DISTRIBUTION AND INDEMNITY AGREEMENT
BETWEEN
UNITED WISCONSIN SERVICES, INC.
AND
NEWCO/UWS, INC.
DATED AS OF ____________, 1998.
DISTRIBUTION AND INDEMNITY AGREEMENT
TABLE OF CONTENTS
RECITALS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE I
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 1.01 DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 1.02 REFERENCES; INTERPRETATION. . . . . . . . . . . . . . . . . . . 5
ARTICLE II
TRANSFER OF ASSETS; ASSUMPTION OF LIABILITIES . . . . . . . . . . . . . . . . 6
Section 2.01 CONVEYANCE OF ASSETS; DISCHARGE OF LIABILITIES. . . . . . . . . 6
Section 2.02 NO REPRESENTATIONS OR WARRANTIES. . . . . . . . . . . . . . . . 6
Section 2.03 MUTUAL RELEASE. . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 2.04 ANCILLARY AGREEMENTS. . . . . . . . . . . . . . . . . . . . . . 7
Section 2.05 RESIGNATIONS. . . . . . . . . . . . . . . . . . . . . . . . . . 8
ARTICLE III
THE DISTRIBUTION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
ARTICLE IV
INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 4.01 NEWCO INDEMNIFICATION OF THE UWS GROUP. . . . . . . . . . . . . 8
Section 4.02 UWS INDEMNIFICATION OF NEWCO GROUP. . . . . . . . . . . . . . . 8
Section 4.03 LIMITATIONS ON INDEMNIFICATION OBLIGATIONS. . . . . . . . . . . 8
Section 4.04 INSURANCE AND THIRD PARTY OBLIGATIONS . . . . . . . . . . . . . 9
ARTICLE V
INDEMNIFICATION PROCEDURES. . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 5.01 NOTICE AND PAYMENT OF NON-THIRD PARTY CLAIMS. . . . . . . . . . 9
Section 5.02 NOTICE AND DEFENSE OF THIRD PARTY CLAIMS. . . . . . . . . . . . 9
Section 5.03 OTHER ADJUSTMENTS . . . . . . . . . . . . . . . . . . . . . . . 11
ARTICLE VI
INSURANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 6.01 GENERAL LIABILITY INSURANCE . . . . . . . . . . . . . . . . . . 12
Section 6.02 DIRECTORS' AND OFFICERS' INSURANCE. . . . . . . . . . . . . . . 13
Section 6.03 INSURED LITIGATION. . . . . . . . . . . . . . . . . . . . . . . 13
ARTICLE VII
ADDITIONAL COVENANTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 7.01 GUARANTEED NEWCO AND UWS LIABILITIES. . . . . . . . . . . . . . 13
Section 7.02 PRIVILEGED MATTERS. . . . . . . . . . . . . . . . . . . . . . . 14
Section 7.03 LIMITATION ON SOLICITATION OF EMPLOYEES . . . . . . . . . . . . 16
Section 7.04 PRODUCTION OF WITNESSES . . . . . . . . . . . . . . . . . . . . 16
Section 7.05 RETENTION OF RECORDS. . . . . . . . . . . . . . . . . . . . . . 16
Section 7.06 ACCESS TO INFORMATION.. . . . . . . . . . . . . . . . . . . . . 17
Section 7.07 PROVISION OF CORPORATE RECORDS. . . . . . . . . . . . . . . . . 17
Section 7.08 LITIGATION COOPERATION. . . . . . . . . . . . . . . . . . . . . 17
Section 7.09 CONFIDENTIALITY . . . . . . . . . . . . . . . . . . . . . . . . 17
ARTICLE VIII
ACCOUNTING MATTERS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 8.01 ALLOCATION OF PREPAID ITEMS AND RESERVES. . . . . . . . . . . . 18
Section 8.02 ACCOUNTING TREATMENT OF ASSETS TRANSFERRED AND
LIABILITIES ASSUMED . . . . . . . . . . . . . . . . . . . . . . 18
Section 8.03 INTERCOMPANY ACCOUNTS . . . . . . . . . . . . . . . . . . . . . 18
Section 8.04 ALLOCATION OF DISTRIBUTION EXPENSES . . . . . . . . . . . . . . 18
ARTICLE IX
MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 9.01 INTEREST. . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 9.02 NOTICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 9.03 AMENDMENT AND WAIVER. . . . . . . . . . . . . . . . . . . . . . 19
Section 9.04 ENTIRE AGREEMENT. . . . . . . . . . . . . . . . . . . . . . . . 19
Section 9.05 ASSIGNMENT. . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 9.06 SUCCESSORS AND ASSIGNS. . . . . . . . . . . . . . . . . . . . . 20
Section 9.07 THIRD PARTY BENEFICIARIES . . . . . . . . . . . . . . . . . . . 20
Section 9.08 FURTHER ASSURANCES AND CONSENTS . . . . . . . . . . . . . . . . 20
Section 9.09 SEVERABILITY. . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 9.10 GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 9.11 TITLES AND HEADINGS . . . . . . . . . . . . . . . . . . . . . . 20
Section 9.12 TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 9.13 COUNTERPARTS. . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 9.14 DISPUTES. . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
SCHEDULE A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
SCHEDULE B . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
SCHEDULE C . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
SCHEDULE D . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
DRAFT 8/4/98
DISTRIBUTION AND INDEMNITY AGREEMENT
DISTRIBUTION AND INDEMNITY AGREEMENT ("Agreement"), dated as
of__________________, 1998 by and between UNITED WISCONSIN SERVICES, INC., a
Wisconsin corporation ("UWS"), and NEWCO/UWS, INC., a Wisconsin corporation
("Newco").
RECITALS
1. Newco is a wholly owned subsidiary of UWS formed for the purpose of
effecting the Distribution (as defined and described herein);
2. The UWS Board of Directors ("UWS Board") has determined that it is
in the best interests of UWS and its shareholders to transfer and assign to
Newco the Management Business (as defined herein) of UWS;
3. The UWS Board has further determined that it is in the best
interests of UWS and its shareholders to transfer and assign to Newco the
Newco Assets (as defined herein)
4. The UWS Board has further determined that it is in the best
interests of UWS and its shareholders to contribute working capital to Newco
and to assign to Newco the Newco Liabilities (as defined herein);
5. The UWS Board has further determined that it is in the best
interests of UWS and its shareholders to distribute Newco to the holders of
UWS Common Stock by distributing all outstanding shares of Newco Common Stock
at the rate of one share of Newco Common Stock for every one share of UWS
Common Stock outstanding as of the Record Date (as defined herein);
6. UWS has formed and incorporated Newco under the laws of the State
of Wisconsin. Newco has 50,000,000 authorized shares of Newco Common Stock
which are identical to UWS Common Stock, including with respect to voting
rights, dividend and liquidation preferences. Newco has 1,000,000 authorized
shares of Preferred Stock. UWS currently owns one share of Newco Common
Stock and is and shall remain the sole shareholder of Newco until the
Distribution.
7. UWS and Newco have determined that it is appropriate and desirable
to set forth the principal corporate transactions required to effect the
Distribution and to set forth other agreements that will govern certain other
matters following the Distribution;
NOW, THEREFORE, in consideration of the mutual agreements, provisions
and covenants contained in this Agreement, and the benefits to be derived
from the Distribution, the parties hereby agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01 DEFINITIONS. Terms defined in the first paragraph of this
Agreement shall have the meanings assigned thereto. As used herein, the
following terms have the following meaning:
ACCRUED LIABILITIES: those liabilities set forth on the Final Balance
Sheet.
ACTION: any claim, action, suit, arbitration, inquiry, proceeding or
investigation by or before any court, governmental or other regulatory or
administrative agency or commission or any other tribunal.
ANCILLARY AGREEMENTS: all of the written agreements, instruments,
documents, certificates, understandings, assignments and other arrangements
entered into in connection with the transactions contemplated hereby,
including, without limitation, the Employee Benefits Agreement, the Service
Agreement, the Intellectual Property Agreement, and the Tax Allocation
Agreement.
ASSETS: all properties, rights, contracts, leases and claims, of every
kind and description, wherever located, whether tangible or intangible, and
whether real, personal or mixed.
BCBSUW NOTE: a $70 million principal amount note of UWS in favor of
Blue Cross Blue & Shield United of Wisconsin that matures on October 30,
1999, evidenced by a promissory note and pledge agreement, both dated October
30, 1996.
CASH AND INVESTMENTS: those assets as indicated and set forth on the
Final Balance Sheet.
CODE: The Internal Revenue Code of 1986, as amended.
DISPUTES: shall have the meaning ascribed thereto in Section 9.14.
DISTRIBUTION: the distribution to holders of UWS Common Stock of the
shares of Newco Common Stock owned by UWS on the Distribution Date.
DISTRIBUTION AGENT: Firstar Trust Company, in its capacity as agent for
UWS in connection with the Distribution.
DISTRIBUTION DATE: the date on which the Distribution shall be made as
determined by the UWS Board.
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EFFECTIVE TIME: _____ [a./p.]m. Milwaukee time on _____________, 1998.
[DATE THIS AGREEMENT SIGNED]
EMPLOYEE BENEFITS AGREEMENT: the Employee Benefits Agreement entered
into at or prior to the Effective Time between UWS and Newco, as amended from
time to time.
FINAL BALANCE SHEET: means a balance sheet as of the end of the month
occurring closest to the Distribution Date, which balance sheet shall be
prepared on a basis consistent with UWS's historical practices for the
preparation of unaudited monthly divisional balance sheets.
GROUP: the UWS Group or the Newco Group, as the context so requires.
GUARANTEED NEWCO LIABILITIES: the Newco Liabilities on which any member
of the UWS Group is an obligor by reason of any guarantee or contractual
commitment.
GUARANTEED UWS LIABILITIES: the UWS Liabilities on which any member of
the Newco Group is an obligor by reason of any guarantee or contractual
commitment.
INDEMNIFIABLE LOSS: any and all damage, loss, liability and expense
(including, without limitation, reasonable expenses of investigation and
reasonable attorneys' fees and expenses) in connection with any and all
Actions or threatened Actions.
INDEMNIFIED PARTY: shall have the meaning ascribed thereto in Section
4.03(a).
INDEMNIFYING PARTY: shall have the meaning ascribed thereto in Section
4.03(a).
INTELLECTUAL PROPERTY AGREEMENT: the Intellectual Property Agreement
entered into at or prior to the Effective Time between UWS and Newco, as
amended from time to time.
SERVICE AGREEMENT: Agreement relating to the provision of interim
administrative services entered into at or prior to the Effective Time
between Newco and UWS, as amended from time to time.
LIABILITIES: any and all claims, debts, liabilities and obligations,
absolute or contingent, matured or not matured, liquidated or unliquidated,
accrued or unaccrued, known or unknown, whenever arising, including all costs
and expenses relating thereto, and including, without limitation, those
debts, liabilities and obligations arising under this Agreement or any
Ancillary Agreement, any law, rule, regulation, action, order or consent
decree of any governmental entity or any award of any arbitrator of any kind,
and those arising under any contract, commitment or undertaking.
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MANAGED CARE COMPANIES: the following companies and their subsidiaries:
Compcare Health Services Insurance Corporation, a Wisconsin corporation;
Valley Health Plan, Inc., a Wisconsin corporation; HMO-W, Inc., a Wisconsin
corporation; Hometown Insurance Service, Inc., a Wisconsin corporation;
United Wisconsin Insurance Company, a Wisconsin corporation; United Heartland
Life Insurance Company, a Wisconsin corporation; Meridian Resource
Corporation, a Wisconsin corporation; Meridian Managed Care, Inc., a
Wisconsin corporation; Meridian Marketing Services, Inc., a Wisconsin
corporation; United Wisconsin Proservices, Inc., a Wisconsin corporation;
United Heartland, Inc., a Wisconsin corporation; CNR Health, Inc., a
Wisconsin corporation; Unity Health Plans Insurance Corporation, a Wisconsin
corporation and Heartland Dental Plan, Inc., a Wisconsin corporation.
NEWCO ARTICLES: the articles of incorporation of Newco in the form
filed with the Wisconsin Department of Financial Institutions.
NEWCO ASSETS: (a) the capital stock of the Managed Care Companies; (b)
all assets of UWS used in connection with the management and operational
services performed by UWS for the operations of the Managed Care Companies
including all trademarks and tradenames related solely to products sold by
the Managed Care Companies; and (c) cash and investments as set forth on the
Final Balance Sheet.
NEWCO BUSINESS: all businesses conducted by the Newco Group.
NEWCO BYLAWS: the bylaws of Newco as adopted by the Newco Board of
Directors on May 27, 1998.
NEWCO COMMON STOCK: the shares of common stock, no par value, of Newco.
NEWCO GROUP: Newco, any of its subsidiaries and any subsidiary or
division of any member of the UWS Group that is included in the operations of
the Newco Business and is included in the results of the Newco Business for
internal financial reporting purposes.
NEWCO INDEMNITEES: shall have the meaning ascribed thereto in Section
4.02.
NEWCO LIABILITIES: The Post Retirement Liability, the Accrued
Liabilities and the BCBSUW Note.
PERSON: any natural person, corporation, limited liability company,
business trust, joint venture, association, company, partnership or
government, or any agency or tribunal or political subdivision thereof.
POST RETIREMENT LIABILITY: unfunded employee post-retirement health
benefit liabilities as set forth on the Final Balance Sheet.
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PRIME RATE: the prime rate of interest as determined from time to time
by M&I Marshal & Ilsley Bank.
REINSURANCE AGREEMENT: the Reinsurance Agreement between Newco and UWS,
dated _______________, 1998.
SUBORDINATED NOTES: shall mean UWS's $45 million principal amount 7.75%
Subordinated Notes due 2000.
TAX: shall have the meaning given to such term in the Tax Allocation
Agreement.
TAX ALLOCATION AGREEMENT: the Tax Allocation Agreement entered into at
or before the Effective Time between UWS and Newco, as amended from time to
time.
THIRD-PARTY CLAIM: shall have the meaning ascribed thereto in Section
5.02(c).
TRANSITION INSURANCE PROGRAM: shall have the meaning ascribed thereto
in Section 6.01(a).
UWS BUSINESS: the business now or formerly conducted by UWS and its
present and former subsidiaries, joint ventures and partnerships, other than
the Newco Business.
UWS COMMON STOCK: the outstanding shares of common stock, no par value,
of UWS.
UWS GROUP: UWS and its subsidiaries, joint ventures and partnerships,
excluding any member of the Newco Group.
UWS INDEMNITEES: shall have the meaning ascribed thereto in Section
4.01.
UWS LIABILITIES: means (i) Liabilities of any member of the UWS Group
under this Agreement or any Ancillary Agreement, and (ii) Liabilities, other
than Newco Liabilities, incurred in connection with the operation of the UWS
Business, whether arising before, at or after the Effective Time.
Section 1.02 REFERENCES; INTERPRETATION. References to an "Exhibit" or
to a "Schedule" are, unless otherwise specified, to one of the Exhibits or
Schedules attached to this Agreement. References to a "Section" or to an
"Article" are, unless otherwise specified, to one of the Sections or Articles
of this Agreement.
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ARTICLE II
TRANSFER OF ASSETS; ASSUMPTION OF LIABILITIES
Section 2.01 CONVEYANCE OF ASSETS; DISCHARGE OF LIABILITIES. Except as
otherwise expressly provided herein or in any of the Ancillary Agreements:
(a) UWS hereby assigns and transfers to Newco and Newco hereby accepts
and acknowledges receipt of the Newco Assets.
(b) UWS hereby assigns and transfers to Newco and Newco hereby
acknowledges receipt of and assumes the Newco Liabilities.
(c) In exchange for the transfers listed above, Newco shall issue
concurrently with the execution of this Agreement ____________ shares of
Newco Common Stock to UWS so that UWS's total holdings of Newco Common Stock,
when combined with the 100 shares already owned, will equal the number of
shares of UWS Common Stock outstanding on the Record Date.
(d) Those employees of UWS or its subsidiaries (other than American
Medical Security Holdings, Inc. or its subsidiaries) shall become employees
of Newco and UWS shall have no further responsibility or liability with
respect to such employees from and after the date hereof, other than with
respect to the final settlement of obligations with respect to such employees
except as may be set forth in the Employee Benefits Agreement.
(e) If any Newco Asset may not be transferred by reason of the
requirement to obtain the consent of any third party and such consent has not
been obtained by the date hereof, then such Asset shall not be transferred
until such consent has been obtained, and UWS and Newco, as the case may be,
shall cause the owner of such Newco Asset to use all reasonable efforts to
provide to the appropriate member of the other Group all the rights and
benefits under such Asset and cause such owner to enforce such Asset for the
benefit of such member.
Section 2.02 NO REPRESENTATIONS OR WARRANTIES. Except as expressly set
forth in this Agreement or any Ancillary Agreement, instrument or document
contemplated by this Agreement or any Ancillary Agreement, neither any member
of the UWS Group nor any member of the Newco Group has made or shall be
deemed to have made any representation or warranty as to (i) the Assets,
business or Liabilities retained, transferred or assumed as contemplated
hereby or thereby, (ii) any consents or approvals required in connection with
the transfer or assumption by such party of any Asset or Liability
contemplated by this Agreement, (iii) the value or freedom from any lien,
claim, equity or other encumbrance of, or any other matter concerning, any
Assets of such party or (iv) the absence of any defenses or right of setoff
or freedom from counterclaim with respect to any claim or other Asset of such
party. EXCEPT AS MAY BE EXPRESSLY SET FORTH IN THIS AGREEMENT OR ANY
ANCILLARY AGREEMENT, ALL ASSETS WERE, OR ARE BEING, TRANSFERRED, OR ARE BEING
6
RETAINED ON A "AS IS," "WHERE IS" BASIS WITHOUT REPRESENTATION OR WARRANTY OF
ANY KIND AND THE RESPECTIVE TRANSFEREES WILL BEAR THE ECONOMIC AND LEGAL
RISKS THAT ANY CONVEYANCE SHALL PROVE TO BE INSUFFICIENT TO VEST IN THE
TRANSFEREE A TITLE THAT IS FREE AND CLEAR OF ANY LIEN, CLAIM, EQUITY OR OTHER
ENCUMBRANCE.
Section 2.03 MUTUAL RELEASE. Effective as of the Distribution Date and
except as otherwise specifically set forth in this Agreement or any of the
Ancillary Agreements, UWS, on the one hand, and Newco, on the other hand, on
its own behalf and on behalf of each of its respective Subsidiaries, releases
and forever discharges the other and its Subsidiaries, and its and their
respective officers, directors, agents, Affiliates, record and beneficial
security holders (including, without limitation, trustees and beneficiaries
of trusts holding such securities), advisors and Representatives (in their
respective capacities as such) and their respective heirs, executors,
administrators, successors and assigns, of and from all debts, demands,
actions, causes of action, suits, accounts, covenants, contracts, agreements,
damages, claims and Liabilities whatsoever of every name and nature, both in
law and in equity, which the releasing party has or ever had, which arise out
of or relate to events, circumstances or actions taken by such other party,
occurring or failing to occur, or any conditions existing, on or prior to the
Distribution Date; provided, however, that the foregoing general release
shall not apply to (i) any Liabilities (including Liabilities with respect to
indemnification) assumed, transferred, assigned, allocated or arising under
this Agreement or any of the Ancillary Agreements and shall not affect any
party's right to enforce this Agreement or any Ancillary Agreement in
accordance with its terms or (ii) any Liability the release of which would
result in the release of any Person other than a Person released pursuant to
this Section 2.04.
Section 2.04 ANCILLARY AGREEMENTS. Concurrently with the execution of
this Agreement UWS and Newco shall execute and deliver:
(a) The Employee Benefits Agreement;
(b) The Tax Allocation Agreement;
(c) The Service Agreement;
(d) The Reinsurance Agreements;
(e) The Intellectual Property Agreement; and
(f) Such other agreements, leases, documents or instruments as the
parties may agree are necessary or desirable in order to achieve the purposes
hereof.
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Section 2.05 RESIGNATIONS. Concurrently with the execution of this
Agreement, Newco has delivered to UWS resignations of those persons
designated who will be employees of Newco from and after the Distribution
Date and who are officers or directors of UWS or any of its subsidiaries or
affiliates not constituting a member of the Newco Group.
ARTICLE III
THE DISTRIBUTION
Immediately following the Effective Date, UWS shall deliver to the
Distribution Agent a certificate or certificates representing all of the then
outstanding shares of Newco Common Stock held by UWS, endorsed by UWS in
blank, and shall irrevocably instruct the Distribution Agent to distribute to
each holder of record of UWS Common Stock on the Record Date one share of
Newco Common Stock for each share of UWS Common Stock so held either by
crediting the holder's brokerage account or by delivering a certificate or
certificates representing such shares. Newco agrees to provide all
certificates for shares of Newco Common Stock that the Distribution Agent
shall require in order to effect the Distribution.
ARTICLE IV
INDEMNIFICATION
Section 4.01 NEWCO INDEMNIFICATION OF THE UWS GROUP. On and after the
Distribution Date, Newco shall indemnify, defend and hold harmless each
member of the UWS Group, and each of their respective directors, officers,
employees and agents (the "UWS Indemnitees") from and against any and all
Indemnifiable Losses incurred or suffered by any of the UWS Indemnitees and
arising out of, or due to the failure of Newco or any member of the Newco
Group to pay, perform or otherwise discharge in due course any item set forth
on Schedule A.
Section 4.02 UWS INDEMNIFICATION OF NEWCO GROUP. On and after the
Distribution Date, if the Distribution occurs, on and after the Distribution
Date, UWS shall indemnify, defend and hold harmless each member of the Newco
Group and each of their respective directors, officers, employees and agents
(the "Newco Indemnitees") from and against any and all Indemnifiable Losses
incurred or suffered by any of the Newco Indemnitees and arising out of, or
due to the failure of UWS or any member of the UWS Group to pay, perform or
otherwise discharge in due course any item set forth on Schedule B.
Section 4.03 LIMITATIONS ON INDEMNIFICATION OBLIGATIONS. The amount
that any party (an "Indemnifying Party") is or may be required to pay to any
other party (an "Indemnified Party") pursuant to Section 4.01 or Section 4.02
shall be reduced (including, without limitation, retroactively) by any
Insurance Proceeds or other amounts actually recovered
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by or on behalf of such Indemnified Party, in reduction of the related Loss.
If an Indemnified Party shall have received the payment required by this
Agreement from an Indemnifying Party in respect of any Loss and the
Indemnified Party shall subsequently actually receive Insurance Proceeds or
other amounts in respect of such Loss, then such Indemnified Party shall pay
to such Indemnifying Party a sum equal to the amount of such Insurance
Proceeds or other amounts actually received (up to but not in excess of the
amount of any indemnity payment made hereunder).
Section 4.04 INSURANCE AND THIRD PARTY OBLIGATIONS. No insurer or any
other third party shall be, by virtue of the foregoing indemnification
provisions, (a) entitled to a benefit it would not be entitled to receive in
the absence of such provisions, (b) relieved of the responsibility to pay any
claims to which it is obligated, or (c) entitled to any subrogation rights
with respect to any obligation hereunder.
ARTICLE V
INDEMNIFICATION PROCEDURES
Section 5.01 NOTICE AND PAYMENT OF NON-THIRD PARTY CLAIMS. If the
Indemnified Party determines that it is or may be entitled to indemnification
by the Indemnifying Party pursuant to this Agreement (other than in
connection with any Action or claim subject to Section 5.02), the Indemnified
Party shall deliver to the Indemnifying Party a written notice specifying, to
the extent reasonably practicable, the basis for its claim for
indemnification and the amount for which the Indemnified Party reasonably
believes it is entitled to be indemnified. After the Indemnifying Party
shall have been notified of the amount for which the Indemnified Party seeks
indemnification, the Indemnifying Party shall, within 30 days after receipt
of such notice, pay the Indemnified Party such amount in cash or other
immediately available funds (or reach agreement with the Indemnified Party as
to a mutually agreeable alternative payment schedule) or send a written
notice to the Indemnified Party objecting to the claim for indemnification or
the amount thereof. If the Indemnifying Party does not give the Indemnified
Party written notice objecting to such claim and setting forth the grounds
therefor within the same 30 day period, the Indemnifying Party shall be
deemed to have acknowledged its liability for such claim and the Indemnified
Party may exercise any and all of its rights under applicable law to collect
such amount.
Section 5.02 NOTICE AND DEFENSE OF THIRD PARTY CLAIMS.
(a) If the Indemnified Party shall receive notice or otherwise learn
of the assertion or probable assertion by a Person (including, without
limitation, any governmental entity) who is not a party to this Agreement or
to any of the Ancillary Agreements of any claim or of the commencement by any
such Person of any Action (a "Third-Party Claim") against or otherwise
involving the Indemnified Party with respect to which indemnification may be
sought pursuant to this Agreement or any Ancillary Agreement, such
Indemnified Party shall give such Indemnifying Party written notice thereof
promptly after becoming aware of such Third-Party
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Claim; PROVIDED that the failure of the Indemnified Party to give notice as
provided in this Section 5.02(a) shall not relieve the Indemnifying Party of
its obligations under this Article V, unless such Indemnifying Party is
prejudiced by such failure to give notice (except that the Indemnifying Party
shall not be liable for any expenses incurred during the period in which the
Indemnified Party failed to give such notice). Such notice shall describe
the Third-Party Claim in reasonable detail and, if reasonably ascertainable,
shall indicate the amount (estimated if necessary) of the Loss that has been
or may be sustained by such Indemnified Party. After such notice, the
Indemnified Party shall deliver to the Indemnifying Party, promptly after the
Indemnified Party's receipt thereof, copies of all notices and documents
(including court papers) received by the Indemnified Party relating to the
Third Party Claim.
(b) Within 30 days after receipt of such notice, the Indemnifying Party
shall by giving written response thereof to the Indemnified Party, (a)
acknowledge, as between the parties hereto, liability for, and at its option
assumption of the defense of such Third Party Claim at its sole cost and
expense or (b) object to the claim of indemnification set forth in the notice
delivered by the Indemnified Party pursuant to the first sentence of Section
5.02(a) setting forth the grounds therefor; provided that if the Indemnifying
Party does not within the same 30 day period give the Indemnified Party
written notice acknowledging liability and electing to assume the defense or
objecting to such claim and setting forth the grounds therefor, the
Indemnifying Party shall be deemed to have acknowledged, as between the
parties hereto, its liability to the Indemnified Party for such Third Party
Claim.
(c) Any contest of a Third Party Claim as to which the Indemnifying
Party has elected to assume the defense shall be conducted by attorneys
employed by the Indemnifying Party and reasonably satisfactory to the
Indemnified Party; provided that the Indemnified Party shall have the right
to participate in such proceedings and to be represented by attorneys of its
own choosing at the Indemnified Party's sole cost and expense. If the
Indemnifying Party assumes the defense of a Third Party Claim, the
Indemnifying Party may settle or compromise the claim without the prior
written consent of the Indemnified Party; provided that the Indemnifying
Party may not agree to any such settlement pursuant to which any remedy or
relief, other than monetary damages for which the Indemnifying Party shall be
responsible hereunder, shall be applied to or against the Indemnified Party,
without the prior written consent of the Indemnified Party, which consent
shall not be unreasonably withheld.
(d) If the Indemnifying Party does not assume the defense of a Third
Party Claim for which it has acknowledged liability for indemnification under
Article IV, the Indemnified Party may require the Indemnifying Party to
reimburse it on a current basis for its reasonable expenses of investigation,
reasonable attorney's fees and reasonable out-of-pocket expenses incurred in
defending against such Third Party Claim and the Indemnifying Party shall be
bound by the result obtained with respect thereto by the Indemnified Party;
provided that the Indemnifying Party shall not be liable for any settlement
effected without its consent, which consent shall not be unreasonably
withheld.
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(e) The Indemnifying Party shall pay to the Indemnified Party in cash
the amount for which the Indemnified Party is entitled to be indemnified (if
any) within 15 days after the final resolution of such Third Party Claim
(whether by the final nonappealable judgment of a court of competent
jurisdiction or otherwise), or, in the case of any Third Party Claim as to
which the Indemnifying Party has not acknowledged liability, within 15 days
after such Indemnifying Party's objection has been resolved by settlement,
compromise or the final nonappealable judgment of a court of competent
jurisdiction.
(f) If the Indemnifying Party chooses to defend or to seek to compromise
or settle any Third-Party Claim, the Indemnified Party shall make available
to such Indemnifying Party any personnel or any books, records or other
documents within its control or which it otherwise has the ability to make
available that are necessary or appropriate for such defense, settlement or
compromise, and shall otherwise cooperate in the defense, settlement or
compromise of such Third-Party Claims. The Indemnifying Party shall promptly
reimburse the Indemnified Party its reasonable out-of-pocket costs incurred
in providing assistance pursuant to the foregoing sentence and for the
Indemnified Party's reasonable personnel costs on any occasion on which
personnel of the Indemnified Party spend one full day or more in providing
such assistance.
(g) In the event of payment by the Indemnifying Party to the Indemnified
Party in connection with any Third-Party Claim, such Indemnifying Party shall
be subrogated to and shall stand in the place of such Indemnified Party as to
any events or circumstances in respect of which such Indemnified Party may
have any right or claim relating to such Third-Party Claim against any
claimant or plaintiff asserting such Third-Party Claim or against any other
person. Such Indemnified Party shall cooperate with such Indemnifying Party
in a reasonable manner, and at the cost and expense of such Indemnifying
Party, in prosecuting any subrogated right or claim.
Section 5.03 OTHER ADJUSTMENTS.
(a) The amount of any Indemnifiable Loss shall be (x) increased to take
into account any net Tax cost actually incurred by the Indemnified Party arising
from any payments received from the Indemnifying Party (grossed up for such
increase) and (y) reduced to take account of any net Tax benefit actually
realized by the Indemnified Party arising from the incurrence or payment of any
such Indemnifiable Loss. In computing the amount of such Tax cost or Tax
benefit, the Indemnified Party shall be deemed to recognize all other items of
income, gain, loss, deduction or credit before recognizing any item arising from
the receipt of any payment with respect to an Indemnifiable Loss or the
incurrence or payment of any Indemnifiable Loss.
(b) If the amount of any Indemnifiable Loss shall, at any time subsequent
to the payment required by this Agreement, be reduced by recovery, settlement or
otherwise, the amount of such reduction, less any expenses incurred in
connection therewith, shall promptly be repaid by the Indemnified Party to the
Indemnifying Party, up to the aggregate amount of any payments received from
such Indemnifying Party pursuant to this Agreement in respect of such
Indemnifiable Loss.
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(c) If the amount of any Indemnifiable Loss shall, at any time
subsequent to the payment required by this Agreement, be reduced by recovery,
settlement or otherwise, the amount of such reduction that has been received
by the Indemnified Party, less any expenses incurred in connection therewith,
shall promptly be repaid by the Indemnified Party to the Indemnifying Party.
ARTICLE VI
INSURANCE
Section 6.01 GENERAL LIABILITY INSURANCE.
(a) UWS shall continue to maintain coverage for workers' compensation,
general liability, automobile liability, other liability, property and other
insurable business risks and exposures to Newco and the Newco Group in the
same manner and to the same extent as in effect on the date of this Agreement
(the "Transition Insurance Program") for incidents, acts, omissions or
occurrences occurring from the date such coverage first commenced until 12:00
midnight on the Distribution Date or such later date as may be agreed to by
UWS and Newco, and Newco and the Newco Group shall pay UWS the costs, fees
and expenses for such coverage in accordance with the past and current
practices established between UWS, Newco and the Newco Group. Such costs
include, but are not limited to, premiums, deductibles, retrospective rating
adjustments, assessments paid and audit adjustments completed.
(b) UWS shall cooperate and, if requested, shall assist Newco and the
Newco Group in obtaining their own separate insurance coverage for Newco and
the Newco Group, effective with respect to incidents, acts, omissions or
occurrences occurring from and after the Distribution Date. Following the
Distribution Date, each of the parties shall cooperate with and assist the
other party in the prevention of conflicts or gaps in insurance coverage
and/or collection of any insurance proceeds.
(c) UWS and Newco agree that Newco and the Newco Group shall have the
right to present claims directly to UWS's insurers under the Transition
Insurance Program for insured incidents, acts, omissions or occurrences
occurring from the date said coverage first commenced until the Distribution
Date.
(d) With respect to any insured losses or retrospective premium
adjustments relating to assets and/or operations of Newco and/or the Newco
Group prior to the Distribution Date: (i) UWS shall pay over to Newco within
60 days of receipt any insurance proceeds it receives on account of such
losses and any such retrospective premium reductions (all subject to support
documentation); and (ii) Newco and the Newco Group shall reimburse UWS within
60 days of UWS's request for all costs, expenses or payments (all subject to
support documentation) made by UWS after the Distribution Date to insurers or
incurred by UWS with respect to such Losses and any such retrospective
premium increases. The defense of and the responsibility for any
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litigation or claims pending at the Distribution Date, or commenced after the
Distribution Date (as respects losses which occurred prior to the
Distribution Date), relating to Newco or the Newco Group and covered by the
Transition Insurance Program shall continue to be managed by Newco and the
Newco Group. Newco shall advise UWS when there is a reasonable expectation
that any such litigation will exceed the policy limits of the current
Transition Insurance Program or result in a loss not covered by such program.
Section 6.02 DIRECTORS' AND OFFICERS' INSURANCE. UWS will maintain
directors' and officers' liability insurance coverage at least equal to the
amount of UWS's current directors' and officers' liability insurance coverage
for a period of five years from the Distribution Date with respect to the
directors and officers of UWS for acts as directors and officers of members
of the UWS Group during periods prior to the Distribution Date.
Section 6.03 INSURED LITIGATION. In recognition that premiums, premium
adjustments, retrospective rating adjustments,assessments and audit
adjustments have been paid or charged to Newco and the Newco Group prior to
the Distribution Date, and that similar such payments and charges will be
made by and to Newco and the Newco Group after the Distribution Date, UWS
agrees to cooperate with Newco and the Newco Group in insured litigation.
Furthermore, in insured litigation in which the reasonable expectation is
that Newco and/or Newco Group will be financially responsible for the entire
result in the litigation (a "Newco Responsibility Case"), Newco shall have
the right to participate and control at its cost the defense of such
litigation, to the extent that UWS would be able to do so. In such event,
UWS shall cooperate with Newco in all reasonable respects in the defense and
resolution of such Newco Responsibility Case.
ARTICLE VII
ADDITIONAL COVENANTS
Section 7.01 GUARANTEED NEWCO AND UWS LIABILITIES.
(a) Newco shall use all reasonable efforts (excluding payment of money)
to obtain as promptly as practicable after the Distribution Date the release
of UWS from its obligations with respect to Guaranteed Newco Liabilities. In
no event shall any member of the Newco Group extend the term of any
Guaranteed Newco Liabilities (such as by exercising an option to renew a
lease) or modify any such Guaranteed Newco Liability, in either instance in
any way that would increase the liability guaranteed thereunder unless the
guarantee of UWS is released as to any extended or modified liability
obligations under such Guaranteed Newco Liabilities or UWS otherwise consents
in writing.
(b) UWS shall use all reasonable efforts (excluding payment of money) to
obtain as promptly as practicable after the Distribution Date the release of
members of Newco Group from their respective obligations with respect to
Guaranteed UWS Liabilities. In no event shall any
13
member of the UWS Group extend the term of any Guaranteed UWS Liabilities
(such as by exercising an option to renew a lease) or modify any such
Guaranteed UWS Liability, in either instance in any way that would increase
the liability guaranteed thereunder unless the guarantee of Newco is released
as to any extended or modified liability obligations under such Guaranteed
UWS Liabilities or Newco otherwise consents in writing.
(c) In the event that UWS is required to pay any Guaranteed Newco
Liabilities, without limiting any of UWS's rights and remedies against Newco
under this Agreement or otherwise, in order to secure Newco's indemnity
obligations to UWS hereunder in respect of such Guaranteed Newco Liabilities,
UWS shall be entitled to all the rights of the payee in any property of any
member of the Newco Group pledged as security for such Guaranteed Newco
Liabilities.
(d) In the event that Newco is required to pay any Guaranteed UWS
Liabilities, without limiting any of Newco's rights and remedies against UWS
under this Agreement or otherwise, in order to secure UWS's indemnity
obligations to Newco hereunder in respect of such Guaranteed UWS Liabilities,
Newco shall be entitled to all the rights of the payee in any property of any
member of the UWS Group pledged as security for such Guaranteed UWS
Liabilities.
Section 7.02 PRIVILEGED MATTERS. The parties hereto recognize that
legal and other professional services that have been and will be provided on
or prior to the Distribution Date have been and will be rendered for the
benefit of UWS and Newco and their subsidiaries, and that each of the
foregoing should be deemed to be the client for the purposes of asserting all
privileges which may be asserted under applicable law. To allocate the
interests of each party in the information as to which any party or any its
subsidiaries is entitled to assert a privilege, the parties agree as follows:
(a) UWS shall be entitled, in perpetuity, to control the assertion or
waiver of all privileges in connection with privileged information which
relates solely to UWS or any UWS Subsidiary or the business of UWS or any UWS
Subsidiary, whether or not the privileged information is in the possession of
or under the control of UWS or Newco or any of their subsidiaries. UWS shall
also be entitled, in perpetuity, to control the assertion or waiver of all
privileges in connection with privileged Information that relates solely to
the subject matter of any claims arising out of any item set forth on
Schedule C or any claims which may be asserted in the future in any lawsuits
or other proceedings (not involving Newco or any Newco Subsidiary) initiated
against or by UWS or any UWS Subsidiary, whether or not the privileged
Information is in the possession of or under the control of UWS or Newco or
any of their subsidiaries.
(b) Newco shall be entitled, in perpetuity, to control the assertion or
waiver of all privileges in connection with privileged Information which
relates solely to Newco or any Newco Subsidiary or the business of Newco or
any Newco Subsidiary, whether or not the privileged Information is in the
possession of or under the control of UWS or Newco or any of their
14
subsidiaries. Newco shall also be entitled, in perpetuity, to control the
assertion or waiver of all privileges in connection with privileged
Information which relates solely to the subject matter of any claims arising
out of any item set forth in Schedule D or any claims which may be asserted
in the future in any lawsuits or other proceedings (not involving UWS or any
UWS Subsidiary) initiated against or by Newco or any Newco Subsidiary,
whether or not the privileged Information is in the possession of or under
the control of UWS or Newco or any of their subsidiaries.
(c) The parties hereto agree that they shall have a shared privilege,
with equal right to assert or waive, subject to the restrictions in this
Section 7.03(a) and (b); that no party shall have a shared privilege in
connection with privileged information that does not relate to such party,
any of its subsidiaries or their respective businesses. All privileges
relating to any claims, proceedings, litigation, disputes, or other matters
which involve UWS or any UWS Subsidiary and/or Newco or any Newco Subsidiary
in respect of which each party retains any responsibility or liability under
this Agreement, shall be subject to a shared privilege among them.
(d) No party hereto may waive any privilege which could be asserted
under any applicable law, and in which any other party hereto has a shared
privilege, without the consent of the other party, except to the extent
reasonably required in connection with any litigation as provided in
Subsection (e) below. Consent shall be in writing, or shall be deemed to be
granted unless written objection is made within 20 calendar days after
written notice from the party requesting such consent.
(e) In the event of any litigation or dispute between or among the
parties hereto, any party and a subsidiary of another party hereto, or a
subsidiary of one party hereto and a subsidiary of another party hereto,
either such party may waive a privilege in which the other party has a shared
privilege, without obtaining the consent of the other party; provided,
however, that such waiver of a shared privilege shall be effective only as to
the use of information with respect to the litigation or dispute between the
relevant parties and/or their subsidiaries, and, notwithstanding the
provisions of Wis. Stats. Section 905.03, shall not operate as a waiver of
the shared privilege with respect to third parties.
(f) If a dispute arises between or among the parties hereto or their
respective subsidiaries regarding whether a privilege should be waived to
protect or advance the interest of any party, each party agrees that it shall
negotiate in good faith, shall endeavor to minimize any prejudice to the
rights of the other parties, and shall not unreasonably withhold consent to
any request for waiver by another party. Each party hereto specifically
agrees that it will not withhold consent to waiver for any purpose except to
protect its own legitimate interests.
(g) Upon receipt by any party hereto or by any subsidiary thereof of any
subpoena, discovery or other request which arguably calls for the production
or disclosure of information subject to a shared privilege or as to which
another party has the sole right hereunder to assert a privilege, or if any
party obtains knowledge that any of its or any of its subsidiaries' current
or former directors, officers, agents or employees has received any subpoena,
discovery or other
15
requests which arguably calls for the production or disclosure of such
privileged information, such party shall promptly notify the other party or
parties of the existence of the request and shall provide the other party or
parties a reasonable opportunity to review the information and to assert any
rights it or they may have under this Section 7.02 or otherwise to prevent
the production or disclosure of such privileged information.
(h) The furnishing and delivery of information pursuant to this
Agreement is made in reliance on the agreement of the parties, as set forth
in Section 7.10, to maintain the confidentiality of confidential or
privileged Information and to assert and maintain all applicable privileges.
The access to Information being granted pursuant to Section 7.07 and the
agreement to provide witnesses pursuant to Section 7.05, shall not be deemed
a waiver of any privilege that has been or may be asserted under this
Agreement or otherwise.
Section 7.03 LIMITATION ON SOLICITATION OF EMPLOYEES.
(a) UWS agrees on behalf of itself, its subsidiaries and Affiliates
which it controls, without any separate bargained for consideration, but
rather as an integral part of the Distribution provided for in this
Agreement, that it shall not directly or indirectly, through a subsidiary or
otherwise, until one year after the Distribution Date, employ or attempt to
employ any Newco employee or induce or attempt to induce any Newco employee
to leave his or her employment.
(b) Newco agrees on behalf of itself, its subsidiaries and Affiliates
which it controls, without any separate bargained for consideration, but
rather as an integral part of the Distribution provided for in this
Agreement, that it shall not directly or indirectly, through a subsidiary or
otherwise, until one year after the Distribution Date, employ or attempt to
employ any employee of UWS or any UWS Subsidiary or induce or attempt to
induce any employee of UWS or any UWS Subsidiary to leave his or her
employment.
(c) The parties agree and acknowledge that the restrictions contained in
this Section 7.04 are reasonable in scope and duration and are necessary to
protect the other party hereto.
Section 7.04 PRODUCTION OF WITNESSES. After the Distribution Date, each
of UWS and Newco and its respective subsidiaries shall use reasonable efforts
to make available to the other party and its subsidiaries, upon written
request, its directors, officers, employees and agents as witnesses to the
extent that any such person may reasonably be required (giving consideration
to business demands of such Representatives) in connection with any legal,
administrative or other proceedings in which the requesting party may from
time to time be involved, without cost to the requesting party.
Section 7.05 RETENTION OF RECORDS. Except as otherwise required by law
or agreed to in writing, each party shall, and shall cause the members of its
Group to, retain all information relating to the other's business in
accordance with the past practice of such party. Notwithstanding the
foregoing, either party may destroy or otherwise dispose of any information
16
at any time in accordance with the corporate record retention policy
maintained by such party with respect to its own records.
Section 7.06 ACCESS TO INFORMATION. From and after the Effective Time,
UWS and Newco shall each afford the other and its accountants, counsel and
other designated representatives reasonable access (including using
reasonable efforts to give access to persons or firms possessing information)
and duplicating rights during normal business hours to all records, books,
contracts, instruments, computer data and other data and information in its
possession relating to the business and affairs of the other or a member of
its Group (other than data and information subject to an attorney/client or
other privilege), insofar as such access is reasonably required by the other
including, without limitation, for audit, accounting and litigation purposes.
Section 7.07 PROVISION OF CORPORATE RECORDS. As soon as practicable
following the Effective Time, UWS and Newco shall each arrange for the
provision to the other of existing corporate documents (e.g. minute books,
stock registers, stock certificates, documents of title, contracts, etc.) in
its possession relating to the other or its business and affairs or to any
other entity that is part of such other's respective Group or to the business
and affairs of such other entity.
Section 7.08 LITIGATION COOPERATION. UWS and Newco shall each use
reasonable efforts to make available to the other, upon written request, its
officers, directors, employees and agents, and the officers, directors,
employees and agents of its subsidiaries, as witnesses to the extent that
such persons may reasonably be required in connection with any legal,
administrative or other proceedings arising out of the business of the other,
or of any entity that is part of the others' respective Group, prior to the
Effective Time in which the requesting party or one of its subsidiaries may
from time to time be involved.
Section 7.09 CONFIDENTIALITY. Each party shall, and shall cause each
member of its Group to, hold and cause its directors, officers, employees,
agents, consultants and advisors to hold, in strict confidence, unless
compelled to disclose by judicial or administrative process or, in the
opinion of its counsel, by other requirements of law, all information
concerning the other party (except to the extent that such information can be
shown to have been (a) in the public domain through no fault of such
disclosing party or (b) later lawfully acquired after the Effective Time on a
non-confidential basis from other sources by the disclosing party), and
neither party shall release or disclose such information to any other person,
except its auditors, attorneys, financial advisors, bankers and other
consultants and advisors who shall be advised of the provisions of this
Section 7.10 and be bound by them. Each party shall be deemed to have
satisfied its obligation to hold confidential information concerning or
supplied by the other party if it exercises the same care as it takes to
preserve confidentiality for its own similar information.
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ARTICLE VIII
ACCOUNTING MATTERS
Section 8.01 ALLOCATION OF PREPAID ITEMS AND RESERVES. All prepaid
items and reserves that have been maintained by UWS on a consolidated basis
but that relate in part to assets or liabilities of the Newco Group shall be
allocated between UWS and Newco as determined by UWS and Newco.
Section 8.02 ACCOUNTING TREATMENT OF ASSETS TRANSFERRED AND LIABILITIES
ASSUMED. The transfer by UWS of the Newco Assets and the assumption by Newco
of the Newco Liabilities shall be treated as a capital contribution to Newco.
Section 8.03 INTERCOMPANY ACCOUNTS. On or before the Distribution
Date, UWS shall prepare and deliver to Newco a preliminary balance sheet
which shall set forth good faith estimates of all intercompany account
balances between members of the UWS Group and members of the Newco Group as
of the Effective Time. On the Distribution Date, all estimated account
balances set forth on the preliminary balance sheet shall be paid in full by
Newco to UWS or UWS to Newco, as the case may be. Within 30 business days
after the Distribution, Newco shall prepare and deliver to UWS the Final
Balance Sheet. Within ten business days after the delivery of the Final
Balance Sheet, UWS shall pay to Newco or Newco shall pay to UWS, as the case
may be, the difference between the estimated account balances set forth on
the preliminary balance sheet and the final account balances set forth on the
Final Balance Sheet.
Section 8.04 ALLOCATION OF DISTRIBUTION EXPENSES. All expenses
incurred in connection with the Distribution, when finally determined, shall
be the legal obligation of UWS. The parties desire, however, that the cash
xxxxxx for such expense be shared equally between Newco and UWS. UWS, both
before and after the Distribution, shall pay for all Distribution expenses,
but after all Distribution expenses have been paid, UWS shall pay to Newco,
or Newco shall pay to UWS, as the case may be, the difference between 50% of
all Distribution expenses and the Distribution expenses actually paid by such
party. For this purpose, Newco shall be deemed to have paid all Distribution
expenses paid by UWS prior to the Distribution, and UWS shall be deemed to
have paid only the Distribution expenses paid after the Distribution.
ARTICLE IX
MISCELLANEOUS
Section 9.01 INTEREST. Except as otherwise expressly provided in this
Agreement or an Ancillary Agreement, all payments by one party to the other
under this Agreement or any Ancillary Agreement shall be paid, by check or
wire transfer of immediately available funds to an account in the United
States designated by the recipient, within 30 days after receipt of an
invoice or other written request for payment setting forth the specific
amount due and a
18
description of the basis therefor in reasonable detail. Any amount remaining
unpaid beyond its due date, including disputed amounts that are ultimately
determined to be payable, shall bear interest at a rate of simple interest
per annum equal to the Prime Rate plus 2%.
Section 9.02 NOTICES. All notices and communications under this
Agreement shall be deemed to have been given (a) when received, if such
notice or communication is delivered by facsimile, hand delivery or overnight
courier, and, (b) three (3) business days after mailing if such notice or
communication is sent by United States registered or certified mail, return
receipt requested, first class postage prepaid. All notices and
communications, to be effective, must be properly addressed to the party to
whom the same is directed at its address as follows:
If to UWS, to: American Medical Security Group, Inc.
0000 XXX Xxxxxxxxx
Xxxxx Xxx, Xxxxxxxxx 00000
Attention: General Counsel
If to Newco, to: United Wisconsin Services, Inc.
000 Xxxx Xxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxx 00000
Attention: General Counsel
Either party may, by written notice delivered to the other party in
accordance with this Section 9.02, change the address to which delivery of
any notice shall thereafter be made.
Section 9.03 AMENDMENT AND WAIVER. This Agreement may not be altered
or amended, nor may any rights hereunder be waived, except by an instrument
in writing executed by the party or parties to be charged with such amendment
or waiver. No waiver of any terms, provision or condition of or failure to
exercise or delay in exercising any rights or remedies under this Agreement,
in any one or more instances, shall be deemed to be, or construed as, a
further or continuing waiver of any such term, provision, condition, right or
remedy or as a waiver of any other term, provision or condition of this
Agreement.
Section 9.04 ENTIRE AGREEMENT. This Agreement, together with the
Ancillary Agreements, constitutes the entire understanding of the parties
hereto with respect to the subject matter hereof, superseding all
negotiations, prior discussions and prior agreements and understandings
relating to such subject matter. To the extent that the provisions of this
Agreement are inconsistent with the provisions of any Ancillary Agreement,
the provisions of such Ancillary Agreement shall prevail with respect to the
subject matter hereof.
Section 9.05 ASSIGNMENT. This Agreement shall be assignable in whole
in connection with a merger or consolidation or the sale of all or
substantially all the assets of a party hereto so long as the resulting,
surviving or transferee entity assumes all the obligations of the relevant
party hereto by operation of law or pursuant to an agreement in form and
substance reasonably satisfactory to the other party to this Agreement.
Otherwise this
19
Agreement shall not be assignable, in whole or in part, directly or
indirectly, by any party hereto without the prior written consent of the
others and any attempt to assign any rights or obligations arising under this
Agreement without such consent shall be void.
Section 9.06 SUCCESSORS AND ASSIGNS. This Agreement shall be binding
upon, and shall inure to the benefit of, the parties hereto and their
respective successors and permitted assigns.
Section 9.07 THIRD PARTY BENEFICIARIES. Nothing contained in this
Agreement, express or implied, is intended to confer any benefits, rights or
remedies upon any person or entity other than members of the UWS Group and
the Newco Group and the UWS Indemnitees and Newco Indemnitees under Articles
IV and V hereof.
Section 9.08 FURTHER ASSURANCES AND CONSENTS. From time to time after
the Distribution Date, each party shall do, execute and deliver, or cause to
be done, executed and delivered, to another party hereto, or its successors
and assigns, all such further acts, deeds, assignments, powers of attorney
and other instruments of conveyance and transfer as such party may reasonably
request as may be necessary to consummate the Distribution and the
transactions contemplated hereby, including filings with, and obtaining the
approval of, any governmental body.
Section 9.09 SEVERABILITY. The provisions of this Agreement are
severable and should any provision hereof be void, voidable or unenforceable
under any applicable law, such provision shall not affect or invalidate any
other provision of this Agreement, which shall continue to govern the
relative rights and duties of the parties as though such void, voidable or
unenforceable provision were not a part hereof.
Section 9.10 GOVERNING LAW. This Agreement shall be construed in
accordance with, and governed by, the laws of the State of Wisconsin, without
regard to the conflicts of law rules of such state.
Section 9.11 TITLES AND HEADINGS. Titles and headings to sections
herein are inserted for the convenience of reference only and are not
intended to be part of or to affect the meaning or interpretation of this
Agreement.
Section 9.12 TERMINATION. This Agreement may be terminated and the
Distribution abandoned at any time prior to the Distribution Date by and in
the sole discretion of the UWS Board without the approval of the Newco or UWS
shareholders.
Section 9.13 COUNTERPARTS. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original instrument, but
all of which together shall constitute but one and the same Agreement.
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Section 9.14 DISPUTES.
(a) All disputes arising from or in connection with this Agreement,
whether based on contract, tort, statute or otherwise, including, but not
limited to, disputes in connection with claims by third parties
(collectively, "Disputes"), shall be resolved only in accordance with the
provisions of this Section 9.14; provided, however, that nothing contained
herein shall preclude either party from seeking or obtaining (i) injunctive
relief to prevent an actual or threatened breach of any of the provisions of
this Agreement, or (ii) equitable or other judicial relief to enforce the
provisions of this Section 9.14 hereof or to preserve the status quo pending
resolution of Disputes hereunder.
(b) Either party may give the other party written notice of any Dispute
not resolved in the normal course of business. Within ten days after
delivery of the notice of a Dispute, the receiving party shall submit to the
other a written response. The notice and the response shall include a
statement of such party's position and a summary of arguments supporting that
position and the name and title of the executive who will represent that
party and of any other person who will accompany such executive in resolving
the Dispute. Within 20 days after delivery of the first notice, the
executives of both parties shall meet at a mutually acceptable time and
place, and thereafter as often as they reasonably deem necessary, and shall
negotiate in good faith to attempt to resolve the Dispute. All reasonable
requests for information made by one party to the other will be honored.
(c) If the Dispute has not been resolved by negotiation within sixty
days of the first party's notice, the Dispute shall be submitted, upon
application of either party, for resolution by binding arbitration in
accordance with the Commercial Arbitration Rules of the American Arbitration
Association (the "Rules")
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the day and year first above written.
UNITED WISCONSIN SERVICES, INC.
By:_________________________________
NEWCO/UWS, INC.
By:_________________________________
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SCHEDULE A
(Section 4.01)
1. Newco Liabilities.
2. Breach by Newco or its subsidiaries of the Distribution Agreement or any
Ancillary Agreement.
3. Operation of the business conducted by Newco and its subsidiaries or the
ownership of its assets, except as provided in the Distribution Agreement
or any Ancillary Agreement.
4. Failure of Newco to comply with applicable provisions of ERISA or the Code
with respect to Newco's employee benefit plans.
5. Violations of the Code or federal or state securities laws in connection
with the Distribution or with any filings made with governmental agencies,
to the extent such violations result from or are related to disclosure, or
failure to disclose, information to UWS's corporate staff by officers,
directors, employees, agents, consultants and representatives of Newco.
22
SCHEDULE B
(Section 4.02)
1. UWS Liabilities.
2. Any breach by UWS or any of its subsidiaries of the Distribution Agreement
or any Ancillary Agreement.
3. The operation of the business conducted or to be conducted by UWS and its
subsidiaries or the ownership of its assets (other than businesses and
assets to be contributed to Newco) both prior to and following the
Effective Time, except as otherwise provided in the Distribution Agreement
or any Ancillary Agreements.
4. Failure by UWS to comply with provisions of ERISA or the Code with respect
to its employee benefit plans.
5. Violations of the Code or federal or state securities laws in connection
with the Distribution or with any filings made with governmental agencies
in connection with the operation of Newco's businesses prior to the
Effective Time, except to the extent that such violations result from or
are related to the disclosure or failure to disclose information to UWS's
corporate staff by officers, directors, employees, agents, consultants or
representatives of Newco.
23
SCHEDULE C
(Section 7.02(a))
24
SCHEDULE D
(Section 7.02(b))
25
