EXHIBIT 1
3,500,000 SHARES
AMERICAN MEDICAL SECURITY GROUP, INC.
COMMON STOCK
UNDERWRITING AGREEMENT
May [ ], 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 3,500,000 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 525,000 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 $_____ per
share (the "Initial Price"), the number of Firm
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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 certificates for, the Firm Shares shall be made at the offices of
CIBC World Markets Corp., 000 0xx Xxxxxx, 0xx Xxxxx, Xxx Xxxx, Xxx Xxxx, 00000,
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 certificates, for such Option Shares shall be made at the above-mentioned
offices, 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 delivery of the respective certificates to the
Representatives for the respective accounts of the Underwriters of certificates
for the Shares to be purchased by them.
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Certificates evidencing 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. 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 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 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.
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
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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 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
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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.
(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,
5
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 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
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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 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
7
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.
(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
8
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.
(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,
9
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
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
10
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 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
11
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 an account with La Salle
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 to be held by the Transfer Agent on behalf of the Selling
Shareholder until the Closing.
(b) This Agreement and the Lock-Up Agreement have each been duly
authorized, executed and delivered by or on behalf of the Selling
Shareholder and, assuming due authorization, execution and delivery by the
other parties hereto, constitutes the valid and legally binding agreement
of the Selling Shareholder, enforceable against the Selling Shareholder in
accordance with its terms.
(c) The execution and delivery by the Selling Shareholder of this
Agreement and the performance by the Selling Shareholder of its obligations
under this Agreement (i) will not contravene any provision of applicable
law, statute, regulation or filing or any agreement or other instrument
binding upon the Selling Shareholder or any judgment, order or decree of
any governmental body, agency or court having jurisdiction over the Selling
Shareholder, (ii) does not require any consent, approval, authorization or
order of or registration or filing with any court or governmental agency or
body having jurisdiction over it, except such as may be required by the
Blue Sky laws of the various states in connection with the offer and sale
of the Shares which have been or will be effected in accordance with this
Agreement, (iii) does not and will not violate any statute, law, regulation
or filing or judgment, injunction, order or decree applicable to the
Selling Shareholder or (iv) will not result in the creation or imposition
of any lien, charge or encumbrance upon any property or assets of the
Selling Shareholder pursuant to the terms of any agreement or instrument to
which the Selling Shareholder is a party or by which the Selling
12
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.
(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.
13
(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.
(xii) The capital stock of the Company conforms in all material
respects to the description thereof contained in the Prospectus under
the
17
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 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
18
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 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
19
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 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
20
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.
(ii) This Agreement and the Lock-Up Agreement each constitute the
legal, valid and binding obligation of the Selling Shareholder
enforceable against
21
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.
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
22
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:
(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
23
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 12-month period, which shall
satisfy the provisions of Section 11(a) of the Securities Act or Rule
158 of the Rules.
24
(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.
(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
25
condition, financial or otherwise, or the earnings, business affairs
or business prospects of the Company, or the offering of the Shares
without the prior written consent of the Representatives unless in the
judgment of the Company and its counsel, and after notification to the
Representatives, such press release or press conference is required by
law.
(b) The Company agrees to pay, or reimburse if paid by the
Representatives, whether or not the transactions contemplated hereby are
consummated or this Agreement is terminated, all costs and expenses
incident to the public offering of the Shares and the performance of the
obligations of the Company under this Agreement including those relating
to: (i) the preparation, printing, filing and distribution of the
Registration Statement including all exhibits thereto, each Preliminary
Prospectus, the Prospectus, all amendments and supplements to the
Registration Statement and the Prospectus and any document incorporated by
reference therein, and the printing, filing and distribution of this
Agreement; (ii) the registration or qualification of the Shares for offer
and sale under the securities or Blue Sky laws of the various jurisdictions
referred to in Section 7(a)(vi), including the reasonable fees and
disbursements of counsel for the Underwriters in connection with such
registration and qualification and the preparation, printing, distribution
and shipment of preliminary and supplementary Blue Sky memoranda; (iii) the
furnishing (including costs of shipping and mailing) to the Representatives
and to the Underwriters of copies of each Preliminary Prospectus, the
Prospectus and all amendments or supplements to the Prospectus, and of the
several documents required by this Section to be so furnished, as may be
reasonably requested for use in connection with the offering and sale of
the Shares by the Underwriters or by dealers to whom Shares may be sold;
(iv) the filing fees of the NASD in connection with its review of the terms
of the public offering and reasonable fees and disbursements of counsel for
the Underwriters in connection with such review; and (v) all transfer
taxes, if any, with respect to the sale and delivery of the Shares by the
Selling Shareholder to the Underwriters. Subject to the provisions of
Section 10, the Underwriters agree to pay, whether or not the transactions
contemplated hereby are consummated or this Agreement is terminated, all
costs and expenses incident to the performance of the obligations of the
Underwriters under this Agreement not payable by the Company pursuant to
the preceding sentence, including, without limitation, the fees and
disbursements of counsel for the Underwriters.
(c) As provided in Section 6.03(c) of the Stock Purchase Agreement
dated as of March 19, 2002, among the Selling Shareholder, Cobalt
Corporation, and the Company (the "Stock Purchase Agreement"), (1) the
Selling Shareholder 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
26
provisions among the Company, the Selling Shareholder and Cobalt
Corporation which shall remain in force as between such parties, provided,
however, that no provision of the Stock Purchase Agreement shall affect or
alter the indemnification and other rights of the Underwriters provided in
this Agreement.
8. INDEMNIFICATION.
(a) The Company agrees to indemnify and hold harmless each Underwriter
and each person, if any, who controls any Underwriter within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act against
any and all losses, claims, damages and liabilities, joint or several
(including any reasonable investigation, legal and other expenses incurred
in connection with, and any amount paid in settlement of, any action, suit
or proceeding or any claim asserted), to which they, or any of them, may
become subject under the Securities Act, the Exchange Act or other Federal
or state law or regulation, at common law or otherwise, insofar as such
losses, claims, damages or liabilities arise out of or are based upon (i)
any untrue statement or alleged untrue statement of a material fact
contained in any Preliminary Prospectus, the Registration Statement or the
Prospectus or any amendment thereof or supplement thereto, or in any Blue
Sky application or other information or other documents executed by the
Company filed in any state or other jurisdiction to qualify any or all of
the Shares under the securities laws thereof (any such application,
document or information being hereinafter referred to as a "Blue Sky
Application") or arise out of or are based upon any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, (ii) in whole or
in part upon any breach of the representations and warranties set forth in
Section 4 hereof, or (iii) in whole or in part upon any failure of the
Company to perform any of its obligations hereunder or under law; provided,
however, that such indemnity shall not inure to the benefit of any
Underwriter (or any person controlling such Underwriter) on account of any
losses, claims, damages or liabilities arising from the sale of the Shares
to any person by such Underwriter if such untrue statement or omission or
alleged untrue statement or omission was made in such Preliminary
Prospectus, the Registration Statement or the Prospectus, or such amendment
or supplement thereto, or in any Blue Sky Application in reliance upon and
in conformity with information furnished in writing to the Company by the
Representatives on behalf of any Underwriter specifically for use 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.
27
(b) The Selling Shareholder agrees to indemnify and hold harmless each
Underwriter and each person, if any, who controls any Underwriter within
the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act to the same extent as the foregoing indemnity from the Company
to each Underwriter, but only insofar as such losses, claims, damages or
liabilities arise out of or are based upon (i) any untrue statement or
omission or alleged untrue statement or omission of a material fact which
was made in any Preliminary Prospectus, the Registration Statement or the
Prospectus, or any amendment thereof or supplement thereto, (ii) in whole
or in part upon any breach of the representations and warranties of the
Selling Shareholder set forth in Section 5 hereof, or (iii) in whole or in
part upon any failure of the Selling Shareholder to perform any of its
obligations hereunder or under law; provided that such indemnity shall not
inure to the benefit of any Underwriter (or any person controlling such
Underwriter) on account of any loss, claim, damage or liability arising out
of any such untrue statement or alleged untrue statement or omission or
alleged omission in any Preliminary Prospectus if the Company shall have
timely furnished copies of the Prospectus to such Underwriter and such
Underwriter shall not have given or sent a copy of the Prospectus to the
person who purchased Shares from such Underwriter and who is asserting such
loss, claim, damage or liability, if required by law to have been
delivered, at or prior to the written confirmation of the sale of Shares to
such person by such Underwriter, to the extent that the Prospectus would
have cured such defect or alleged defect giving rise to such loss, claim,
damage or liability. Notwithstanding the foregoing, the liability of the
Selling Shareholder pursuant to the provisions of this Section 8(b) shall
be limited to an amount equal to the aggregate net proceeds received by
such Selling Shareholder from the sale of the Shares sold by the Selling
Shareholder hereunder. This indemnity agreement will be in addition to any
liability which the Selling Shareholder may otherwise have.
(c) Each Underwriter agrees, severally and not jointly, to indemnify
and hold harmless the Company, the Selling Shareholder and each person, if
any, who 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
28
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 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
29
arising out of the same general allegations or circumstances or (iii) the
indemnifying parties shall not have employed counsel to assume the defense
of such action within a reasonable time after notice of the commencement
thereof, in each of which cases the fees and expenses of counsel shall be
at the expense of the indemnifying parties. An indemnifying party shall not
be liable for any settlement of any action, suit, proceeding or claim
effected without its written consent, which consent shall not be
unreasonably withheld or delayed.
9. CONTRIBUTION. In order to provide for just and equitable
contribution in circumstances in which the indemnification provided for in
Section 8(a), 8(b), or 8(c) is due in accordance with its terms but for any
reason is held to be unavailable to or insufficient to hold harmless an
indemnified party under Section 8(a), 8(b), or 8(c), then each indemnifying
party shall contribute to the aggregate losses, claims, damages and liabilities
(including any investigation, legal and other expenses reasonably incurred in
connection with, and any amount paid in settlement of, any action, suit or
proceeding or any claims asserted, but after deducting any contribution received
by any person entitled hereunder to contribution from any person who may be
liable for contribution) to which the indemnified party may be subject in such
proportion as is appropriate to reflect the relative benefits received by the
Company and the Selling Shareholder on the one hand and the Underwriters on the
other from the offering of the Shares or, if such allocation is not permitted by
applicable law or indemnification is not available as a result of the
indemnifying party not having received notice as provided in Section 8 hereof,
in such proportion as is appropriate to reflect not only the relative benefits
referred to above but also the relative fault of the Company and the Selling
Shareholder on the one hand and the Underwriters on the other in connection with
the statements or omissions which resulted in such losses, claims, damages,
liabilities or expenses, as well as any other relevant equitable considerations.
The relative benefits received by the Company, the Selling Shareholder and the
Underwriters shall be deemed to be in the same proportion as (x) the total
proceeds from the offering (net of underwriting discounts but before deducting
expenses) received by the Selling Shareholder, as set forth in the table on the
cover page of the Prospectus, bear to (y) the underwriting discounts received by
the Underwriters, as set forth in the table on the cover page of the Prospectus.
The relative fault of the Company and the Selling Shareholder or the
Underwriters shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact related to information
supplied by the Company and the Selling Shareholder or the Underwriters and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission. The Company, the Selling
Shareholder and the Underwriters agree that it would not be just and equitable
if contribution pursuant to this Section 9 were determined by pro rata
allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation which does not take account of the
equitable considerations referred to above. Notwithstanding the provisions of
this Section 9, (i) in no case shall any Underwriter (except as may be provided
in the Master Agreement Among Underwriters) be liable or responsible for any
amount in excess of the underwriting discount applicable to the Shares purchased
by such
30
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.
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
31
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 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.
32
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.
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
33
53202, 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:
----------------------------------------
Name:
Title:
Blue Cross & Blue Shield United of Wisconsin
By:
----------------------------------------
Name:
Title:
Confirmed:
CIBC WORLD MARKETS CORP.
XXXXXX X. XXXXX & CO. INCORPORATED
XXXXXX, XXXXXXXX & COMPANY, INCORPORATED
Acting severally on behalf of itself
and as representative of the several
Underwriters named in Schedule I annexed
hereto.
By CIBC WORLD MARKETS CORP.
By:
-----------------------------------
Name:
Title:
SCHEDULE I
NUMBER OF
FIRM SHARES TO
NAME BE PURCHASED
CIBC World Markets Corp.
Xxxxxx X. Xxxxx & Co. Incorporated
Xxxxxx, Xxxxxxxx & Company, Incorporated
-------------------
Total 3,500,000
