2,610,000 Shares
AMERICAN MEDICAL SECURITY GROUP, INC.
Common Stock
UNDERWRITING AGREEMENT
May 29, 2002
CIBC World Markets Corp.
Xxxxxx X. Xxxxx & Co. Incorporated
Xxxxxx, Xxxxxxxx & Company, Incorporated
c/o CIBC World Markets Corp.
000 0xx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
On behalf of the Several Underwriters named on Schedule I attached hereto.
Ladies and Gentlemen:
Blue Cross & Blue Shield United of Wisconsin (the "Selling Shareholder"),
proposes, subject to the terms and conditions contained herein, to sell to you
and the other underwriters named on Schedule I to this Agreement (the
"Underwriters"), for whom you are acting as Representatives (the
"Representatives"), an aggregate of 2,610,000 shares (the "Firm Shares") of the
Common Stock, no par value (the "Common Stock") of American Medical Security
Group, Inc., a Wisconsin corporation (the "Company"). The respective amounts of
the Firm Shares to be purchased by each of the several Underwriters are set
forth opposite their names on Schedule I hereto. In addition, the Selling
Shareholder proposes to grant to the Underwriters an option to purchase up to an
additional 391,500 shares (the "Option Shares") of Common Stock from it for the
purpose of covering over-allotments in connection with the sale of the Firm
Shares. The Firm Shares and the Option Shares are together called the "Shares."
1. Sale and Purchase of the Shares.
On the basis of the representations, warranties and agreements contained
in, and subject to the terms and conditions of, this Agreement:
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(a) The Selling Shareholder agrees to sell to each of the
Underwriters, and each of the Underwriters agrees, severally and not
jointly, to purchase from the Selling Shareholder, at a price of $18.00
per share, less an underwriting discount of $1.06 per share, (the
"Initial Price"), the number of Firm Shares set forth opposite the name
of such Underwriter under the column "Number of Firm Shares to be
Purchased" on Schedule I to this Agreement, subject to adjustment in
accordance with Section 11 hereof.
(b) The Selling Shareholder grants to the several Underwriters an
option to purchase, severally and not jointly, all or any part of the
Option Shares at the Initial Price. The number of Option Shares to be
purchased by each Underwriter shall be the same percentage (adjusted by
the Representatives to eliminate fractions) of the total number of Option
Shares to be purchased by the Underwriters as such Underwriter is
purchasing of the Firm Shares. Such option may be exercised only to cover
over-allotments in the sales of the Firm Shares by the Underwriters and
may be exercised in whole or in part at any time on or before 12:00 noon,
New York City time, on the business day before the Firm Shares Closing
Date (as defined below), and from time to time thereafter within 30 days
after the date of this Agreement, in each case upon written, facsimile or
telegraphic notice, or verbal or telephonic notice confirmed by written,
facsimile or telegraphic notice, by the Representatives to the Selling
Shareholder no later than 12:00 noon, New York City time, on the business
day before the Firm Shares Closing Date or at least two business days
before the Option Shares Closing Date (as defined below), as the case may
be, setting forth the number of Option Shares to be purchased and the
time and date (if other than the Firm Shares Closing Date) of such
purchase.
2. Delivery and Payment. Payment of the purchase price for, and delivery
of the Firm Shares by book-entry transfer or in certificated form shall be made
at the offices of CIBC World Markets Corp., 000 0xx Xxxxxx, 0xx Xxxxx, Xxx Xxxx,
Xxx Xxxx, 00000, as applicable, or at such other place as shall be agreed upon
by the Representatives, the Company and the Selling Shareholder, at 10:00 a.m.,
New York City time, on the third business day following the date of this
Agreement or at such time on such other date, not later than ten (10) business
days after the date of this Agreement, as shall be agreed upon by the Company,
the Selling Shareholder and the Representatives (such time and date of delivery
and payment are called the "Firm Shares Closing Date").
In addition, in the event that any or all of the Option Shares are
purchased by the Underwriters, payment of the purchase price, and delivery of
the Option Shares by book-entry transfer or in certificated form shall be made
at the above-mentioned offices, as applicable, or at such other place as shall
be agreed upon by the Representatives and the Company, on each date of delivery
as specified in the notice from the Representatives to the Company and the
Selling Shareholder (such time and date of delivery and payment are called the
"Option Shares Closing Date"). The Firm Shares Closing Date and the Option
Shares Closing Date are called, individually, a "Closing Date" and, together,
the "Closing Dates."
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Payment shall be made to the Selling Shareholder by wire transfer of
immediately available funds or by certified or official bank check or checks
payable in New York Clearing House (same day) funds drawn to the order of the
Selling Shareholder, against delivery of the Shares, by book-entry transfer or
in certificated form, to the Representatives for the respective accounts of the
Underwriters of the Shares to be purchased by them.
The Shares shall be registered in such names and shall be in such
denominations as the Representatives shall request at least two full business
days before the Firm Shares Closing Date or, in the case of Option Shares, on
the day of notice of exercise of the option as described in Section l(b) and
shall be delivered by or on behalf of the Selling Shareholder to the
Representatives through the facilities of the Depository Trust Company ("DTC")
for the account of such Underwriter. If applicable, the Company and the Selling
Shareholder will cause the certificates representing the Shares to be made
available for checking and packaging, at such place as is designated by the
Representatives, on the full business day before the Firm Shares Closing Date
(or the Option Shares Closing Date in the case of the Option Shares).
3. Registration Statement and Prospectus; Public Offering. The Company
has prepared and filed in conformity with the requirements of the Securities Act
of 1933, as amended (the "Securities Act"), and the published rules and
regulations thereunder (the "Rules") adopted by the Securities and Exchange
Commission (the "Commission") a Registration Statement on Form S-3 (No.
333-86660), including a Preliminary Prospectus relating to the Shares, and such
amendments thereof as may have been required to the date of this Agreement.
Copies of such Registration Statement (including all amendments thereof) and of
the related Preliminary Prospectus have heretofore been delivered by the Company
to you. The term "Preliminary Prospectus" means any preliminary prospectus (as
described in Rule 430 of the Rules) included at any time as a part of the
Registration Statement or filed with the Commission by the Company with the
consent of the Representatives pursuant to Rule 424(a) of the Rules. The term
"Registration Statement" as used in this Agreement means the initial
registration statement (including all exhibits, financial schedules and
information deemed to be a part of the Registration Statement through
incorporation by reference or otherwise), as amended at the time and on the date
it finally becomes effective (the "Effective Date") including the information
(if any) deemed to be part thereof at the time of effectiveness pursuant to Rule
430A of the Rules. If the Company has filed an abbreviated registration
statement to register additional Shares pursuant to Rule 462(b) under the Rules
(the "462(b) Registration Statement") then any reference herein to the
Registration Statement shall also be deemed to include such 462(b) Registration
Statement. The term "Prospectus" as used in this Agreement means the prospectus
in the form included in the Registration Statement at the time of final
effectiveness or, if Rule 430A of the Rules is relied on, the term Prospectus
shall also include the final prospectus filed with the Commission pursuant to
Rule 424(b) of the Rules. Reference made herein to any Preliminary Prospectus or
to the Prospectus shall be deemed to refer to and include any documents
incorporated by reference therein pursuant to Item 12 of Form S-3 under the
Securities Act, as of the date of such Preliminary Prospectus or the
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Prospectus, as the case may be, and any reference to any amendment or supplement
to any Preliminary Prospectus or the Prospectus shall be deemed to refer to and
include any document filed under the United States Securities Exchange Act of
1934 (the "Exchange Act") after the date of such Preliminary Prospectus or the
Prospectus, as the case may be, and incorporated by reference in such
Preliminary Prospectus or the Prospectus, as the case may be.
The Company and the Selling Shareholder understand that the Underwriters
propose to make a public offering of the Shares, as set forth in and pursuant to
the Prospectus, as soon after the Effective Date and the date of this Agreement
as the Representatives deem advisable. The Company and the Selling Shareholder
hereby confirm that the Underwriters and dealers have been authorized to
distribute or cause to be distributed each Preliminary Prospectus and are
authorized to distribute the Prospectus (as from time to time amended or
supplemented if the Company furnishes amendments or supplements thereto to the
Underwriters).
4. Representations and Warranties of the Company. The Company hereby,
represents and warrants to each Underwriter as follows:
(a) On the Effective Date, the Registration Statement complied,
and on the date of the Prospectus, the date any post-effective amendment
to the Registration Statement becomes effective, the date any supplement
or amendment to the Prospectus is filed with the Commission and each
Closing Date, the Registration Statement and the Prospectus (and any
amendment thereof or supplement thereto) will comply, in all material
respects, with the applicable provisions of the Securities Act and the
Rules and the Exchange Act, and the rules and regulations of the
Commission thereunder. The Registration Statement did not, as of the
Effective Date, contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary in
order to make the statements therein not misleading; and on the Effective
Date and the other dates referred to above neither the Registration
Statement nor the Prospectus, nor any amendment thereof or supplement
thereto, will contain any untrue statement of a material fact or will
omit to state any material fact required to be stated therein or
necessary in order to make the statements therein not misleading. When
any related Preliminary Prospectus was first filed with the Commission
(whether filed as part of the Registration Statement or any amendment
thereto or pursuant to Rule 424(a) of the Rules) and when any amendment
thereof or supplement thereto was first filed with the Commission, such
Preliminary Prospectus as amended or supplemented complied in all
material respects with the applicable provisions of the Securities Act
and the Rules and did not contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein not misleading. If
applicable, each Preliminary Prospectus and the Prospectus delivered to
the Underwriters for use in connection with this offering was identical
to the electronically transmitted copies thereof filed with the
Commission pursuant to XXXXX, except to the extent permitted by
Regulation S-T. If Rule 434 is used, the Company will comply with the
requirements of Rule 434 and the Prospectus shall
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not be "materially different," as such term is used in Rule 434, from the
Prospectus included in the Registration Statement at the time it became
effective. Notwithstanding the foregoing, none of the representations and
warranties in this paragraph 4(a) shall apply to statements in, or
omissions from, the Registration Statement or the Prospectus made in
reliance upon, and in conformity with, information herein or otherwise
furnished in writing by the Representatives on behalf of the several
Underwriters for use in the Registration Statement or the Prospectus.
With respect to the preceding sentence, the Company acknowledges that the
only information furnished in writing by the Representatives on behalf of
the several Underwriters for use in the Registration Statement or the
Prospectus is the statements contained in the table under the second
paragraph and in the fourth (except for the first sentence), tenth,
eleventh and thirteenth (with respect to the absence of representations
by the Underwriters) paragraphs under the caption "Underwriting" in the
Prospectus.
(b) The Registration Statement is effective under the Securities
Act and no stop order preventing or suspending the effectiveness of the
Registration Statement or suspending or preventing the use of the
Prospectus has been issued and no proceedings for that purpose have been
instituted or are threatened under the Securities Act. Any required
filing of the Prospectus and any supplement thereto pursuant to Rule
424(b) of the Rules has been or will be made in the manner and within the
time period required by such Rule 424(b).
(c) The documents incorporated by reference in the Registration
Statement and the Prospectus, at the time they became effective or were
filed with the Commission as the case may be, complied in all material
respects with the requirements of the Securities Act or the Exchange Act,
as applicable, and, when read together and with the other information in
the Registration Statement and the Prospectus, do not contain an untrue
statement of a material fact or omit to state a material fact required to
be stated therein or necessary in order to make the statements therein,
in the light of the circumstances under which they were made, not
misleading and any further documents so filed and incorporated by
reference in the Registration Statement and the Prospectus, when such
documents become effective or are filed with the Commission, as the case
may be, will conform in all material respects to the requirements of the
Securities Act or the Exchange Act, as applicable, and the rules and
regulations of the Commission thereunder and will not contain an untrue
statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein.
(d) The financial statements of the Company (including all notes
and schedules thereto) included or incorporated by reference in the
Registration Statement and Prospectus present fairly in all material
respects the financial position, the results of operations, the
statements of cash flows and the statements of
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shareholders' equity and the other information purported to be shown
therein of the Company at the respective dates and for the respective
periods to which they apply; and such financial statements and related
schedules and notes have been prepared in conformity with generally
accepted accounting principles, consistently applied (with the exception
of new accounting principles adopted as described in the Company's
Consolidated Financial Statements) throughout the periods involved, and
all adjustments necessary for a fair presentation of the results for such
periods have been made. The summary and selected financial data included
in the Prospectus present fairly in all material respects the information
shown therein as at the respective dates and for the respective periods
specified and the summary and selected financial data have been presented
on a basis consistent with the consolidated financial statements so set
forth in the Prospectus and other financial information.
(e) Ernst & Young LLP whose reports are filed with the Commission
as a part of the Registration Statement, are and, during the periods
covered by their reports, were independent public accountants as required
by the Securities Act and the Rules.
(f) Each of the Company and its Material Subsidiaries (as
hereinafter defined) has been duly organized and is validly existing as a
corporation or partnership, as the case may be, and in good standing (or
equivalent status) under the laws of their respective jurisdictions of
organization. For purposes of this Agreement, "Material Subsidiaries"
shall include the following direct or indirect Subsidiaries of the
Company: (i) American Medical Security Holdings, Inc.; (ii) American
Medical Security, Inc.; (iii) United Wisconsin Life Insurance Company;
(iv) Accountable Health Plans of America, Inc.; (v) American Medical
Security Insurance Company of Georgia; and (vi) U&C Real Estate
Partnership, a general partnership. Other than the Material Subsidiaries,
the Company does not own or control, directly or indirectly, any other
entity whose operations are material to the Company and its Subsidiaries
taken as a whole, or that would constitute a "significant subsidiary"
under Regulation S-X of the Exchange Act. Each of the Company and its
Material Subsidiaries is duly qualified or certified to transact business
and is in good standing or equivalent status as a foreign corporation or
partnership, as the case may be, in each jurisdiction in which the nature
of the business conducted by it or location of the assets or properties
owned, leased or licensed by it requires such qualification or
certification, except for such jurisdictions where the failure to so
qualify or be certified would not have a material adverse effect on the
assets or properties, business, results of operations or financial
condition of the Company and its Subsidiaries, taken as a whole (a
"Material Adverse Effect"). For purposes of this Agreement,
"Subsidiaries" shall include those entities owned and controlled by the
Company directly or indirectly through one or more intermediaries. The
Company does not own, lease or license any asset or property or conduct
any business outside the United States of America. Each of
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the Company and its Subsidiaries has all requisite corporate or
partnership, as the case may be, power and authority, and all necessary
authorizations, approvals, consents, orders, licenses, certificates and
permits of and from all governmental or regulatory bodies or any other
person or entity (collectively, the "Permits"), to own, lease and license
its assets and properties and conduct its business, all of which are
valid and in full force and effect, as described in the Registration
Statement and the Prospectus, except where the lack of such Permits,
individually or in the aggregate, would not have a Material Adverse
Effect. Each of the Company and its Material Subsidiaries has fulfilled
and performed in all material respects all of its material obligations
with respect to such Permits and no event has occurred that allows, or
after notice or lapse of time would allow, revocation or termination
thereof or results in any other material impairment of the rights of the
Company thereunder.
(g) Each of the Company and its Material Subsidiaries owns or
possesses adequate and enforceable rights to use all trademarks,
trademark applications, trade names, service marks, copyrights, copyright
applications, licenses, know-how and other similar rights and proprietary
knowledge (collectively, "Intangibles") described in the Prospectus as
being owned by it necessary for the conduct of its business. Neither the
Company nor any of its Subsidiaries has received any notice of, or is
aware of, any infringement of or conflict with asserted rights of others
with respect to any Intangibles that, if determined adversely to the
Company or any of its Subsidiaries, would have a Material Adverse Effect.
(h) Except as disclosed in the Prospectus, the Company and its
Subsidiaries have good and marketable title to all real properties and
all personal properties owned by them, in each case free from liens,
encumbrances and defects, except as would not materially affect the
Company and its Subsidiaries taken as a whole, or materially interfere
with the use made or to be made thereof by them, taken as a whole; and
except as disclosed in the Prospectus, the Company and its Subsidiaries
hold any leased real or personal property under valid, existing and
enforceable leases, free and clear of all liens, encumbrances, claims,
security interests and defects, except such as are described in the
Registration Statement and the Prospectus or would not have a Material
Adverse Effect or would not materially interfere with the use made or to
be made thereof by them, taken as a whole.
(i) Except as disclosed in the Registration Statement and the
Prospectus, there are no litigation or governmental proceedings to which
any of the Company or its Subsidiaries is subject or which are pending
or, to the knowledge of the Company, threatened against the Company or
any of its Subsidiaries, which, individually or in the aggregate, could
reasonably be expected to have a Material Adverse Effect or affect the
consummation of this Agreement or that are required to be disclosed in
the Registration Statement and the Prospectus but are not so disclosed.
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(j) Subsequent to the respective dates as of which information is
given in the Registration Statement and the Prospectus, except as
described therein, (a) there has not been any material adverse change
with regard to the assets or properties, business, results of operations
or financial condition of the Company; (b) neither the Company nor any of
its Subsidiaries has sustained any loss or interference with its assets,
businesses or properties (whether owned or leased) from fire, explosion,
earthquake, flood or other calamity, whether or not covered by insurance,
or from any labor dispute or any court or legislative or other
governmental action, order or decree which would have a Material Adverse
Effect; and (c) since the date of the latest balance sheet included or
incorporated by reference in the Registration Statement and the
Prospectus, except as reflected therein, neither the Company nor any of
its Subsidiaries has (i) issued any securities or incurred any liability
or obligation, direct or contingent, for borrowed money, except such
liabilities or obligations incurred in the ordinary course of business,
(ii) entered into any transaction not in the ordinary course of business
or (iii) declared or paid any dividend or made any distribution on any
shares of its stock or redeemed, purchased or otherwise acquired or
agreed to redeem, purchase or otherwise acquire any shares of its stock.
(k) There is no document, contract or other agreement of a
character required to be described in the Registration Statement or
Prospectus or to be filed as an exhibit to the Registration Statement
which is not described or filed as required by the Securities Act or
Rules. Each description of a contract, document or other agreement in the
Registration Statement and the Prospectus accurately reflects in all
material respects the terms of the underlying document, contract or
agreement. Each agreement described in the Registration Statement and
Prospectus or listed in the Exhibits to the Registration Statement or
incorporated by reference is in full force and effect (unless otherwise
so described) and is valid and enforceable by and against the Company or
any Subsidiary, as the case may be, in accordance with its terms. Neither
the Company nor any Subsidiary, if the Subsidiary is a party, nor to the
Company's knowledge, any other party is in default in the observance or
performance of any term or obligation to be performed by it under any
such agreement, and no event has occurred which with notice or lapse of
time or both would constitute such a default, in any such case which
default or event, individually or in the aggregate, would have, or in the
case of the default of any party other than the Company or a Subsidiary,
could reasonably be expected to have, a Material Adverse Effect. No
default exists, and no event has occurred which with notice or lapse of
time or both would constitute a default, in the due performance and
observance of any term, covenant or condition, by the Company or any
Subsidiary, if the Subsidiary is a party thereto, of any other agreement
or instrument to which the Company or any Subsidiary is a party or by
which the Company, any Subsidiary or their properties or business may be
bound or affected which default or event, individually or in the
aggregate, would have a Material Adverse Effect.
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(l) Neither the Company nor any of its Subsidiaries is in
violation of any term or provision of its charter or by-laws or of any
franchise, license, permit, judgment, decree, order, statute, rule or
regulation, where the consequences of such violation, individually or in
the aggregate, would have a Material Adverse Effect.
(m) Neither the execution, delivery and performance of this
Agreement by the Company nor the consummation of any of the transactions
contemplated hereby will (i) give rise to a right to terminate or
accelerate the due date of any payment due under, or conflict with or
result in the breach of any term or provision of, or constitute a default
(or an event which with notice or lapse of time or both would constitute
a default) under, or require any consent or waiver under (except for such
consents or waivers which have already been obtained and are in full
force and effect), or result in the execution or imposition of any lien,
charge or encumbrance upon any properties or assets of the Company or any
Subsidiary pursuant to the terms of, any indenture, mortgage, deed of
trust or other agreement or instrument to which the Company or any
Subsidiary is a party or by which either the Company or any Subsidiary or
any of their properties or businesses is bound, or any franchise,
license, permit, judgment, decree, order, statute, rule or regulation
applicable to the Company or any Subsidiary except where the consequences
would not have a Material Adverse Effect or (ii) violate any provision of
the charter or by-laws of the Company or any Material Subsidiary, except
for such consents or waivers which have already been obtained and are in
full force and effect.
(n) The Company has authorized and outstanding capital stock as
set forth under the caption "Capitalization" in the Prospectus. All of
the issued and outstanding shares of Common Stock, including the Shares,
have been duly authorized and validly issued and are fully paid and
nonassessable, subject to the personal liability that may be imposed on
shareholders by Section 180.0622(2)(b) of the Wisconsin Business
Corporation Law, as judicially interpreted, for debts owing to employees
for services performed, but not exceeding six months service in any one
case, and were not issued in violation of any preemptive or other similar
rights. None of the outstanding shares of capital stock of any Material
Subsidiary was issued in violation of any preemptive or other similar
rights. There are no preemptive or other similar rights to subscribe for
or to purchase or acquire any shares of the Company's Common Stock
pursuant to the Company's Restated Articles of Incorporation or Bylaws or
any agreement or other instrument to or by which the Company or any of
its Subsidiaries is a party or bound. Except as disclosed in the
Registration Statement and the Prospectus, there is no outstanding
option, warrant or other right calling for the issuance of, and there is
no commitment, plan or arrangement to issue, any shares of stock of the
Company or its Material Subsidiaries or any security convertible into, or
exercisable or exchangeable for, such stock. The Common Stock and the
Shares conform in all material respects to all statements in relation
thereto contained in the Registration Statement and the Prospectus. All
outstanding shares of capital stock of each
9
Material Subsidiary that is a corporation have been duly authorized and
validly issued, and are fully paid and nonassessable, subject to the
personal liability that may be imposed on shareholders by Section
180.0622(2)(b) of the Wisconsin Business Corporation Law, as judicially
interpreted, for debts owing to employees for services performed, but not
exceeding six months service in any one case, and are owned directly by
the Company or by another wholly-owned subsidiary of the Company free and
clear of any security interests, liens, encumbrances, equities or claims,
other than those described in the Prospectus.
(o) Except as described in the Prospectus, no holder of any
security of the Company has the right to have any security owned by such
holder included in the Registration Statement or to demand registration
of any security owned by such holder during the period ending 90 days
after the date of this Agreement. The Selling Shareholder and each
director of the Company has delivered to the Representatives a written
lock-up agreement in the form attached to this Agreement ("Lock-Up
Agreement").
(p) All necessary corporate action has been duly and validly taken
by the Company to authorize the execution, delivery and performance of
this Agreement by the Company. This Agreement has been duly authorized,
executed and delivered by the Company and constitutes and will constitute
a legal, valid and binding obligation of the Company enforceable against
the Company in accordance with its terms, except as the enforceability
thereof may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting the enforcement of creditors'
rights generally and by general equitable principles and, as to
indemnification provisions, by public policy and the undertaking
contained in the Registration Statement.
(q) Neither the Company nor any of its Subsidiaries is involved in
any labor dispute nor, to the knowledge of the Company, is any such
dispute threatened, which dispute would have a Material Adverse Effect.
The Company is not aware of any existing or imminent labor disturbance by
the employees of any of its principal suppliers or contractors which
would have a Material Adverse Effect. The Company is not aware of any
threatened or pending litigation between the Company or its Subsidiaries
and any of its executive officers which, if adversely determined, could
have a Material Adverse Effect and has no reason to believe that such
officers will not remain in the employment of the Company.
(r) No transaction has occurred between or among the Company and
any of its officers or directors or five percent shareholders or any
affiliate or affiliates of any such officer or director or five percent
shareholders that is required to be described in and is not described in
the Registration Statement and the Prospectus.
(s) The Company has not taken, nor will it take, directly or
indirectly,
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any action designed to or which might reasonably be expected to cause or
result in, or which has constituted or which might reasonably be expected
to constitute, the stabilization or manipulation of the price of the
Common Stock to facilitate the sale or resale of any of the Shares.
(t) The Company and its Subsidiaries have filed all Federal,
state, local and foreign tax returns which are required to be filed
through the date hereof, which returns are true and correct in all
material respects or has received extensions thereof, and has paid all
taxes shown on such returns and all assessments received by it to the
extent that the same are material and have become due. There are no tax
audits or investigations pending, which if adversely determined would
have a Material Adverse Effect; nor are there any material proposed
additional tax assessments against the Company and any of its
Subsidiaries.
(u) The Shares are listed on the New York Stock Exchange ("NYSE").
(v) The Company has taken no action designed to, or likely to have
the effect of, terminating the registration of the Common Stock under the
Exchange Act or the listing of the Common Stock on the NYSE, nor has the
Company received any notification that the Commission or the NYSE is
contemplating terminating such registration or listing.
(w) The books, records and accounts of the Company and its
Subsidiaries accurately and fairly reflect, in all material respects, the
transactions in, and dispositions of, the assets of, and the results of
operations of, the Company and its Subsidiaries. The Company, with
respect to itself and its Subsidiaries, maintains a system of internal
accounting controls sufficient to provide reasonable assurances that (i)
transactions are executed in conformity with management's general or
specific authorizations, (ii) transactions are recorded as necessary to
permit preparation of financial statements in accordance with generally
accepted accounting principles and to maintain accountability for assets,
(iii) access to assets is permitted only in accordance with management's
general or specific authorization and (iv) the recorded accountability
for assets is compared with the existing assets at reasonable intervals
and appropriate action is taken with respect to any differences.
(x) The Company and its Subsidiaries are insured by insurers of
recognized financial responsibility against such losses and risks and in
such amounts as are in accordance with normal industry practice in the
businesses in which they are engaged; all policies of insurance and
fidelity or surety bonds described in the Prospectus insuring the Company
or any of its Subsidiaries or the Company's or its Subsidiaries'
respective businesses, assets, employees, officers and directors are in
full force and effect; and the Company and each of its Subsidiaries are
in compliance with the terms of such policies and instruments in all
material respects.
(y) No consent, approval, authorization, or order of, or filing
with, any
11
governmental agency or body or any court is required to be obtained or
made by the Company for the consummation of the transactions contemplated
by this Agreement in connection with the sale of the Shares, except such
as (i) have been obtained and made under the Securities Act, (ii) may be
required under state securities laws and (iii) may be required by the
National Association of Securities Dealers, Inc. (the "NASD"). For
purposes of this Section it is assumed that no investor (whether an
individual or entity), nor any group of investors acting in concert, will
acquire control of the Company requiring prior insurance regulatory
approval as a direct result of the public offering of the Shares.
(z) To the knowledge of the Company, there are no affiliations
with the NASD among the Company's officers, directors or any five percent
or greater shareholder of the Company, except as set forth in the
Registration Statement or in the NASD questionnaires delivered to the
Representatives or otherwise disclosed in writing to the Representatives.
(aa) (i) Each of the Company and its Subsidiaries is in compliance
in all material respects with all rules, laws and regulation relating to
the use, treatment, storage and disposal of toxic substances and
protection of health or the environment ("Environmental Law") which are
applicable to its business; (ii) neither the Company nor any of its
Subsidiaries has received any notice from any governmental authority or
third party of an asserted claim under Environmental Laws; (iii) each of
the Company and its Subsidiaries has received all material permits,
licenses or other approvals required of it under applicable Environmental
Laws to conduct its business and is in compliance with all terms and
conditions of any such material permit, license or approval; (iv) to the
Company's knowledge, no facts currently exist that will require the
Company or its Subsidiaries to make future material capital expenditures
to comply with Environmental Laws; and (v) no property which is or has
been owned, or to the Company's knowledge, leased or occupied by the
Company or its Subsidiaries has been designated as a Superfund site
pursuant to the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended (42 U.S.C. Section 9601, et. seq.)
("CERCLA") or otherwise designated as a contaminated site under
applicable state or local law. Neither the Company nor any of its
Subsidiaries has been named as a "potentially responsible party" under
CERCLA.
(bb) The Company is not and, after giving effect to the offering
and sale of the Shares, will not be an "investment company" within the
meaning of the Investment Company Act of 1940, as amended (the
"Investment Company Act").
(cc) To the Company's knowledge, the Company, its Subsidiaries or
any other person associated with or acting on behalf of the Company or
its Subsidiaries including, without limitation, any director, officer,
agent or employee of the Company or its Subsidiaries has not, directly or
indirectly, while acting on behalf of the Company or its Subsidiaries (i)
used any corporate funds for unlawful contributions,
12
gifts, entertainment or other unlawful expenses relating to political
activity; (ii) made any unlawful payment to foreign or domestic
government officials or employees or to foreign or domestic political
parties or campaigns from corporate funds; (iii) violated any provision
of the Foreign Corrupt Practices Act of 1977, as amended; or (iv) made
any other unlawful payment.
5. Representations and Warranties of the Selling Shareholder. The Selling
Shareholder hereby represents and warrants to each Underwriter as follows:
(a) The Selling Shareholder has caused the Shares to be sold by
the Selling Shareholder hereunder to be transferred to LaSalle Bank
National Association (the "Transfer Agent"), on or prior to the date
hereof, free and clear of any lien, claim, security interest or other
encumbrance.
(b) This Agreement and the Lock-Up Agreement have each been duly
authorized, executed and delivered by or on behalf of the Selling
Shareholder and, assuming due authorization, execution and delivery by
the other parties hereto, constitutes the valid and legally binding
agreement of the Selling Shareholder, enforceable against the Selling
Shareholder in accordance with its terms.
(c) The execution and delivery by the Selling Shareholder of this
Agreement and the performance by the Selling Shareholder of its
obligations under this Agreement (i) will not contravene any provision of
applicable law, statute, regulation or filing or any agreement or other
instrument binding upon the Selling Shareholder or any judgment, order or
decree of any governmental body, agency or court having jurisdiction over
the Selling Shareholder, (ii) does not require any consent, approval,
authorization or order of or registration or filing with any court or
governmental agency or body having jurisdiction over it, except such as
may be required by the Blue Sky laws of the various states in connection
with the offer and sale of the Shares which have been or will be effected
in accordance with this Agreement, (iii) does not and will not violate
any statute, law, regulation or filing or judgment, injunction, order or
decree applicable to the Selling Shareholder or (iv) will not result in
the creation or imposition of any lien, charge or encumbrance upon any
property or assets of the Selling Shareholder pursuant to the terms of
any agreement or instrument to which the Selling Shareholder is a party
or by which the Selling Shareholder may be bound or to which any of the
property or assets of the Selling Shareholder is subject.
(d) The Selling Shareholder has, and on the Firm Shares Closing
Date will have, valid and marketable title to the Shares to be sold by
the Selling Shareholder free and clear of any lien, claim, security
interest or other encumbrance, including, without limitation, any
restriction on transfer, except as otherwise described in the
Registration Statement and Prospectus.
(e) The Selling Shareholder has, and on the Firm Shares Closing
Date will have, full legal right, power and authorization, and any
approval required by law, to
13
sell, assign, transfer and deliver the Shares to be sold by the Selling
Shareholder in the manner provided by this Agreement.
(f) Upon delivery of and payment for the Shares to be sold by the
Selling Shareholder pursuant to this Agreement, the several Underwriters
will receive valid and marketable title to such Shares free and clear of
any lien, claim, security interest or other encumbrance.
(g) All information relating to the Selling Shareholder furnished
in writing by the Selling Shareholder expressly for use in the
Registration Statement and Prospectus is, and on each Closing Date will
be, true, correct, and complete, and does not, and on each Closing Date
will not, contain any untrue statement of a material fact or omit to
state any material fact necessary to make such information not
misleading.
(h) The Selling Shareholder has reviewed the Registration
Statement and Prospectus and, although the Selling Shareholder has not
independently verified the accuracy or completeness of all the
information contained therein, nothing has come to the attention of the
Selling Shareholder that would lead the Selling Shareholder to believe
that (i) on the Effective Date, the Registration Statement contained any
untrue statement of a material fact or omitted to state any material fact
required to be stated therein in order to make the statements made
therein not misleading and (ii) on the Effective Date the Prospectus
contained and, on each Closing Date contains, any untrue statement of a
material fact or omitted or omits to state any material fact necessary in
order to make the statements therein, in the light of the circumstances
under which they were made, misleading.
(i) The sale of Shares by the Selling Shareholder pursuant to this
Agreement is not prompted by the Selling Shareholder's knowledge of any
material information concerning the Company or its Subsidiaries which is
not set forth in the Prospectus.
(j) The Selling Shareholder has not taken and will not take,
directly or indirectly, any action designed to or that might reasonably
be expected to cause or result in stabilization or manipulation of the
price of any security of the Company to facilitate the sale or resale of
the Shares.
(k) The Selling Shareholder has no actual knowledge that any
representation or warranty of the Company set forth in Section 4 above is
untrue or inaccurate in any material respect.
6. Conditions of the Underwriters' Obligations. The obligations of the
Underwriters under this Agreement are several and not joint. The respective
obligations of the Underwriters to purchase the Shares are subject to each of
the following terms and conditions:
(a) Notification that the Registration Statement has become
effective shall
14
have been received by the Representatives and the Prospectus shall have
been timely filed with the Commission in accordance with Section 7(a) of
this Agreement.
(b) No order preventing or suspending the use of any Preliminary
Prospectus or the Prospectus shall have been or shall be in effect and no
order suspending the effectiveness of the Registration Statement shall be
in effect and no proceedings for such purpose shall be pending before or
threatened by the Commission, and any requests for additional information
on the part of the Commission (to be included in the Registration
Statement or the Prospectus or otherwise) shall have been complied with
to the satisfaction of the Commission and the Representatives. If the
Company has elected to rely upon Rule 430A, Rule 430A information
previously omitted from the effective Registration Statement pursuant to
Rule 430A shall have been transmitted to the Commission for filing
pursuant to Rule 424(b) within the prescribed time period and the Company
shall have provided evidence satisfactory to the Underwriters of such
timely filing, or a post-effective amendment providing such information
shall have been promptly filed and declared effective in accordance with
the requirements of Rule 430A.
(c) The representations and warranties of the Company and the
Selling Shareholder contained in this Agreement and in the certificates
delivered pursuant to Section 6(d) and Section 6(e), respectively, shall
be true and correct when made and on and as of each Closing Date as if
made on such date. The Company and the Selling Shareholder shall have
performed all covenants and agreements and satisfied all the conditions
contained in this Agreement required to be performed or satisfied by them
at or before such Closing Date.
(d) The Representatives shall have received on each Closing Date a
certificate, addressed to the Representatives and dated such Closing
Date, of the chief executive or chief operating officer and the chief
financial officer or chief accounting officer of the Company to the
effect that (i) the signers of such certificate have carefully examined
the Registration Statement, the Prospectus and this Agreement and that
the representations and warranties of the Company in this Agreement are
true and correct on and as of such Closing Date with the same effect as
if made on such Closing Date and the Company has performed all covenants
and agreements and satisfied all conditions contained in this Agreement
required to be performed or satisfied by it at or prior to such Closing
Date, and (ii) no stop order suspending the effectiveness of the
Registration Statement has been issued and to the best of their
knowledge, no proceedings for that purpose have been instituted or are
pending under the Securities Act.
(e) The Representatives shall have received on each Closing Date a
certificate, addressed to the Representatives and dated such Closing
Date, of the Selling Shareholder, to the effect that the Selling
Shareholder has carefully examined the Registration Statement, the
Prospectus and this Agreement and that the
15
representations and warranties of the Selling Shareholder in this
Agreement are true and correct on and as of such Closing Date with the
same effect as if made on such Closing Date and the Selling Shareholder
has performed all covenants and agreements and satisfied all conditions
contained in this Agreement required to be performed or satisfied by it
at or prior to such Closing Date.
(f) The Representatives shall have received, at the time this
Agreement is executed and on each Closing Date a signed letter from Ernst
& Young LLP addressed to the Representatives and dated, respectively, the
date of this Agreement and each such Closing Date, in form and substance
reasonably satisfactory to the Representatives containing statements and
information of the type ordinarily included in accountants' "comfort
letters" to underwriters with respect to the financial statements and
certain financial information contained in the Registration Statement and
the Prospectus.
(g) The Representatives shall have received on each Closing Date
from Xxxxxxx & Xxxxx LLP, counsel for the Company, an opinion, addressed
to the Representatives and dated such Closing Date, and stating in effect
that:
(i) The Company has been duly incorporated and is validly
existing as a corporation under the laws of the State of
Wisconsin; and the Company is duly qualified to transact business
as a foreign corporation in the jurisdictions identified on a
schedule to such opinion. The Company has filed its most recent
required annual report, and has not filed articles of dissolution,
with the Wisconsin Department of Financial Institutions.
(ii) The Company has corporate power and authority to own
its properties and conduct its business as described in the
Registration Statement and the Prospectus and to enter into,
deliver and perform its obligations under this Agreement.
(iii) The Company's authorized capital stock is as set
forth in the Registration Statement and the Prospectus under the
caption "Description of Capital Stock". The Shares have been duly
authorized and validly issued, are fully paid and nonassessable
(subject to the personal liability that may be imposed on
shareholders by Section 180.0622(2)(b) of the Wisconsin Business
Corporation Law, as judicially interpreted, for debts owing to
employees for services performed, but not exceeding six months
service in any one case), and none of them was issued in violation
of any preemptive or other similar right. The description thereof
contained in the Registration Statement and the Prospectus under
the caption "Description of Capital Stock," to the extent that
such information constitutes matters of law or summaries of legal
matters or documents, has been reviewed by such counsel and is
correct in all material respects; and the shareholders of the
Company
16
have no preemptive rights with respect to the Common Stock.
(iv) All necessary corporate action has been duly and
validly taken by the Company to authorize the execution, delivery
and performance of this Agreement by the Company. This Agreement
has been duly authorized, executed and delivered by the Company.
(v) Neither the execution, delivery and performance of this
Agreement by the Company nor the consummation of any of the
transactions contemplated by this Agreement will (A) give rise to
a right to terminate or accelerate the due date of any payment due
under, or conflict with or result in the breach of any term or
provision of, or constitute a default (or any event which with
notice or lapse of time, or both, would constitute a default)
under, or require consent or waiver under, or result in the
execution or imposition of any lien, charge, claim, security
interest or encumbrance upon any properties or assets of the
Company or any Subsidiary pursuant to (i) any agreement filed as
an exhibit to the Registration Statement, the Company's Annual
Report on Form 10-K for the year ended December 31, 2001 or the
Company's Quarterly Report on Form 10-Q for the period ended Xxxxx
00, 0000, (xx) any statute, rule or regulation of any governmental
agency or body or any authority of the United States of America or
the State of Wisconsin applicable to the Company or (iii) any
judgment, decree or order of any court or governmental agency or
body of the United States of America or the State of Wisconsin
applicable to the Company set forth in the officers' certificate
to be attached to such opinion (if any) or (B) contravene any
provision of the Restated Articles of Incorporation or Bylaws of
the Company, as amended.
(vi) No consent, approval, registration, qualification,
authorization or order of, or filing with, any Wisconsin or
federal governmental agency, body or court is required to be
obtained or made by the Company for the consummation of the
transactions contemplated by this Agreement in connection with the
sale of the Shares by the Selling Shareholder, except such as (A)
have been obtained and made under the Securities Act, (B) may be
required under state securities laws and (C) may be required by
the NASD.
(vii) To the knowledge of such counsel, there is no
litigation or governmental or other proceeding or investigation,
before any court or before or by any public body or board pending
or threatened against, or involving the assets, properties or
businesses of, the Company which is required to be disclosed in
the Registration Statement and the Prospectus and is not so
disclosed.
(viii) The statements in the Prospectus under the captions
"Certain
17
Transactions," "Description of Capital Stock," and "Shares
Eligible for Future Sale," insofar as such statements purport to
summarize the Company's authorized capital stock and agreements to
which the Company is a party or matters of law, are accurate in
all material respects and provide a fair summary of such documents
and matters.
(ix) The Registration Statement, all Preliminary
Prospectuses and the Prospectus and each amendment or supplement
thereto (except for the financial statements and schedules and
other financial and statistical data included therein, as to which
such counsel expresses no opinion) comply as to form in all
material respects with the requirements of the Securities Act and
the Rules and the documents incorporated by reference in the
Registration Statement, all Preliminary Prospectuses and the
Prospectus and any further amendment or supplement to any such
incorporated document made by the Company (except for the
financial statements and schedules and other financial and
statistical data included therein, as to which such counsel
expresses no opinion) when they became effective or were filed
with the Commission, as the case may be, complied as to form in
all material respects with the requirements of the Securities Act
or the Exchange Act, as applicable, and the rules and regulations
of the Commission thereunder.
(x) The Registration Statement is effective under the
Securities Act, and to such counsel's knowledge no stop order
suspending the effectiveness of the Registration Statement has
been issued and no proceedings for that purpose have been
instituted or are threatened, pending or contemplated. Any
required filing of the Prospectus and any supplement thereto
pursuant to Rule 424(b) under the Securities Act has been made in
the manner and within the time period required by such Rule
424(b).
(xi) The Shares are listed on the NYSE.
(xii) The capital stock of the Company conforms in all
material respects to the description thereof contained in the
Prospectus under the caption "Description of Capital Stock."
(xiii) The Company is not an "investment company" or an
entity controlled by an "investment company" as such terms are
defined in the Investment Company Act of 1940, as amended.
To the extent deemed advisable by such counsel, they may rely as to
matters of fact on certificates of responsible officers of the Company and
public officials and on the opinions of other counsel satisfactory to the
Representatives as to matters which are governed by laws other than the laws of
the State of Wisconsin, the General Corporation Law of the State of Delaware and
the Federal laws of the United States; provided that such counsel shall
18
state that in their opinion the Underwriters and they are justified in relying
on such other opinions. Copies of such certificates and other opinions shall be
furnished to the Representatives and counsel for the Underwriters. Such counsel
may assume, for purposes of its opinion, that no investor (whether an individual
or entity), nor any group of investors acting in concert, will acquire control
of the Company requiring prior insurance regulatory approval as a direct result
of the public offering of the Shares.
In addition, such counsel shall state that such counsel has participated
in conferences with officers and other representatives of the Company,
representatives of the Representatives and representatives of the independent
certified public accountants of the Company, at which conferences the contents
of the Registration Statement and the Prospectus and related matters were
discussed and, although such counsel is not passing upon and does not assume any
responsibility for the accuracy, completeness or fairness of the statements
contained in the Registration Statement and the Prospectus and have made no
independent check or verification thereof (except as specified in the foregoing
opinion), on the basis of the foregoing, no facts have come to the attention of
such counsel which lead such counsel to believe that (i) the Registration
Statement at the time it became effective (except with respect to the financial
statements and notes and schedules thereto and other financial data included
therein or omitted therefrom, as to which such counsel need express no belief)
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading, or that the Prospectus as amended or supplemented (except with
respect to the financial statements, notes and schedules thereto and other
financial data included therein or omitted therefrom, as to which such counsel
need make no statement) on the date thereof contained any untrue statement of a
material fact or omitted to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading or (ii) any document incorporated by reference in the
Prospectus or any further amendment or supplement to any such incorporated
document made by the Company (except with respect to the financial statements,
notes and schedules thereto and other financial data included therein or omitted
therefrom, as to which such counsel need make no statement), when they became
effective or were filed with the Commission, as the case may be, contained, in
the case of a registration statement which became effective under the Securities
Act, any untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary in order to make the statements
therein not misleading, or, in the case of other documents which were filed
under the Exchange Act with the Commission, any untrue statement of a material
fact or omitted to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading.
(h) The Representatives shall have received on each Closing Date
from Xxxxxxx X. Xxxxx, general counsel for the Company, an opinion,
addressed to the Representatives and dated such Closing Date, and stating
in effect that:
(i) Each of the Material Subsidiaries has been duly
organized and is validly existing as a corporation or partnership,
as the case may be, in good standing (or equivalent status) under
the laws of their respective
19
jurisdictions of organization. Each of the Material Subsidiaries
is duly qualified or certified to transact business and in good
standing (or equivalent status) as a foreign corporation or
partnership, as the case may be in the jurisdictions listed in an
exhibit to the opinion.
(ii) Each of the Company and the Material Subsidiaries has
all requisite corporate or partnership, as the case may be, power
and authority to own, lease and license its assets and properties
and conduct its business as now being conducted and as described
in the Registration Statement and the Prospectus and with respect
to the Company to enter into, deliver and perform its obligations
under this Agreement.
(iii) The Company has authorized, issued and outstanding
capital stock as set forth in the Registration Statement and the
Prospectus under the caption "Capitalization" as of the dates
stated therein; all of the outstanding shares of Common Stock of
the Company, including the Shares, have been duly and validly
authorized and issued and are fully paid and nonassessable
(subject to the personal liability that may be imposed on
shareholders by Section 180.0622(2)(b) of the Wisconsin Business
Corporation Law, as judicially interpreted, for debts owing to
employees for services performed, but not exceeding six months
service in any one case), and none of them was issued in violation
of any preemptive or other similar right. To the best of such
counsel's knowledge, except as disclosed in the Registration
Statement and the Prospectus, there is no outstanding option,
warrant or other right calling for the issuance of, and no
commitment, plan or arrangement to issue, any share of stock of
the Company or any security convertible into, exercisable for, or
exchangeable for stock of the Company. The Common Stock and the
Shares conform in all material respects to the descriptions
thereof contained in the Registration Statement and the
Prospectus. The issued and outstanding shares of capital stock of
each of the Company's Material Subsidiaries that is a corporation
have been duly authorized and validly issued, are fully paid and
nonassessable (subject to the personal liability that may be
imposed on shareholders by Section 180.0622(2)(b) of the Wisconsin
Business Corporation Law, as judicially interpreted, for debts
owing to employees for services performed, but not exceeding six
months service in any one case) and are owned by the Company or by
another wholly owned subsidiary of the Company, free and clear of
any perfected security interest or, to the knowledge of such
counsel, any other security interests, liens, encumbrances,
equities or claims, other than those described in the Registration
Statement and the Prospectus. Except as disclosed in the
Registration Statement and the Prospectus, there are no preemptive
or other rights to subscribe for or to purchase or any restriction
upon the voting or transfer of the Company's Common Stock pursuant
to the Company's Restated Articles of Incorporation or Bylaws or,
to such counsel's
20
knowledge, any agreements or other instruments to which the
Company is a party or by which it is bound.
(iv) To such counsel's knowledge, except as disclosed in
the Prospectus, neither the Company nor any of its Subsidiaries is
in violation of any term or provision of its charter or by-laws or
any franchise, license, permit, judgment, decree, order, statute,
rule or regulation, domestic or foreign, where the consequences of
such violation, individually or in the aggregate, would have a
Material Adverse Effect. To such counsel's knowledge, except as
disclosed in the Prospectus, the Company and its Subsidiaries are
conducting their respective businesses in compliance in all
respects with all laws, rules, regulations, decisions, directives
and orders applicable to them except where the failure to do so
would not have a Material Adverse Effect.
(v) The statements in the Prospectus under the captions
"Management's Discussion and Analysis of Financial Condition and
Results of Operations--Liquidity and Capital Resources,"
"Business--Industry," "Business--Regulation" and "Business--Legal
Proceedings," insofar as such statements constitute a summary of
documents referred to therein or matters of law, are accurate in
all material respects and accurately present the information
called for with respect to such documents and matters. Accurate
copies of all contracts and other documents required to be filed
as exhibits to, or described in, the Registration Statement have
been so filed with the Commission or are fairly described in the
Registration Statement, as the case may be.
(vi) (A) Each of the Company and its Subsidiaries is in
compliance in all material respects with any and all applicable
Environmental Laws; (B) none of the Company or its Subsidiaries
has received any notice from any governmental authority or third
party of an asserted claim under any Environmental Law; (C) each
of the Company and its Subsidiaries has received all material
permits, licenses or other approvals required of it under
applicable Environmental Laws to conduct its business and is in
compliance with all terms and conditions of any such material
permit, license or approval, except where such failure to receive
required permits, licenses or other approvals or failure to comply
with the terms and conditions of such permits, licenses or other
approvals would not, singly or in the aggregate, have a Material
Adverse Effect; and (D) no property which is or has been owned, or
to such counsel's knowledge, leased or occupied, by the Company or
its Subsidiaries has been designated as a Superfund site pursuant
to CERCLA, or otherwise designated as a contaminated site under
applicable state or local law.
(vii) To such counsel's knowledge, no default exists, and
no event has occurred which with notice or lapse of time, or both,
would constitute a
21
default, in the due performance and observance of any term,
covenant or condition by the Company of any indenture, mortgage,
deed of trust, note or any other agreement or instrument to which
the Company is a party or by which it or any of its assets or
properties or businesses may be bound or affected, where the
consequences of such default, individually or in the aggregate, is
required to be disclosed in the Registration Statement and the
Prospectus or which would have a Material Adverse Effect.
Such counsel may assume, for purposes of its opinion, that no investor
(whether an individual or entity), nor any group of investors acting in concert,
will acquire control of the Company requiring prior insurance regulatory
approval as a direct result of the public offering of the Shares.
In addition, such counsel shall state that such counsel has participated
in conferences with officers and other representatives of the Company,
representatives of the Representatives and representatives of the independent
public accountants of the Company, at which conferences the contents of the
Registration Statement and the Prospectus as they related to the matters set
forth in the foregoing opinion were discussed. While such counsel has not
undertaken to independently verify and does not assume any responsibility for
the accuracy, completeness or fairness of the statements contained in the
Registration Statement and the Prospectus (except as specified in the foregoing
opinion), on the basis of the foregoing, no facts have come to the attention of
such counsel which lead such counsel to believe that the Registration Statement
at the time it became effective (except with respect to the financial statements
and notes and schedules thereto and other financial data included therein or
omitted therefrom, as to which such counsel need express no belief) contained
any untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading, or that the Prospectus as amended or supplemented (except with
respect to the financial statements, notes and schedules thereto and other
financial data included therein or omitted therefrom, as to which such counsel
need make no statement) on the date thereof and the date of such opinion
contained any untrue statement of a material fact or omitted to state a material
fact necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
(i) The Representatives shall have received on each Closing Date
from Xxxxx & Lardner, counsel for the Selling Shareholder, an opinion,
addressed to the Representatives and dated such Closing Date, and stating
in effect that:
(i) This Agreement has been duly authorized, executed and
delivered by or on behalf of the Selling Shareholder.
(ii) This Agreement and the Lock-Up Agreement each
constitute the legal, valid and binding obligation of the Selling
Shareholder enforceable against the Selling Shareholder in
accordance with its terms, subject, as to enforcement of remedies,
to applicable bankruptcy, insolvency, reorganization, moratorium
or other similar laws from time to time in effect and to general
principles of equity, including, without limitation, concepts of
materiality, reasonableness, good faith and fair dealing,
22
regardless of whether considered in a proceeding in equity or at
law; and provided further that counsel need express no opinion
concerning the enforeceability of indemnification provisions. The
Selling Shareholder has full legal right and authority to enter
into this Agreement and to sell, transfer and deliver in the
manner provided in this Agreement, the Shares to be sold by the
Selling Shareholder hereunder.
(iii) The transfer and sale by the Selling Shareholder of
the Shares to be sold by the Selling Shareholder as contemplated
by this Agreement will not conflict with, result in a breach of,
or constitute a default under any agreement or instrument known to
such counsel to which the Selling Shareholder is a party or by
which the Selling Shareholder or any of its properties may be
bound, or any franchise, license, permit, judgment, decree, or
order known to such counsel by which the Selling Shareholder or
any of its properties may be bound, or any statute, rule or
regulation.
(iv) Upon delivery of the Shares to the Underwriters who
have severally purchased such Shares pursuant to this Agreement,
in the manner provided in Section 2 hereof, the several
Underwriters will acquire all of the Selling Shareholder's rights
in the Shares, free and clear of adverse claims within the meaning
of the Wisconsin Uniform Commercial Code, assuming for purposes of
this opinion that the Underwriters purchased the same in good
faith without notice of any adverse claims.
(v) No consent, approval, authorization, license,
certificate, permit or order of any court, governmental or
regulatory agency, authority or body or (to the knowledge of such
counsel) any financial institution is required in connection with
the performance of this Agreement by the Selling Shareholder or
the consummation of the transactions contemplated hereby,
including the delivery and sale of the Shares to be delivered and
sold by the Selling Shareholder, except such as may be required
under state securities or blue sky laws in connection with the
purchase and distribution of the Shares by the several
Underwriters.
To the extent deemed advisable by such counsel, they may rely as to
matters of fact on certificates of the Selling Shareholder and on the opinions
of other counsel satisfactory to the Representatives as to matters which are
governed by laws other than the laws of the State of Wisconsin or the Federal
laws of the United States; provided that such counsel shall state that in their
opinion the Underwriters and they are justified in relying on such other
opinions. Copies of such certificates and other opinions shall be furnished to
the Representatives and counsel for the Underwriters.
Such counsel may assume, for purposes of its opinion, that no investor
(whether an individual or entity), nor any group of investors acting in concert,
will acquire control of the Company requiring prior insurance regulatory
approval as a direct result of the public offering of the Shares.
In addition, such counsel shall state that such counsel has participated
in conferences with officers and other representatives of the Company,
representatives of the Representatives
23
and representatives of the independent public accountants of the Company, at
which conferences the contents of the Registration Statement and the Prospectus
as they related to the matters set forth in the foregoing opinion were
discussed. While such counsel has not undertaken to independently verify and
does not assume any responsibility for the accuracy, completeness or fairness of
the statements contained in the Registration Statement and the Prospectus
(except as specified in the foregoing opinion), on the basis of the foregoing,
no facts have come to the attention of such counsel which lead such counsel to
believe that the Registration Statement at the time it became effective (except
with respect to the financial statements and notes and schedules thereto and
other financial data included therein or omitted therefrom, as to which such
counsel need express no belief) contained any untrue statement of a material
fact or omitted to state a material fact required to be stated therein or
necessary to make the statements therein not misleading, or that the Prospectus
as amended or supplemented (except with respect to the financial statements,
notes and schedules thereto and other financial data included therein or omitted
therefrom, as to which such counsel need make no statement) on the date thereof
and the date of such opinion contained any untrue statement of a material fact
or omitted to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading.
(j) All proceedings taken in connection with the sale of the Firm
Shares and the Option Shares as herein contemplated shall be reasonably
satisfactory in form and substance to the Representatives, and their
counsel and the Underwriters shall have received from Xxxxxx & Xxxxxxx an
opinion, addressed to the Representatives and dated such Closing Date,
with respect to the Shares, the Registration Statement and the
Prospectus, and such other related matters, as the Representatives may
reasonably request, and the Company shall have furnished to Xxxxxx &
Xxxxxxx such documents as they may reasonably request for the purpose of
enabling them to pass upon such matters.
(k) The Representatives shall have received copies of the Lock-up
Agreements executed by each entity or person described in Section 4(o).
(l) The Company and the Selling Shareholder shall have furnished
or caused to be furnished to the Representatives such further
certificates or documents as the Representatives shall have reasonably
requested.
7. Covenants of the Company and the Selling Shareholder.
(a) The Company covenants and agrees as follows:
(i) The Company will use its best efforts to cause any
amendments to the Registration Statement, to become effective as
promptly as possible. The Company shall prepare the Prospectus in
a form approved by the Representatives and file such Prospectus
pursuant to Rule 424(b) under the Securities Act not later than
the Commission's close of business on the second business day
following the execution and delivery of this
24
Agreement, or, if applicable, such earlier time as may be required
by Rule 430A(a)(3) under the Securities Act.
(ii) The Company shall promptly advise the Representatives
in writing (i) when any amendment to the Registration Statement
shall have become effective, (ii) of any request by the Commission
for any amendment of the Registration Statement or the Prospectus
or for any additional information, (iii) of the prevention or
suspension of the use of any Preliminary Prospectus or the
Prospectus or of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or the
institution or threatening of any proceeding for that purpose and
(iv) of the receipt by the Company of any notification with
respect to the suspension of the qualification of the Shares for
sale in any jurisdiction or the initiation or threatening of any
proceeding for such purpose. The Company shall not file any
amendment of the Registration Statement or supplement to the
Prospectus or any document incorporated by reference in the
Registration Statement unless the Company has furnished the
Representatives a copy for its review prior to filing and shall
not file any such proposed amendment or supplement to which the
Representatives reasonably object. The Company shall use its best
efforts to prevent the issuance of any such stop order and, if
issued, to obtain as soon as possible the withdrawal thereof.
(iii) If, at any time when a prospectus relating to the
Shares is required to be delivered under the Securities Act and
the Rules, any event occurs as a result of which the Prospectus as
then amended or supplemented would include any untrue statement of
a material fact or omit to state any material fact necessary to
make the statements therein in the light of the circumstances
under which they were made not misleading, or if it shall be
necessary to amend or supplement the Prospectus to comply with the
Securities Act or the Rules, the Company promptly shall prepare
and file with the Commission, subject to the second sentence of
paragraph (ii) of this Section 7(a), an amendment or supplement
which shall correct such statement or omission or an amendment
which shall effect such compliance.
(iv) The Company shall make generally available to its
security holders and to the Representatives as soon as
practicable, but not later than 45 days after the end of the
12-month period beginning at the end of the fiscal quarter of the
Company during which the Effective Date occurs (or 90 days if such
12-month period coincides with the Company's fiscal year), an
earning statement (which need not be audited) of the Company,
covering such 12-month period, which shall satisfy the provisions
of Section 11(a) of the Securities Act or Rule 158 of the Rules.
25
(v) The Company shall furnish to the Representatives and
counsel for the Underwriters, without charge, signed copies of the
Registration Statement (including all exhibits thereto and
amendments thereof) and to each other Underwriter a copy of the
Registration Statement (without exhibits thereto) and all
amendments thereof and, so long as delivery of a prospectus by an
Underwriter or dealer may be required by the Securities Act or the
Rules, as many copies of any Preliminary Prospectus and the
Prospectus and any amendments thereof and supplements thereto as
the Representatives may reasonably request. If applicable, the
copies of the Registration Statement and Prospectus and each
amendment and supplement thereto furnished to the Underwriters
will be identical to the electronically transmitted copies thereof
filed with the Commission pursuant to XXXXX, except to the extent
permitted by Regulation S-T.
(vi) The Company shall cooperate with the Representatives
and their counsel in endeavoring to qualify the Shares for offer
and sale in connection with the offering under the laws of such
jurisdictions as the Representatives may designate and shall
maintain such qualifications in effect so long as required for the
distribution of the Shares; provided, however, that the Company
shall not be required in connection therewith, as a condition
thereof, to qualify as a foreign corporation or to execute a
general consent to service of process in any jurisdiction or
subject itself to taxation as doing business in any jurisdiction.
(vii) The Company, during the period when the Prospectus is
required to be delivered under the Securities Act and the Rules or
the Exchange Act, will file all documents required to be filed
with the Commission pursuant to Section 13, 14 or 15 of the
Exchange Act within the time periods required by the Exchange Act
and the regulations promulgated thereunder.
(viii) Without the prior written consent of CIBC World
Markets Corp., for a period of 90 days after the date of this
Agreement, the Company shall not issue, sell or register with the
Commission (other than on Form S-8 or on any successor form), or
otherwise dispose of, directly or indirectly, any shares of Common
Stock of the Company (or any securities convertible into,
exercisable for or exchangeable for shares of Common Stock of the
Company), except for the registration of the Shares pursuant to
the Registration Statement and grants of options and the issuance
of shares pursuant to the Company's existing stock option, bonus,
deferred compensation or savings plans as described in the
Registration Statement and the Prospectus.
(ix) On or before completion of this offering, the Company
shall
26
make all filings required under applicable securities laws and by
the NYSE.
(x) Prior to the Firm Shares Closing Date, the Company will
issue no press release and hold no press conference with respect
to the Company, the condition, financial or otherwise, or the
earnings, business affairs or business prospects of the Company,
or the offering of the Shares without the prior written consent of
the Representatives unless in the judgment of the Company and its
counsel, and after notification to the Representatives, such press
release or press conference is required by law.
(b) The Company agrees to pay, or reimburse if paid by the
Representatives, whether or not the transactions contemplated hereby are
consummated or this Agreement is terminated, all costs and expenses
incident to the public offering of the Shares and the performance of the
obligations of the Company under this Agreement including those relating
to: (i) the preparation, printing, filing and distribution of the
Registration Statement including all exhibits thereto, each Preliminary
Prospectus, the Prospectus, all amendments and supplements to the
Registration Statement and the Prospectus and any document incorporated
by reference therein, and the printing, filing and distribution of this
Agreement; (ii) the registration or qualification of the Shares for offer
and sale under the securities or Blue Sky laws of the various
jurisdictions referred to in Section 7(a)(vi), including the reasonable
fees and disbursements of counsel for the Underwriters in connection with
such registration and qualification and the preparation, printing,
distribution and shipment of preliminary and supplementary Blue Sky
memoranda; (iii) the furnishing (including costs of shipping and mailing)
to the Representatives and to the Underwriters of copies of each
Preliminary Prospectus, the Prospectus and all amendments or supplements
to the Prospectus, and of the several documents required by this Section
to be so furnished, as may be reasonably requested for use in connection
with the offering and sale of the Shares by the Underwriters or by
dealers to whom Shares may be sold; (iv) the filing fees of the NASD in
connection with its review of the terms of the public offering and
reasonable fees and disbursements of counsel for the Underwriters in
connection with such review; and (v) all transfer taxes, if any, with
respect to the sale and delivery of the Shares by the Selling Shareholder
to the Underwriters. Subject to the provisions of Section 10, the
Underwriters agree to pay, whether or not the transactions contemplated
hereby are consummated or this Agreement is terminated, all costs and
expenses incident to the performance of the obligations of the
Underwriters under this Agreement not payable by the Company pursuant to
the preceding sentence, including, without limitation, the fees and
disbursements of counsel for the Underwriters.
(c) As provided in Section 6.03(c) of the Stock Purchase Agreement
dated as of March 19, 2002, among the Selling Shareholder, Cobalt
Corporation, and the Company (the "Stock Purchase Agreement"), (1) the
Selling Shareholder
27
shall bear all underwriting discounts, fees and commissions related to
the sale of the Shares, (2) the expenses of the offering and sale of the
Shares up to an aggregate of $650,000 shall be borne by the Company, and
(3) any expenses incurred in excess of such $650,000 amount shall be
borne equally by the Company and the Selling Shareholder. The Selling
Shareholder agrees to reimburse the Company for half of any amount of
such expenses in excess of $650,000 paid by the Company, in accordance
with the Stock Purchase Agreement. The Stock Purchase Agreement contains
indemnification provisions among the Company, the Selling Shareholder and
Cobalt Corporation which shall remain in force as between such parties,
provided, however, that no provision of the Stock Purchase Agreement
shall affect or alter the indemnification and other rights of the
Underwriters provided in this Agreement.
8. Indemnification.
(a) The Company agrees to indemnify and hold harmless each
Underwriter and each person, if any, who controls any Underwriter within
the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act against any and all losses, claims, damages and liabilities,
joint or several (including any reasonable investigation, legal and other
expenses incurred in connection with, and any amount paid in settlement
of, any action, suit or proceeding or any claim asserted), to which they,
or any of them, may become subject under the Securities Act, the Exchange
Act or other Federal or state law or regulation, at common law or
otherwise, insofar as such losses, claims, damages or liabilities arise
out of or are based upon (i) any untrue statement or alleged untrue
statement of a material fact contained in any Preliminary Prospectus, the
Registration Statement or the Prospectus or any amendment thereof or
supplement thereto, or in any Blue Sky application or other information
or other documents executed by the Company filed in any state or other
jurisdiction to qualify any or all of the Shares under the securities
laws thereof (any such application, document or information being
hereinafter referred to as a "Blue Sky Application") or arise out of or
are based upon any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading, (ii) in whole or in part upon any
breach of the representations and warranties set forth in Section 4
hereof, or (iii) in whole or in part upon any failure of the Company to
perform any of its obligations hereunder or under law; provided, however,
that such indemnity shall not inure to the benefit of any Underwriter (or
any person controlling such Underwriter) on account of any losses,
claims, damages or liabilities arising from the sale of the Shares to any
person by such Underwriter if such untrue statement or omission or
alleged untrue statement or omission was made in such Preliminary
Prospectus, the Registration Statement or the Prospectus, or such
amendment or supplement thereto, or in any Blue Sky Application in
reliance upon and in conformity with information furnished in writing to
the Company by the Representatives on behalf of any Underwriter
specifically for use
28
therein; and provided further that such indemnity shall not inure to the
benefit of any Underwriter (or any person controlling such Underwriter)
on account of any loss, claim, damage or liability arising out of any
such untrue statement or alleged untrue statement or omission or alleged
omission in any Preliminary Prospectus if the Company shall have timely
furnished copies of the Prospectus to such Underwriter and such
Underwriter shall not have given or sent a copy of the Prospectus to the
person who purchased Shares from such Underwriter and who is asserting
such loss, claim, damage or liability, if required by law to have been
delivered, at or prior to the written confirmation of the sale of Shares
to such person by such Underwriter, to the extent that the Prospectus
would have cured such defect or alleged defect giving rise to such loss,
claim, damage or liability. This indemnity agreement will be in addition
to any liability which the Company may otherwise have.
(b) The Selling Shareholder agrees to indemnify and hold harmless
each Underwriter and each person, if any, who controls any Underwriter
within the meaning of Section 15 of the Securities Act or Section 20 of
the Exchange Act to the same extent as the foregoing indemnity from the
Company to each Underwriter, but only insofar as such losses, claims,
damages or liabilities arise out of or are based upon (i) any untrue
statement or omission or alleged untrue statement or omission of a
material fact which was made in any Preliminary Prospectus, the
Registration Statement or the Prospectus, or any amendment thereof or
supplement thereto, (ii) in whole or in part upon any breach of the
representations and warranties of the Selling Shareholder set forth in
Section 5 hereof, or (iii) in whole or in part upon any failure of the
Selling Shareholder to perform any of its obligations hereunder or under
law; provided that such indemnity shall not inure to the benefit of any
Underwriter (or any person controlling such Underwriter) on account of
any loss, claim, damage or liability arising out of any such untrue
statement or alleged untrue statement or omission or alleged omission in
any Preliminary Prospectus if the Company shall have timely furnished
copies of the Prospectus to such Underwriter and such Underwriter shall
not have given or sent a copy of the Prospectus to the person who
purchased Shares from such Underwriter and who is asserting such loss,
claim, damage or liability, if required by law to have been delivered, at
or prior to the written confirmation of the sale of Shares to such person
by such Underwriter, to the extent that the Prospectus would have cured
such defect or alleged defect giving rise to such loss, claim, damage or
liability. Notwithstanding the foregoing, the liability of the Selling
Shareholder pursuant to the provisions of this Section 8(b) shall be
limited to an amount equal to the aggregate net proceeds received by such
Selling Shareholder from the sale of the Shares sold by the Selling
Shareholder hereunder. This indemnity agreement will be in addition to
any liability which the Selling Shareholder may otherwise have.
(c) Each Underwriter agrees, severally and not jointly, to
indemnify and hold harmless the Company, the Selling Shareholder and each
person, if any, who
29
controls the Company within the meaning of Section 15 of the Securities
Act or Section 20 of the Exchange Act, each director of the Company, and
each officer of the Company who signs the Registration Statement, to the
same extent as the foregoing indemnity from the Company and the Selling
Shareholder to each Underwriter, but only insofar as such losses, claims,
damages or liabilities (i) arise out of or are based upon any untrue
statement or omission or alleged untrue statement or omission of a
material fact which was made in any Preliminary Prospectus, the
Registration Statement or the Prospectus, or any amendment thereof or
supplement thereto, contained in the table under the second paragraph and
in the fourth (except for the first sentence), tenth, eleventh and
thirteenth (with respect to the absence of representations by the
Underwriters) paragraphs under the caption "Underwriting" in the
Prospectus, or (ii) arise out of or are based upon the failure of such
Underwriter to deliver a Prospectus, if the Company shall have timely
furnished copies of the Prospectus (as then amended if the Company shall
have furnished any amendments thereto) to such Underwriter and the person
who purchased Shares from such Underwriter and who is asserting such
loss, claim, damage or liability purchased Shares from such Underwriter
and a copy of the Prospectus (as then amended if the Company shall have
furnished any amendments thereto) was not sent or given by or on behalf
of such Underwriter to such person, if required by law to have been so
delivered, at or prior to the written confirmation of the sale of the
Shares to such person by such Underwriter, and if the Prospectus (as so
amended) would have cured the defect or alleged defect giving rise to
such loss, claim, damage or liability; provided, however, that the
obligation of each Underwriter to indemnify the Company or the Selling
Shareholder (including any controlling person, director or officer
thereof) shall be limited to the net proceeds received by the Selling
Shareholder from such Underwriter. This indemnity agreement will be in
addition to any liability which each Underwriter may otherwise have.
(d) Any party that proposes to assert the right to be indemnified
under this Section will, promptly after receipt of notice of commencement
of any action, suit or proceeding against such party in respect of which
a claim is to be made against an indemnifying party or parties under this
Section, notify each such indemnifying party of the commencement of such
action, suit or proceeding, enclosing a copy of all papers served. No
indemnification provided for in Section 8(a), 8(b) or 8(c) shall be
available to any party who shall fail to give notice as provided in this
Section 8(d) if the party to whom notice was not given was unaware of the
proceeding to which such notice would have related and was prejudiced by
the failure to give such notice but the omission so to notify such
indemnifying party of any such action, suit or proceeding shall not
relieve it from any liability that it may have to any indemnified party
for contribution or otherwise than under this Section. In case any such
action, suit or proceeding shall be brought against any indemnified party
and it shall notify the indemnifying party of the commencement thereof,
the indemnifying party shall be entitled to participate in, and, to the
extent that it shall
30
wish, jointly with any other indemnifying party similarly notified, to
assume the defense thereof, with counsel reasonably satisfactory to such
indemnified party, and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof and
the approval by the indemnified party of such counsel, the indemnifying
party shall not be liable to such indemnified party for any legal or
other expenses, except as provided below and except for the reasonable
costs of investigation subsequently incurred by such indemnified party in
connection with the defense thereof. The indemnified party shall have the
right to employ its counsel in any such action, but the fees and expenses
of such counsel shall be at the expense of such indemnified party unless
(i) the employment of counsel by such indemnified party has been
authorized in writing by the indemnifying parties, (ii) the indemnified
party shall have been advised by counsel that there may be one or more
legal defenses available to it which are different from or in addition to
those available to the indemnifying party (in which case the indemnifying
parties shall not have the right to direct the defense of such action on
behalf of the indemnified party), it being understood, however, that the
indemnifying parties shall not be liable for the expenses of more than
one separate counsel (in addition to local counsel) representing the
indemnified parties in connection with any one action or related actions
in the same jurisdiction arising out of the same general allegations or
circumstances or (iii) the indemnifying parties shall not have employed
counsel to assume the defense of such action within a reasonable time
after notice of the commencement thereof, in each of which cases the fees
and expenses of counsel shall be at the expense of the indemnifying
parties. An indemnifying party shall not be liable for any settlement of
any action, suit, proceeding or claim effected without its written
consent, which consent shall not be unreasonably withheld or delayed.
9. Contribution. In order to provide for just and equitable contribution
in circumstances in which the indemnification provided for in Section 8(a),
8(b), or 8(c) is due in accordance with its terms but for any reason is held to
be unavailable to or insufficient to hold harmless an indemnified party under
Section 8(a), 8(b), or 8(c), then each indemnifying party shall contribute to
the aggregate losses, claims, damages and liabilities (including any
investigation, legal and other expenses reasonably incurred in connection with,
and any amount paid in settlement of, any action, suit or proceeding or any
claims asserted, but after deducting any contribution received by any person
entitled hereunder to contribution from any person who may be liable for
contribution) to which the indemnified party may be subject in such proportion
as is appropriate to reflect the relative benefits received by the Company and
the Selling Shareholder on the one hand and the Underwriters on the other from
the offering of the Shares or, if such allocation is not permitted by applicable
law or indemnification is not available as a result of the indemnifying party
not having received notice as provided in Section 8 hereof, in such proportion
as is appropriate to reflect not only the relative benefits referred to above
but also the relative fault of the Company and the Selling Shareholder on the
one hand and the Underwriters on the other in connection with the statements or
omissions which
31
resulted in such losses, claims, damages, liabilities or expenses, as well as
any other relevant equitable considerations. The relative benefits received by
the Company, the Selling Shareholder and the Underwriters shall be deemed to be
in the same proportion as (x) the total proceeds from the offering (net of
underwriting discounts but before deducting expenses) received by the Selling
Shareholder, as set forth in the table on the cover page of the Prospectus, bear
to (y) the underwriting discounts received by the Underwriters, as set forth in
the table on the cover page of the Prospectus. The relative fault of the Company
and the Selling Shareholder or the Underwriters shall be determined by reference
to, among other things, whether the untrue or alleged untrue statement of a
material fact related to information supplied by the Company and the Selling
Shareholder or the Underwriters and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission. The Company, the Selling Shareholder and the Underwriters agree that
it would not be just and equitable if contribution pursuant to this Section 9
were determined by pro rata allocation (even if the Underwriters were treated as
one entity for such purpose) or by any other method of allocation which does not
take account of the equitable considerations referred to above. Notwithstanding
the provisions of this Section 9, (i) in no case shall any Underwriter (except
as may be provided in the Master Agreement Among Underwriters) be liable or
responsible for any amount in excess of the underwriting discount applicable to
the Shares purchased by such Underwriter hereunder; (ii) the Company shall be
liable and responsible for any amount in excess of such underwriting discount
(to the extent not paid by the Selling Shareholder); and (iii) in no case shall
the Selling Shareholder be liable and responsible for any amount in excess of
the aggregate net proceeds of the sale of Shares received by the Selling
Shareholder; provided, however, that no person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. For purposes of this Section 9, each person, if
any, who controls an Underwriter within the meaning of Section 15 of the
Securities Act or Section 20(a) of the Exchange Act shall have the same rights
to contribution as such Underwriter, and each person, if any, who controls the
Company within the meaning of the Section 15 of the Securities Act or Section
20(a) of the Exchange Act, each officer of the Company who shall have signed the
Registration Statement and each director of the Company shall have the same
rights to contribution as the Company, subject in each case to clauses (i) and
(ii) in the immediately preceding sentence of this Section 9. Any party entitled
to contribution will, promptly after receipt of notice of commencement of any
action, suit or proceeding against such party in respect of which a claim for
contribution may be made against another party or parties under this Section,
notify such party or parties from whom contribution may be sought, but the
omission so to notify such party or parties from whom contribution may be sought
shall not relieve the party or parties from whom contribution may be sought from
any other obligation it or they may have hereunder or otherwise than under this
Section. No party shall be liable for contribution with respect to any action,
suit, proceeding or claim settled without
32
its written consent. The Underwriters' obligations to contribute pursuant to
this Section 9 are several in proportion to their respective underwriting
commitments and not joint.
10. Termination. This Agreement may be terminated with respect to the
Shares to be purchased on a Closing Date by the Representatives by notifying the
Company and the Selling Shareholder at any time
(a) in the absolute discretion of the Representatives at or before
any Closing Date: (i) if on or prior to such date, any domestic or
international event or act or occurrence has materially disrupted, or in
the opinion of the Representatives will in the future materially disrupt,
the securities markets; (ii) if there has occurred any new outbreak or
material escalation of hostilities or other calamity or crisis the effect
of which on the financial markets of the United States is such as to make
it, in the judgment of the Representatives, inadvisable to proceed with
the offering; (iii) if there shall be such a material adverse change in
general financial, political or economic conditions or the effect of
international conditions on the financial markets in the United States is
such as to make it, in the judgment of the Representatives, inadvisable
or impracticable to market the Shares; (iv) if trading in the Shares has
been suspended by the Commission or trading generally on the NYSE on the
American Stock Exchange, Inc. or the National Association of Security
Dealers Automated Quotation National Market has been suspended or
limited, or minimum or maximum ranges for prices for securities shall
have been fixed, or maximum ranges for prices for securities have been
required, by said exchanges or by order of the Commission, the NASD or
any other governmental or regulatory authority; or (v) if a banking
moratorium has been declared by any state or Federal authority; or (vi)
if, in the judgment of the Representatives, there has occurred a Material
Adverse Effect, or
(b) at or before any Closing Date, that any of the conditions
specified in Section 6 shall not have been fulfilled when and as required
by this Agreement.
If this Agreement is terminated pursuant to any of its provisions,
neither the Company nor the Selling Shareholder shall be under any liability to
any Underwriter, and no Underwriter shall be under any liability to the Company,
except that (y) if this Agreement is terminated by the Representatives or the
Underwriters because of any failure, refusal or inability on the part of the
Company or the Selling Shareholder to comply with the terms or to fulfill any of
the conditions of this Agreement, the Company will reimburse the Underwriters
for all out-of-pocket expenses (including the reasonable fees and disbursements
of their counsel) incurred by them in connection with the proposed purchase and
sale of the Shares or in contemplation of performing their obligations hereunder
and (z) no Underwriter who shall have failed or refused to purchase the Shares
agreed to be purchased by it under this Agreement, without some reason
sufficient hereunder to justify cancellation or termination of its obligations
under this Agreement, shall be relieved of liability to the Company, the Selling
33
Shareholder or to the other Underwriters for damages occasioned by its failure
or refusal.
11. Substitution of Underwriters. If one or more of the Underwriters
shall default in their obligations to purchase on any Closing Date the Shares
agreed to be purchased on such Closing Date by such Underwriter or Underwriters,
the Representatives may find one or more substitute underwriters to purchase
such Shares or make such other arrangements as the Representatives may deem
advisable or one or more of the remaining Underwriters may agree to purchase
such Shares in such proportions as may be approved by the Representatives, in
each case upon the terms set forth in this Agreement. If no such arrangements
have been made by the close of business on the business day following such
Closing Date,
(a) if the number of Shares to be purchased by the defaulting
Underwriters on such Closing Date shall not exceed 10% of the Shares that
all the Underwriters are obligated to purchase on such Closing Date, then
each of the nondefaulting Underwriters shall be obligated to purchase
such Shares on the terms herein set forth in proportion to their
respective obligations hereunder; provided, that in no event shall the
maximum number of Shares that any Underwriter has agreed to purchase
pursuant to Section 1 be increased pursuant to this Section 11 by more
than one-ninth of such number of Shares without the written consent of
such Underwriter, or
(b) if the number of Shares to be purchased by the defaulting
Underwriters on such Closing Date shall exceed 10% of the Shares that all
the Underwriters are obligated to purchase on such Closing Date, then the
Company or the Selling Shareholder shall be entitled to one additional
business day within which it may, but is not obligated to, find one or
more substitute underwriters reasonably satisfactory to the
Representatives to purchase such Shares upon the terms set forth in this
Agreement.
In any such case, either the Representatives or the Company and the
Selling Shareholder shall have the right to postpone the applicable Closing Date
for a period of not more than five business days in order that necessary changes
and arrangements (including any necessary amendments or supplements to the
Registration Statement or Prospectus) may be effected by the Representatives,
the Selling Shareholder and the Company. If the number of Shares to be purchased
on such Closing Date by such defaulting Underwriter or Underwriters shall exceed
10% of the Shares that all the Underwriters are obligated to purchase on such
Closing Date, and none of the nondefaulting Underwriters, the Selling
Shareholder or the Company shall make arrangements pursuant to this Section
within the period stated for the purchase of the Shares that the defaulting
Underwriters agreed to purchase, this Agreement shall terminate with respect to
the Shares to be purchased on such Closing Date without liability on the part of
any nondefaulting Underwriter to the Company or the Selling Shareholder and
without liability on the part of the Company, except in both cases as provided
in Sections 7(b), 8, 9 and 10. The provisions of this Section shall not in any
way affect the
34
liability of any defaulting Underwriter to the Company, the Selling Shareholder
or the nondefaulting Underwriters arising out of such default. A substitute
underwriter hereunder shall become an Underwriter for all purposes of this
Agreement.
12. Miscellaneous. The respective agreements, representations,
warranties, indemnities and other statements of the Company or its officers, of
the Selling Shareholder and of the Underwriters set forth in or made pursuant to
this Agreement shall remain in full force and effect, regardless of any
investigation made by or on behalf of any Underwriter or the Company or the
Selling Shareholder or any of the officers, directors or controlling persons
referred to in Sections 8 and 9 hereof, and shall survive delivery of and
payment for the Shares. The provisions of Sections 7(b), 8, 9 and 10 shall
survive the termination or cancellation of this Agreement.
This Agreement has been and is made for the benefit of the Underwriters,
the Company and the Selling Shareholder and their respective successors and
assigns, and, to the extent expressed herein, for the benefit of persons
controlling any of the Underwriters, or the Company, and directors and officers
of the Company, and their respective successors and assigns, and no other person
shall acquire or have any right under or by virtue of this Agreement. The term
"successors and assigns" shall not include any purchaser of Shares from any
Underwriter merely because of such purchase.
All notices and communications hereunder shall be in writing and mailed
or delivered or by telephone or telegraph if subsequently confirmed in writing,
(a) if to the Representatives, c/o CIBC World Markets Corp., 000 0xx Xxxxxx, 0xx
Xxxxx, Xxx Xxxx, Xxx Xxxx 00000 with a copy to Xxxxxx & Xxxxxxx, 000 Xxxx Xxxxx
Xxxxxx, Xxxxx 0000, Xxx Xxxxxxx, Xxxxxxxxxx 00000 Attention: Xxxxxxx X. Xxxxxx,
and (b) if to the Company, to its agent for service as such agent's address
appears on the cover page of the Registration Statement with a copy to Xxxxxxx &
Xxxxx LLP, 000 Xxxx Xxxxxxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxxx 00000, Attention:
Xxxxx X. Xxxxxxxx, and (c) if to the Selling Shareholder to Blue Cross & Blue
Shield United of Wisconsin, Attn: Xxxxxxx X. Xxxxxxxx, Vice President, 000 Xxxx
Xxxxxxxx Xxxxxx, Xxxxxxxxx, XX 00000, with a copy to Xxxxx & Lardner, 000 Xxxx
Xxxxxxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxxx 00000, Attention: Xxxx X. Xxxxx.
This Agreement shall be governed by and construed in accordance with the
laws of the State of New York, applicable to agreements made and to be fully
performed therein.
This Agreement may be signed in any number of counterparts, each of which
shall be an original, with the same effect as if the signatures thereto and
hereto were upon the same instrument.
35
Please confirm that the foregoing correctly sets forth the
agreement among us.
Very truly yours,
American Medical Security Group, Inc.
By:
----------------------------------
Name:
Title:
Blue Cross & Blue Shield United of
Wisconsin
By:
----------------------------------
Name:
Title:
Confirmed:
CIBC WORLD MARKETS CORP.
XXXXXX X. XXXXX & CO. INCORPORATED
XXXXXX, XXXXXXXX & COMPANY, INCORPORATED
Acting severally on behalf of itself and as representative of the several
Underwriters named in Schedule I annexed hereto.
By CIBC WORLD MARKETS CORP.
By:
---------------------------------------
Name:
Title:
36
SCHEDULE I
Number of Firm
Shares to Be
Name Purchased
------------------------------------------------------------ ----------------
CIBC World Markets Corp..................................... 1,312,800
Xxxxxx X. Xxxxx & Co. Incorporated.......................... 515,600
Xxxxxx, Xxxxxxxx & Company, Incorporated.................... 515,600
Banc of America Securities LLC.............................. 38,000
Deutsche Bank Securities Inc................................ 38,000
XX Xxxxx Securities Corporation............................. 38,000
UBS Warburg LLC............................................. 38,000
Xxxxxxx, Xxxxxxx & Co., Inc................................. 19,000
Emerging Growth Equities, Ltd............................... 19,000
Friedman, Billings, Xxxxxx & Co., Inc....................... 19,000
Fulcrum Global Partners LLC................................. 19,000
Gilford Securities Incorporated............................. 19,000
Leerink Xxxxx & Company..................................... 19,000
----------
Total................................................. 2,610,000
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