EXHIBIT 1
__________ SHARES
LIFE TIME FITNESS, INC.
COMMON STOCK, PAR VALUE $0.02 PER SHARE
UNDERWRITING AGREEMENT
_____________, 2004
CREDIT SUISSE FIRST BOSTON LLC
▇▇▇▇▇▇▇ LYNCH, PIERCE, ▇▇▇▇▇▇ & ▇▇▇▇▇ INCORPORATED
As Representatives of the Several Underwriters,
c/o Credit Suisse First Boston LLC
Eleven Madison Avenue
New York, N.Y. 10010-3629
Dear Sirs:
1. Introductory. LIFE TIME FITNESS, Inc., a Minnesota corporation (the
"COMPANY"), proposes to issue and sell to the several underwriters listed on
Schedule A hereto (the "UNDERWRITERS"), for whom Credit Suisse First Boston LLC
("CSFB") and ▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated are acting as
the representatives (the "REPRESENTATIVES"), shares of its common stock,
par value $0.02 per share (the "COMMON STOCK"), and the shareholders listed in
Schedule B hereto (the "SELLING SHAREHOLDERS") propose severally to sell to the
Underwriters an aggregate of outstanding shares of the Common Stock
(such shares of Common Stock to be sold by the Company and the Selling
Shareholders being hereinafter referred to as the "FIRM SECURITIES"). The
Company also proposes to sell to the Underwriters, at the option of the
Underwriters, an aggregate of not more than additional shares of its
Common Stock and certain of the Selling Shareholders also propose to sell to the
Underwriters, at the option of the Underwriters, an aggregate of not more than
additional outstanding shares of the Common Stock, as set forth below (such
additional shares being hereinafter referred to as the "OPTIONAL
SECURITIES"). The Firm Securities and the Optional Securities are herein,
collectively, called the "OFFERED SECURITIES". The Company and the Selling
Shareholders hereby agree with the several Underwriters as follows:
2. Representations and Warranties of the Company and the Selling Shareholders.
(a) The Company represents and warrants to, and agrees with, the several
Underwriters that:
(i) A registration statement (No. 333-113764) relating to the
Offered Securities, including a form of prospectus, has been filed with the
Securities and Exchange Commission ("COMMISSION") and either (A) has been
declared effective under the Securities Act of 1933 ("ACT") and is not proposed
to be amended or (B) is proposed to be amended by amendment or post-effective
amendment. If such registration statement (the "INITIAL REGISTRATION STATEMENT")
has been declared effective, either (A) an additional registration statement
(the "ADDITIONAL REGISTRATION STATEMENT") relating to the Offered Securities may
have been filed with the Commission pursuant to Rule 462(b) ("RULE 462(b)")
under the Act and, if so filed, has become effective upon filing pursuant to
such Rule and the Offered Securities all have been duly registered under the Act
pursuant to the initial registration statement and, if applicable, the
additional registration statement or (B) such an additional registration
statement is proposed to be filed with the Commission pursuant to Rule 462(b)
and will become effective upon filing pursuant to such Rule and, upon such
filing, the Offered Securities will all have been duly registered under the Act
pursuant to the initial registration statement and such additional registration
statement. If the Company does not propose to amend the initial registration
statement or if an additional registration statement has been filed and the
Company does not propose to amend it, and if any post-effective amendment to
either such registration statement has been filed with the Commission prior to
the execution and delivery of this Agreement, the most recent amendment (if
any) to each such registration statement has been declared effective by the
Commission or has become effective upon filing pursuant to Rule 462(c) ("RULE
462(c)") under the Act or, in the case of the additional registration statement,
Rule 462(b). For purposes of this Agreement, "EFFECTIVE TIME," with respect to
the initial registration statement, or, if filed prior to the execution and
delivery of this Agreement, the additional registration statement, means (A) if
the Company has advised the Representatives that it does not propose to amend
such registration statement, the date and time as of which such registration
statement, or the most recent post-effective amendment thereto (if any) filed
prior to the execution and delivery of this Agreement, was declared effective by
the Commission or has become effective upon filing pursuant to Rule 462(c), or
(B) if the Company has advised the Representatives that it proposes to file an
amendment or post-effective amendment to such registration statement, the date
and time as of which such registration statement, as amended by such amendment
or post-effective amendment, as the case may be, is declared effective by the
Commission. If an additional registration statement has not been filed prior to
the execution and delivery of this Agreement but the Company has advised the
Representatives that it proposes to file one, "EFFECTIVE TIME," with respect to
such additional registration statement, means the date and time as of which such
registration statement is filed and becomes effective pursuant to Rule 462(b).
"EFFECTIVE DATE," with respect to the initial registration statement or the
additional registration statement (if any), means the date of the Effective Time
thereof. The initial registration statement, as amended at its Effective Time,
including all information contained in the additional registration statement (if
any) and deemed to be a part of the initial registration statement as of the
Effective Time of the additional registration statement pursuant to the General
Instructions of the Form on which it is filed and including all information (if
any) deemed to be a part of the initial registration statement as of its
Effective Time pursuant to Rule 430A(b) ("RULE 430A(b)") under the Act, is
hereinafter referred to as the "INITIAL REGISTRATION STATEMENT". The additional
registration statement, as amended at its Effective Time, including the contents
of the initial registration statement incorporated by reference therein and
including all information (if any) deemed to be a part of the additional
registration statement as of its Effective Time pursuant to Rule 430A(b), is
hereinafter referred to as the "ADDITIONAL REGISTRATION STATEMENT". The Initial
Registration Statement and the Additional Registration are hereinafter referred
to, collectively, as the "REGISTRATION STATEMENTS" and, individually, as a
"REGISTRATION STATEMENT". The form of prospectus relating to the Offered
Securities, as first filed with the Commission pursuant to and in accordance
with Rule 424(b) ("RULE 424(b)") under the Act or (if no such filing is
required) as included in a Registration Statement, is hereinafter referred to as
the "PROSPECTUS". No document has been or will be prepared or distributed in
reliance on Rule 434 under the Act.
(ii) If the Effective Time of the Initial Registration
Statement is prior to the execution and delivery of this Agreement: (A) on the
Effective Date of the Initial Registration Statement, the Initial Registration
Statement conformed in all respects to the requirements of the Act and the rules
and regulations of the Commission ("RULES AND REGULATIONS") and did not include
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein not
misleading, (B) on the Effective Date of the Additional Registration Statement
(if any), each Registration Statement conformed, or will conform, in all
respects to the requirements of the Act and the Rules and Regulations and did
not include, or will not include, any untrue statement of a material fact and
did not omit, or will not omit, to state any material fact required to be stated
therein or necessary to make the statements therein not misleading, and (C) on
the date of this Agreement, the Initial Registration Statement and, if the
Effective Time of the Additional Registration Statement is prior to the
execution and delivery of this Agreement, the Additional Registration Statement
each conforms, and at the time of filing of the Prospectus pursuant to Rule
424(b) or (if no such filing is required) at the Effective Date of the
Additional Registration Statement in which the Prospectus is included, each
Registration Statement and the Prospectus will conform, in all respects to the
requirements of the Act and the Rules and Regulations, and neither of such
documents includes, or will include, any untrue statement of a material fact or
omits, or will omit, to state any material fact required to be stated therein or
necessary to make the statements therein not misleading. If the Effective Time
of the Initial Registration Statement is subsequent to the execution and
delivery of this Agreement: on the Effective Date of the Initial Registration
Statement, the Initial Registration Statement and the Prospectus will conform in
all respects to the requirements of the Act and the Rules and Regulations,
neither of such documents will include any untrue statement of a material fact
or will omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading, and no Additional
Registration Statement has been or will be filed. The two preceding sentences do
not apply to statements in or omissions from a Registration Statement or the
Prospectus based upon written information furnished to the Company by any
Underwriter through the Representatives specifically for use therein, it being
understood and agreed that the only such information is that described as such
in Section 7(c) hereof.
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(iii) The Company has been duly incorporated and is an
existing corporation in good standing under the laws of the State of Minnesota,
with power and authority (corporate and other) to own its properties and conduct
its business as described in the Prospectus. The Company is duly qualified to do
business as a foreign corporation in good standing in all other jurisdictions in
which its ownership or lease of property or the conduct of its business requires
such qualification.
(iv) Except for the Company's non-profit foundation, each
Subsidiary of the Company (as defined below) has been duly formed and is an
existing limited liability company in good standing under the laws of the
jurisdiction of its formation, with power and authority (corporate and other) to
own its properties and conduct its business as described in the Prospectus. Each
Subsidiary is duly qualified to do business as a foreign company in good
standing in all other jurisdictions in which its ownership or lease of property
or the conduct of its business requires such qualification. All of the issued
and outstanding membership units of each Subsidiary have been duly authorized
and validly issued and are fully paid and nonassessable, and the membership
units of each Subsidiary owned by the Company, directly or through any
Subsidiary, are owned free from liens, encumbrances and defects. The
subsidiaries listed on Exhibit 21 to the Registration Statement are the only
subsidiaries of the Company (collectively, the "SUBSIDIARIES" and, individually,
a "SUBSIDIARY").
(v) The Company has an authorized capitalization as set forth
in the Registration Statement. The Offered Securities and all other outstanding
shares of capital stock of the Company have been duly authorized and validly
issued, are fully paid and nonassessable (with respect to all outstanding
shares) and, upon issuance as contemplated by this Agreement, will be fully paid
and nonassessable (with respect to all Offered Securities not yet issued and
outstanding), and conform to the description thereof contained in the
Prospectus; and the shareholders of the Company have no preemptive rights with
respect to the Securities. Except as disclosed in the Prospectus, no options,
warrants or other rights to purchase, agreements or other obligations to issue,
or rights to convert any obligations into or exchange any securities for, shares
of capital stock of or other ownership interests in the Company are outstanding.
(vi) Except as disclosed in the Prospectus, there are no
contracts, agreements or understandings between the Company and any person that
would give rise to a valid claim against the Company or any Underwriter for a
brokerage commission, finder's fee or other like payment in connection with the
transactions contemplated by this Agreement.
(vii) Except as disclosed in the Prospectus or as waived in
writing prior to the date hereof, there are no contracts, agreements or
understandings between the Company and any person granting such person the right
to require the Company to file a registration statement under the Act with
respect to any securities of the Company owned or to be owned by such person or
to require the Company to include such securities in the securities registered
pursuant to a Registration Statement or in any securities being registered
pursuant to any other registration statement filed by the Company under the Act.
(viii) The Securities have been approved for listing subject
to notice of issuance on The New York Stock Exchange.
(ix) No consent, approval, authorization, or order of, or
filing with, any governmental agency or body or any court is required to be
obtained or made by the Company for the consummation of the transactions
contemplated by this Agreement in connection with the sale of the Offered
Securities, except such as have been obtained and made under the Act and such as
may be required under state securities laws or pursuant to the rules of the
National Association of Securities Dealers, Inc. (the "NASD").
(x) The execution, delivery and performance of this Agreement
and the consummation of the transactions herein contemplated will not result in
a breach or violation of any of the terms and provisions of, result in the
imposition of any lien, charge or encumbrance upon any property or assets of the
Company or any Subsidiary under, or constitute a default under, any statute,
rule, regulation or order of any governmental agency or body or any court,
domestic or foreign, having jurisdiction over the Company or any Subsidiary or
any of their respective properties, or any agreement or instrument to which the
Company or any such Subsidiary is a party or by which the Company or any such
Subsidiary is bound or to which any of the properties of the Company or any such
Subsidiary is subject, or the charter, by-laws or other constituent documents of
the Company or any such Subsidiary, as
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applicable. For purposes of this Agreement, any reference to any property or
asset shall include all owned and leased properties or assets, as applicable.
(xi) This Agreement has been duly authorized, executed and
delivered by the Company and constitutes the legal, valid and binding obligation
of the Company, enforceable against the Company in accordance with its terms,
except as the enforcement of rights to indemnity and contribution hereunder may
be limited by federal or state securities laws or principles of public policy
and subject to the qualification that the enforceability of obligations of the
Company hereunder may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting the enforcement of creditors' rights
generally and by general equitable principles (whether applied in a proceeding
in law or equity).
(xii) Except as disclosed in the Prospectus, the Company and
the Subsidiaries have good and marketable title to all real properties and all
other properties and assets owned by them, in each case free from claims, liens,
encumbrances and defects that would materially affect the value of the affected
property or asset or materially interfere with the use made or to be made of the
same by them; and, except as disclosed in the Prospectus, the Company and the
Subsidiaries hold any leased real or personal property under valid and
enforceable leases which are in full force and effect, with no exceptions that
would materially interfere with the use made or to be made of the affected
property by them.
(xiii) The Company and the Subsidiaries possess adequate
certificates, authorities or permits issued by appropriate governmental agencies
or bodies necessary to conduct the business now operated by them and to use and
occupy their properties and assets as currently used and occupied for their
business and have not received any notice of proceedings relating to the
revocation or modification of any such certificate, authority or permit that, if
determined adversely to the Company or any of the Subsidiaries, would,
individually or in the aggregate, have a material adverse effect on the
condition (financial or other), business, properties or results of operations of
the Company and the Subsidiaries taken as a whole (a "MATERIAL ADVERSE EFFECT").
All of the properties and assets of the Company and the Subsidiaries, including,
without limitation, all buildings, building systems, structural components,
roofs and building equipment, are in good condition and repair suitable for
their intended purposes and the purposes for which they are currently being
used, in each case in all material respects.
(xiv) Neither the Company nor any of the Subsidiaries is in
violation of or default under any of the terms or provisions of its charter,
by-laws or other constituent documents or in default (and no event has occurred
which, with notice or lapse of time or both, would constitute a default) under
any indenture, real property lease or sublease, mortgage, deed of trust, loan or
credit agreement or any provision of any agreement or instrument to which the
Company or any such Subsidiary is a party or by which the Company or any such
Subsidiary is bound or to which any of the properties of the Company or any such
Subsidiary is subject that would, individually or in the aggregate, have a
Material Adverse Effect.
(xv) No labor dispute with the employees of the Company or any
Subsidiary exists or, to the knowledge of the Company, is imminent that might
have a Material Adverse Effect.
(xvi) The Company and the Subsidiaries own, possess or can
acquire on reasonable terms adequate trademarks, trade names and other rights to
inventions, know-how, patents, copyrights, confidential information and other
intellectual property (collectively, "INTELLECTUAL PROPERTY RIGHTS") necessary
to conduct the business now operated by them, and have not received any notice
of infringement of or conflict with asserted rights of others with respect to
any intellectual property rights that, if determined adversely to the Company or
any of the Subsidiaries, would, individually or in the aggregate, have a
Material Adverse Effect.
(xvii) Except as disclosed in the Prospectus, neither the
Company, any of the Subsidiaries nor any of their properties or assets is in
violation of any statute, rule, regulation, decision or order of any
governmental agency or body or any court, domestic or foreign, including those
relating to the use, disposal or release of hazardous or toxic substances or
relating to the protection or restoration of the environment or human exposure
to hazardous or toxic substances (collectively, "ENVIRONMENTAL LAWS"). Neither
the Company nor any of the Subsidiaries owns or operates any real property
contaminated with any substance that is subject to any environmental laws, is
liable for any off-site disposal or contamination pursuant to any environmental
laws, or is subject to any claim relating to any environmental laws, which
violation, contamination, liability or claim would,
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individually or in the aggregate, have a Material Adverse Effect; and the
Company is not aware of any pending investigation which might lead to any such
claim.
(xviii) Except as disclosed in the Prospectus, there are no
pending actions, suits or proceedings against or affecting the Company, any of
the Subsidiaries or any of their respective properties that, if determined
adversely to the Company or any of the Subsidiaries, would, individually or in
the aggregate, have a Material Adverse Effect, or would materially and adversely
affect the ability of the Company to perform its obligations under this
Agreement, or which are otherwise material in the context of the sale of the
Offered Securities; and no such actions, suits or proceedings are threatened or,
to the Company's knowledge, contemplated.
(xix) The financial statements included in each Registration
Statement and the Prospectus present fairly the financial position of the
Company and its consolidated subsidiaries as of the dates shown and their
results of operations and cash flows for the periods shown, and such financial
statements comply as to form with the applicable accounting requirements of the
Act and have been prepared in conformity with the generally accepted accounting
principles in the United States applied on a consistent basis (except as
otherwise noted therein); and the schedules included in each Registration
Statement present fairly the information required to be stated therein. Any
financial data set forth under the caption "Selected Financial Data" in the
Prospectus and Registration Statement fairly present, on the basis stated in the
Prospectus and the Registration Statement, the information included therein and
have been compiled on a basis consistent with the financial statements included
in the Registration Statement and Prospectus. The assumptions used in preparing
the pro forma financial statements included in each Registration Statement and
the Prospectus provide a reasonable basis for presenting the significant effects
directly attributable to the transactions or events described therein, the
related pro forma adjustments give appropriate effect to those assumptions, and
the pro forma columns therein reflect the proper application of those
adjustments to the corresponding historical financial statement amounts.
(xx) Except as disclosed in the Prospectus, since the date of
the latest audited financial statements included in the Prospectus, there has
been no material adverse change, nor any development or event involving a
prospective material adverse change, in the condition (financial or other),
business, properties or results of operations of the Company and the
Subsidiaries taken as a whole, and, except as disclosed in or contemplated by
the Prospectus, there has been no dividend or distribution of any kind declared,
paid or made by the Company on any class of its capital stock.
(xxi) The Company is not and, after giving effect to the
offering and sale of the Offered Securities and the application of the proceeds
thereof as described in the Prospectus, will not be an "investment company" as
defined in the Investment Company Act of 1940.
(xxii) The Company and the Subsidiaries are insured by
insurers of recognized financial responsibility against such losses and risks
and in such amounts as are prudent and customary in the businesses in which they
are engaged; all policies of insurance and fidelity or surety bonds insuring the
Company and the Subsidiaries or their respective businesses, assets, employees,
officers and directors are in full force and effect and the Company and the
Subsidiaries are in compliance with the terms of such policies and instruments
in all material respects. There are no claims by the Company or any of the
Subsidiaries under any such policy or instrument as to which any insurance
company is denying liability or defending under a reservation of rights clause
and neither the Company nor any Subsidiary has been refused any insurance
coverage sought or applied for. Neither the Company nor any Subsidiary has any
reason to believe that it will not be able to renew its existing insurance
coverage as and when such coverage expires or to obtain similar coverage from
similar insurers as may be necessary to continue its business at a cost that
would not have a Material Adverse Effect.
(xxiii) Deloitte & Touche LLP, which has audited the financial
statements of the Company and the Subsidiaries included in the Prospectus, is an
independent public accountant as required by the Act and the Rules and
Regulations.
(xxiv) Neither the Company nor any entity that is or was a
member of the Company's controlled group (within the meaning of Section
412(n)(6) of The Internal Revenue Code of 1986, as amended (the "CODE")) has any
direct, contingent or secondary liability under Title IV of The Employee
Retirement Income Security Act of 1974 or Section 412 of the Code.
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(xxv) There are no transfer taxes or other similar fees or
charges under Federal law or the laws of any state, or any political subdivision
thereof, required to be paid in connection with the execution and delivery of
this Agreement or the issuance by the Company or sale by the Company of the
Offered Securities.
(xxvi) Following the first Closing Date (as hereinafter
defined), the Company and the Subsidiaries will maintain a system of internal
accounting controls sufficient to provide reasonable assurance that (i)
transactions are executed in accordance with management's general or specific
authorizations; (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles and to maintain asset accountability; (iii) access to
assets is permitted only in accordance with management's general or specific
authorization; and (iv) the recorded accountability for assets is compared with
the existing assets at reasonable intervals and appropriate action is taken with
respect to any differences. The Company is not aware of (A) any significant
deficiency or material weakness in the design or operation of the Company's
internal control over financial reporting which is reasonably likely to
adversely affect the Company's ability to record, process, summarize and report
financial information or (B) any fraud, whether or not material, that involves
management or other employees who have a significant role in the Company's
internal control over financial reporting; and no change in the Company's
internal control over financial reporting occurred during or since the Company's
most recent fiscal quarter that has materially affected, or is reasonably likely
to materially affect, the Company's internal control over financial reporting.
(b) Each Selling Shareholder severally and not jointly represents and
warrants to, and agrees with, the several Underwriters that:
(i) Such Selling Shareholder has, and on each Closing Date
hereinafter mentioned will have, valid and unencumbered title to the Offered
Securities to be delivered by such Selling Shareholder on such Closing Date and
full right, power and authority to enter into this Agreement, the Custody
Agreement (as hereinafter defined) and Irrevocable Power of Attorney (the "POWER
OF ATTORNEY") entered into by such Selling Shareholder in connection with the
transactions contemplated hereby and to sell, assign, transfer and deliver the
Offered Securities to be delivered by such Selling Shareholder on such Closing
Date hereunder; and upon the delivery of and payment for the Offered Securities
on each Closing Date hereunder the several Underwriters will acquire valid and
unencumbered title to the Offered Securities to be delivered by such Selling
Shareholder on such Closing Date.
(ii) If the Effective Time of the Initial Registration
Statement is prior to the execution and delivery of this Agreement: (A) on the
Effective Date of the Initial Registration Statement, the Initial Registration
Statement conformed in all respects to the requirements of the Act and the Rules
and Regulations and did not include any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary to
make the statements therein not misleading, (B) on the Effective Date of the
Additional Registration Statement (if any), each Registration Statement
conformed, or will conform, in all respects to the requirements of the Act and
the Rules and Regulations and did not include, or will not include, any untrue
statement of a material fact and did not omit, or will not omit, to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading, and (C) on the date of this Agreement, the Initial
Registration Statement and, if the Effective Time of the Additional Registration
Statement is prior to the execution and delivery of this Agreement, the
Additional Registration Statement each conforms, and at the time of filing of
the Prospectus pursuant to Rule 424(b) or (if no such filing is required) at the
Effective Date of the Additional Registration Statement in which the Prospectus
is included, each Registration Statement and the Prospectus will conform, in all
respects to the requirements of the Act and the Rules and Regulations, and
neither of such documents includes, or will include, any untrue statement of a
material fact or omits, or will omit, to state any material fact required to be
stated therein or necessary to make the statements therein not misleading. If
the Effective Time of the Initial Registration Statement is subsequent to the
execution and delivery of this Agreement: on the Effective Date of the Initial
Registration Statement, the Initial Registration Statement and the Prospectus
will conform in all respects to the requirements of the Act and the Rules and
Regulations, neither of such documents will include any untrue statement of a
material fact or will omit to state any material fact required to be stated
therein or necessary to make the statements therein not misleading. With respect
to such Selling Shareholder, the first two sentences of this Section 2(b)(ii)
apply only to the extent that statements in or omissions from a Registration
Statement or the Prospectus are based upon written information furnished to the
Company by such Selling Shareholder specifically for use therein.
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(iii) This Agreement, the Custody Agreement and the Power of
Attorney have each been duly authorized, executed and delivered by or on behalf
of such Selling Shareholder and this Agreement, the Custody Agreement and the
Power of Attorney each constitute the legal, valid and binding obligations of
such Selling Shareholder enforceable against such Selling Shareholder in
accordance with their respective terms, except as the enforcement of rights to
indemnity and contribution hereunder and thereunder may be limited by federal or
state securities laws or principles of public policy and subject to the
qualification that the enforceability of obligations of such Selling Shareholder
hereunder and thereunder may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the enforcement of
creditors' rights generally and by general equitable principles (whether applied
in a proceeding in law or equity).
(iv) No consent, approval, authorization, or order of, or
filing with, any governmental agency or body or any court is required to be
obtained or made by such Selling Shareholder for the consummation of the
transactions contemplated by this Agreement, the Custody Agreement and the Power
of Attorney in connection with the sale of the Offered Securities, except such
as have been obtained and made under the Act and such as may be required under
state securities laws or pursuant to the rules of the NASD.
(v) Except as disclosed in the Prospectus, there are no
contracts, agreements or understandings between such Selling Shareholder and any
person that would give rise to a valid claim against such Selling Shareholder or
any Underwriter for a brokerage commission, finder's fee or other like payment
in connection with the transactions contemplated by this Agreement, the Custody
Agreement and the Power of Attorney.
(vi) The execution, delivery and performance of this Agreement
and the consummation of the transactions herein contemplated will not result in
a breach or violation of any of the terms and provisions of, result in the
imposition of any lien, charge or encumbrance upon any property or assets of
such Selling Shareholder under, or constitute a default under, any statute,
rule, regulation or order of any governmental agency or body or any court,
domestic or foreign, having jurisdiction over such Selling Shareholder or any of
his, her or its properties, or any agreement or instrument to which such Selling
Shareholder is a party or by which such Selling Shareholder is bound or to which
any of the properties of such Selling Shareholder is subject, or the charter,
by-laws or other constituent documents of such Selling Shareholder.
(vii) Except as disclosed in the Prospectus or as waived in
writing prior to the date hereof, there are no contracts, agreements or
understandings between the Company and such Selling Shareholder granting such
person the right to require the Company to file a registration statement under
the Act with respect to any securities of the Company owned or to be owned by
such Selling Shareholder or to require the Company to include such securities in
the securities registered pursuant to a Registration Statement or in any
securities being registered pursuant to any other registration statement filed
by the Company under the Act.
3. Purchase, Sale and Delivery of Offered Securities. On the basis of the
representations, warranties and agreements contained herein, but subject to the
terms and conditions set forth herein, the Company and each Selling Shareholder
agree, severally and not jointly, to sell to each Underwriter, and each
Underwriter agrees, severally and not jointly, to purchase from the Company and
each Selling Shareholder, at a purchase price of $ per share, that number of
Firm Securities (rounded up or down, as determined by the Representatives in
their discretion, in order to avoid fractions) obtained by multiplying Firm
Securities, in the case of the Company, and the number of Firm Securities set
forth opposite the name of such Selling Shareholder in Schedule B hereto, in the
case of a Selling Shareholder, in each case by a fraction, the numerator of
which is the number of Firm Securities set forth opposite the name of such
Underwriter in Schedule A hereto and the denominator of which is the total
number of Firm Securities.
Certificates in negotiable form for the Offered Securities to be sold
by the Selling Shareholders hereunder have been placed in custody, for delivery
under this Agreement, under a Custody Agreement (the "CUSTODY AGREEMENT") made
with ▇▇▇▇▇ Fargo Bank, N.A., as custodian ("CUSTODIAN"). Each Selling
Shareholder agrees that the shares represented by the certificates held in
custody for the Selling Shareholders under such Custody Agreement are subject to
the interests of the Underwriters hereunder, that the arrangements made by the
Selling Shareholders for such custody are to that extent irrevocable, and that
the obligations of the Selling Shareholders hereunder shall not be terminated by
operation of law, whether by the death of any individual Selling Shareholder or
the occurrence of any
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other event, or in the case of a trust, by the death of any trustee or trustees
or the termination of such trust. If any individual Selling Shareholder or any
such trustee or trustees should die, or if any other such event should occur, or
if any of such trusts should terminate, before the delivery of the Offered
Securities hereunder, certificates for such Offered Securities shall be
delivered by the Custodian in accordance with the terms and conditions of this
Agreement as if such death or other event or termination had not occurred,
regardless of whether or not the Custodian shall have received notice of such
death or other event or termination.
The Company and the Custodian will deliver the Firm Securities to the
Representatives for the accounts of the Underwriters, against payment of the
purchase price in Federal (same day) funds by official bank check or checks or
wire transfer to an account at a bank acceptable to the Representatives drawn to
the order of , in the case of shares of Firm Securities,
and , in the case of shares of Firm Securities, at the
office of , at A.M., New York time, on or at such other time not
later than seven full business days thereafter as the Representatives and the
Company determine, such time being herein referred to as the "FIRST CLOSING
DATE". For purposes of Rule 15c6-1 under the Securities Exchange Act of 1934,
the First Closing Date (if later than the otherwise applicable settlement date)
shall be the settlement date for payment of funds and delivery of securities for
all the Offered Securities sold pursuant to the offering of the Offered
Securities. The certificates for the Firm Securities to be so delivered will be
in definitive form, in such denominations and registered in such names as the
Representatives request and will be made available for checking and packaging at
the [above] office of at least 24 hours prior to the First Closing Date.
In addition, upon written notice from the Representatives given to the
Company and the Selling Shareholders from time to time not more than 30 days
subsequent to the date of the Prospectus, the Underwriters may purchase all or
less than all of the Optional Securities at the purchase price per Security to
be paid for the Firm Securities. The Company and the certain Selling
Shareholders agree, severally and not jointly, to sell to the Underwriters the
respective numbers of Optional Securities obtained by multiplying the number of
Optional Securities specified in such notice by a fraction the numerator of
which is , in the case of the Company, and the number of
shares set forth opposite the names of such Selling Shareholders in Schedule B
hereto under the caption "Number of Optional Securities to be Sold", in the case
of the Selling Shareholders, and the denominator of which is the total number of
Optional Securities (subject to adjustment by the Representatives to eliminate
fractions). Such Optional Securities shall be purchased from the Company and
such Selling Shareholders for the account of each Underwriter in the same
proportion as the number of Firm Securities set forth opposite such
Underwriter's name bears to the total number of Firm Securities (subject to
adjustment by the Representatives to eliminate fractions) and may be purchased
by the Underwriters only for the purpose of covering over-allotments made in
connection with the sale of the Firm Securities. No Optional Securities shall be
sold or delivered unless the Firm Securities previously have been, or
simultaneously are, sold and delivered. The right to purchase the Optional
Securities or any portion thereof may be exercised from time to time and to the
extent not previously exercised may be surrendered and terminated at any time
upon notice by the Representatives to the Company and such Selling Shareholders.
Each time for the delivery of and payment for the Optional Securities,
being herein referred to as an "OPTIONAL CLOSING DATE", which may be the First
Closing Date (the First Closing Date and each Optional Closing Date, if any,
being sometimes referred to as a "CLOSING DATE"), shall be determined by the
Representatives but shall be not later than five full business days after
written notice of election to purchase Optional Securities is given. The Company
and the Custodian will deliver the Optional Securities being purchased on each
Optional Closing Date to the Representatives for the accounts of the several
Underwriters, against payment of the purchase price therefor in Federal (same
day) funds by official bank check or checks or wire transfer to an account at a
bank acceptable to the Representatives drawn to the order of , in the
case of Optional Securities, and , in the case of Optional Securities,
at the [above] office of . The certificates for the Optional Securities
being purchased on each Optional Closing Date will be in definitive form, in
such denominations and registered in such names as the Representatives request
upon reasonable notice prior to such Optional Closing Date and will be made
available for checking and packaging at the [above] office of at a
reasonable time in advance of such Optional Closing Date.
4. Offering by Underwriters. It is understood that the several Underwriters
propose to offer the Offered Securities for sale to the public as set forth in
the Prospectus.
8
5. Certain Agreements of the Company and the Selling Shareholders. The Company
and the Selling Shareholders agree with the several Underwriters that:
(a) If the Effective Time of the Initial Registration Statement is
prior to the execution and delivery of this Agreement, the Company will file the
Prospectus with the Commission pursuant to and in accordance with subparagraph
(1) (or, if applicable and if consented to by the Representatives, subparagraph
(4)) of Rule 424(b) not later than the earlier of (A) the second business day
following the execution and delivery of this Agreement or (B) the fifteenth
business day after the Effective Date of the Initial Registration Statement. The
Company will advise the Representatives promptly of any such filing pursuant to
Rule 424(b). If the Effective Time of the Initial Registration Statement is
prior to the execution and delivery of this Agreement and an additional
registration statement is necessary to register a portion of the Offered
Securities under the Act but the Effective Time thereof has not occurred as of
such execution and delivery, the Company will file the additional registration
statement or, if filed, will file a post-effective amendment thereto with the
Commission pursuant to and in accordance with Rule 462(b) on or prior to 10:00
P.M., New York time, on the date of this Agreement or, if earlier, on or prior
to the time the Prospectus is printed and distributed to any Underwriter, or
will make such filing at such later date as shall have been consented to by the
Representatives.
(b) The Company will advise the Representatives promptly of any
proposal to amend or supplement the initial or any additional registration
statement as filed or the related prospectus or the Initial Registration
Statement, the Additional Registration Statement (if any) or the Prospectus and
will not effect such amendment or supplementation without the Representatives'
consent; and the Company will also advise the Representatives promptly of the
effectiveness of each Registration Statement (if its Effective Time is
subsequent to the execution and delivery of this Agreement) and of any amendment
or supplementation of a Registration Statement or the Prospectus and of the
institution by the Commission of any stop order proceedings in respect of a
Registration Statement and will use its best efforts to prevent the issuance of
any such stop order and to obtain as soon as possible its lifting, if issued.
(c) If, at any time when a prospectus relating to the Offered
Securities is required to be delivered under the Act in connection with sales by
any Underwriter or dealer, any event occurs as a result of which the Prospectus
as then amended or supplemented would include an untrue statement of a material
fact or omit to state any material fact necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, or if it is necessary at any time to amend the Prospectus to comply
with the Act, the Company will promptly notify the Representatives of such event
and will promptly prepare and file with the Commission, at its own expense, an
amendment or supplement which will correct such statement or omission or an
amendment which will effect such compliance. Neither the Representatives'
consent to, nor the Underwriters' delivery of, any such amendment or supplement
shall constitute a waiver of any of the conditions set forth in Section 6.
(d) As soon as practicable, but not later than the Availability Date
(as defined below), the Company will make generally available to its
securityholders an earning statement covering a period of at least 12 months
beginning after the Effective Date of the Initial Registration Statement (or, if
later, the Effective Date of the Additional Registration Statement) which will
satisfy the provisions of Section 11(a) of the Act. For the purpose of the
preceding sentence, "AVAILABILITY DATE" means the 45th day after the end of the
fourth fiscal quarter following the fiscal quarter that includes such Effective
Date, except that, if such fourth fiscal quarter is the last quarter of the
Company's fiscal year, "AVAILABILITY DATE" means the 90th day after the end of
such fourth fiscal quarter.
(e) The Company will furnish to the Representatives copies of each
Registration Statement (seven of which will be signed and will include all
exhibits), each related preliminary prospectus, and, so long as a prospectus
relating to the Offered Securities is required to be delivered under the Act in
connection with sales by any Underwriter or dealer, the Prospectus and all
amendments and supplements to such documents, in each case in such quantities as
the Representatives request. The Prospectus shall be so furnished on or prior to
3:00 P.M., New York time, on the business day following the later of the
execution and delivery of this Agreement or the Effective Time of the Initial
Registration Statement. The Company also will deliver one copy of each of the
foregoing to each counsel for a Selling Shareholder delivering an opinion
pursuant to Section 6(e). All other such documents shall be so furnished as soon
as available. The Company will pay the expenses of printing and distributing to
the Underwriters and to such counsel all such documents.
9
(f) The Company will arrange for the qualification of the Offered
Securities for sale under the laws of such jurisdictions as the Representatives
designate and will continue such qualifications in effect so long as required
for the distribution.
(g) For a period of 180 days after the date of the initial public
offering of the Offered Securities, the Company will not offer, sell, contract
to sell, pledge or otherwise dispose of, directly or indirectly, or file with
the Commission a registration statement under the Act relating to, any
additional shares of its Securities or securities convertible into or
exchangeable or exercisable for any shares of its Securities, or publicly
disclose the intention to make any such offer, sale, pledge, disposition or
filing, without the prior written consent of the Representatives, except
issuances of Common Stock pursuant to the conversion or exchange of convertible
or exchangeable securities or the exercise of warrants or options issued and
outstanding as of the date hereof, or grants of employee stock options or the
sale or issuance of Common Stock pursuant to the terms of an employee equity
incentive or stock option purchase plan in effect on the date hereof. For the
purpose of allowing the Underwriters to comply with NASD Rule 2711(f)(4), if (1)
during the period that begins on the date that is 18 calendar days before the
last day of the lock-up period and ends on the last day of the lock-up period,
(a) the Company issues an earnings release, (b) the Company publicly announces
material news or (c) a material event relating to the Company occurs; or (2)
prior to the expiration of the lock-up period, the Company announces that it
will release earnings results during the 16-day period beginning on the last day
of the lock-up period, then the restrictions in this agreement, unless otherwise
waived by the Representatives in writing, shall continue to apply until the
expiration of the date that is 18 calendar days after the date on which (a) the
Company issues the earnings release, (b) the Company publicly announces material
news or (c) a material event relating to the Company occurs; provided, however,
that this provision will not apply to any research report concerning the Company
to be published or distributed by an Underwriter pursuant to Rule 139
promulgated under the Securities Act at a time when the Company's shares of
Common Stock are "actively traded securities," as defined in Regulation M, 17
C.F.R. 242.101(c)(1).
(h) The Company and each Selling Shareholder agree with the several
Underwriters that the Company will pay all expenses incident to the performance
of the obligations of the Company and such Selling Shareholder, as the case may
be, under this Agreement, for any filing fees and other expenses (including fees
and disbursements of counsel) in connection with qualification of the Offered
Securities for sale under the laws of such jurisdictions as the Representatives
designate and the printing of memoranda relating thereto, for the filing fee
incident to the review by the NASD of the Offered Securities and any fees and
disbursements of Underwriters' counsel and other related expenses in connection
with the clearance of this offering by the NASD, for any travel expenses of the
Company's officers and employees and any other expenses of the Company in
connection with attending or hosting meetings with prospective purchasers of the
Offered Securities and for expenses incurred in distributing preliminary
prospectuses and the Prospectus (including any amendments and supplements
thereto) to the Underwriters; provided, however, that the Selling Shareholders
will be responsible for any fees and disbursements of any counsel for the
Selling Shareholders other than [▇▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇, P.A.] and for any
commissions or transfer taxes on the sale by the Selling Shareholders of the
Offered Securities to the Underwriters .
(i) Each Selling Shareholder agrees, for a period of 180 days after the
date of the initial public offering of the Offered Securities (the "LOCK-UP
PERIOD") not to offer, sell, contract to sell, pledge or otherwise dispose of,
directly or indirectly, any additional shares of the Common Stock of the Company
or securities convertible into or exchangeable or exercisable for any shares of
the Common Stock, enter into a transaction which would have the same effect, or
enter into any swap, hedge or other arrangement that transfers, in whole or in
part, any of the economic consequences of ownership of any shares of the Common
Stock, whether any such aforementioned transaction is to be settled by delivery
of any shares of the Common Stock or such other securities, in cash or
otherwise, or publicly disclose the intention to make any such offer, sale,
pledge or disposition, or enter into any such transaction, swap, hedge or other
arrangement, without, in each case, the prior written consent of the
Representatives. In addition, each Selling Shareholder agrees that, without the
prior written consent of the Representatives, it will not, during the Lock-Up
Period, make any demand for or exercise any right with respect to, the
registration of any shares of Common Stock or any security convertible into or
exercisable or exchangeable for shares of Common Stock. For the purpose of
allowing the Underwriters to comply with NASD Rule 2711(f)(4), if (1) during the
period that begins on the date that is 18 calendar days before the last day of
the lock-up period and ends on the last day of the lock-up period, (a) the
Company issues an earnings release, (b) the Company publicly announces material
news or (c) a material event relating to the Company occurs; or (2) prior to the
expiration of the lock-up period, the Company announces that it will release
earnings results during the 16-day period beginning on
10
the last day of the lock-up period, then the restrictions in this agreement,
unless otherwise waived by the Representatives in writing, shall continue to
apply until the expiration of the date that is 18 calendar days after the date
on which (a) the Company issues the earnings release, (b) the Company publicly
announces material news or (c) a material event relating to the Company occurs;
provided, however, that this provision will not apply to any research report
concerning the Company to be published or distributed by an Underwriter pursuant
to Rule 139 promulgated under the Securities Act at a time when the Company's
shares of Common Stock are "actively traded securities," as defined in
Regulation M, 17 C.F.R. 242.101(c)(1).
Any shares of Common Stock received upon exercise of options granted to
a Selling Shareholder will also be subject to this subsection (i). The
restrictions on transfers of this subsection (i), however, will not apply to (x)
the sale of any shares of Common Stock to the Underwriters pursuant to this
Agreement and (y) any shares of Common Stock acquired by the undersigned in the
open market. A transfer of shares of Common Stock in connection with a bona fide
gift or to a family member or trust may be made, provided the transferee agrees
to be bound in writing by the terms of this Agreement. In addition,
notwithstanding the foregoing, if a Selling Shareholder is a corporation,
business trust, association, limited liability company, partnership, limited
liability partnership, limited liability limited partnership or other entity
(collectively, the "ENTITIES" or, individually, the "ENTITY"), such Selling
Shareholder may transfer shares of Common Stock or securities convertible into
or exchangeable or exercisable for any shares of Common Stock to any Entity
which is directly or indirectly controlled by, or is under common control with,
such Selling Shareholder and, if such Selling Shareholder (other than Norwest
Equity Partners, Apax Managers, Inc. or any affiliate thereof) is a partnership
or limited liability company, such Selling Shareholder may transfer the Common
Stock or securities convertible into or exchangeable or exercisable for any
shares of Common Stock to its partners, former partners or an affiliated
partnership (or members former members or an affiliated limited liability
company) managed by the same manager or managing partner (or managing member, as
the case may be) or management company, or managed by an entity controlling,
controlled by, or under common control with, such manager or managing partner
(or managing member) or management company in accordance with partnership (or
membership) interests; provided, however, that in any such case, it shall be a
condition to the transfer that the transferee execute an agreement stating that
the transferee is receiving and holding such shares of Common Stock or
securities convertible into or exchangeable or exercisable for any shares of
Common Stock subject to the provisions of this Agreement and there shall be no
further transfer of such Common Stock or securities convertible into or
exchangeable or exercisable for any shares of Common Stock except in accordance
with this Agreement, and provided further that any such transfer shall not
involve a disposition for value.
(j) The Company will be in compliance, upon the First Closing Date,
with all applicable provisions of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002, as amended
(the "▇▇▇▇▇▇▇▇-▇▇▇▇▇ ACT"), that are effective and is actively taking steps to
ensure that it will be in compliance with other applicable provisions of the
▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act upon the effectiveness of such provisions.
6. Conditions of the Obligations of the Underwriters. The obligations of the
several Underwriters to purchase and pay for the Firm Securities on the First
Closing Date and the Optional Securities to be purchased on each Optional
Closing Date will be subject to the accuracy of the representations and
warranties on the part of the Company and the Selling Shareholders herein, to
the accuracy of the statements of Company officers made pursuant to the
provisions hereof, to the performance by the Company and the Selling
Shareholders of their obligations hereunder and to the following additional
conditions precedent:
(a) The Representatives shall have received a letter, dated the date of
delivery thereof (which, if the Effective Time of the Initial Registration
Statement is prior to the execution and delivery of this Agreement, shall be on
or prior to the date of this Agreement or, if the Effective Time of the Initial
Registration Statement is subsequent to the execution and delivery of this
Agreement, shall be prior to the filing of the amendment or post-effective
amendment to the registration statement to be filed shortly prior to such
Effective Time), of Deloitte & Touche LLP confirming that they are independent
public accountants within the meaning of the Act and the applicable published
Rules and Regulations thereunder and stating to the effect that:
(i) in their opinion the financial statements and schedules
examined by them and included in the Registration Statements comply as to form
in all material respects with the applicable accounting requirements of the Act
and the related published Rules and Regulations;
11
(ii) they have performed the procedures specified by the
American Institute of Certified Public Accountants for a review of
interim consolidated financial information as described in Statement of
Auditing Standards No. 100, Interim Financial Information, on the
unaudited financial statements included in the Registration Statements;
(iii) on the basis of the review referred to in clause (ii)
above, a reading of the latest available interim consolidated financial
statements of the Company, inquiries of officials of the Company who
have responsibility for financial and accounting matters and other
specified procedures, nothing came to their attention that caused them
to believe that:
(A) the unaudited consolidated financial statements included
in the Registration Statements do not comply as to form in all material
respects with the applicable accounting requirements of the Act and the
related published Rules and Regulations or any material modifications
should be made to such unaudited consolidated financial statements for
them to be in conformity with generally accepted accounting principles;
(B) the unaudited consolidated total revenues, net income and
net income applicable to common shareholders amounts for the
three-month periods ended March 31, 2003 and March 31, 2004 included in
the Prospectus do not agree with the amounts set forth in the unaudited
consolidated financial statements for those same periods or were not
determined on a basis substantially consistent with that of the
corresponding amounts in the audited statements of income;
(C) at the date of the latest available consolidated balance
sheet read by such accountants, or at a subsequent specified date not
more than three business days prior to the date of this Agreement,
there was any change in the capital stock or any increase in short-term
indebtedness or long-term debt of the Company and its consolidated
subsidiaries or, at the date of the latest available consolidated
balance sheet read by such accountants, there was any decrease in
consolidated net current assets or net assets, as compared with amounts
shown on the latest balance sheet included in the Prospectus; or
(D) for the period from the closing date of the latest
consolidated income statement included in the Prospectus to the closing
date of the latest available consolidated income statement read by such
accountants, there were any decreases, as compared with the
corresponding period of the previous year and with the period of
corresponding length ended the date of the latest income statement
included in the Prospectus, in consolidated total revenues, net income
or net income applicable to common shareholders or in per share amounts
of net income applicable to common shareholders;
except in all cases set forth in clauses (C) and (D) above for changes,
increases or decreases which the Prospectus discloses have occurred or
may occur or which are described in such letter; and
(iv) they have compared specified dollar amounts (or
percentages derived from such dollar amounts) and other financial
information contained in the Registration Statements (in each case to
the extent that such dollar amounts, percentages and other financial
information are derived from the general accounting records of the
Company and the Subsidiaries subject to the internal controls of the
Company's accounting system or are derived directly from such records
by analysis or computation) with the results obtained from inquiries, a
reading of such general accounting records and other procedures
specified in such letter and have found such dollar amounts,
percentages and other financial information to be in agreement with
such results, except as otherwise specified in such letter.
For purposes of this subsection, (i) if the Effective Time of the
Initial Registration Statements is subsequent to the execution and
delivery of this Agreement, "REGISTRATION STATEMENTS" shall mean the
initial registration statement as proposed to be amended by the
amendment or post-effective amendment to be filed shortly prior to its
Effective Time, (ii) if the Effective Time of the Initial Registration
Statements is prior to the execution and delivery of this Agreement but
the Effective Time of the Additional Registration
12
Statement is subsequent to such execution and delivery, "REGISTRATION
STATEMENTS" shall mean the Initial Registration Statement and the
additional registration statement as proposed to be filed or as
proposed to be amended by the post-effective amendment to be filed
shortly prior to its Effective Time, and (iii) "PROSPECTUS" shall mean
the prospectus included in the Registration Statements.
(b) If the Effective Time of the Initial Registration Statement is not
prior to the execution and delivery of this Agreement, such Effective Time shall
have occurred not later than 10:00 P.M., New York time, on the date of this
Agreement or such later date as shall have been consented to by the
Representatives. If the Effective Time of the Additional Registration Statement
(if any) is not prior to the execution and delivery of this Agreement, such
Effective Time shall have occurred not later than 10:00 P.M., New York time, on
the date of this Agreement or, if earlier, the time the Prospectus is printed
and distributed to any Underwriter, or shall have occurred at such later date as
shall have been consented to by the Representatives. If the Effective Time of
the Initial Registration Statement is prior to the execution and delivery of
this Agreement, the Prospectus shall have been filed with the Commission in
accordance with the Rules and Regulations and Section 5(a) of this Agreement.
Prior to such Closing Date, no stop order suspending the effectiveness of a
Registration Statement shall have been issued and no proceedings for that
purpose shall have been instituted or, to the knowledge of any Selling
Shareholder, the Company or the Representatives, shall be contemplated by the
Commission.
(c) Subsequent to the execution and delivery of this Agreement, there
shall not have occurred (i) any change, or any development or event involving a
prospective change, in the condition (financial or other), business, properties
or results of operations of the Company and the Subsidiaries taken as one
enterprise which, in the judgment of a majority in interest of the Underwriters,
including the Representatives, is material and adverse and makes it impractical
or inadvisable to proceed with completion of the public offering or the sale of
and payment for the Offered Securities; (ii) any downgrading in the rating of
any debt securities of the Company by any "nationally recognized statistical
rating organization" (as defined for purposes of Rule 436(g) under the Act), or
any public announcement that any such organization has under surveillance or
review its rating of any debt securities of the Company (other than an
announcement with positive implications of a possible upgrading, and no
implication of a possible downgrading, of such rating); (iii) any change in U.S.
or international financial, political or economic conditions or currency
exchange rates or exchange controls as would, in the judgment of a majority in
interest of the Underwriters, including the Representatives, be likely to
prejudice materially the success of the proposed issue, sale or distribution of
the Offered Securities, whether in the primary market or in respect of dealings
in the secondary market; (iv) any material suspension or material limitation of
trading in securities generally on The New York Stock Exchange, or any setting
of minimum prices for trading on such exchange; (v) any suspension of trading of
any securities of the Company on any exchange or in the over-the-counter market;
(vi) any banking moratorium declared by U.S. Federal or New York authorities;
(vii) any major disruption of settlements of securities or clearance services in
the United States; or (viii) any attack on, outbreak or escalation of
hostilities or act of terrorism involving the United States, any declaration of
war by Congress or any other national or international calamity or emergency if,
in the judgment of a majority in interest of the Underwriters, including the
Representatives, the effect of any such attack, outbreak, escalation, act,
declaration, calamity or emergency makes it impractical or inadvisable to
proceed with completion of the public offering or the sale of and payment for
the Offered Securities.
(d) The Representatives shall have received an opinion, dated such
Closing Date, of Faegre & ▇▇▇▇▇▇ LLP, counsel for the Company, to the effect
that:
(i) The Company has been duly incorporated and is an existing
corporation in good standing under the laws of the State of Minnesota, with
power and authority (corporate and other) to own its properties and conduct its
business as described in the Prospectus. The Company is duly qualified to do
business as a foreign corporation in good standing in all jurisdictions listed
on Schedule A attached thereto in which its ownership or lease of property or
the conduct of its business requires such qualification;
(ii) Each Subsidiary of the Company (as defined below) has
been duly formed and is an existing limited liability company in good standing
under the laws of the jurisdiction of its formation, with power and authority
(corporate and other) to own its properties and conduct its business as
described in the Prospectus. Each Subsidiary is duly qualified to do business as
a foreign company in good standing in all jurisdictions listed on Schedule A
attached thereto in which its ownership or lease of property or the conduct of
its business requires such qualification. All of the issued and outstanding
membership units of each Subsidiary have been duly authorized and
13
validly issued and are fully paid and nonassessable, and the membership units of
each Subsidiary owned by the Company, directly or through any Subsidiary, are
owned free from liens, encumbrances and defects. The subsidiaries listed on
Exhibit 21 to the Registration Statement are the only subsidiaries of the
Company (collectively, the "SUBSIDIARIES" and, individually, a "SUBSIDIARY");
(iii) The Company has an authorized capitalization as set
forth in the Registration Statement. The Offered Securities and all other
outstanding shares of capital stock of the Company have been duly authorized and
validly issued, are fully paid and nonassessable (with respect to all
outstanding shares) and, upon issuance as contemplated by this Agreement, will
be fully paid and nonassessable (with respect to all Offered Securities not yet
issued and outstanding), and conform to the description thereof contained in the
Prospectus; and the shareholders of the Company have no preemptive rights with
respect to the Securities. Except as disclosed in the Prospectus, no options,
warrants or other rights to purchase, agreements or other obligations to issue,
or rights to convert any obligations into or exchange any securities for, shares
of capital stock of or ownership interests in the Company are outstanding;
(iv) Except as disclosed in the Prospectus or as waived in
writing prior to the date hereof, there are no contracts, agreements or
understandings between the Company and any person granting such person the right
to require the Company to file a registration statement under the Act with
respect to any securities of the Company owned or to be owned by such person or
to require the Company to include such securities in the securities registered
pursuant to a Registration Statement or in any securities being registered
pursuant to any other registration statement filed by the Company under the Act;
(v) The Securities have been approved for listing subject to
notice of issuance on The New York Stock Exchange;
(vi) The Company is not and, after giving effect to the
offering and sale of the Offered Securities and the application of the proceeds
thereof as described in the Prospectus, will not be an "investment company" as
defined in the Investment Company Act of 1940;
(vii) No consent, approval, authorization or order of, or
filing with, any governmental agency or body or any court is required to be
obtained or made by the Company for the consummation of the transactions
contemplated by this Agreement in connection with the sale of the Offered
Securities, except such as have been obtained and made under the Act and such as
may be required under state securities laws or pursuant to the rules of the
NASD;
(viii) The execution, delivery and performance of this
Agreement and the consummation of the transactions herein contemplated will not
result in a breach or violation of any of the terms and provisions of, result in
the imposition of any lien, charge or encumbrance upon any property or assets of
the Company or any Subsidiary, or constitute a default under, any statute, any
rule, regulation or order of any governmental agency or body or any court,
domestic or foreign, having jurisdiction over the Company or any Subsidiary or
any of their respective properties, or any agreement or instrument to which the
Company or any such Subsidiary is a party or by which the Company or any such
Subsidiary is bound or to which any of the properties of the Company or any such
Subsidiary is subject, or the charter, by-laws or other constituent documents of
the Company or any such Subsidiary, as applicable;
(ix) The Initial Registration Statement was declared effective
under the Act as of the date and time specified in such opinion, the Additional
Registration Statement (if any) was filed and became effective under the Act as
of the date and time (if determinable) specified in such opinion, the Prospectus
either was filed with the Commission pursuant to the subparagraph of Rule 424(b)
specified in such opinion on the date specified therein or was included in the
Initial Registration Statement or the Additional Registration Statement (as the
case may be), and, to the best of the knowledge of such counsel, no stop order
suspending the effectiveness of a Registration Statement or any part thereof has
been issued and no proceedings for that purpose have been instituted or are
pending or contemplated under the Act, and each Registration Statement and the
Prospectus, and each amendment or supplement thereto, as of their respective
effective or issue dates, complied as to form in all material respects with the
requirements of the Act and the Rules and Regulations;
14
(x) This Agreement has been duly authorized, executed and
delivered by the Company and constitutes the legal, valid and binding obligation
of the Company, enforceable against the Company in accordance with its terms,
except as the enforcement of rights to indemnity and contribution hereunder may
be limited by federal or state securities laws or principles of public policy
and subject to the qualification that the enforceability of obligations of the
Company hereunder may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting the enforcement of creditors' rights
generally and by general equitable principles (whether applied in a proceeding
in law or equity);
(xi) Neither the Company nor any of the Subsidiaries is (A) in
violation of or default under any of the terms or provisions of its charter,
by-laws or other constituent documents or (B) in default (and no event has
occurred which, with notice or lapse of time or both, would constitute a
default) under any indenture, real property lease or sublease, mortgage, deed of
trust, loan or credit agreement or any provision of any agreement or instrument
to which the Company or any such Subsidiary is a party or by which the Company
or any such Subsidiary is bound or to which any of the properties of the Company
or any such Subsidiary is subject that, in the case of clause (B), would,
individually or in the aggregate, have a material adverse effect on the
condition (financial or other), business, properties or results of operations of
the Company and the Subsidiaries taken as a whole ("MATERIAL ADVERSE EFFECT");
(xii) Except as disclosed in the Prospectus, there are no
pending actions, suits or proceedings against or affecting the Company, any of
the Subsidiaries or any of their respective properties that, if determined
adversely to the Company or any of the Subsidiaries, would, individually or in
the aggregate, have a Material Adverse Effect, or would materially and adversely
affect the ability of the Company to perform its obligations under this
Agreement; and, to such counsel's knowledge, no such actions, suits or
proceedings are threatened or contemplated;
(xiii) To such counsel's knowledge, (A) there are no
contracts, licenses, agreements, leases or documents of a character which are
required to be filed as exhibits to the Registration Statement or to be
summarized or described in the Prospectus which have not been so filed,
summarized or described as required and (B) there are no actions, suits, claims,
investigations, proceedings pending or threatened to which the Company or any of
the Subsidiaries is subject or by which any of their respective properties is
subject at law or in equity or before or by any federal, state or local
government or regulatory commission, board, body, authority or agency which are
required to be described in the Prospectus but are not so described as required;
and
(xiv) Such counsel has read the statements in the Prospectus
under the captions "Risk Factors - We are subject to extensive government
regulation, and changes in these regulations could have a negative effect on our
financial condition and results of operations," "Business - Government
Regulation," "Business - Legal Proceedings," "Management - 401(k) Plan,"
"Management - Stock Option Plans and Other Employee Incentive Plans," "Certain
Relationships and Related Party Transactions," "Description of Capital Stock,"
"Shares Eligible for Future Sale" and "U.S. Federal Tax Considerations for
Non-U.S. Holders," and insofar as such statements constitute summaries of legal
matters, contracts, agreements, documents or proceedings referred to therein or
refer to statements of law or legal conclusions, such statements are accurate in
all material respects and fairly present the information purported to be shown.
At the time the foregoing opinion is delivered, such counsel for the
Company shall also state that it has participated in conferences with the
Representatives, officers and representatives of the Company and the
representatives of the independent public accountant for the Company, at which
conferences the contents of the Registration Statements and the Prospectus and
related matters were discussed and, although such counsel does not pass upon and
does not assume any responsibility for the accuracy, completeness or fairness of
the statements contained in the Registration Statements and the Prospectus, on
the basis of the foregoing (relying as to materiality in part upon the factual
statements of officers and representations of the Company) such counsel has no
reason to believe that any part of a Registration Statement or any amendment
thereto, as of its effective date or as of such Closing Date, contained any
untrue statement of a material fact or omitted to state any material fact
required to be stated therein or necessary to make the statements therein not
misleading; or that the Prospectus or any amendment or supplement thereto, as of
its issue date or as of such Closing Date, contained any untrue statement of a
material fact or omitted to state any material fact necessary in order to make
the statements therein, in the light of the circumstances under which they were
made, not misleading; it being understood that such counsel need express no
15
opinion as to the financial statements or other financial data contained in the
Registration Statements or the Prospectus.
(e) The Representatives shall have received an opinion, dated such
Closing Date, of counsel for each of the Selling Shareholders, to the effect
that:
(i) Each Selling Shareholder had valid and unencumbered title
to the Offered Securities delivered by such Selling Shareholder on such Closing
Date and had full right, power and authority to sell, assign, transfer and
deliver the Offered Securities delivered by such Selling Shareholder on such
Closing Date hereunder; and the several Underwriters have acquired valid and
unencumbered title to the Offered Securities purchased by them from the Selling
Shareholders on such Closing Date hereunder;
(ii) No consent, approval, authorization or order of, or
filing with, any governmental agency or body or any court is required to be
obtained or made by any Selling Shareholder for the consummation of the
transactions contemplated by the Custody Agreement or this Agreement in
connection with the sale of the Offered Securities sold by the Selling
Shareholders, except such as have been obtained and made under the Act and such
as may be required under state securities laws or pursuant to the rules of the
NASD;
(iii) The execution, delivery and performance of the Custody
Agreement and this Agreement and the consummation of the transactions therein
and herein contemplated will not result in a breach or violation of any of the
terms and provisions of, or constitute a default under, any statute, any rule,
regulation or order of any governmental agency or body or any court having
jurisdiction over any Selling Shareholder or any of his, her or its properties
or any agreement or instrument to which any Selling Shareholder is a party or by
which any Selling Shareholder is bound or to which any of the properties of any
Selling Shareholder is subject, or the charter or by-laws or other constituent
documents of any Selling Shareholder which is a corporation or other entity;
(iv) The Power of Attorney and related Custody Agreement with
respect to each Selling Shareholder have been duly authorized, executed and
delivered by such Selling Shareholder and constitute valid and legally binding
obligations of each such Selling Shareholder enforceable in accordance with
their terms, except as the enforcement of rights to indemnity and contribution
thereunder may be limited by federal or state securities laws or principles of
public policy and subject to the qualification that the enforceability of
obligations of such Selling Shareholder thereunder may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting the
enforcement of creditors' rights generally and by general equitable principles
(whether applied in a proceeding in law or equity); and
(v) This Agreement has been duly authorized, executed and
delivered by each Selling Shareholder and constitutes the legal, valid and
binding obligation of such Selling Shareholder, enforceable against such Selling
Shareholder in accordance with its terms, except as the enforcement of rights to
indemnity and contribution hereunder may be limited by federal or state
securities laws or principles of public policy and subject to the qualification
that the enforceability of obligations of such Selling Shareholder hereunder may
be limited by bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting the enforcement of creditors' rights generally and by
general equitable principles (whether applied in a proceeding in law or equity).
(f) The Representatives shall have received from ▇▇▇▇▇▇, ▇▇▇▇▇ &
Bockius LLP, counsel for the Underwriters, such opinion or opinions, dated such
Closing Date, with respect to the incorporation of the Company, the validity of
the Offered Securities delivered on such Closing Date, the Registration
Statements, the Prospectus and other related matters as the Representatives may
require, and the Selling Shareholders and the Company shall have furnished to
such counsel such documents as they request for the purpose of enabling them to
pass upon such matters. In rendering such opinion, ▇▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP
may rely as to the incorporation of the Company and all other matters governed
by Minnesota law upon the opinion of Faegre & ▇▇▇▇▇▇ LLP referred to above.
(g) The Representatives shall have received a certificate, dated such
Closing Date, of the President or any Vice President and a principal financial
or accounting officer of the Company in which such officers, to the best of
their knowledge after reasonable investigation, shall state that: (1) the
representations and warranties of the Company in this Agreement are true and
correct; (2) the Company has complied with all agreements and satisfied all
16
conditions on its part to be performed or satisfied hereunder at or prior to
such Closing Date; (3) no stop order suspending the effectiveness of any
Registration Statement has been issued and no proceedings for that purpose have
been instituted or are contemplated by the Commission; and (4) the Additional
Registration Statement (if any) satisfying the requirements of subparagraphs (1)
and (3) of Rule 462(b) was filed pursuant to Rule 462(b), including payment of
the applicable filing fee in accordance with Rule 111(a) or (b) under the Act,
prior to the time the Prospectus was printed and distributed to any Underwriter;
and (5) subsequent to the date of the most recent financial statements in the
Prospectus, there has been no material adverse change, nor any development or
event involving a prospective material adverse change, in the condition
(financial or other), business, properties or results of operations of the
Company and the Subsidiaries taken as a whole, except as set forth in the
Prospectus or as described in such certificate.
(h) The Representatives shall have received a letter, dated such
Closing Date, of Deloitte & Touche LLP which meets the requirements of
subsection (a) of this Section, except that the specified date referred to in
such subsection will be a date not more than three days prior to such Closing
Date for the purposes of this subsection.
(i) On or prior to the date of this Agreement, the Representatives
shall have received lock-up letters from each of the executive officers,
directors and shareholders of the Company who are not Selling Shareholders
except as agreed to by the Representatives.
(j) The Custodian shall have delivered to the Representatives a letter
stating that they will deliver to each Selling Shareholder a United States
Treasury Department Form 1099 (or other applicable form or statement specified
by the United States Treasury Department regulations in lieu thereof) on or
before January 31 of the year following the date of this Agreement. To avoid a
28% backup withholding tax each Selling Shareholder will deliver to the
Custodian or the Representatives, as appropriate, a properly completed and
executed United States Treasury Department Form W-9 (or other applicable form or
statement specified by Treasury Department regulations in lieu thereof).
The Selling Shareholders and the Company will furnish the Representatives with
such conformed copies of such opinions, certificates, letters and documents as
the Representatives reasonably request. The Representatives may, in their sole
discretion, waive on behalf of the Underwriters compliance with any conditions
to the obligations of the Underwriters hereunder, whether in respect of an
Optional Closing Date or otherwise.
7. Indemnification and Contribution.
(a) The Company will indemnify and hold harmless each Underwriter, its
partners, affiliates, members, directors and officers and each person, if any,
who controls such Underwriter within the meaning of Section 15 of the Act,
against any losses, claims, damages or liabilities, joint or several, to which
such Underwriter may become subject, under the Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon any untrue statement or alleged untrue statement of any
material fact contained in any Registration Statement, the Prospectus, or any
amendment or supplement thereto, or any related preliminary prospectus, or arise
out of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, and will reimburse each Underwriter for any legal or
other expenses reasonably incurred by such Underwriter in connection with
investigating or defending any such loss, claim, damage, liability or action as
such expenses are incurred; provided, however, that the Company will not be
liable in any such case to the extent that any such loss, claim, damage or
liability arises out of or is based upon an untrue statement or alleged untrue
statement in or omission or alleged omission from any of such documents in
reliance upon and in conformity with written information furnished to the
Company by any Underwriter through the Representatives specifically for use
therein, it being understood and agreed that the only such information furnished
by any Underwriter consists of the information described as such in subsection
(c) below.
(b) Each of the Selling Shareholders, severally and not jointly, will
indemnify and hold harmless each Underwriter, its partners, affiliates, members,
directors and officers and each person who controls such Underwriter within the
meaning of Section 15 of the Act, against any losses, claims, damages or
liabilities, joint or several, to which such Underwriter may become subject,
under the Act or otherwise, insofar as such losses, claims, damages or
liabilities
17
(or actions in respect thereof) arise out of or are based upon any untrue
statement or alleged untrue statement of any material fact contained in any
Registration Statement, the Prospectus, or any amendment or supplement thereto,
or any related preliminary prospectus, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, and
will reimburse each Underwriter for any legal or other expenses reasonably
incurred by such Underwriter in connection with investigating or defending any
such loss, claim, damage, liability or action as such expenses are incurred;
provided, however, that such Selling Shareholder will be liable in any such case
only to the extent that any such loss, claim, damage or liability arises out of
or is based upon an untrue statement or alleged untrue statement in or omission
or alleged omission from any of such documents in reliance upon and in
conformity with written information furnished to the Company by such Selling
Shareholder specifically for use therein.
(c) Each Underwriter will, severally and not jointly, indemnify and
hold harmless the Company, its directors and officers and each person, if any,
who controls the Company within the meaning of Section 15 of the Act, and each
Selling Shareholder against any losses, claims, damages or liabilities to which
the Company or such Selling Shareholder may become subject, under the Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in any Registration Statement,
the Prospectus, or any amendment or supplement thereto, or any related
preliminary prospectus, or arise out of or are based upon the omission or the
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, in each case to the
extent, but only to the extent, that such untrue statement or alleged untrue
statement or omission or alleged omission was made in reliance upon and in
conformity with written information furnished to the Company by such Underwriter
through the Representatives specifically for use therein, and will reimburse any
legal or other expenses reasonably incurred by the Company and each Selling
Shareholder in connection with investigating or defending any such loss, claim,
damage, liability or action as such expenses are incurred, it being understood
and agreed that the only such information furnished by any Underwriter consists
of (i) the following information in the Prospectus furnished on behalf of each
Underwriter: the concession and reallowance figures appearing under the caption
"Underwriting"; and (ii) the information in the Prospectus furnished on behalf
of ▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. and ▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated
with respect to their prior or current relationships with the Company, as
applicable, under the caption "Underwriting."
(d) Promptly after receipt by an indemnified party under this Section
of notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against an indemnifying party under
subsection (a), (b) or (c) above, notify the indemnifying party of the
commencement thereof; but the failure to notify the indemnifying party shall not
relieve it from any liability that it may have under subsection (a), (b) or (c)
above except to the extent that it has been materially prejudiced (through the
forfeiture of substantive rights or defenses) by such failure; and, provided
further, that the failure to notify the indemnifying party shall not relieve it
from any liability that it may have to an indemnified party otherwise than under
subsection (a), (b) or (c) above. In case any such action is brought against any
indemnified party and it notifies an indemnifying party of the commencement
thereof, the indemnifying party will be entitled to participate therein and, to
the extent that it may wish, jointly with any other indemnifying party similarly
notified, to assume the defense thereof, with counsel satisfactory to such
indemnified party (who shall not, except with the consent of the indemnified
party, be counsel to the indemnifying party), and after notice from the
indemnifying party to such indemnified party of its election to so assume the
defense thereof, the indemnifying party will not be liable to such indemnified
party under this Section for any legal or other expenses subsequently incurred
by such indemnified party in connection with the defense thereof other than
reasonable costs of investigation. No indemnifying party shall, without the
prior written consent of the indemnified party, effect any settlement of any
pending or threatened action in respect of which any indemnified party is or
could have been a party and indemnity could have been sought hereunder by such
indemnified party unless such (i) settlement includes an unconditional release
of such indemnified party from all liability on any claims that are the subject
matter of such action and (ii) does not include a statement as to, or an
admission of, fault, culpability or a failure to act by or on behalf of an
indemnified party.
(e) If the indemnification provided for in this Section is unavailable
or insufficient to hold harmless an indemnified party under subsection (a), (b)
or (c) above, then each indemnifying party shall contribute to the amount paid
or payable by such indemnified party as a result of the losses, claims, damages
or liabilities referred to in subsection (a), (b) or (c) above (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Company and the Selling Shareholders on the one hand and the Underwriters on the
other from the offering of
18
the Securities or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law, in such proportion as is appropriate to reflect not
only the relative benefits referred to in clause (i) above but also the relative
fault of the Company and the Selling Shareholders, on the one hand, and the
Underwriters, on the other hand, in connection with the statements or omissions
which resulted in such losses, claims, damages or liabilities, as well as any
other relevant equitable considerations. The relative benefits received by the
Company and the Selling Shareholders, on the one hand, and the Underwriters, on
the other hand, shall be deemed to be in the same proportion as the total net
proceeds from the offering (before deducting expenses) received by the Company
and the Selling Shareholders bear to the total underwriting discounts and
commissions received by the Underwriters. The relative fault shall be determined
by reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission or alleged omission to state a
material fact relates to information supplied by the Company, the Selling
Shareholders or the Underwriters and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such untrue
statement or omission. The amount paid by an indemnified party as a result of
the losses, claims, damages or liabilities referred to in the first sentence of
this subsection (e) shall be deemed to include any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any action or claim which is the subject of this subsection (e).
Notwithstanding the provisions of this subsection (e), no Underwriter shall be
required to contribute any amount in excess of the amount by which the total
price at which the Securities underwritten by it and distributed to the public
were offered to the public exceeds the amount of any damages which such
Underwriter has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The Underwriters' obligations in this subsection
(e) to contribute are several in proportion to their respective underwriting
obligations and not joint.
(f) The obligations of the Company and the Selling Shareholders under
this Section shall be in addition to any liability which the Company and the
Selling Shareholders may otherwise have and shall extend, upon the same terms
and conditions, to each person, if any, who controls any Underwriter within the
meaning of the Act; and the obligations of the Underwriters under this Section
shall be in addition to any liability which the respective Underwriters may
otherwise have and shall extend, upon the same terms and conditions, to each
director of the Company, to each officer of the Company who has signed a
Registration Statement and to each person, if any, who controls the Company
within the meaning of the Act.
(g) To the extent that any interim reimbursement payment pursuant to
Section 7 is held to be improper by a court of competent jurisdiction, any
indemnified party that received such payment shall promptly return it to the
indemnifying party.
8. Default of Underwriters. If any Underwriter or Underwriters default in their
obligations to purchase Offered Securities hereunder on either the First or any
Optional Closing Date and the aggregate number of shares of Offered Securities
that such defaulting Underwriter or Underwriters agreed but failed to purchase
does not exceed 10% of the total number of shares of Offered Securities that the
Underwriters are obligated to purchase on such Closing Date, the Representatives
may make arrangements satisfactory to the Company and the Selling Shareholders
for the purchase of such Offered Securities by other persons, including any of
the Underwriters, but if no such arrangements are made by such Closing Date, the
non-defaulting Underwriters shall be obligated severally, in proportion to their
respective commitments hereunder, to purchase the Offered Securities that such
defaulting Underwriters agreed but failed to purchase on such Closing Date. If
any Underwriter or Underwriters so default and the aggregate number of shares of
Offered Securities with respect to which such default or defaults occur exceeds
10% of the total number of shares of Offered Securities that the Underwriters
are obligated to purchase on such Closing Date and arrangements satisfactory to
the Representatives, the Company and the Selling Shareholders for the purchase
of such Offered Securities by other persons are not made within 36 hours after
such default, this Agreement will terminate without liability on the part of any
non-defaulting Underwriter, the Company or the Selling Shareholders, except as
provided in Section 9 (provided that if such default occurs with respect to
Optional Securities after the First Closing Date, this Agreement will not
terminate as to the Firm Securities or any Optional Securities purchased prior
to such termination). As used in this Agreement, the term "Underwriter" includes
any person substituted for an Underwriter under this Section. Nothing herein
will relieve a defaulting Underwriter from liability for its default.
19
9. Survival of Certain Representations and Obligations. The respective
indemnities, agreements, representations, warranties and other statements of the
Selling Shareholders, of the Company or its officers and of the several
Underwriters set forth in or made pursuant to this Agreement will remain in full
force and effect, regardless of any investigation, or statement as to the
results thereof, made by or on behalf of any Underwriter, any Selling
Shareholder, the Company or any of their respective representatives, officers or
directors or any controlling person, and will survive delivery of and payment
for the Offered Securities. If this Agreement is terminated pursuant to Section
8 or if, for any reason, the purchase of the Offered Securities by the
Underwriters is not consummated, the Company and the Selling Shareholders shall
remain responsible for the expenses to be paid or reimbursed by them pursuant to
Section 5 and the respective obligations of the Company, the Selling
Shareholders, and the Underwriters pursuant to Section 7 shall remain in effect,
and if any Offered Securities have been purchased hereunder the representations
and warranties in Section 2 and all obligations under Section 5 shall also
remain in effect. If the purchase of the Offered Securities by the Underwriters
is not consummated for any reason other than solely because of the termination
of this Agreement pursuant to Section 8 or the occurrence of any event specified
in clause (iii), (iv), (vi), (vii) or (viii) of Section 6(c), the Company and
the Selling Shareholders will, jointly and severally, reimburse the Underwriters
for all out-of-pocket expenses (including fees and disbursements of counsel)
reasonably incurred by them in connection with the offering of the Offered
Securities.
10. Notices. All communications hereunder will be in writing and, if sent to the
Underwriters, will be mailed, delivered or telegraphed and confirmed to the
Representatives, c/o Credit Suisse First Boston LLC, Eleven ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇
▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇, Attention: Transactions Advisory Group, or, if sent to the
Company, will be mailed, delivered or telegraphed and confirmed to it at ▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, Attention: Chief Financial Officer ,
or, if sent to the Selling Shareholders or any of them, will be mailed,
delivered or telegraphed and confirmed to the Selling Shareholders c/o LIFE TIME
FITNESS, Inc., ▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇
▇▇▇▇; provided, however, that any notice to an Underwriter pursuant to Section 7
will be mailed, delivered or telegraphed and confirmed to such Underwriter.
11. Successors. This Agreement will inure to the benefit of and be binding upon
the parties hereto and their respective personal representatives and successors
and the officers and directors and controlling persons referred to in Section 7,
and no other person will have any right or obligation hereunder.
12. Representation. The Representatives will act for the several Underwriters in
connection with the transactions contemplated by this Agreement, and any action
under this Agreement taken by the Representatives jointly or by CSFB will be
binding upon all the Underwriters. ▇▇▇▇ ▇▇▇▇ or ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, as the
Attorneys in Fact, will act for the Selling Shareholders in connection with such
transactions, and any action under or in respect of this Agreement taken by such
persons will be binding upon all of the Selling Shareholders.
13. Counterparts. This Agreement may be executed in any number of counterparts,
each of which shall be deemed to be an original, but all such counterparts shall
together constitute one and the same Agreement.
14. APPLICABLE LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES
OF CONFLICTS OF LAWS.
The Company hereby submits to the non-exclusive jurisdiction of the
Federal and state courts in the Borough of Manhattan in The City of New York in
any suit or proceeding arising out of or relating to this Agreement or the
transactions contemplated hereby.
20
If the foregoing is in accordance with the Representatives'
understanding of our agreement, kindly sign and return to the Company one of the
counterparts hereof, whereupon it will become a binding agreement among the
Selling Shareholders, the Company and the several Underwriters in accordance
with its terms.
Very truly yours,
Acting on behalf of the Selling
Shareholders listed in Schedule B hereto
as the Attorney in Fact
----------------------------------------
▇▇▇▇ ▇. ▇▇▇▇
LIFE TIME FITNESS, INC.
By:
-------------------------------------
Name:
Title:
The foregoing Underwriting Agreement
is hereby confirmed and accepted as
of the date first above written.
Acting on behalf of themselves and as
the Representatives of the several
Underwriters
CREDIT SUISSE FIRST BOSTON LLC
By:
-------------------------------------
Name:
Title:
▇▇▇▇▇▇▇ LYNCH, PIERCE, ▇▇▇▇▇▇ &
▇▇▇▇▇ INCORPORATED
By:
-------------------------------------
Name:
Title:
21
SCHEDULE A
NUMBER OF
FIRM SECURITIES
UNDERWRITER TO BE PURCHASED
----------- ---------------
Credit Suisse First Boston LLC............................................
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated......................................................
Banc of America Securities LLC............................................
UBS Investment Bank.......................................................
▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co........................................................
▇▇▇▇▇▇▇ ▇▇▇▇▇ & Company, L.L.C............................................
---------------
Total..........................................
===============
SCHEDULE B
NUMBER OF
NUMBER OF OPTIONAL
FIRM SECURITIES SECURITIES TO
SELLING SHAREHOLDER TO BE SOLD BE SOLD
------------------- --------------- -------------
--------------- -------------
Total....................................................
=============== =============