EXHIBIT 10.4
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:
(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
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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."
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
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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 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.
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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 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
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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 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.
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(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 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
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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.
(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
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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.
(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.
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(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
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.
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(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, 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
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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
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
11
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, 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
12
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 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.
13
(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 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.
14
(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 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
15
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 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
16
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
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.
17
(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 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
18
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 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
19
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
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
20
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
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 & Xxxxxxx, 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.
21
(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, 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.
22
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.
(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:
23
(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 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
24
12-month period, which shall satisfy the provisions of Section 11(a) of the
Securities Act or Rule 158 of the Rules.
(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 make
all filings required under applicable securities laws and by the NYSE.
25
(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,
26
Cobalt Corporation, and the Company (the "Stock Purchase Agreement"),
(1) the Selling Shareholder 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
27
reliance upon and in conformity with information furnished in
writing to the Company by the Representatives on behalf of any Underwriter
specifically for use 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.
28
(c) Each Underwriter agrees, severally and not jointly, to indemnify and
hold harmless the Company, the Selling Shareholder and each person, if any, who
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 wish, jointly
with any other indemnifying party similarly notified, to assume the defense
thereof, with counsel
29
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
incircumstances 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 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)
30
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 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.
31
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
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
32
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 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.
33
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.
34
Please confirm that the foregoing correctly sets forth the agreement
among us.
Very truly yours,
American Medical Security Group, Inc.
By: /S/ XXXXXXX X. XXXXX
Name: Xxxxxxx X. Xxxxx
Title: Senior Vice President
General Counsel & Secretary
Blue Cross & Blue Shield United of Wisconsin
By: /S/ XXXX X. XXXXXX
Name: Xxxx X. Xxxxxx
Title: Senior Vice President
Treasurer and Chief
Financial Officer
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: /S/ XXXXXXX XXXXXXXX
Name: Xxxxxxx Xxxxxxxx
Title: Managing Director
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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