent of the National Association:
(a) the Voting Trust Agreement shall be amended,
eliminated or otherwise impaired or any person shall be
permitted, by the ruling of any court or otherwise, to take any
action contrary to any of the terms of the Voting Trust
Agreement;
(b) the Foundation shall breach any of its
covenants in Article V of the Voting Trust Agreement;
(c) the voting trust established by the Voting
Trust Agreement (the "Voting Trust") shall expire or otherwise
cease to exist other than as a result of the termination of the
Voting Trust Agreement pursuant to section 9.01 thereof;
(d) except for the Undeposited Shares, any of the
Foundation Shares shall be voted in any manner contrary to the
express terms in the Voting Trust Agreement;
(e) except for the Undeposited Shares, any of the
Foundation Shares shall not be held on deposit in the Voting
Trust and subject to all of the provisions in the Voting Trust
Agreement from the time the Foundation acquires Beneficial
Ownership of that Share until the earlier of (i) the sale of that
Share in a manner that complies with clause (f) or (ii) the
Selldown Completion Date;
(f) any of the Foundation Shares shall be
withdrawn from the Voting Trust for any reason other than a sale
consummating at the time of such withdrawal that causes the
Foundation to cease to Beneficially Own that share.
The term "Undeposited Shares" means Foundation Shares which
(i) have not been deposited in the voting trust established by
the Voting Trust Agreement and (ii) in the aggregate are at all
times less than 5% of the outstanding common stock of RightCHOICE
and, if RightCHOICE shall issue any equity security other than
common stock, are less than 5% of the outstanding common stock
and less than levels of ownership of RightCHOICE shares that (but
for this Addendum) could provide a basis for termination of the
RightCHOICE Primary Licenses as then constituted.
2.4 Foundation Independence. A Triggering Event shall
be deemed to have occurred if at any time prior to the Selldown
Completion Date without the written consent of the National
Association the Foundation shall not be independent of all
federal, state, local and other governmental authority over its
affairs including any authority over the composition and
membership of its board of directors, other than customary
regulatory powers exercised by the Missouri Attorney General over
similar situated entities, provided that (i) the nomination,
selection and/or election of directors of the Foundation in
accordance with the provisions of the Articles of Incorporation
and Bylaws for the Foundation as constituted on the date hereof
shall not be deemed to breach this Section 2.4 but (ii) the
election or other appointment of any person to the Foundation
Board shall constitute a Triggering Event if that person shall be
an officer, agent, employee or independent contractor of any
governmental authority whatsoever, whether federal, state or
local.
2.5 Impairment of the Permanent Protections. A
Triggering Event shall be deemed to have occurred if at any time
without the written consent of the National Association:
(a) Any person who does not qualify as an
"Independent Director" under RightCHOICE's Charter as constituted
on the date hereof shall be elected or appointed to the
RightCHOICE Board of Directors and immediately after such
election or appointment, less than 80% of the sitting members of
the RightCHOICE Board shall constitute Independent Directors; or
(b) The RightCHOICE Board shall use its
discretionary powers under the RightCHOICE Charter to cause any
person not to constitute a "Major Participant" who would but for
such Board action have constituted a Major Participant under
Article IV Section 4 of the RightCHOICE Charter; or
(c) The RightCHOICE Board shall take any action
that impairs or eliminates RightCHOICE's ability to eliminate any
concentrated ownership of RightCHOICE shares that could provide
grounds for termination of any of the RightCHOICE Licenses
including but not limited to any such action under clause (12) in
the definition of Beneficial Ownership in Section 1 of Article
VII of the RightCHOICE Charter or any such action under Section
15 of Article VII of the RightCHOICE Charter; or
(d) Any of the provisions in Article IV (other
than provisions in Sections 2, 8 and 9 of Article IV), Article
VII, Article VIII, Article X, or Article XII of RightCHOICE's
Charter shall be amended, eliminated or otherwise impaired or any
person shall be permitted, by the ruling of any court or
otherwise, to take any action contrary to the terms of any of
those provisions; or
(e) The RightCHOICE Charter shall be amended to
eliminate, change or impair the language in Article VI that reads
"In no event shall any director be
deemed to breach any fiduciary duty or other obligation owed to
any stockholders of the Corporation or any other person by reason
of (i) his or her failure to vote for (or by reason of such
director's vote against) any proposal or course of action that in
such director's judgment would breach any requirement imposed by
the Blue Cross and Blue Shield Association (or its then
successor) (the ?BCBSA") or could lead to termination of any
license granted by the BCBSA to the Corporation or any subsidiary
or affiliate of the Corporation, or (ii) his or her decision to
vote in favor of any proposal or course of action that in such
director's judgment is necessary to prevent a breach of any
requirement imposed by the BCBSA or could prevent termination of
any license granted by the BCBSA to the Corporation or any
subsidiary or affiliate of the Corporation"; or
(f) Any shares known by RightCHOICE to be Excess
Shares under the terms of Article VII of RightCHOICE's Charter
shall not be voted in accordance with the terms in Section 7 of
Article VII of RightCHOICE's Charter; or
(g) Any of the provisions in Section 2.3, 2.11,
3.5, or 3.6 of RightCHOICE's Bylaws shall be amended, eliminated
or otherwise impaired or any person shall be permitted, by the
ruling of any court or otherwise, to take any action contrary to
the terms of any of those provisions; or
(h) any warranty by RightCHOICE in Section 6.4
shall not be correct (whether or not RightCHOICE or any other
person knew or could have known that such warranty was
incorrect).
2.6 Notice. RightCHOICE shall notify the National
Association in writing immediately after RightCHOICE learns of
any development or state of facts that constitutes a Triggering
Event.
3. Termination Provisions.
3.1 Automatic Termination. Except as otherwise
provided in Section 3.2 or Section 3.3, all RightCHOICE Licenses
shall automatically terminate thirty days after RightCHOICE first
learns of any development or state of facts that constitutes a
Triggering Event under the terms of this Addendum. The
termination of any of the RightCHOICE Licenses under any of the
provisions in this Addendum shall have the consequences
prescribed in paragraphs 11 and 15(d) (including subparagraph
(iii) of paragraph 15(d)) of the RightCHOICE Primary Licenses and
other consequences consistent therewith arising out of the terms
of the RightCHOICE Licenses, this Addendum or other applicable
provisions.
3.2 Waiver Request.
(a) RightCHOICE shall have the right to request
that the National Association grant a waiver to prevent or
reverse an automatic termination under Section 3.1. Any such
request shall (i) describe the Triggering Event, (ii) describe
the action RightCHOICE proposes to take in response to the
Triggering Event, and (iii) describe the action from the National
Association requested by RightCHOICE in connection with the
Triggering Event.
(b) If in connection with any particular
Triggering Event, RightCHOICE shall actually deliver a waiver
request to the National Association in writing on or prior to the
thirtieth day (the "Request Deadline") after RightCHOICE first
learns of the development or state of facts that constitutes that
Triggering Event, then no automatic termination shall become
effective by reason of the occurrence of that particular
Triggering Event until the conclusion of the first meeting of the
members of the National Association that occurs after receipt of
such a waiver request.
(c) If in connection with any particular
Triggering Event, RightCHOICE shall not deliver a waiver request
to the National Association in writing on or prior to the Request
Deadline but shall do so after the Request Deadline, then the
National Association shall have the right to temporarily
reinstate all or any one or more of the RightCHOICE Licenses
effective from the date upon which they would otherwise have
automatically terminated under Section 3.1 upon such terms and
subject to such conditions as the National Association may
prescribe and utilize the procedure prescribed in Section 3.3 to
determine whether the RightCHOICE Licenses shall terminate or
whether an Alternative Outcome shall be prescribed. In no event
shall the National Association be deemed obligated to grant any
such temporary reinstatement and unless the National Association
does so the automatic termination of the RightCHOICE Licenses
effected under Section 3.1 shall be permanent.
3.3 Members' Disposition.
(a) If any automatic termination of the
RightCHOICE Licenses shall have been postponed pursuant to the
provisions of Section 3.2 until a particular meeting of the
members of the National Association, then such automatic
termination shall become effective at the conclusion of that
meeting unless a Double Disinterested Majority in their sole
discretion prescribe an alternative outcome (herein called an
"Alternative Outcome").
(b) The Alternative Outcome may have any terms as
the Double Disinterested Majority shall prescribe and (without
limiting by implication the discretion of such Double
Disinterested Majority) may be (i) an interim outcome (such as
the postponement of a final decision to a subsequent meeting
subject to such conditions as such Double Disinterested Majority
shall prescribe) or (ii) a final outcome in which RightCHOICE's
right to retain the RightCHOICE Licenses may be made subject to
such terms and conditions as the Double Disinterested Majority
may prescribe and in which the terms of those RightCHOICE
Licenses and or this Addendum may be changed in such manner as
the Double Disinterested Majority may prescribe. The Double
Disinterested Majority shall also have the right to delegate to
any committee, group or person the right to establish any of the
terms of an Alternative Outcome, to administer any Alternative
Outcome, and/or to make determinations required under the
Alternative Outcome (such as a determination as to whether
RightCHOICE has satisfied any conditions that may be prescribed
in the Alternative Outcome for the continuation of the
RightCHOICE Licenses).
(c) If RightCHOICE shall be dissatisfied with any
Alternative Outcome, RightCHOICE shall have the right to elect to
have the RightCHOICE Licenses automatically terminate rather than
accept such Alternative Outcome. Unless RightCHOICE shall
expressly agree in writing to the terms of an Alternative Outcome
not later than the Acceptance Deadline, the RightCHOICE Licenses
shall automatically terminate on the Acceptance Deadline. Unless
the Double Disinterested Majority shall prescribe another date,
the Acceptance Deadline for any Alterative Outcome shall be the
third business day after the Double Disinterested Majority
approves the Alterative Outcome.
(d) For purposes of this Agreement, the term
"Double Disinterested Majority" means a majority of the
disinterested members of the National Association and a majority
of the total then current weighted vote of the disinterested
members of the National Association.
3.4 Each Triggering Event Operates Independently.
Each Triggering Event shall operate independently of any other
Triggering Event for purposes of this Addendum. Every Triggering
Event shall constitute a separate and self-sufficient cause for
automatic termination of the RightCHOICE Licenses regardless of
whether any prior occurrence of such event or any other event
shall have been waived absolutely or conditionally. Accordingly
whenever a development occurs or a state of facts exists that
constitutes a Triggering Event under any of the provisions in
Part 2, (i) that development or state of facts shall cause an
automatic termination of the RightCHOICE Licenses under Section
3.1 unless a separate Alternative Outcome shall be separately
approved for that particular Triggering Event under the
provisions of Section 3.3 and (ii) the result prescribed in
clause (i) shall occur regardless of whether one or more
Triggering Events shall have earlier occurred and regardless of
the outcome of any preceding Triggering Event.
3.5 Association's Independent Authority. The National
Association shall have the right and power to make each
determination available to it under this Addendum in such manner
as the National Association shall determine in its sole
discretion and shall not be under any explicit or implicit
obligation to act in any particular manner or to avoid any
particular course of action. Without limiting by implication the
generality of the preceding provisions, in no event shall the
National Association have any duty or obligation (i) to prevent
any automatic termination of the RightCHOICE Licenses or to
approve any Alternative Outcome to any such automatic termination
or (ii) to treat any particular development or circumstances in a
manner consistent with the manner in which the National
Association treated any prior development or circumstances
(whether involving RightCHOICE or any other National Association
member).
4. License Relationships
4.1 This Addendum Controls. The RightCHOICE Primary
Licenses and all other RightCHOICE Licenses granted on or after
the date hereof shall be deemed subject to this Addendum
regardless of whether any such RightCHOICE License explicitly so
states or otherwise refers to this Addendum. In the event there
shall be any conflict between any provision in this Addendum and
any provision in any of the RightCHOICE Licenses, this Addendum
shall control.
4.2 No Other Waiver. Nothing herein shall constitute
a waiver of the National Association's rights to terminate the
RightCHOICE Licenses for any reason allowed under the RightCHOICE
Licenses other than the reason expressly waived in Part 1 of this
Addendum.
4.3 Cancellation of Preceding Licenses. All
agreements, understandings or other circumstances which were made
or arose prior to the date hereof granting Old Parent, Old
RightCHOICE, RightCHOICE or any of their respective subsidiaries,
affiliates or predecessors licenses or rights in the Blue Cross
name or Blue Shield name or other rights licensed by the National
Association are hereby terminated, and neither RightCHOICE, Old
RightCHOICE nor Old Parent nor any of their respective affiliates
shall have any rights under or by reason of such earlier
agreements, understandings or other circumstances. The rights of
RightCHOICE and its subsidiaries and affiliates to use the Blue
Cross name, the Blue Shield name and other rights licensed by the
National Association shall instead be derived from and after the
date hereof exclusively from the RightCHOICE Licenses and related
written agreements granted on or after the date hereof. No rule
of strict construction, rule resolving ambiguities against the
person who drafted the provision giving rise to such ambiguities,
or other such rule of interpretation shall be applied against any
party with respect to this Addendum or any RightCHOICE License.
5. Definitions. The following terms shall have the
following meanings as used herein:
Beneficially Own. The terms "Beneficially Own" and
"Beneficial Owner" each has the meaning it is given in Article
VII of the Charter as constituted on the date hereof. For
purposes of determining the percentage of outstanding shares that
any particular person (including the Foundation) shall be deemed
to Beneficially Own at any particular time, the number of
outstanding shares shall be deemed equal to the number of shares
then actually outstanding plus any shares not then outstanding
that the particular person shall be deemed to Beneficially Own at
that particular time.
Charter. The term "Charter" means RightCHOICE's
Certificate of Incorporation.
Common Share. The term "common share" means a share of
common stock.
Common Stock The term "common stock" means common
stock issued or issuable by RightCHOICE.
RightCHOICE Licenses. The term "RightCHOICE Licenses"
designates and includes both the RightCHOICE Primary Licenses and
any other licenses which shall have been granted by the National
Association to RightCHOICE or to any subsidiary or affiliate of
RightCHOICE and shall be in effect at the time as of which the
term shall be applied. In the event the RightCHOICE Primary
Licenses shall terminate, such termination shall have the effect
of terminating all other RightCHOICE Licenses and terminating the
right of any RightCHOICE subsidiary or affiliate to use the Blue
Cross or Blue Shield name and all other names or rights licensed
from the National Association.
RightCHOICE Primary Licenses. The term "RightCHOICE
Primary Licenses" means (i) the license to use the Blue Cross
name and all other rights granted under or by reason of the Blue
Cross License Agreement dated the date hereof between the
National Association and RightCHOICE and under any amendments or
supplements to, or restatements or replacements of, that
Agreement and (ii) the license to use the Blue Shield name and
all other rights granted under or by reason of the Blue Shield
License Agreement dated the date hereof between the National
Association and RightCHOICE and under any amendments or
supplements to, or restatements or replacements of, that
Agreement.
RightCHOICE Share. The term "RightCHOICE share"
designates and includes a share of common stock or a share (or
other basic unit) of any class, series or kind of any other
equity security which RightCHOICE may at any time issue or be
authorized to issue.
6. Miscellaneous
6.1 Assignment. RightCHOICE shall not assign its
rights or obligations under this Addendum to any other person
without the prior written consent of the National Association.
The National Association shall have the right to assign its
rights under this Addendum to any corporation or other entity
which shall assume any of its responsibility for the Blue Cross
or Blue Shield name or other rights licensed under the
RightCHOICE Primary Licenses. This Addendum and the provisions
hereof shall be binding upon each of the parties, and their
successors and assigns, and shall inure to the benefit of each
party's successors and permitted assignees.
6.2 Amendment. Any term or provision of this Addendum
may be amended, and the observance of any term of this Addendum
may be waived (either generally or in a particular instance and
either retroactively or prospectively) only by a writing signed
by the party to be bound thereby. The failure of any party to
enforce any of the provisions hereof shall not be construed to be
a waiver of the right of such party thereafter to enforce such
provisions. No oral agreement, arrangement or understanding
which might otherwise affect the rights or obligations of any
person under or by reason of this Addendum or any of the
RightCHOICE Licenses shall be effective to change any of the
rights or obligations that would otherwise arise under or by
reason of this Addendum or any of the RightCHOICE Licenses.
6.3 Specific Enforcement. Each of the parties
acknowledges that the other party will be irreparably harmed and
that there will be no adequate remedy at law for a violation of
any of the covenants of the other party set forth herein.
Therefore, it is agreed that, in addition to any other remedies
that may be available to either party to this Addendum in
connection with any such violation or prospective violation, such
party shall have the right to enforce such covenant by specific
performance, by injunctive relief or by any other means available
to such party at law or in equity.
6.4 RightCHOICE Warranties. RightCHOICE warrants to
the National Association that: (i) the Missouri Reorganization
has become effective in Delaware and Missouri on the terms and
with the effect described in the proxy statement/prospectus,
dated October 4, 2000, by RightCHOICE and Old RightCHOICE and
that proxy statement/prospectus does not contain any misstatement
of a material fact or omit any material fact necessary to prevent
any statement made therein from being misleading; (ii)
RightCHOICE provided the National Association prior to the date
hereof with a complete and accurate copy of the Amended and
Restated Settlement Agreement among Old RightCHOICE, the Attorney
General of the State of Missouri, the Missouri Department of
Insurance and Blue Cross and Blue Shield of Missouri as
constituted on the date hereof and all exhibits to that Amended
and Restated Settlement Agreement as constituted on the date
hereof; (iii) the terms of RightCHOICE's Charter, RightCHOICE's
Bylaws, the Voting Trust Agreement and the Registration Rights
Agreement between RightCHOICE and the Foundation and the
Foundation's Articles of Incorporation and Bylaws, all as
constituted immediately after the Missouri Reorganization and as
constituted at the time of the execution and delivery of this
Addendum are identical to the terms of such documents attached to
the Amended and Restated Settlement Agreement cited in clause
(ii) except for those changes provided to the National
Association in writing prior to the date hereof; (iv) the
Foundation has executed and delivered the Voting Trust Agreement
and the Registration Rights Agreement; (v) there are no
agreements or understandings that govern the rights or
obligations of RightCHOICE or the Foundation with respect to each
other except those cited in clause (iii) or disclosed to the
National Association prior to the date hereof; the Amended and
Restated Settlement Agreement and other exhibits to the Amended
and Restated Settlement Agreement; (vi) on the date hereof and
after giving effect to the consummation of the Missouri
Reorganization, the Foundation Beneficially Owns not more than
80.5% of RightCHOICE's outstanding common stock; (vii) on the
date hereof and after giving effect to the consummation of the
Missouri Reorganization, RightCHOICE has no knowledge that any
person other than the Foundation Beneficially Owns more than 5%
of RightCHOICE's outstanding common stock except that Heartland
Advisors, Inc. ("Heartland") Beneficially Owns more than 5% but
less than 10% of RightCHOICE's outstanding common stock; (viii)
Heartland qualifies as an "Institutional Investor" as defined in
the RightCHOICE Primary Licenses; (ix) on the date hereof and
after giving effect to the consummation of the Missouri
Reorganization there are no RightCHOICE shares outstanding other
than common stock and RightCHOICE has no obligation to issue any
RightCHOICE shares other than common stock; and (x) the Board of
Directors of RightCHOICE is on the date hereof comprised
exclusively of the individuals named in the proxy
statement/prospectus cited in clause (i) as the individuals who
will serve on such Board after completion of the Consummating
Merger; and (xi) each of the Board of Directors of the Foundation
and the Community Advisory Committee established for purposes of
the Foundation's Bylaws is on the date hereof comprised
exclusively of the individuals named on a list provided to the
National Association prior to the date hereof as the individuals
who will serve on such Board or Committee after completion of the
Consummating Merger.
6.5 Citations. The citations in this Addendum to
provisions in RightCHOICE's Charter, Bylaws, and Voting Trust
Agreement are to the versions of those documents cited in clause
(iii) of Section 6.4 and in the event the nomenclature used in
such document shall change, then the citation in this Addendum
shall be deemed to refer to the provision in that document having
the same wording as the provision in the original document cited
in clause (iii) of Section 6.4.
6.6 Illinois Law Governs. The internal laws of the
State of Illinois (irrespective of its choice of law principles)
shall govern all issues concerning the validity of this Addendum,
the construction of its terms, and the interpretation and
enforcement of the rights and duties of the parties.
Each of the parties has executed this Addendum to
evidence its agreement to be bound by all of its terms.
Blue Cross and Blue Shield Association
By: /s/ Roger G. Wilson
Name: Roger G. Wilson
Title: Senior Vice President
RightCHOICE Managed Care, Inc.
(a Delaware corporation identified herein
as "RightCHOICE")
By: /s/ John A. O'Rourke
Name: John A. O'Rourke
Title: President
