EXHIBIT 10.1
AGREEMENT
AGREEMENT, dated as of February 1, 2002 (the "Agreement"), by
and among American Medical Security Group, Inc., a Wisconsin corporation
("AMS"), Cobalt Corporation, a Wisconsin corporation ("Cobalt") and Blue Cross &
Blue Shield United of Wisconsin, a Wisconsin corporation and a wholly-owned
subsidiary of Cobalt ("BCBSUW" and, together with Cobalt, the "Cobalt Group").
WHEREAS, AMS would like to formally clarify the intended meaning
of the Rights Agreement by and between AMS and Firstar Bank, N.A., as Rights
Agent (the "Rights Agent"), dated as of August 9, 2001 (such Rights Agreement as
may be amended pursuant to Section 1 hereof or otherwise, and shareholder rights
plans adopted thereby, the "Rights Agreement"), to provide that a Person (as
hereinafter defined) who merely enters into an agreement to acquire, directly or
indirectly, the stock of BCBSUW, does not, by reason of that act alone, become
an "Acquiring Person" (as defined in, and pursuant to, the Rights Agreement),
provided that such Person does not then or thereafter beneficially own any of
AMS's common shares other than those indirectly acquired by virtue of an
acquisition of BCBSUW;
WHEREAS, BCBSUW has agreed to formally withdraw its proposal
regarding the Rights Agreement and any other shareholder rights plan or share
purchase rights plan that may be adopted by AMS, dated as of November 27, 2001,
for action at AMS's 2002 annual meeting of shareholders (the "Proposal"), and
has agreed to refrain from taking certain actions in consideration for AMS
agreeing to amend the Rights Agreement to reflect the clarification provided for
in the Resolution;
NOW, THEREFORE, in consideration of the mutual agreements
contained herein, and for other good and valuable consideration, the parties
hereto agree as follows:
1. Rights Agreement Amendment. Simultaneously with the execution of
this Agreement, AMS shall execute the Amendment to the Rights
Agreement, attached hereto as Exhibit A (the "Amendment"), and shall
deliver the Amendment to the Rights Agent for execution, together
with the certificate required by Section 27 of the Rights Agreement.
2. Withdrawal of Proposal. Simultaneously with the execution of this
Agreement, BCBSUW shall withdraw the Proposal by executing the
letter attached hereto as Exhibit B (the "Withdrawal Letter") and
delivering the Withdrawal Letter to AMS. As soon as reasonably
practicable following its receipt of the Withdrawal Letter, AMS
shall cause the Securities and Exchange Commission to be informed
that the Proposal was withdrawn and shall cause the no-action letter
submitted by AMS's counsel to be withdrawn.
3. Restrictions on Certain Actions. Each of BCBSUW and Cobalt hereby
agree, beginning on the date hereof and ending on the date which is
ten (10) days prior to the last date upon which shareholder
proposals for action at the 2004 annual meeting of shareholders of
AMS may be submitted pursuant to Rule 14a-8 of the Exchange Act (or
the bylaws of AMS, if earlier), not to, and to cause their
respective Affiliates under the control of Cobalt, Associates,
directors, officers, employees, and, on its behalf, representatives,
agents and advisors (collectively, the "Cobalt Group
Representatives") not to take, whether individually or as part of
any "group" (within the meaning of Section 13(d)(3) of the
Securities and Exchange Act of 1934, as amended (the "Exchange
Act")), directly or indirectly, any of the following actions:
(a) (i) make any publicly disclosed proposal, announcement,
statement, communication or disclosure regarding the Amendment,
the Withdrawal Letter, the Rights Agreement, or other
shareholder rights plans or share purchase rights plans
relating to AMS or this Agreement (other than an amended filing
to its Schedule 13D containing the disclosure set forth in
Exhibit C hereto), or (ii) make any proposal, statement,
communication or disclosure regarding any of the foregoing in a
manner that would require any public disclosure by AMS, BCBSUW,
Cobalt or any other Person, or (iii) without limiting clauses
(i) or (ii) of this Section 3(a), initiate any discussion or
comment with or to any Person (other than AMS) regarding any of
the foregoing;
(b) submit a proposal under Rule 14a-8 of the Exchange Act or
otherwise relating in any way to the Rights Agreement or other
shareholder rights plans or share purchase rights plans
relating to AMS for consideration or action at AMS's 2002 or
2003 annual meetings of shareholders, or at any other meeting
of shareholders or action by consent prior to December 31,
2003; or
(c) make, or in any way participate, directly or indirectly, in any
"solicitation" (as such term is used in the proxy rules of the
Securities and Exchange Commission as in effect on the date
hereof) of proxies or consents, seek to advise, encourage or
influence any Person with respect to the voting of any Voting
Securities, initiate, propose or otherwise "solicit" (as such
term is used in the proxy rules of the Securities and Exchange
Commission as in effect on the date hereof) shareholders of AMS
for the approval of shareholder proposals, whether made
pursuant to Rule 14a-8 of the Exchange Act or otherwise, or
induce or attempt to induce any other Person to initiate any
such shareholder proposal or publicly comment on any such
shareholder proposal of any other Person, in each case with
respect to the Amendment, the Withdrawal Letter, the Rights
Agreement, or other shareholder rights plans or share purchase
rights plans relating to AMS or this Agreement;
(d) have any discussion with, or make any comment to, any Person
where there is a substantial probability that such discussion
or comment will be publicly disclosed; provided, however, that
for 30 days following public announcement of the subject of
this agreement Cobalt Group may make public comments to
questions from media and analysts confined to factual responses
concerning the Rights Agreement Amendment and the Cobalt
Group's withdrawal of the Proposal, and thereafter will confine
its comments to (i) references to earlier comments; (ii)
intentions with respect to voting shares of AMS held by the
Cobalt Group; and (iii) comments concerning the Cobalt Group's
position as to shareholder rights plans generally, with no
specific reference to AMS or the Rights Agreement other than as
specifically permitted under 3(d)(i) or 3(d)(ii), above;
(e) have any discussions or communications, or enter into any
arrangements, understandings or agreements (whether written or
oral) with, or advise, finance, assist, encourage or act in
concert with, any other Person in furtherance of any of the
foregoing;
provided, however, that (A) if AMS withdraws or modifies the
Amendment, or amends the Rights Agreement or substitutes a new
shareholder rights plan in its place, in a manner that would change
the effect of the Amendment on the Rights Agreement, the obligations
of BCBSUW, Cobalt and the Cobalt Group Representatives pursuant to
this Section 3 shall cease immediately; (B) nothing in this Section
3 shall (i) restrict the manner in which BCBSUW, Cobalt or the
Cobalt Group Representatives may vote shares of AMS in any meeting
of shareholders, (ii) prohibit BCBSUW, Cobalt or the Cobalt Group
Representatives from a disclosure limited solely to how it will vote
such shares (without any further comment thereon), or (iii) prohibit
any Cobalt Group Representative that is a member of the AMS Board of
Directors from commenting in any meeting of such Board or voting on
any matter placed before the Board as such director believes is
appropriate; and (C) nothing in this Section 3 shall prohibit
BCBSUW, Cobalt or the Cobalt Group Representatives from responding
factually to questions from (i) Cobalt's shareholders (so long as
such responses are not publicly made or made in a manner where there
is a substantial probability that such comments would result in
public disclosure by any Person), (ii) a potential acquiror of all
or substantially all of the capital stock of BCBSUW or Cobalt (which
acquiror shall be subject to a customary confidentiality agreement
with BCBSUW or Cobalt, respectively and so long as such responses
are not publicly made or made in a manner where there is a
substantial probability that such comments would result in public
disclosure by any Person), (iii) applicable regulators; or (iv) a
stock exchange, in each case directly relating the Amendment, the
Withdrawal Letter or this Agreement, or making such public
statements as are required, in the opinion of their respective
counsel, by the rules and regulations of the Securities and Exchange
Commission (including the Exchange Act), the New York Stock
Wisconsin.
4. Public Disclosure. Promptly after the execution hereof by all
parties, AMS shall issue a press release substantially in the form
attached hereto as Exhibit D and file the Amendment with the
Securities and Exchange Commission. Beginning on the date hereof and
ending on December 31, 2003 (or on such earlier date as the
obligations of BCBSUW, Cobalt and the Cobalt Group Representatives
pursuant to Section 3 hereof shall cease), AMS agrees not to, and to
cause its Affiliates, Associates, directors, officers, employees,
and representatives, agents and advisors acting on its behalf not
to, make any public statements regarding the Amendment, the
Withdrawal Letter or this Agreement, other than to respond factually
to questions from third parties relating directly to the Amendment,
the Withdrawal Letter or this Agreement, or as are required, in the
opinion of their respective counsel, by the rules and regulations of
the Securities and Exchange Commission (including the Exchange Act),
the New York Stock Exchange or the Office of the Commissioner of
Insurance of the State of Wisconsin.
5. Representations and Warranties of AMS and the Cobalt Group. Each of
AMS, Cobalt, BCBSUW and the Foundation hereby represents and
warrants to other parties as follows:
(a) Such party is a corporation duly organized, validly existing
and in good standing under the laws of the state of Wisconsin.
Such party has the full corporate power and authority to
execute, deliver and carry out the terms and provisions of thi
Agreement and to consummate the transactions contemplated by
this Agreement, and has taken all necessary action to authorize
the execution, delivery and performance of this Agreement.
(b) This Agreement has been duly and validly authorized, executed
and delivered by such party and constitutes a valid and binding
obligation of such party.
(c) The execution, delivery and performance of this Agreement, and
the consummation of the transactions contemplated hereby, by
such party do not require any authorization, consent, waiver,
approval, exemption, permit or order of or other action by, or
notice or declaration to, or filing with, any governmental
agency or organization, under any law applicable to such party,
or any of its assets or of, by or with any other Person.
(d) Neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby, in each
case with or without the giving of notice or the lapse of time
or both, (i) violate or conflict with any term or provision of
the articles of incorporation or by-laws of such party, (ii)
violate or conflict with any statute, law, rule, regulation,
order, judgment or decree affecting such party, (iii) result in
the creation of any lien, liability or obligation upon such
party, or (iv) violate or conflict with, constitute a breach or
default, or give rise to any right of termination, acceleration
of any obligation or amendment under, or require any notice, or
result in the loss of material benefit under, any term or
provision of any contract, commitment, understanding,
arrangement, agreement or restriction of any kind or character
to which such party is a party, by which such party is bound or
by which any of its assets are subject.
6. Certain Definitions. The terms "Affiliates" and "Associates" shall
have the meanings set forth in Rule 12b-2 of the Exchange Act. The
term "Person" means an individual, a corporation, a company, a
limited liability company, a partnership, a governmental agency or
body, an association, a trust or other entity, group, organization
or individual.
7. Entire Agreement. This Agreement contains the entire understanding
of the parties with respect to its subject matter. There are no
restrictions, agreements, promises, representations, warranties,
covenants or undertakings other than those expressly set forth
herein. This Agreement supersedes all prior written or oral
agreements or understandings between the parties with respect to its
subject matter. This Agreement may not be amended, modified or
supplemented except upon the execution and delivery of a written
amendment executed by AMS, BCBSUW and Cobalt.
8. Assignment; Binding Effect. This Agreement shall not be assigned or
delegated by either party hereto. This Agreement shall be binding
upon and inure to the benefit of, and be enforceable by, the
successors of each of the parties hereto.
9. Waiver of Compliance. Any failure of AMS, on the one hand, or any of
the Cobalt Group, on the other hand, to comply with any obligation,
covenant, agreement or condition herein may be waived by Cobalt on
behalf of the Cobalt Group or AMS, as the case may be, only by a
written instrument signed by the party granting such waiver, but
such waiver or failure to insist upon strict compliance with such
obligation, covenant, agreement or condition shall not operate as a
waiver of, or estoppel with respect to, any subsequent or other
failure.
10. Descriptive Headings. Descriptive headings in this Agreement are for
convenience only and shall not control or affect the meaning or
construction of any provision of this Agreement.
11. Notices. All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered personally, by
facsimile transmission (except for legal process), or mailed
(registered or certified mail, postage prepaid, return receipt
requested) to the respective parties at the following addresses:
If to AMS:
American Medical Security Group, Inc.
0000 XXX Xxxxxxxxx
Xxxxx Xxx, XX 00000
Facsimile No.: (000) 000-0000
Attention: General Counsel
with copies to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
Xxxx Xxxxx Xxxxxx
Xxx Xxxx, XX 00000-0000
Facsimile No.: (000) 000-0000
If to BCBSUW:
Blue Cross & Blue Shield United of Wisconsin
000 Xxxx Xxxxxxxx Xxxxxx
X.X. Xxx 0000
Xxxxxxxxx, XX 00000-0000
Facsimile No.: (000) 000-0000
Attention: General Counsel
with a copy to:
Xxxxx & Lardner
000 Xxxx Xxxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxx, XX
00000-0000
Facsimile No.: (000) 000-0000
Attention: Xxxxxx X. Xxxxxx, Esq.
If to Cobalt:
Cobalt Corporation
000 Xxxx Xxxxxxxx Xxxxxx
X.X. Xxx 0000
Xxxxxxxxx, XX 00000-0000
Facsimile No.: (000) 000-0000
Attention: General Counsel
with a copy to:
Xxxxx & Lardner
000 Xxxx Xxxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxx, XX
00000-0000
Facsimile No.: (000) 000-0000
Attention: Xxxxxx X. Xxxxxx, Esq.
or to such other address as either party hereto may, from time to time,
designate in a written notice given in the manner provided for herein.
12. Governing Law. This Agreement shall be governed by, and construed
and enforced in accordance with, the laws of the State of Wisconsin,
without regard to its rules regarding conflict of laws.
13. Counterparts. For the convenience of the parties, this Agreement may
be executed in counterparts and each such executed counterpart shall
be, and shall be deemed to be, an original instrument.
14. Specific Performance. AMS, BCBSUW and Cobalt each acknowledges and
agrees that the others would be irreparably harmed and could not be
made whole by monetary damages in the event any of the terms and
provisions of this Agreement were not performed in accordance with
their terms or were otherwise breached. Therefore, each party agrees
to the granting of specific performance of this Agreement and
injunctive or other equitable relief in favor of the non-breaching
party as a remedy for any such breach, without proof of actual
damages, and each party further waives any requirement for the
securing or posting of any bond in connection with any such remedy.
Such remedy shall not be deemed to be the exclusive remedy for a
party's breach of this Agreement, but shall be in addition to all
other remedies available at law or equity to the other party.
IN WITNESS WHEREOF, this Agreement has been duly executed and
delivered by the parties hereto as of the date first above written.
AMERICAN MEDICAL SECURITY GROUP, INC.
By: /s/ Xxxxxxx X. Xxxxx
Name: Xxxxxxx X. Xxxxx
Title: Senior Vice President, General Counsel
and Secretary
COBALT CORPORATION
By: /s/ Xxxxxx X. Xxxxx
Name: Xxxxxx X. Xxxxx
Title: Chairman, President & CEO
BLUE CROSS & BLUE SHIELD UNITED OF WISCONSIN
By: /s/ Xxxxxx X. Xxxxx
Name: Xxxxxx X. Xxxxx
Title: Chairman, President & CEO
EXHIBIT A
AMENDMENT TO RIGHTS AGREEMENT
AMENDMENT, dated as of February [ ], 2002, to Rights Agreement by
and between American Medical Security Group, Inc., a Wisconsin corporation (the
"Company"), and Firstar Bank, N.A., as Rights Agent, dated as of August 9, 2001
(the "Rights Agreement").
WHEREAS, Firstar Bank, N.A. and the Company, entered into a
Termination Agreement, dated as of December 21, 2001, terminating the
appointment of Firstar Bank, N.A. as Rights Agent;
WHEREAS, LaSalle Bank National Association, a national banking
association (the "Rights Agent"), and the Company entered into an Appointment
and Assumption Agreement between, dated as of December 17, 2001, appointing
LaSalle Bank National Association as Rights Agent;
WHEREAS, on September 27, 2001, the Board of Directors of AMS
adopted a resolution (the "Resolution") clarifying the intended meaning of the
Rights Agreement, to provide that a Person (as hereinafter defined) who merely
enters into an agreement to acquire, directly or indirectly, the stock of Blue
Cross & Blue Shied United of Wisconsin ("BCBS"), does not, by reason of that act
alone, become an "Acquiring Person" (as defined in, and pursuant to, the Rights
Agreement), provided that such Person does not then or thereafter beneficially
own any of AMS's common shares other than those indirectly acquired by virtue of
an acquisition of BCBS;
WHEREAS, the Company and the Rights Agent desire to formally amend
the Rights Agreement, in accordance with Section 27 of the Rights Agreement, to
give effect to the Resolution and clarify the definition of "Acquiring Person,"
such amendment to supersede the Resolutions;
NOW, THEREFORE, in consideration of the mutual agreements contained
herein, and for other good and valuable consideration, the parties hereto agree
as follows:
15. The definition of "Acquiring Person" in Section 1(a) of the Rights
Agreement is hereby amended to add the following sentence to the end
of such definition:
For the avoidance of doubt, a Person who merely enters into an
agreement to acquire, directly or indirectly, the stock of BCBS
or Cobalt Corporation, will not, by reason of that act alone,
become an "Acquiring Person", provided that such Person does not,
at the time of such agreement beneficially own any of the
Company's Common Shares, or any Company securities convertible or
exchangeable into, or exercisable for, Common Shares, in each
case other than those Common Shares then beneficially owned by
BCBS and Cobalt Corporation that are indirectly acquired by
virtue of such acquisition of the stock of BCBS or Cobalt
Corporation, and provided further that if, following such
agreement to acquire, or acquisition of, the stock of BCBS or
Cobalt Corporation, such Person increases the aggregate number of
Common Shares, (or any Company securities convertible or
exchangeable into, or exercisable for, Common Shares), over which
such Person has beneficial ownership or otherwise becomes the
Beneficial Owner of or beneficially owns other Common Shares (or
any Company Securities convertible or exchangeable into, or
exercisable for, Common Shares) (other than Common Shares the
beneficial ownership of which was acquired through (x) any
dividend or distribution of any Common Shares or any Company
Shares (or the exercise of any such securities for Common Shares)
under any benefit plan of the Company generally available for
directors of the Company), then such Person will be deemed an
"Acquiring Person" for all purposes of this Agreement.
16. The term "Agreement" as used in the Rights Agreement shall be deemed
to refer to the Rights Agreement as amended hereby.
17. The foregoing amendment shall be effective as of the date hereof
and, except as set forth herein, the Rights Agreement shall remain
in full force and effect and shall be otherwise unaffected hereby.
18. This Amendment may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment
to be duly executed as of the day and year first above written.
ATTEST: American Medical Security Group, Inc.
By:
---------------------------- -----------------------------------
Name: Name:
Title: Title:
ATTEST: LaSalle Bank National Association
Rights Agent
By:
---------------------------- -----------------------------------
Name: Name:
Title: Title:
EXHIBIT B
[BCBSUW letterhead]
February __, 2002
VIA HAND DELIVERY
Mr. Xxx Xxxxx, Secretary
American Medical Security Group, Inc.
0000 XXX Xxxxxxxxx
Xxxxx Xxx, XX 00000
Re: Withdrawal of Shareholder Proposal
Dear Xxx:
Reference is made to the shareholder proposal submitted to American
Medical Security Group, Inc.(the "Company") by Blue Cross Blue Shield United of
Wisconsin ("BCBSUW") on November 27, 2001 for inclusion in the proxy statement
of the Company related to the its 2002 annual meeting of shareholders (the
"Proposal"). Please be advised that BCBSUW hereby withdraws the Proposal.
BLUE CROSS & BLUE SHIELD UNITED OF
WISCONSIN
By:_______________________________
Name:
Title:
