SETTLEMENT AGREEMENT
This Agreement, entered into this 1st day of April, 1998 by and between
United Wisconsin Services, Inc., a Wisconsin corporation ("UWS"), on behalf of
itself and on behalf of UWS Acquisition Co., a Wisconsin corporation to be
formed which initially will be a wholly owned subsidiary of UWS ("UWS
Acquisition"), Xxxxxxx X. Xxxxxxxx ("Xxxxxxxx") and Xxxxxx X. Xxxxxx ("Xxxxxx").
RECITALS
1. UWS, Xxxxxxxx and Xxxxxx are parties to an Agreement and Plan of
Merger dated July 31, 1996 between UWS, Blue Cross & Blue Shield
United of Wisconsin, American Medical Security Group, Inc. (the
"Company"), Xxxxxxxx and Xxxxxx (the "Merger Agreement").
2. Pursuant to Article VIII of the Merger Agreement, UWS has asserted
claims against the Shareholders (as defined in the Merger Agreement).
3. Xxxxxxxx, in his capacity as a Shareholder and as Agent (both as
defined in the Merger Agreement) and UWS desire to settle any and all
claims under the Merger Agreement.
4. UWS has submitted a Private Letter Ruling Request ("PLR") to the
Internal Revenue Service ("IRS") regarding a possible distribution to
existing shareholders of UWS of all of the stock of UWS Acquisition by
means of a tax-free spinoff (the "Spinoff").
5. In processing the PLR, the IRS has requested that certain shareholders
of UWS, including Xxxxxxxx and Xxxxxx, make certain representations
regarding their plan or intention to sell or otherwise transfer either
Common Stock of UWS ("UWS Common Stock") or Common Stock of UWS
Acquisition ("UWS Acquisition Common Stock") received by them in the
Spinoff.
6. Xxxxxxxx and Xxxxxx are willing to make the representations referred
to in Recital 5 above, along with certain additional covenants
relating to their UWS Common Stock and UWS Acquisition Common Stock to
be received in the Spinoff.
7. In connection with the Merger Agreement, each of Xxxxxxxx and Xxxxxx
entered into the Registration Rights Agreement (as defined in the
Merger Agreement).
8. In connection with the Spinoff, the parties desire that the terms of
the Registration Rights Agreement be extended to cover UWS Acquisition
Common Stock to be received by Xxxxxxxx and Xxxxxx in the Spinoff.
9. In connection with their respective Employment and Noncompetition
Agreements (as defined in the Merger Agreement) (the "Employment
Agreement"), each of Xxxxxxxx and Xxxxxx received Options (as defined
in the Employment Agreements).
10. The parties desire to set forth herein the manner in which the Options
will be treated in the Spinoff.
NOW, THEREFORE, the parties agree as follows:
1. RELEASE AND DISCHARGE OF INDEMNIFICATION CLAIMS. Concurrently with
the execution of this Agreement, Xxxxxxxx, as Agent, and UWS shall
(a) execute and deliver the Mutual Release and Termination Agreement
attached hereto as Exhibit A, and (b) execute and deliver the written
instructions to the Escrow Agent attached hereto as Exhibit B
providing for the payment to UWS of $500,000.
2. CERTIFICATION. Concurrently with the execution of this Agreement,
each of Xxxxxxxx and Xxxxxx shall execute a Certification in the form
attached hereto as Exhibit C.
3. AMENDMENT TO EMPLOYMENT AGREEMENT. Concurrently with the execution of
this Agreement, each of Xxxxxxxx and Xxxxxx and American Medical
Security Holdings, Inc. shall enter into an Amendment to Employment
and Noncompetition Agreement in the form attached hereto as Exhibit D
(the "Amendment"). The parties agree that, upon execution of the
Amendment, neither Xxxxxxxx nor Xxxxxx will be subject to the terms of
any xxxxxxx xxxxxxx policies of UWS or any of its current
subsidiaries, except for any general trading limitations or
restrictions under federal or state securities laws.
4. OPTION. If the Spinoff is completed, each of Xxxxxxxx and Xxxxxx will
receive in exchange for or as a result of their holding Options (as
defined in the Employment Agreement) "stapled options" consisting of
an equal number of options to purchase stock of UWS and UWS
Acquisition, in each case with an exercise price proportionally
adjusted or set to take into account the economic value of the Options
immediately prior to the Spinoff. Any such adjustment shall be made
such that (a) the aggregate exercise price of the stapled options
shall not be greater than the aggregate exercise price of the original
Option, (b) the other terms of the stapled options shall not be less
favorable to the option holder than the original Options, and (c) the
securities to be issued to the option holder pursuant to the stapled
options shall be registered under the Securities Act of 1933, as
amended, on Form S-8 or other appropriate form.
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5. REGISTRATION RIGHTS. On or before the Spinoff is completed, UWS
Acquisition and Xxxxxxxx and Xxxxxx shall enter into a Registration
Rights and Stock Restriction Agreement in the form attached hereto as
Exhibit E concerning certain matters relating to their ownership of
UWS Acquisition Common Stock.
6. ARBITRATION. Any controversy or dispute arising out of or relating to
this Agreement shall be settled by a single arbitrator in arbitration
conducted in Chicago, Illinois in accordance with the Commercial
Arbitration Rules of the American Arbitration Associate, and judgment
upon the award rendered by the arbitrator may be entered in any court
having jurisdiction thereof. The arbitrator's decision shall be in
writing and shall be final and nonappealable. The arbitrator also
shall make a determination regarding which party's legal position in
any such controversy or claim is the more substantially correct (the
"Prevailing Party") and the arbitrator may require the other party to
pay the reasonable legal and other professional fees and costs
incurred by the Prevailing Party in connection with such arbitration
proceeding and any necessary court action.
7. NOTICES. All notices and other communications hereunder shall be in
writing and shall be deemed given (i) when delivered personally; (ii)
the second business day after being deposited in the United States
mail registered or certified (return receipt requested); (iii) the
first business day after being deposited with Federal Express or any
other recognized national overnight courier service or (iv) on the
business day on which it is sent and received by facsimile, in each
case to the parties at the following addresses (or at such other
address for a party as shall be specified by like notice):
(a) If to UWS:
United Wisconsin Services, Inc.
000 Xxxx Xxxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxx, President
With a copy to:
Xxxxxxx Xxxx & Xxxxxxxxx LLP
000 Xxxx Xxxxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attention: Xxxxxxxx X. Xxxxxx.
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(b) If to Xxxxxxxx or Xxxxxx:
Xxxxxxx X. Xxxxxxxx
0000 Xxxxxx Xxxxxx
Xxxxx Xxx, XX 00000
Xxxxxx X. Xxxxxx
0000 Xxxx Xxxxxxx Xxxx
Xxxxx Xxx, XX 00000
With a copy to:
Xxxxxxx & Xxxx, S.C.
000 Xxxx Xxxxxx, Xxxxx 000
Xxxxx Xxx, XX 00000-0000
Attention: Xxxxxxxx X. Xxxxx
Xxxxxxx & Xxxx, S.C.
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxxx
8. MISCELLANEOUS. This Agreement (including the exhibits, documents and
instruments referred to herein or therein):
(a) constitutes the entire agreement, and supersedes all other prior
agreements and understandings, both written and oral, among the
parties, or any of them with respect to the subject matter
hereof;
(b) is not intended to confer upon any person which is not a party
hereto any rights or remedies hereunder;
(c) shall not be assigned by operation of law or otherwise except
that UWS may assign all or any portion of its rights hereunder to
UWS Acquisition or any other subsidiary of UWS; and
(d) may be executed in two or more counterparts which together shall
constitute a single agreement.
9. WAIVER; REMEDIES. No delay or failure on the part of any party hereto
to exercise any right, power, or privilege hereunder shall operate as a waiver
hereof, nor shall any waiver on the part of any party hereto of any right,
power, or privilege hereunder
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operate as a waiver of any other right, power, or privilege hereunder, nor shall
any single or partial exercise of any right, power, or privilege hereunder
preclude any other or further exercise thereof or the exercise of any other
right, power, or privilege hereunder.
10. SEVERABILITY. If any provision of this Agreement shall be held by any
court of competent jurisdiction to be illegal, invalid or unenforceable, such
provision shall be construed and enforced as if it had been more narrowly drawn
so as not to be illegal, invalid or unenforceable, and such illegality,
invalidity or unenforceability shall have no effect upon and shall not impair
the enforceability of any other provision of this Agreement.
11. GOVERNING LAW. This Agreement shall be construed in accordance with
the law of the State of Wisconsin (without regard to principles of conflicts of
laws) applicable to contracts made and to be performed within such State.
UNITED WISCONSIN SERVICES, INC.
By: /s/ Xxxxxx X. Xxxxx
-------------------------------------
Its: President
------------------------------------
/s/ Xxxxxxx X. Xxxxxxxx
----------------------------------------
Xxxxxxx X. Xxxxxxxx
/s/ Xxxxxx X. Xxxxxx
----------------------------------------
Xxxxxx X. Xxxxxx
EXHIBIT A
MUTUAL RELEASE AND TERMINATION AGREEMENT
This Agreement ("Agreement") is made and entered into as of this 1st day of
April, 1998 by and among United Wisconsin Services, Inc., a Wisconsin
corporation (the "Company"), Xxxxxxx X. Xxxxxxxx ("Xxxxxxxx"), individually and
as Agent under the Escrow Agreement (hereinafter defined), and Xxxxxx X. Xxxxxx,
individually (collectively the "Principal Shareholders").
RECITALS
WHEREAS, the Principal Shareholders, individually, and the Company are
parties to an Agreement and Plan of Merger dated July 31, 1996 (the "Merger
Agreement") between the Company, Blue Cross & Blue Shield United of Wisconsin,
American Medical Security Group, Inc. and the Principal Shareholders;
WHEREAS, Xxxxxxxx, as Agent, is a party to the Escrow Agreement dated
December 3, 1996 (the "Escrow Agreement"), between the Company, Xxxxxxx X.
Xxxxxxxx as Agent, and Bank One Wisconsin Trust Company, N.A; and
WHEREAS, the parties hereto each desired to release all claims under the
Merger Agreement and Escrow Agreement and to terminate the Escrow Agreement.
NOW THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by the parties hereto, the parties
agree as follows:
ARTICLE I
MUTUAL RELEASE AND TERMINATION OF ESCROW AGREEMENT
SECTION 1.1 MUTUAL RELEASE. Effective as of the execution hereof:
(a) Each Principal Shareholder, individually and on behalf of
the Shareholders (as defined in the Merger Agreement) forever and irrevocably
releases and discharges the Company, its subsidiaries, and their respective
directors, officers, employees, agents and representatives, and each of them,
past and present, from any and all actions, suits, obligations, damages, losses,
claims, liabilities and demands of whatever character (collectively, "Claims")
relating to, arising from or in any way connected with (i) the Merger Agreement
(including, but not limited to, any claims for indemnification thereunder), and
(ii) the Escrow Agreement. This release is limited to a release of Claims in
connection with the Merger Agreement and the Escrow Agreement and does not
extend to any Claims arising or resulting from a breach or violation by the
Company of its obligations under this Agreement or any other agreement between
Principal Shareholders and the Company, including but not limited to the
Registration Rights Agreement and the Employment Agreements, as each such term
is defined in the Merger Agreement.
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(b) The Company forever and irrevocably releases and discharges
the Principal Shareholders and the Shareholders from any and all Claims relating
to, or arising from or in any way connected with (i) the Merger Agreement
(including, but not limited to, any claims for indemnification thereunder), and
(ii) the Escrow Agreement. This release is limited to a release of Claims in
connection with the Merger Agreement and the Escrow Agreement and does not
extend to any Claims arising or resulting from a breach or violation by the
Principal Shareholders of their respective obligations under this Agreement or
any other agreement between either Principal Shareholder and the Company,
including but not limited to the Registration Rights Agreement and their
respective Employment Agreements.
(c) It is understood and agreed that this release extends to all
Claims arising pursuant to the Merger Agreement and Escrow Agreement, whether
known or unknown, suspected or unsuspected, and that the facts in respect of
which these releases are given hereafter may prove to be different than the
facts now known or believed. Each of the releasing parties hereto represents and
warrants that such party has not heretofore assigned or transferred to any firm,
corporation or person whatsoever, any Claim of the types hereby released.
SECTION 1.2 TERMINATION OF ESCROW AGREEMENT. Effective upon the
execution hereof, the Escrow Agreement (hereinafter defined) is hereby
terminated in its entirety and shall be of no further force or effect.
Concurrently with the execution hereof, the Company and Xxxxxxx X. Xxxxxxxx
shall each execute and deliver to the Escrow Agent (as such term is defined in
the Escrow Agreement) the letter of direction attached as Exhibit B to the
Settlement Agreement of even date herewith which letter directs the Escrow Agent
to disburse all remaining escrowed funds in accordance with the instructions set
forth therein.
ARTICLE II
MISCELLANEOUS
SECTION 2.1 BENEFIT AND ASSIGNMENT. This Agreement shall be
binding upon and inure to the benefit of the parties hereto, their heirs,
successors, assignees, and beneficiaries in interest, provided, however, that
neither party shall assign this Agreement.
SECTION 2.2 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of Wisconsin
(regardless of such State's conflict of laws principles), and without reference
to any rules of construction regarding the party responsible for the drafting
hereof.
SECTION 2.3 COUNTERPARTS. This Agreement may be executed
simultaneously in two or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument, provided that all such counterparts, in the aggregate, shall contain
the signatures of all parties hereto.
SECTION 2.4 HEADINGS. All Section headings herein are inserted for
convenience only and shall not modify or affect the construction or
interpretation of any provision of this Agreement.
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SECTION 2.5 AMENDMENT, MODIFICATION AND WAIVER. This Agreement may
not be modified, amended or supplemented except by mutual written agreement of
all the parties hereto. Any party may waive in writing any term or condition
contained in this Agreement and intended to be for its benefit; provided,
however, that no waiver by any party, whether by conduct or otherwise, in any
one or more instances, shall be deemed or construed as a further or continuing
waiver of any such term or condition. Each amendment, modification, supplement
or waiver shall be in writing signed by the party or the parties to be charged.
SECTION 2.6 ENTIRE AGREEMENT. This Agreement (and its appendix)
represents the full and complete agreement of the parties with respect to the
subject matter hereof and supersede and replace any prior understandings and
agreements among the parties with respect to the subject matter hereof and no
provision or document of any kind shall be included in or form a part of such
agreement unless signed and delivered to the other party by the parties to be
charged.
SECTION 2.7 THIRD-PARTY BENEFICIARIES. No third parties are
intended to benefit from this Agreement, and no third-party beneficiary rights
shall be implied from anything contained in this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
UNITED WISCONSIN SERVICES, INC.
By:/s/ Xxxxxx X. Xxxxx
-------------------------------------
Xxxxxx X. Xxxxx, President
/s/ Xxxxxxx X. Xxxxxxxx
----------------------------------------
Xxxxxxx X. Xxxxxxxx, individually, on
behalf of the Shareholders and as Agent
/s/ Xxxxxx X. Xxxxxx
----------------------------------------
Xxxxxx X. Xxxxxx, individually and on
behalf of the Shareholders
3
EXHIBIT B
April 1, 1998
VIA MESSENGER
Bank One Trust Company, N.A.
000 Xxxx Xxxxxxxxx Xxxxxx
0xx Xxxxx
Xxxxxxxxx, XX 00000
ATTN: Xxxxxxxx Xxxxxxxxx
RE: Escrow Agreement dated December 3, 1996 ("Escrow Agreement") by and
among United Wisconsin Services, Inc., a Wisconsin Corporation
("UWS"), Xxxxxxx X. Xxxxxxxx ("Agent"), and Bank One Wisconsin Trust
Company, N.A. (the "Escrow Agent")
----------------------------------------------------------------------
Ladies and Gentlemen:
You are hereby directed and instructed as Escrow Agent to immediately
distribute the Escrowed Funds (as defined in the Escrow Agreement) as follows:
1. $500,000 to United Wisconsin Services, Inc.
000 Xxxx Xxxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
2. The entire remaining balance of the Escrowed Funds in accordance
with the written instructions of the Agent.
This letter shall constitute "written instructions" to you in accordance
with Section 4(c) of the Escrow Agreement.
UNITED WISCONSIN
SERVICES, INC.
By: /s/ Xxxxxxx X. Xxxxxxxx
-------------------------------- ----------------------------------------
Title: Xxxxxxx X. Xxxxxxxx, as Agent
------------------------------
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EXHIBIT C
REPRESENTATION OF
XXXXXXX X. XXXXXXXX
The undersigned hereby represents as follows:
He has no plan or intention to sell, exchange, transfer by gift
or otherwise dispose of any of his stock in either the
distributing or controlled corporation subsequent to the proposed
transaction.
April _____, 1998 ----------------------------------------
Xxxxxxx X. Xxxxxxxx
EXHIBIT C
REPRESENTATION OF
XXXXXX X. XXXXXX
The undersigned hereby represents as follows:
He has no plan or intention to sell, exchange, transfer by gift
or otherwise dispose of any of his stock in either the
distributing or controlled corporation subsequent to the proposed
transaction.
April _____, 1998 ----------------------------------------
Xxxxxx X. Xxxxxx
EXHIBIT D
AMENDMENT TO EMPLOYMENT
AND NONCOMPETITION AGREEMENT
This Amendment is entered into as of April ____, 1998, by and between
American Medical Security Holdings, Inc., a Wisconsin corporation (the
"Company") and a wholly owned subsidiary of United Wisconsin Services, Inc., a
Wisconsin corporation ("UWSI"), and Xxxxxxx X. Xxxxxxxx, an individual
("Employee").
RECITALS
WHEREAS, the parties and UWSI have entered into an Employment and
Noncompetition Agreement executed as of December 3, 1996; and
WHEREAS, the parties desire to amend Section 1.2 of the Employment
Agreement as hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and mutual agreements and
covenants contained herein and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged by the Company and
Employee, it is hereby agreed as follows:
1. The first sentence of Section 1.2 of the Employment Agreement is
hereby amended to read in its entirety as follows:
Employee shall be employed by the Company and shall have
such duties as may be set forth by the President from time
to time.
2. All other terms and conditions of the Employment Agreement shall
remain in full force and effect.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year written above.
AMERICAN MEDICAL SECURITY
HOLDINGS, INC.
By:
-------------------------------------
----------------------------------------
Xxxxxxx X. Xxxxxxxx
EXHIBIT D
AMENDMENT TO EMPLOYMENT
AND NONCOMPETITION AGREEMENT
This Amendment is entered into as of April ____, 1998, by and between
American Medical Security Holdings, Inc., a Wisconsin corporation (the
"Company") and a wholly owned subsidiary of United Wisconsin Services, Inc., a
Wisconsin corporation ("UWSI"), and Xxxxxx X. Xxxxxx, an individual
("Employee").
RECITALS
WHEREAS, the parties and UWSI have entered into an Employment and
Noncompetition Agreement executed as of December 3, 1996; and
WHEREAS, the parties desire to amend Section 1.2 of the Employment
Agreement as hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and mutual agreements and
covenants contained herein and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged by the Company and
Employee, it is hereby agreed as follows:
1. The first sentence of Section 1.2 of the Employment Agreement is
hereby amended to read in its entirety as follows:
Employee shall be employed by the Company and shall have
such duties as may be set forth by the President from time
to time.
2. All other terms and conditions of the Employment Agreement shall
remain in full force and effect.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year written above.
AMERICAN MEDICAL SECURITY
HOLDINGS, INC.
By:
-------------------------------------
----------------------------------------
Xxxxxx X. Xxxxxx
EXHIBIT E
REGISTRATION RIGHTS AND STOCK
RESTRICTION AGREEMENT
This Agreement ("Agreement") is made and entered into as of this 1st day of
April, 1998 by and among United Wisconsin Services Acquisition, Inc., a
Wisconsin corporation (the "Company"), Xxxxxxx X. Xxxxxxxx and Xxxxxx X. Xxxxxx
(individually a "Holder" and collectively the "Holders").
RECITALS
WHEREAS, the Holders and United Wisconsin Services, Inc. ("UWS") are
parties to a Registration Rights and Stock Restriction Agreement dated December
3, 1996, pursuant to which, among other things, the Holders obtained
registration rights with respect to shares of common stock, no par value, of UWS
("UWSI Common Stock") and options to purchase shares of UWSI Common Stock ("UWSI
Options") owned by the Holders.
WHEREAS, on the date hereof UWS is distributing all of the issued and
outstanding shares of the Company's no par value common stock ("Company Common
Stock") to the holders of the UWSI Common Stock on a one-for-one basis (the
"Spinoff"), and pursuant to the Spinoff the holders of UWSI Options will receive
options to purchase shares of Company Common Stock ("Company Options").
WHEREAS, in connection with the transactions contemplated by the Spinoff,
the Holders desire to obtain certain registration rights with respect to Company
Common Stock to be received in the Spinoff and the Company Options, and the
Company desires to enter into the agreements with the Holders as set forth
below.
NOW THEREFORE, the parties agree as follows:
ARTICLE I
REGISTRATION RIGHTS
Section 1.01 GENERAL. For purposes of Article I: (i) the terms
"register", "registered" and "registration" refer to a registration effected by
preparing and filing a registration statement (a "registration statement") in
compliance with the Securities Act of 1933, as amended (the "1933 Act"), and the
declaration or ordering of effectiveness of such registration statement; and
(ii) the term "Registrable Securities" means the shares of Company Common Stock
to be received by the Holders in the Spinoff and any shares of Company common
stock acquired by the Holders through the exercise of Company Options or any
securities issued in exchange therefor in the event of a recapitalization, stock
split, merger, consolidation or other combination or exchange of shares.
1
Section 1.02 REQUEST FOR REGISTRATION. Subject to Section 1.07(a)
hereof, at any time on or after the date hereof if the Company shall receive a
written request (specifying that it is being made pursuant to this Section 1.02)
from both Holders that the Company register at least fifty percent (50%) of the
then outstanding Registrable Securities, then the Company shall use its best
efforts to cause to be registered all Registrable Securities that the Holders
have requested be registered. Notwithstanding the foregoing, the Company shall
not be obligated to effect a registration pursuant to this Section 1.02 during
the period starting with the date forty-five (45) days prior to the Company's
estimated date of filing of, and ending on a date one-hundred-eighty (180) days
following the effective date of, a registration statement pertaining to an
underwritten public offering of Company Common Stock for the account of the
Company. The Company shall be obligated to effect not more than two (2)
registrations pursuant to this Section 1.02. Any request for registration under
this Section must be for a firmly underwritten public offering in accordance
with terms agreed upon between the underwriter or underwriters and the Holders
to be managed by an underwriter or underwriters designated by the Holders and
reasonably acceptable to the Company. Notwithstanding anything else in this
Agreement to the contrary, all of the Company's obligations under this Section
shall expire on the earlier of December 3, 2001 or the date on which the Holders
own in the aggregate less than three percent of the outstanding Company Common
Stock. Subject to the provisions of Section 1.07(a) hereof, the Company shall
be permitted to cause to be registered additional shares of Company Common Stock
(whether previously unissued or owned by a person or entity designated by the
Company) in connection with any registration effected pursuant to this Section
1.02. If, while a registration request is pending pursuant to this Section
1.02, the Company has determined in good faith that (A) the filing of a
registration statement could jeopardize or delay any contemplated material
transaction other than a financing plan involving the Company or would require
the disclosure of material information that the Company had a bona fide business
purpose for preserving as confidential; or (B) the Company then is unable to
comply with requirements of the Securities and Exchange Commission ("SEC")
applicable to the requested registration (notwithstanding its best efforts to so
comply), the Company shall not be required to effect a registration pursuant to
this Section 1.02 until the earlier of (1) the date upon which such contemplated
transaction is completed or abandoned or such material information is otherwise
disclosed to the public or ceases to be material or the Company is able to so
comply with applicable SEC requirements, as the case may be, and (2) 45 days
after the Company makes such good-faith determination.
Section 1.03 COMPANY REGISTRATION. Subject to Section 1.07(b)
hereof, if at any time the Company determines to register any Company Common
Stock under the 1933 Act in connection with the public offering of such
securities solely for cash on a form that would also permit the registration of
any of the Registrable Securities, the Company shall promptly give the Holders
written notice of such determination. Upon the written request of any Holder
received by the Company within thirty (30) days after the giving of any such
notice by the Company, the Company shall use its best efforts to cause to be
registered all of the Registrable Securities that the Holders have requested be
registered together with the registration of the Company Common Stock otherwise
being registered by the Company. Notwithstanding anything else in this
Agreement to the contrary, all of the Company's obligations under this Section
shall expire on the earlier of the fifth anniversary of the date hereof or the
date on which the Holders own in the aggregate less than three percent of the
outstanding Company Common Stock. The Company shall be obligated to include
Registerable Securities in not more than two (2)
2
registrations pursuant to this Section 1.03. The Company may, for any reason or
for no reason, elect to either not file or withdraw the filing of any
registration statement relating to a registration described in this Section 1.03
at any time prior to the effectiveness thereof and in such case the request by
the Holders to be included in such registration will not be deemed to have been
the exercise of one registration right under this Section 1.03.
Section 1.04 OBLIGATIONS OF THE COMPANY. Whenever the Company shall
be required under Sections 1.02 or 1.03 hereof to use its best efforts to effect
the registration of any Registrable Securities, the Company shall:
(a) as expeditiously as reasonable possible, prepare and file with
the Securities and Exchange Commission ("SEC," which term includes any successor
agency) a registration statement with respect to such Registrable Securities and
use its reasonable efforts to cause such registration statement to become and
remain effective under the 1933 Act, except that the Company shall in no event
be obligated to cause any such registration to remain effective for more than
three months;
(b) as expeditiously as reasonably possible, prepare and file with
the SEC such amendments and supplements to such registration statement and the
prospectus used in connection with such registration statement as may be
necessary to comply with the provisions of the 1933 Act with respect to the
disposition of all securities covered by such registration statement;
(c) as expeditiously as reasonably possible, furnish to the Holders
such numbers of copies of a prospectus, including a preliminary prospectus, and
such other documents as they may reasonably request in order to facilitate the
disposition of Registrable Securities owned by them;
(d) as expeditiously as reasonably possible, use its reasonable
efforts to register and qualify the securities covered by such registration
statement under such securities or Blue Sky laws of such jurisdictions as shall
be reasonably appropriate or requested by the Holders, except that the Company
shall not be required in connection therewith or as a condition thereto to
qualify to do business or to file a general consent to service of process in any
such jurisdiction;
(e) advise each Holder, promptly after it shall receive notice or
obtain knowledge thereof, of (i) the issuance of any stop order by the SEC
suspending the effectiveness of such registration statement or the initiation or
threatening of any proceeding for that purpose, and (ii) any similar action by
any regulatory agency of competent jurisdiction under the securities or Blue Sky
laws of any jurisdiction, and in any such case promptly use its reasonable best
efforts to prevent the issuance of any stop order or the taking of any such
similar action or to obtain its withdrawal if such stop order should be issued
or any such similar action shall be taken; and
(f) furnish to each Holder of Registrable Securities covered by such
registration statement copies of all documents proposed to be filed with respect
to any amendment or supplement to such registration statement or prospectus at a
reasonable time prior to such filing.
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Section 1.05 FURNISH INFORMATION. It shall be a condition precedent
to the obligations of the Company to take any action pursuant to this Article I
that the Holders shall furnish to the Company such information regarding them,
the Registrable Securities held by them, and the intended method of disposition
of such securities and such other matters as may be required by the 1933 Act and
other applicable law and regulation as the Company shall request and as shall be
required in connection with the action to be taken by the Company.
Section 1.06 EXPENSES OF REGISTRATION. In connection with a
registration pursuant to Section 1.02, all underwriter's discounts and
commissions, all registration and qualification fees, printers' and any
extraordinary accounting fees, required as a result of the Holders'
registration, shall be borne by the Holders and, all such expenses incurred in
connection with a registration pursuant to Section 1.03 shall be borne by the
Company, the Holders and any other sellers pro rata in relation to the number of
shares of Company Common Stock being registered by each such party. For any
registrations pursuant to Sections 1.02 or Section 1.03, all parties shall pay
all of their own respective attorneys' fees.
Section 1.07 UNDERWRITING REQUIREMENTS.
(a) In connection with any registration requested by Holders under
Section 1.02, the Company shall not be required under Section 1.02 to register
any Registrable Securities of any Holder unless such Holder accepts the terms of
the underwriting required by Section 1.02, and then only in such quantity as
will not, in the written opinion of the managing underwriters, exceed the
maximum number of shares that can be marketed at a price reasonably related to
the then current market price for such shares, or otherwise materially and
adversely affect such offering or the trading market for such shares (the
"Maximum Feasible Quantity"). All securities sold to cover any over-allotment
shall be apportioned among the Holders and the Company in proportion to the
total number of shares being sold by each, provided, however, that any such
over-allotment shall first be allocated to the Holders to the extent any of the
Registrable Securities of the Holders were not included in such registration
because the total number of Registrable Securities requested to be registered by
the Holders exceeded the Maximum Feasible Quantity for such registration, and
shall thereafter be allocated to the Company to the extent that the shares
requested to be registered by the Company were not included in such registration
because such shares, when added to the shares being registered by the Holders,
exceeded the Maximum Feasible Quantity for such registration.
(b) In connection with any registration in which Registerable
Securities are included pursuant to Section 1.03 hereof, the Company shall not
be required to include any of the Holders' Registrable Securities in such
registration unless the Holders accept the terms of the underwriting as agreed
upon between the Company and the underwriters selected by it, and then only in
such quantity as will not, when added to the shares otherwise being registered
by the Company, in the written opinion of the managing underwriters, exceed the
Maximum Feasible Quantity for such registration. All securities sold to cover
any over-allotment shall be apportioned among the Holders and the Company in
proportion to the total number of shares being sold by each; provided, however,
that any such over-allotment shall first be allocated to the Company to the
extent any of the securities of the Company were not included in such
registration because the total number of Registrable Securities included in such
registration by the Holders, when added to the shares otherwise being registered
by the Company, exceeded the
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Maximum Feasible Quantity for such registration, and shall thereafter be
allocated to the Holders to the extent that the Registrable Securities requested
to be registered by the Holders were not included in such registration because
such shares when added to the shares being requested by the Company, included
the Maximum Feasible Quantity for such registration.
ARTICLE II
STANDSTILL
Section 2.01 PURCHASES OF VOTING SECURITIES. Xxxxxxxx and Xxxxxx
each agrees that, until December 3, 2006, without the prior written consent of
the Company, he will not acquire, offer or propose to acquire, directly or
indirectly, by purchase or otherwise, any securities of the Company, other than
pursuant to the Company Options, with the power to vote with respect to the
election of directors generally ("Voting Securities"), or direct or indirect
rights or options to acquire (through purchase, exchange, conversion or
otherwise) any Voting Securities, if any such acquisitions would require any
regulatory approval, application or notification other than as required by the
1934 Act.
Section 2.02. OTHER STANDSTILL PROVISIONS. Xxxxxxxx and Xxxxxx each
agrees that until December 3, 1999, without the prior written consent of the
Company, he will not:
(a) make, or in any way participate, directly or indirectly, in any
"solicitation" of "proxies" (as such terms are defined in Rule 14a-1 under
the 0000 Xxx) to vote any Voting Securities, initiate or propose any
shareholder proposal or induce or attempt to induce any other person to
initiate any shareholder proposal;
(b) make any proposal, whether written or oral, to the Board of
Directors of the Company, or to any director or officer of the Company, or
otherwise make any public announcement or proposal whatsoever with respect
to a merger or other business combination, sale or transfer of assets,
liquidation or other extraordinary corporate transaction with the Company;
(c) form, join or in any way participate in a "group" (within the
meaning of Section 13(d)(3) of the 0000 Xxx) with respect to any securities
of the Company or otherwise act, alone or in concert with others, to seek
to exercise any control or influence over the management, Board of
Directors or policies of the Company other than pursuant to his employment
with the Company or any of its subsidiaries.
Section 2.03. NO PUBLIC REQUESTS. Xxxxxxxx and Xxxxxx each agrees that he
will not make a public request to the Company (or its directors, officers,
shareholders, employees or agents) to amend or waive any provisions of this
Article III, including without limitation any public request to permit him or
any other person to take any other action referred to in Sections 3.01 and 3.02
hereof.
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ARTICLE III
VOTING AGREEMENT
Xxxxxxxx and Xxxxxx each agree that until December 3, 2006, to vote
all shares of Company Common Stock owned or held by them respectively, (or over
which they have or share voting power) in accordance with the directions of Blue
Cross & Blue Shield United of Wisconsin ("BCBSUW") on any matters relating to or
affecting the Blue Cross Blue Shield Association market conditions or rules and
regulations, as may be determined in good faith by the BCBSUW Board of
Directors.
ARTICLE IV
GENERAL PROVISIONS
Section 4.01 NOTICES. All notices and other communications
hereunder shall be in writing and shall be deemed given (i) when delivered
personally; (ii) the second business day after being deposited in the United
States mail registered or certified (return receipt requested); (iii) the first
business day after being deposited with Federal Express or any other recognized
national overnight courier service or (iv) on the business day on which it is
sent and received by facsimile, in each case to the parties at the following
addresses (or at such other address for a party as shall be specified by like
notice):
(a) If to the Company:
United Wisconsin Services, Inc.
000 Xxxx Xxxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxx, President
With a copy to:
Xxxxxxx Xxxx & Xxxxxxxxx
000 Xxxx Xxxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxx 00000
Attention: Xxxxxxxx X. Xxxxxx, Esq.
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(b) If to the Holders:
Xxxxxxx X. Xxxxxxxx
0000 Xxxxxx Xxxxxx
Xxxxx Xxx, XX 00000
Xxxxxx X. Xxxxxx
0000 Xxxx Xxxxxxx Xxxx
Xxxxx Xxx, XX 00000
With a copy to:
Xxxxxxx & Xxxx, S.C.
000 Xxxx Xxxxxx, Xxxxx 000
Xxxxx Xxx, XX 00000-0000
Attention: Xxxxxxxx X. Xxxxx, Esq.
Xxxxxxx & Xxxx, S.C.
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxxx, Esq.
Section 4.02 MISCELLANEOUS. This Agreement (including the exhibits,
documents and instruments referred to herein or therein):
(a) constitutes the entire agreement, and supersedes all other prior
agreements and understandings, both written and oral, among the parties, or
any of them, with respect to the subject matter hereof;
(b) is not intended to confer upon any person which is not a party
hereto any rights or remedies hereunder;
(c) shall not be assigned by operation of law or otherwise; and
(d) may be executed in two or more counterparts which together shall
constitute a single agreement.
Section 4.03 WAIVER: REMEDIES. No delay or failure on the part of
any party hereto to exercise any right, power, or privilege hereunder shall
operate as a waiver thereof, nor shall any waiver on the part of any party
hereto of any right, power, or privilege hereunder operate as a waiver of any
other right, power, or privilege hereunder, nor shall any single or partial
exercise of any right, power, or privilege hereunder preclude any other or
further exercise thereof or the exercise of any other right, power, or privilege
hereunder.
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Section 4.04 SEVERABILITY. If any provision of this Agreement shall
be held by any court of competent jurisdiction to be illegal, invalid or
unenforceable, such provision shall be construed and enforced as if it had been
more narrowly drawn so as not to be illegal, invalid or unenforceable, and such
illegality, invalidity or unenforceability shall have no effect upon and shall
not impair the enforceability of any other provision of this Agreement.
Section 4.05 GOVERNING LAW. This Agreement shall be construed in
accordance with the law of the State of Wisconsin (without regard to principles
of conflicts of laws) applicable to contracts made and to be performed within
such State.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
UNITED WISCONSIN SERVICES ACQUISITION, INC.
By:/s/ Xxxxxx X. Xxxxx
------------------------------------------
Xxxxxx X. Xxxxx, President
/s/ Xxxxxxx X. Xxxxxxxx
---------------------------------------------
Xxxxxxx X. Xxxxxxxx
/s/ Xxxxxx X. Xxxxxx
---------------------------------------------
Xxxxxx X. Xxxxxx
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