EXHIBIT 3.1. AMENDED AND RESTATED ARTICLES OF INCORPORATION OF TRIPLE-S
MANAGEMENT CORPORATION.
AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF
TRIPLE-S MANAGEMENT CORPORATION
TRIPLE-S MANAGEMENT CORPORATION, a corporation organized and existing
under the laws of the Commonwealth of Puerto Rico, hereby certifies pursuant to
Article 8.05 of the General Corporation Law of the Commonwealth of Puerto Rico,
as follows:
1. The name of the corporation is Triple-S Management Corporation and
its original Articles of Incorporation were filed with the Secretary of State of
the Commonwealth of Puerto Rico on October 9, 1996, Registration Number 95,905.
2. The Board of Directors of Triple-S Management Corporation at a
meeting duly called and held on March 7, 2006, adopted a resolution proposing
and declaring advisable the following Amended and Restated Articles of
Incorporation which restate, integrate and amend the provisions of the original
Articles of Incorporation of Triple-S Management Corporation in accordance with
Article 8.02(b) of the General Corporation Law of the Commonwealth of Puerto
Rico.
3. That thereafter, pursuant to the resolution of its Board of
Directors, the shareholders of Triple-S Management Corporation at an annual
meeting of shareholders duly called and held on April 30, 2006, approved the
proposed Amended and Restated Articles of Incorporation.
4. The text of the Articles of Incorporation of Triple-S Management
Corporation, as amended, is hereby restated and amended, effective as of the
date of filing of this instrument with the Secretary of State of the
Commonwealth of Puerto Rico, to read in their entirety as follows:
FIRST: The name of this corporation is TRIPLE-S MANAGEMENT CORPORATION.
SECOND: The physical address of the designated office of the Corporation is
1441 F.D. Roosevelt Avenue, San Juan, Puerto Rico 00920.
THIRD: The Corporation's registered agent will be the Corporation itself,
Triple-S Management Corporation. The address of such resident agent is
1441 F.D. Roosevelt Avenue, San Juan, Puerto Rico 00920.
FOURTH: The nature of the business or purposes to be conducted or promoted by
the Corporation is to engage in any lawful act or activity for which
corporations may be organized under the General Corporation Law of the
Commonwealth of Puerto Rico, as from time to time amended (the
"GCLPR").
FIFTH: A. The total number of shares of all classes of stock which the
Corporation shall have authority to issue is two hundred million
(200,000,000) shares, consisting of (a) one hundred million
(100,000,000) shares of common stock, $1.00 par value per share (the
"Common Stock"), and (b) one hundred million (100,000,000) shares of
preferred stock, $1.00 par value per share (the "Preferred Stock").
B. The Board of Directors of the Corporation is hereby expressly
authorized at any time and from time to time to provide for the
issuance of all or any shares of the Preferred Stock in one or more
classes or series, and to fix for each such class or series such
distinctive powers, designations, preferences and relative,
participating, optional or other special rights and such
qualifications, limitations or restrictions thereof, as shall be stated
and expressed in the resolution or resolutions adopted by the Board of
Directors providing for the issuance of such class or series and to the
fullest extent as may now or hereafter be permitted by the GCLPR,
including, without
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limiting the generality of the foregoing, the authority to provide that
any such class or series may be (i) subject to redemption at such time
or times and at such price or prices; (ii) entitled to receive
dividends (which may be cumulative or non cumulative) at such rates, on
such conditions, and at such times, and payable in preference to, or in
such relation to, the dividends payable on any other class or classes
or any other series; (iii) entitled to such rights upon the dissolution
of, or upon any distribution of the assets of, the Corporation; or (iv)
convertible into, or exchangeable for, shares of any other class or
classes of stock, or of any other series of the same or any other class
or classes of stock, or other securities or property, of the
Corporation at such price or prices or at such rates of exchange and
with such adjustments; all as may be stated in such resolution or
resolutions. Unless otherwise provided in such resolution or
resolutions, shares of the Preferred Stock of such class or series
which shall be issued and thereafter acquired by the Corporation
through purchase, redemption, exchange, conversion or otherwise shall
return to the status of authorized but unissued Preferred Stock.
SIXTH: The shares of capital stock of the Corporation shall be subject to the
transfer restrictions set forth in Attachment A to these Articles of
Incorporation. Such transfer restrictions are being adopted in order
for the Corporation to comply with the License Agreement between Blue
Cross and Blue Shield Association (or its then successor) (the "BCBSA")
and the Corporation and related License Agreements between the
subsidiaries of the Corporation and BCBSA.
SEVENTH: A. At every annual or special meeting of shareholders of the
Corporation, every holder of shares of Common Stock shall be entitled
to one (1) vote for each share of Common Stock standing in his or her
name on the books of the Corporation.
B. There shall be no cumulative voting by shareholders of any class or
series of capital stock as may be set forth in the PRGCL or any other
law, regulation, decree or agreement.
EIGHTH: A. The Corporation shall be required, to the maximum extent permitted
by the GCLPR, to indemnify each of its directors, officers and
employees and any director, officer or employee who is or was serving
at the request of the Corporation as a director, officer, employee, or
agent of another corporation, partnership, joint venture, trust,
limited liability company or other enterprise against expenses,
judgments, fines, settlements, and other amounts actually and
reasonably incurred in connection with any proceeding arising due to
the fact that any such person is or was a director, an officer or an
employee of the Corporation or is or was serving at the request of the
Corporation as a director, officer, employee, or agent of another
corporation, partnership, joint venture, trust, limited liability
company or other enterprise.
B. The Corporation may, in its absolute discretion, up to the maximum
extent permitted by the GCLPR, indemnify each person who is not
required to be indemnified under Section A above against expenses,
judgments, fines, settlements, and other amounts actually and
reasonably incurred in connection with any proceeding arising by reason
of the fact that any such person is or was serving or has agreed to
serve the Corporation in any capacity, other than as a director,
officer or employee, to the extent that the Corporation is required or
permitted to indemnify directors, officers or employees under Section A
above.
C. The Corporation shall indemnify any director, officer, employee, or
other agent of the Corporation against expenses, judgments, fines,
settlements, and other amounts actually and reasonably incurred in
connection with any proceeding arising by reason of the fact that any
such person is or was a trustee, investment manager, or other fiduciary
under any employee benefit plan of the Corporation.
D. To the extent permitted by the GCLPR and applicable law, expenses
incurred in defending any proceeding in the case described in Sections
A and C above shall be advanced (and in the case of Section B may be
advanced) by the Corporation prior to the final disposition of such
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proceeding upon receipt of any undertaking by or on behalf of such
person to repay such amount if it shall be determined ultimately that
he or she is not entitled to be indemnified by the Corporation.
Additionally, the Corporation shall reimburse attorneys' fees and other
reasonable related expenses incurred by any person in enforcing such
person's indemnification rights described in Section A above if it
shall ultimately be determined that such person is entitled to such
indemnification by the Corporation.
E. The indemnification and the advancement of expenses provided by this
Article EIGHTH shall not be exclusive of any other rights to which
those seeking indemnification or advancement of expenses may be
entitled under any statute, these Articles of Incorporation, the Bylaws
or any agreement, vote of shareholders or disinterested directors,
policy of insurance or otherwise, both as to action in their official
capacity and as to action in another capacity while holding their
respective offices, and shall not limit in any way any right which the
Corporation may have to provide additional indemnification with respect
to the same or different persons or classes of persons. The
indemnification and advancement of expenses provided by this Article
EIGHTH shall continue as to a person who has ceased to serve in a
capacity that entitles such person to indemnity under this Article
EIGHTH (an "Indemnifiable Capacity") and shall inure to the benefit of
the heirs, executors and administrators of such a person.
F. Upon resolution passed by the Board of Directors, the Corporation
may purchase and maintain insurance on behalf of any person who is or
was serving in an Indemnifiable Capacity against any liability asserted
against such person and incurred by such person in any such capacity,
or arising out of such person's status as such, whether or not the
Corporation would have the power to indemnify such person against such
liability under the provisions of this Article EIGHTH. Notwithstanding
anything in this Article EIGHTH to the contrary: (i) the Corporation
shall not be obligated to indemnify any person serving in an
Indemnifiable Capacity for any amounts which have been paid directly to
such person by any insurance maintained by the Corporation; and (ii)
any indemnification provided pursuant to this Article EIGHTH, (A) shall
not be used as a source of contribution to, or as a substitute for, or
as a basis for recoupment of any payments pursuant to, any
indemnification obligation or insurance coverage which is available
from any other enterprise, and (B) shall become operative, and payments
shall be required to be made thereunder, only in the event and to the
extent that the amounts in question have not been fully paid by any
indemnification obligation or insurance coverage which is available
from any other enterprise.
G. The rights granted or created hereby shall be vested in each person
entitled to indemnification hereunder as a bargained-for contractual
condition of such person's serving or having served in an Indemnifiable
Capacity and, while this Article EIGHTH may be amended or repealed, no
such amendment or repeal shall release, terminate or adversely affect
the rights of such person under this Article EIGHTH with respect to any
act taken or the failure to take any act by such person prior to such
amendment or repeal or with respect to any action, suit or proceeding
with respect to such act or failure to act filed after such amendment
or repeal.
H. If any provision of this Article EIGHTH or the application of any
such provision to any person or circumstance is held invalid, illegal
or unenforceable for any reason whatsoever, the remaining provisions of
this Article EIGHTH and the application of such provision to other
persons or circumstances shall not be affected thereby and, to the
fullest extent possible, the court finding such provision invalid,
illegal or unenforceable shall modify and construe the provision so as
to render it valid and enforceable as against all persons or entities
and to give the maximum possible protection to persons subject to
indemnification hereby within the bounds of validity, legality and
enforceability. Without limiting the generality of the foregoing, if
any person who is or was serving in an Indemnifiable Capacity is
entitled under any provision of this Article EIGHTH to indemnification
by the Corporation for some or a portion of the judgments, amounts paid
in settlement, attorneys' fees, ERISA excise taxes or penalties, fines
or other expenses actually and reasonably incurred by any such person
in connection with any threatened, pending or completed action, suit or
proceeding (including, without limitation, the investigation, defense,
settlement or
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appeal of such action, suit or proceeding), whether civil, criminal,
administrative, investigative or appellate, but not, however, for all
of the total amount thereof, the Corporation shall nevertheless
indemnify such person for the portion thereof to which such person is
entitled.
NINTH: A director of the Corporation shall not be personally liable to the
Corporation or its shareholders for monetary damages for breach of
fiduciary duty as a director, except to the extent such exemption from
liability or limitation thereof is not permitted under the GCLPR. In no
event shall any director be deemed to breach any fiduciary duty or
other obligation owed to any shareholders 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 on the Corporation or any subsidiary or affiliate of the
Corporation by 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. Any
repeal or modification of the foregoing provisions of this Article
NINTH by the shareholders of the Corporation shall not adversely affect
any right or protection of a director of the Corporation existing at
the time of such repeal or modification.
TENTH:
A. The powers of this Corporation are to be exercised by the
nineteen (19) members of the Board of Directors.
B. The Board of Directors is divided into three groups, plus the
President of the Corporation. The first is made up of five (5)
directors, the second group is composed of six (6) directors,
and the third group is made up of seven (7) directors. The
terms of the groups will be placed at intervals, therefore,
the term of the first group of directors will end in the
Shareholders Annual Meeting in the year 2005; the term of the
second group of directors will end in the Shareholders Annual
Meeting in the year 2006 and the term of the third group of
directors will end in the Shareholders Annual Meeting in the
year 2007.
C. The term each group member subsequently elected at the
Shareholders Annual Meeting will occupy will be three (3)
years. Every director will continue with his/her duties until
his/her successor is duly elected and in possession of his/her
position. No director, except the Corporation's President,
while fulfilling said hierarchic duties, may be elected for
more than three (3) terms or serve as such for more than nine
(9) years. The President of the Corporation, which is also a
member of the Board of Directors, is excluded from the
aforementioned groups.
ELEVENTH: The Corporation will exist in perpetuity.
TWELFTH:
The Corporation reserves the right to amend any provision
contained in these Articles of Incorporation, in the manner
now or hereafter prescribed by the GCLPR or other applicable
law and these Articles of Incorporation, and all rights
conferred upon shareholders herein are granted subject to this
reservation; provided, however, that notwithstanding anything
contained in these Articles of Incorporation to the contrary,
(1) the approval of BCBSA (unless each and every License
Agreement with BCBSA to which the Corporation or its
subsidiaries shall be subject shall have been terminated) and
(2) the affirmative vote of the holders of at least
three-fourths (3/4) of the issued and outstanding voting
shares of capital stock of the Corporation (the "Supermajority
Shareholder Vote") shall be required to amend Article SIXTH
(including the provisions of Attachment A hereto), Paragraph B
of Article SEVENTH, Paragraph B of Article TENTH or the BCBSA
approval requirement or the Supermajority Shareholder Vote
requirement set forth in this first provision of Article
TWELFTH; and provided further, however, that (i) the
requirement for Supermajority Shareholder Vote shall become
ineffective and shall be of no further force and effect in the
event that each and every License Agreement with BCBSA to
which the Corporation or its subsidiaries shall be subject
shall have been terminated; and (ii) the Supermajority
Shareholder Vote shall not apply to (1) any amendment to
Article SIXTH (including the provisions of Attachment A
hereto), Paragraph B of Article SEVENTH, Paragraph B of
Article TENTH or the
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BCBSA approval requirement or the Supermajority Shareholder
Vote requirement set forth in the first provision of Article
TWELFTH to conform such Articles to a change to the terms of
any License Agreement, or (2) any amendment to Article SIXTH
(including the provisions of Attachment A hereto), Paragraph B
of Article SEVENTH, Paragraph B of Article TENTH or the BCBSA
approval requirement or the Supermajority Shareholder Vote
requirement set forth in the first provision of Article
TWELFTH required or permitted by the BCBSA (whether or not
constituting a change to the terms of any License Agreement).
The affirmative vote of the holders of at least the percentage
of the issued and outstanding capital stock entitled to vote
thereon required by the GCLPR or other applicable law shall be
required to amend any provisions of these Articles of
Incorporation that shall not require the Supermajority
Shareholder Vote under this Article TWELFTH.
THIRTEENTH:
A. The Bylaws shall govern the management and affairs of the
Corporation, the rights and powers of the directors, officers,
employees and shareholders of the Corporation in accordance
with its terms and shall govern the rights of all persons
concerned relating in any way to the Corporation except that
if any provision in the Bylaws shall be irreconcilably
inconsistent with any provision in these Articles of
Incorporation, the provision in these Articles of
Incorporation shall control.
B. The Board of Directors of the Corporation shall have the
power to amend the Bylaws of the Corporation by the vote of a
majority of the whole Board of Directors of the Corporation.
The shareholders of the Corporation shall not have the power
to amend the Bylaws of the Corporation unless such amendment
shall be approved by the holders of at least a majority of the
then issued and outstanding shares of capital stock entitled
to vote thereon. Notwithstanding anything contained in these
Articles of Incorporation of the Corporation to the contrary,
the approval of BCBSA (unless each and every License Agreement
with BCBSA to which the Corporation or its subsidiaries shall
be subject shall have been terminated) shall be required to
amend Section 5-2, Paragraph D of Section 6-2, Paragraph H of
Section 7-11 and Sub-Section 12 of Section 7-14 of the By-Laws
of the Corporation and the BCBSA approval requirement
contained in this Article THIRTEENTH. For purposes of this
Section B of Article THIRTEENTH, the term "whole Board of
Directors of the Corporation" means the total number of
Directors which the Corporation would have as of the date of
such determination if the Board of Directors of the
Corporation had no vacancies.
IN WITNESS WHEREOF, the undersigned has duly executed this Amended and
Restated Articles of Incorporation as of the 30th day of April, 2006.
TRIPLE-S MANAGEMENT CORPORATION
By:
--------------------------
Name: Dr. Wilmer Rodriguez Silva
Title: Chairman of the Board
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ATTACHMENT A TO AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF TRIPLE-S MANAGEMENT CORPORATION
RESTRICTION ON TRANSFER
SECTION 1. The following defined words and definitions shall apply with
respect to this Attachment A to the Corporation's Articles of Incorporation
("Attachment A") in which such defined words are used.
(a) "Affiliate" and "Associate" have the respective meanings ascribed
to such terms in Rule 12b-2 of the General Rules and Regulations under the
Exchange Act.
(b) a Person shall be deemed to "Beneficially Own," be the "Beneficial
Owner" of or have "Beneficial Ownership" of any capital stock of the
Corporation:
(1) in which such Person shall then have a direct or indirect
beneficial ownership interest which confers a profit, benefit or
advantage but which does not constitute legal ownership or control;
(2) in which such Person shall have the right to acquire any
direct or indirect beneficial ownership interest pursuant to any option
or other agreement (either immediately or after the passage of time or
the occurrence of any contingency);
(3) which such Person shall have the right to vote;
(4) in which such Person shall hold any other interest which
would count in determining whether such Person would be required to
file a Schedule 13D or Schedule 13G under Regulation 13D-G under the
Exchange Act; or
(5) which shall be Beneficially Owned (under the concepts
provided in the preceding clauses) by any affiliate or associate of the
particular Person or by any other Person with whom the particular
Person or any such affiliate or associate has any agreement,
arrangement or understanding (other than customary agreements with and
between underwriters and selling group members with respect to a bona
fide public offering of securities) relating to the acquisition,
holding, voting or disposing of any securities of the Corporation;
provided, however, that
(6) a Person shall not be deemed to Beneficially Own, be the
Beneficial Owner of, or have Beneficial Ownership of Capital Stock by
reason of possessing the right to vote if (i) such right arises solely
from a revocable proxy or consent given to such Person in response to a
public proxy or consent solicitation made pursuant to, and in
accordance with, the applicable rules and regulations promulgated under
the Exchange Act, and (ii) such Person is not the Excess Owner of any
Excess Shares, is not named as holding a beneficial ownership interest
in any Capital Stock in any filing on Schedule 13D or Schedule 13G, and
is not an affiliate or associate of any such Excess Owner or named
Person;
(7) a member of a national securities exchange or a
registered depositary shall not be deemed to Beneficially Own, be the
Beneficial Owner of or have Beneficial Ownership of Capital Stock held
directly or indirectly by it on behalf of another Person (and not for
its own account) solely because such member or depositary is the record
holder of such Capital Stock, and (in the case of such member),
pursuant to the rules of such exchange, such member may direct the vote
of such Capital Stock without instruction on matters which are
uncontested and do not affect substantially the rights or privileges of
the holders of the Capital Stock to be voted, but is otherwise
precluded by the rules of such exchange from voting such Capital Stock
without instruction on either contested matters or matters that may
affect substantially the rights or the privileges of the holders of
such Capital Stock to be voted;
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(8) a Person who in the ordinary course of business is a
pledgee of Capital Stock under a written pledge agreement shall not be
deemed to Beneficially Own, be the Beneficial Owner of or have
Beneficial Ownership of such pledged Capital Stock solely by reason of
such pledge until the pledgee has taken all formal steps which are
necessary to declare a default or has otherwise acquired the power to
vote or to direct the vote of such pledged Capital Stock, provided
that:
(A) the pledge agreement is bona fide and was not
entered into with the purpose nor with the effect of changing
or influencing the control of the Corporation, nor in
connection with any transaction having such purpose or effect,
including any transaction subject to Rule 13d-3(b) promulgated
under the Exchange Act; and
(B) the pledge agreement does not grant to the
pledgee the right to vote or to direct the vote of the pledged
securities prior to the time the pledgee has taken all formal
steps which are necessary to declare a default;
(9) a Person engaged in business as an underwriter or a
placement agent for securities who enters into an agreement to acquire
or acquires Capital Stock solely by reason of its participation in good
faith and in the ordinary course of its business in the capacity of
underwriter or placement agent in any underwriting or agent
representation registered under the Securities Act, as a bona fide
private placement, a resale under Rule 144A promulgated under the
Securities Act, or in any foreign or other offering exempt from the
registration requirements under the Securities Act shall not be deemed
to Beneficially Own, be the Beneficial Owner of or have Beneficial
Ownership of such securities until the expiration of forty (40) days
after the date of such acquisition so long as (i) such Person does not
vote such Capital Stock during such period, and (ii) such participation
is not with the purpose or with the effect of changing or influencing
control of the Corporation, nor in connection with or facilitating any
transaction having such purpose or effect, including any transaction
subject to Rule 13d-3(b) promulgated under the Exchange Act;
(10) if the Corporation shall sell shares in a transaction not
involving any public offering, then each purchaser in such offering
shall be deemed to obtain Beneficial Ownership in such offering of the
shares purchased by such purchaser, but no particular purchaser shall
be deemed to Beneficially Own or have acquired Beneficial Ownership or
be the Beneficial Owner in such offering of shares purchased by any
other purchaser solely by reason of the fact that all such purchasers
are parties to customary agreements relating to the purchase of equity
securities directly from the Corporation in a transaction not involving
a public offering, provided that:
(A) all the purchasers are persons specified in Rule
13d-1(b)(1)(ii) promulgated under the Exchange Act;
(B) the purchase is in the ordinary course of each
purchaser's business and not with the purpose nor with the
effect of changing or influencing control of the Corporation,
nor in connection with or as a participant in any transaction
having such purpose or effect, including any transaction
subject to Rule 13d-3(b) promulgated under the Exchange Act,
(C) there is no agreement among or between any
purchasers to act together with respect to the Corporation or
its securities except for the purpose of facilitating the
specific purchase involved; and
(D) the only actions among or between any purchasers
with respect to the Corporation or its securities subsequent
to the closing date of the nonpublic offering are those which
are necessary to conclude ministerial matters directly related
to the completion of the offer or sale of the securities sold
in such offering;
(11) the Share Escrow Agent shall not be deemed to be the
Beneficial Owner of any Excess Share held by such Share Escrow Agent
pursuant to an Excess Share Escrow Agreement, nor shall any such Excess
Shares be aggregated with any other shares of Capital Stock held by
affiliates or associates of such Share Escrow Agent; and
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(12) a Person shall not be deemed to Beneficially Own, be the
Beneficial Owner of, or have Beneficial Ownership of Capital Stock by
reason of the fact that such Person shall have entered into an
agreement with the Corporation pursuant to which such Person, or its
associates or affiliates, shall, upon consummation of the transaction
described in such agreement, acquire, directly or indirectly, all of
the Capital Stock of the Corporation (by means of a merger,
consolidation, stock purchase or otherwise), provided that:
(A) such agreement shall have been approved by a
majority of the board (not including any director who is not
Independent as to such matter) prior to the execution thereof
by the Corporation;
(B) neither such Person nor its associates or
affiliates shall have been the Excess Owner of any Excess
Shares immediately prior to the execution of such agreement;
(C) the consummation of the transaction described in
such agreement shall be subject to the approval of the holders
of Capital Stock of the Corporation entitled to vote thereon
under the GCLPR or pursuant to other applicable law or the
rules of the New York Stock Exchange, Inc. or any other
national securities exchange or automated quotation system on
which any of the Capital Stock shall then be listed or quoted;
and
(D) neither such Person nor its associates or
affiliates shall have made any acquisition of Capital Stock
after the execution of such agreement other than pursuant to
the terms of such agreement.
Anything herein to the contrary notwithstanding, a Person
shall continue to be deemed to Beneficially Own, be the Beneficial
Owner of, and have Beneficial Ownership of, such Person's Excess Shares
which shall have been conveyed, or shall be deemed to have been
conveyed, to the Share Escrow Agent in accordance with this Attachment
A until such time as such Excess Shares shall have been sold by the
Share Escrow Agent as provided in this Attachment A.
(c) "BCBSA" means Blue Cross and Blue Shield Association.
(d) "Capital Stock" means shares (or any basic unit) of any class or
series of any equity security, voting or non-voting, common or preferred, which
the Corporation may at any time issue or be authorized to issue.
(e) "Common Stock" means the shares of common stock of the Corporation.
(f) "Excess Owner" means a Person who Beneficially Owns Excess Shares.
(g) "Excess Shares" means (i) with respect to any Institutional
Investor, all the shares of Capital Stock Beneficially Owned by such
Institutional Investor in excess of the Institutional Investor Ownership Limit,
(ii) with respect to any Noninstitutional Investor, all the shares of Capital
Stock Beneficially Owned by such Noninstitutional Investor in excess of the
Noninstitutional Investor Ownership Limit, and (iii) with respect to any Person,
all the shares of Capital Stock Beneficially Owned by such Person in excess of
the General Ownership Limit. All Excess Shares shall be deemed to be issued and
outstanding shares of Capital Stock even when subject to or held pursuant to
this Attachment A.
(h) "Exchange Act" means the Securities Exchange Act of 1934, as
amended or supplemented, and any other federal law which the Board of Directors
of the Corporation shall reasonably judge to have replaced or supplemented the
coverage of the Exchange Act.
(i) "GCLPR" means the General Corporation Law of the Commonwealth of
Puerto Rico.
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(j) "General Ownership Limit" means (i) that number of shares of Common
Stock one share lower than the number of shares of Common Stock which would
represent 20% of all shares of Common Stock issued and outstanding at the time
of determination, or (ii) any combination of shares of Capital Stock in any
series or class that represents 20% of the ownership interest in the Corporation
at the time of determination. So long as Common Stock shall be the only class of
Capital Stock issued by the Corporation, the General Ownership Limit shall be
irrelevant for purposes of this Attachment A because the Institutional Investor
Ownership Limit shall exclusively determine whether any shares of Common Stock
owned by any Institutional Investor constitute Excess Shares and the
Noninstitutional Investor Ownership Limit shall exclusively determine whether
any shares of Common Stock owned by any Noninstitutional Investor constitute
Excess Shares. If, however, the Corporation were to issue a series of Preferred
Stock or other class of Capital Stock other than Common Stock, then (a) shares
Beneficially Owned by an Institutional Investor in excess of either the
Institutional Investor Ownership Limit or the General Ownership Limit would
constitute Excess Shares, and (b) shares Beneficially Owned by a
Noninstitutional Investor in excess of either the Noninstitutional Investor
Ownership Limit or the General Ownership Limit would constitute Excess Shares.
(k) "Independent" means a person who, at any given time, shall (i) not
be a Major Participant (as defined in Section 1(o) of this Attachment A), (ii)
not have been nominated to the Board of Directors of the Corporation at the
initiative of a Major Participant, (iii) not have announced a commitment to any
proposal made by a Major Participant that has not been approved by a majority of
the board (not including any director who is not Independent as to such matter),
and not have been determined by a majority of the board (not including any
director who is not Independent as to such matter) to have been subject to any
relationship, arrangement or circumstance (including any relationship with a
Major Participant) which, in the judgment of a majority of the board of
directors (not including any director who is not Independent as to such matter),
is reasonably possible or likely to interfere to an extent deemed unacceptable
by such majority of the board (not including any director who is not Independent
as to such matter) with his or her exercise of independent judgment as a
director.
(l) "Institutional Investor" means any Person that is an entity or
group identified in Rule 13d-1(b)(1)(ii) under the Exchange Act, provided that
every filing made by such Person with the SEC under Regulation 13D-G (or any
successor Regulation) under the Exchange Act with respect to such Person's
Beneficial Ownership of Capital Stock by such Person shall have contained a
certification identical to the one required by Item 10 of Schedule 13G, or such
other affirmation as shall be approved by the BCBSA and the Board of Directors.
(m) "Institutional Investor Ownership Limit" means that number of
shares of Capital Stock one share lower than the number of shares of Capital
Stock which would represent 10% of the Voting Power of all shares of Capital
Stock issued and outstanding at the time of determination; provided that, that
the Institutional Investor Ownership Limit may be revised from time to time
pursuant to Section 14 of this Attachment A.
(n) "License Agreements" means the license agreements as constituted
from time to time between the Corporation or any of its subsidiaries or
affiliates and the BCBSA, including any and all addenda thereto, with respect
to, among other things, the "Blue Cross" and "Blue Shield" names and marks.
(o) "Major Participant" means a Person who, except as provided in the
next sentence, is (i) an Excess Owner, (ii) a Person that has filed proxy
materials with the SEC (as defined in Section 1(w) of this Attachment A hereof)
supporting a candidate for election to the Board of Directors of the Corporation
in opposition to candidates approved by a majority of the board (not including
any director who is not Independent as to such matter), (iii) a Person that has
made a proposal, made a filing with the SEC or taken other actions in which such
Person indicates that such Person may seek to become a Major Participant or
which in the judgment of a majority of the board (not including any director who
is not Independent as to such matter) indicates that it is reasonably possible
or likely that such Person will seek to become a Major Participant, or (iv) such
Person is an affiliate or associate of a Major Participant.
Notwithstanding the foregoing, in the event that a majority of the
board (not including any director who is not Independent as to such matter)
shall have approved an acquisition of outstanding Capital Stock of the
Corporation, prior to the time such acquisition shall occur, which would
otherwise render a Person a Major Participant and such Person (a) shall not have
made any subsequent acquisition of outstanding Capital Stock of the Corporation
not approved by a majority of the board (not including any director who is not
Independent as to such matter) and (b) shall not have subsequently taken any of
the actions specified in the preceding sentence without the
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prior approval of a majority of the board (not including any director who is not
Independent as to such matter), then such Person shall not be deemed a Major
Participant. In the event there shall be any question as to whether a particular
Person is a Major Participant, the determination of a majority of the board (not
including any director who is not Independent as to such matter)shall be binding
upon all parties concerned.
(p) "Noninstitutional Investor" means any Person that is not an
Institutional Investor.
(q) "Noninstitutional Investor Ownership Limit" means that number of
shares of Capital Stock one share lower than the number of shares of Capital
Stock which would represent 5% of the Voting Power of all shares of Capital
Stock issued and outstanding at the time of determination; provided, however,
that the Noninstitutional Investor Ownership Limit may be revised from time to
time pursuant to Section 14 of this Attachment A.
(r) "Ownership Limit" means each of the General Ownership Limit, the
Institutional Investor Ownership Limit and the Noninstitutional Investor
Ownership Limit, as each may be revised from time to time pursuant to Section 14
of this Attachment A.
(s) "Permitted Transferee" means a Person whose acquisition of Capital
Stock will not violate any Ownership Limit applicable to such Person.
(t) "Person" means any individual, firm, partnership, corporation,
limited liability company, trust, association, joint venture or other entity,
and shall include any successor (by merger or otherwise) or of any such entity.
(u) "Schedule 13D" means a report on Schedule 13D under Regulation
13D-G under the Exchange Act and any report which may be required in the future
under any requirements which the BCBSA shall reasonably judge to have any of the
purposes served by Schedule 13D.
(v) "Schedule 13G" means a report on Schedule 13G under Regulation
13D-G under the Exchange Act and any report which may be required in the future
under any requirements which the BCBSA shall reasonably judge to have any of the
purposes served by Schedule 13G.
(w) "SEC" means the United States Securities and Exchange Commission
and any successor federal agency having similar powers.
(x) "Securities Act" means the Securities Act of 1933, as amended or
supplemented, and any other federal law which the Board of Directors shall
reasonably judge to have replaced or supplemented the coverage of the Securities
Act.
(y) "Share Escrow Agent" means the Person appointed by the Corporation
to act as escrow agent with respect to the Excess Shares.
(z) "Transfer" means any of the following which would affect the
Beneficial Ownership of Capital Stock: (a) any direct or indirect sale,
transfer, gift, hypothecation, pledge, assignment, devise or other disposition
of Capital Stock (including (i) the granting of any option or entering into any
agreement for the sale, transfer or other disposition of Capital Stock, or (ii)
the sale, transfer, assignment or other disposition of any securities or rights
convertible into or exchangeable for Capital Stock), whether voluntary or
involuntary, whether of record, constructively or beneficially and whether by
operation of law or otherwise, and (b) any other transaction or event,
including, without limitation, a merger, consolidation, or acquisition of any
Person, the expiration of a voting trust which is not renewed, or the
aggregation of the Capital Stock Beneficially Owned by one Person with the
Capital Stock Beneficially Owned by any other Person, which would affect the
Beneficial Ownership of Capital Stock.
(aa) "Transferability" means the ability of a Person to Transfer shares
of Capital Stock of the Corporation.
(bb) "Voting Power" means the voting power attributable to the shares
of Capital Stock issued and outstanding at the time of determination and shall
be equal to the number of all votes which could be cast in any election of any
director, other than directors electable under the terms of any series of
Preferred Stock in specified
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circumstances, which could be accounted for by all shares of Capital Stock
issued and outstanding at the time of determination. If, in connection with an
election for any particular position on the Board of Directors of the
Corporation, shares in different classes or series are entitled to be voted
together for purposes of such election, then in determining the number of "all
votes which could be cast" in the election for that particular position for
purposes of the preceding sentence, the number shall be equal to the number of
votes which could be cast in the election for that particular position if all
shares entitled to be voted in such election (regardless of series or class)
were in fact voted in such election. For any particular Person, the Voting Power
of such Person shall be equal to the quotient, expressed as a percentage, of the
number of votes that may be cast with respect to shares of Capital Stock
Beneficially Owned by such Person (including, for these purposes, any Excess
Shares Beneficially Owned by such Person and held and/or voted by the Escrow
Share Agent) divided by the total number of votes that could be cast by all
stockholders of the Corporation (including such particular Person) based upon
the issued and outstanding shares of Capital Stock at the time of determination.
If the Corporation shall issue any series or class of shares for which positions
on the Board of Directors of the Corporation are reserved or shall otherwise
issue shares which have voting rights which can arise or vary based upon terms
governing that class or series, then the percentage of the voting power
represented by the shares of Capital Stock Beneficially Owned by any particular
Person shall be the highest percentage of the total votes which could be
accounted for by those shares in any election of any director.
SECTION 2. (a) No Institutional Investor shall Beneficially Own shares
of Capital Stock in excess of the Institutional Investor Ownership Limit. No
Noninstitutional Investor shall Beneficially Own shares of Capital Stock in
excess of the Noninstitutional Investor Ownership Limit. No Person shall
Beneficially Own shares of Capital Stock in excess of the General Ownership
Limit.
(b) The occurrence of any Transfer which would cause any Person to
Beneficially Own Capital Stock in excess of any Ownership Limit applicable to
such Person shall have the following legal consequences: (i) such Person shall
receive no rights to the Excess Shares resulting from such Transfer (other than
as specified in this Attachment A), and (ii) the Excess Shares resulting from
such Transfer immediately shall be deemed to be conveyed to the Share Escrow
Agent.
(c) Notwithstanding the foregoing, a Person's Beneficial Ownership of
Capital Stock shall not be deemed to exceed any Ownership Limit applicable to
such Person if (A) the Excess Shares with respect to such Person do not exceed
the lesser of 1% of the Voting Power of the Capital Stock or 1% of the ownership
interest in the Corporation, and (B) within fifteen (15) days of the time when
such Person becomes aware of the existence of such Excess Shares, such Person
transfers or otherwise disposes of sufficient shares of Capital Stock so that
such Person's Beneficial Ownership of Capital Stock shall not exceed any
Ownership Limit.
SECTION 3. Any Excess Owner who acquires or attempts to acquire shares
of Capital Stock in violation of Section 2 of this Attachment A, or any Excess
Owner who is a transferee such that any shares of Capital Stock are deemed
Excess Shares, shall immediately give written notice to the Corporation of such
event and shall provide to the Corporation such other information as the
Corporation may request.
SECTION 4. The Corporation shall take such actions as it deems
necessary to give effect to the transfer of Excess Shares to the Share Escrow
Agent, including refusing to give effect to the Transfer or any subsequent
Transfer of Excess Shares by the Excess Owner on the books of the Corporation.
Excess Shares so held or deemed held by the Share Escrow Agent shall be issued
and outstanding shares of Capital Stock. An Excess Owner shall have no rights in
such Excess Shares except as expressly provided in this Attachment A and the
administration of the Excess Shares escrow shall be governed by the terms of an
Excess Share Escrow Agreement to be entered into between the Corporation and the
Share Escrow Agent and having such terms as the Corporation shall deem
appropriate.
SECTION 5. The Share Escrow Agent, as record holder of Excess Shares,
shall be entitled to receive all dividends and distributions as may be declared
by the Board of Directors of the Corporation with respect to Excess Shares (the
"Excess Share Dividends") and shall hold the Excess Share Dividends until
disbursed in accordance with the provisions of Section 9 of this Attachment A.
In the event an Excess Owner receives any Excess Share Dividends (including,
without limitation, Excess Share Dividends received prior to the time the
Corporation determines that Excess Shares exist with respect to such Excess
Owner) such Excess Owner shall repay such Excess Share Dividends to the Share
Escrow Agent or the Corporation. The Corporation shall take all measures that it
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determines reasonably necessary to recover the amount of any Excess Share
Dividends paid to an Excess Owner, including, if necessary, withholding any
portion of future dividends or distributions payable on shares of Capital Stock
Beneficially Owned by any Excess Owner (including future dividends on
distributions on shares of Capital Stock which fall below the Ownership Limit as
well as on Excess Shares), and, as soon as practicable following the
Corporation's receipt or withholding thereof, shall pay over to the Share Escrow
Agent the dividends so received or withheld, as the case may be.
SECTION 6. In the event of any voluntary or involuntary liquidation,
dissolution, or winding up of, or any distribution of the assets of, the
Corporation, the Share Escrow Agent shall be entitled to receive, ratably with
each other holder of Capital Stock of the same class or series, that portion of
the assets of the Corporation that shall be available for distribution to the
holders of such class or series of Capital Stock. The Share Escrow Agent shall
distribute the amounts received upon such liquidation, dissolution or winding up
or distribution in accordance with the provisions of Section 9 of this
Attachment A.
SECTION 7. The Share Escrow Agent shall be entitled to vote all Excess
Shares. The Share Escrow Agent shall vote, consent, or assent Excess Shares as
follows:
(a) to vote in favor of each nominee to the Board of Directors of the
Corporation whose nomination has been approved by a majority of the board (not
including any director who is not Independent as to such matter) and to vote
against any candidate for the Board of Directors of the Corporation for whom no
competing candidate has been nominated or selected by a majority of the board
(not including any director who is not Independent as to such matter);
(b) unless such action is initiated by or with the consent of the Board
of Directors of the Corporation, (i) to vote against removal of any director of
the Corporation, (ii) to vote against any alteration, amendment, change or
addition to or repeal (collectively, "Change") of the Bylaws or the
Corporation's Articles of Incorporation, (iii) not to nominate any candidate to
fill any vacancy of the Board of Directors of the Corporation and (iv) not take
any action by voting such Excess Shares that would be inconsistent with or would
have the effect, directly or indirectly, of defeating or subverting the voting
requirements contained in Section 7(a) of this Attachment A or this Section 7(b)
of this Attachment A; and
(c) to the extent not covered by clauses (a) and (b) above, to vote as
recommended by the Board of Directors of the Corporation.
SECTION 8. (a) The Share Escrow Agent shall hold all Excess Shares
until such time as they are sold in accordance with this Section 8 of Attachment
A.
(b) The Share Escrow Agent shall sell or cause the sale of Excess
Shares at such time or times and on such terms as shall be determined by the
Corporation. The Share Escrow Agent shall have the right to take such actions as
the Corporation shall deem appropriate to ensure that sales of Excess Shares
shall be made only to Permitted Transferees.
(c) The Share Escrow Agent shall have the power to convey to the
purchaser of any Excess Shares sold by the Share Escrow Agent ownership of such
Excess Shares free of any interest of the Excess Owner of those Excess Shares
and free of any other adverse interest arising through the Excess Owner. The
Share Escrow Agent shall be authorized to execute any and all documents
sufficient to transfer title to any Permitted Transferee.
(d) Upon acquisition by any Permitted Transferee of any Excess Shares
sold by the Share Escrow Agent or the Excess Owner, such shares shall upon such
sale cease to be Excess Shares and shall become regular shares of Capital Stock
in the class or series to which such Excess Shares otherwise belong, and the
purchaser of such shares shall acquire such shares free of any claims of the
Share Escrow Agent or the Excess Owner.
(e) To the extent permitted by the GCLPR or other applicable law,
neither the Corporation, the Share Escrow Agent nor anyone else shall have any
liability to the Excess Owner or anyone else by reason of any action or inaction
the Corporation or the Share Escrow Agent or any director, officer or agent of
the Corporation shall take which any of them shall in good faith believe to be
within the scope of their authority under this Attachment A or by
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reason of any decision as to when or how to sell any Excess Shares or by reason
of any other action or inaction in connection with the activities permitted
under this Attachment A which does not constitute gross negligence or willful
misconduct.
Without limiting by implication the scope of the preceding sentence, to
the extent permitted by law, neither the Share Escrow Agent nor the Corporation
nor any director, officer or agent of the Corporation (a) shall have any
liability on grounds that any of them failed to take actions which would or
could have produced higher proceeds for any of the Excess Shares or by reason of
the manner or timing for any disposition of any Excess Shares, and (b) shall be
deemed to be a fiduciary or agent of any Excess Owner.
SECTION 9. The proceeds from the sale of the Excess Shares and any
Excess Share Dividends shall be distributed as follows (i) first, to the Share
Escrow Agent for any costs and expenses incurred in respect of its
administration of the Excess Shares that have not theretofore been reimbursed by
the Corporation; (ii) second, to the Corporation for all costs and expenses
incurred by the Corporation in connection with the appointment of the Share
Escrow Agent, the payment of fees to the Share Escrow Agent with respect to the
services provided by the Share Escrow Agent in respect of the escrow and for any
other direct or indirect and out of pocket expenses incurred by the Corporation
in connection with the Excess Shares, including any litigation costs and
expenses, and all funds expended by the Corporation to reimburse the Share
Escrow Agent for costs and expenses incurred by the Share Escrow Agent in
respect of its administration of the Excess Shares and for all fees,
disbursements and expenses incurred by the Share Escrow Agent in connection with
the sale of the Excess Shares; and (iii) third, the remainder thereof (as the
case may be) to the Excess Owner; provided, however, if the Corporation shall
have any questions as to whether any security interest or other interest adverse
to the Excess Owner shall have existed with respect to any Excess Shares,
neither the Share Escrow Agent, the Corporation nor anyone else shall have the
obligation to disburse proceeds for those shares until the Share Escrow Agent
shall be provided with such evidence as the Corporation shall deem necessary to
determine the parties who shall be entitled to such proceeds.
SECTION 10. Each certificate for Capital Stock shall bear the following
legend:
"The shares of stock represented by this certificate are subject to
restrictions on ownership and Transfer. All capitalized terms in this legend
have the meanings ascribed to them in the Corporation's Articles of
Incorporation, as the same may be amended from time to time, a copy of which,
including the restrictions on ownership and Transfer, shall be sent without
charge to each stockholder who so requests. No Person shall Beneficially Own
shares of Capital Stock in excess of any Ownership Limit applicable to such
Person. Subject to certain limited specific exemptions, (i) Beneficial Ownership
of that number of shares of Capital Stock by an Institutional Investor which
would represent 10% or more of the Voting Power would exceed the Institutional
Investor Ownership Limit, (ii) Beneficial Ownership of that number of shares of
Capital Stock by a Noninstitutional Investor which would represent 5% or more of
the Voting Power would exceed the Noninstitutional Investor Ownership Limit, and
(iii) Beneficial Ownership of (a) 20% or more of the issued and outstanding
shares of Common Stock or (b) any combination of shares in any series or class
of Capital Stock that represents 20% or more of the Ownership Interest in the
Corporation (determined as provided in the Corporation's Articles of
Incorporation) would exceed the General Ownership Limit. Any Person who attempts
to Beneficially Own shares of Capital Stock in violation of this limitation must
immediately notify the Corporation. Upon the occurrence of any event that would
cause any person to exceed any Ownership Limit applicable to such Person, all
shares of Capital Stock Beneficially Owned by such Person in excess of any
Ownership Limit applicable to such Person shall automatically be deemed Excess
Shares and shall be transferred automatically to the Share Escrow Agent and
shall be subject to the provisions of the Corporation's Articles of
Incorporation. The foregoing summary of the restrictions on ownership and
Transfer is qualified in its entirety by reference to the Corporation's Articles
of Incorporation."
The legend may be amended from time to time to reflect amendments to
the Corporation's Articles of Incorporation, or revisions to the Ownership
Limits in accordance with Section 14 of this Attachment A.
SECTION 11. Nothing contained in this Attachment A or in any other
provision of the Corporation's Articles of Incorporation shall limit the
authority of the Corporation to take such other action as it deems necessary or
advisable to protect the Corporation and the interests of its stockholders.
xvi
SECTION 12. Nothing contained in the Corporation's Articles of
Incorporation (including this Attachment A) shall preclude the settlement of any
transactions entered into through the facilities of the New York Stock Exchange,
Inc. or any other exchange or through the means of any automated quotation
system now or hereafter in effect.
SECTION 13. Except in the case of manifest error, any interpretation of
this Attachment A by the Board of Directors of the Corporation shall be
conclusive and binding; provided, however, that in making any such
interpretation, the Board of Directors of the Corporation shall consider,
wherever relevant, the Corporation's obligations to the BCBSA.
SECTION 14. A majority of the board of directors shall have the right
to revise the definition of one or more Ownership Limits to change the
percentage ownership of Capital Stock under such Ownership Limit to conform the
definition to a change to the terms of the License Agreements or as required or
permitted by the BCBSA. In the event the Corporation issues any series or class
of Capital Stock other than Common Stock, then majority of the board of
directors shall have the power to determine the manner in which each class or
series of Capital Stock shall be counted for purposes of determining each
Ownership Limit. Any such revision to the definition of any Ownership Limit
shall not be deemed a Change to the Corporation's Articles of Incorporation
(including this Attachment A), and shall not require stockholder approval under
Article THIRTEENTH of the Corporation's Articles of Incorporation; provided,
however, that no such revision shall be effective until such time as the
Corporation shall have notified the stockholders of such revision in such manner
as it shall deem appropriate under the circumstances (provided that notification
of any such revision by means of a filing by the Corporation describing such
revision with the SEC under the Exchange Act or with the Secretary of State of
the Commonwealth of Puerto Rico under the GCLPR shall be deemed appropriate
notice under all circumstances).
xvii