Control Share Acquisitions. Under Chapter 42 of the IBCL, an acquiring person or
group who acquires, directly or indirectly, ownership of, or the power to direct the exercise of voting power with respect to, issued and outstanding control shares in an issuing public corporation may not exercise voting
rights on any control shares unless these voting rights are conferred by a majority vote of the disinterested shareholders of the issuing public corporation at a special meeting of those shareholders held upon the request and at the expense of the
acquiring person. If the acquiring person has acquired control shares with a majority or more of the voting power and the control shares are accorded full voting rights by the disinterested shareholders, all shareholders of the issuing public
corporation have dissenters rights to receive the fair value of their shares pursuant to Chapter 44 of the IBCL. We are an issuing public corporation as defined under Chapter 42.
Under Chapter 42, control shares means shares acquired by a person that, when added to all other shares of the issuing public
corporation owned by that person or in respect to which that person may exercise or direct the exercise of voting power, would otherwise entitle that person to exercise voting power of the issuing public corporation in the election of directors
within any of the following ranges: (i) one-fifth or more but less than one-third; (ii) one-third or more but less than
a majority; or (iii) a majority or more.
Chapter 42 does not apply if, before a control share acquisition is made, the
corporations articles of incorporation or bylaws, including a bylaw adopted by the corporations board of directors, provide that they do not apply. Our bylaws provide that we are not subject to Chapter 42; however, our board of directors
could amend our bylaws to rescind our election to opt out of Chapter 42.
Certain Business Combinations. Chapter 43 of the IBCL
restricts the ability of an Indiana corporation that has 100 or more shareholders to engage in any business combinations with an interested shareholder for five years after the date the shareholder became an interested
shareholder (such date, the share acquisition date), unless the business combination or the purchase of shares by the interested shareholder on the interested shareholders share acquisition date is approved by the board of
directors of the corporation before the share acquisition date. If such prior approval is not obtained, the interested shareholder may effect a business combination after the five-year period only if that shareholder receives approval from a
majority of the disinterested shareholders or the offer meets specified fair price criteria.
For purposes of Chapter 43, interested
shareholder means any person, other than the corporation or its subsidiaries, who is (1) the beneficial owner, directly or indirectly, of 10% or more of the voting power of the outstanding voting shares of the corporation or (2) an
affiliate or associate of the corporation, which at any time within the five-year period immediately before the date in question, was the beneficial owner, directly or indirectly, of 10% or more of the voting power of the then outstanding shares of
the corporation.
Chapter 43 does not apply to corporations that elect not to be subject to Chapter 43 in an amendment to their articles
of incorporation approved by a majority of the disinterested shareholders. That amendment, however, cannot become effective until 18 months after its passage and would apply only to share acquisitions occurring after its effective date. Our articles
of incorporation do not exclude us from Chapter 43.
Mandatory Classified Board of Directors. Under Chapter 33 of the IBCL, a
corporation with a class of voting shares registered with the SEC under Section 12 of the Exchange Act must have a classified board of directors unless the corporation adopts a bylaw expressly electing not to be governed by this provision.
Although our articles of incorporation and our bylaws provide for a classified board of directors so long as we are required to do so under our licenses with the BCBSA, we adopted an amendment to our bylaws electing not to be subject to this
mandatory requirement effective July 29, 2009.
Unanimous Written Consent of Shareholders. Under the IBCL, as well as our
articles of incorporation and our bylaws, any action required or permitted to be taken by the holders of common stock may be effected only at an annual meeting or special meeting of such holders, and shareholders may act in lieu of such meetings
only by unanimous written consent.
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