4,500,000 Shares Global Traffic Network, Inc. Common Stock, Par Value $0.001 Per Share Underwriting Agreement
EXHIBIT 1.1
4,500,000 Shares
Global Traffic Network, Inc.
Common Stock, Par Value $0.001 Per Share
Underwriting Agreement
Global Traffic Network, Inc.
Common Stock, Par Value $0.001 Per Share
Underwriting Agreement
, 2007
XXXXXXXXXXX & CO.
As Representative of the several Underwriters
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
As Representative of the several Underwriters
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
Introductory. Global Traffic Network, Inc., a Delaware corporation (the “Company”), proposes
to sell to the several underwriters named in Schedule I hereto (the “Underwriters”) an aggregate of
4,500,000 shares (the “Firm Shares”) of common stock, par value $0.001 per share (the “Common
Stock”), of the Company. In addition, the Company has granted to the Underwriters an option to
purchase up to an additional 675,000 shares (the “Optional Shares”) of Common Stock, as provided in
Section 2. The Firm Shares and, if and to the extent such option is exercised, the Optional Shares
are collectively called the “Shares.” Xxxxxxxxxxx & Co. (“Xxxxxxxxxxx”) has agreed to act as
representative of the several Underwriters (in such capacity, the “Representative”) in connection
with the offering and sale of the Shares.
The Company has filed, in accordance with the provisions of the Securities Act of 1933, as
amended, and the rules and regulations thereunder (collectively, the “Securities Act”), with the
Securities and Exchange Commission (the “Commission”) a registration statement on Form S-1 (File
No. 333-144137) under the Securities Act (the “registration statement”), which contains a form of
prospectus to be used in connection with the public offering and sale of the Shares, and such
amendments thereof as may have been required to the date of this agreement. Such registration
statement, as amended, has been declared by the Commission to be effective under the Securities
Act. The Company will next file with the Commission pursuant to Rule 424(b) under the Securities
Act a final prospectus describing the Shares and the offering thereof, in such form as has been
provided to or discussed with, and approved by, the Representative. Such prospectus, in the form
first used by the Underwriters to confirm sales of the Shares, is called the “Prospectus.”
“Preliminary Prospectus” means any preliminary form of the Prospectus.
The term “Registration Statement” as used in this Agreement means the registration statement,
as amended at the time it became effective and as supplemented or amended (including all
information deemed to be part of and included in the registration statement pursuant to Rule 430B
under the Securities Act) prior to the execution of this Agreement, including (i) all financial
schedules and exhibits thereto and (ii) all documents incorporated by reference or deemed to be
incorporated by reference therein. If an abbreviated registration statement is prepared and filed
with the Commission in accordance with Rule 462(b) under the Securities Act (an “Abbreviated
Registration Statement”), the term “Registration
Statement” includes the Abbreviated Registration Statement.
“Permitted Free Writing Prospectuses,” as used herein, means the documents listed on Schedule
II hereto and each “road show” (as defined in Rule 433 under the Securities Act), if any, related
to the offering of the Shares contemplated hereby that is a “written communication” (as defined in
Rule 405 under the Securities Act) (each such road show, a “Road Show”). “Issuer Free Writing
Prospectus” as used herein means issuer free writing prospectus as defined in Rule 433 of the
Securities Act. “Disclosure Package,” as used herein, means the Preliminary Prospectus and the
Permitted Free Writing Prospectuses, if any, all considered together.
Any reference herein to the registration statement, the Registration Statement, the
Preliminary Prospectus or the Prospectus shall be deemed to refer to and include the documents
incorporated by reference therein pursuant to Item 12 of Form S-1 under the Securities Act. Any
reference herein to the terms “amend,” “amendment” or “supplement” with respect to the Registration
Statement, the Preliminary Prospectus or the Prospectus shall be deemed to refer to and include the
filing of any document under the Securities Exchange Act of 1934, as amended, and the rules and
regulations thereunder (collectively, the “Exchange Act”) after the effective date of the
Registration Statement, or the date of such Preliminary Prospectus, or the Prospectus, as the case
may be, deemed to be incorporated therein by reference (the “Incorporated Documents”).
The Company hereby confirms its agreement with the Underwriters as follows:
SECTION 1. Representations and Warranties of the Company. The Company hereby represents,
warrants and covenants to each Underwriter as follows:
(a) Registration Statement. The Registration Statement has been declared effective under the
Securities Act; no stop order of the Commission preventing or suspending the use of the Preliminary
Prospectus or the Prospectus or the effectiveness of the Registration Statement has been issued and
no proceedings for such purpose have been instituted or threatened by the Commission; the
Registration Statement complied when it became effective, complies and will comply, at the time of
purchase, in all material respects with the requirements of the Securities Act and the Preliminary
Prospectus complied, as of its date and at the time of purchase, in all material respects, with the
requirements of the Securities Act; the conditions to the use of Form S-1 in connection with the
offering and sale of the Shares as contemplated hereby have been satisfied; the Registration
Statement did not, as of the time such Registration Statement became effective, and at the time of
purchase, contain an untrue statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein not misleading; at all times
during the period beginning with the execution of this Agreement and ending at the time of
purchase, the Disclosure Package does not and will not include an untrue statement of a material
fact or omit to state a material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading; the Prospectus will comply,
as of the date that it is filed with the Commission, the date of the Prospectus and, as amended or
supplemented, at all times during the period beginning with the execution of this Agreement and
ending on the Closing Date (as defined below) or any Subsequent Closing Date (as defined below), in
all material respects, with the requirements of
-2-
the Securities Act (including, without limitation, Section 10(a) of the Securities Act); the
Prospectus, as of the date that it is filed with the Commission, the date of the Prospectus and, as
amended or supplemented, at the time of purchase did not or will not include an untrue statement of
a material fact or omit to state a material fact necessary in order to make the statements therein,
in the light of the circumstances under which they were made, not misleading; provided, however,
that the Company makes no representation or warranty with respect to any statement contained in or
omitted from the Registration Statement, the Disclosure Package or the Prospectus in reliance upon
and in conformity with information concerning the Underwriters and furnished in writing by or on
behalf of the Underwriters to the Company expressly for use therein; provided, further, that if, at
any time after the time of purchase, the Company is obligated to prepare and furnish to the
Underwriters an amendment or supplement to the Prospectus under Section 3(A)(e) of this Agreement
and so furnishes such amendment or supplement, then from and after the time that such Prospectus as
amended or supplemented is furnished to the Underwriters in accordance with Section 3(A)(e), the
term “Prospectus” shall be deemed to mean the Prospectus as so amended or supplemented.
Each copy of the Preliminary Prospectus and the Prospectus, delivered to the Underwriters for
use in connection with the offer and sale of the Shares was identical to the copies thereof filed
by electronic transmission pursuant to XXXXX (except as may be permitted by Regulation S-T under
the Securities Act).
There are no contracts or other documents required to be described in the Prospectus or to be
filed as exhibits to the Registration Statement which have not been described or filed as required.
(b) Company Not Ineligible Issuer. (i) At the time of filing the Registration Statement and
(ii) as of the date of the execution and delivery of this Agreement (with such date being used as
the determination date for purposes of this clause (ii)), the Company was not and is not an
Ineligible Issuer (as defined in Rule 405 of the Securities Act), without taking account of any
determination by the Commission pursuant to Rule 405 of the Securities Act that it is not necessary
that the Company be considered an Ineligible Issuer.
(c) Issuer Free Writing Prospectuses. Each Issuer Free Writing Prospectus, as of its issue
date and at all subsequent times through the completion of the public offer and sale of the Shares
or until any earlier date on which the Company notified or notifies the Representative as described
in Section 3A(e), (i) did not, does not and will not include any information that conflicted,
conflicts or will conflict with the information contained in the Registration Statement or the
Prospectus, including any document incorporated by reference therein that has not been superseded
or modified, and (ii) when taken together with the preliminary prospectus preceding or accompanying
such Issuer Free Writing Prospectus, did not, does not and will not contain any untrue statement of
a material fact or omit to state a material fact necessary in order to make the statements therein,
in the light of the circumstances under which they were made, not misleading.
(d) Distribution of Offering Material By the Company. The Company has not distributed and
will not distribute, prior to the later of the last Subsequent Closing Date (as defined below) and
the completion of the Underwriters’ distribution of the Shares, any offering
-3-
material in connection with the offering and sale of the Shares other than the Preliminary
Prospectus, the Prospectus, any Issuer Free Writing Prospectus reviewed and consented to in writing
by the Representative or the Registration Statement.
(e) The Underwriting Agreement. This Agreement has been duly authorized, executed and
delivered by, and is a valid and binding agreement of, the Company, enforceable against the Company
in accordance with its terms.
(f) Authorization of the Shares. The Shares to be purchased by the Underwriters from the
Company have been duly authorized for issuance and sale pursuant to this Agreement and, when issued
and delivered by the Company to the Underwriters pursuant to this Agreement on the Closing Date or
any Subsequent Closing Date, will be validly issued, fully paid and nonassessable.
(g) No Transfer Taxes. 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 Shares.
(h) No Applicable Registration or Other Similar Rights. There are no persons with
registration or other similar rights to have any equity or debt securities registered for sale
under the Registration Statement or included in the offering contemplated by this Agreement, except
for such rights as have been duly waived.
(i) No Material Adverse Change. Except as otherwise disclosed in the Disclosure Package,
subsequent to the respective dates as of which information is given in the Disclosure Package: (i)
there has been no material adverse change, or any development that could reasonably be expected to
result in a material adverse change, in the condition, financial or otherwise, or in the earnings,
business, properties, operations or prospects, whether or not arising from transactions in the
ordinary course of business, of the Company and its subsidiaries, considered as one entity (any
such change is called a “Material Adverse Change”); (ii) the Company and its subsidiaries,
considered as one entity, have not incurred any material liability or obligation, indirect, direct
or contingent, nor entered into any material transaction or agreement; and (iii) there has been no
dividend or distribution of any kind declared, paid or made by the Company or, except for dividends
paid to the Company or other subsidiaries, any of its subsidiaries on any class of capital stock or
repurchase or redemption by the Company or any of its subsidiaries of any class of capital stock.
(j) Independent Accountants. BDO Kendalls (NSW) (formerly BDO) (“BDO”), who has expressed its
opinion with respect to the financial statements (which term as used in this Agreement includes the
related notes thereto) filed with the Commission as a part of the Registration Statement and
included in the Disclosure Package and the Prospectus, are independent registered public
accountants as required by the Securities Act.
(k) Preparation of the Financial Statements. The financial statements and schedules of the
Company included or incorporated by reference in the Registration Statement and the Disclosure
Package and the Prospectus present fairly the consolidated financial position
-4-
of the Company and its subsidiaries as of and at the dates indicated and the results of their
operations and cash flows for the periods specified. The supporting schedules included or
incorporated by reference in the Registration Statement, if any, present fairly the information
required to be stated therein. Such financial statements and supporting schedules comply as to
form with the applicable accounting requirements of the Securities Act and have been prepared in
conformity with generally accepted accounting principles as applied in the United States applied on
a consistent basis throughout the periods involved, except as may be expressly stated in the
related notes thereto. No other financial statements or supporting schedules are required to be
included the Registration Statement, the Disclosure Package or the Prospectus. The financial data
set forth in the Prospectus and the Registration Statement under the captions “Summary — Summary of
Selected Financial Information,” “Capitalization,” “Selected Financial Data” and “Management’s
Discussion and Analysis of Financial Conditions and Results of Operations” fairly present the
information set forth therein on a basis consistent with that of the audited financial statements
contained in the Registration Statement.
(l) Incorporation and Good Standing of the Company and its Subsidiaries. Each of the Company
and its subsidiaries has been duly incorporated or organized and is validly existing as a
corporation, proprietary company or private limited company in good standing under the laws of the
jurisdiction of its incorporation or organization and has the power and authority (corporate or
otherwise) to own or lease, as the case may be, and operate its properties and to conduct its
business as described in the Disclosure Package and the Prospectus and, in the case of the Company,
to enter into and perform its obligations under this Agreement. Each of the Company and its
subsidiaries is duly qualified as a foreign corporation to transact business and is in good
standing in each jurisdiction in which such qualification is required, whether by reason of the
ownership or leasing of property or the conduct of business, except for such jurisdictions where
the failure to so qualify or to be in good standing would not, individually or in the aggregate,
result in a Material Adverse Change. All of the issued and outstanding capital stock or other
equity or ownership interest of each subsidiary has been duly authorized and validly issued, is
fully paid and nonassessable and, except as set forth in each of the Disclosure Package and the
Prospectus, is owned by the Company, directly or through subsidiaries, free and clear of any
security interest, mortgage, pledge, lien, encumbrance or adverse claim.
(m) Capitalization and Other Capital Stock Matters. The authorized, issued and outstanding
capital stock of the Company is as set forth in each of the Disclosure Package and the Prospectus
under the caption “Capitalization” (other than upon exercise of outstanding options or warrants
described in the Disclosure Package and the Prospectus). The Common Stock (including the Shares)
conform in all material respects to the descriptions thereof contained in each of the Disclosure
Package and the Prospectus. All of the issued and outstanding shares of Common Stock have been duly
authorized and validly issued, are fully paid and nonassessable and have been issued in compliance
with federal and state securities laws. None of the outstanding shares of Common Stock were issued
in violation of any preemptive rights, rights of first refusal or other similar rights to subscribe
for or purchase securities of the Company. There are no authorized or outstanding options,
warrants, preemptive rights, rights of first refusal or other rights to purchase, or equity or debt
securities convertible into or exchangeable or exercisable for, any capital stock of the Company or
any of its subsidiaries other than those described in the Disclosure Package and the Prospectus.
The description of the Company’s stock option, stock bonus and other stock plans or arrangements,
-5-
and the options or other rights granted thereunder, set forth in each of the Disclosure
Package and the Prospectus accurately and fairly presents the information required to be shown with
respect to such plans, arrangements, options and rights.
(n) No Issuance of Securities. Except as expressly disclosed in the disclosure Package and the
Prospectus, the Company has not sold or issued any securities during the six-month period preceding
the date of the Disclosure Package and the Prospectus, including any sales pursuant to Rule 144A
under, or Regulations D or S of, the Securities Act.
(o) Company’s Accounting System. The Company makes and keeps accurate books and records and
maintains a system of accounting controls sufficient to provide reasonable assurances that: (i)
transactions are executed in accordance with management’s general or specific authorization; (ii)
transactions are recorded as necessary to permit preparation of financial statements in conformity
with generally accepted accounting principles as applied in the United States and to maintain
accountability for assets; (iii) access to assets is permitted only in accordance with management’s
general or specific authorization; and (iv) the recorded accountability for assets is compared with
existing assets at reasonable intervals and appropriate action is taken with respect to any
differences.
(p) Stock Exchange Listing. The Shares are registered pursuant to Section 12(b) or 12(g) of
the Exchange Act and are listed on the Nasdaq Global Market, and the Company has taken no action
designed to, or likely to have the effect of, terminating the registration of the Shares under the
Exchange Act or delisting the Shares from the Nasdaq Global Market, nor has the Company received
any notification that the Commission or the Nasdaq Global Market is contemplating such
deregistration or delisting.
(q) Non-Contravention of Existing Instruments; No Further Authorizations or Approvals
Required. Neither the Company nor any of its subsidiaries is (i) in violation or in default (or,
with the giving of notice or lapse of time, would be in default) (“Default”) under its charter or
by-laws, (ii) in Default under any indenture, mortgage, loan or credit agreement, deed of trust,
note, contract, franchise, lease or other agreement, obligation, condition, covenant or instrument
to which the Company or any of its subsidiaries is a party or by which it may be bound, or to which
any of the property or assets of the Company or any of its subsidiaries is subject (each, an
“Existing Instrument”), or (iii) in violation of any statute, law, rule, regulation, judgment,
order or decree of any court, regulatory body, administrative agency, governmental body, arbitrator
or other authority having jurisdiction over the Company, such subsidiary or any of their
properties, as applicable. The Company’s execution, delivery and performance of this Agreement and
consummation of the transactions contemplated hereby and by the Disclosure Package and by the
Prospectus and the issuance and sale of the Shares (i) have been duly authorized by all necessary
corporate action and will not result in any Default under the charter or by-laws of the Company or
any subsidiary, (ii) will not conflict with or constitute a breach of, or Default under, or result
in the creation or imposition of any lien, charge or encumbrance upon any property or assets of the
Company or any of its subsidiaries pursuant to, or require the consent of any other party to, any
Existing Instrument, and (iii) will not result in any violation of any statute, law, rule,
regulation, judgment, order or decree applicable to the Company or any subsidiary of any court,
regulatory body, administrative agency, governmental body, arbitrator or other authority having
jurisdiction over the Company, any subsidiary or any of their properties.
-6-
No consent, approval, authorization or other order of, or registration or filing with, any
court or other governmental or regulatory authority or agency is required for the Company’s
execution, delivery and performance of this Agreement and consummation of the transactions
contemplated hereby and by the Disclosure Package and by the Prospectus, except such as have been
obtained or made by the Company and are in full force and effect under the Securities Act,
applicable state securities or blue sky laws and from the Nasdaq Global Market and NASD Inc. (the
“NASD”).
(r) No Material Actions or Proceedings. There are no legal or governmental actions, suits or
proceedings pending or threatened (i) against or affecting the Company or any of its subsidiaries,
(ii) which has as the subject thereof any officer or director of, or property owned or leased by,
the Company or any of its subsidiaries or (iii) relating to environmental or discrimination
matters, where in any such case (A)(1) there is a reasonable possibility that such action, suit or
proceeding might be determined adversely to the Company or any of its subsidiaries and (2) any such
action, suit or proceeding, if so determined adversely, would reasonably be expected to result in a
Material Adverse Change or adversely affect the consummation of the transactions contemplated by
this Agreement or (B) any such action, suit or proceeding is or would be material in the context of
the sale of Common Stock.
(s) Labor Matters. No labor problem or dispute with the employees of the Company or any of
its subsidiaries exists or is threatened or, to the knowledge of the Company, is imminent, and the
Company is not aware of any existing or imminent labor disturbance by the employees of any of its
or its subsidiaries’ principal suppliers, contractors or customers.
(t) Intellectual Property Rights. The Company and its subsidiaries own, possess, license or
have other rights to use, on reasonable terms, all patents, patent applications, trade and service
marks, trade and service xxxx registrations, trade names, copyrights, licenses, inventions, trade
secrets, technology, know-how and other intellectual property (collectively, the “Intellectual
Property”) necessary for the conduct of the Company’s or any of its subsidiary’s business as now
conducted or as proposed in each of the Disclosure Package and the Prospectus to be conducted.
Except as set forth in the Disclosure Package, (i) no party has been granted an exclusive license
to use any portion of such Intellectual Property owned by the Company or any of its subsidiaries;
(ii) to the knowledge of the Company, there is no infringement by third parties of any such
Intellectual Property owned by or exclusively licensed to the Company or any of its subsidiaries;
(iii) there is no pending or, to the knowledge of the Company, threatened action, suit, proceeding
or claim by others challenging the Company’s or any of its subsidiaries’ rights in or to any
Intellectual Property, and the Company is unaware of any facts which would form a reasonable basis
for any such claim; (iv) there is no pending or, to the knowledge of the Company, threatened
action, suit, proceeding or claim by others challenging the validity or scope of any such
Intellectual Property, and the Company is unaware of any facts which would form a reasonable basis
for any such claim; and (v) there is no pending or threatened action, suit, proceeding or claim by
others that the Company’s or any of its subsidiary’s business as now conducted infringes or
otherwise violates any patent, trademark, copyright, trade secret or other proprietary rights of
others, and the Company is unaware of any other fact which would form a reasonable basis for any
such claim.
-7-
(u) Patent Applications. Neither the Company nor any of its subsidiaries has filed or caused
to be filed with the U. S. Patent and Trademark Office (the “PTO”) or any applicable foreign and
international patent authorities any patent applications.
(v) Intellectual Property Licenses. Neither the Company nor any of its subsidiaries has
breached or is currently in breach of any provision of any license, contract or other agreement
governing the Company’s or any of its subsidiaries’ use of Intellectual Property owned by third
parties (collectively, the “Intellectual Property Licenses”) and no third party has alleged any
such breach and the Company is unaware of any facts that would form a reasonable basis for such a
claim. No other party to the Intellectual Property Licenses has breached or is currently in breach
of any provision of the Intellectual Property Licenses. Each of the Intellectual Property Licenses
is in full force and effect and constitutes a valid and binding agreement between the parties
thereto, enforceable in accordance with its terms, and there has not occurred any breach or default
under any such Intellectual Property Licenses or any event that with the giving of notice or lapse
of time would constitute a breach or default thereunder. Neither the Company nor any of its
subsidiaries has been or is currently involved in any disputes regarding the Intellectual Property
Licenses. There are no patents or patent applications licensed to the Company or any of its
subsidiaries.
(w) All Necessary Permits, etc. Each of the Company and its subsidiaries possesses such valid
and current licenses, certificates, authorizations or permits issued by the appropriate state,
federal or foreign regulatory agencies or bodies (“Licenses”) necessary to conduct their respective
businesses, except to the extent that any failure to have any such Licenses would not, individually
or in the aggregate, result in a Material Adverse Change. Neither the Company nor any of its
subsidiaries has received any notice of proceedings relating to the revocation or modification of,
or non-compliance with, any such License which, individually or in the aggregate, if the subject of
an unfavorable decision, ruling or finding, could result in a Material Adverse Change. Each of the
Company and its subsidiaries is in compliance with the terms of the Licenses. No registrations,
filings, applications, notices, transfers, consents, approvals, audits, qualifications, waivers or
other actions of any kind is required by virtue of the execution and delivery of this Agreement, or
of the consummation of the transactions contemplated hereby, by the Disclosure Package or by the
Prospectus and the issuance and sale of the Shares (i) to avoid the loss of any such License or any
asset, property or right pursuant to the terms thereof, or the violation or breach of any
applicable law thereto or (ii) to enable the Company or its subsidiaries to hold and enjoy the same
after the Closing Date or any Subsequent Closing Date, as the case may be, in the conduct of its
business as conducted prior to the Closing Date.
(x) Title to Properties. Each of the Company and its subsidiaries has good and marketable
title to all the properties and assets reflected as owned in the financial statements referred to
in Section 1(k) above (or elsewhere in the Disclosure Package), in each case free and clear of any
security interests, mortgages, liens, encumbrances, equities, claims and other defects. The real
property, improvements, equipment and personal property held under lease by the Company or any of
its subsidiaries are held under valid and enforceable leases, with such exceptions as are not
material and do not materially interfere with the use made or proposed to be made of such real
property, improvements, equipment or personal property by the Company or any of its subsidiaries.
-8-
(y) Tax Law Compliance. Each of the Company and its subsidiaries has filed all necessary
federal, state, local and foreign income, franchise and other applicable tax returns in a timely
manner (after giving effect to all permissible extensions) and has paid all taxes required to be
paid by it and, if due and payable, any related or similar assessment, fine or penalty levied
against it, except for any taxes, assessments, fines or penalties being contested in good faith for
which reserves in accordance with generally accepted accounting principles have been provided. Each
of the Company and its subsidiaries has made appropriate provisions in the applicable financial
statements referred to in Section 1(k) above in respect of all federal, state, local and foreign
income, franchise and other applicable taxes for all current or prior periods as to which the tax
liability of the Company or any of its subsidiaries has not been finally determined.
(z) Company Not an “Investment Company.” The Company has been advised of the rules and
requirements under the Investment Company Act of 1940, as amended (the “Investment Company Act”).
The Company is not, and after receipt of payment for the Shares and the application of the proceeds
thereof as contemplated under the caption “Use of Proceeds” in the Prospectus will not be, an
“investment company” within the meaning of the Investment Company Act and will conduct its business
in a manner so that it will not become subject to the Investment Company Act.
(aa) Insurance. Each of the Company and its subsidiaries is insured by recognized,
financially sound and reputable institutions with policies in such amounts and with such
deductibles and covering such risks as are generally deemed adequate and customary in the business
in which it is engaged, including, but not limited to, policies covering real and personal property
owned or leased by the Company and its subsidiaries against theft, damage, destruction, and acts of
vandalism. All policies of insurance and fidelity or surety bonds insuring the Company and its
subsidiaries or their businesses, assets, employees, officers and directors are in full force and
effect. Each of the Company and its subsidiaries is in compliance with the terms of such policies
and instruments in all material respects; and there are no claims by the Company or any of its
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 of its
subsidiaries has been refused any insurance coverage sought or applied for. Each of the Company and
its subsidiaries has no reason to believe that it will not be able (i) to renew its existing
insurance coverage as and when such policies expire or (ii) to obtain comparable coverage from
similar institutions as may be necessary or appropriate to conduct its business as now conducted
and at a cost that would not result in a Material Adverse Change.
(bb)
No Restrictions on Dividends. No
subsidiary of the Company is currently prohibited, directly or indirectly, from paying any
dividends to the Company, from making any other distribution on such subsidiary’s capital stock,
from repaying to the Company any loans or advances to such subsidiary from the Company or from
transferring any of such subsidiary’s property or assets to the Company or any other subsidiary of
the Company, except as described in or contemplated by the Disclosure Package and the Prospectus.
-9-
(cc) No Price Stabilization or Manipulation. The Company has not taken and will not take,
directly or indirectly, any action designed to or that might be reasonably expected to cause or
result in stabilization or manipulation of the price of any security of the Company to facilitate
the sale or resale of the Shares. The Company acknowledges that the Underwriters may engage in
passive market making transactions in the Shares on the Nasdaq Global Market in accordance with
Regulation M under the Exchange Act.
(dd) Related Party Transactions. There are no business relationships or related-party
transactions involving the Company, any subsidiary or any other person required by the Securities
Act or the Exchange Act to be described in the Preliminary Prospectus or the Prospectus that have
not been described as required.
(ee) Controls and Procedures. The Company has established and maintains disclosure controls
and procedures (as such term is defined in Rule 13a-15 and 15d-15 under the Exchange Act), which
(i) are designed to ensure that material information relating to the Company, including its
consolidated subsidiaries, is made known to the Company’s principal executive officer and its
principal financial officer by others within those entities, particularly during the periods in
which the periodic reports required under the Exchange Act are being prepared, (ii) have been
evaluated for effectiveness as of a date within 90 days prior to the earlier of the date that the
Company filed its most recent annual or quarterly report with the Commission and the date of the
Disclosure Package and the Prospectus and (iii) are effective to perform the functions for which
they were established.
(ff) No Material Weakness in Internal Controls. Except as disclosed in the Disclosure Package
and the Prospectus, since the end of the Company’s most recent audited fiscal year, there has been
(i) no significant deficiency or material weakness in the design or operation of the Company’s
internal control over financial reporting (whether or not remediated) (ii) no 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 (iii) no change in the Company’s internal control
over financial reporting that has materially affected, or is reasonably likely to materially
affect, the Company’s internal control over financial reporting.
(gg) No Unlawful Contributions or Other Payments. Neither the Company, any of its
subsidiaries nor any director, officer, agent, employee or affiliate of the Company or any of its
subsidiaries is aware of or has taken any action, directly or indirectly, that would result in a
violation by such persons of the FCPA (as defined below), including, without limitation, making use
of the mails or any means or instrumentality of interstate commerce corruptly in furtherance of an
offer, payment, promise to pay or authorization of the payment of any money, or other property,
gift, promise to give, or authorization of the giving of anything of value to any “foreign
official” (as such term is defined in the FCPA) or any foreign political party or official thereof
or any candidate for foreign political office, in contravention of the FCPA, and each of the
Company and its subsidiaries and their respective affiliates have conducted their businesses in
compliance with the FCPA and have instituted and maintain policies and procedures designed to
ensure, and which are reasonably expected to continue to ensure, continued compliance therewith.
For purposes of this paragraph, “FCPA” means Foreign Corrupt Practices Act of 1977, as amended, and
the rules and regulations thereunder.
-10-
(hh) No Conflict with Money Laundering Laws. The operations of each of the Company and its
subsidiaries are and have been conducted at all times in compliance with applicable financial
recordkeeping and reporting requirements of the Currency and Foreign Transactions Reporting Act of
1970, as amended, the money laundering statutes of all applicable jurisdictions, the rules and
regulations thereunder and any related or similar rules, regulations or guidelines issued,
administered or enforced by any governmental agency (collectively, the “Money Laundering Laws”) and
no action, suit or proceeding by or before any court or governmental agency, authority or body or
any arbitrator involving the Company or any of its subsidiaries with respect to the Money
Laundering Laws is pending or, to the knowledge of the Company, threatened.
(ii) No Conflict with OFAC Laws. Neither the Company, any of its subsidiaries nor any
director, officer, agent, employee or affiliate of the Company or any of its subsidiaries, is
currently subject to any U.S. sanctions administered by the Office of Foreign Assets Control of the
U.S. Treasury Department (“OFAC”); and each of the Company and its subsidiaries will not directly
or indirectly use the proceeds of the offering, or lend, contribute or otherwise make available
such proceeds, to any subsidiary, joint venture partner or other person or entity, for the purpose
of financing the activities of any person currently subject to any U.S. sanctions administered by
OFAC.
(jj) Compliance with Environmental Laws. Except as otherwise disclosed in the Disclosure
Package and the Prospectus: (i) neither the Company nor any of its subsidiaries is in violation of
any federal, state, local or foreign statute, law, rule, regulation, ordinance, code, order,
permit, policy or rule of common law or any judicial or administrative order, consent, decree or
judgment or other requirement relating to pollution or protection of human health or the
environment (including, without limitation, ambient air, surface water, groundwater, land surface
or subsurface strata) or wildlife, including without limitation, laws and regulations relating to
emissions, discharges, releases or threatened releases of chemicals, pollutants, contaminants,
wastes, toxic substances, hazardous substances, petroleum and petroleum products (collectively,
“Materials of Environmental Concern”), or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of Materials of Environment
Concern (collectively, “Environmental Laws”), which violation includes, but is not limited to,
noncompliance with any permits or other governmental authorizations required for the operation of
the business of the Company or any of its subsidiaries under applicable Environmental Laws, or
noncompliance with the terms and conditions thereof, nor has the Company or any of its subsidiaries
received any written communication, whether from a governmental authority, citizens group, employee
or otherwise, that alleges that the Company or any of its subsidiaries is in violation of any
Environmental Law; (ii) there is no claim, action or cause of action filed with a court or
governmental authority, no investigation with respect to which the Company or any of its
subsidiaries has received written notice, and no written notice by any person or entity alleging
potential liability for investigatory costs, cleanup costs, governmental responses costs, natural
resources damages, property damages, personal injuries, attorneys’ fees or penalties arising out
of, based on or resulting from the presence, or release into the environment, of any Material of
Environmental Concern at any location owned, leased or operated by the Company or any of its
subsidiaries now or in the past (collectively, “Environmental Claims”), pending or threatened
against the Company, any of its subsidiaries or any person or entity whose liability for any
Environmental Claim the Company or any of its
-11-
subsidiaries has retained or assumed either contractually or by operation of law; (iii) there
are no past, present or anticipated future actions, activities, circumstances, conditions, events
or incidents, including, without limitation, the release, emission, discharge, presence or disposal
of any Material of Environmental Concern, that reasonably could result in a violation of any
Environmental Law, require expenditures to be incurred pursuant to Environmental Law, or form the
basis of a potential Environmental Claim against the Company, any of its subsidiaries or against
any person or entity whose liability for any Environmental Claim the Company or any of its
subsidiaries has retained or assumed either contractually or by operation of law; and (iv) neither
the Company nor any of its subsidiaries is subject to any pending or threatened proceeding under
Environmental Law to which a governmental authority is a party and which is reasonably likely to
result in monetary sanctions of $100,000 or more.
(kk) ERISA Compliance. No “prohibited transaction” (as defined in Section 406 of the Employee
Retirement Income Security Act of 1974, as amended, including the regulations and published
interpretations thereunder (“ERISA”), or Section 4975 of the Internal Revenue Code of 1986, as
amended from time to time (the “Code”)) or “accumulated funding deficiency” (as defined in Section
302 of ERISA) or any of the events set forth in Section 4043(b) of ERISA (other than events with
respect to which the thirty-day notice requirement under Section 4043 of ERISA has been waived) has
occurred with respect to any employee benefit plan of the Company or any of its subsidiaries. Each
employee benefit plan of the Company or any of its subsidiaries is in compliance with applicable
law, including ERISA and the Code. The Company and its subsidiaries have not incurred and do not
expect to incur liability under Title IV of ERISA with respect to the termination of, or withdrawal
from, any pension plan as defined in ERISA). Each “pension plan” for which the Company or any of
its subsidiaries would have any liability that is intended to be qualified under Section 401(a) of
the Code is so qualified and nothing has occurred, whether by action or by failure to act, which
could cause the loss of such qualification.
(ll) Brokers. There is no broker, finder or other party, except for the Underwriters, that is
entitled to receive from the Company any brokerage or finder’s fee or other fee or commission as a
result of any transactions contemplated by this Agreement.
(mm) No Outstanding Loans or Other Indebtedness. There are no outstanding loans, advances
(except normal advances for business expenses in the ordinary course of business) or guarantees or
indebtedness by the Company or any of its subsidiaries to or for the benefit of any of the officers
or directors of the Company, any of its subsidiaries or any of the members of any of them, except
as disclosed in the Disclosure Package and the Prospectus.
(nn) Xxxxxxxx-Xxxxx Compliance. There is and has been no failure on the part of the Company
or any of its subsidiaries or any of the their respective directors or officers, in their
capacities as such, to comply with any applicable provision of the Xxxxxxxx-Xxxxx Act of 2002 and
the rules and regulations promulgated in connection therewith (the “Xxxxxxxx-Xxxxx Act”), including
Section 402 related to loans.
(oo) Nasdaq Governance Rules. The Company has duly adopted organizational structures and
policies sufficient to comply with the requirements of the Nasdaq Stock Market corporate governance
rules in effect as of the date hereof.
-12-
(pp) Subsidiaries. The Company does not own or control, directly or indirectly, any
corporation, association, or other entity other than the subsidiaries listed in Exhibit 21 to the
Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2006 and Global Traffic
Network (UK) Limited, a private company limited by shares incorporated in England and Wales. With
the exception of the subsidiaries listed in Exhibit 21 to the Company’s Annual Report on Form 10-K
for the fiscal year ended June 30, 2006, the Company has no subsidiaries which, considered alone or
in the aggregate as a single subsidiary, constitutes a “significant subsidiary” as defined in Rule
1-02 of Regulation S-X.
(qq) Lending Relationship. Except as disclosed in the Registration Statement and the
Disclosure Package and the Prospectus, the Company (i) does not have any material lending or other
relationship with any bank or lending affiliate of any Underwriter, and (ii) does not intend to use
any of the proceeds from the sale of the Shares hereunder to repay any outstanding debt owed to any
affiliate of any Underwriter.
(rr) Statistical and Market Related Data. Nothing has come to the attention of the Company
that has caused the Company to believe that the statistical and market-related data included in
each of the Disclosure Package and the Prospectus is not based on or derived from sources that are
reliable and accurate.
(ss) SEC Comment Letters. There are no comments outstanding under any letters from the staff
of the SEC relating to the Company’s SEC filings.
(tt) Compliance with Laws. Except as expressly disclosed in the Registration Statement, the
Disclosure Package and the Prospectus, the Company and its subsidiaries: (i) are and at all times
have been in full compliance with all statutes, rules, regulations, permits, licenses,
authorizations, ordinances, orders, decrees and guidances issued by the applicable federal, state,
local or foreign governmental or self-regulatory agencies or bodies having authority over the
Company or its subsidiaries (“Governmental Authority”), applicable to the conduct of their
business, use and piloting of fixed wing aircraft and helicopters, ownership, testing, development,
manufacture, packaging, processing, recordkeeping, use, distribution, marketing, labeling,
promotion, sale, offer for sale, storage, import, export or disposal of any product manufactured or
distributed by the Company and its subsidiaries (the “Applicable Laws”), except for such
non-compliance as would not, individually or in the aggregate, result in a Material Adverse Change;
(ii) have not received any notice of adverse finding, warning letter, untitled letter or other
correspondence or notice from any Governmental Authority alleging or asserting noncompliance with
any Applicable Laws or any licenses, certificates, approvals, clearances, registrations,
authorizations, permits, orders and supplements or amendments thereto required by any such
Applicable Laws (“Authorizations”); (iii) possess all Authorizations and such Authorizations are
valid and in full force and effect and neither the Company nor any of its Subsidiaries is in
violation of any term of any such Authorizations; (iv) have not received notice of any pending or
threatened claim, suit, proceeding, hearing, enforcement, audit, investigation, arbitration or
other action from any Governmental Authority or third party alleging that any company operation or
activity is in violation of any Applicable Laws or Authorizations and the Company has no knowledge
or reason to believe that any such Governmental Authority or third party is considering any such
claim, suit, proceeding, hearing, enforcement, audit, investigation, arbitration or other action;
(v) have not received notice that any Governmental Authority has
-13-
taken, is taking or intends to take action to limit, suspend, modify or revoke any
Authorizations and the Company has no knowledge or reason to believe that any such Governmental
Authority is considering such action; (vi) have filed, obtained, maintained or submitted all
reports, documents, forms, notices, applications, records, claims, submissions and supplements or
amendments as are required by all Applicable Laws or Authorizations and all such reports,
documents, forms, notices, applications, records, claims, submissions and supplements or amendments
were complete and correct in all material respects on the date filed (or were corrected or
supplemented by a subsequent submission); and (vii) have not, either voluntarily or involuntarily,
initiated, conducted, or issued or caused to be initiated, conducted or issued, any recall, market
withdrawal or replacement, post-sale warning or other notice or action relating to an alleged lack
of efficacy of any product, any alleged product defect, or violation on any Applicable Laws or
Authorizations; the Company is not aware of any facts that would cause the Company or its
Subsidiaries to initiate any such notice or action; and the Company does not have any knowledge or
reason to believe that any Governmental Authority or third party intends to initiate any such
notice or
action.
(uu) Preliminary Prospectus. Each Preliminary Prospectus filed as part of the Registration
Statement, or filed pursuant to Rule 424 under the Securities Act, complied when so filed with the
Securities Act and the applicable rules and regulations of the Commission thereunder.
The Company acknowledges that the Underwriters and for purposes of the opinions to be
delivered pursuant to Section 5 hereof, counsel to the Company and counsel to the Underwriters,
will rely upon the accuracy and truthfulness of the foregoing representations and hereby consents
to such reliance.
SECTION 2. Purchase, Sale and Delivery of the Shares.
(a) The Firm Shares. The Company agrees to sell to the several Underwriters the Firm Shares
upon the terms herein set forth. On the basis of the representations, warranties and agreements
herein contained, and upon the terms but subject to the conditions herein set forth, the
Underwriters agree, severally and not jointly, to purchase from the Company that number of Firm
Shares, which number of Firm Shares is set forth opposite the name of such Underwriter in Schedule
I hereto. The purchase price per Firm Common Share to be paid by the several Underwriters to the
Company shall be $ per share.
(b) The Closing Date. Delivery of certificates for the Firm Shares to be purchased by the
Underwriters and payment therefor shall be made at the offices of O’Melveny & Xxxxx LLP, 000
Xxxxxxx Xxxxxx, Xxxxx 0000, Xxx Xxxxxxxxx, Xxxxxxxxxx 00000 (or such other place as may be agreed
to by the Company and the Representative) at 10:00 a.m. Eastern time, on the third business day
after the date of this Agreement (fourth, if the pricing occurs after 4:30 p.m. Eastern time), or
such other time and date as shall be agreed upon by the Representative and the Company, but not
more than three business days after the foregoing date (the time and date of such closing are
called the “Closing Date”).
(c) The Optional Shares; the Subsequent Closing Date. In addition, the Company hereby grants
an option to the several Underwriters to purchase on the basis of the
-14-
representations, warranties and agreements herein contained, and upon the terms but subject to
the conditions herein set forth, severally and not jointly, up to an aggregate of 675,000 Optional
Shares from the Company at the purchase price per share to be paid by the Underwriters for the Firm
Shares. The option granted hereunder may be exercised at any time and from time to time upon notice
by the Representative to the Company, which notice may be given at any time within 30 days from the
date of this Agreement. Such notice shall set forth (i) the aggregate number of Optional Shares as
to which the Underwriters are exercising the option, (ii) the names and denominations in which the
certificates for the Optional Shares are to be registered and (iii) the time, date and place at
which such certificates will be delivered (which time and date may be simultaneous with, but not
earlier than, the Closing Date; and in such case the term “Closing Date” shall refer to the time
and date of delivery of certificates for the Firm Shares and the Optional Shares). Each time and
date of delivery, if subsequent to the Closing Date, is called a “Subsequent Closing Date” and
shall be determined by the Representative and shall not be earlier than three nor later than five
full business days after delivery of such notice of exercise. If any Optional Shares are to be
purchased, each Underwriter agrees, severally and not jointly, to purchase the number of Optional
Shares (subject to such adjustments to eliminate fractional shares as the Representative may
determine) that bears the same proportion to the total number of Optional Shares to be purchased as
the number of Firm Shares set forth on Schedule I opposite the name of such Underwriter bears to
the total number of Firm Shares.
(d) Public Offering of the Shares. The Representative hereby advises the Company that the
Underwriters intend to offer for sale to the public, as described in the Prospectus, their
respective portions of the Shares as soon after this Agreement has been executed and the
Registration Statement has been declared effective as the Representative, in its sole judgment, has
determined is advisable and practicable.
(e) Payment for the Shares. Payment for the Shares to be sold by the Company shall be made at
the Closing Date (and, if applicable, on any Subsequent Closing Date) by wire transfer of
immediately available funds to the order of the Company.
It is understood that the Representative has been authorized, for its own account and the
accounts of the several Underwriters, to accept delivery of and receipt for, and make payment of
the purchase price for, the Firm Shares and any Optional Shares the Underwriters have agreed to
purchase. Xxxxxxxxxxx, individually and not as the Representative of the Underwriters, may (but
shall not be obligated to) make payment for any Shares to be purchased by any Underwriter whose
funds shall not have been received by the Representative by the Closing Date or any Subsequent
Closing Date, as the case may be, for the account of such Underwriter, but any such payment shall
not relieve such Underwriter from any of its obligations under this Agreement.
(f) Delivery of the Shares. Delivery of the Firm Shares and the Optional Shares shall be made
through the facilities of The Depository Trust Company unless the Representative shall otherwise
instruct. Time shall be of the essence, and delivery at the time and place specified in this
Agreement is a further condition to the obligations of the Underwriters.
SECTION 3. Covenants.
-15-
A. Covenants of the Company. The Company covenants and agrees with each Underwriter as
follows:
(a) Delivery of Registration Statement, Disclosure Package and Prospectus. The Company shall
furnish to the Representative, without charge, one signed copy of the Registration Statement
(including exhibits thereto) and for delivery to each other Underwriter a conformed copy of the
Registration Statement (without exhibits thereto) and to furnish to the Representative in New York
City, without charge, prior to 10:00 a.m. New York City time on the second business day next
succeeding the date of this Agreement and during the period mentioned in Section 3(b) or 3(d)
below, as many copies of the Disclosure Package and the Prospectus and any supplements and
amendments thereto or to the Registration Statement as the Representative may reasonably request.
(b) Representative’s Review of Proposed Amendments and Supplements. During such period
beginning on the date of purchase, and ending on the later of the Closing Date or such date, as in
the opinion of counsel for the Underwriters, the Prospectus is no longer required by law to be
delivered in connection with sales of the Shares by an Underwriter or dealer, including in
circumstances where such requirement may be satisfied pursuant to Rule 172 (the “Prospectus
Delivery Period”), prior to amending or supplementing the Registration Statement, the Disclosure
Package or the Prospectus, the Company shall furnish to the Representative for review a copy of
each such proposed amendment or supplement, and the Company shall not file or use any such proposed
amendment or supplement without the Representative’s consent.
(c) Securities Act Compliance. After the date of this Agreement, the Company shall promptly
advise the Representative in writing (i) of the receipt of any comments of, or requests for
additional or supplemental information from, the Commission, (ii) of the time and date of any
filing of any post-effective amendment to the Registration Statement or any amendment or supplement
to any Preliminary Prospectus or the Prospectus, (iii) of the time and date that any post-effective
amendment to the Registration Statement becomes effective and (iv) of the issuance by the
Commission of any stop order suspending the effectiveness of the Registration Statement or any
post-effective amendment thereto or of any order preventing or suspending the use of any
Preliminary Prospectus or the Prospectus, or of any proceedings to remove, suspend or terminate
from listing or quotation the Common Stock from any securities exchange upon which it is listed for
trading or included or designated for quotation, or of the threatening or initiation of any
proceedings for any of such purposes. The Company shall use its best efforts to prevent the
issuance of any such stop order or suspension of such use. If the Commission shall enter any such
stop order at any time, the Company will use its best efforts to obtain the lifting of such order
at the earliest possible moment. Additionally, the Company agrees that it shall comply with the
provisions of Rules 424(b) and 430B, as applicable, under the Securities Act and will use its best
efforts to confirm that any filings made by the Company under such Rule 424(b) were received in a
timely manner by the Commission.
(d) Exchange Act Compliance. During the Prospectus Delivery Period, the Company will file all
documents required to be filed with the Commission pursuant to Section 13, 14 or 15 of the Exchange
Act in the manner and within the time periods required by the Exchange Act.
-16-
(e) Amendments and Supplements to the Prospectus and Other Securities Act Matters. If, during
the Prospectus Delivery Period, any event or development shall occur or condition exist as a result
of which the Disclosure Package or the Prospectus as then supplemented would include any untrue
statement of a material fact or omit 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, or
if it shall be necessary to amend or supplement the Disclosure Package or the Prospectus in order
to make the statements therein, in the light of the circumstances when the Disclosure Package or
the Prospectus is delivered to a purchaser, not misleading, or if in the opinion of the
Representative or counsel for the Underwriters it is otherwise necessary to amend or supplement the
Disclosure Package or the Prospectus in order to comply with law, the Company agrees to (i) notify
the Representative of any such event or condition and (ii) promptly prepare (subject to Sections
3(A)(b) and 3(A)(d) hereof), file with the Commission and furnish at its own expense to the
Underwriters and to dealers, amendments or supplements to the Disclosure Package or the Prospectus,
necessary in order to make the statements in the Disclosure Package or the Prospectus as so amended
or supplemented, in the light of the circumstances when the Disclosure Package or the Prospectus is
delivered to a purchaser, not misleading or so that the Disclosure Package or the Prospectus, as
amended or supplemented, will comply with law. If at any time following the issuance of an Issuer
Free Writing Prospectus there occurred or occurs an event or development as a result of which such
Issuer Free Writing Prospectus conflicted or would conflict with the information contained in the
Registration Statement or any other registration statement relating to the Shares or included or
would include an untrue statement of a material fact or omitted or would omit to state a material
fact necessary in order to make the statements therein, in the light of the circumstances under
which they were made or prevailing at the time such event or development occurs or condition
exists, not misleading, the Company will promptly notify the Representative and will promptly amend
or supplement such Issuer Free Writing Prospectus to eliminate or correct such conflict, untrue
statement or omission.
(f) Permitted Free Writing Prospectuses. Without the prior written consent of the
Representative, which consent may be withheld in the sole discretion of the Representative for any
reason or no reason, the Company shall not make any offer relating to the Shares that would
constitute an Issuer Free Writing Prospectus or that would otherwise constitute a “free writing
prospectus” (as defined in Rule 405 of the Securities Act) required to be filed by the Company with
the Commission or retained by the Company under Rule 433 of the Securities Act; provided that the
prior written consent of the Representative hereto shall be deemed to have been given in respect of
the Free Writing Prospectuses included in Schedule II hereto. The Company agrees that (i) it has
treated and will treat, as the case may be, each Permitted Free Writing Prospectus as an Issuer
Free Writing Prospectus, and (ii) has complied and will comply, as the case may be, with the
requirements of Rules 164 and 433 of the Securities Act applicable to any Permitted Free Writing
Prospectus, including in respect of timely filing with the Commission, legending and record
keeping.
(g) Copies of any Amendments and Supplements to the Prospectus. The Company shall furnish the
Representative, without charge, during the Prospectus Delivery Period, as many copies of each
Preliminary Prospectus, the Disclosure Package, the Prospectus and any amendments and supplements
thereto as the Representative may request.
-17-
(h) Copies of the Registration Statement and the Prospectus. The Company shall furnish to the
Representative and counsel for the Underwriters signed copies of the Registration Statement
(including exhibits thereto) and, so long as delivery of a prospectus by an Underwriter or dealer
may be required by the Securities Act, as many copies of each Preliminary Prospectus and the
Prospectus and any supplement thereto as the Representative may reasonably request.
(i) Blue Sky Compliance. The Company shall cooperate with the Representative and counsel for
the Underwriters to qualify or register the Shares for sale under (or obtain exemptions from the
application of) the state securities or blue sky laws or Canadian provincial securities laws of
those jurisdictions designated by the Representative, shall comply with such laws and shall
continue such qualifications, registrations and exemptions in effect so long as required for the
distribution of the Shares. The Company shall not be required to qualify as a foreign corporation
or to take any action that would subject it to general service of process in any such jurisdiction
where it is not presently qualified or where it would be subject to taxation as a foreign
corporation, other than those arising out of the offering or sale of the Shares in any jurisdiction
where it is not now so subject. The Company will advise the Representative promptly of the
suspension of the qualification or registration of (or any such exemption relating to) the Shares
for offering, sale or trading in any jurisdiction or any initiation or threat of any proceeding for
any such purpose, and in the event of the issuance of any order suspending such qualification,
registration or exemption, the Company shall use its best efforts to obtain the withdrawal thereof
at the earliest possible moment.
(j) Use of Proceeds. The Company shall apply the net proceeds from the sale of the Shares
sold by it in the manner described under the caption “Use of Proceeds” in each of the Disclosure
Package and the Prospectus.
(k) Transfer Agent. The Company shall engage and maintain, at its expense, a registrar and
transfer agent for the Common Stock.
(l) Earnings Statement. As soon as practicable, the Company shall make generally available to
its security holders and to the Representative an earnings statement (which need not be audited)
covering the twelve-month period beginning after the effective date of the Registration Statement
that satisfies the provisions of Section 11(a) of the Securities Act and Rule 158 under the
Securities Act.
(m) Periodic Reporting Obligations. During the Prospectus Delivery Period the Company shall
file, on a timely basis, with the Commission and the Nasdaq Global Market all reports and documents
required to be filed under the Exchange Act. Additionally, the Company shall report the use of
proceeds from the issuance of the Shares as may be required under Rule 463 under the Securities
Act.
(n) Company to Provide Interim Financial Statements. Prior to the Closing Date, the Company
will furnish the Underwriters, as soon as they have been prepared by or are available to the
Company, a copy of any unaudited interim financial statements of the Company for any period
subsequent to the period covered by the most recent financial statements appearing in the
Registration Statement and the Prospectus.
-18-
(o) Listing. The Company will use its best efforts to effect and maintain the listing of the
Shares on the Nasdaq Global Market and maintain the listing of the Shares on the Nasdaq Global
Market.
(p) Agreement Not to Offer or Sell Additional Shares. During the period commencing on the
date hereof and ending on the 90th day following the date of the Prospectus (the “Lock-up Period”),
the Company will not, without the prior written consent of Xxxxxxxxxxx (which consent may be
withheld at the sole discretion of Xxxxxxxxxxx), directly or indirectly, sell, offer, contract or
grant any option to sell (including, without limitation, any short sale), pledge, lend, transfer or
establish an open “put equivalent position” or liquidate or decrease a “call equivalent position”
within the meaning of Rule 16a-1 under the Exchange Act, enter into any swap or other arrangement
that transfers to another, in whole or in part, any of the economic consequences of ownership, or
otherwise dispose of or transfer (or enter into any transaction which is designed to result in the
disposition or transfer of), any shares of Common Stock, options or warrants to acquire shares of
Common Stock, or securities exchangeable or exercisable for or convertible into shares of Common
Stock (regardless of whether any such transaction is to be settled by delivery of any shares of
Common Stock or other securities, in cash or otherwise) currently or hereafter owned either of
record or beneficially (as defined in Rule 13d-3 under the Exchange Act), or publicly announce an
intention to do any of the foregoing, or announce the offering of, or file any registration
statement under the Securities Act in respect of, any shares of Common Stock, options or warrants
to acquire shares of the Common Stock or securities exchangeable or exercisable for or convertible
into shares of Common Stock (other than as contemplated by this Agreement with respect to the
Shares); provided, however, that the foregoing does not apply to (i) the issuance of employee stock
options not exercisable during the Lock-Up Period pursuant to stock option plans described in the
Registration Statement and the Prospectus; (ii) any exercise of warrants or options to acquire
shares of Common Stock (including with respect to any “net exercise” provisions thereof)
outstanding on the date of this Agreement or the exchange of any securities of the Company for
Common Stock; provided, however, that any shares of Common Stock received upon the exercise of such
warrants or exchange of such securities shall not be transferable in any respect during
the Lock-Up Period; (iii) with the prior written consent of the Representative, which consent shall
not be unreasonably withheld or delayed, the issuance of shares of Common Stock or securities
exchangeable or exercisable for or convertible into shares of Common Stock to a bona fide third
party as consideration for a business acquisition by the Company or its subsidiaries; provided,
that the consideration for such acquisition is primarily non-cash; or (iv) any sale of shares of
Common Stock to the Underwriters. Notwithstanding the foregoing, if (x) during the last 17 days of
the 90-day restricted period the Company issues an earnings release or material news or a material
event relating to the Company occurs, or (y) prior to the expiration of the 90-day restricted
period, the Company announces that it will release earnings results during the 16-day period
beginning on the last day of the 90-day period, the restrictions imposed in this clause shall
continue to apply until the expiration of the 18-day period beginning on the issuance of the
earnings release or the occurrence of the material news or material event. The Company will provide
the Representative and any co-managers and each individual subject to the restricted period
pursuant to the lock-up letters described in Section 5(i) with prior notice of any such
announcement that gives rise to an extension of the restricted period.
-19-
(q) Compliance with Xxxxxxxx-Xxxxx Act. The Company shall comply with all applicable
securities and other laws, rules and regulations, including, without limitation, the Xxxxxxxx-Xxxxx
Act, and use its best efforts to cause the Company’s directors and officers, in their capacities as
such, to comply with such laws, rules and regulations, including, without limitation, the
provisions of the Xxxxxxxx-Xxxxx Act.
(r) Future Reports to Stockholders. For so long as required by the Exchange Act, the Company
will furnish or make available to its stockholders in compliance with the Exchange Act as soon as
practicable after the end of each fiscal year an annual report (including a balance sheet and
statements of income, stockholders’ equity and cash flows of the Company and its consolidated
subsidiaries certified by independent registered public accountants) and, as soon as practicable
after the end of each of the first three quarters of each fiscal year (beginning with the fiscal
quarter ending after the effective date of the Registration Statement), make available to its
stockholders consolidated summary financial information of the Company and its subsidiaries for
such quarter in reasonable detail.
(s) Future Reports to the Representative. For so long as the Company has a class of
securities registered under the Exchange Act, during the period of five years hereafter the Company
will furnish to the Representative at 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000; Attention: Ms.
Sun Xxx Xxxx: (i) as soon as practicable after the end of each fiscal year, copies of the Annual
Report of the Company containing the balance sheet of the Company as of the close of such fiscal
year and statements of income, stockholders’ equity and cash flows for the year then ended and the
opinion thereon of the Company’s independent public or certified public accountants; (ii) as soon
as practicable after the filing thereof, copies of each proxy statement, Annual Report on Form
10-K, Quarterly Report on Form 10-Q, Current Report on Form 8-K or other report filed by the
Company with the Commission, NASD or any securities exchange; and (iii) as soon as available,
copies of any report or communication of the Company mailed generally to holders of its capital
stock; provided, however, if such documents are publicly available in electronic format on the
website of the Company or the Commission, the Company shall be deemed to have satisfied this
covenant.
(t) Investment Limitation. The Company shall not invest, or otherwise use the proceeds
received by the Company from its sale of the Shares in such a manner as would require the Company
or any of its subsidiaries to register as an investment company under the Investment Company Act.
(u) No Manipulation of Price. The Company will not take, directly or indirectly, any action
designed to cause or result in, or that has constituted or might reasonably be expected to
constitute, under the Exchange Act or otherwise, the stabilization or manipulation of the price of
the Shares or any other securities of the Company, whether to facilitate the sale or resale of the
Shares, or otherwise.
The Representative, on behalf of the several Underwriters, may, in its sole discretion, waive
in writing the performance by the Company of any one or more of the foregoing covenants or extend
the time for their performance.
-20-
B. Covenant of the Underwriters. Each Underwriter agrees that, unless it obtains the
prior written consent of the Company, it will not make any offer relating to the Shares that would
constitute an Issuer Free Writing Prospectus or that would otherwise (without taking into account
any approval, authorization, use or reference to such Free Writing Prospectus by the Company)
constitute a Free Writing Prospectus required to be filed by the Company with the Commission or
retained by the Company under Rule 433 of the Securities Act; provided that the prior written
consent of the Company hereto shall be deemed to have been given in respect of any Free Writing
Prospectuses included in Schedule II hereto. Any such Free Writing Prospectus consented to by the
Company is included in the definition of Permitted Free Writing Prospectus and will be treated by
the Company as an Issuer Free Writing Prospectus.
SECTION 4. Payment of Expenses. The Company agrees to pay all costs, fees and expenses
incurred in connection with the performance of its obligations hereunder and in connection with the
transactions contemplated hereby, including, without limitation (i) all expenses incident to the
issuance and delivery of the Shares (including all printing and engraving costs), (ii) all fees and
expenses of the registrar and transfer agent of the Common Stock, (iii) all necessary issue,
transfer and other stamp taxes in connection with the issuance and sale of the Shares to the
Underwriters, (iv) all fees and expenses of the Company’s counsel, independent public or certified
public accountants and other advisors, (v) all costs and expenses incurred in connection with the
preparation, printing, filing, shipping and distribution of the Registration Statement (including
financial statements, exhibits, schedules, consents and certificates of experts), each Issuer Free
Writing Prospectus, each Preliminary Prospectus and the Prospectus, and all amendments and
supplements thereto, and this Agreement (vi) all filing fees, attorneys’ fees and expenses incurred
by the Company or the Underwriters in connection with qualifying or registering (or obtaining
exemptions from the qualification or registration of) all or any part of the Shares for offer and
sale under the state securities or blue sky laws or the provincial securities laws of Canada, and,
if requested by the Representative, preparing and printing a “Blue Sky Survey” or memorandum, and
any supplements thereto, advising the Underwriters of such qualifications, registrations and
exemptions, (vii) the filing fees incident to NASD’s review and approval of the Underwriters’
participation in the offering and distribution of the Shares, (viii) all transportation and other
expenses incurred in connection with presentations to prospective purchasers of the Shares and (ix)
all other fees, costs and expenses referred to in Item 13 of Part II of the Registration Statement.
Except as provided in this Section 4, Section 6, Section 8 and Section 9 hereof, the Underwriters
shall pay their own expenses, including the fees and disbursements of their counsel.
SECTION 5. Conditions of the Obligations of the Underwriters. The obligations of the several
Underwriters to purchase and pay for the Shares as provided herein on the Closing Date and, with
respect to the Optional Shares, any Subsequent Closing Date, shall be subject to the accuracy of
the representations and warranties on the part of the Company set forth in Section 1 hereof as of
the date hereof and as of the Closing Date as though then made and, with respect to the Optional
Shares, as of any Subsequent Closing Date as though then made, to the accuracy of the statements of
the Company made in any certificates pursuant to the provisions hereof, to the timely performance
by the Company of their respective covenants and other obligations hereunder, and to each of the
following additional conditions:
-21-
(a) Accountants’ Comfort Letter. On the date hereof, the Representative shall have received
from BDO, independent registered public accountants for the Company, a letter dated the date hereof
addressed to the Underwriters, the form of which is attached as Exhibit A.
(b) Compliance with Registration Requirements; No Stop Order; No Objection from NASD. For the
period from and after effectiveness of this Agreement and prior to the Closing Date and, with
respect to the Optional Shares, any Subsequent Closing Date:
(i) the Company shall have filed the Prospectus with the Commission (including the
information required by Rule 430A under the Securities Act) in the manner and within the time
period required by Rule 424(b) under the Securities Act; or the Company shall have filed a
post-effective amendment to the Registration Statement containing the information required by such
Rule 430A, and such post-effective amendment shall have become effective;
(ii) no stop order suspending the effectiveness of the Registration Statement, or any
post-effective amendment to the Registration Statement, shall be in effect and no proceedings for
such purpose shall have been instituted or threatened by the Commission; and
(iii) NASD shall have raised no objection to the fairness and reasonableness of the
underwriting terms and arrangements.
(c) No Material Adverse Change. For the period from and after the date of this Agreement and
prior to the Closing Date and, with respect to the Optional Shares, any Subsequent Closing Date:
(i) in the judgment of the Representative there shall not have occurred any Material Adverse
Change; and
(ii) there shall not have been any change or decrease specified in the letter or letters
referred to in paragraph (a) of this Section 5 which is, in the sole judgment of the
Representative, so material and adverse as to make it impractical or inadvisable to proceed with
the offering or delivery of the Shares as contemplated by the Registration Statement and the
Prospectus.
(d) Opinion of Counsel for the Company. On each of the Closing Date and any Subsequent
Closing Date, the Representative shall have received the favorable opinion of Xxxxxx Xxxxxxx Xxxxxx
& Brand, LLP, counsel for the Company, dated as of such closing date, the form of which is attached
as Exhibit B.
(e) Opinion of Foreign Counsel for the Company. On each of the Closing Date and any Subsequent
Closing Date, the Representative shall have received the favorable opinion of Gowling Xxxxxxx
Xxxxxxxxx LLP and Xxxxxx Xxxxxxx Lawyers, Canadian and Australian counsel for the Company,
respectively, dated as of such closing date, the respective forms of which are attached as
Exhibit C and Exhibit D.
(f) Opinion of Counsel for the Underwriters. On each of the Closing Date and any Subsequent
Closing Date, the Representative shall have received the favorable opinion of O’Melveny & Xxxxx
LLP, counsel for the Underwriters, dated as of such closing date, in form and substance
satisfactory to, and addressed to, the Representative, with respect to the issuance
-22-
and sale of the Shares, the Registration Statement, the Prospectus (together with any
supplement thereto) and other related matters as the Representative may reasonably require, 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.
(g) Officers’ Certificate. On each of the Closing Date and any Subsequent Closing Date, the
Representative shall have received a written certificate executed by the Chairman, Chief Executive
Officer and President of the Company and the Chief Operating Officer and Chief Financial Officer of
the Company, dated as of such closing date, to the effect that the signers of such certificate have
carefully examined the Registration Statement, the Prospectus and any amendment or supplement
thereto, any Issuer Free Writing Prospectus and any amendment or supplement thereto and this
Agreement, to the effect set forth in subsection (b) of this Section 5, and further to the effect
that:
(i) for the period from and after the date of this Agreement and prior to such closing date,
there has not occurred any Material Adverse Change;
(ii) the representations and warranties of the Company set forth in Section 1 of this
Agreement are true and correct on and as of such closing date with the same force and effect as
though expressly made on and as of such closing date; and
(iii) the Company has complied with all of the agreements hereunder and satisfied all the
conditions on its part to be performed or satisfied hereunder at or prior to such closing date.
(h) Bring-down Comfort Letter. On each of the Closing Date and any Subsequent Closing Date,
the Representative shall have received from BDO, independent registered public accountants for the
Company, a letter dated such date, in form and substance satisfactory to the Representative, to the
effect that it reaffirms the statements made in the letter furnished by it pursuant to subsection
(a) of this Section 5, except that the specified date referred to therein for the carrying out of
procedures shall be no more than three business days prior to the Closing Date or Subsequent
Closing Date, as the case may be.
(i) Lock-Up Agreement. On or prior to the date hereof, the Company shall have furnished to
the Representative an agreement in the form of Exhibit E hereto from each director, officer
and Metro Networks Communications, Inc., and each such agreement shall be in full force and effect
on each of the Closing Date and any Subsequent Closing Date.
(j) Additional Documents. On or before each of the Closing Date and any Subsequent Closing
Date, the Representative and counsel for the Underwriters shall have received such information,
documents and opinions as they may reasonably require for the purposes of enabling them to pass
upon the issuance and sale of the Shares as contemplated herein, or in order to evidence the
accuracy of any of the representations and warranties, or the satisfaction of any of the conditions
or agreements, herein contained.
If any condition specified in this Section 5 is not satisfied when and as required to be
satisfied, this Agreement may be terminated by the Representative by notice to the Company at any
time on or prior to the Closing Date and, with respect to the Optional Shares, at any time prior to
the applicable Subsequent Closing Date, which termination shall be without liability on
-23-
the part of any party to any other party, except that Section 4, Section 6, Section 7, Section
8 and Section 9 shall at all times be effective and shall survive such termination.
SECTION 6. Reimbursement of Underwriters’ Expenses. If this Agreement is terminated by the
Representative pursuant to Section 5, Section 7, Section 10, or Section 11, or if the sale to the
Underwriters of the Shares on the Closing Date is not consummated because of any refusal, inability
or failure on the part of the Company to perform any agreement herein or to comply with any
provision hereof, the Company agrees to reimburse the Representative and the other Underwriters (or
such Underwriters as have terminated this Agreement with respect to themselves), upon demand for
all out-of-pocket expenses that shall have been incurred by the Representative and the Underwriters
in connection with the proposed purchase and the offering and sale of the Shares, including but not
limited to fees and disbursements of counsel, printing expenses, travel expenses, postage,
facsimile and telephone charges.
SECTION 7. Effectiveness of this Agreement. This Agreement shall not become effective until
the execution of this Agreement by the parties hereto.
Prior to such effectiveness, this Agreement may be terminated by any party by notice to each
of the other parties hereto, and any such termination shall be without liability on the part of (a)
the Company to any Underwriter, except that the Company shall be obligated to reimburse the
expenses of the Representative and the Underwriters to the extent required by Sections 4 and 6
hereof or (b) any Underwriter to the Company.
SECTION 8. Indemnification.
(a) Indemnification of the Underwriters by the Company. The Company agrees to indemnify and
hold harmless each Underwriter, its directors, officers, employees and agents, and each person, if
any, who controls any Underwriter within the meaning of the Securities Act and the Exchange Act
against any loss, claim, damage, liability or expense, as incurred, to which such Underwriter or
such controlling person may become subject, insofar as such loss, claim, damage, liability or
expense (or actions in respect thereof as contemplated below) arises out of or is based (i) upon
any untrue statement or alleged untrue statement of a material fact contained in the Registration
Statement, or any amendment thereto, including any information deemed to be a part thereof pursuant
to Rule 430A, Rule 430B or Rule 430C under the Securities Act, or the omission or alleged omission
therefrom of a material fact required to be stated therein or necessary to make the statements
therein not misleading; or (ii) upon any untrue statement or alleged untrue statement of a material
fact contained in any Issuer Free Writing Prospectus, any Permitted Free Writing Prospectus, any
Preliminary Prospectus or the Prospectus (or any amendment or supplement thereto), or the omission
or alleged omission therefrom of a material fact necessary in order to make the statements therein,
in the light of the circumstances under which they were made, not misleading, and to reimburse each
Underwriter, its officers, directors, employees, agents and each such controlling person for any
and all expenses (including the fees and disbursements of counsel chosen by the Representative) as
such expenses are reasonably incurred by such Underwriter, or its officers, directors, employees
and agents or such controlling person in connection with investigating, defending, settling,
compromising or paying any such loss, claim, damage, liability, expense or action; provided,
however, that the foregoing indemnity agreement shall not apply to any loss, claim, damage,
liability or expense to the extent, but only
-24-
to the extent, arising out of or based upon any untrue statement or alleged untrue statement
or omission or alleged omission made in reliance upon and in conformity with written information
furnished to the Company by the Representative expressly for use in the Registration Statement, any
Issuer Free Writing Prospectus, any Permitted Free Writing Prospectus, any Preliminary Prospectus
or the Prospectus (or any amendment or supplement thereto). The indemnity agreement set forth in
this Section 8(a) shall be in addition to any liabilities that the Company may otherwise have.
(b) Indemnification by the Underwriters. Each Underwriter agrees, severally and not jointly,
to indemnify and hold harmless the Company, each of its directors, each of its officers who signed
the Registration Statement, and each person, if any, who controls the Company within the meaning of
the Securities Act or the Exchange Act, against any loss, claim, damage, liability or expense, as
incurred, to which the Company, or any such director, officer or controlling person may become
subject, insofar as such loss, claim, damage, liability or expense (or actions in respect thereof
as contemplated below) arises out of or is based upon any untrue or alleged untrue statement of a
material fact contained in the Registration Statement, any Issuer Free Writing Prospectus, any
Permitted Free Writing Prospectus, any Preliminary Prospectus or the Prospectus (or any amendment
or supplement thereto), or arises out of or is 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, in each case to the extent, and only to the extent, that such untrue statement or
alleged untrue statement or omission or alleged omission was made in the Registration Statement,
any Issuer Free Writing Prospectus, any Preliminary Prospectus or the Prospectus (or any amendment
or supplement thereto), in reliance upon and in conformity with written information furnished to
the Company by the Representative expressly for use therein; and to reimburse the Company, or any
such director, officer, or controlling person for any legal and other expense reasonably incurred
by the Company, or any such director, officer, or controlling person in connection with
investigating, defending, settling, compromising or paying any such loss, claim, damage, liability,
expense or action. The Company hereby acknowledges that the only information that the Underwriters
have furnished to the Company expressly for use in the Registration Statement, the Disclosure
Package, any Preliminary Prospectus or the Prospectus (or any amendment or supplement thereto) are
the statements set forth in (i) the table at the end of the first paragraph and (ii) the second,
ninth, tenth, eleventh and thirteenth paragraphs in each case under the caption “Underwriting” in
the Prospectus. The indemnity agreement set forth in this Section 8(b) shall be in addition to any
liabilities that each Underwriter may otherwise have.
(c) Notifications and Other Indemnification Procedures. Promptly after receipt by an
indemnified party under this Section 8 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 this Section 8, notify the indemnifying party in writing of the commencement thereof; but the
failure to so notify the indemnifying party (i) will not relieve it from liability under paragraph
(a) or (b) above unless and to the extent it did not otherwise learn of such action and such
failure results in the forfeiture by the indemnifying party of substantial rights and defenses and
(ii) will not, in any event, relieve the indemnifying party from any liability other than the
indemnification obligation provided in paragraph (a) or (b) above. In case any such action is
brought against any indemnified party and such indemnified party seeks or intends to seek indemnity
from an indemnifying party, the indemnifying party will be entitled to participate in, and, to the
extent
-25-
that it shall elect, jointly with all other indemnifying parties similarly notified, by
written notice delivered to the indemnified party promptly after receiving the aforesaid notice
from such indemnified party, to assume the defense thereof with counsel satisfactory to such
indemnified party; provided, however, if the defendants in any such action include both the
indemnified party and the indemnifying party and the indemnified party shall have reasonably
concluded that a conflict may arise between the positions of the indemnifying party and the
indemnified party in conducting the defense of any such action or that there may be legal defenses
available to it and/or other indemnified parties that are different from or additional to those
available to the indemnifying party, the indemnified party or parties shall have the right to
select separate counsel to assume such legal defenses and to otherwise participate in the defense
of such action on behalf of such indemnified party or parties. Upon receipt of notice from the
indemnifying party to such indemnified party of such indemnifying party’s election so to assume the
defense of such action and approval by the indemnified party of counsel, the indemnifying party
will not be liable to such indemnified party under this Section 8 for any legal or other expenses
subsequently incurred by such indemnified party in connection with the defense thereof unless (i)
the indemnified party shall have employed separate counsel in accordance with the proviso to the
preceding sentence (it being understood, however, that the indemnifying party shall not be liable
for the expenses of more than one separate counsel (other than local counsel), reasonably approved
by the indemnifying party (or by the Representative in the case of Section 9), representing the
indemnified parties who are parties to such action) or (ii) the indemnifying party shall not have
employed counsel satisfactory to the indemnified party to represent the indemnified party within a
reasonable time after notice of commencement of the action, in each of which cases the fees and
expenses of counsel shall be at the expense of the indemnifying party.
(d) Settlements. The indemnifying party under this Section 8 shall not be liable for any
settlement of any proceeding effected without its written consent, but if settled with such consent
or if there be a final judgment for the plaintiff, the indemnifying party agrees to indemnify the
indemnified party against any loss, claim, damage, liability or expense by reason of such
settlement or judgment. Notwithstanding the foregoing sentence, if at any time an indemnified party
shall have requested an indemnifying party to reimburse the indemnified party for fees and expenses
of counsel as contemplated by Section 8(c) hereof, the indemnifying party agrees that it shall be
liable for any settlement of any proceeding effected without its written consent if (i) such
settlement is entered into more than 30 days after receipt by such indemnifying party of the
aforesaid request and (ii) such indemnifying party shall not have reimbursed the indemnified party
in accordance with such request prior to the date of such settlement. No indemnifying party shall,
without the prior written consent of the indemnified party, effect any settlement, compromise or
consent to the entry of judgment in any pending or threatened action, suit or proceeding in respect
of which any indemnified party is or could have been a party and indemnity was or could have been
sought hereunder by such indemnified party, unless such settlement, compromise or consent (i)
includes an unconditional release of such indemnified party from all liability on claims that are
the subject matter of such action, suit or proceeding 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 any indemnified
party.
SECTION 9. Contribution. If the indemnification provided for in Section 8 is for any reason
unavailable to or otherwise insufficient to hold harmless an indemnified party in
-26-
respect of any losses, claims, damages, liabilities or expenses referred to therein, then each
indemnifying party shall contribute to the aggregate amount paid or payable by such indemnified
party, as incurred, as a result of any losses, claims, damages, liabilities or expenses referred to
therein (i) in such proportion as is appropriate to reflect the relative benefits received by the
Company, on the one hand, and the Underwriters, on the other hand, from the offering of the Shares
pursuant to this Agreement 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, on the one hand, and
the Underwriters, on the other hand, in connection with the statements or omissions or inaccuracies
in the representations and warranties herein which resulted in such losses, claims, damages,
liabilities or expenses, as well as any other relevant equitable considerations. The relative
benefits received by the Company, on the one hand, and the Underwriters, on the other hand, in
connection with the offering of the Shares pursuant to this Agreement shall be deemed to be in the
same respective proportions as the total net proceeds from the offering of the Shares pursuant to
this Agreement (before deducting expenses) received by the Company, and the total underwriting
discount received by the Underwriters, in each case as set forth on the front cover page of the
Prospectus bear to the aggregate public offering price of the Shares as set forth on such cover.
The relative fault of the Company, on the one hand, and the Underwriters, on the other hand, shall
be determined by reference to, among other things, whether any such untrue or alleged untrue
statement of a material fact or omission or alleged omission to state a material fact or any such
inaccurate or alleged inaccurate representation or warranty relates to information supplied by the
Company, on the one hand, or the Underwriters, on the other hand, and the parties’ relative intent,
knowledge, access to information and opportunity to correct or prevent such statement or omission.
The amount paid or payable by a party as a result of the losses, claims, damages, liabilities
and expenses referred to above shall be deemed to include, subject to the limitations set forth in
Section 8(c), any legal or other fees or expenses reasonably incurred by such party in connection
with investigating or defending any action or claim. The provisions set forth in Section 8(c) with
respect to notice of commencement of any action shall apply if a claim for contribution is to be
made under this Section 9; provided, however, that no additional notice shall be required with
respect to any action for which notice has been given under Section 8(c) for purposes of
indemnification.
The Company and the Underwriters agree that it would not be just and equitable if contribution
pursuant to this Section 9 were determined by pro rata allocation (even if the Underwriters were
treated as one entity for such purpose) or by any other method of allocation which does not take
account of the equitable considerations referred to in this Section 9.
Notwithstanding the provisions of this Section 9, no Underwriter shall be required to
contribute any amount in excess of the underwriting commissions received by such Underwriter in
connection with the Shares underwritten by it and distributed to the public. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent misrepresentation.
The Underwriters’ obligations to contribute pursuant to this Section 9 are several, and not joint,
in proportion to their respective underwriting commitments as set forth opposite their names in
Schedule I. For purposes of this Section 9, each director,
-27-
officer, employee and agent of an Underwriter and each person, if any, who controls an
Underwriter within the meaning of the Securities Act and the Exchange Act shall have the same
rights to contribution as such Underwriter, and each director of the Company, each officer of the
Company who signed the Registration Statement and each person, if any, who controls the Company
within the meaning of the Securities Act and the Exchange Act shall have the same rights to
contribution as the Company.
SECTION 10. Default of One or More of the Several Underwriters. If, on the Closing Date or a
Subsequent Closing Date, as the case may be, any one or more of the several Underwriters shall fail
or refuse to purchase Shares that it or they have agreed to purchase hereunder on such date, and
the aggregate number of Shares which such defaulting Underwriter or Underwriters agreed but failed
or refused to purchase does not exceed 10% of the aggregate number of the Shares to be purchased on
such date, the Representative may make arrangements satisfactory to the Company for the purchase of
such Shares by other persons, including any of the Underwriters, but if such arrangements are not
made by the Closing Date, the other Underwriters shall be obligated, severally, in the proportions
that the number of Firm Shares set forth opposite their respective names on Schedule I bears to the
aggregate number of Firm Shares set forth opposite the names of all such non-defaulting
Underwriters, or in such other proportions as may be specified by the Representative with the
consent of the non-defaulting Underwriters, to purchase the Shares which such defaulting
Underwriter or Underwriters agreed but failed or refused to purchase on such date. If, on the
Closing Date or a Subsequent Closing Date, as the case may be, any one or more of the Underwriters
shall fail or refuse to purchase Shares and the aggregate number of Shares with respect to which
such default occurs exceeds 10% of the aggregate number of Shares to be purchased on such date, and
arrangements satisfactory to the Representative and the Company for the purchase of such Shares are
not made within 48 hours after such default, this Agreement shall terminate without liability of
any party, other than the liability of a defaulting Underwriter, to any other party except that the
provisions of Section 4, Section 6, Section 7, Section 8 and Section 9 shall at all times be
effective and shall survive such termination. No action taken pursuant to this Section 10 shall
relieve any defaulting Underwriter from liability in respect of its default. In any such case
either the Representative or the Company shall have the right to postpone the Closing Date or a
Subsequent Closing Date, as the case may be, but in no event for longer than seven days in order
that the required changes, if any, to the Registration Statement and the Prospectus or any other
documents or arrangements may be effected.
As used in this Agreement, the term “Underwriter” shall be deemed to include any person
substituted for a defaulting Underwriter under this Section 10. Any action taken under this Section
10 shall not relieve any defaulting Underwriter from liability in respect of any default of such
Underwriter under this Agreement.
SECTION 11. Termination of this Agreement. Prior to the Closing Date, this Agreement may be
terminated by the Representative by notice given to the Company if at any time (i) trading or
quotation in any of the Company’s securities shall have been suspended or limited by the Commission
or by the Nasdaq Global Market, or trading in securities generally on the New York Stock Exchange
or the American Stock Exchange shall have been suspended or limited, or minimum or maximum prices
shall have been generally established on any of such stock exchanges by the Commission or NASD;
(ii) a general banking moratorium shall have
-28-
been declared by federal or New York authorities or a material disruption in commercial
banking or securities settlement or clearance services in the United States has occurred; (iii)
there shall have occurred any outbreak or escalation of national or international hostilities or
any crisis or calamity, or any change in the United States or international financial markets, or
any substantial change or development involving a prospective substantial change in United States’
or international political, financial or economic conditions, as in the judgment of the
Representative is material and adverse and makes it impracticable or inadvisable to market the
Shares in the manner and on the terms described in the Disclosure Package or the Prospectus or to
enforce contracts for the sale of securities; or (iv) the Company shall have sustained a loss by
strike, fire, flood, earthquake, accident or other calamity of such character as in the judgment of
the Representative may interfere materially with the conduct of the business and operations of the
Company regardless of whether or not such loss shall have been insured. Any termination pursuant to
this Section 11 shall be without liability on the part of (a) the Company to any Underwriter,
except that the Company shall be obligated to reimburse the expenses of the Representative and the
Underwriters pursuant to Sections 4 and 6 hereof or (b) any Underwriter to the Company.
SECTION 12. No Advisory or Fiduciary Responsibility. The Company acknowledges and agrees
that: (i) the purchase and sale of the Shares pursuant to this Agreement, including the
determination of the public offering price of the Shares and any related discounts and commissions,
is an arm’s-length commercial transaction between the Company, on the one hand, and the several
Underwriters, on the other hand, and the Company is capable of evaluating and understanding and
understands and accepts the terms, risks and conditions of the transactions contemplated by this
Agreement; (ii) in connection with each transaction contemplated hereby and the process leading to
such transaction each Underwriter is and has been acting solely as a principal and is not the
financial advisor, agent or fiduciary of the Company or the respective affiliates, stockholders,
creditors or employees or any other party; (iii) no Underwriter has assumed or will assume an
advisory, agency or fiduciary responsibility in favor of the Company with respect to any of the
transactions contemplated hereby or the process leading thereto (irrespective of whether such
Underwriter has advised or is currently advising the Company on other matters) and no Underwriter
has any obligation to the Company with respect to the offering contemplated hereby except the
obligations expressly set forth in this Agreement; (iv) the several Underwriters and their
respective affiliates may be engaged in a broad range of transactions that involve interests that
differ from those of the Company and that the several Underwriters have no obligation to disclose
any of such interests by virtue of any advisory, agency or fiduciary relationship; and (v) the
Underwriters have not provided any legal, accounting, regulatory or tax advice with respect to the
offering contemplated hereby and the Company has consulted its own legal, accounting, regulatory
and tax advisors to the extent it deemed appropriate.
This Agreement supersedes all prior agreements and understandings (whether written or oral)
between the Company and the several Underwriters, or any of them, with respect to the subject
matter hereof. The Company hereby waives and releases, to the fullest extent permitted by law, any
claims that the Company may have against the several Underwriters with respect to any breach or
alleged breach of agency or fiduciary duty.
SECTION 13. Representations and Indemnities to Survive Delivery. The respective indemnities,
agreements, representations, warranties and other statements of the
-29-
Company and of the several Underwriters set forth in or made pursuant to this Agreement (i)
will remain operative and in full force and effect, regardless of any (A) investigation, or
statement as to the results thereof, made by or on behalf of any Underwriter, the officers or
employees of any Underwriter, or the Company, the officers or employees of the Company, or any
person controlling the Company, as the case may be or (B) acceptance of the Shares and payment for
them hereunder and (ii) will survive delivery of and payment for the Shares sold hereunder and any
termination of this Agreement.
SECTION 14. Notices. All communications hereunder shall be in writing and shall be mailed,
hand delivered or telecopied and confirmed to the parties hereto as follows:
If to the Representative:
Xxxxxxxxxxx & Co.
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
Attention: Ms. Sun Xxx Xxxx
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
Attention: Ms. Sun Xxx Xxxx
with a copy to:
O’Melveny & Xxxxx LLP
000 Xxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: X. Xxxxxx Xxxxxxxxxxx, Esq.
000 Xxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: X. Xxxxxx Xxxxxxxxxxx, Esq.
If to the Company:
Global Traffic Network, Inc.
000 Xxxxxx Xxxxxx, Xxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
Attention: Xx. Xxxxxxx X. Xxx III
000 Xxxxxx Xxxxxx, Xxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
Attention: Xx. Xxxxxxx X. Xxx III
with a copy to:
Xxxxxx Xxxxxxx Xxxxxx & Brand, LLP
00 Xxxxx Xxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxxxx, Xxxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxx X. Xxxxxxx, Esq.
00 Xxxxx Xxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxxxx, Xxxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxx X. Xxxxxxx, Esq.
Any party hereto may change the address for receipt of communications by giving written notice
to the others.
SECTION 15. Successors. This Agreement will inure to the benefit of and be binding upon the
parties hereto, including any substitute Underwriters pursuant to Section 10
-30-
hereof, and to the benefit of (i) the Company, its directors, any person who controls the
Company within the meaning of the Securities Act and the Exchange Act and any officer of the
Company who signs the Registration Statement, (ii) the Underwriters, the officers, directors,
employees and agents of the Underwriters, and each person, if any, who controls any Underwriter
within the meaning of the Securities Act and the Exchange Act, and (ii) the respective successors
and assigns of any of the above, all as and to the extent provided in this Agreement, and no other
person shall acquire or have any right under or by virtue of this Agreement. The term “successors
and assigns” shall not include a purchaser of any of the Shares from any of the several
Underwriters merely because of such purchase.
SECTION 16. Partial Unenforceability. The invalidity or unenforceability of any Section,
paragraph or provision of this Agreement shall not affect the validity or enforceability of any
other Section, paragraph or provision hereof. If any Section, paragraph or provision of this
Agreement is for any reason determined to be invalid or unenforceable, there shall be deemed to be
made such minor changes (and only such minor changes) as are necessary to make it valid and
enforceable.
SECTION 17. Governing Law Provisions. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED
IN SUCH STATE.
SECTION 18. General Provisions. This Agreement constitutes the entire agreement of the
parties to this Agreement and supersedes all prior written or oral and all contemporaneous oral
agreements, understandings and negotiations with respect to the subject matter hereof. This
Agreement may be executed in two or more counterparts, each one of which shall be an original, with
the same effect as if the signatures thereto and hereto were upon the same instrument. This
Agreement may not be amended or modified unless in writing by all of the parties hereto, and no
condition herein (express or implied) may be waived unless waived in writing by each party whom the
condition is meant to benefit. The Section headings herein are for the convenience of the parties
only and shall not affect the construction or interpretation of this Agreement.
Each of the parties hereto acknowledges that it is a sophisticated business person who was
adequately represented by counsel during negotiations regarding the provisions hereof, including,
without limitation, the indemnification provisions of Section 8 and the contribution provisions of
Section 9, and is fully informed regarding said provisions. Each of the parties hereto further
acknowledges that the provisions of Sections 8 and 9 hereto fairly allocate the risks in light of
the ability of the parties to investigate the Company, its affairs and its business in order to
assure that adequate disclosure has been made in the Registration Statement, any Preliminary
Prospectus and the Prospectus (and any amendments and supplements thereto), as required by the
Securities Act and the Exchange Act.
[signature page follows]
-31-
If the foregoing is in accordance with your understanding of our agreement, kindly sign and
return to the Company the enclosed copies hereof, whereupon this instrument, along with all
counterparts hereof, shall become a binding agreement in accordance with its terms.
| Very truly yours, GLOBAL TRAFFIC NETWORK, INC. |
||||
| By: | ||||
| Name: | ||||
| Title: | ||||
-32-
The foregoing Underwriting Agreement is hereby confirmed and accepted by the Representative as
of the date first above written.
XXXXXXXXXXX & CO. INC.
Acting as Representative of the
several Underwriters named in
the attached Schedule I.
several Underwriters named in
the attached Schedule I.
| By: |
-33-
SCHEDULE I
| Number of | ||||
| Name of Underwriter | Firm Shares | |||
Xxxxxxxxxxx & Co. Inc. |
||||
JMP Securities LLC |
||||
Feltl and Company, Inc. |
||||
Total |
4,500,000 | |||
Schedule I-1
SCHEDULE II
Permitted Free Writing Prospectuses
Schedule II-1
EXHIBIT A
Form of BDO Comfort Letter
Exhibit A-1
EXHIBIT B
Form of Opinion of Counsel for the Company
Exhibit B-1
EXHIBIT C
Form of Opinion of Canadian Counsel for the Company
Exhibit C-1
EXHIBIT D
Form of Opinion of Australian Counsel for the Company
Exhibit D-1
EXHIBIT E
Form of Lock-up
Exhibit E-1
