EXHIBIT 10
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STOCK PURCHASE AGREEMENT
By and among
BLUE CROSS & BLUE SHIELD UNITED OF WISCONSIN,
COBALT CORPORATION,
and
AMERICAN MEDICAL SECURITY GROUP, INC.
Dated as of March 19, 2002
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STOCK PURCHASE AGREEMENT, dated as of March 19, 2002 (the
"Agreement"), by and among Cobalt Corporation, a Wisconsin corporation (the
"Seller's Parent"), Blue Cross & Blue Shield United of Wisconsin, a Wisconsin
corporation and a wholly-owned subsidiary of Seller's Parent (the "Seller" and,
together with the Seller's Parent, the "Seller Group"), and American Medical
Security Group, Inc., a Wisconsin corporation (the "Company").
This Agreement sets forth the terms and conditions pursuant to
which the Seller shall sell to the Company, and the Company shall purchase from
the Seller, an aggregate of 1,400,000 shares of common stock, without par value,
of the Company owned by the Seller. The common stock, without par value, of the
Company is referred to herein as the "Common Stock". As used in this Agreement,
the term "Shares" shall mean the 1,400,000 shares of the Common Stock owned by
the Seller to be sold to the Company pursuant to the terms hereof, and the term
"Share" shall mean one of the Shares, and the term "Additional Shares" shall
mean any shares of the Common Stock (other than the Shares) beneficially owned
as of the date of this Agreement by the Seller Group together with any shares of
the Common Stock or other voting securities which may be issued and beneficially
owned by the Seller Group in respect of such shares of the Common Stock in
connection with any stock-split, stock dividend, distribution of any securities,
reclassification, recapitalization or other similar transaction of the Company.
In consideration of the mutual agreements contained herein,
and for other good and valuable consideration, the parties hereto agree as
follows:
ARTICLE I
SALE AND PURCHASE OF THE SHARES
1.01 SALE AND PURCHASE. Subject to the terms and conditions of
this Agreement, and in reliance on the other party's representations,
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warranties, agreements and covenants contained herein, at the closing of the
repurchase of the Shares by the Company, as contemplated by this Agreement (the
"Closing"), the Seller agrees to sell, transfer and deliver to the Company, and
the Company agrees to purchase from the Seller, the Shares, free and clear of
all liens, claims, options, proxies, voting agreements, charges and encumbrances
of whatever nature affecting the Shares (collectively, "Liens").
1.02 CONSIDERATION. Subject to the terms and conditions of
this Agreement, and in reliance on the Seller Group's representations,
warranties, agreements and covenants contained herein, and in consideration of
the sale, transfer and delivery of the Shares as provided for herein and of the
covenants of the Seller Group set forth in Article IV hereof, at the Closing,
the Company shall deliver to the Seller, in full payment therefor, a purchase
price of U.S. $13.00 per Share, or an aggregate of U.S. $18,200,000 for all of
such Shares, payable by wire transfer of immediately available funds to an
account designated in writing by the Seller at least two business days prior to
the Closing Date (as defined below).
ARTICLE II
THE CLOSING
2.01 DATE AND PLACE. Subject to the satisfaction or waiver of
all of the conditions to the Closing set forth in Article VII of this Agreement,
the Closing shall take place at the offices of Xxxxx & Xxxxxxx, Firstar Center,
000 Xxxx Xxxxxxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxxx, as promptly as practicable
after the satisfaction or waiver (by the party entitled to waive the condition)
of all of the conditions set forth in Article VII hereof (other than those
conditions that by their nature are to be fulfilled only at the Closing, but
subject to the fulfillment or waiver of all such conditions at the time of the
Closing), unless another date and/or place is agreed to in writing by the
parties hereto (the "Closing Date").
2.02 DELIVERIES AT THE CLOSING. At the Closing, the Seller
shall deliver to the Company stock certificates representing all of the Shares,
duly endorsed or accompanied by stock powers relating to such Shares duly
executed in blank with appropriate transfer stamps, if any, affixed, with
documentations satisfactory to the Company evidencing the transfer of good and
valid title to the Shares, free and clear of all Liens, in form acceptable to
the Company for transfer on the Company's books. At the Closing, the Company
shall deliver to the Seller the cash payment provided for in Section 1.02
hereof.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.01 REPRESENTATIONS AND WARRANTIES OF THE SELLER GROUP.
The Seller and Seller's Parent hereby jointly and severally represent and
warrant to the Company as follows:
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(a) Each of the Seller and Seller's Parent is a corporation
duly organized and validly existing under the laws of the State of Wisconsin and
has filed its most recent required annual report and has not filed articles of
dissolution. Each of the Seller and the Seller's Parent has the full corporate
power and authority to execute, deliver and carry out the terms and provisions
of this 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 and consummation of the transactions
contemplated hereby.
(b) This Agreement has been duly and validly authorized,
executed and delivered by each of the Seller and the Seller's Parent, and
constitutes a valid and binding obligation of each of the Seller and the
Seller's Parent, enforceable in accordance with its terms.
(c) The Seller has complete and unrestricted power and the
unqualified right to sell, assign, transfer and deliver the Shares to the
Company. The execution, delivery and performance of this Agreement, and the
consummation of the transactions contemplated hereby, by each of the Seller and
the Seller's Parent 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 the Seller or the Seller's Parent, as appropriate, or any of their
respective assets, or of, by or with any other Person (as hereinafter defined),
except for (i) notification to the Office of the Commissioner of Insurance of
the State of Wisconsin with respect to the repurchase of the Shares by the
Company from the Seller, (ii) any filings required to be made under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), or any
regulations promulgated thereunder, and (iii) where the failure to obtain such
authorization, consent, waiver, approval, exemption, permit or order or to make
such notice or declaration or filing would not adversely affect the ability of
the Seller and the Seller's Parent to consummate or perform the transactions
contemplated by this Agreement. As used in this Agreement, 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.
(d) The Seller has good and valid title to the Shares, free
and clear of all Liens. Upon consummation of the transactions contemplated
hereby, the Seller shall deliver to the Company good and valid title to the
Shares, free and clear of all Liens.
(e) 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
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conflict with any term or provision of the articles of incorporation or by-laws
of the Seller or Seller's Parent, (ii) violate or conflict with any statute,
law, rule, regulation, order, judgment or decree affecting the Seller or
Seller's Parent, (iii) result in the creation of any Lien, liability or
obligation upon the Seller, Seller's Parent or the Shares, 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 the Seller or Seller's Parent is a
party, by which the Seller or the Seller's Parent is bound or to which any of
their respective assets are subject.
(f) As of the date hereof, there are no claims pending or,
to the knowledge of the Seller Group, threatened which, if adversely determined,
could, directly or indirectly, limit or impair the ability of Seller or Seller's
Parent to consummate the transactions contemplated by this Agreement. There are
no outstanding or unsatisfied judgments, orders, decrees or stipulations to
which the Seller or Seller's Parent is a party that could limit or impair the
ability of the Seller or Seller's Parent to consummate the transactions
contemplated by this Agreement.
3.02 REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The
Company hereby represents and warrants to the Seller Group as follows:
(a) The Company is a corporation duly organized and validly
existing under the laws of the State of Wisconsin and has filed its most recent
required annual report and has not filed articles of dissolution. The Company
has the full corporate power and authority to execute, deliver and carry out the
terms and provisions of this 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 and consummation of
the transactions contemplated hereby.
(b) This Agreement has been duly and validly authorized,
executed and delivered by the Company and constitutes a valid and binding
obligation of the Company, enforceable in accordance with its terms.
(c) The execution, delivery and performance of this
Agreement, and the consummation of the transactions contemplated hereby, by the
Company 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 (collectively, "Consents"), any governmental agency or organization, under
any law applicable to the Company, or any of its assets or of, by or with any
other Person, except for (i) the approval of the Office of the Commissioner of
Insurance of the State of Wisconsin approving the extraordinary cash dividends
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to be declared and paid by subsidiaries of the Company to the Company to fund
the payment to be made by the Company pursuant to Section 1.02 of this Agreement
(the "Insurance Regulatory Approval"), (ii) any filings required to be made
under the Exchange Act, or any regulations promulgated thereunder, (iii) any
Consents required under the Credit Agreement, dated as of March 24, 2000, among
the Company, LaSalle Bank National Association and the other Lenders (as
amended, the "Credit Agreement"), and (iv) where the failure to obtain such
Consent would not adversely effect the ability of the Company to consummate or
perform the transactions contemplated by this Agreement.
(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 the Company, (ii) violate or conflict with any statute, law, rule,
regulation, order, judgment or decree affecting the Company, (iii) result in the
creation of any Lien, liability or obligation upon the Company, 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 the Company is a party, by which
the Company is bound or to which any of its assets are subject.
(e) The Company has received an opinion of Banc of America
Securities LLC, financial advisor to the Company, to the effect that, as of the
date hereof, the consideration to be paid by the Company pursuant to Section
1.02 hereof is fair from a financial point of view to the Company and
shareholders of the Company (other than Seller's Parent and its subsidiaries).
(f) As of the date hereof, there are no claims pending or,
to the knowledge of the Company, threatened which, if adversely determined,
could, directly or indirectly, limit or impair the ability of the Company to
consummate the transactions contemplated by this Agreement. There are no
outstanding or unsatisfied judgments, orders, decrees or stipulations to which
the Company is a party that could limit or impair the ability of the Company to
consummate the transactions contemplated by this Agreement.
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ARTICLE IV
COVENANTS OF THE SELLER GROUP
4.01 CERTAIN RESTRICTIONS. Subject to Section 4.06 hereof,
each of the Seller and the Seller's Parent jointly and severally covenants and
agrees with the Company that, for so long as the Seller Group shall have, at
least one Seller-Nominated Director on the Board of Directors of the Company
pursuant to Section 6.01 hereof, it shall not, and shall cause its respective
directors, officers, affiliates and, on its behalf, representatives, agents and
advisors not to, whether individually or as part of any "group" (within the
meaning of Section 13(d)(3) of the Exchange Act), directly or indirectly:
(a) purchase, offer to purchase or otherwise acquire or
offer or agree to acquire any shares of the Common Stock or other securities of
the Company which are entitled to vote generally for the election of directors,
or any securities which are convertible or exchangeable into or exercisable for
any securities of the Company which are entitled to vote generally for the
election of directors (the Common Stock, together with such other securities,
are referred to herein as "Voting Securities");
(b) (i) (x) 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 ("SEC") as in effect on the date hereof)
of proxies or consents, (y) seek to advise, encourage or influence any Person
with respect to the voting (either at a meeting or by written consent) of any
Voting Securities, or (z) initiate, propose or otherwise "solicit" (as such term
is used in the proxy rules of the SEC as in effect on the date hereof)
shareholders of the Company, in each case for (A) the election of Persons to the
Board of Directors or (B) the approval of shareholder proposals, whether made
pursuant to Rule 14a-8 of the Exchange Act or otherwise, or (ii) induce or
attempt to induce any other Person to initiate any such solicitation for the
election of Persons to the Board of Directors or the approval of shareholder
proposals or otherwise communicate with the Company's shareholders pursuant to
Rule 14a-2(a) or (b) under the Exchange Act; provided, however, that, subject
only to Section 4.02 hereof, nothing in this Section 4.01(b) shall prohibit or
otherwise limit the Seller Group's ability to vote its Additional Shares in
connection with any solicitation by or on behalf of the Board of Directors of
the Company; and provided, further, that, notwithstanding any other provision in
this Agreement, the provisions of this Section 4.01(b) with respect to the
election of Persons to the Board of Directors shall terminate upon the later to
occur of (i) December 31, 2003 and (ii) the date upon which the Seller Group
shall no longer have any Seller-Nominated Directors on the Board of Directors of
the Company pursuant to Section 6.01 hereof;
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(c) without the prior consent of the Company, seek,
propose, or make any statement that is critical of management of the Company or
reasonably likely to be publicly disclosed with respect to, any merger,
consolidation, business combination, tender or exchange offer, sale or purchase
of assets, sale or purchase of securities, dissolution, liquidation,
reorganization, restructuring, recapitalization, change in capitalization,
change in corporate structure or business or similar transaction or other
extraordinary transaction involving the Company or its subsidiaries; provided,
however, that nothing in this Agreement shall prohibit or otherwise limit the
Seller Group's right to seek or propose the sale of, or sell any of its
Additional Shares;
(d) deposit any Voting Securities in any voting trust or
subject any Voting Securities to any arrangement or agreement with respect to
the voting of any Voting Securities, except as set forth in this Agreement,
other than a voting trust, arrangement or agreement that is not formed for the
purpose of taking, and does not result in the taking of, any of the actions
prohibited by this Section 4.01;
(e) call or seek to have called any meeting of the
shareholders of the Company;
(f) otherwise act to control or seek to control or
influence or seek to influence the management, Board of Directors or policies of
the Company, other than as provided in Section 6.01 hereof or make any statement
that is critical of any of the Persons nominated by the Board of Directors of
the Company for election as directors of the Company;
(g) seek representation on the Board of Directors of the
Company, or seek the removal of any member of such Board or a change in the
composition or size of such Board, other than as provided in Section 6.01
hereof; provided, however, that, notwithstanding any other provision in this
Agreement, the provisions of this Section 4.01(g) shall terminate upon the later
to occur of (i) December 31, 2003 and (ii) the date upon which the Seller Group
shall no longer have any Seller-Nominated Directors on the Board of Directors of
the Company pursuant to Section 6.01 hereof;
(h) make any publicly disclosed proposal, comment,
statement or communication (including, without limitation, any request to amend,
waive or terminate any provision of this Agreement other than Section 4.01), or
make any proposal, comment, statement or communication (including, without
limitation, any request to amend, waive or terminate any provision of this
Agreement other than Section 4.01) in a manner that would require any public
disclosure by the Company, the Seller, the Seller's Parent or any other Person,
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or enter into any discussion with any Person (other than the then current
directors and officers of the Company), regarding any of the foregoing;
(i) 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 connection with any of the foregoing or make any investment in any Person for
the purpose of engaging in any of the foregoing, or take any action inconsistent
with the foregoing; or
(j) make any written request, or any request to the Board
of Directors of the Company, written or oral, to amend, waive or terminate any
of the foregoing or disclose any request to amend, waive or terminate any of the
foregoing to any Person, other than oral disclosure to management of the Company
in a manner that would not require any public disclosure by the Company, the
Seller, the Seller's Parent or any other Person.
4.02 VOTING OF ADDITIONAL SHARES. Subject to Section 4.06
hereof, the Seller Group agrees that, until the date on which the Seller Group
shall beneficially own less than 10% of the then issued and outstanding shares
of the Common Stock and each of the Seller-Nominated Directors (as hereinafter
defined) shall have resigned from the Board and any Committee thereof, all of
the Additional Shares beneficially owned by any the Seller Group (a) shall be
present, in person or by proxy, at all of the annual and special meetings of
shareholders of the Company at which directors will be elected in order to
participate in a quorum at such meetings, and (b) shall be voted on the election
of directors at any such meeting, and consented to on the election of directors,
if submitted to shareholders for action by consent of shareholders without a
meeting, in favor of each of the nominees recommended by the Board of Directors
of the Company; provided, however, that, notwithstanding the foregoing, (i) the
Seller Group may vote Additional Shares as it determines, in its sole
discretion, on any matter other than the election of directors and (ii) the
Seller Group may vote Additional Shares as it determines, in its sole
discretion, at any annual or special meeting of shareholders, and may act by
written consent, on the election of directors in the event that the Company
shall then be in material breach of its obligations under Section 6.01 hereof.
4.03 COOPERATION REGARDING REGULATORY FILINGS. The Seller
Group (i) shall file the necessary documentation with the Office of the
Commissioner of Insurance of the State of Wisconsin and shall use commercially
reasonable efforts to obtain any approval required in connection with the Share
repurchase as soon as reasonably practicable following the date of this
Agreement and (ii) shall cooperate with the Company in preparing any filings
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made in connection with obtaining the Insurance Regulatory Approval, and in
responding to any inquiries of the Office of the Commissioner of Insurance of
the State of Wisconsin relating thereto.
4.04 COOPERATION REGARDING CONSENTS. Each of the Seller Group
shall use commercially reasonable efforts to obtain all Consents of all
governmental authorities and all third parties required in connection with the
consummation of the transactions contemplated by this Agreement. Notwithstanding
the foregoing, none of the Seller Group shall have any obligation to pay any fee
to any third party (which does not include filing or other fees payable by the
Seller Group to governmental authorities) for the purpose of obtaining any
Consent or any costs and expenses of any third party resulting from the process
of obtaining such Consents. Each of the Seller Group shall make or cause to be
made all filings and submissions under laws and regulations applicable to it as
may be required for the consummation of the transactions contemplated by this
Agreement.
4.05 WITHDRAWAL OF NOMINATION NOTICE. The Seller hereby agrees
to irrevocably withdraw, concurrently with the execution of this Agreement, the
Seller's notice, dated January 28, 2002, of its intent to nominate directors at
the Company's next annual meeting of shareholders, by executing and delivering
to the Company a withdrawal letter in the form attached hereto as Exhibit A (the
"Withdrawal Letter").
4.06 SELLER GROUP'S RIGHT TO TERMINATE. Notwithstanding
anything to the contrary contained herein, the Seller Group shall have the
right, effective at any time after December 31, 2002, upon thirty (30) days'
prior written notice to the Company, to terminate the covenants and agreements
set forth in Sections 4.01 and 4.02 hereof (other than the covenants and
agreements in Sections 4.01(b) (with respect to the election of directors) and
4.01(g), which may not be terminated hereunder until after December 31, 2003);
provided, however, that, in the event that the Company shall be in material
breach of this Agreement, the Seller Group shall have the right, upon thirty
(30) days' prior written notice to the Company, to terminate the covenants and
agreements set forth in Sections 4.01 and 4.02 hereof at any time after the date
hereof (other than the covenants and agreements in Sections 4.01(b) (with
respect to the election of directors) and 4.01(g), which may not be terminated
hereunder until after December 31, 2003); provided, further, that in the event
of any termination pursuant to this Section 4.06, each Seller-Nominated Director
then serving as a director on the Company's Board of Directors shall have
resigned from the Company's Board of Directors, effective immediately on the
date on which such notice is given, pursuant to the Resignation Letter (as
hereinafter defined) delivered by such Seller-Nominated Director.
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ARTICLE V
COVENANTS OF THE COMPANY
5.01 REGULATORY APPROVAL. The Company shall file the necessary
documentation with the Office of the Commissioner of Insurance of the State of
Wisconsin and shall use commercially reasonable efforts to obtain the Insurance
Regulatory Approval as soon as reasonably practicable following the date of this
Agreement.
5.02 COOPERATION REGARDING CONSENTS. The Company shall use
commercially reasonable efforts to obtain all Consents of all governmental
authorities and all third parties required in connection with the consummation
of the transactions contemplated by this Agreement. Notwithstanding the
foregoing, the Company shall not have any obligation to pay any fee to any third
party (which does not include filing or other fees payable by the Company to
governmental authorities) for the purpose of obtaining any Consent or any costs
and expenses of any third party resulting from the process of obtaining such
Consents. The Company shall make or cause to be made all filings and submissions
under laws and regulations applicable to it as may be required for the
consummation of the transactions contemplated by this Agreement.
5.03 RIGHTS AGREEMENT AMENDMENT. If, immediately upon
consummation of the Secondary Sale, the Seller Group shall own more than twelve
percent (12%) of the then issued and outstanding shares of Common Stock, the
Company shall execute an amendment to the Rights Agreement between the Company
and Firstar Bank, N.A., dated as of August 9, 2001, as amended (the "Rights
Agreement"), substantially in the form attached hereto as Exhibit B (the
"Amendment"), which shall provide that the definition of "Acquiring Person"
shall be amended to mean any Person beneficially owning such percentage of
issued and outstanding shares of Common Stock as is equal to the lesser of (i)
20% of the issued and outstanding shares of Common Stock or (ii) the percentage
(rounded up to the nearest whole number) of the then issued and outstanding
shares of Common Stock beneficially owned by the Seller Group immediately upon
consummation of the Secondary Sale. The Company shall deliver the Amendment to
the Rights Agent for execution, together with the certificate required by
Section 27 of the Rights Agreement, and shall use commercially reasonable
efforts to take all other actions necessary to effect such amendment. The Seller
Group acknowledges and agrees that, to the extent that following consummation of
the Secondary Sale, the Seller Group's percentage ownership of Common Stock
thereafter decreases, the Company shall have the right from time to time to
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further amend the Rights Agreement to lower the definition of "Acquiring Person"
to the percentage (rounded up to the nearest whole number) of the issued and
outstanding shares of Common Stock then beneficially owned by the Seller Group.
ARTICLE VI
CERTAIN AGREEMENTS
6.01 BOARD REPRESENTATION.
(a) Prior to execution of this Agreement, the Board of
Directors of the Company (the "Board") has taken all actions necessary to
increase the size of the Board to fourteen (14) directors and cause Xxxxxx X.
Xxxxx and Xxxxxxx X. Xxxxxx to become directors of the Company, effective
immediately following consummation of the purchase and sale of Shares at the
Closing, to fill the vacancies created by such increase in size of the Board.
Xxxxxx X. Xxxxx shall be included in the class of directors whose terms expire
at the second annual meeting of shareholders following the Closing Date, and
Xxxxxxx X. Xxxxxx shall be included in the class of directors whose terms expire
at the third annual meeting of shareholders following the Closing Date. Each of
Xxxxxx X. Xxxxx and Xxxxxxx X. Xxxxxx (or any successor of Xxxxxx X. Xxxxx or
Xxxxxxx X. Xxxxxx pursuant to Section 6.01(c) hereof) and each Seller Nominee
(as hereinafter defined) elected to the Board pursuant to Section 6.01(b) shall
be referred to as a "Seller-Nominated Director" herein.
(b) Subject to Section 4.06, for so long as the Seller
Group beneficially owns 20% or more of the then outstanding shares of Common
Stock, the Seller Group shall be entitled to designate two (2) nominees to the
Board, which nominees shall be reasonably acceptable to the Company ("Seller
Nominees"), and the Company shall use its best efforts to take all action
necessary so that such Seller Nominees shall be nominated for election or
re-election to the Board, as the case may be. Subject to Section 4.06, for so
long as the Seller Group beneficially owns 10% or more, but less than 20%, of
the then issued and outstanding shares of the Common Stock, the Seller Group
shall be entitled to designate only one (1) nominee to the Board, which nominee
shall be reasonably acceptable to the Company, and the Company shall use its
best efforts to take all action necessary so that such Seller Nominee shall be
nominated for election or re-election to the Board, as the case may be. If the
Seller Group at any time beneficially owns less than 10% of the then issued and
outstanding shares of the Common Stock, then the Seller Group shall not be
entitled to designate any directors to the Board, and the Seller Group shall
cause each of the Seller-Nominated Directors (including any successors pursuant
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to Section 6.01(c)) to immediately resign from the Board and any Committee
thereof. The Seller Group shall notify the Company in writing promptly in the
event that, at any time, the Seller Group shall (i) own 10% or more, but less
than 20%, of the then issued and outstanding shares of Common Stock, and (ii)
own less than 10% of the then issued and outstanding shares of Common Stock. In
the event that the Company requests the Seller Group to inform the Company of
the number of shares of Common Stock then beneficially owned by the Seller
Group, the Seller Group shall promptly provide such information to the Company.
For purposes of this Section 6.01, Xxxxxx X. Xxxxx and Xxxxxxx X. Xxxxxx shall
be deemed "reasonably acceptable to the Company."
(c) In the event that any Seller-Nominated Director shall
cease to serve as a director as a result of the death, removal or resignation of
such Seller-Nominated Director (other than by reason of the fact that the Seller
Group no longer has a right to designate any directors to the Board or the fact
that the Seller Group is entitled to designated fewer directors to the Board
pursuant to Section 6.01(b)), the vacancy created thereby shall be filled by a
designee nominated by the Seller Group, which nominee shall be reasonably
acceptable to the Company. Upon the appointment of any such nominee to the
Board, such nominee shall be a "Seller Nominated Director" hereunder, and all of
the provisions of this Section 6.01 shall apply to such nominee, including,
without limitation, Section 6.01(e).
(d) The Company shall provide the Seller with notice of the
estimated mailing date for proxy materials relating to an annual meeting of
shareholders at which a Seller Nominee may be considered for election or
re-election at least 10 business days prior to such mailing date. The Seller
shall provide in a timely manner all information required by Regulation 14A and
Schedule 14A under the Exchange Act with respect to any Seller Nominee.
(e) Prior to nomination to the Board, (i) Xxxxxx X. Xxxxx
(and any successor of Xxxxxx X. Xxxxx pursuant to Section 6.01(b) or (c) hereof)
shall execute and deliver to the Company a resignation letter, in the form
attached hereto as Exhibit C-1, which shall provide that Xxxxxx X. Xxxxx (or any
successor of Xxxxxx X. Xxxxx pursuant to Section 6.01(b) or (c) hereof) shall
resign effective immediately upon the earlier of (x) the date upon which the
Seller Group shall deliver written notice to the Company that it is exercising
its right, pursuant to Section 4.06, to terminate the covenants and agreements
set forth in Sections 4.01 and 4.02 hereof and (y) the first date that the
Seller owns less than 20% of the then issued and outstanding shares of the
Common Stock and (ii) Xxxxxxx X. Xxxxxx (and any successor of Xxxxxxx X. Xxxxxx
pursuant to Section 6.01(b) or (c) hereof) shall execute and deliver to the
Company a resignation letter, in the form attached hereto as Exhibit C-2, which
shall provide that Xxxxxxx X. Xxxxxx (or any successor of Xxxxxxx X. Xxxxxx
pursuant to Section 6.01(b) or (c) hereof) shall resign effective immediately
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upon the earlier of (x) the date upon which the Seller Group shall deliver
written notice to the Company that it is exercising its right, pursuant to
Section 4.06, to terminate the covenants and agreements set forth in Sections
4.01 and 4.02 hereof and (y) the first date that the Seller owns less than 10%
of the then issued and outstanding shares of the Common Stock. Notwithstanding
any other provision of this Agreement, from and after the date upon which the
Seller Group shall deliver written notice to the Company that it is exercising
its right, pursuant to Section 4.06, to terminate the covenants and agreements
set forth in Sections 4.01 and 4.02 hereof, the Seller shall no longer have the
right to designate any Seller-Nominated Directors pursuant to this Agreement,
and the resignation of each Seller-Nominated Director then in office shall
become immediately effective on such date.
(f) In the event that the Seller Group shall deliver
written notice to the Company that it is exercising its right, pursuant to
Section 4.06, to terminate the covenants and agreements set forth in Sections
4.01 and 4.02 hereof, the provisions of this Section 6.01 shall terminate
immediately and shall be of no further force and effect.
6.02 PRIVATE PLACEMENT. If, at any time following the date
hereof and irrespective of whether the Secondary Sale has been consummated, the
Seller chooses to sell any of its Additional Shares pursuant to a private
placement to reduce its holdings of the Common Stock, the Company shall
cooperate to facilitate such sale at mutually agreed upon terms and conditions,
subject to receipt by the Company of a confidentiality agreement, in form and
substance reasonably satisfactory to the Company, duly executed by the
prospective purchaser in such private placement.
6.03 REGISTRATION.
(a) Promptly following the date hereof, the Seller and the
Company shall cooperate to prepare and file with the SEC a registration
statement, including all exhibits and financial statements required to be filed
therewith, to effect the registration and sale of at least three million
(3,000,000) Additional Shares, with the exact number of Additional Shares to be
sold to be as many Additional Shares as the Underwriters (as hereinafter
defined) advise may be sold therein (the "Secondary Sale"), and to cause such
registration statement to become effective under the Securities Act of 1933, as
amended (the "Securities Act") as expeditiously as possible following the date
hereof. The Company and the Seller hereby agree to use commercially reasonable
efforts to complete the Secondary Sale as promptly as reasonably practicable on
commercially reasonable terms, mutually acceptable to the parties, in order to
sell as many Additional Shares as the Underwriters advise may be sold therein.
The registration of Additional Shares contemplated by this Section 6.01(a) shall
be conducted pursuant to the terms and conditions of the Registration Rights
13
Agreement by and between the Seller and the Company dated as of September 1,
1998 (the "Registration Rights Agreement"), including, without limitation,
Section 1.05 thereof; provided, however, that (i) the engagement of the
Underwriters shall be determined pursuant to Section 6.03(b); (ii) payment of
expenses incurred in connection with the Secondary Sale shall be determined
pursuant to Section 6.03(c); (iii) the registration of Additional Shares
contemplated herein shall be considered a registration pursuant to Section 1.02
of the Registration Rights Agreement, and Section 1.02 of the Registration
Rights Agreement shall otherwise apply to the registration of Additional Shares
contemplated herein; except that, notwithstanding the foregoing, in the event
the Secondary Sale is not effected, other than as a result of a breach of this
Section 6.03 by the Seller Group, then the registration of Additional Shares
contemplated herein shall not be considered a registration pursuant to Section
1.02 of the Registration Rights Agreement; and (iv) the Company shall not sell
securities for its own account in the registration of Additional Shares
contemplated herein and shall not permit the sale of any securities other than
the Additional Shares in such registration.
(b) Seller's Parent shall engage the following lead
managing underwriters for the Secondary Sale: CIBC Xxxxxxxxxxx Corp., Xxxxxx X.
Xxxxx & Co., Incorporated and one other underwriter reasonably acceptable to the
Company (collectively, the "Underwriters").
(c) Except for all underwriters' discounts, fees and
commissions related to the Secondary Sale, which shall be borne exclusively by
the Seller, all reasonable out-of-pocket registration, qualification, legal,
printers', extraordinary accounting and other reasonable, out-of-pocket fees and
expenses required to be disclosed in connection with the Secondary Sale by Item
511 of Regulation S-K under the Securities Act ("Expenses"), up to an aggregate
of U.S. $650,000 of Expenses, shall be borne by the Company; and any Expenses
incurred in excess of such U.S. $650,000 amount shall be borne equally by the
Company and the Seller.
(d) In the event that, prior to the consummation of the
Secondary Sale, the Board shall receive an unsolicited bona fide, written offer
to acquire all of the outstanding shares of Common Stock at a price, to be paid
in cash, in excess of the then current market price of the Common Stock, the
Seller Group shall have the right to postpone the Secondary Sale for a period of
ten (10) business days in order to give the Board an opportunity to review and
evaluate such offer. In the event the Board approves such offer, the Seller
Group shall have the right to terminate the Secondary Sale.
6.03. PRESS RELEASE. The Company and the Seller's Parent
hereby agree to jointly issue, concurrently with the execution of this
14
Agreement, a mutually acceptable joint press release regarding the transactions
contemplated hereby, in substantially the form attached as Exhibit D hereto.
ARTICLE VII
CONDITIONS TO CLOSING
7.01 CONDITIONS TO THE OBLIGATIONS OF THE COMPANY AND THE
SELLER GROUP. The obligations of the Company and the Seller Group to effect the
Closing are subject to the satisfaction (or waiver, to the extent permitted by
applicable law) at or prior to the Closing of the following conditions:
(a) NO INJUNCTIONS; ORDERS. There shall not be in effect
any order, writ, judgment, injunction or decree entered by any governmental
agency or organization or arbitrator of competent jurisdiction that prohibits or
enjoins the transactions contemplated by this Agreement.
(b) APPROVALS. All waiting periods shall have expired or
have been earlier terminated and all required Consents of governmental
authorities of appropriate jurisdiction and of all third parties shall have been
obtained, including, without limitation, the Insurance Regulatory Approval and
the Consent under the Credit Agreement.
7.02 CONDITIONS TO THE OBLIGATIONS TO THE COMPANY. The
obligation of the Company to effect the Closing is further subject to the
satisfaction (or waiver by the Company, to the extent permitted by applicable
law) at or prior to the Closing of the following conditions:
(a) REPRESENTATIONS, WARRANTIES AND CONVENANTS. The
representations and warranties of the Seller Group contained herein shall be
true and correct in all material respects as of the date of this Agreement and
as of the Closing Date as if made as of the Closing Date, and the covenants and
agreements of the Seller Group to be performed at or prior to the Closing shall
have been duly performed in all material respects.
(b) PENDING LITIGATION. No action shall be pending by any
Person (i) seeking to enjoin or prohibit the performance of this Agreement or
the consummation of the transactions contemplated hereby or (ii) seeking
material damages from the Company as a result of the performance of this
Agreement or the consummation of the transactions contemplated hereby.
15
(c) RESIGNATION LETTERS. The Company shall have received
resignation letters, in the form of Exhibits C-1 and C-2 hereto, duly executed
by Xxxxxx X. Xxxxx and Xxxxxxx X. Xxxxxx, respectively.
(d) WITHDRAWAL LETTER. The Company shall have received
the Withdrawal Letter, in the form of Exhibit A hereto, duly executed by an
authorized officer of Seller.
7.03 CONDITIONS TO THE OBLIGATIONS OF THE SELLER GROUP. The
obligation of the Seller Group to effect the Closing is further subject to the
satisfaction (or waiver by the Seller, to the extent permitted by applicable
law) at or prior to the Closing of the following conditions:
(a) REPRESENTATIONS, WARRANTIES AND COVENANTS. The
representations and warranties of the Company contained herein shall be true and
correct in all material respects as of the date of this Agreement and as of the
Closing Date as if made as of the Closing Date, and the covenants and agreements
of the Company to be performed at or prior to the Closing shall have been duly
performed in all material respects.
(b) PENDING LITIGATION. No action shall be pending by any
Person (i) seeking to enjoin or prohibit the performance of this Agreement or
the consummation of the transactions contemplated hereby or (ii) seeking
material damages from the Seller Group as a result of the performance of this
Agreement or the consummation of the transactions contemplated hereby.
ARTICLE VIII
MISCELLANEOUS
8.01 INDEMNIFICATION.
(a) INDEMNIFICATION BY COMPANY. The Company agrees to
indemnify and hold harmless, to the full extent permitted by law, Seller,
Seller's Parent, and the Underwriters, and their respective officers and
directors, and each Person who controls (within the meaning of the Securities
Act or the Exchange Act) any of the foregoing Persons (each, an "Indemnified
Party" and collectively, the "Indemnified Parties"), from and against any and
all losses, claims, damages, liabilities and expenses, joint or several
(including reasonable costs of investigation and legal expenses) (each, a "Loss"
and collectively "Losses"), arising out of or based upon (i) any untrue or
alleged untrue statement of a material fact contained in the registration
16
statement under which the Additional Shares are registered under the Securities
Act in connection with the Secondary Sale contemplated hereby (including any
final, preliminary or summary prospectus contained therein or any amendment
thereof or supplement thereto or any documents incorporated by reference
therein), or (ii) any omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein
(in the case of a prospectus or preliminary prospectus, in light of the
circumstances under which they were made) not misleading; provided, however,
that the Company shall not be liable in any such case to the extent that any
such Loss arises out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission made in any such registration
statement in reliance upon information furnished to the Company by the Seller
Group for inclusion therein or the Seller Group's failure to deliver a copy of
the registration statement (or prospectus or any amendments or supplements
thereto) after the Company has furnished the Seller Group with a sufficient
number of copies of the same.
(b) INDEMNIFICATION BY THE SELLER GROUP. Seller and
Seller's Parent agree to jointly and severally indemnify and hold harmless, to
the full extent permitted by law, the Company, its directors and officers and
each Person who controls the Company (within the meaning of the Securities Act
and the Exchange Act) from and against any Losses arising out of or based on any
untrue or alleged untrue statement of a material fact contained in, or any
omission or alleged omission of a material fact required to be stated in, the
registration statement under which the Additional Shares are registered under
the Securities Act in connection with the Secondary Sale contemplated hereby
(including any final, preliminary or summary prospectus contained therein or any
amendment thereof or supplement thereto or any documents incorporated by
reference therein), or necessary to make the statements therein (in the case of
a prospectus or preliminary prospectus, in light of the circumstances under
which they were made) not misleading, to the extent, but only to the extent,
that such untrue or alleged untrue statement or omission or alleged omission is
made in reliance upon information furnished to the Company by the Seller Group
for inclusion therein. In no event shall the liability of the Seller Group be
greater in amount than the dollar amount of the proceeds received by the Seller
Group under the sale of the Additional Shares in connection with the Secondary
Sale contemplated hereby.
(c) CONDUCT OF INDEMNIFICATION PROCEEDINGS. Any Person
entitled to indemnification hereunder shall (i) give prompt written notice to
the indemnifying party of any claim with respect to which it seeks
indemnification (provided, that any delay or failure to so notify the
indemnifying party shall relieve the indemnifying party of its obligations
hereunder only to the extent, if at all, that it is actually prejudiced by
reason of such delay or failure) and (ii) permit such indemnifying party to
assume the defense of such claim with counsel reasonably satisfactory to the
indemnified party; provided, however, that any Person entitled to
17
indemnification hereunder shall have the right to select and employ separate
counsel and to participate in the defense of such claim, but the fees and
expenses of such counsel shall be at the expense of such Person unless (A) the
indemnifying party has agreed in writing to pay such fees or expenses, (B) the
indemnifying party shall have failed to assume the defense of such claim within
a reasonable time after receipt of notice of such claim from the Person entitled
to indemnification hereunder and employ counsel reasonably satisfactory to such
Person, (C) the indemnified party has reasonably concluded (based on advice of
counsel) that there may be legal defenses available to it or other indemnified
parties that are different from or in addition to those available to the
indemnifying party, or (D) in the reasonable judgment of any such Person, based
upon advice of its counsel, a conflict of interest may exist between such Person
and the indemnifying party with respect to such claims (in which case, if the
Person notifies the indemnifying party in writing that such Person elects to
employ separate counsel at the expense of the indemnifying party, the
indemnifying party shall not have the right to assume the defense of such claim
on behalf of such Person). If such defense is not assumed by the indemnifying
party, the indemnifying party will not be subject to any liability for any
settlement made without its consent, but such consent may not be unreasonably
withheld. If the indemnifying party assumes the defense, the indemnifying party
shall have the right to settle such action without the consent of the
indemnified party; provided, however, that the indemnifying party shall be
required to obtain such consent (which consent shall not be unreasonably
withheld) if the settlement includes any admission of wrongdoing on the part of
the indemnified party or any decree or restriction on the indemnified party or
its officers or directors. No indemnifying party shall consent to entry of any
judgment or enter into any settlement which does not include as an unconditional
term thereof the giving by the claimant or plaintiff to such indemnified party
of an unconditional release from all liability in respect to such claim or
litigation or which would impose any material obligations on such indemnified
party (given against an appropriate cross-release). Except as provided above it
is understood that the indemnifying party or parties shall not, in connection
with any proceeding or related proceedings in the same jurisdiction, be liable
for the reasonable fees, disbursements and other charges of more than one
separate firm admitted to practice in such jurisdiction at any one time from all
such indemnified party orparties unless the employment of more than one counsel
has been authorized in writing by the indemnified party or parties.
(d) CONTRIBUTION. If for any reason the indemnification
provided for in Section 8.01(a) or Section 8.01(b) is unavailable to an
indemnified party, other than as specified therein, then the indemnifying party
shall contribute to the amount paid or payable by the indemnified party as a
result of such Loss in such proportion as is appropriate to reflect the relative
fault of the indemnifying party on the one hand and the indemnified party on the
other. The relative fault shall be determined by reference to, among other
18
things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the indemnifying party or the indemnified party and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such untrue statement or omission. Notwithstanding anything in this
Section 8.01(d) to the contrary, no indemnifying party (other than the Company)
shall be required pursuant to this Section 8.01(d) to contribute any amount in
excess of the amount by which the net proceeds received by such indemnifying
party from the sale of Additional Shares in connection with the Secondary Sale
contemplated hereby exceeds the amount of any Losses which such indemnifying
party has otherwise been required to pay by reason of such untrue statement or
omission. The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 8.01(d) were determined by pro rata
allocation or by any other method of allocation that does not take account of
the equitable considerations referred to in this Section 8.01(d). No person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any Person who was
not guilty of such fraudulent misrepresentation.
8.02 SURVIVAL. All representations, warranties, agreements and
covenants made by each of the parties pursuant to this Agreement shall survive
the Closing hereunder.
8.03 EXPENSES. Except as provided in Section 6.02(c), all fees
and expenses incurred by either the Seller or Seller's Parent in connection with
this Agreement (including, without limitation, any applicable stock transfer
taxes) shall be borne by the Seller Group, and all fees and expenses incurred by
the Company in connection with this Agreement shall be borne by the Company.
8.04 COMMISSIONS AND FEES. Except as provided in Section
6.02(c), each of the Company, on the one hand, and the Seller and Seller's
Parent, on the other hand, represents and warrants that there are no claims for
any brokerage commissions, fees or like payments in connection with the
transactions contemplated by this Agreement, except that the Company has engaged
Banc of America Securities LLC and the Seller and Seller's Parent have engaged
Bear, Xxxxxxx & Co. Inc., in each case to render financial advisory services in
connection with the transactions contemplated hereby, and the Company is solely
responsible for all amounts due Banc of America Securities LLC, (including,
without limitation, fees, expenses and other amounts related to the fairness
opinion of Banc of America Securities, LLC referenced in Section 3.02(e), which
fees, expenses and other amounts shall not be considered Expenses for purposes
of this Agreement) and the Seller and Seller's Parent are solely responsible for
all amounts due Bear, Xxxxxxx & Co. Inc., as a result thereof. Each of the
Company, on the one hand, and the Seller and Seller's Parent, on the other hand,
19
shall pay or discharge, and shall indemnify and hold harmless the other from and
against, any and all claims or liabilities for any other brokerage commissions,
fees or other like payments incurred by reason of any action taken by the other
hereunder.
8.05 ENTIRE AGREEMENT AND AMENDMENT. This Agreement and the
Registration Rights Agreement, together with all exhibits hereto, contain 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 and in the
Registration Rights Agreement. This Agreement supersedes all prior written or
oral agreements or understandings between the parties with respect to its
subject matter, other than the Registration Rights Agreement. This Agreement may
not be amended, modified or supplemented except upon the execution and delivery
of a written amendment executed by the Company, the Seller and Seller's Parent.
8.06 ASSIGNMENT; BINDING EFFECT. This Agreement shall not be
assigned or delegated by either party hereto, and any attempted assignment or
delegation shall be null and void. This Agreement shall be binding upon and
inure to the benefit of, and be enforceable by, the successors of each of the
parties hereto.
8.07 WAIVER OF COMPLIANCE. Any failure of the Company, on the
one hand, or the Seller or Seller's Parent, on the other hand, to comply with
any obligation, covenant, agreement or condition herein may be waived by the
Seller on behalf of the Seller Group or the Company, 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.
8.08 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.
8.09 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:
20
If to the Company:
American Medical Security Group, Inc.
0000 XXX Xxxxxxxxx
X.X. Xxx 00000
Facsimile No.: (000) 000-0000
Attention: Xxxxxxx X. Xxxxx, Esquire
with copies to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
Xxxx Xxxxx Xxxxxx
Xxx Xxxx, XX 00000-0000
Facsimile No.: (000) 000-0000
Attention: Xxxx X. Xxxxxxx, Esq.
If to the Seller:
Blue Cross & Blue Shield United of Wisconsin
000 Xxxx Xxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxx 00000
Facsimile No.: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxxxx, Esquire
with a copy to:
Xxxxx & Lardner
Firstar Center
000 Xxxx Xxxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxx 00000-0000
Facsimile No.: (000) 000-0000
Attention: Xxxxxx X. Xxxxxx, Esquire
If to the Seller's Parent:
Cobalt Corporation
000 Xxxx Xxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxx 00000
Facsimile No.: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxxxx, Esquire
21
with a copy to:
Xxxxx & Xxxxxxx
Firstar Center
000 Xxxx Xxxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxx 00000-0000
Facsimile No.: (000) 000-0000
Attention: Xxxxxx X. Xxxxxx, Esquire
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.
8.10 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.
8.11 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.
8.12 SPECIFIC PERFORMANCE. The Seller, the Seller's Parent and
the Company each acknowledges and agrees that the other party would be
irreparably injured by a breach of this Agreement by the other party or its
representatives and that money damages are an inadequate remedy for an actual or
threatened breach of this Agreement because of the difficulty of ascertaining
the amount of damage that will be suffered by either party in the event that
this Agreement is breached. Therefore, each party agrees to the granting of
specific performance of this Agreement and injunctive or other equitable relief
in favor of the other party as a remedy for any such breach, without proof of
actual damages, and each party further waives any requirement for the securities
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.
[SIGNATURE PAGE FOLLOWS]
22
IN WITNESS WHEREOF, this Agreement has been duly executed and
delivered by the parties hereto as of the date first above written.
BLUE CROSS & BLUE SHIELD UNITED OF WISCONSIN
By: /s/ Xxxxxxx X. Xxxxxxxx
Name: Xxxxxxx X. Xxxxxxxx
Title: Sr. Vice President & General Counsel
COBALT CORPORATION
By: /s/ Xxxx X. Xxxxxx
Name: Xxxx X. Xxxxxx
Title: Sr. Vice President, Treasurer & CFO
AMERICAN MEDICAL SECURITY GROUP, INC.
By: /s/ Xxxxxxx X. Xxxxx
Name: Xxxxxxx X. Xxxxx
Title: Sr. Vice President, General Counsel &
Secretary
23
EXHIBIT A
FORM OF WITHDRAWAL LETTER
[BCBSUW letterhead]
March 19, 2002
Mr. Xxx Xxxxx, Secretary
American Medical Security Group, Inc.
0000 XXX Xxxxxxxxx
Xxxxx Xxx, XX 00000
Re: Withdrawal of Notice of Intent to Submit Nominations
Dear Xxx:
Reference is made to the notice submitted to American Medical
Security Group, Inc. (the "Company") by Blue Cross & Blue Shield United of
Wisconsin ("BCBSUW") on January 28, 2002, stating the intent of BCBSUW to
nominate four persons for election to the Company's Board of Directors at the
Company's next annual meeting of shareholders (the "Notice"). Please be advised
that BCBSUW hereby irrevocably withdraws the Notice and thereby will not propose
such nominees for election.
BLUE CROSS & BLUE SHIELD UNITED OF WISCONSIN
By:_________________________________________
Name:
Title:
EXHIBIT B
AMENDMENT TO RIGHTS AGREEMENT
AMENDMENT, dated as of ________, 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,
as amended (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 under the Rights Agreement;
WHEREAS, LaSalle Bank National Association, a national banking
association (the "Rights Agent"), and the Company entered into an Appointment
and Assumption Agreement, dated as of December 17, 2001, appointing LaSalle Bank
National Association as Rights Agent;
WHEREAS, the Company, Cobalt Corporation and Blue Cross & Blue
Shield United of Wisconsin entered into a Stock Purchase Agreement, dated as
of March 19, 2002 (the "Stock Purchase Agreement"), providing for this
amendment to the Rights Agreement;
WHEREAS, the Company and the Rights Agent desire to formally
amend the Rights Agreement, in accordance with Section 27 of the Rights
Agreement, as contemplated by the Stock Purchase Agreement;
NOW, THEREFORE, in consideration of the mutual agreements
contained herein, and for other good and valuable consideration, the parties
hereto agree as follows:
1. The definition of "Acquiring Person" in Section 1(a) of the Rights
Agreement is hereby replaced by the following definition:
"Acquiring Person" shall mean any Person (as such term is
hereinafter defined) who or which, together with all
Affiliates and Associates (as such terms are hereinafter
defined) of such Person, shall become the Beneficial Owner (as
such term is hereinafter defined) of such number of Common
Shares (the "Maximum Number") as is equal to _____% of the
Common Shares of the Company then outstanding after the date
hereof. Notwithstanding the foregoing, the term "Acquiring
Person" shall not include (i) the Company; (ii) any Subsidiary
(as such term is hereinafter defined) of the Company; (iii)
any employee benefit plan or employee stock ownership plan of
the Company or any Subsidiary of the Company; (iv) any entity
holding Common Shares for or pursuant to the terms of any such
plan; (v) BCBS and its Affiliates and Associates, provided
that from time to time after the date hereof BCBS and its
Affiliates and Associates do not increase the aggregate number
of Common Shares over which such Persons have beneficial
ownership as of any such time (other than Common Shares the
beneficial ownership of which was acquired through (A) any
dividend or distribution of any Common Shares or any Company
securities convertible or exchangeable into Common Shares or
any stock split or (B) any grants of Common Shares or any
Company securities exercisable for Common 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), provided, however, that nothing in this
clause (v) shall prohibit BCBS and its Affiliates and
Associates from collectively owning less than the Maximum
Number of the Common Shares of the Company then outstanding;
or (vi) any Person who or which together with all Affiliates
and Associates of such Person shall become an "Acquiring
Person" as the result of an acquisition of Common Shares by
the Company which, by reducing the number of shares
outstanding, increases the proportional number of shares
beneficially owned by such Person together with all Affiliates
and Associates of such Person to the Maximum Number or more of
the Common Shares of the Company then outstanding, provided,
however, that if a Person shall become the Beneficial Owner of
the Maximum Number or more of the Common Shares of the Company
then outstanding by reason of share purchases by the Company
and shall, after such share purchases by the Company, become
the Beneficial Owner of any additional Common Shares of the
Company, then such Person shall be deemed to be an "Acquiring
Person". Notwithstanding the foregoing, if the Board of
Directors of the Company determines in good faith that a
Person who would otherwise be an "Acquiring Person," as
defined pursuant to the foregoing provisions of this paragraph
(a), has become such inadvertently, and such Person divests as
promptly as practicable a sufficient number of Common Shares
so that such Person would no longer be an "Acquiring Person,"
as defined pursuant to the foregoing provisions of this
paragraph (a), then such Person shall not be deemed to be an
"Acquiring Person" for any purposes of this Agreement. For the
B-ii
avoidance of doubt, a Person who merely enters into an
agreement to acquire, directly or indirectly, the stock of
BCBS or Cobalt Corporation, shall 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 securities convertible or
exchangeable into Common Shares or any stock split or (y) any
grants of Common Shares or any Company securities exercisable
for Common 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
shall be deemed an "Acquiring Person" for all purposes of this
Agreement.
2. The term "Agreement" as used in the Rights Agreement shall be deemed to
refer to the Rights Agreement as amended hereby.
3. 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.
4. 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.
B-iii
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:
B-iv
EXHIBIT C-1
FORM OF RESIGNATION LETTER
[date]
To the Board of Directors of
American Medical Security Group Inc.
I hereby resign as director of American Medical Security Group, Inc.
(the "Company") effective upon the earliest to occur of (i) the date upon which
Blue Cross & Blue Shield United of Wisconsin ("BCBSUW") shall beneficially own
less than twenty percent (20%) of the then issued and outstanding shares of
common stock, no par value, of the Company and (ii) the date upon which the
Seller Group shall deliver written notice to the Company that it is exercising
its right, pursuant to Section 4.06, to terminate the covenants and agreements
set forth in Sections 4.01 and 4.02 of the Stock Purchase Agreement, dated as of
March 19, 2002, by and among BCBSUW, Cobalt Corporation and the Company. For
purposes hereof, "beneficially own" shall be determined pursuant to Rule 13d-3
of the General Rules and Regulations under the Securities Exchange Act of 1934,
as amended.
--------------------------------
Xxxxxx X. Xxxxx
EXHIBIT C-2
FORM OF RESIGNATION LETTER
[date]
To the Board of Directors of
American Medical Security Group Inc.
I hereby resign as director of American Medical Security Group, Inc.
(the "Company") effective upon the earliest to occur of (i) the date upon which
Blue Cross & Blue Shield United of Wisconsin ("BCBSUW") shall beneficially own
less than ten percent (10%) of the then issued and outstanding shares of common
stock, no par value, of the Company and (ii) the date upon which the Seller
Group shall deliver written notice to the Company that it is exercising its
right, pursuant to Section 4.06, to terminate the covenants and agreements set
forth in Sections 4.01 and 4.02 of the Stock Purchase Agreement, dated as of
March 19, 2002, by and among BCBSUW, Cobalt Corporation and the Company. For
purposes hereof, "beneficially own" shall be determined pursuant to Rule 13d-3
of the General Rules and Regulations under the Securities Exchange Act of 1934,
as amended.
--------------------------------
Xxxxxxx X. Xxxxxx
