-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, UrqZJdM85lFBfd2J2VCT9DqZQFavsdBagKWmkB17y/xldhq5LrVq1JxBA839mDG0 k4OeB9EyHtdyOdJ27uEJ8g== 0001068861-98-000009.txt : 19981001 0001068861-98-000009.hdr.sgml : 19981001 ACCESSION NUMBER: 0001068861-98-000009 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19980925 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 19980930 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: AMERICAN MEDICAL SECURITY GROUP INC CENTRAL INDEX KEY: 0000878897 STANDARD INDUSTRIAL CLASSIFICATION: HOSPITAL & MEDICAL SERVICE PLANS [6324] IRS NUMBER: 391431799 STATE OF INCORPORATION: WI FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 001-13154 FILM NUMBER: 98718331 BUSINESS ADDRESS: STREET 1: 3100 AMS BLVD CITY: GREEN BAY STATE: WI ZIP: 54313 BUSINESS PHONE: 9206611111 MAIL ADDRESS: STREET 1: 3100 AMS BLVD CITY: GREEN BAY STATE: WI ZIP: 54313 FORMER COMPANY: FORMER CONFORMED NAME: UNITED WISCONSIN SERVICES INC /WI DATE OF NAME CHANGE: 19930328 8-K 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 -------------- FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): SEPTEMBER 25, 1998 AMERICAN MEDICAL SECURITY GROUP, INC. (Exact name of Registrant as specified in its charter) WISCONSIN 1-13154 39-1431799 (State of Incorporation) (Commission File Number) (I.R.S. Employer Identification No.) 3100 AMS BOULEVARD, GREEN BAY, WISCONSIN 54313 (Address of principal executive offices) (Zip Code) (920) 661-1111 (Registrant's telephone number, including area code) United Wisconsin Services, Inc. 401 West Michigan Street, Milwaukee, Wisconsin 53203-2896 (Former name and former address) -------------- ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS. THE DISTRIBUTION On September 25, 1998 (the "Distribution Date"), the Registrant effected the distribution (the "Distribution") of shares of common stock, no par value per share (the "Distributed Shares" or the "Newco Common Stock"), of its wholly owned subsidiary Newco/UWS, Inc. ("Newco"), a Wisconsin corporation, to the Registrant's shareholders. Each shareholder was entitled to receive one share of Newco Common Stock for each share of common stock of the Registrant ("Registrant Common Stock") owned at the close of business on September 11, 1998 (the "Record Date"). The Distribution resulted in all of the issued and outstanding shares of Newco Common Stock being distributed to holders of shares of Registrant Common Stock on a pro rata basis. On or about the Distribution Date, the Company began to mail certificates evidencing shares of Newco Common Stock to holders of shares of Registrant Common Stock. No consideration is required of holders of shares of Registrant Common Stock in return for the Distributed Shares. The Registrant has received a ruling from the Internal Revenue Service to the effect that the Distribution will qualify as a tax-free distribution to the Registrant, Newco and the Registrant's shareholders for federal income tax purposes. In connection with the Distribution, the Registrant's name was changed from United Wisconsin Services, Inc. to American Medical Security Group, Inc. ("AMSG" or the "Company"), and Newco was renamed United Wisconsin Services, Inc. ("UWS"). Newco is a newly formed corporation which, as a result of the transactions entered into in connection with the Distribution, now owns the businesses and assets of, and is responsible for the liabilities associated with, the health maintenance organization (HMO) managed care and specialty products businesses and management business formerly conducted by the Registrant. AMSG continues to own the businesses and assets of, and is responsible for the liabilities associated with, the Registrant's small group business described in the Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1997. Following the Distribution, AMSG does not own any shares of Newco Common Stock, and Newco does not own any shares of AMSG Common Stock. Immediately after the Distribution, Blue Cross & Blue Shield United of Wisconsin ("Blue Cross") owned 38.1% of the outstanding shares of AMSG Common Stock and 38.1% of the outstanding shares of Newco Common Stock. The shares of Newco (now named UWS) Common Stock are listed on the New York Stock Exchange ("NYSE") under the symbol "UWZ." The shares of Registrant (now named AMSG) Common Stock continue to be listed on the NYSE, but are now listed under the symbol "AMZ." BUSINESS OF THE COMPANY AMSG, based in Green Bay, Wisconsin, intends to concentrate its efforts on continuing to develop, market and administer small group medical and specialty insurance products and administrative services for small groups. The Company offers a wide variety of health care insurance products including medical, dental, prescription drug, life insurance and disability. The Company's products are sold through approximately 38,000 independent licensed agents in 33 states and the District of Columbia. More than 145 Company sales managers located at 70 offices throughout the U.S. support the agents. As of June 30, 1998, the Company served approximately 578,000 medical members. The Company specializes in providing health-care benefits and other insurance products designed to maximize choice and control costs in a compassionate environment. The Company principally markets health benefit products that provide discounts to insureds that utilize preferred provider organizations (PPOs). PPO plans differ from HMO plans in that they typically provide a wider choice of health professionals, fewer benefit restrictions and increased access to specialists at a somewhat higher price. AMSG owns two preferred provider networks through which approximately 22% of its business was conducted as of June 30, 1998. It also contracts with more than 65 other networks to ensure cost-effective health care choices for its customers. The Company's health benefit products are targeted to groups of two to 99 employees. The Company can customize employee benefit packages for businesses and individuals by providing benefit options which allow businesses to offer employees multiple medical plans in a single package. In addition, the Company offers a wide range of voluntary benefits providing protection beyond medical coverage. These voluntary benefits include group life, dental and short-term disability. Optional services available include a workplace wellness incentive program, administrative services for groups subject to COBRA regulation, and Section 125 plans that allows employees to set aside funds on a pretax basis for unreimbursed medical and dependent care expenses. Self-funded plans that provide employers with the opportunity to customize benefits for their employees, are offered to groups of 25 to 99 employees. The Company also provides coverage for individuals and families that can be customized to fit various lifestyles and budgets. BUSINESS STRATEGY The Company believes that the heart of the national health care debate is consumer demand for broader choices and increased access to health care providers. As a specialist in providing and underwriting PPO products, the Company believes that it can capitalize on the growing demand for these products. According to recent reports of the U.S. Department of Census, the small business market in which the Company markets its products is the fastest growing segment of the U.S. economy. While the small business market is a rapidly growing market, the Company also believes that the primary factors affecting the Company's profitability are the management of medical expenses and the control of its expense ratio through scale and operational efficiency. To achieve its goal of becoming a multi-billion dollar company and the nation's foremost small group, managed care company, AMSG has developed the following business strategies: - DEVELOP INTERNAL GROWTH. Through its independent agents, the Company will continue to offer a wide range of competitively priced products emphasizing choice and flexible benefits, with excellent customer service support 24 hours per day, 365 days per year. - CONTAIN MEDICAL LOSS RATIO. The Company plans to contain its medical loss ratio through pricing and product design reflective of ultimate claims costs. Actions taken to support this strategy include exiting certain unprofitable markets in states where regulations preclude meeting this standard, terminating unprofitable business, and implementing appropriate rate increases. - LEVERAGE EXPENSE RATIO. The Company intends to leverage its expense ratio by increasing its business in force at its existing facility in Green Bay, Wisconsin and by increasing productivity through process re-engineering and automation efforts. - GROW THROUGH ACQUISITIONS. Growth through acquisitions will continue as a core strategy. The Company plans to continue to leverage its expense ratio advantage and its expertise in the small group segment to acquire books of business during a period of industry consolidation. In 1997, the Company acquired the small group business of Pan-American Life Insurance Company. It acquired the balance of Pan-American's domestic health benefit business in July 1998. MANAGEMENT AMSG will be managed by substantially the same senior management that managed American Medical Security Holdings, Inc. ("AMS"), a wholly owned subsidiary of the Registrant, prior to the Distribution. After the Distribution Date, the Company's Board of Directors consists of three continuing directors, two of whom were also directors of AMS and six new directors, five of whom were also directors of AMS. Subsequent to the Distribution, the executive officers of the Company are as follows: SAMUEL V. MILLER, CHAIRMAN OF THE BOARD, PRESIDENT AND CHIEF EXECUTIVE OFFICER. Mr. Miller joined the Company in 1995 as an Executive Vice President. He became a Director, President and CEO of AMS in 1996 and was elected Chairman of AMS earlier this year. From 1994 to 1996, Mr. Miller was a member of the executive staff planning group with the Travelers Group, serving as Chairman and Group Chief Executive of National Benefit Insurance Company and Primerica Financial Services Ltd. of Canada. Prior to 1994, Mr. Miller spent 10 years as President and CEO of American Express Life Assurance Company. From 1976 to 1984 Mr. Miller served as Senior Vice President of Sales and Marketing at Employers Health Insurance Company, now the small group business of Humana, Inc. He was one of the builders of Employers Health Insurance Company where he later took on additional responsibility as chief operating officer and led Employers Health Insurance Company's sale to American Express. EDWARD R. SKOLDBERG, EXECUTIVE VICE PRESIDENT AND CHIEF OPERATING OFFICER. Mr. Skoldberg joined AMS in 1996 in his present capacity. He has 25 years of financial, technical and operational experience, the last 10 years in the health insurance industry. Prior to joining AMS, Mr. Skoldberg held management positions with Time Insurance, Empire Blue Cross Blue Shield, City Federal Savings & Loan, and Howard Savings Bank. GARY D. GUENGERICH, EXECUTIVE VICE PRESIDENT, CHIEF FINANCIAL OFFICER AND TREASURER. Mr. Guengerich joined AMS in 1997 in his present capacity. He has more than 23 years of financial management experience in the insurance industry. Before joining AMS, Mr. Guengerich held senior management positions with First Colony Life Insurance Company, American Life Insurance Company and Colonial Penn Group. TIMOTHY J. MOORE, SENIOR VICE PRESIDENT, GENERAL COUNSEL AND CORPORATE SECRETARY. Mr. Moore joined AMS in 1997 in his present capacity. He has 25 years of insurance experience and is admitted to practice law in Wisconsin and Illinois. Prior to joining AMS, he was a partner in the Chicago law firm of Katten, Muchin & Zavis. He has also held positions with Insurance Company of Illinois, Underwriters Adjusting Company and Southwestern Adjusting Company. CLIFFORD A. BOWERS, VICE PRESIDENT, CORPORATE COMMUNICATIONS. Before joining AMS in 1997 in his present capacity, Mr. Bowers held senior communications positions with Fort Howard, Tenneco, Manville and Brunswick Corporations. SCOTT B. WESTPHAL, VICE PRESIDENT AND CHIEF ACTUARY. Mr. Westphal has held various management positions with AMS since its inception in 1988, and has 15 years of experience as an actuary. Before joining AMS, he worked for Employers Health Insurance Company. JOHN R. WIRCH, VICE PRESIDENT HUMAN RESOURCES AND CORPORATE SERVICES. Mr. Wirch joined AMS in 1996 in his present capacity. Prior to joining AMS, he spent 18 years in various human resources management positions with Little Rapids Corporation, Presto Products and Universal Foundry. Subsequent to the Distribution, the Directors of the Company are as follows: CLASS I - TERM EXPIRING AT ANNUAL MEETING OF SHAREHOLDERS IN 1999 ROGER H. BALLOU. Mr. Ballou has been the Chairman and CEO of Global Vacation Group since March 1998. Immediately prior to that time, Mr. Ballou served as a senior advisor to Thayer Capital Partners. Between May 1995 and September 1997, Mr. Ballou served as Vice Chairman and Chief Marketing Officer and then as President and Chief Operating Officer of Alamo Rent-a-Car. For more than 16 years prior to joining Alamo, Mr. Ballou held several executive positions with American Express Travel, serving most recently as President - Travel Services Group. W. FRANCIS BRENNAN. Mr. Brennan is a retired Executive Vice President of UNUM Corporation, an insurance holding company, where he served on the boards of UNUM's insurance affiliates in the United States, Canada, the United Kingdom and Japan. Before joining UNUM in 1984, he spent 21 years in a variety of senior management positions with CIGNA Corporation and Connecticut General Life Insurance Company. He is a Director of Margent Group, Inc., a reinsurance holding company with operations in the United States, the United Kingdom and Bermuda. J. GUS SWOBODA. Mr. Swoboda is a retired Senior Vice President of Human and Corporate Development of Wisconsin Public Service Corporation where he also held various other senior management positions in his long career with Wisconsin Public Service. He is a Director of First Northern Capital Corp., a publicly traded financial institution operating in Northeast Wisconsin. CLASS II - TERM EXPIRING AT ANNUAL MEETING OF SHAREHOLDERS IN 2000 JAMES C. HICKMAN. Mr. Hickman has been a Director of the Company since 1991. He is also currently a Director of Blue Cross and Century Investment Management Company. In addition, Mr. Hickman has been an Emeritus Professor and Emeritus Dean of the School of Business at the University of Wisconsin-Madison ("UW School of Business") since July 1993. He was a Professor in the UW School of Business from 1990 to 1993, and was Dean of the UW School of Business from 1985 to 1990. WILLIAM R. JOHNSON. Mr. Johnson has been a Director of the Company since 1993. In addition, he has been Chairman of Johansen Capital Investment and Financial Consulting since 1986, and President of Johansen Capital Associates, Inc., a financial and investment consultant to corporations and individuals since 1984. He was also Chairman, President and Chief Executive Officer of National Investment Services of America, Inc., an investment manager of pension, profit sharing, and other funds, from 1968 to 1984. FRANK SKILLERN. Mr. Skillern has been Chief Executive Officer of American Express Centurion Bank, a consumer bank located in Salt Lake City, Utah, since 1995. From 1993 to 1995 he was President, Consumer Card Group, USA, American Express Travel Related Services Company ("TRS"), having served as an Executive Vice President of TRS for the prior two years. Mr. Skillern was general counsel of American Express Financial Advisors (then IDS Financial Services) from 1983 to 1991. Prior to that time, he practiced law with several prominent laws firms and spent time as general counsel of the Federal Depository Insurance Corporation. CLASS III - TERM EXPIRING AT ANNUAL MEETING OF SHAREHOLDERS IN 2001 EUGENE A. MENDEN. Mr. Menden has been a Director of the Company since 1991. He was a Director of Blue Cross from January 1987 until 1992. Prior to retirement, he was a Director of International Finance for Marquette Medical Systems, Inc. (formerly Marquette Electronics, Inc.), a manufacturer of medical electronic products. He also served as Vice President of Finance for Marquette Electronics, Inc. from 1970 to 1991, as Treasurer from 1970 to 1989, and as a director from 1972 until June 1996. SAMUEL V. MILLER. See officer description above. MICHAEL T. RIORDAN. Mr. Riordan was President and Chief Operating Officer of Fort James Corporation, Deerfield, Illinois from 1997 to 1998. Prior to that time, he was Chairman, President and CEO of Fort Howard Corporation which merged with James River Corporation in 1997 to become Fort James Corporation. Mr. Riordan held various senior management positions with Fort Howard since 1983. He is also a director of the Dial Corporation. After the Distribution, the Company and Newco will have three common directors, Messrs. Menden, Hickman and Johnson. Messrs. Menden, Hickman and Johnson, as well as certain other officers and directors of the Company and Newco, also will own shares in both companies following the Distribution. DIVIDEND POLICY The Company does not expect to pay any cash dividends in the foreseeable future following the Distribution. The Company intends to employ its earnings in the continued development of its business. The future dividend policy will depend on the Company's earnings, capital requirements, financial condition and other factors considered relevant by the Board of Directors. ADDITIONAL INFORMATION Further information concerning the Distribution and related matters is contained in the Registration Statement on Form 10, as amended (the "Registration Statement"), filed with the Securities and Exchange Commission and the NYSE by Newco to register the Newco Common Stock pursuant to Section 12(b) of the Securities Exchange Act of 1934, as amended, and in the Information Statement of Newco, dated September 11, 1998, filed with and incorporated by reference in the Registration Statement. The Distribution and Indemnity Agreement entered into by Newco and the Registrant in connection with the Distribution, a Tax Allocation Agreement, Employee Benefits Agreement and various other agreements with respect to employee benefits, management and corporate and administrative services, reinsurance arrangements and intellectual property transfers, for the purpose of giving effect to the Distribution and related matters, are described in and/or filed as exhibits to the Registration Statement. FORWARD-LOOKING STATEMENTS This report contains certain forward-looking statements with respect to the financial condition, results of operations and business of the Company. The terms "anticipate", "believe", "estimate", "expert", "objective", "plan", "project" and similar expressions are intended to identify forward-looking statements. Such forward-looking statements are subject to inherent risks and uncertainties that may cause actual results or events to differ materially from those contemplated by such forward-looking statements. In addition to the assumptions and other factors referred to specifically in connection with such statements, factors that may cause actual results or events to differ materially from those contemplated by such forward-looking statements include, among others, rising health care costs, business conditions and competition in the managed care industry, developments in health care reform and other regulatory issues, and other factors that may be referred to in the Company's reports filed with the Securities and Exchange Commission from time to time. ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS (b) PRO FORMA FINANCIAL INFORMATION: The following unaudited pro forma consolidated financial statements of AMSG and subsidiaries, reflecting the Distribution, are filed herewith: Pro Forma Consolidated Balance Sheet as of June 30, 1998 Pro Forma Consolidated Statements of Income for the Six Months Ended June 30, 1998 and the Year Ended December 31, 1997 Notes to the Pro Forma Consolidated Financial Information (c) EXHIBITS: See the Exhibit Index following the Signature page of this report, which is incorporated herein by reference. AMERICAN MEDICAL SECURITY GROUP, INC. PRO FORMA CONSOLIDATED FINANCIAL INFORMATION (Unaudited) The following unaudited pro forma consolidated financial information is based on the historical consolidated financial statements of American Medical Security Group, Inc., formerly United Wisconsin Services, Inc. (the "Company") and gives effect to the distribution of Newco/UWS, Inc. to the shareholders of the Company. The unaudited Pro Forma Consolidated Balance Sheet as of June 30, 1998 presents the financial position of the Company assuming the distribution of Newco/UWS, Inc. had been completed as of that date. The unaudited Pro Forma Consolidated Statements of Income for the six month period ended June 30, 1998 and the year ended December 31, 1997 present the results of operations of the Company assuming that the distribution had been completed on January 1 of the respective period. In the opinion of management, the unaudited pro forma financial information includes all material adjustments necessary to restate the Company's historical results. The adjustments required to reflect such assumptions are described in Note 2 of the Notes to the Pro Forma Consolidated Financial Information. The unaudited pro forma consolidated financial information should be read in conjunction with the historical consolidated financial statements and notes thereto in the Company's 1997 Annual Report. The pro forma information presented is for information purposes only and may not necessarily reflect future results of operations or financial position or what the results of operations or financial position would have been had the distribution actually taken place at the beginning of the period or as of the dates specified. AMERICAN MEDICAL SECURITY GROUP, INC. PRO FORMA CONSOLIDATED BALANCE SHEET (Unaudited)
June 30, 1998 ------------------------------------------------------ Pro Forma Historical Adjustments Pro Forma ------------------------------------------------------ (000'S OMITTED) ASSETS Investments: Securities available for sale, at fair value: Fixed maturities................................................. $275,949 $- $275,949 Equity securities - common....................................... 15,728 - 15,728 Equity securities - preferred.................................... 2,515 - 2,515 Fixed maturity securities held to maturity, at amortized cost....... 3,928 - 3,928 ------------ ------------ ------------ Total investments.............................................. 298,120 - 298,120 Cash and cash equivalents................................................ 7,078 - 7,078 Other assets: Property and equipment, net......................................... 36,839 - 36,839 Goodwill and other intangibles, net................................. 134,557 - 134,557 Other assets........................................................ 25,412 - 25,412 ------------ ------------ ------------ Total other assets............................................. 196,808 - 196,808 Net assets of discontinued operations.................................... 126,194 (126,194) - ------------ ------------ ------------ TOTAL ASSETS............................................................. $628,200 $(126,194) $502,006 ============ ============ ============ LIABILITIES AND SHAREHOLDERS' EQUITY Liabilities: Medical and other benefits payable.................................. $102,422 $- $102,422 Advance premiums.................................................... 20,038 - 20,038 Payables and accrued expenses....................................... 20,401 - 20,401 Notes payable....................................................... 126,013 (70,000) 56,013 Other liabilities................................................... 30,157 - 30,157 ------------ ------------ ------------ Total liabilities.............................................. 299,031 (70,000) 229,031 Shareholders' equity: Common stock........................................................ 16,570 - 16,570 Paid-in capital..................................................... 188,428 - 188,428 Retained earnings................................................... 121,021 (54,947) 66,074 Unrealized gain on investments...................................... 3,150 (1,247) 1,903 ------------ ------------ ------------ Total shareholders' equity..................................... 329,169 (56,194) 272,975 ------------ ------------ ------------ TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY............................... $628,200 $(126,194) $502,006 ============ ============ ============ See Notes to the Pro Forma Consolidated Financial Information
AMERICAN MEDICAL SECURITY GROUP, INC. PRO FORMA CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
Six months ended Twelve months ended June 30, 1998 December 31, 1997 --------------------------------------- --------------------------------------- Pro Forma Pro Forma Historical Adjustments Pro Forma Historical Adjustments Pro Forma --------------------------------------- --------------------------------------- (000'S OMITTED, EXCEPT PER SHARE DATA) Revenues: Insurance premiums........................ $461,915 $- $461,915 $1,518,886 $(561,682) $957,204 Net investment results.................... 11,804 - 11,804 46,308 (22,237) 24,071 Other revenue............................. 9,475 - 9,475 50,088 (25,839) 24,249 ----------- ----------- ----------- ----------- ----------- ----------- Total Revenues......................... 483,194 - 483,194 1,615,282 (609,758) 1,005,524 Expenses: Medical and other benefits................ 353,610 - 353,610 1,220,052 (486,561) 733,491 Selling, general and administrative....... 116,735 - 116,735 344,650 (92,490) 252,160 Profit sharing on joint ventures.......... - - - 3,381 (3,381) - Interest expense.......................... 4,707 (2,433) 2,274 9,311 (4,892) 4,419 Amortization of goodwill and intangibles.. 4,435 4,435 8,793 (818) 7,975 ----------- ----------- ----------- ----------- ----------- ----------- Total Expenses......................... 479,487 (2,433) 477,054 1,586,187 (588,142) 998,045 ----------- ----------- ----------- ----------- ----------- ----------- Income From Continuing Operations Before Income Taxes....................... 3,707 2,433 6,140 29,095 (21,616) 7,479 Income Tax Expense............................. 1,764 852 2,616 10,945 (8,201) 2,744 ----------- ----------- ----------- ----------- ----------- ----------- Net Income From Continuing Operations.......... $1,943 $1,581 $3,524 $18,150 $(13,415) $4,735 =========== =========== =========== =========== =========== =========== Net Income From Continuing Operations Per Common Share: Basic..................................... $0.12 $0.21 $1.11 $0.29 Diluted................................... $0.12 $0.21 $1.10 $0.29 See Notes to the Pro Forma Consolidated Financial Information
AMERICAN MEDICAL SECURITY GROUP, INC NOTES TO THE PRO FORMA CONSOLIDATED FINANCIAL INFORMATION (Unaudited) NOTE 1. The accompanying unaudited Pro Forma Consolidated Financial Information reflects all adjustments which, in the opinion of management, are necessary for fair presentation of the company's financial position and results of operations. This information does not include certain disclosures required under generally accepted accounting principles and, therefore, should be read in conjunction with the Company's historical financial statements and notes thereto. NOTE 2. The pro forma adjustments to the accompanying financial information as of and for the six months ended June 30, 1998 are as follows: To record the distribution of $70 million in long term debt to Newco/UWS, Inc., the debt and related interest expense has been eliminated. The income tax impact for this adjustment is estimated at a rate of 35%. To reflect the distribution of net assets of Newco/UWS, Inc. to the Company's shareholders, "Net assets of discontinued operations" has been eliminated. This amount, less the long term debt assumed by Newco/UWS, Inc. (as described above), has been reflected as a reduction of retained earnings and unrealized gains on investments. The pro forma adjustments to the accompanying financial information for the year ended December 31, 1997 are described as follows: Adjustments to remove results of operations of Newco/UWS, Inc. from the Company's historical statement of income. Interest expense on long term debt distributed to Newco/UWS, Inc. (as described above) and the related income tax impact at 35% has been eliminated. NOTE 3. Basic and diluted per share information is based upon historical weighted average common shares outstanding for the six months ended June 30, 1998 and the year ended December 31, 1997, respectively. Diluted per share information differs from basic per share data due to potentially dilutive common stock options held by officers and employees of both Newco/UWS, Inc. and the Company and other parties. The number of shares under option and their exercise prices of each companies' common stock subsequent to the distribution date is based upon the market value of each company's shares immediately following the distribution as described in the Newco/UWS, Inc. Registration Statement on Form 10, as amended. The number of common shares and potentially dilutive shares used to compute earnings per share after the distribution is not known at this time and may vary from the historical reported earnings per share. SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. AMERICAN MEDICAL SECURITY GROUP, INC. Dated: September 30, 1998 /s/ Timothy J. Moore ------------------ -------------------- Timothy J. Moore Senior Vice President AMERICAN MEDICAL SECURITY GROUP, INC. (F/K/A UNITED WISCONSIN SERVICES, INC.) (COMMISSION FILE NO. 1-13154)
EXHIBIT INDEX TO FORM 8-K CURRENT REPORT Date of Report: September 25, 1998 INCORPORATED HEREIN FILED EXHIBIT NO. DESCRIPTION BY REFERENCE TO HEREWITH 2.1 Distribution and Indemnity Agreement Exhibit 2.1 to Newco/UWS, Inc.'s between United Wisconsin Services, Registration Statement on Form 10, Inc. and Newco/UWS, Inc., dated as as amended (the "Registration of September 11, 1998 Statement") (File No. 1-14177) 2.2 Employee Benefits Agreement, dated Exhibit 10.1 to the Registration as of September 11, 1998, by and Statement between United Wisconsin Services, Inc. and Newco/UWS, Inc. 2.3 Tax Allocation Agreement, entered Exhibit 10.2 to the Registration into as of September 11, 1998, by Statement and between United Wisconsin Services, Inc. and Newco/UWS, Inc. 3.1 Restated and Amended Articles of X Incorporation of American Medical Security Group, Inc. (f/k/a United Wisconsin Services, Inc.), as amended through September 28, 1998 3.2 Bylaws of American Medical Security X Group, Inc. (f/k/a United Wisconsin Services, Inc.), as amended and restated through September 25, 1998 99.1 Information Statement of Newco/UWS, Exhibit 99 to the Registration Inc., dated September 11, 1998 Statement. 99.2 Press Release dated September 29, X 1998
EX-3.1 2 EXHIBIT 3.1 COMPOSITE COPY RESTATED AND AMENDED ARTICLES OF INCORPORATION OF AMERICAN MEDICAL SECURITY GROUP, INC. (AS AMENDED THROUGH SEPTEMBER 28, 1998) These Articles of Incorporation are executed by the undersigned for the purpose of amending and superseding the corporate charter of a Wisconsin corporation authorized pursuant to Chapter 180 of the Wisconsin Statutes. ARTICLE I - NAME AND PRINCIPAL OFFICE The name of the corporation shall be AMERICAN MEDICAL SECURITY GROUP, INC. ARTICLE II - PURPOSES The purposes of this Corporation are to engage in any lawful activity within the purposes for which corporations may be organized under the Wisconsin Business Corporation Law, Chapter 180 of the Wisconsin Statutes. ARTICLE III - CAPITAL STOCK a. The aggregate number of authorized shares of Common Stock of the Corporation shall be Fifty Million (50,000,000) shares, designed as "Common Stock", and having no par value per share. b. The aggregate number of authorized shares of Preferred Stock of the Corporation shall be Five Hundred Thousand (500,000) shares, designed as "Preferred Stock", and having no par value per share. Authority is hereby vested in the Board of Directors from time to time to issue the Preferred Stock as Preferred Stock in one or more series of any number of shares and, in connection with the creation of each such series, to fix, by resolution providing for the issue of shares thereof, the voting rights, if any; the designations, preferences, limitations and relative rights of such series in respect to the rate of dividend, the price, the terms and conditions of redemption; the amounts payable upon such series in the event of voluntary or involuntary liquidation; sinking fund provisions for the redemption or purchase of such series of shares; and, if the shares of any series are issued with the privilege of conversion, the terms and conditions on which such series of shares may be converted. In addition to the foregoing, to the full extent now or hereafter permitted by Wisconsin law, in connection with each issue thereof, the Board of Directors may at its discretion assign to any series of the Preferred Stock such other terms, conditions, restrictions, limitations, rights and privileges as it may deem appropriate. The aggregate number of preferred shares issued and not canceled of any and all preferred series shall not exceed the total number of shares of Preferred Stock hereinabove authorized. Each series of Preferred Stock shall be distinctively designated by letter or descriptive words or both. Pursuant to the authority expressly granted and vested in the Board of Directors of the Corporation and in accordance with the provisions of the Restated and Amended Articles of Incorporation, as amended as of July 31, 1991, the Board of Directors hereby designates 25,000 shares of the Corporation's authorized and unissued Preferred Stock, no par value per share, as Series A Adjustable Rate Nonconvertible Preferred Stock, $1,000 stated value per share, which shall have the following powers, designations, preferences and relative participating, optional or other special rights and qualifications, limitations or restrictions: SECTION 1. DESIGNATION AND AMOUNT. The shares of such series shall be designated as the "Series A Adjustable Rate Nonconvertible Preferred Stock" and the number of shares constituting such series shall be Twenty Five Thousand (25,000), which number, subject to the Restated and Amended Articles of Incorporation, may be increased or decreased by the Board of Directors without a vote of the shareholders; PROVIDED, HOWEVER, such number may not be decreased below the number of the then currently outstanding shares of Series A Adjustable Rate Nonconvertible Preferred Stock plus the number of shares that may be reserved for issuance upon the exercise of any options, warrants, or rights or upon the conversion of any outstanding securities issued by the Corporation convertible into Series A Adjustable Rate Nonconvertible Preferred Stock. Upon the issuance of any shares of Series A Adjustable Rate Nonconvertible Preferred Stock, an amount equal to the aggregate stated value of the shares so issued will be assigned to the capital of the Corporation representing such shares. SECTION 2. FRACTIONAL SHARES. The Corporation may issue fractions and certificates representing fractions of a share of Series A Adjustable Rate Nonconvertible Preferred Stock in integral multiples of one one-thousandth (1/1000) of a share of Series A Adjustable Rate Nonconvertible Preferred Stock. In the event that fractional shares of Series A Adjustable Rate Nonconvertible Preferred Stock are issued, the holders thereof shall have all the rights provided herein for holders of full shares of Series A Adjustable Rate Nonconvertible Preferred Stock in the proportion which such fraction bears to a full share. SECTION 3. VOTING RIGHTS. Except as required by law, holders of shares of Series A Adjustable Rate Nonconvertible Preferred Stock shall have no right to vote. SECTION 4. CONVERSION OR EXCHANGE. The holders of shares of Series A Adjustable Rate Nonconvertible Preferred Stock shall not have any right to convert such shares into or exchange such shares for shares of any other class or classes or any other series of any class or classes of capital stock of the Corporation. SECTION 5. DIVIDENDS. A. When and as declared by the Board of Directors, the Corporation shall pay, out of any funds legally available for the payment of dividends, cumulative cash dividends to the holders of the shares of Series A Adjustable Rate Nonconvertible Preferred Stock from the date of issuance as provided in this paragraph. The dividend rate on the shares of Series A Adjustable Rate Nonconvertible Preferred Stock shall be fixed on a yearly basis ("Yearly Dividend Period") and shall be payable quarterly, out of any funds legally available for the payment of dividends, in cash on March 31, June 30, September 30 and December 31 in each year ("Quarterly Dividend Period"). The dividend rate for each Yearly Dividend Period, payable each Quarterly Dividend Period in that year, shall be at a rate per annum equal to the Applicable Rate (as defined in Section 5(B)). Such dividends shall be cumulative from the date of original issuance of such shares of Series A Adjustable Rate Nonconvertible Preferred Stock and shall be payable out of funds legally available therefor, when and as declared by the Board of Directors in March, June, September and December of each year. Such dividends will accrue whether or not they have been declared and whether or not there are funds of the Corporation legally available for the payment of dividends. Each of such dividends shall be paid to the holders of record of shares of Series A Adjustable Rate Nonconvertible Preferred Stock as they appear on the stock register of the Corporation on such record date as shall be fixed by the Board of Directors or a committee of the Board of Directors duly authorized to fix such date. Dividends on account of arrears (accrued but not declared) for any past Quarterly Dividend Period may be declared and paid at any time, without reference to any regular dividend payment date, to holders of record on such date as may be fixed by the Board of Directors or a committee of the Board of Directors duly authorized to fix such date. If at any time the Corporation pays less than the total amount of dividends then accrued with respect to the shares of Series A Adjustable Rate Nonconvertible Preferred Stock, such payment shall be distributed ratably among the holders of Series A Adjustable Rate Nonconvertible Preferred Stock based upon the aggregate accrued but unpaid dividends on the shares held by each such holder. B. The "Applicable Rate" for any Yearly Dividend Period shall be the Treasury Bill Rate plus 150 basis points. The "Treasury Bill Rate" for each Yearly Dividend Period shall be the weekly per annum market discount rate for one-year U.S. Treasury bills, as published weekly by the Federal Reserve Board, during the last full week in the month of September in the year prior to the Yearly Dividend Period for which the Applicable Rate is being determined. In the event the Federal Reserve Board does not publish such a weekly per annum market discount rate for one-year U.S. Treasury bills during the last full week in the month of September in the year prior to the Yearly Dividend Period for which the Applicable Rate is being determined, then the Applicable Rate shall mean the weekly per annum market discount rate for one-year U.S. Treasury bills as published weekly by any Federal Reserve Bank or by any U.S. Government department or agency selected by the Corporation, during the last full week in the month of September in the year prior to the Yearly Dividend Period for which the Applicable Rate is being determined. In the event the Corporation determines in good faith that for any reason no such U.S. Treasury bill rates are published as provided above during the last full week in the month of September in the year prior to the Yearly Dividend Period for which the Applicable Rate is being determined, then the Applicable Rate shall be the average weekly per annum market discount rate for one-year U.S. Treasury bills, as quoted to the Corporation by a recognized U.S. Government securities dealer selected by the Corporation. Anything herein to the contrary notwithstanding, the Applicable Rate for any Yearly Dividend Period shall in no event be less than 7.00% or greater than 10.00% per annum. C. The Applicable Rate shall be rounded to the nearest one thousandth (1/1000) of a percentage point. D. Dividends payable on the Series A Adjustable Rate Nonconvertible Preferred Stock for each full Quarterly Dividend Period shall be computed by annualizing the Applicable Rate and dividing by four and multiplying the quotient so obtained by the stated value per share of the Series A Adjustable Rate Nonconvertible Preferred Stock. Dividends payable on the Series A Adjustable Rate Nonconvertible Preferred Stock for any period less than a full Quarterly Dividend Period shall be computed on the basis of a 360-day year of 30-day months and the actual number of days elapsed in the period for which dividends are payable. E. Holders of shares of Series A Adjustable Rate Nonconvertible Preferred Stock shall not be entitled to any dividends, whether payable in cash, property or stock, in excess of full cumulative dividends on the Series A Adjustable Rate Nonconvertible Preferred Stock as provided in this Section 5. Accrued but unpaid dividends shall not bear interest, and no interest, or sum of money in lieu of interest, shall be payable in respect of any dividend payment or payments on the Series A Adjustable Rate Nonconvertible Preferred Stock which may be in arrears. F. Anything herein to the contrary notwithstanding, dividends may be declared and paid upon any of the equity securities of the Corporation even if all accrued dividends on the Series A Adjustable Rate Nonconvertible Preferred Stock have not yet been declared and/or paid in full. SECTION 6. LIQUIDATION. Upon any liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary, the holders of the Series A Adjustable Rate Nonconvertible Preferred Stock will be entitled to be paid, whether from capital or surplus, before any distribution or payment is made upon the then outstanding shares of Common Stock or any other class of stock of the Corporation ranking junior to the Series A Adjustable Rate Nonconvertible Preferred Stock upon liquidation, an amount in cash equal to the stated value of, together with all accrued but unpaid dividends on, the Series A Adjustable Rate Nonconvertible Preferred Stock (the "Liquidation Price"). To the extent any accrued dividends have not been paid by the Corporation as of the date the Corporation pays to the holders of the shares of Series A Adjustable Rate Nonconvertible Preferred Stock the Liquidation Price hereunder, and to the extent the Corporation has at that time funds legally available for the payment of dividends, the Board of Directors shall, prior to the payment of the Liquidation Price, declare and cause such dividends to be paid. If upon any such liquidation, dissolution, or winding up of the Corporation, the Corporation's assets to be distributed among the holders of the shares of Series A Adjustable Rate Nonconvertible Preferred Stock are insufficient to permit payment to such holders of the aggregate amount which they are entitled to be paid, then the entire assets to be distributed will be distributed ratably among such holders based upon the aggregate Liquidation Price of the shares of Series A Adjustable Rate Nonconvertible Preferred Stock held by each such holder. Upon receipt of the aggregate Liquidation Price for each share of Series A Adjustable Rate Nonconvertible Preferred Stock, holders of shares of Series A Adjustable Rate Nonconvertible Preferred Stock shall have no further rights to participate in any liquidation, dissolution or winding up of the Corporation. SECTION 7. RANKING OF CLASSES OF STOCK. The Series A Adjustable Rate Nonconvertible Preferred Stock shall rank junior to all other series of the Corporation's Preferred Stock as to the payment of dividends and the distribution of assets in liquidation, unless the terms of any such series shall provide otherwise. Nothing contained herein shall be deemed to restrict the ability of the Corporation to create and issue additional classes or series of its Preferred Stock or other capital stock ranking senior or junior to, or on a parity with, the Series A Adjustable Rate Nonconvertible Preferred Stock as to the payment of dividends or the distribution of assets upon liquidation, or both. Specifically, any stock of any class or classes of the Corporation shall be deemed to rank: i. prior to the shares of Series A Adjustable Rate Nonconvertible Preferred Stock, either as to dividends or upon liquidation, if the holders of such class or classes shall be entitled to the receipt of dividends or of amounts distributable upon dissolution, liquidation or winding up of the Corporation, as the case may be, in preference of or in priority to the holders of shares of Series A Adjustable Rate Nonconvertible Preferred Stock; ii. on a parity with shares of Series A Adjustable Rate Nonconvertible Preferred Stock, either as to dividends or upon liquidation, whether or not the dividend rates, dividend payment rates or redemption or liquidation prices per share or sinking fund provisions, if any, are different from those of the Series A Adjustable Rate Nonconvertible Preferred Stock, if the holders of such stock shall be entitled to the receipt of dividends or of amounts distributable upon dissolution, liquidation or winding up of the Corporation, as the case may be, in proportion to their respective dividend rates or liquidation prices, without preference or priority, one over the other, as between the holders of such stock and the holders of shares of Series A Adjustable Rate Nonconvertible Preferred Stock; and iii. junior to shares of Series A Adjustable Rate Nonconvertible Preferred Stock, either as to dividends or upon liquidation, if such class shall be Common Stock or if the holders of shares of Series A Adjustable Rate Nonconvertible Preferred Stock shall be entitled to receipt of dividends or of amounts distributable upon dissolution, liquidation or winding up of the Corporation, as the case may be, in preference of or priority to the holders of shares of such class or classes. SECTION 8. REDEMPTION OF SHARES. A. The shares of Series A Adjustable Rate Nonconvertible Preferred Stock shall be subject to the following redemption rights: i. At any time or from time to time following issuance, the Corporation, at its option, may redeem shares of Series A Adjustable Rate Nonconvertible Preferred Stock in whole or in part. The redemption price per share in such event shall be paid in cash and shall be equal to the greater of the following: (aa) $1,000, plus in each case an amount equal to accrued (whether or not declared) and unpaid dividends to the redemption date (out of funds legally available therefor); or (bb) the fair market value per share as of the end of the quarter preceding the quarter during which the redemption is to occur, as determined in good faith by the Board of Directors in accordance with a written appraisal which is prepared by an independent appraiser selected by the Board and which meets the requirements of applicable law. Upon the date of notice to the holder of shares of Series A Adjustable Rate Nonconvertible Preferred Stock of the Corporation's election to redeem shares, notwithstanding that any certificates for such shares have not been surrendered for cancellation, the shares of Series A Adjustable Rate Nonconvertible Preferred Stock represented thereby shall no longer be deemed outstanding, the rights to receive dividends thereon shall cease to accrue from and after the date of notice and all rights of the holder of shares so redeemed shall cease and terminate, excepting only the right to receive the redemption price therefor; and ii. The Corporation shall redeem shares of Series A Adjustable Rate Nonconvertible Preferred Stock which are beneficially owned by any of its employees, or employees of any of the Corporation's Affiliates, pursuant to the Corporation's or any of its Affiliates' employees pre-tax savings plans (the "401(k) Plans"), immediately prior to any distribution or withdrawal of shares of Series A Adjustable Rate Nonconvertible Preferred Stock from any of the 401(k) Plans for any reason. For purposes of this Section 8, an "Affiliate" of the Corporation means a "person" that directly, or through one or more intermediaries, controls, or is controlled by, or is under common control with, the Corporation, and a "person" means an individual, a corporation, a partnership, an associate, a joint-stock company, a business trust or an unincorporated organization. The redemption price per share in such event shall be paid in cash and shall be equal to the greater of the following: (aa) $1,000, plus in each case an amount equal to accrued (whether or not declared) and unpaid dividends to the redemption date (out of funds legally available therefor); or (bb) the fair market value per share as of the end of the quarter preceding the quarter during which the redemption is to occur, as determined in good faith by the Board of Directors in accordance with a written appraisal which is prepared by an independent appraiser selected by the Board and which meets the requirements of applicable law. Upon such attempted withdrawal, notwithstanding that any certificates for such shares have not been surrendered for cancellation, the shares of Series A Adjustable Rate Nonconvertible Preferred Stock represented thereby shall no longer be deemed outstanding, the rights to receive dividends thereon shall cease to accrue from and after the date of attempted withdrawal and all rights of the employee as a holder shall cease and terminate, excepting only the right to receive the redemption price therefor. In the event the Corporation is unable to redeem all such shares of Series A Adjustable Rate Nonconvertible Preferred Stock upon the occurrence of such an attempted withdrawal, the obligation of the Corporation to so redeem pursuant to this subparagraph (ii) shall continue and funds legally available therefor shall be applied for such purpose until such obligation is discharged. B. Anything herein to the contrary notwithstanding, in accordance with Section 180.0640 of the Wisconsin Business Corporation Law, the Corporation may not redeem shares of Series A Adjustable Rate Nonconvertible Preferred Stock pursuant to Section 8(A) (i) or (ii) if, after giving effect to the redemption, either of the following would occur: i. The Corporation would not be able to pay its debts as they become due in the usual course of business; or ii. The Corporation's total assets would be less than the sum of its total liabilities plus the amount that would be needed, if the Corporation were to be dissolved at the time of the redemption, to satisfy the preferential rights upon dissolution to shareholders whose preferential rights are superior to those of the holders of the Series A Adjustable Rate Nonconvertible Preferred Stock. SECTION 9. REACQUIRED SHARES. Any shares of Series A Adjustable Rate Nonconvertible Preferred Stock redeemed or otherwise acquired by the Corporation in any manner whatsoever shall be retained and canceled promptly after the redemption or acquisition thereof. All such shares shall upon their cancellation become authorized but unissued shares of Preferred Stock and may be reissued as part of a new series of Preferred Stock which may be created by resolutions of the Board of Directors. SECTION 10. NO SINKING FUND. The shares of Series A Adjustable Rate Nonconvertible Preferred Stock are not subject or entitled to the operation of a retirement or sinking fund. ARTICLE IV - REGISTERED OFFICE AND REGISTERED AGENT The registered office is 3100 AMS Boulevard, Green Bay, Wisconsin, 54313, and the registered agent at such address is Timothy J. Moore. ARTICLE V - BOARD OF DIRECTORS a. The number of directors of the Corporation shall be as is provided in the bylaws. The general powers, number, classification, and requirements for nomination of directors shall be as set forth in Articles II and III of the bylaws of the Corporation (and as such sections shall exist from time to time). The Board of Directors of the Corporation shall be divided into three (3) classes of not less than three (3) nor more than five (5) directors each. The term of office of the first class of directors shall expire at the first annual meeting after their initial election under the provisions of this Article V, the term of office of the second class shall expire at the second annual meeting after their initial election under the provisions of this Article V, and the term of office of the third class shall expire at the third annual meeting after their initial election under the provisions of this Article V. At each annual meeting after the initial classification of the Board of Directors under this Article V, the class of Directors whose term expires at the time of such election shall be elected to hold office until the third succeeding annual meeting. b. A director may be removed from office only by affirmative vote of at least 80% of the outstanding shares entitled to vote for the election of such director, taken at an annual meeting or a special meeting of shareholders called for that purpose, and any vacancy so created may be filled by the affirmative vote of at least 80% of such shares. c. Notwithstanding any other provision of these Restated Articles of Incorporation (and notwithstanding the fact that a lesser affirmative vote may be specified by law), the affirmative vote of shareholders possessing at least 75 % of the voting power of the then outstanding shares of all classes of stock of the Corporation generally possessing voting rights in elections of directors, considered for this purpose as one class, shall be required to amend, alter, change or repeal, or adopt any provision inconsistent with, the provisions of this Article V. d. Notwithstanding the foregoing and provisions in the bylaws of the Corporation, whenever the holders of any one or more series of Preferred Stock issued by the Corporation pursuant to Article III hereof have the right, voting separately as a class or by series, to elect directors at an annual or special meeting of shareholders, the election, term of office, filling of vacancies and other features of such directorships shall be governed by the terms of the series of Preferred Stock applicable thereto, and such directors so elected shall not be divided into classes unless expressly provided by the terms of the applicable series. ARTICLE VI - AMENDMENTS These articles may be amended in the manner provided by law at the time of adoption of the amendment. EX-3.2 3 EXHIBIT 3.2 BYLAWS OF AMERICAN MEDICAL SECURITY GROUP, INC. (AS AMENDED AND RESTATED SEPTEMBER 25, 1998) ARTICLE I. OFFICES SECTION 1. PRINCIPAL AND BUSINESS OFFICES. The Corporation may have such principal and other business offices, either within or without the State of Wisconsin, as the Board of Directors may designate or as the business of the Corporation may require from time to time. SECTION 2. REGISTERED OFFICE. The registered office of the Corporation required by the Wisconsin Business Corporation Law to be maintained in the State of Wisconsin may be, but need not be, identical to the principal office in the state of Wisconsin; and the address of the registered office may be changed from time to time by the Board of Directors or by the registered agent. The business office of the registered agent of the Corporation shall be identical to the registered office. ARTICLE II. SHAREHOLDERS SECTION 1. ANNUAL MEETING. The Annual Meeting of the Shareholders shall be held at the principal office of the Corporation in the City of Green Bay, Brown County, Wisconsin, unless the Board of Directors shall designate another location either within or without the State of Wisconsin. The Annual Meeting shall take place on the last Thursday of May each year or at such other time and date as may be fixed by or under the authority of the Board of Directors. If the day fixed for the Annual Meeting shall be a legal holiday in the State of Wisconsin, such meeting shall be held on the next succeeding business day. At such meeting the Shareholders shall elect directors and transact such other business as shall lawfully come before them. A. ELECTIONS AND OTHER BUSINESS. Nominations of persons for election to the Board of Directors of the Corporation and the proposal of business to be considered by the Shareholders may be made at the Annual Meeting: 1. Pursuant to the Corporation's notice of meeting; 2. By or at the direction of the Board of Directors; or 3. By any Shareholder of the Corporation who is a shareholder of record at the time of the giving of the notice provided for in these Bylaws and who is entitled to vote at the meeting and complies with the notice procedures set forth below. B. NOMINATIONS AND SUBMISSION OF BUSINESS MATTERS. For nominations or other business to be properly brought before an Annual Meeting by a Shareholder, the Shareholder must have given timely notice thereof in writing to the Secretary of the Corporation. Timely notice is that notice which is received by the Secretary at the Corporation's principal office not less than 60 days nor more than 90 days prior to the date on which the Corporation first mailed its proxy materials for the prior year's Annual Meeting, provided, however, that in the event the date of the Annual Meeting is advanced by more than 30 days or delayed by more than 60 days from the last Thursday in May, notice by the Shareholder, to be timely, must be received as provided above not earlier than the 90th day prior to the date of such Annual Meeting and not later than the close of business on the later of (x) the 60th day prior to such Annual Meeting, or (y) the 10th day on which public announcement of the date of such a meeting is first made. Such Shareholder's notice shall be signed by the Shareholder of record who intends to make the nomination or introduce the other business (or his or her duly authorized proxy or other representative), shall bear the date of signature of such Shareholder or representative, and shall set forth: 1. The name and address, as they appear on the Corporation's books, of such Shareholder and the beneficial owner(s), if any, on whose behalf the nomination or proposal is made; 2. The class and number of shares of the Corporation which are beneficially owned by such Shareholder or beneficial owner(s); 3. A representation that such Shareholder is a holder of record of shares entitled to vote at such meeting and intends to appear in person or by proxy at the meeting to make the nomination or introduce the other business specified in the notice; 4. In the case of any proposed nomination for election or reelection as a director: (a) the name and residence address of the nominee; (b) a description of all arrangements or understandings between such Shareholder or beneficial owner(s) and each nominee and any other person(s) (naming such person(s)) pursuant to which the nomination is to be made by the Shareholder; (c) such other information regarding each nominee proposed by such Shareholder as would be required to be disclosed in solicitations of proxies for elections of directors, or would be otherwise required to be disclosed, in each case pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended, including any information that would be required to be included in a proxy statement filed pursuant to Regulation 14A had the nominee been nominated by the Board of Directors; and (d) the written consent of each nominee to be named in a proxy statement and to serve as a director of the Corporation if so elected; and 5. In the case of any other business that such Shareholder proposes to bring before the meeting, (a) a brief description of the business desired to be brought before the meeting, and, if the business includes a proposal to amend these Bylaws, the language of the proposed amendment; (b) such Shareholder's and beneficial owner's(s') reasons for conducting such business at such time; and (c) any material interest in such business of such Shareholder or beneficial owners(s). Notwithstanding anything in the above paragraph to the contrary, in the event that the number of directors to be elected to the Board of Directors of this Corporation is increased and there is no public announcement naming all of the nominees for director or specifying the size of the increased Board of Directors made by the Corporation at least 70 days prior to the last Wednesday in May, a Shareholder's notice required by this Section shall also be considered timely, but only with respect to nominees for new positions created by such increase, if it is received by the Secretary at the Corporation's principal office not later than the close of business on the 10th day following the day on which such public announcement is first made by the Corporation. SECTION 2. SPECIAL MEETINGS. Special meetings of the Shareholders may be called by the Chairman of the Board, and shall be called by the Secretary on written request of a majority of members of the Board of Directors, or on written request of the holders of at least 10 percent of the Corporation's shares entitled to vote on a matter. The request shall be signed, dated and delivered to the Secretary describing one or more purposes for which the meeting is to be held. The Board of Directors shall set the place of the meeting. If no such designation is made, the place of the meeting shall be the principal business office of the Corporation in the State of Wisconsin, but any meeting may be adjourned to reconvene at any place designated by a vote of a majority of the shares represented thereat. A. ELECTIONS AND OTHER BUSINESS. Nominations of persons for election to the Board of Directors may be made at a Special Meeting at which directors are to be elected pursuant to such notice of meeting: 1. By or at the direction of the Board of Directors; or 2. By any Shareholder of the Corporation who: (a) is a Shareholder of record at the time of giving notice of the meeting, (b) is entitled to vote at the meeting, and (c) complies with the notice procedures set forth below. B. NOMINATIONS AND SUBMISSION OF BUSINESS MATTERS. Only such business as shall have been described in such notice shall be conducted at the Special Meeting. Any Shareholder desiring to nominate persons for election to the Board of Directors at a Special Meeting shall cause written notice to be received by the Secretary of the Corporation at its principal office not earlier than 90 days prior to such Special Meeting and not later than the close of business on the later of (x) the 60th day prior to such Special Meeting or (y) the 10th day following the day on which public announcement is first made of the date of such Special Meeting and of the nominees proposed by the Board of Directors to be elected at such meeting. Such written notice shall be signed by the Shareholder of record who intends to make the nomination (or his or her duly authorized proxy or other representative), shall bear the date of signature of such Shareholder or other representative, and shall set forth: 1. The name and address, as they appear on the Corporation's books, of such Shareholder and the beneficial owner(s), if any, on whose behalf the nomination is made; 2. The class and number of shares of the Corporation which are beneficially owned by such Shareholder or beneficial owner(s); 3. A representation that such Shareholder is a holder of record of shares of the Corporation entitled to vote at such meeting and intends to appear in person or by proxy at the meeting to make the nomination specified in the notice; 4. The name and residence address of the person(s) to be nominated; 5. A description of all arrangements or understandings between such Shareholder or beneficial owner(s) and each nominee and any other person(s) (naming such person(s)) pursuant to which the nomination is to be made by such Shareholder; 6. Such other information regarding each nominee proposed by such Shareholder as would be required to be disclosed in solicitations of proxies for elections of directors, or would be otherwise required to be disclosed, in each case pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended, including any information that would be required to be included in a proxy statement filed pursuant to Regulation 14A had the nominee been nominated by the Board of Directors; and 7. The written consent of each nominee to be named in a proxy statement and to serve as a director of the Corporation if so elected. SECTION 3. NOTICE OF ANNUAL OR SPECIAL MEETING. Notice may be communicated by telegraph, teletype, facsimile or other form of wire or wireless communication, or by mail or private carrier, and, if these forms of personal notice are impracticable, notice may be communicated by public announcement. Such notice stating the place, day and hour of the meeting and, in case of a special meeting, a description of each purpose for which the meeting is called, shall be communicated or sent not less than 10 days nor more than 60 days before the date of the meeting, by or at the direction of the Chairman of the Board or the Secretary, or other Officer or persons calling the meeting, to each shareholder of record entitled to vote at such meeting. Written notice by the Corporation to its shareholders is effective when mailed and may be addressed to the shareholder's address shown in the Corporation's current record of shareholders. SECTION 4. UNANIMOUS CONSENT WITHOUT MEETING. Any action that may be taken at a meeting of the Shareholders may be taken without a meeting if a consent in writing setting forth the action so taken shall be signed by all of the Shareholders entitled to vote with respect to the subject matter thereof. SECTION 5. CLOSING OF STOCK TRANSFER BOOKS OR FIXING OF RECORD DATE. A "Shareholder" of the Corporation shall mean the person in whose name shares are registered in the stock transfer books of the Corporation or the beneficial owner of shares to the extent of the rights granted by a nominee certificate on file with the Corporation. Such nominee certificates, if any, shall be reflected in the stock transfer books of the Corporation. For the purpose of determining Shareholders entitled to notice of or to vote at any meeting of Shareholders or any adjournment thereof, or Shareholders entitled to receive payment of any dividend, or in order to make a determination of Shareholders for any other proper purpose, the Board of Directors may provide that the stock transfer books shall be closed for a stated period but not to exceed, in any case, 70 days. If the stock transfer books shall be closed for the purpose of determining Shareholders entitled to the notice of or to vote at a meeting of Shareholders, such books shall be closed for at least 10 days immediately preceding such meeting. In lieu of closing the stock transfer books, the Board of Directors may fix in advance a date as the record date for any such determination of Shareholders, such date in any case to be not more than 70 days and, in case of a meeting of Shareholders, not less than 10 days prior to the date on which the particular action requiring such determination of Shareholders is to be taken. If the stock transfer books are not closed and no record date is fixed for the determination of Shareholders entitled to notice of or to vote at a meeting of Shareholders, or Shareholders entitled to receive payment of a dividend, the close of business on the date on which notice of the meeting is mailed or on the date on which the resolution of the Board of Directors declaring such dividend is adopted, as the case may be, shall be the record date for such determination of Shareholders. When a determination of Shareholders entitled to vote at any meeting of Shareholders has been made as provided in this Section, such determination shall be applied to any adjournment thereof except where the determination has been made through the closing of the stock transfer books and the stated period of closing has expired. SECTION 6. VOTING RECORD. The Secretary shall, before each meeting of Shareholders, make a complete list of the Shareholders entitled to vote at such meeting, or any adjournment thereof, with the address of and the number of shares held by each. Such record shall be produced and kept open at the time and place of the meeting and shall be subject to the inspection of any Shareholder during the whole time of the meeting for the purposes of the meeting. The original stock transfer books shall be prima facie evidence as to who are the Shareholders entitled to examine such record or transfer books or to vote at any meeting of Shareholders. Failure to comply with the requirements of this Section shall not affect the validity of any action taken at such meeting. SECTION 7. QUORUM. Shares entitled to vote as a separate voting group as defined in the Wisconsin Business Corporation Law may take action on a matter at a meeting only if a quorum of those shares exists with respect to that matter. Unless the Articles of Incorporation or the Wisconsin Business Corporation Law provide otherwise, a majority of the votes entitled to be cast on the matter by a voting group constitutes a quorum of that voting group for action on that matter. Once a share is represented for any purposes at a meeting, other than for the purpose of objecting to holding the meeting or transacting business at the meeting, it is considered present for purposes of determining whether a quorum exists for the remainder of the meeting and for any adjournment of that meeting unless a new record date is or must be set for that adjourned meeting. If a quorum exists, action on a matter by a voting group is approved if the votes cast within the voting group favoring the action exceed the votes cast opposing the action, unless the Articles of Incorporation or the Wisconsin Business Corporation Law require a greater number of affirmative votes. "Voting group" means any of the following: A. All shares of one or more classes or series that under the Articles of Incorporation or the Wisconsin Business Corporation Law are entitled to vote and be counted together collectively on a matter at a meeting of Shareholders. B. All shares that under the Articles of Incorporation or the Wisconsin Business Corporation Law are entitled to vote generally on a matter. Though less than a quorum of the outstanding shares are represented at a meeting, a majority of the shares so represented may adjourn the meeting from time to time without further notice. At such adjourned meeting at which a quorum shall be present or represented, any business may be transacted which might have been transacted at the meeting as originally notified. SECTION 8. PROXIES. At all meetings of Shareholders, a Shareholder entitled to vote may vote in person or by proxy. A Shareholder may appoint a proxy to vote or otherwise act for the Shareholder by signing an appointment form, either personally or by his or her attorney-in-fact. Such proxy appointment is effective when received by the Secretary of the Corporation before or at the time of the meeting. Unless otherwise provided in the appointment form of proxy, a proxy appointment may be revoked at any time before it is voted, either by written notice filed with the Secretary or the acting Secretary of the meeting or by oral notice given by the Shareholder to the presiding officer during the meeting. The presence of a Shareholder who has filed his or her proxy appointment shall not of itself constitute a revocation. No proxy appointment shall be valid after eleven months from the date of its execution, unless otherwise provided in the appointment form of proxy. The Board of Directors shall have the power and authority to make rules establishing presumptions as to the validity and sufficiency of proxy appointments. SECTION 9. VOTING OF SHARES. Each outstanding share shall be entitled to one vote upon each matter submitted to a vote at a meeting of Shareholders, except to the extent that the voting rights of the shares of any voting group or groups are enlarged, limited or denied by the Articles of Incorporation. SECTION 10. VOTING OF SHARES BY CERTAIN HOLDERS. A. OTHER CORPORATIONS. Shares standing in the name of another corporation may be voted either in person or by proxy, by the president of such corporation or any other officer appointed by such president. An appointment form of proxy executed by any principal officer of such other corporation or assistant thereto shall be conclusive evidence of the signer's authority to act, in the absence of express notice to this Corporation, given in writing to the Secretary of this Corporation, or the designation of some other person by the Board of Directors or by the Bylaws of such other corporation. B. LEGAL REPRESENTATIVES AND FIDUCIARIES. Shares held by an administrator, executor, guardian, conservator, trustee in bankruptcy, receiver or assignee for creditors may be voted by him, either in person or by proxy, without a transfer of such shares into his or her name, provided that there is filed with the Secretary before or at the time of meeting proper evidence of his or her incumbency and the number of shares held by him, either in person or by proxy. An appointment form of proxy executed by a fiduciary shall be conclusive evidence of the signer's authority to act, in the absence of express notice to this Corporation, given in writing to the Secretary, that such manner of voting is expressly prohibited or otherwise directed by the document creating the fiduciary relationship. C. PLEDGEES. A Shareholder whose shares are pledged shall be entitled to vote such shares until the shares have been transferred into the name of the pledgee, and thereafter the pledgee shall be entitled to vote the shares so transferred; provided, however, a pledgee shall be entitled to vote shares held of record by the pledgor if the Corporation receives acceptable evidence of the pledgee's authority to sign. D. TREASURY STOCK AND SUBSIDIARIES. Neither treasury shares, nor shares held by another corporation if a majority of the shares entitled to vote for the election of directors of such other corporation is held by this Corporation, shall be voted at any meeting or counted in determining the total number of outstanding shares entitled to vote, but shares of its own issue held by this Corporation in a fiduciary capacity, or held by such other corporation in a fiduciary capacity, may be voted and shall be counted in determining the total number of outstanding shares entitled to vote. E. MINORS. Shares held by a minor may be voted by such minor in person or by proxy and no such vote shall be subject to disaffirmance or avoidance, unless prior to such vote the Secretary of the Corporation has received written notice or has actual knowledge that such Shareholder is a minor. Shares held by a minor may be voted by a personal representative, administrator, executor, guardian or conservator representing the minor if evidence of such fiduciary status, acceptable to the Corporation, is presented. F. INCOMPETENTS AND SPENDTHRIFTS. Shares held by an incompetent or spendthrift may be voted by such incompetent or spendthrift in person or by proxy and no such vote shall be subject to disaffirmance or avoidance, unless prior to such vote the Secretary of the Corporation has actual knowledge that such Shareholder has been adjudicated an incompetent or spendthrift or actual knowledge of judicial proceedings for appointment of a guardian. Shares held by an incompetent or spendthrift may be voted by a personal representative, administrator, executor, guardian or conservator representing the minor if evidence of such fiduciary status, acceptable to the Corporation, is presented. G. JOINT TENANTS. Shares registered in the names of two or more individuals who are named in the registration as joint tenants may be voted in person or by proxy signed by any one or more of such individuals if either (i) no other such individual or his or her legal representative is present and claims the right to participate in the voting of such shares or prior to the vote files with the Secretary of the Corporation a contrary written voting authorization or direction or written denial of authority of the individual present or signing the appointment form of proxy proposed to be voted, or (ii) all such other individuals are deceased and the Secretary of the Corporation has no actual knowledge that the survivor has been adjudicated not to be the successor to the interests of those deceased. SECTION 11. CONDUCT OF MEETINGS. The Chairman of the Board, or in the Chairman's absence, the President, or, in their absence such Vice President as is designated by the Board of Directors, shall call the meeting to order and act as Chairperson of the meeting. Only persons nominated in accordance with the procedures set forth in Article II, Sections 1 and 2, shall be eligible to serve as Directors. Only such business as shall have been brought before a meeting in accordance with the procedures set forth in Article II, Sections 1 and 2, shall be eligible to be conducted. The Chairperson of the meeting shall have the power and duty to determine whether any nomination or any business proposed to be brought before the meeting was made in accordance with the procedures set forth in Article II, Sections 1 and 2, and, if any proposed nomination or business is not in compliance therewith, to declare that such defective proposal shall be disregarded. SECTION 12. PUBLIC ANNOUNCEMENT. For purposes of Article II, Sections 1 and 2, "public announcement" shall mean disclosure in a press release reported by the Dow Jones News Service, Associated Press, or comparable national news service or in a document publicly filed by the Corporation with the Securities and Exchange Commission pursuant to Section 13, 14, or 15(d) of the Securities Exchange Act of 1934, as amended. SECTION 13. INVALIDITY. The Chairperson, upon recommendation of the Secretary, may reject a vote, consent, waiver, or proxy appointment, if the Secretary or other officer or agent of the Corporation who is authorized to tabulate votes, acting in good faith, has reasonable doubt about the validity of the signature on it or about the signatory's authority to sign for the Shareholder. The Corporation and its officer or agent who accepts or rejects a vote, consent, waiver or proxy appointment in good faith and in accordance with the Wisconsin Business Corporation Law shall not be liable for damages to the Shareholders for consequences of the acceptance or rejection. SECTION 14. WAIVER OF NOTICE. A Shareholder may waive any notice required by the Wisconsin Business Corporation Law, the Articles of Incorporation, or these Bylaws before or after the date and time stated in the notice. The waiver shall be in writing and signed by the Shareholder entitled to the notice, contain the same information that would have been required in the notice under the Wisconsin Business Corporation Law (except that the time and place of meeting need not be stated), and be delivered to the Corporation for inclusion in the corporate records. A Shareholder's attendance at any Annual Meeting or Special Meeting, in person or by proxy, waives objection to all of the following: (a) lack of notice or defective notice of the meeting, unless the Shareholder promptly upon arrival or at the beginning of the meeting objects to holding, or transacting business at, the meeting; and (b) consideration of a particular matter at the meeting that is not within the purpose described in the meeting notice, unless the Shareholder objects to considering the matter when it is presented. ARTICLE III. BOARD OF DIRECTORS SECTION 1. NUMBER OF DIRECTORS. Within the limits established in the Articles of Incorporation, the number of Directors of the Corporation shall be such number as shall be determined by the Board of Directors from time to time. SECTION 2. TERM OF OFFICE. Elected Directors shall hold office for a term of three (3) years and until their successors are elected and qualified, except as otherwise provided in this Section or until their death, resignation or removal. The Board of Directors shall be divided into three (3) classes of three (3) or more directors each, with, as nearly as possible, an equal number of Directors in each class. The term of office of the first class of Directors shall expire at the first annual meeting after their initial election and when their successors are elected and qualified, the term of office of the second class shall expire at the second annual meeting after their initial election and when their successors are elected and qualified, and the terms of office of the third class shall expire at the third annual meeting after their initial election and when their successors are elected and qualified. At each annual meeting after the initial classification of the Board of Directors, the class of Directors whose term expires at the time of such election shall be elected to hold office until the third succeeding annual meeting and until their successors are elected and qualified. SECTION 3. NOMINATIONS. Nominations for the election of directors shall be made in accordance with the provisions of Article II, Sections 1 and 2 hereof, which requirements are hereby incorporated by reference in this Article III, Section 3. SECTION 4. REGULAR MEETINGS. A regular meeting of the Board of Directors shall be held without other notice than this Bylaw immediately after, and at the same place as, the Annual Meeting of Shareholders, for election of corporate officers and transaction of other business. The Board of Directors may provide by resolution the time and place for holding additional meetings without other notice than such resolution. SECTION 5. SPECIAL MEETINGS. Special Meetings of the Board of Directors shall be held whenever called by the Chairman of the Board or the Secretary upon written request of any three Directors. The Secretary shall give sufficient notice of such meeting, to be not less than two (2) days, in person or by mail or by telephone, telegraph, teletype, facsimile or other form of wire or wireless communication as to enable the Directors so notified to attend such meeting. The Chairman or Secretary who calls the meeting may fix any place, within or without the State of Wisconsin, as the place for holding any Special Meeting of the Board of Directors. SECTION 6. WAIVER OF NOTICE. Whenever any notice whatsoever is required to be given to any Director of the Corporation under the Articles of Incorporation or Bylaws or any provisions of law, a waiver thereof in writing, signed at any time, whether before or after the time of meeting, by the Director entitled to such notice, shall be deemed equivalent to the giving of such notice, and the Corporation shall retain copies of such waivers in its corporate records. A director's attendance at or participation in a meeting waives any required notice to him or her of the meeting unless the Director at the beginning of the meeting or promptly upon his or her arrival objects to holding the meeting and does not thereafter vote for or assent to action taken at the meeting. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the Board of Directors need be specified in the notice or waiver of notice of such meeting. SECTION 7. QUORUM. A majority of the Directors in office for the time being, and convened according to these Bylaws, shall constitute a quorum for the transaction of business, but a majority of the directors present or participating (though less than a quorum) may adjourn the meeting from time to time without further notice. SECTION 8. VACANCIES. Vacancies, including those created by an increase in the number of directors in the Board of Directors, may be filled by the remaining Directors. A Director elected to fill a vacancy shall serve for the unexpired term of his or her predecessor. In the absence of action by the remaining Directors, the Shareholders may fill such vacancy at a Special Meeting in accordance with the Articles of Incorporation, or by unanimous consent according to these Bylaws. SECTION 9. REMOVAL. The Shareholders may remove one or more directors, with or without cause, at a meeting called for that purpose, the notice of which reflects that purpose, in accordance with the Articles of Incorporation of this Corporation. SECTION 10. COMPENSATION. A director may receive such compensation for services as is determined by resolution of the Board irrespective of any personal interest of its members. A director also may serve the Corporation in any other capacity and receive compensation therefore. The Board of Directors also shall have authority to provide for or to delegate authority to an appropriate committee to provide for reasonable pensions, disability or death benefits and other benefits or payments, to Directors, Officers and employees and to their estates, families, dependents or beneficiaries on account of prior services rendered to the Corporation by such Directors, Officers and employees. SECTION 11. GENERAL POWERS. All corporate powers shall be exercised by or under the authority of, and the business and affairs of the Corporation shall be managed under the direction of, the Board of Directors, subject to any limitation set forth in these Bylaws or the Articles of Incorporation. SECTION 12. CONDUCT OF MEETINGS. The Chairman of the Board, or in the Chairman's absence the President, or in their absence such Vice President as is designated by the Board of Directors, shall call meetings of the Board of Directors to order and shall act as Chairperson of the meeting. The Secretary of the Corporation shall act as Secretary of all meetings of the Board of Directors, but in the absence of the Secretary, the presiding Officer may appoint an Assistant Secretary or any Director or other person present or participating to act as Secretary of the meeting. SECTION 13. MANNER OF ACTING. If a quorum is present or participating when a vote is taken, the affirmative vote of a majority of directors present or participating is the act of the Board of Directors or a committee of the Board of Directors, unless the Wisconsin Business Corporation Law or the Articles of Incorporation or these Bylaws require the vote of a greater number of directors. SECTION 14. PRESUMPTION OF ASSENT. A Director of the Corporation who is present at or participates in a meeting of the Board of Directors or a committee thereof which he or she is a member, at which action on any corporate matter is taken, shall be presumed to have assented to the action taken unless his or her dissent shall be entered in the minutes of the meeting or unless he or she shall file his or her written dissent to such action with the person acting as the Secretary of the meeting before the adjournment thereof or shall forward such dissent by registered mail to the Secretary of the Corporation immediately after the adjournment of the meeting. Such right to dissent shall not apply to a Director who voted in favor of such action. SECTION 15. UNANIMOUS CONSENT WITHOUT MEETING. Any action required or permitted by the Articles of Incorporation or Bylaws or any provision of law to be taken by the Board of Directors at a meeting or by resolution may be taken without a meeting if a consent in writing, setting forth the action so taken, shall be signed by all of the Directors then in office. SECTION 16. MEETING BY TELEPHONE OR BY OTHER COMMUNICATION TECHNOLOGY. Meetings of the Board of Directors or committees may be conducted by telephone or by other communication technology in accordance with Section 180.0820 of the Wisconsin Business Corporation Law. SECTION 17. COMMITTEES. A. REGULAR COMMITTEES. 1. GENERAL DESCRIPTION. In order to facilitate the work of the Board of Directors of this Corporation, the following regular committees shall be elected from the membership of the Board of Directors at the regular meeting held in May of each year (or at such other time as the Board of Directors may determine): Executive Committee Finance Committee Compensation Committee Audit Committee Each committee shall consist of such number of members, not less than three (3), as shall be determined by the Board of Directors. The Chairman of the Board of Directors, and in the Chairman's absence the President, and in their absence, such Vice President as is designated by the Board of Directors, shall submit nominations for such committee memberships. Committee members shall hold office until the next board meeting at which Committee elections are conducted in accordance with these Bylaws, and until their successors are elected and qualified. Each Regular Committee of the Board of Directors may exercise the authority of the full Board within the scope of the duties and powers delegated to it in these Bylaws, except that no committee of this Board shall do any of the following: (a) Authorize distributions; (b) Approve or propose to shareholders action that the Wisconsin Business Corporation Law requires be approved by shareholders; (c) Fill vacancies on the board of directors or, except as provided herein, on any of its committees; (d) Amend the Articles of Incorporation; (e) Adopt, amend or repeal the Bylaws; (f) Approve a plan of merger not requiring shareholder approval; (g) Authorize or approve reacquisition of shares, except according to a formula or method prescribed by the full Board; or (h) Authorize or approve the issuance or sale or contract for sale of shares or determine the designation and relative rights, preferences and limitations of a class or series of shares, except that the Board of Directors may authorize a committee or a senior executive officer of the Corporation to do so within limits prescribed by the Board of Directors. 2. THE EXECUTIVE COMMITTEE. When the Board of Directors is not in session, the Executive Committee shall have and may exercise all of the powers of the full Board solely with regard to those matters which are within the scope of the Executive Committee's designated duties, as provided herein. The Chairman of the Board of Directors shall be a member of the Executive Committee. The Executive Committee shall: (a) Approve long range corporate and strategic plans, including plans for any major borrowing or capital raising programs; (b) Advise and consult with management on corporate policies regarding reserving, reinsurance and other liabilities; (c) Approve the annual operating plan; (d) Approve major changes in policy affecting new services and programs; and (e) Carry out such special assignments as the Board of Directors may, from time to time, give to the Executive Committee. 3. THE FINANCE COMMITTEE. When the Board of Directors is not in session, the Finance Committee shall have and may exercise all of the powers of the full Board solely with regard to those matters which are within the scope of the Finance Committee's designated duties, as provided herein. The Chairman of the Board of Directors shall be a member of the Finance Committee. The Finance Committee shall: (a) Approve investment policies and plans; (b) Authorize and approve the investment of funds of the Corporation; (c) Consult with management regarding real estate, accounts receivable and other assets; (d) Determine the amount and types of all insurance that should be carried by this Corporation and authorize the purchase thereof; (e) Advise and consult with the operating management in the selection of the carriers of such insurance; (f) Advise and consult with management on corporate tax policy; and (g) Carry out such special assignments as the Board of Directors may, from time to time, give to the Finance Committee. 4. THE COMPENSATION COMMITTEE. When the Board of Directors is not in session, the Compensation Committee shall have and may exercise all of the powers of the full Board solely with regard to those matters which are within the scope of the Compensation Committee's designated duties, as provided herein. The Compensation Committee shall: (a) Evaluate Senior Management (corporate officers) performance against objectives; (b) Approve Senior Management development programs; (c) Approve the corporate compensation policy, including making recommendations and decisions on any bonuses or incentive plans, and establish the annual compensation for the Chairman of the Board of Directors; (d) Act as the Nominating Committee for officers and directors and make recommendations to the Board for types, methods and levels of directors' compensation; (e) Administer the compensation plans for the officers, directors, and key employees; and (f) Carry out such special assignments as the Board of Directors may, from time to time, give to the Compensation Committee. 5. THE AUDIT COMMITTEE. When the Board of Directors is not in session, the Audit Committee shall have and may exercise all of the powers of the full Board solely with regard to those matters which are within the scope of the Audit Committee's designated duties, as provided herein. The Audit Committee shall: (a) Select and engage the independent certified public accountants to audit the books, records and financial transactions of the Corporation; (b) Review with the independent accountants the scope of their examination, with particular emphasis on the areas to which either the committee or the independent accountants believe special attention should be directed. The Audit Committee may have the independent accountants perform such additional procedures as the Committee or the auditors deem necessary; (c) Review and approve the annual plan for the financial audit (internal audit) department; (d) Review with the independent accountants the financial statements and auditors' reports thereon; (e) Review the management letter of the independent accountants, and audit reports by the Corporation's internal auditors to assure that appropriate action has been taken by Senior Management as to each item recommended; (f) Encourage the independent accountants and the internal auditors to communicate directly with the Chairman of the Board and President or, if necessary, the Chairman of the Audit Committee whenever any significant recommendation has not been satisfactorily resolved at the Senior Management level; (g) Review the Conflict of Interest statements to assure the Board of Directors that any conflict of interest has been duly reported to and reviewed by Audit Committee; (h) Review and approve all related party transactions; and (i) Carry out such special assignments as the Board of Directors may, from time to time, give to the Audit Committee. B. SPECIAL COMMITTEES. In addition to the foregoing Regular Committees, the Board of Directors may, from time to time, establish Special Committees and specify the composition, functions and authority of any such Special Committee. C. VACANCIES; TEMPORARY APPOINTMENTS. When, for any cause a vacancy occurs in any Regular Committee, the remaining committee members, by majority vote, may fill such vacancy by a temporary appointment of a director on the Board not on the subject committee to fill the vacancy until the next Board Meeting, at which time the full Board shall fill the vacancy. D. COMMITTEE MINUTES AND REPORTS. All of the foregoing committees shall keep minutes and records of all of their meetings and activities and shall report the same to the Board of Directors at its next regular meeting. Such minutes and records shall be available for inspection by the Directors at all times. ARTICLE IV. OFFICERS SECTION 1. GENERALLY. The principal Officers of the Corporation shall be a Chairman of the Board (Chief Executive Officer), a President, one or more Vice Presidents, a Secretary and a Treasurer. The Board of Directors shall elect the principal officers annually at the Annual Meeting. All officers shall hold office for a period of one year and until their successors are duly elected and qualified, or until their prior death, resignation or removal. SECTION 2. REMOVAL. Any officer or agent may be removed by the Board of Directors with or without cause whenever in its judgment the best interests of the Corporation would be served thereby, but such removal shall be without prejudice to the contract rights, if any, of the person so removed. Election or appointment shall not of itself create contract rights. SECTION 3. VACANCIES. A vacancy in any principal office because of death, resignation, removal, or otherwise, shall be filled by the Board of Directors for the unexpired portion of the term. The Board of Directors may, from time to time, omit to elect one or more officers, or may omit to fill a vacancy, and in such case, the designated duties of such officer, unless otherwise provided in these Bylaws, shall be discharged by the Chairman of the Board or such other officers as he or she may designate. SECTION 4. CHAIRMAN OF THE BOARD. The Chairman of the Board, who shall also be the Chief Executive Officer, shall preside at all meetings of the Shareholders and of the Directors and shall do and perform such other duties as from time to time may be assigned to that office by the Board of Directors. SECTION 5. PRESIDENT. The President shall have general supervision of the business and affairs of the Corporation. The President may sign and execute all authorized bonds, notes, checks, contracts, or other obligations in the name of the Corporation. The President shall perform such other duties as from time to time may be assigned to him or her by the Board of Directors. SECTION 6. VICE PRESIDENTS. Should the Chairman or the President be absent or unable to act, the Board of Directors shall designate a Vice President or other Officer to discharge the duties of the vacant office with the same power and authority as is vested in that office. The Vice Presidents shall perform such other duties as from time to time may be assigned to them by the President or the Board of Directors. SECTION 7. SECRETARY. The Secretary shall keep a record of the minutes of the meetings of the Shareholders and of the Board of Directors. He or she shall countersign all instruments and documents executed by the Corporation; affix to instruments and documents the seal of the Corporation; keep in books therefore the transactions of the Corporation; see that all notices are duly given in accordance with the provisions of these Bylaws or as required by law; and perform such other duties as usually are incident to such office or may be assigned by the Chairman of the Board, the President or the Board of Directors. SECTION 8. TREASURER. The Treasurer, subject to the control of the Board of Directors, shall collect, receive, and safely keep all monies, funds and securities of the Corporation, and attend to all its pecuniary affairs. He or she shall keep full and complete accounts and records of all its transactions, of sums owing to or by the Corporation, and all rents and profits in its behalf. SECTION 9. ASSISTANTS AND ACTING OFFICERS. The Chairman of the Board, the President and the Board of Directors shall have the power to appoint any person to act as assistant to any officer, or as agent for the Corporation in the officer's stead, or to perform the duties of such officer whenever for any reason it is impracticable for the officer to act personally, and the assistant or acting officer or other agent so appointed by the Chairman of the Board, the President or the Board of Directors shall have the power to perform all the duties of the office to which he or she is so appointed to be assistant, or as to which he or she is so appointed to act, except as such power otherwise may be defined or restricted by the Chairman of the Board, the President or the Board of Directors. SECTION 10. SALARIES. The salaries of the principal officers shall be fixed from time to time by the Board of Directors or by a duly authorized committee thereof, and no officer shall be prevented from receiving such salary by reason of the fact that he or she is also a Director of the Corporation. ARTICLE V. FUNDS OF THE CORPORATION SECTION 1. FUNDS. All funds of the Corporation shall be deposited or invested in such depositories or in such securities as may be authorized from time to time by the Board of Directors or appropriate committee under authorization of the Board of Directors. SECTION 2. NAME. All investments and deposits of funds of the Corporation shall be made and held in its corporate name, except that securities kept under a custodial agreement or trust arrangement with a bank or banking and trust company may be issued in the name of a nominee of such bank or banking and trust company and except that securities may be acquired and held in bearer form. SECTION 3. LOANS. All loans contracted on behalf of the Corporation and all evidences of indebtedness that are issued in the name of the Corporation shall be under the authority of a resolution of the Board of Directors. Such authorization may be general or specific. SECTION 4. CONTRACTS. The Board of Directors may authorize one or more officers, or agents, to enter into any contract or execute and deliver any instrument in the name of and on behalf of the Corporation. Such authorization may be general or specific. In the absence of other designation, all deeds, mortgages and instruments of assignment or pledge made by the Corporation shall be executed in the name of the Corporation by the Chairman of the Board, the President or one of the Vice Presidents and by the Secretary or Treasurer; the Secretary, when necessary or required, shall affix the corporate seal thereto; and when so executed no other party to such instrument or any third party shall be required to make any inquiry into the authority of the signing officer or officers. SECTION 5. DISBURSEMENTS. All monies of the Corporation shall be disbursed by check, draft, or written order only, and all checks and orders for the payment of money shall be signed by such Officer or Officers as may be designated by the Board of Directors. The Officers and employees of the Corporation handling funds and securities of the corporation shall give surety bonds in such sums as the Board of Directors or appropriate committee may require. SECTION 6. PROHIBITED TRANSACTIONS. No directors or Officer of the Corporation shall borrow money from the Corporation, or receive any compensation for selling, aiding in the sale, or negotiating for the sale of any property belonging to the Corporation, or for negotiating any loan for or by the Corporation. SECTION 7. VOTING OF SECURITIES OWNED BY THIS CORPORATION. Subject always to the specific directions of the Board of Directors: A. Any shares or other securities issued by any other corporation and owned or controlled by this Corporation may be voted at any meeting of security holders of such other corporation by the Chairman of the Board, the President or in their absence any Vice President of this Corporation who may be present and designated by the Board of Directors; and B. Whenever, in the judgment of the Chairman of the Board, the President, or in their absence, a designated Vice President, it is desirable for this Corporation to execute a proxy or written consent in respect to any shares or other securities issued by any other corporation and owned by this Corporation, such proxy or consent shall be executed in the name of this Corporation by the Chairman of the Board, the President, or a designated Vice President of this Corporation in the order as provided in clause A. of this Section, without necessity of any authorization by the Board of Directors, affixation of corporate seal or countersignature or attestation by another officer. Any person or persons designated in the manner above stated as the proxy or proxies of this Corporation shall have full right, power and authority to vote the shares or other securities issued by such other corporation and owned by this Corporation the same as such shares or other securities might be voted by this Corporation. ARTICLE VI. CERTIFICATES FOR SHARES AND THEIR TRANSFER SECTION 1. CERTIFICATES FOR SHARES. Certificates representing shares of the Corporation shall be in such form, consistent with law, as shall be determined by the Board of Directors. Such Certificates shall be signed by the Chairman of the Board, the President, or a Vice President, and the Secretary, or by another officer designated by the Chairman of the Board, the President or the Board of Directors. All certificates for shares shall be consecutively numbered or otherwise identified. The name and address of the person to whom the shares represented thereby are issued, with the number of shares and date of issue, shall be entered on the stock transfer books of the Corporation. All certificates surrendered to the Corporation for transfer shall be canceled and no new certificate shall be issued until the former certificate for a like number of shares shall have been surrendered and canceled, except as provided in Section 6 of this Article VI. SECTION 2. FACSIMILE SIGNATURES AND SEAL. The seal of the Corporation on any certificates for shares may be a facsimile. The signature of the Chairman of the Board, the President or other authorized officer upon a certificate may be a facsimile if the certificate is manually signed on behalf of a transfer agent, or a registrar, other than the Corporation itself or an employee of the Corporation. SECTION 3. SIGNATURE BY FORMER OFFICER. In case any officer who has signed or whose facsimile signature has been placed upon any certificate for shares shall have ceased to be such officer before such certificate is issued, it may be issued by the Corporation with the same effect as if he or she were such officer at the date of its issue. SECTION 4. TRANSFER OF SHARES. Prior to due presentment of a certificate for shares for registration of transfer, the Corporation may treat the shareholder of such shares as the person exclusively entitled to vote, to receive notifications and otherwise to have and exercise all the rights and powers of an owner. Where a certificate for shares is presented to the Corporation with a request to register for transfer, the Corporation shall not be liable to the owner or any other person suffering loss as a result of such registration of transfer if: A. There were on or with the certificate the necessary endorsements; and B. The Corporation had no duty to inquire into adverse claims or has discharged any such duty. The Corporation may require reasonable assurance that said endorsements are genuine and effective and in compliance with such other regulations as may be prescribed by or under the authority of the Board of Directors: SECTION 5. RESTRICTIONS ON TRANSFER. The face or reverse side of each certificate representing shares shall bear a conspicuous notation of any restriction imposed by the Corporation upon the transfer of such shares. SECTION 6. LOST, DESTROYED OR STOLEN CERTIFICATES. Where the owner claims that his or her certificate for shares has been lost, destroyed or wrongfully taken, a new certificate shall be issued in place thereof if the owner: A. So requests before the Corporation has notice that such shares have been acquired by a bona fide purchaser; B. Files with the Corporation a sufficient indemnity bond; and C. Satisfies such other reasonable requirements as may be prescribed by or under the authority of the Board of Directors. SECTION 7. CONSIDERATION FOR SHARES. The shares of the Corporation may be issued for such consideration as shall be fixed from time to time by the Board of Directors, provided that any shares having a par value shall not be issued for a consideration less than the par value thereof. The consideration to be received for shares may consist of any tangible or intangible property or benefit to the Corporation, including cash, promissory notes, services performed, contracts for services to be performed or other securities of the Corporation. When the Corporation receives the consideration for which the Board of Directors authorized the issuance of shares, the shares issued for that consideration are fully paid and nonassessable, except as provided by Section 180.0622 of the Wisconsin Business Corporation Law which may require further assessment for unpaid wages to employees under certain circumstances. The Corporation may place in escrow shares issued for a contract for future services or benefits or a promissory note, or make other arrangements to restrict the transfer of the shares, and may credit distributions in respect of the shares against their purchase price, until the services are performed, the benefits are received or the note is paid. If the services are not performed, the benefits are not received or the note is not paid, the Corporation may cancel, in whole or in part, the shares escrowed or restricted and the distributions credited. SECTION 8. UNCERTIFICATED SHARES. In accordance with Section 180.0626 of the Wisconsin Business Corporation Law, the Board of Directors may issue any shares of any of its classes or series without certificates. The authorization does not affect shares already represented by certificates until the certificates are surrendered to the Corporation. Within a reasonable time after the issuance or transfer of shares without certificates, the Corporation shall send the Shareholder a written statement of the information required on share certificates by Sections 180.0625 and 180.0627, if applicable, of the Wisconsin Business Corporation Law, and by the Bylaws of the Corporation. The Corporation shall maintain at its offices, or at the office of its transfer agent, an original or duplicate stock transfer book containing the names and addresses of all Shareholders and the number of shares held by each Shareholder. If the shares are uncertificated, the Corporation shall be entitled to recognize the exclusive right of a person registered on its books as such, as the owner of shares for all purposes, and shall not be bound to recognize any equitable or other claim to or interest in such shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise provided by the laws of the State of Wisconsin. SECTION 9. TRANSFER AGENT AND REGISTRAR. The Corporation may maintain one or more transfer offices or agencies, each in charge of a transfer agent designated by the Board of Directors, where the shares of stock of the Corporation shall be transferable. The Corporation also may maintain one or more registry offices, each in charge of a registrar designated by the Board of Directors, where such shares of stock shall be registered. The same person or entity may be both a transfer agent and registrar. SECTION 10. STOCK REGULATIONS. The Board of Directors shall have the power and authority to make all such further rules and regulations not inconsistent with the laws of the State of Wisconsin as it may deem expedient concerning the issue, transfer and registration of certificates representing shares of the Corporation. ARTICLE VII. INDEMNIFICATION AND LIABILITY OF OFFICERS AND DIRECTORS SECTION 1. INDEMNIFICATION. A. Any person, or such person's estate or personal representative, made or threatened with being made a party to any action, suit, arbitration, or proceeding (civil, criminal, administrative, or investigative, whether formal or informal), which involves foreign, federal, state or local law, by reason of the fact that such person is or was a Director or Officer of this Corporation or of any corporation or other enterprise for which he or she served at this Corporation's request as a director, officer, partner, trustee, member of any decision-making committee, employee, or agent, shall be indemnified by this Corporation for all reasonable expenses incurred in the proceeding to the extent he or she has been successful on the merits or otherwise. B. In cases where a person described in subsection A. is not successful on the merits or otherwise, this Corporation shall indemnify such person against liability and reasonable expenses incurred by him or her in any such proceeding, unless liability was incurred because the person breached or failed to perform a duty he or she owed to the Corporation and the breach or failure to perform constituted any of the following: 1. A willful failure to deal fairly with the Corporation or its Shareholders in connection with a matter in which the Director or Officer had a material conflict of interest; 2. A violation of criminal law, unless the Director or Officer had reasonable cause to believe his or her conduct was lawful or no reasonable cause to believe his or her conduct was unlawful; 3. A transaction from which the Director or Officer derived an improper personal profit; or 4. Willful misconduct. C. The determination whether indemnification shall be required under subsection B. shall be made, at the selection of the Director or Officer, according to one of the following methods: 1. By a majority vote of a quorum of the Board of Directors consisting of directors not at the time parties to the same or related proceedings. If a quorum of disinterested directors cannot be obtained, by majority vote of a committee duly appointed by the Board of Directors and consisting solely of two or more directors not at the time parties to the same or related proceedings. Directors who are parties to the same or related proceedings may participate in the designation of members of the committee; 2. By independent legal counsel selected by a quorum of the Board of Directors or its committee in the manner prescribed in sub. 1. or, if unable to obtain such a quorum or committee, by a majority vote of the full Board of Directors, including Directors who are parties to the same or related proceedings; or 3. By the court conducting the proceedings or another court of competent jurisdiction, either on application by the Director or Officer for an initial determination or on application for review of an adverse determination under 1. or 2. above. D. The termination of a proceeding by judgment, order, settlement or conviction, or upon a plea of no contest or an equivalent plea, does not, by itself, create a presumption that indemnification of the Director or Officer is not required. E. A Director or Officer who seeks indemnification under this Section shall make a written request to the Corporation. F. Upon written request by a Director or Officer who is a party to a proceeding described in subsection A., this Corporation may pay or reimburse his or her reasonable expenses as incurred if the Director or Officer provides the Corporation with all of the following: 1. A written affirmation of his or her good faith belief that he or she has not breached or failed to perform his or her duties to the Corporation; and 2. A written undertaking, executed personally or on his or her behalf, to repay the allowance, and reasonable interest thereon, to the extent that it is ultimately determined under subsections C. 1. or C. 2., above, that indemnification is not required or to the extent that indemnification is not ordered by a court under subsection C. 3., above. The undertaking under this subsection shall be an unlimited general obligation of the Director or Officer, may be accepted without reference to his or her ability to repay the allowance, and may be secured or unsecured. G. This Article VII, Section 1 subsections A.-F., shall also apply where a person, or such person's estate or personal representative, is made or threatened with being made a party to any proceeding described in subsection A. by reason of the fact that such person is or was an Employee of the Corporation, except that in addition to the categories of conduct set forth in subsection B. in relation to which the Corporation has no duty to indemnify, the Corporation also shall have no duty to indemnify the Employee against liability and reasonable expenses incurred by him or her in any such proceeding if liability was incurred because the person breached or failed to perform a duty he or she owed to the Corporation and the breach or failure to perform constituted material negligence or material misconduct in performance of the Employee's duties to the Corporation. H. Unless a Director or Officer of this Corporation has knowledge that makes reliance unwarranted, a Director or Officer, in discharging his or her duties to the Corporation, may rely on information, opinions, reports or statements, any of which may be written or oral, formal or informal, including financial statements and other financial data, if prepared or presented by any of the following: 1. An officer or employee of the Corporation whom the Director or Officer believes in good faith to be reliable and competent in the matters presented; 2. Legal counsel, public accountants or other persons as to matters the Director or Officer believes in good faith are within the person's professional or expert competence; or 3. In the case of reliance by a Director, a committee of the Board of Directors of which the Director is not a member if the Director believes in good faith that the committee merits confidence. This subsection does not apply to the liability of a Director for improper declaration of dividends, distribution of assets, corporate purchase of its own shares, or distribution of assets to shareholders during liquidation, or for corporate loans made to an Officer or Director, under Wisconsin Business Corporation Law Section 180.0832(1), or the reliance of a Director on financial information represented as correct by corporate officers or independent or certified public accountants under Wisconsin Business Corporation Law Section 180.0826. I. In discharging his or her duties to the Corporation and in determining what he or she believes to be in the best interest of the Corporation, a Director or Officer may, in addition to considering the effects of any action on Shareholders, consider the following: 1. The effects of the action on employees, suppliers and customers of the Corporation; 2. The effects of the action on communities in which the Corporation operates; or 3. Any other factor the Director or Officer considers pertinent. SECTION 2. LIMITED LIABILITY OF DIRECTORS AND OFFICERS TO CORPORATION AND SHAREHOLDERS. A. Except as provided in subsection B. of this Section 2, a Director or Officer is not liable to this Corporation, its Shareholders, or any person asserting rights on behalf of the Corporation or its Shareholders, for damages, settlements, fees, fines, penalties or other monetary liabilities arising from a breach of, or failure to perform, any duty resulting solely from his or her status as a Director, unless the person asserting liability proves that the breach or failure to perform constitutes any of the following: 1. A willful failure to deal with the Corporation or its Shareholders in connection with a matter in which the Director had a material conflict of interest; 2. A violation of criminal law, unless the Director or Officer had reasonable cause to believe his or her conduct was lawful or no reasonable cause to believe his or her conduct was unlawful; 3. A transaction from which the Director derived an improper personal profit; or 4. Willful misconduct. B. This Section 2 does not apply to the liability of a Director or Officer for improper declaration of dividends, distribution of assets, corporate purchase of its own shares, or distribution of assets to shareholders during liquidation, or for corporate loans made to an Officer or Director, under Wisconsin Business Corporation Law Section 180.0832(1). SECTION 3. CODE OF ETHICS. A. Directors, Officers and management employees shall exercise the utmost good faith in all transactions touching upon their duties to the Corporation and its property. In their dealings with and on behalf of the Corporation they are held to a strict rule of honesty and fair dealing between themselves and the Corporation. They shall not use their positions, or knowledge gained therefrom, so that a conflict may arise between the Corporation's interest and that of the individual. A "conflict of interest" transaction means a transaction with the Corporation in which a Director of the Corporation has a direct or indirect interest. The circumstances in which a Director of the Corporation has an indirect interest in a transaction include but are not limited to a transaction under any of the following circumstances: 1. Another entity in which the Director has a material financial interest or in which the Director is a general partner is a party to the transaction; or 2. Another entity of which the Director is a director, officer or trustee is a party to the transaction and the transaction is, or because of its significance to the Corporation should be, considered material by the Board of Directors of the Corporation. A conflict of interest transaction is not voidable by the Corporation solely because of the Director's interest in the transaction if any of the circumstances set forth in Section 180.0831 of the Wisconsin Business Corporation Law are true or occur. B. All acts of Directors, Officers and management employees shall be for the sole benefit of the Corporation in any dealing which may affect it adversely. C. No Director, Officer or management employee shall accept any favor which might influence his official act or which might reflect upon his business conduct. D. Officers and management employees shall avoid outside employment or activity which involves obligations which may compete with or be in conflict with the interests of the Corporation. E. A full disclosure of all facts of any transaction which is subject to any doubt shall be made to the Chairman of the Board or the President of the Corporation before consummating the same. F. A copy of this Article VII, Section 3, annually shall be delivered to all Directors, Officers and management employees, each of whom shall acknowledge receipt thereof to the Secretary of the Corporation. ARTICLE VIII. CORPORATE DIVIDENDS The Board of Directors may from time to time declare dividends on its outstanding shares in the manner and upon the terms and conditions provided by law and its Articles of Incorporation. ARTICLE IX. CORPORATE SEAL The Board of Directors may provide a corporate seal which may be circular in form and may have inscribed thereon the name of the Corporation and the state of incorporation and the words "Corporate Seal." ARTICLE X. FISCAL YEAR The fiscal year shall be set by the Board of Directors. ARTICLE XI. AMENDMENTS SECTION 1. BY SHAREHOLDERS. These Bylaws may be altered, amended or repealed and new Bylaws may be adopted by the Shareholders by affirmative vote of not less than a majority of the shares present or represented at an annual or special meeting of the Shareholders at which a quorum is in attendance. SECTION 2. BY DIRECTORS. These Bylaws may also be altered, amended or repealed and new Bylaws may be adopted by the Board of Directors by affirmative vote of a majority of the number of Directors present at or participating in any meeting at which a quorum is in attendance; but no bylaw adopted by the Shareholders shall be amended or repealed by the Board of Directors if the bylaw so adopted so provides. SECTION 3. IMPLIED AMENDMENTS. Any action taken or authorized by the Shareholders or by the Board of Directors, which would be inconsistent with the Bylaws then in effect but is taken or authorized by affirmative vote of not less than the number of shares or the number of Directors required to amend the Bylaws so that the Bylaws would be consistent with such action, shall be given the same effect as though the Bylaws had been temporarily amended or suspended so far, but only so far, as is necessary to permit the specific action so taken or authorized. EX-99.2 4 EXHIBIT 99.2 [Letterhead] NEWS RELEASE For Immediate Release For more information contact: Cliff Bowers Vice-President Corporate Communications (920)661-2766 NEW YORK STOCK EXCHANGE TRADING BEGINS ON SHARES OF AMERICAN MEDICAL SECURITY GROUP GREEN BAY, Wis. -- Sept. 29, 1998 -- Shares of the reconstituted American Medical Security Group, Inc. (ticker AMZ), were officially traded for the first time yesterday on the New York Stock Exchange. The beginning of trading in American Medical Security Group (AMSG) common shares follows the completion last week of the company's spinoff of United Wisconsin Services, Inc. AMS BACKGROUND The continuing operations of AMSG consist of the individual and small employer group health business of American Medical Security Holdings, Inc., and its operating subsidiaries (AMS). AMS health care benefit policies are sold by independent agents in 33 states and the District of Columbia. Approximately 578,000 individuals in the U.S. are covered by the company's policies. The Green Bay, Wis.-based company specializes in providing cost-effective managed care for the small business market. AMS, with 1997 revenues of approximately $1 billion, offers a full complement of health care services: medical, dental, prescription drug, life insurance and disability. - Ad One - According to the U.S. Department of Census, the small business market where AMS has significant expertise is the fastest-growing segment of the U.S. economy. The segment currently accounts for 21 million businesses, 68 percent of all new U.S. jobs and 57 percent of the nation's private workforce. Most AMS health care benefits are provided through PPO (Preferred Provider Organization) plans. PPO plans differ from HMO plans in that they often provide a wider choice of health professionals, fewer benefit restrictions and increased access to specialists at a somewhat higher price than HMOs. Medical plan enrollment has grown faster in PPOs than in HMOs in recent years. At the end of 1997, 35 percent of the nation's employees was covered by PPO health plans and 30 percent was enrolled in HMO plans. In addition to its nearly 578,000 medical members, AMS has approximately 411,000 dental members 2,000 employees 70 U.S. sales offices 38,000 independent agents AMS owns two provider networks through which nearly a quarter of its business is conducted. It also leases networks to ensure cost efficient health care choices for its customers. Other alliances include: 7,000 hospitals 400,000 medical providers 50,000 pharmacies AMS HISTORY AMS was founded in 1988 as a joint venture between United Wisconsin Services and two health care industry entrepreneurs. AMS grew rapidly until 1995 and 1996 when it experienced significant operating losses. In 1996, UWS exercised its option to purchase the remainder of AMS. At that time, Samuel V. Miller was named President & Chief Operating Officer. - Ad Two - Miller initiated a far-reaching turnaround strategy that returned AMS to profitability in 1997. Improved health-loss and health-expense ratios, a restructured sales and marketing strategy, and a new senior management team were central components of the turnaround. CURRENT AMS MANAGEMENT SAMUEL V. MILLER -- CHAIRMAN, PRESIDENT & CHIEF EXECUTIVE OFFICER Prior to joining AMS, Miller was a member of the Executive Staff Planning Group with Travelers Group in New York. In that capacity he served as Chairman and Group Chief Executive of National Benefit Life Insurance Company and Primerica Financial Services Ltd. of Canada. He was also one of the builders of Employers Health, now the small group business of Humana, where he worked as Senior Vice President of Sales & Marketing. He later took on additional responsibility as Chief Operating Officer and led the company's sale to American Express in 1982. Miller moved to American Express Life in 1984 and presided over the building of the largest long-term-care business in America. He was also a member of the Senior Management Committee at American Express in New York and was President & CEO of American Express Life. Within the first 12 months of becoming President & CEO of AMS, Miller assembled a new team of executive officers with significant professional and industry experience. Those executives include Edward R. Skoldberg, Executive Vice President & Chief Operating Officer; Gary D. Guengerich, Executive Vice President & Chief Financial Officer; and Timothy J. Moore, Senior Vice President, General Counsel and Corporate Secretary. Last week the AMSG board of directors elected Miller Chairman, President & CEO of the company. Skoldberg, Guengerich and Moore have been elected to the same offices with AMSG they previously held with AMS. - Ad Three - OVERALL STRATEGY The central company objective is to build a multi-billion dollar corporation that is the nation's foremost small group, managed care organization. It will do so by expanding sales through independent agents and by continuing to reduce loss and expense ratios. In addition, AMSG will continue to leverage its expense ratio advantage and its expertise in the small group segment to acquire books of business during a period of industry consolidation. In September 1997, AMS purchased the individual and small group business of Pan-American Life Insurance Company. It acquired much of Pan-American's remaining domestic health benefit business in July 1998. # # # # # CAUTIONARY STATEMENT: This release contains forward-looking statements with respect to the financial condition, results of operations and business of American Medical Security Group, Inc. Such forward-looking statements are subject to inherent risks and uncertainties that may cause actual results or events to differ materially from those contemplated by such forward-looking statements. Factors that may cause actual results or events to differ materially from those contemplated include rising health care costs, business conditions and competition in the managed care industry, developments in health care reform and other regulatory issues and other factors that may be referred to in the Company's reports filed with the Securities and Exchange Commission from time to time. -----END PRIVACY-ENHANCED MESSAGE-----