Exhibit 1.1
4,500,000 Shares
Global Traffic Network, Inc.
Common Stock, Par Value $0.001 Per Share
Underwriting Agreement
July 26, 2007
OPPENHEIMER & CO.
As Representative of the several
Underwriters
125 Broad Street, 16th Floor
New York, New York 10004
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.” Oppenheimer & Co.
(“Oppenheimer”) 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
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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 EDGAR (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
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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
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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,
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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.
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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 mark 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.
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(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.
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(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.
(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
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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.
(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
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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 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
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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)
Sarbanes-Oxley 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 Sarbanes-Oxley
Act of 2002 and the rules and regulations promulgated in connection
therewith (the “Sarbanes-Oxley 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.
(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
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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 lendin
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