**TIER II**

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**EXECUTIVE SEVERANCE AGREEMENT**

**Cobalt Corporation**

 

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| **TABLE  OF CONTENTS** |
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| ARTICLE  1             | ESTABLISHMENT,  TERM, AND PURPOSE         |
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| ARTICLE  2             | DEFINITIONS                               |
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| ARTICLE  3             | LOSS  OF ELIGIBILITY UNDER THIS AGREEMENT |
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| ARTICLE 4              | SEVERANCE BENEFITS                        |
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| ARTICLE  5             | FORM  AND TIMING OF SEVERANCE BENEFITS    |
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| ARTICLE  6             | EXCISE  TAX EQUALIZATION PAYMENT          |
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| ARTICLE  7             | THE  COMPANY’S PAYMENT OBLIGATION    |
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| ARTICLE 8              | LEGAL REMEDIES                            |
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| ARTICLE 9              | OUTPLACEMENT  ASSISTANCE                  |
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| ARTICLE 10             | SUCCESSORS  AND ASSIGNMENT                |
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| ARTICLE 11             | MISCELLANEOUS                             |

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**Cobalt CorporationExecutive Severance Agreement**

             THISAGREEMENT is made and entered into as of the ___ day of ________ 2001, by andbetween Cobalt Corporation (hereinafter referred to as the “Company”) and «ExecName»(hereinafter referred to as the “Executive”).

             WHEREAS,the Executive is a key executive of the Company;

             WHEREAS,should the possibility of a Change in Control of the Company (as defined inSection 2.6 hereof) arise, the Board believes it is imperative that the Companyand the Board should be able to rely upon the Executive to continue in his orher position, and that the Company should be able to receive and rely upon theExecutive’s advice, if requested, as to the best interests of the Companywithout concern that the Executive might be distracted by the personaluncertainties and risks created by the possibility of a Change in Control;

             WHEREAS,should the possibility of a Change in Control arise, in addition to his or herregular duties, the Executive may be called upon to assist in the assessment ofsuch possible Change in Control, advise management and the Board as to whethersuch Change in Control would be in the best interests of the Company, and totake such other actions as the Board might determine to be appropriate;

             WHEREAS,the Executive previously entered into an executive severance agreement (the“Prior Agreement”) with Blue Cross & Blue Shield United of Wisconsin(“BCBSUW”) which is substantially similar to this Agreement;

             WHEREAS,through a reorganization, BCBSUW has become a subsidiary of the Company;

             WHEREAS,the Prior Agreement would have covered a Change in Control of the Company andimposed the financial obligations of the Prior Agreement on BCBSUW which is nowa subsidiary of the Company;

             WHEREAS,the Board of Directors of the Company believes that the Executive SeveranceAgreement and the obligations thereunder should be between the Company and theExecutive now that the Company has become BCBSUW’s parent; and

             WHEREAS,the Board of Directors of the Company desires to substitute this Agreement forthe Prior Agreement.

             NOW,THEREFORE, to assure the Company that it will have the continued dedication ofthe Executive and the availability of his or her advice and counselnotwithstanding the possibility, threat, or occurrence of a Change in Controlof the Company, and to induce the Executive to remain in the employ of theCompany, and for other good and valuable consideration, the Company and theExecutive agree as follows:

**Article 1**    ESTABLISHMENT, TERM, ANDPURPOSE

             ThisAgreement will commence on the Effective Date and, subject to Article 3, shallcontinue in effect for three (3) full years. However, at the end of such three (3) year period and, if extended, atthe end of each additional year thereafter, the term of this Agreement shall beextended automatically for one (1) additional year, unless the Committeedelivers written notice six (6) months prior to the end of such term, orextended term, to the Executive, that the Agreement will not be extended.  In the latter case, the Agreement willterminate at the end of the term, or extended term, then in progress, or asprovided in Article 3.

             However,in the event a Change in Control occurs during the original or any extendedterm, this Agreement will remain in effect for the longer of:  (i) twenty-four (24) months beyond the monthin which such Change in Control occurred; or (ii) until all obligations of theCompany hereunder have been fulfilled, and until all benefits requiredhereunder have been paid to the Executive.

**Article2**    DEFINITIONS

             Wheneverused in this Agreement, the following terms shall have the meanings set forthbelow and, when the meaning is intended, the initial letter of the word iscapitalized.

**             2.1**  “BaseSalary” means the salary of record paid to an Executive by the Company, or byBlue Cross & Blue Shield United of Wisconsin or any other subsidiary of theCompany as annual salary, excluding amounts received under incentive or otherbonus plans, whether or not deferred.

**             2.2**  “BeneficialOwner” shall have the meaning ascribed to such term in Rule 13d-3 of theGeneral Rules and Regulations under the Exchange Act, but excluding those whosestatus arises from the holding of proxies and including option holders on afully diluted basis.

**             2.3** “Beneficiary” means the persons or entities designated or deemeddesignated by the Executive pursuant to Section 11.2 herein.

**             2.4**  “Board”means the Board of Directors of the Company.

**             2.5**  “Cause”means:  (a) the Executive’s willful andcontinued failure to substantially perform his or her duties with the Company(other than any such failure resulting from Disability or occurring afterissuance by the Executive of a Notice of Termination for Good Reason), after awritten demand for substantial performance is delivered to the Executive thatspecifically identifies the manner in which the Company believes that theExecutive has willfully failed to substantially perform his or her duties, andafter the Executive has failed to resume substantial performance of his or herduties on a continuous basis within thirty (30) calendar days of receiving suchdemand; (b) the Executive willfully engaging in conduct (other than conductcovered under (a) above) which is demonstrably and materially injurious to theCompany, monetarily or otherwise; or (c) the Executive having been convicted ofa felony (as evidenced by binding and final judgment, order or decree of acourt of competent jurisdiction, in effect after exhaustion of all rights ofappeal) which substantially impairs the Executive’s ability to perform his orher duties or responsibilities.  Forpurposes of this Section 2.5, the Executive’s actions or failures to act willbe deemed “willful” only if done or omitted in bad faith and without reasonablebelief that the action or omission was in the best interests of the Company.

**             2.6**  “Change inControl” shall mean:

             (i)          Anyindividual, entity or group (within the meaning of Section 13(d)(3) of theExchange Act) (a “Person”), other than the Wisconsin United for HealthFoundation, Inc. (the “Foundation”) becoming the beneficial owner(within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% ormore of the either (x) the then outstanding shares of common stock of theCompany (the “Outstanding CompanyCommon Stock”) or (y) thecombined voting power of the then outstanding voting securities of the Companyentitled to vote generally in an election of directors (the “OutstandingCompany Voting Securities”); provided, however, that for purposes of thisSection 2.6, the following acquisitions shall not constitute a Change inControl: (A) any acquisition directly from the Company, (B) any acquisition bythe Company, (C) any acquisition by any employee benefit plan (or relatedtrust) sponsored by or maintained by the Company or any corporation controlledby the Company, (D) any acquisition by any corporation controlled by theCompany, or (E) any acquisition by any corporation pursuant to a transactionthat complies with clauses (A), (B) and (C) of Section 2.6 (iii); or (F) anyacquisition where the Person owns, after the acquisition, less of the OutstandingCompany Voting Securities or Outstanding Company Common Stock than theFoundation then owns after such acquisition.

             (ii)         Individuals who, as of the date of this Agreement,constitute the Board (the “Incumbent Board”) cease for any reason to constituteat least a majority of the Board; provided, however, that any individualbecoming a director subsequent to the date hereof whose election, or nominationfor election by the Company’s shareholders, was approved by a vote of at leasta majority of the directors then comprising the Incumbent Board shall beconsidered as though such individual were a member of the Incumbent Board, butexcluding, for this purpose, any such individual whose initial assumption ofoffice occurs as a result of an actual or threatened election contest withrespect to the election or removal of directors or other actual or threatenedsolicitation of proxies or consents by or on behalf of a Person other than theBoard; or

             (iii)        Consummation of a reorganization, merger or consolidation orsale or other disposition of all or substantially all of the assets of theCompany (a “Business Combination”), in each case, unless, following suchBusiness Combination: (A) all or substantially all of the individuals andentities who were the beneficial owners, respectively, of the OutstandingCompany Common Stock and Outstanding Company Voting Securities immediatelyprior to such Business Combination beneficially own, directly or indirectly,more than 50% of, respectively, the then Outstanding shares of common stock andthe combined voting power of the then Outstanding voting Company Securitiesentitled to vote generally in the election of directors, as the case may be, ofthe corporation resulting from such Business Combination (including, withoutlimitation, a corporation that as a result of such transaction owns the Companyor all or substantially all of the Company’s assets either directly or throughone or more subsidiaries) in substantially the same proportions as theirownership, immediately prior to such Business Combination of the OutstandingCompany Common Stock and Outstanding Company Voting Securities, as the case maybe, (B) no Person (excluding any corporation resulting from such BusinessCombination or any employee benefit plan (or related trust) of the Company orsuch corporation resulting from such Business Combination) beneficially owns,directly or indirectly, 20% or more of, respectively, the then outstandingshares of common stock of the corporation resulting from such Business Combinationor the combined voting power of the then outstanding voting securities of suchcorporation except to the extent that such ownership existed prior to theBusiness Combination and (C) at least a majority of the members of the board ofdirectors of the corporation resulting from such Business Combination weremembers of the Incumbent Board at the time of the execution of the initialagreement, or of the action of the Board providing for such BusinessCombination; or

             (iv)       Approval by the shareholders of theCompany of a complete liquidation or dissolution of the Company.

**             2.7**  “Code”means the United States Internal Revenue Code of 1986, as amended, and anysuccessors thereto.

**             2.8**  “Committee”means the Management Review Committee of the Board or any other committeeappointed by the Board to perform the functions of the Management ReviewCommittee or any successor committee which performs the functions of theManagement Review Committee or, in the absence of one, by the Board.

             **2.9**  “Company”means Cobalt Corporation, a Wisconsin corporation, or any successor thereto asprovided in Article 10 herein.

             **2.10** “Disability” means a complete and permanent disability as determined bythe Committee in accordance with the Company Long-Term Disability Plan, as ineffect on the Effective Date.

             **2.11**  “EffectiveDate” means the date of this Agreement set forth above.

             **2.12**  “EffectiveDate of Termination” means the date on which a Qualifying Termination occurs.

             **2.13**  “ExchangeAct” means the United States Securities Exchange Act of 1934, as amended.

             **2.14**  “GoodReason” shall mean, without the Executive’s express written consent, theoccurrence of any one or more of the following:

|   | (a)    | The  assignment of the Executive to duties materially inconsistent with the Executive’s  authorities, duties, responsibilities, and status (including offices and  reporting requirements) as an employee of the Company, or a reduction or  alteration in the nature or status of the Executive’s authorities, duties, or  responsibilities from the greater of those in effect (i) on the Effective  Date; (ii) during the fiscal year immediately preceding the year of the  Change in Control; or (iii) immediately preceding the Change in Control; |
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|   | (b)    | Any  breach of this Agreement by the Company, other than an isolated,  insubstantial or inadvertent failure which is not taken in bad faith and  which the Company or any successor remedies promptly after notice from the  Executive;                                                                                                                                                                                                                                                                                                                            |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|   | (c)    | The  Executive’s principal office is moved to a location that is more than fifty  (50) miles farther from the Executive’s home than the principal office  location immediately prior to the Change in Control;                                                                                                                                                                                                                                                                                                                                           |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|   | (d)    | A  reduction by the Company in the Executive’s Base Salary as in effect on the  Effective Date or as the same shall be increased from time to time;                                                                                                                                                                                                                                                                                                                                                                                                           |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|   | (e)    | A  material reduction in the Executive’s level of participation in any of the  Company’s short- and/or long-term incentive compensation plans, or employee  benefit or retirement plans, policies, practices, or arrangements in which  the Executive participates from the greater of the levels in place on:  (i) the Effective Date; (ii) the fiscal  year immediately preceding the Change in Control; or (iii) immediately  preceding the Change in Control;                                                                                   |
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|   | (f)    | The  failure of the Company to obtain a satisfactory agreement from any successor  to the Company to assume and agree to perform this Agreement, as contemplated  in Article 10 herein; or                                                                                                                                                                                                                                                                                                                                                                         |
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|   | (g)    | Any  termination of Executive’s employment by the Company that is not effected  pursuant to a Notice of Termination.                                                                                                                                                                                                                                                                                                                                                                                                                                          |

             Theexistence of Good Reason shall not be affected by the Executive’s temporaryincapacity due to physical or mental illness not constituting aDisability.  The Executive’s continuedemployment shall not constitute a waiver of the Executive’s rights with respectto any circumstance constituting Good Reason.

**             2.15**  “Notice ofTermination” means a written notice which shall indicate the specific provisionin this Agreement governing the Executive’s termination of employment and shallset forth in reasonable detail the facts and circumstances claimed to provide abasis for termination of the Executive’s employment under the provision soindicated.

             **2.16**  “Person”shall have the meaning ascribed to such term in Section 3(a)(9) of the ExchangeAct and used in Sections 13(d) and 14(d) thereof, including a “group” asprovided in Section 13(d).

             **2.17**  “ProfitSharing Plan” means the Company Profit Sharing Plan.

             **2.18**  “QualifyingTermination” means termination of the Executive’s employment under one of thecircumstances described in Section 4.2 below.

             **2.19** “Retirement” shall mean termination of employment after the Executivehas attained Age 55 and completed 10 “Years of Service” (as such term isdefined in the Company’s tax-qualified defined benefit pension plan.)  “Retirement” shall be deemed to occur onlyif it is pursuant to a mandatory retirement provision in such plan or if theExecutive and the Company agree in writing that “Retirement” has occurred forpurposes of this Agreement.  (Retirementpursuant to a mandatory retirement provision added on or after a date sixmonths prior to a Change in Control will not be treated as mandatory retirementfor purposes of this Agreement.)

             **2.20**  “SeveranceBenefits” means the payment of severance compensation as provided in Section4.3 herein.

**Article 3**   LOSS OFELIGIBILITY UNDER THIS AGREEMENT

             Inthe event Executive’s job classification is reduced, the Committee, in its solediscretion, may cancel this Agreement by written notice delivered to theExecutive.  A cancellation occurringlater than six (6) months prior to a Change in Control shall be null and void.

**Article 4**    SEVERANCE BENEFITS

**             4.1**        **Right to Severance Benefits.**  TheExecutive shall be entitled to receive from the Company Severance Benefits, asdescribed in Section 4.3 herein, if the Executive incurs a QualifyingTermination during the six (6) month period immediately prior to a Change inControl or within twenty-four (24) calendar months following a Change in Control.

             TheExecutive shall not be entitled to receive Severance Benefits if he or she isterminated for Cause, or if his or her employment with the Company ends due todeath, Disability, or Retirement or due to termination of employment by theExecutive without Good Reason.

**             4.2**** QualifyingTermination of Employment.**  Upon the occurrence of any oneor more of the following events the Company shall pay Severance Benefits to theExecutive under this Agreement:

|   | (a)    | Termination  of the Executive’s employment by the Company for reasons other than  Cause.                      |
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|   | (b)    | Termination  by the Executive for Good Reason pursuant to a Notice of Termination  delivered to the Company by theExecutive. |

 

             **4.3**  **Descriptionof Severance Benefits.**  In the event the Executive becomesentitled to receive Severance Benefits as provided in Sections 4.1 and 4.2herein, the Company shall pay to the Executive and provide him or her with thefollowing:

|   | (a)    | An  amount equal to two (2) times the highest rate of the Executive’s annualized  Base Salary in effect at any time up to and including the Effective Date of  Termination.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
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|   | (b)    | An  amount equal to two (2) times the Executive’s target award under the annual  bonus plan and the Profit Sharing Plan established for the plan year in which  the Executive’s Effective Date of Termination occurs, or the prior plan year  if a target award has not been established for the plan year in which the  Executive’s Effective Date of Termination occurs.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
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|   | (c)    | A  continuation of the welfare benefits of health care, life and accidental  death and dismemberment, and disability insurance coverage (collectively,  “Supplemental Benefits”) for two (2) full years after the Effective Date of  Termination.  These benefits shall be  provided at the same cost to the Executive (if any), and at the same coverage  level, as in effect as of the Executive’s Effective Date of Termination.  However, in the event the premium cost  and/or level of coverage shall change for all management employees with  respect to Supplemental Benefits, the cost and/or coverage level, likewise,  shall change for the Executive in a corresponding manner.  COBRA-related benefits will begin as of  the end of the three year period (or upon earlier discontinuance described  below).                                                                                                                                                                                                                                                                                                                                                                      |
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|   |   | The  continuation of any or all of the Supplemental Benefits shall be discontinued  prior to the end of the two (2) year period in the event the Executive has  available substantially similar benefits at a comparable cost from a  subsequent employer.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
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|   |   | The  Executive must supply all information reasonably requested by the Company  pursuant to this subsection.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
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|   | (d)    | An  amount equal to the Executive’s unpaid targeted annual bonus, established for  the plan year in which the Executive’s Effective Date of Termination occurs,  multiplied by a fraction, the numerator of which is the number of days  completed in the then-existing fiscal year through the Effective Date of  Termination, and the denominator of which is three hundred sixty-five (365).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
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|   | (e)    | An  amount equal to the Executive’s unpaid allocation from the Profit Sharing  Plan, established for the plan year in which the Executive’s Effective Date  of Termination occurs, multiplied by a fraction, the numerator of which is  the number of days completed in the then-existing fiscal year through the  Effective Date of Termination, and the denominator of which is three hundred  sixty-five (365).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
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|   | (f)    | The  Executive shall be eligible for benefits under the Company Retiree Medical  Plan (the “Retiree Medical Plan”) beginning at age 55 regardless of whether  the Executive: (i) is an employee of the Company on the date he attains age  55; or (ii) has completed 10 years of service with the Company.  Executive shall be subject to all of the  other terms and provisions of the Retiree Medical Plan (including the  provisions limiting the cost of the Retiree Medical Plan which the Company  will pay) except: (i) in the event that the Retiree Medical Plan is  terminated, the Company shall obtain substitute coverage providing similar  benefits for the Executive and shall make the same Company contributions  toward the cost of such substitute coverage; (ii) in the event the Executive  has available, from a subsequent employer, similar medical coverage at a  similar employee cost, coverage under the Retiree Medical Plan shall be  suspended until such similar coverage (other than COBRA continuation of such  coverage) terminates; and (iii) the Executive may elect to terminate Retiree  Medical Plan participation, or reenter the Retiree Medical Plan, at any time. |

             Incentiveawards granted under the Company Equity Incentive Plan and other incentivearrangements adopted by the Company shall be governed by the terms of theapplicable plan.

             Theaggregate benefits accrued by the Executive as of the Effective Date ofTermination under the Company Pension Plan, the UGS Pension Plan, the Company401(k) Plan, and other qualified savings and retirement plans sponsored by theCompany shall be governed by the terms of the applicable plan.  For purposes of the Company Supplemental ExecutiveRetirement Plan, such benefits shall be calculated under the assumption thatthe minimum service requirement under Section 4.1 of the Company SupplementalExecutive Retirement Plan (vesting requirement) shall be deemed to have beensatisfied as of the date of a Qualifying Termination and the Executive’semployment continued following the Effective Date of Termination for two (2)full years (i.e., two (2) additional years of service credits shall be added);provided, however, that for purposes of determining “final average pay” undersuch program, the Executive’s actual pay history as of the Effective Date ofTermination shall be used.

             Compensationwhich has been deferred under the Company Deferred Compensation Plan or otherplans sponsored by the Company, as applicable, together with all interest thathas been credited with respect to any such deferred compensation balances,shall be governed by the terms of the applicable plan.

             **4.4        Termination forDisability.**  In the event the Executive’semployment is terminated due to Disability, the Executive shall not be entitledto the Severance Benefits described in Section 4.3.  The terms and conditions of the Executive’s employment rightsunder that circumstance shall be determined without regard to this Agreement.

             **4.5        Termination forRetirement or Death.**  If the Executive’s employment isterminated by reason of his or her Retirement or death, the Executive shall notbe entitled to the Severance Benefits described in Section 4.3.  The terms and conditions of the Executive’semployment rights under those circumstances are to be determined without regardto this Agreement.

             **4.6  Termination for Cause or by the ExecutiveOther Than for Good Reason.**  If the Executive’s employment isterminated either:  (a) by the Companyfor Cause; or (b) by the Executive other than for Good Reason, the Companyshall pay the Executive the amounts specified in Section 4.8 and the Companyshall have no further obligations to the Executive under this Agreement.

             **4.7  Notice of Termination.**  Anytermination of employment by the Company or by the Executive for Good Reasonshall be communicated by a Notice of Termination.  If the Executive is providing the notice, it should be deliveredto a member of the Committee.  If theCompany is providing notice, it should be delivered to the Executive.

             **4.8        Payment of AccruedCompensation and Benefits.**  In all events, Executive shall,upon termination of employment with the Company, be paid an amount equal toExecutive’s unpaid Base Salary, accrued vacation pay and any other accrued butunpaid compensation in cash or cash equivalents within ten (10) days of thetermination except where the terms of the compensation arrangement or plangovern instead of this Agreement and specifically provide for later payment.

             **4.9        Coordination with Other Agreements.**  TheSeverance Benefits described in Section 4.3 shall be reduced by any severancebenefits paid pursuant to either: (i) other agreements between the Company andthe Executive or (ii) any plan adopted by the Company, unless such planor agreement expressly provides that the benefits under such plan or agreementare in addition to the benefits payable under this Agreement.

**Article 5**    FORMAND TIMING OF SEVERANCE BENEFITS

             **5.1**        **Form and Timing of SeveranceBenefits.**  The Severance Benefits describedin Sections 4.3(a), 4.3(b), 4.3(d), and 4.3(e) herein shall be paid in cash orcash equivalents to the Executive in a single lump sum as soon as practicablefollowing the Effective Date of Termination, (or, if later, the date of theChange in Control) but in no event beyond ten (10) days from such date.  The Supplemental Benefits described inSection 4.3(c) shall be paid at the times due under each applicable plan.

             **5.2**        **Withholding of Taxes.**  The Companyshall be entitled to withhold from any amounts payable under this Agreement theminimum taxes legally required to be withheld (including, without limitation,any United States Federal taxes and any other state, city, or local taxes).

**Article 6**    EXCISE TAX EQUALIZATIONPAYMENT

             **6.1**        **Excise Tax EqualizationPayment.**  Notwithstanding anythingcontained in this Agreement or any other agreement between Executive and theCompany to the contrary, or termination of this Agreement following a Change inControl, in the event that the Executive becomes entitled to Severance Benefitsor any other payment or benefit under this Agreement, or under any otheragreement with or plan or compensation arrangement with the Company, itssubsidiaries or affiliates (in the aggregate, the “Total Payments”), if all orany part of the Total Payments will be subject to the tax (the “Excise Tax”)imposed by Section 4999 of the Code (or any similar tax that may hereafter beimposed), the Company shall pay to the Executive in cash an additional amount(the “Gross-Up Payment”) such that the net amount retained by the Executiveafter deduction of any Excise Tax upon the Total Payments and any federal,state, and local income or employment tax, penalties, interest, and Excise Taxupon the Gross-Up Payment provided for by this Section 6.1 (including FICA andFUTA), shall be equal to the Total Payments. Such payment shall be made by the Company to the Executive as soon aspractical following the Effective Date of Termination, but in no event beyondthirty (30) days from such date. Notwithstanding the foregoing, however, the Executive’s SeveranceBenefits shall be grossed up only in the event that application of the gross-upfeature would result in the Executive receiving additional after-tax Change inControl amounts of at least $100,000. In the event that a gross-up of the Executive’s Severance Benefits underthis Agreement would result in less than $100,000 additional after-tax Changein Control related amounts, the Executive’s Severance Benefits shall be cappedat the maximum amount that may be paid without incurring Excise Tax.

             **6.2**        **Tax Computation.**  Forpurposes of determining whether any of the Total Payments will be subject tothe Excise Tax and the amounts of such Excise Tax:

|   | (a)    | The  Severance Benefits and any other payments or benefits received or to be  received by the Executive in connection with a Change in Control of the  Company or the Executive’s termination of employment (whether pursuant to the  terms of this Agreement or any other plan, arrangement, or agreement with the  Company and subsidiaries or affiliates, or with any Person whose actions  result in a Change in Control of the Company or any Person affiliated with  the Company or such Persons) shall be treated as “parachute payments” within  the meaning of Section 280G(b)(2) of the Code, and all “excess parachute  payments” within the meaning of Section 280G(b)(l) shall be treated as  subject to the Excise Tax, unless in the opinion of a nationally recognized  tax counsel selected by the Company’s independent auditors and reasonably  acceptable to the Executive:  (i) the  Severance Benefits and such other payments or benefits (in whole or in part)  do not constitute parachute payments; (ii) such excess parachute payments (in  whole or in part) represent reasonable compensation for services actually  rendered within the meaning of Section 280G(b)(4) of the Code in excess of  the base amount within the meaning of Section 280G(b)(3) of the Code; or  (iii) are otherwise not subject to the Excise Tax; |
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|   | (b)    | The  amount of the Total Payments which shall be treated as subject to the Excise  Tax shall be equal to the lesser of:   (i) the total amount of the Total Payments; or (ii) the amount of  excess parachute payments within the meaning of Section 280G(b)( 1) (after  applying clause (a) above); and                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
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|   | (c)    | The  value of any noncash benefits or any deferred payment or benefit shall be  determined by the Company’s independent auditors in accordance with the  principles of Sections 280G(d)(3) and (4) of the Code.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |

             Forpurposes of determining the amount of the Gross-Up Payment, the Executive shallbe deemed to pay federal income taxes at the highest marginal rate of federalincome taxation in the calendar year in which the Gross-Up Payment is to be made,and state and local income taxes at the highest marginal rate of taxation inthe state and locality of the Executive’s residence on the Effective Date ofTermination, net of the maximum reduction in federal income taxes which couldbe obtained from deduction of such state and local taxes.

**             6.3**        **Subsequent Recalculation.**  In theevent the Internal Revenue Service adjusts the computation of the Company underSection 6.2 herein so that the Executive did not receive the greatest netbenefit, the Company shall reimburse the Executive for the full amountnecessary to make the Executive whole, plus a market rate of interest, asdetermined by the national tax counsel referred to above.

**             6.4**        **Costs of Calculations.**  The Companyagrees to bear all costs associated with, and to indemnify and hold harmless,the national tax counsel of and from any and all claims, damages, and expensesresulting from or relating to its determination pursuant to this Article 6,except for claims, damages, or expenses resulting from the gross negligence orwillful misconduct of such firm.

**Article 7**    THE COMPANY’S PAYMENTOBLIGATION

**             7.1**        **Payment Obligations Absolute.**  TheCompany’s obligation to make the payments and the arrangements provided forherein shall be absolute and unconditional, and shall not be affected by anycircumstances, including, without limitation, any offset, counterclaim,recoupment, defense, or other right which the Company may have against theExecutive or anyone else.  All amountspayable by the Company hereunder shall be paid without notice or demand.  Subject to the provision set forth inSection 8.1 and 8.2, each and every payment made hereunder by the Company shallbe final, and the Company shall not seek to recover all or any part of suchpayment from the Executive or from whomsoever may be entitled thereto, for anyreasons whatsoever.

             TheExecutive shall not be obligated to seek other employment in mitigation of theamounts payable or arrangements made under any provision of this Agreement, andthe obtaining of any such other employment shall in no event effect anyreduction of the Company’s obligations to make the payments and arrangementsrequired to be made under this Agreement, except to the extent provided inSection 4.3(c) herein.

**             7.2**        **Contractual Rights to Benefits.**  ThisAgreement establishes and vests in each Executive a contractual right to thebenefits to which he or she is entitled hereunder.  However, nothing herein contained shall require or be deemed torequire, or prohibit or be deemed to prohibit, the Company to segregate,earmark, or otherwise set aside any funds or other assets, in trust orotherwise, to provide for any payments to be made or required hereunder.

**Article8**    LEGAL REMEDIES

**             8.1**  **Paymentof Legal Fees.**  To the extent permitted by law,the Company shall pay all legal fees, costs of litigation, prejudgmentinterest, and other expenses incurred in good faith by the Executive as aresult of the Company’s refusal to provide the Severance Benefits, the Gross-UpPayment and/or any other benefits under this Agreement to which the Executivebecomes entitled under this Agreement, or as a result of the Company’scontesting the validity, enforceability, or interpretation of this Agreement,or as a result of any conflict (including conflicts related to the calculationof parachute payments) between the parties pertaining to this Agreement;provided, however, that the Company shall be reimbursed by the Executive forall such fees and expenses in the event the Executive fails to prevail withrespect to any one (1) material issue of dispute in connection with such legalaction.  The Executive shall not beliable for the Company’s fees or costs related to any such litigation.

**             8.2** **Arbitration.**  Executiveshall have the right and option to elect (in lieu of litigation) to have anydispute or controversy arising under or in connection with this Agreementsettled by arbitration, conducted before a panel of three (3) arbitratorssitting in a location selected by the Executive within fifty (50) miles fromthe location of his or her employment with the Company, in accordance with therules of the American Arbitration Association then in effect.

             Judgmentmay be entered on the award of the arbitrator in any court having properjurisdiction.  All expenses of sucharbitration, including the fees and expenses of the counsel for the Executive,shall be borne by the Company; provided, however, that the Company shall bereimbursed by the Executive for all such fees and expenses in the event theExecutive fails to prevail with respect to any one (1) material issue ofdispute in connection with such legal action. The Executive shall not be liable for the Company’s fees or costsrelated to any such arbitration.

**Article 9**   ** **OUTPLACEMENT ASSISTANCE

             Followinga Qualifying Termination (as described in Section 4.2 herein), the Executiveshall be reimbursed by the Company for the costs of all outplacement servicesobtained by the Executive within the two (2) year period after the EffectiveDate of Termination; provided, however, that the total reimbursement shall belimited to an amount equal to fifteen percent (15%) of the Executive’s BaseSalary as of the Effective Date of Termination.

**Article 10**    SUCCESSORS AND ASSIGNMENT

**             10.1**     **Successors to the Company.** The Companywill require any successor (whether direct or indirect, by purchase, merger,consolidation, or otherwise) of all or substantially all of the business and/orassets of the Company or of any division or subsidiary thereof to expresslyassume and agree to perform the Company’s obligations under this Agreement inthe same manner and to the same extent that the Company would be required toperform them if no such succession had taken place.  Failure of the Company to obtain such assumption and agreementprior to the effective date of any such succession shall be a breach of thisAgreement and shall entitle Executives to compensation from the Company in thesame amount and on the same terms as they would be entitled to hereunder ifthey had terminated their employment with the Company voluntarily for GoodReason.  Except for the purposes ofimplementing the foregoing, the date on which any such succession becomeseffective shall be deemed the Effective Date of Termination.

**             10.2**     **Assignment by the Executive.**  ThisAgreement shall inure to the benefit of and be enforceable by the Executive’spersonal or legal representatives, executors, administrators, successors,heirs, distributees, devisees, and legatees. If the Executive dies (prior to receipt of all amounts due underSections 4.3(a), (b), (d) or (e) and 4.8, all such amounts, unless otherwiseprovided herein, shall be paid in accordance with the terms of this Agreementto the Executive’s Beneficiary.  If the Executivehas not named a Beneficiary, then such amounts shall be paid to the Executive’sdevisee, legatee, or other designee, or if there is no such designee, to theExecutive’s estate.

**Article11**    MISCELLANEOUS

**             11.1**     **Employment Status.**  Except asmay be provided under any other agreement between the Executive and theCompany, the employment of the Executive by the Company is “at will,” and maybe terminated by either the Executive or the Company at any time, subject toapplicable law.

**             11.2     Beneficiaries.**  TheExecutive may designate one or more persons or entities as the primary and/orcontingent Beneficiaries of any Severance Benefits owing to the Executive underthis Agreement.  Such designation mustbe in the form of a signed writing acceptable to the Committee.  The Executive may make or change suchdesignations at any time.

**             11.3     Severability.**  In theevent any provision of this Agreement shall be held illegal or invalid for anyreason, the illegality or invalidity shall not affect the remaining parts ofthe Agreement, and the Agreement shall be construed and enforced as if theillegal or invalid provision had not been included.  Further, the captions of this Agreement are not part of theprovisions hereof and shall have no force and effect.

**             11.4     Modification. **No provision of this Agreement may be modified,waived, or discharged unless such modification, waiver, or discharge is agreedto in writing and signed by the Executive and by the Company, or by therespective parties’ legal representatives and successors.

**             11.5     EffectOn Prior Agreement.**  This Agreement shall completelysupercede the Prior Agreement between the Company and the Executive and thePrior Agreement shall have no further force or effect.  BCBSUW shall be a third party beneficiary ofthis Section 11.5.

**             11.6     ApplicableLaw.**  To the extent not preempted bythe laws of the United States, the laws of the state of Wisconsin shall be thecontrolling law in all matters relating to this Agreement.

             INWITNESS WHEREOF, the parties have executed this Agreement on this _____ day of___________________, 2001.

| Cobalt Corporation   |   | Executive: |
|--------------------------------|--------|------------|
|                           |   |       |  |
| By:                            |   |       | «ExecName» |
|                           |        |       |   |
| Its:                           |   |       |
|                           |        |       |   |
| Attest:                        |   |       |
|                           |        |       |   |