EXHIBIT 10.9
WISCONSIN BLUE CROSS/BLUE SHIELD LICENSE ADDENDUM
Blue Cross and Blue Shield Association (the "National Association") and
Cobalt Corporation ("Cobalt") have entered into this License Addendum ("this
Addendum") as of March 23, 2001 (the "date hereof").
WHEREAS, the National Association is an association of independent members.
The National Association licenses to each member the right to use the "Blue
Cross" and/or "Blue Shield" names under which the member provides health care
benefits in the state or other service area to which the license applies. The
rights licensed by the National Association are herein collectively called the
"Blue Cross/Blue Shield Licensed Rights."
WHEREAS, each member's right to continue to use the Blue Cross/Blue Shield
Licensed Rights and to remain a member of the Association is conditioned upon
that member's remaining in compliance with membership standards and requirements
established by the National Association.
WHEREAS, it is fundamental to the integrity of the National Association
that each member remain independent of any control or influence by any
particular economic interest or other special interest which might impair its
ability to (i) exercise independent judgment as to the programs which will best
meet the needs of the communities in the state or area for which it is
responsible or (ii) function as an integral part of a unique system that depends
on cooperative efforts of independent members to provide Blue Cross/Blue Shield
coverage on a nationwide basis.
WHEREAS, Blue Cross & Blue Shield United of Wisconsin (which is called the
"Old Parent" in this Addendum) has served as the primary licensee authorized by
the National Association to provide health care benefits in a service area
within the State of Wisconsin established by licenses granted by the National
Association to the Old Parent (the "Wisconsin Service Area"). The Old Parent was
originally organized as a non-stock service insurance corporation incorporated
in Wisconsin.
WHEREAS, the Board of Directors of the Old Parent has approved a series of
related transactions with United Wisconsin Services, Inc. ("UWSI"), a for-profit
corporation incorporated in Wisconsin (herein collectively called the "Wisconsin
Reorganization") that are designed, among other things, to change the member
holding the primary license for the provision of Blue Cross and Blue Shield
health care benefits in the Wisconsin Service Area to an investor-owned
corporation.
WHEREAS, immediately prior to the Wisconsin Reorganization, Old Parent
owned approximately 7.9 million shares of UWSI. The balance of the common stock
in UWSI was owned by other investors (the "UWSI Public Stockholders") and was
publicly traded on the New York Stock Exchange.
WHEREAS, the Wisconsin Reorganization was consummated on the date hereof
and included among other things the following actions: (1) Old Parent converted
from a not-for-profit service insurance corporation to a for-profit stock
insurance corporation in accordance
with Wisconsin law; (2) Wisconsin BC Holdings LLC, a Wisconsin Limited Liability
Corporation CPC Holdings") and wholly-owned subsidiary of Wisconsin United for
Health Foundation, Inc. ("Foundation"), was issued all of the outstanding shares
of Old Parent; (3) BC Holdings simultaneously exchanged all of its Old Parent
shares for 31,313,390 shares of newly issued common stock of UWSI and $500,000
in cash; (4) Old Parent became a wholly owned subsidiary of UWSI; (5) BC
Holdings simultaneously was dissolved on the date hereof and all of its UWSI
stock and cash was distributed to the Foundation; and (5) UWSI changed its legal
name to "Cobalt Corporation" ("Cobalt") and being trading under the ticker
symbol "CBZ" on the New York Stock Exchange. Immediately after Wisconsin
Reorganization, the Foundation owned 77.5% of the outstanding shares of Cobalt
and the remaining Cobalt common stock was owned by the UWSI Public Stockholders.
WHEREAS, Cobalt has been incorporated in Wisconsin for the purpose of
taking the place of the Old Parent as the member primarily licensed to provide
health care benefits in the Wisconsin Service Area under the Blue Cross/Blue
Shield Licensed Rights after completion of the Wisconsin Reorganization.
WHEREAS, the National Association permits a member to convert to
investor-owned status only if the member has in place safeguards designed to
protect the member's independence including safeguards designed to prevent any
institutional investor from acquiring a 10% or higher voting interest in the
member, to prevent any other investor from acquiring a 5% or higher voting
interest in the member, and to prevent any investor from acquiring a 20% or
higher ownership interest in the member. The Foundation does not qualify as an
institutional investor for purposes of these requirements.
WHEREAS, the parties to the Wisconsin Reorganization recognized that the
Wisconsin Reorganization would provide the Foundation with an initial ownership
interest in Cobalt much larger than permitted by the National Association's
license requirements applicable to investor-owned members and requested that the
National Association; (i) grant a temporary exemption from the ownership
concentration limit to provide the Foundation with time to sell its ownership in
Cobalt to buyers whose ownership is below the National Association's limits
cited in the preceding paragraph in an orderly manner though a series of
underwritten public offerings or by other appropriate means; (ii) admit Cobalt
as a member of the National Association (iii) issue Cobalt Primary Licenses
permitting Cobalt to use the names "Blue Cross" and "Blue Shield" and various
other Blue Cross/Blue Shield Licensed Rights in the Wisconsin Service Area; and
(iv) issue controlled affiliate licenses to certain affiliates controlled by
Cobalt permitting them to utilize various Blue Cross/Blue Shield Licensed
Rights.
WHEREAS, the National Association agreed to grant the waiver and take the
other actions specified in the preceding paragraph subject to the following
conditions: (i) a package of safeguards be instituted in Cobalt's Charter and
Bylaws and in agreements between Cobalt and the Foundation in order among other
things to obtain the Foundation's commitment to sell down its ownership interest
in Cobalt by prescribed minimum amounts by prescribed deadlines and to ensure
that Cobalt remains independent of the Foundation during the period the sell
down occurs; (ii) Cobalt explicitly agree that the licenses granted by the
National Association to Cobalt and its controlled affiliates will automatically
terminate on the terms specified in this Addendum if Cobalt's independence is
lost or jeopardized by the loss of any
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of the safeguards or by the failure to observe or enforce any of the safeguards;
and (iii) Cobalt provide certain other commitments contained in this Addendum.
WHEREAS, the parties have entered into this Addendum to evidence the waiver
granted by the National Association and the terms subject to which it has been
granted.
The parties hereby agree as follows:
1. Waiver. The National Association hereby agrees that the ownership of
Cobalt shares by the Foundation in excess of the number permitted by the Cobalt
Primary Licenses will not be deemed to provide grounds for termination of the
Cobalt Licenses so long as the conditions specified in Part 2 of this Addendum
are satisfied. In order to obtain the waiver and consent in the preceding
sentence, Cobalt agrees that its right to hold and utilize the Cobalt Primary
Licenses will at all times be subject to the conditions in Part 2 of this
Addendum and hereby covenants not to take or allow any action (or to fail to
enforce any right or power available to it in any manner) which could provide
grounds for termination of the Cobalt Primary Licenses other than pursuant to
clause (d) of paragraph 10 of the Cobalt Primary Licenses.
2. Triggering Events.
2.1 Selldown Commitments. A Triggering Event shall be deemed to have
occurred if without the written consent of the National Association the
Foundation shall Beneficially Own common stock representing:
(a) more than 80.0% of the outstanding common stock at any time from and
including the date hereof to but not including the "Three Year Divestiture
Deadline", or
(b) 50% or more of the outstanding common stock at any time from and
including the "Three Year Divestiture Deadline" to but not including the "Five
Year Divestiture Deadline", or
(c) 20% or more of the outstanding common stock at any time on or after the
"Five Year Divestiture Deadline."
The terms "Three Year Divestiture Deadline" and "Five Year Divestiture
Deadline" have the respective meanings set forth in the Voting Trust and
Divestiture Agreement dated the date hereof among the Foundation, Wisconsin BC
Holdings LLC, Marshall & Ilsley Trust Company, and Cobalt (herein called the
"Voting Trust Agreement") as such terms are defined therein on the date hereof
and without giving effect to any amendment or supplement to the Voting Trust
Agreement.
The term "Selldown Completion Date" shall be deemed to occur for purposes
of this Addendum when the Foundation reduces its Beneficial Ownership of Cobalt
common stock to less than 5% of the outstanding common stock provided that if
prior to the Selldown Completion Date Cobalt shall issue any equity security
other than common stock, then the Selldown Completion Date shall occur when the
Foundation reduces its Beneficial Ownership of Cobalt shares to (i) less than 5%
of the outstanding common stock and (ii) less than levels of
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ownership of Cobalt shares that (but for this Addendum) could provide a basis
for the termination of the Cobalt Primary Licenses as then constituted.
2.2 Standstill Commitment. A Triggering Event shall be deemed to have
occurred if without the written consent of the National Association the
Foundation shall at any time prior to the Selldown Completion Date become
Beneficial Owner of any Cobalt shares except for (i) the common stock issuable
to the Foundation in the Wisconsin Reorganization and (ii) common stock issued
to the Foundation in connection with stock dividends, stock splits,
recapitalizations and other events in which the Foundation receives the same
consideration per common share owned prior to such event as every other holder
of common stock and in which the voting power and percentage ownership interest
represented by the Foundation Shares does not increase. The term "Foundation
Shares" whenever it is used in this Addendum designates and includes all Cobalt
shares Beneficially Owned by the Foundation at the time as of which the term
shall be applied.
2.3 Voting Trust. A Triggering Event shall be deemed to have occurred if at
any time prior to the Selldown Completion Date without the written consent of
the National Association:
(a) the Voting Trust Agreement shall be amended, eliminated or otherwise
impaired or any person shall be permitted, by the ruling of any court or
otherwise, to take any action contrary to any of the terms of the Voting Trust
Agreement;
(b) the Foundation shall breach any of its covenants in the Voting Trust
Agreement;
(c) the voting trust established by the Voting Trust Agreement (the "Voting
Trust") shall expire or otherwise cease to exist other than as a result of the
termination of the Voting Trust Agreement pursuant to section 9.01 thereof;
(d) except for the Undeposited Shares, any of the Foundation Shares shall
be voted in any manner contrary to the express terms in the Voting Trust
Agreement;
(e) except for the Undeposited Shares, any of the Foundation Shares shall
not be held on deposit in the Voting Trust and subject to all of the provisions
in the Voting Trust Agreement from the time the Foundation acquires Beneficial
Ownership of that Share until the earlier of (i) the sale of that Share in a
manner that complies with clause (f) or (ii) the Selldown Completion Date;
(f) any of the Foundation Shares shall be withdrawn from the Voting Trust
for any reason other than a sale consummating at the time of such withdrawal
that causes the Foundation to cease to Beneficially Own that share.
The term "Undeposited Shares" means Foundation Shares which (i) have not
been deposited in the voting trust established by the Voting Trust Agreement and
(ii) in the aggregate are at all times less than 5% of the outstanding common
stock of Cobalt and, if Cobalt shall issue any equity security other than common
stock, are less than 5% of the outstanding common stock
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and less than levels of ownership of Cobalt shares that (but for this Addendum)
could provide a basis for termination of the Cobalt Primary Licenses as then
constituted.
2.4 Foundation Independence. A Triggering Event shall be deemed to have
occurred if at any time prior to the Selldown Completion Date without the
written consent of the National Association the Foundation shall not be
independent of all federal, state, local and other governmental authority over
its affairs including any authority over the composition and membership of its
board of directors, other than customary regulatory powers exercised by the
Wisconsin Attorney General over similar situated entities, provided that (i) the
nomination, selection and/or election of directors of the Foundation in
accordance with the provisions of the Articles of Incorporation and Bylaws for
the Foundation as constituted on the date hereof shall not be deemed to breach
this Section 2.4 but (ii) the election or other appointment of any person to the
Foundation Board shall constitute a Triggering Event if that person shall be an
officer, agent, employee or independent contractor of any governmental entity
having regulatory authority over the affairs of the Foundation, Cobalt, or any
licensed controlled affiliate of Cobalt, whether federal, state or local.
2.5 Impairment of the Permanent Protections. A Triggering Event shall be
deemed to have occurred if at any time without the written consent of the
National Association:
(a) Any person who does not qualify as an "Independent Director" under
Cobalt's Charter as constituted on the date hereof shall be elected or appointed
to the Cobalt Board of Directors and immediately after such election or
appointment, less than 80% of the sitting members of the Cobalt Board shall
constitute Independent Directors, or such lesser percentage as contemplated
under the provisions of Article III, Section 4 of the Cobalt Charter, or
(b) The Cobalt Board shall use its discretionary powers under the Cobalt
Charter to cause any person not to constitute a "Major Participant" who would
but for such Board action have constituted a Major Participant under Article
III, Section 4 of the Cobalt Charter, or
(c) The Cobalt Board shall take any action that impairs or eliminates
Cobalt's ability to eliminate any concentrated ownership of Cobalt shares that
could provide grounds for termination of any of the Cobalt Licenses including
but not limited to any such action under clause (12) in the definition of
Beneficial Ownership in Article V, Section 1 of the Cobalt Charter or any such
action with respect to "Excess Shares" as defined in Article V, Section 1 of the
Cobalt Charter; or
(d) Any of the provisions in Articles V, VII, VIII or X of Cobalt's Charter
shall be amended, eliminated or otherwise impaired or any person shall be
permitted, by the ruling of any court or otherwise, to take any action contrary
to the terms of any of those provisions; or
(e) The Cobalt Charter shall be amended to eliminate, change or impair the
language in Article IV that reads
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"In no event shall any director be deemed to breach any fiduciary duty or
other obligation owed to any stockholders of the Corporation or any other
person by reason of (i) his or her failure to vote for (or by reason of such
director's vote against) any proposal or course of action that in such
director's judgment would breach any requirement imposed by the Blue Cross
and Blue Shield Association (or its then successor) ("the BCBSA") or could
lead to termination of any license granted by the BCBSA to the Corporation
or any subsidiary or affiliate of the Corporation, or (ii) his or her
decision to vote in favor of any proposal or course of action that in such
director's judgment is necessary to prevent a breach of any requirement
imposed by the BCBSA or could prevent termination of any license granted by
the BCBSA to the Corporation or any subsidiary or affiliate of the
Corporation"; or
(f) Any shares known by Cobalt to be Excess Shares under the terms of
Article V of Cobalt's Charter shall not be voted in accordance with the terms of
Cobalt's Charter; or
(g) Any of the provisions in Section 2.02, 2.12, 3.04 or 3.11 of Cobalt's
Bylaws shall be amended, eliminated or otherwise impaired or any person shall be
permitted, by the ruling of any court or otherwise, to take any action contrary
to the terms of any of those provisions; or
(h) any warranty by Cobalt in Section 6.4 shall not be correct (whether or
not Cobalt or any other person knew or could have known that such warranty was
incorrect); or
(i) BC Holdings beneficially owns or otherwise controls any stock or other
securities of Cobalt; or
(j) BC Holdings exists as a separate legal entity beyond the date hereof.
2.6 Notice. Cobalt shall notify the National Association in writing
immediately after Cobalt learns of any development or state of facts that
constitutes a Triggering Event.
3. Termination Provisions.
3.1 Automatic Termination. Except as otherwise provided in Section 3.2 or
Section 3.3, all Cobalt Licenses shall automatically terminate thirty days after
Cobalt first learns of any development or state of facts that constitutes a
Triggering Event under the terms of this Addendum. The termination of any of the
Cobalt Licenses under any of the provisions in this Addendum shall have the
consequences prescribed in paragraphs 11 and 15(d) (including subparagraph (iii)
of paragraph 15(d)) of the Cobalt Primary Licenses and other consequences
consistent therewith arising out of the terms of the Cobalt Licenses, this
Addendum or other applicable provisions.
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3.2 Waiver Request.
(a) Cobalt shall have the right to request that the National Association
grant a waiver to prevent or reverse an automatic termination under Section 3.1.
Any such request shall (i) describe the Triggering Event, (ii) describe the
action Cobalt proposes to take in response to the Triggering Event, and (iii)
describe the action from the National Association requested by Cobalt in
connection with the Triggering Event.
(b) If in connection with any particular Triggering Event, Cobalt shall
actually deliver a waiver request to the National Association in writing on or
prior to the thirtieth day (the "Request Deadline") after Cobalt first learns of
the development or state of facts that constitutes that Triggering Event, then
no automatic termination shall become effective by reason of the occurrence of
that particular Triggering Event until the conclusion of the first meeting of
the members of the National Association that occurs after receipt of such a
waiver request.
(c) If in connection with any particular Triggering Event, Cobalt shall not
deliver a waiver request to the National Association in writing on or prior to
the Request Deadline but shall do so after the Request Deadline, then the
National Association shall have the right to temporarily reinstate all or any
one or more of the Cobalt Licenses effective from the date upon which they would
otherwise have automatically terminated under Section 3.1 upon such terms and
subject to such conditions as the National Association may prescribe and utilize
the procedure prescribed in Section 3.3 to determine whether the Cobalt Licenses
shall terminate or whether an Alternative Outcome shall be prescribed. In no
event shall the National Association be deemed obligated to grant any such
temporary reinstatement and unless the National Association does so the
automatic termination of the Cobalt Licenses effected under Section 3.1 shall be
permanent.
3.3 Members' Disposition.
(a) If any automatic termination of the Cobalt Licenses shall have been
postponed pursuant to the provisions of Section 3.2 until a particular meeting
of the members of the National Association, then such automatic termination
shall become effective at the conclusion of that meeting unless a Double
Disinterested Majority in their sole discretion prescribe an alternative outcome
(herein called an "Alternative Outcome").
(b) The Alternative Outcome may have any terms as the Double Disinterested
Majority shall prescribe and (without limiting by implication the discretion of
such Double Disinterested Majority) may be (i) an interim outcome (such as the
postponement of a final decision to a subsequent meeting subject to such
conditions as such Double Disinterested Majority shall prescribe) or (ii) a
final outcome in which Cobalt's right to retain the Cobalt Licenses may be made
subject to such terms and conditions as the Double Disinterested Majority may
prescribe and in which the terms of those Cobalt Licenses and or this Addendum
may be changed in such manner as the Double Disinterested Majority may
prescribe. The Double Disinterested Majority shall also have the right to
delegate to any committee, group or person the right to establish any of the
terms of an Alternative Outcome, to administer any Alternative Outcome, and/or
to make determinations required under the Alternative Outcome (such as a
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determination as to whether Cobalt has satisfied any conditions that may be
prescribed in the Alternative Outcome for the continuation of the Cobalt
Licenses).
(c) If Cobalt shall be dissatisfied with any Alternative Outcome, Cobalt
shall have the right to elect to have the Cobalt Licenses automatically
terminate rather than accept such Alternative Outcome. Unless Cobalt shall
expressly agree in writing to the terms of an Alternative Outcome not later than
the Acceptance Deadline, the Cobalt Licenses shall automatically terminate on
the Acceptance Deadline. Unless the Double Disinterested Majority shall
prescribe another date, the Acceptance Deadline for any Alternative Outcome
shall be the third business day after the Double Disinterested Majority approves
the Alternative Outcome.
(d) For purposes of this Agreement, the term "Double Disinterested
Majority" means a majority of the disinterested members of the National
Association and a majority of the total then current weighted vote of the
disinterested members of the National Association.
3.4 Each Triggering Event Operates Independently. Each Triggering Event
shall operate independently of any other Triggering Event for purposes of this
Addendum. Every Triggering Event shall constitute a separate and self-sufficient
cause for automatic termination of the Cobalt Licenses regardless of whether any
prior occurrence of such event or any other event shall have been waived
absolutely or conditionally. Accordingly whenever a development occurs or a
state of facts exists that constitutes a Triggering Event under any of the
provisions in Part 2, (i) that development or state of facts shall cause an
automatic termination of the Cobalt Licenses under Section 3.1 unless a separate
Alternative Outcome shall be separately approved for that particular Triggering
Event under the provisions of Section 3.3 and (ii) the result prescribed in
clause (i) shall occur regardless of whether one or more Triggering Events shall
have earlier occurred and regardless of the outcome of any preceding Triggering
Event.
3.5 Association's Independent Authority. The National Association shall
have the right and power to make each determination available to it under this
Addendum in such manner as the National Association shall determine in its sole
discretion and shall not be under any explicit or implicit obligation to act in
any particular manner or to avoid any particular course of action. Without
limiting by implication the generality of the preceding provisions, in no event
shall the National Association have any duty or obligation (i) to prevent any
automatic termination of the Cobalt Licenses or to approve any Alternative
Outcome to any such automatic termination or (ii) to treat any particular
development or circumstances in a manner consistent with the manner in which the
National Association treated any prior development or circumstances (whether
involving Cobalt or any other National Association member).
4. License Relationships.
4.1 This Addendum Controls. The Cobalt Primary Licenses and all other
Cobalt Licenses granted on or after the date hereof shall be deemed subject to
this Addendum regardless of whether any such Cobalt License explicitly so states
or otherwise refers to this Addendum. In the event there shall be any conflict
between any provision in this Addendum and any provision in any of the Cobalt
Licenses, this Addendum shall control.
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4.2 No Other Waiver. Nothing herein shall constitute a waiver of the
National Association's rights to terminate the Cobalt Licenses for any reason
allowed under the Cobalt Licenses other than the reason expressly waived in Part
1 of this Addendum.
4.3 Cancellation of Preceding Licenses. All agreements, understandings or
other circumstances which were made or arose prior to the date hereof granting
Old Parent, Cobalt or any of their respective subsidiaries, affiliates or
predecessors licenses or rights in the Blue Cross name or Blue Shield name or
other rights licensed by the National Association are hereby terminated, and
neither Cobalt nor Old Parent nor any of their respective affiliates shall have
any rights under or by reason of such earlier agreements, understandings or
other circumstances. The rights of Cobalt and its subsidiaries and affiliates to
use the Blue Cross name, the Blue Shield name and other rights licensed by the
National Association shall instead be derived from and after the date hereof
exclusively from the Cobalt Licenses and related written agreements granted on
or after the date hereof. No rule of strict construction, rule resolving
ambiguities against the person who drafted the provision giving rise to such
ambiguities, or other such rule of interpretation shall be applied against any
party with respect to this Addendum or any Cobalt License.
5. Definitions. The following terms shall have the following meanings as
used herein:
Beneficially Own. The terms "Beneficially Own" and "Beneficial Owner" each
has the meaning it is given in Article V of the Charter as constituted on the
date hereof. For purposes of determining the percentage of outstanding shares
that any particular person (including the Foundation) shall be deemed to
Beneficially Own at any particular time, the number of outstanding shares shall
be deemed equal to the number of shares then actually outstanding plus any
shares not then outstanding that the particular person shall be deemed to
Beneficially Own at that particular time.
Charter. The term "Charter" means Cobalt's Certificate of Incorporation.
Common Share. The term "common share" means a share of common stock.
Common Stock. The term "common stock" means common stock issued or issuable
by Cobalt.
Cobalt Licenses. The term "Cobalt Licenses" designates and includes both
the Cobalt Primary Licenses and any other licenses which shall have been granted
by the National Association to Cobalt or to any subsidiary or affiliate of
Cobalt and shall be in effect at the time as of which the term shall be applied.
In the event the Cobalt Primary Licenses shall terminate, such termination shall
have the effect of terminating all other Cobalt Licenses and terminating the
right of any Cobalt subsidiary or affiliate to use the Blue Cross or Blue Shield
name and all other names or rights licensed from the National Association.
Cobalt Primary Licenses. The term "Cobalt Primary Licenses" means (i) the
license to use the Blue Cross name and all other rights granted under or by
reason of the Blue Cross License Agreement dated the date hereof between the
National Association and Cobalt and under any amendments or supplements to, or
restatements or replacements of, that Agreement
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and (ii) the license to use the Blue Shield name and all other rights granted
under or by reason of the Blue Shield License Agreement dated the date hereof
between the National Association and Cobalt and under any amendments or
supplements to, or restatements or replacements of, that Agreement.
Cobalt Share. The term "Cobalt share" designates and includes a share of
common stock or a share (or other basic unit) of any class, series or kind of
any other equity security which Cobalt may at any time issue or be authorized to
issue.
6. Miscellaneous.
6.1 Assignment. Cobalt shall not assign its rights or obligations under
this Addendum to any other person without the prior written consent of the
National Association. The National Association shall have the right to assign
its rights under this Addendum to any corporation or other entity which shall
assume any of its responsibility for the Blue Cross or Blue Shield name or other
rights licensed under the Cobalt Primary Licenses. This Addendum and the
provisions hereof shall be binding upon each of the parties, and their
successors and assigns, and shall inure to the benefit of each party's
successors and permitted assignees.
6.2 Amendment. Any term or provision of this Addendum may be amended, and
the observance of any term of this Addendum may be waived (either generally or
in a particular instance and either retroactively or prospectively) only by a
writing signed by the party to be bound thereby. The failure of any party to
enforce any of the provisions hereof shall not be construed to be a waiver of
the right of such party thereafter to enforce such provisions. No oral agreement
arrangement or understanding which might otherwise affect the rights or
obligations of any person under or by reason of this Addendum or any of the
Cobalt Licenses shall be effective to change any of the rights or obligations
that would otherwise arise under or by reason of this Addendum or any of the
Cobalt Licenses.
6.3 Specific Enforcement. Each of the parties acknowledges that the other
party will be irreparably harmed and that there will be no adequate remedy at
law for a violation of any of the covenants of the other party set forth herein.
Therefore, it is agreed that, in addition to any other remedies that may be
available to either party to this Addendum in connection with any such violation
or prospective violation, such party shall have the right to enforce such
covenant by specific performance, by injunctive relief or by any other means
available to such party at law or in equity.
6.4 Cobalt Warranties. Cobalt warrants to the National Association that:
(i) the Wisconsin Reorganization has become effective in Wisconsin on the terms
and with the effect described in the proxy statement/prospectus, dated January
31, 2001, by UWSI and that proxy statement/prospectus does not contain any
misstatement of a material fact or omit any material fact necessary to prevent
any statement made therein from being misleading; (ii) the terms of Cobalt's
Charter, Cobalt's Bylaws, the Voting Trust Agreement and the Registration Rights
Agreement between Cobalt and the Foundation and the Foundation's Articles of
Incorporation and Bylaws, all as constituted immediately after the Wisconsin
Reorganization and as constituted at the time of the execution and delivery of
this Addendum are identical to the terms of such documents supplied to BCBSA on
March 22, 2001 via e-mail from Thomas Rose
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of Foley & Lardner; (iii) except for those changes provided to the National
Association in writing prior to the date hereof; (iv) the Foundation has
executed and delivered the Voting Trust Agreement and the Registration Rights
Agreement; (v) there are no agreements or understandings that govern the rights
or obligations of Cobalt or the Foundation with respect to each other except
those cited in clause (iii) or disclosed to the National Association prior to
the date hereof; (vi) on the date hereof and after giving effect to the
consummation of the Wisconsin Reorganization, the Foundation Beneficially Owns
not more than 80.0% of Cobalt's outstanding common stock; (vii) on the date
hereof and after giving effect to the consummation of the Wisconsin
Reorganization, Cobalt has no knowledge that any person other than the
Foundation Beneficially Owns more than 5% of Cobalt's outstanding common stock;
(viii) on the date hereof and after giving effect to the consummation of the
Wisconsin Reorganization there are no Cobalt shares outstanding other than
common stock and Cobalt has no obligation to issue any Cobalt shares other than
common stock; and (ix) the Board of Directors of Cobalt is on the date hereof
comprised exclusively of the individuals named in the proxy statement/prospectus
cited in clause (i) as the individuals who will serve on such Board after
completion of the Consummating Merger.
6.5 Citations. The citations in this Addendum to provisions in Cobalt's
Charter, Bylaws, and Voting Trust Agreement are to the versions of those
documents cited in clause (iii) of Section 6.4 and in the event the nomenclature
used in such document shall change, then the citation in this Addendum shall be
deemed to refer to the provision in that document having the same wording as the
provision in the original document cited in clause (iii) of Section 6.4.
6.6 Illinois Law Governs. The internal laws of the State of Illinois
(irrespective of its choice of law principles) shall govern all issues
concerning the validity of this Addendum, the construction of its terms, and the
interpretation and enforcement of the rights and duties of the parties.
Each of the parties has executed this Addendum to evidence its agreement to
be bound by all of its terms.
Blue Cross and Blue Shield Association
By: /s/ Scott P. Serota
----------------------------------------------------
Name: Scott P. Serota
Title: President
Cobalt Corporation
(a Wisconsin corporation identified herein as "Cobalt")
By: /s/ Thomas R. Hefty
----------------------------------------------------
Name: Thomas R. Hefty
Title: Chief Executive Officer
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