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EXHIBIT 1.3
XXXXXX BROTHERS INC.
XXXXXXX XXXXX BARNEY INC.
CHASE SECURITIES INC.
X. X. XXXXXX SECURITIES INC.
XXXXXXX LYNCH, PIERCE, XXXXXX & XXXXX INCORPORATED
As Representatives of the Several Underwriters
C/X XXXXXX BROTHERS INC.
3 World Financial Center
Xxx Xxxx, Xxx Xxxx 00000
Debt Securities
TERMS AGREEMENT
Dated: February 2, 2000
To: METRICOM, INC.
METRICOM FINANCE, INC.
000 Xxxxxxxxxx Xxxxxx
Xxx Xxxxx, Xxxxxxxxxx 00000
Re: Underwriting Agreement dated February 1, 2000.
Dear Sirs:
We (the "Representatives") understand that Metricom, Inc., a Delaware
corporation, and Metricom Finance, Inc. (each individually a "Company" and
collectively, the "Issuers"), propose to issue and sell $300,000,000 aggregate
principal amount of their 13% Senior Notes due 2010 (the "Senior Notes") and
associated warrants to purchase an aggregate of 1,425,000 shares of Common Stock
of Metricom, Inc. This agreement is a Terms Agreement referred to in the
underwriting agreement dated February 1, 2000 (the "Underwriting Agreement").
Terms used herein but not otherwise defined shall have the meaning ascribed to
such terms in the Underwriting Agreement, the Indenture, dated as of December
29, 1999, as supplemented by the First Supplemental Indenture thereto, dated as
of February 7, 2000, relating to the Senior Notes (the "Indenture") and the
Warrant Agreement, dated as of February 7, 2000. Subject to the terms and
conditions set forth herein or incorporated by reference herein, the
Underwriters named below (the "Underwriters") offer to purchase, severally and
not jointly, the amount of Senior Notes and at the terms set forth below.
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PRINCIPAL AMOUNT OF
UNDERWRITER SENIOR NOTES
----------- -------------------
Xxxxxx Brothers Inc. $141,000,000
Xxxxxxx Xxxxx Barney Inc. 72,000,000
Chase Securities Inc. 34,500,000
X. X. Xxxxxx Securities Inc. 34,500,000
Xxxxxxx Lynch, Pierce, Xxxxxx
& Xxxxx Incorporated 18,000,000
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TOTAL $300,000,000
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TERMS
TITLE OF DEBT SECURITIES: Senior Notes
SENIOR OR SUBORDINATED: Senior
CURRENCY: US Dollars
CURRENT RATINGS: B-/B3
INTEREST RATE OR FORMULA: 13%
INTEREST PAYMENT DATES: February 15 and August 15 of each year
commencing August 15, 2000.
DATE OF MATURITY: February 15, 2010
UNITS: Each Senior Note must be purchased with an associated warrant to
purchase 4.75 shares of Common Stock of the Company (the
"Warrants"). Each unit will consist of a Warrant and $1,000
principal amount of Senior Notes. The Senior Notes and Warrants
will not be separately transferable until the Separation Date,
which will be the earlier of (i) August 15, 2000, (ii) the
occurrence of an Event of Default under the Indenture, (iii) the
occurrence of an Exercise Event, as defined in the Warrant
Agreement; dated as of February 7, 2000, in connection with the
Warrants and (iv) such other date as Xxxxxx Brothers Inc. shall
determine in its sole discretion.
REDEMPTION PROVISIONS: Optional Redemption - Issuers may pay redeem a
part or all of the Senior Notes on or after February 15, 2005, at
the following redemption prices:
Year Redemption Price
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2005 108.00%
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2006 106.00%
2007 104.00%
2008 102.00%
2009 and thereafter 100.00%
There is no provision for mandatory redemption; however, the
Issuers are required to offer to purchase the outstanding Senior
Notes at a purchase price equal to 101% of their principal amount
in the event of a Change of Control or with the Excess Proceeds
of certain Asset Sales.
SINKING FUND REQUIREMENTS: None
PUBLIC OFFERING PRICE: 100%
PURCHASE PRICE: $229,881,495
LISTING REQUIREMENT: None
CONVERTIBLE: No
CONVERSION PROVISIONS: None
DELIVERY DATE AND LOCATION: Senior Notes in definitive global form,
registered in the name of Cede & Co., as nominee of The Depository Trust
Company, having an aggregate amount corresponding to the aggregate
principal amount of the Senior Notes will be delivered on February 7,
2000 at the offices of Weil, Gotshal & Xxxxxx LLP, 0000 Xxxxxxxx Xxxx,
Xxxxx 000, Xxxxx Xxxx, Xxxxxxxxxx 00000 at 10:00 a.m., New York City
time.
ADDITIONAL REPRESENTATIONS, WARRANTIES AND AGREEMENTS: The Company
represents, warrants and agrees as follows:
1. To use the proceeds from the sale of the Senior Notes in the
manner described in the prospectus supplement relating to the Senior
Notes under the caption "Use of Proceeds," and not to voluntarily claim,
and to resist actively any attempts to claim, the benefit of any usury
laws against the holders of any Senior Notes.
2. Not to take, directly or indirectly, any action designed to,
or that might reasonably be expected to, cause or result in
stabilization or manipulation of the price of any security of the
Company to facilitate the sale or resale of the Senior Notes in
violation of the Exchange Act or any applicable rules of the Nasdaq
National Market. Except as permitted by the Securities Act, neither the
Company nor any future Guarantor will distribute any (i) Prospectus,
(ii) Prospectus Supplement, or (iii) other offering material in
connection with the offering and sale of the Senior Notes. Neither the
Company nor any of its subsidiaries has (A) taken, directly or
indirectly, any action designed to, or that might reasonably be expected
to, cause or result in
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stabilization or manipulation of the price of any security of the
Company or any of its subsidiaries to facilitate the sale or resale of
the Senior Notes or (B) since the date of the Preliminary Prospectus
Supplement (1) sold, bid for, purchased or paid any person any
compensation for soliciting purchases of the Senior Notes or (2) paid or
agreed to pay to any person any compensation for soliciting another to
purchase any other securities of the Company or any of its subsidiaries.
3. None of the execution, delivery and performance of this
Agreement, the issuance and sale of the Senior Notes, the application of
the proceeds from the issuance and sale of the Senior Notes and the
consummation of the transactions contemplated thereby as set forth in
the Prospectus and Prospectus Supplement, will violate Regulations T, U
or X promulgated by the Board of Governors of the Federal Reserve System
or analogous foreign laws and regulations.
4. The Company does not intend to, and does not believe that it
will, incur debts beyond its ability to pay such debts as they mature.
The present fair saleable value of the assets of the Company exceeds the
amount that will be required to be paid on or in respect of its existing
debts and other liabilities (including contingent liabilities) as they
become absolute and matured. The assets of the Company do not constitute
unreasonably small capital to carry out its business as conducted or as
proposed to be conducted. Upon the issuance or assumption, as
applicable, of the Senior Notes, the present fair saleable value of the
assets of the Company will exceed the amount that will be required to be
paid on or in respect of its existing debts and other liabilities
(including contingent liabilities) as they become absolute and matured.
Upon the issuance or assumption, as applicable, of the Senior Notes, the
assets of the Company will not constitute unreasonably small capital to
carry out its business as now conducted, including the capital needs of
those entities, taking into account the projected capital requirements
and capital availability.
5. There exist no conditions that would constitute a material
default (or an event which with notice or the lapse of time, or both,
would constitute a material default) under the Indenture, any
supplemental indenture, the Underwriting Agreement or any other Terms
Agreement relating thereto or the Senior Notes.
6. Each certificate signed by any officer of the Company and
delivered to the Representatives or counsel for the Representatives on
the Delivery Date shall be deemed to be a representation and warranty by
the Company, as the case may be, to the Representatives as to the
matters covered thereby.
7. All licenses and authorizations issued by the Federal
Communications Commission ("FCC") and state authorities governing
telecommunications matters (the "Licenses") required for the operation
of the business of the Company and its subsidiaries are in full force
and effect there are no pending modifications, amendments or revocation
proceedings which would adversely affect the operation of any of the
telecommunications business currently owned by the Company and its
subsidiaries (the "Businesses"). All fees requested by governmental
authorities
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pursuant to the rules governing Licenses have been paid. No event has
occurred with respect to the Licenses held by the Company, or its
subsidiaries, which, with the giving of notice or the lapse of time or
both, would constitute grounds for revocation of any Licenses. Each of
the Company and its subsidiaries is in compliance in all material
respects with the terms of the Licenses, as applicable, and there is no
condition, event or occurrence existing, nor is there any proceeding
being conducted of which the Company has received notice, nor, to the
Company's knowledge, is there any proceeding threatened, by any
governmental authority, which would cause the termination, suspension,
cancellation or non-renewal of any of the Licenses, or the imposition of
any penalty or fine (that is material to the Company and its
subsidiaries, taken as a whole) by any regulatory authority. No
registrations, filings, applications, notices, transfers, consents,
approvals, audits, qualifications, waivers or other action of any kind
is required by virtue of the execution, delivery and performance of this
Terms Agreement or any other agreement relating to the transactions
contemplated hereby by the Company and the consummation of the
transactions contemplated hereby and thereby, and the issuance and
delivery of the Senior Notes, to avoid the loss of any such License,
permit, consent, concession or other authorization or any asset,
property or right pursuant to the terms thereof, or the violation or
breach of any applicable law thereto.
8. The Company and its subsidiaries have reviewed the areas
within their business and operations which could reasonably be expected
to have an "Year 2000 Problem" (that is, the risk that computer
applications used by the Company and its subsidiaries may be unable to
recognize and perform properly date-sensitive functions involving
certain dates prior to and any date after December 31, 1999) that would
have a material adverse effect on the Company and have developed a
program to address on a timely basis any such problem, and (ii) based on
such review and program, the "Year 2000 Problem" will not, or is not
reasonably likely to, have a material adverse effect on the Company, and
further, the statements contained under the caption "Risk Factors - We
face risks in connection with the year 2000" in the Preliminary
Prospectus Supplement and the Prospectus Supplement relating to the
Common Stock are true.
LOCK-UP PROVISIONS: N/A
NUMBER OF OPTION SECURITIES: N/A
OTHER TERMS AND CONDITIONS:
1. The respective obligations of the Underwriters hereunder are
subject to the accuracy when made on the Delivery Date, of the
representations and warranties of the Company contained herein and in
the Underwriting Agreement, to the performance by the Company of its
obligations hereunder and thereunder, and to each of the following terms
and conditions:
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a. Prior to the applicable Delivery Date, the Company
shall have furnished to the Representatives such further
information, certificates and documents as the Representatives
may reasonably request.
b. The Company and the Trustee shall have entered into the
supplemental indenture and the Representatives shall have
received copies of executed counterparts thereof.
c. On or after the date hereof, (i) there shall not have
occurred any downgrading, suspension or withdrawal of, nor shall
any notice have been given of any potential or intended
downgrading, suspension or withdrawal of, or of any review (or of
any potential or intended review) for a possible change that does
not indicate the direction of the possible change in, any rating
of the Company or any securities of the Company (including,
without limitation, the placing of any of the foregoing ratings
on credit watch with negative or developing implications or under
review with an uncertain direction) by any "nationally recognized
statistical rating organization" as such term is defined for
purposes of Rule 436(g)(2) under the Act, (ii) there shall not
have occurred any change, nor shall any notice have been given of
any potential or intended change, in the outlook for any rating
of the Company or any securities of the Company by any such
rating organization and (iii) no such rating organization shall
have given notice that it has assigned (or is considering
assigning) a lower rating to the Senior Notes than that on which
the Senior Notes were marketed.
x. Xxxxxx Godward LLP shall have furnished to the
Representatives their written opinion, as counsel to the Company,
addressed to the Underwriters and dated the applicable Delivery
Date, in form and substance reasonably satisfactory to the
Representatives, to the effect that:
i) The statements contained in the Prospectus under
the captions "Description of Debt Securities" and in the
Prospectus Supplement under the captions "Management --
Executive Compensation," "Principal Stockholders" and
"Description of the Notes," and insofar as they describe
charter documents, contracts, statutes, rules and
regulations and other legal matters, constitute an
accurate summary thereof in all material respects;
ii) The statements contained in the Prospectus
Supplement under the caption "Certain U.S. Federal Income
Tax Consequences," insofar as they describe federal
statutes, rules and regulations, constitute an accurate
summary thereof in all material respects.
e. The Company, Metricom Finance, Inc., the Trustee and
the Escrow Agent shall have entered into the Pledge Agreement and
each of the Representatives shall have received copies of
executed counterparts thereof.
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f. The Company, Metricom Finance, Inc., the Warrant Agent
and the Initial Warrant Agent shall have entered into the Warrant
Agreement and each of the Representatives shall have received
copies of executed counterparts thereof.
g. The Company, Metricom Finance, Inc., or an affiliate
thereof shall have deposited cash or U.S. Government Securities
in amounts sufficient to cover the first four cash interest
payments on the Notes.
h. The offering of Warrants (the "Warrants Offering")
shall have been completed, it being understood that the Warrants
Offering is conditioned upon the offering of Senior Notes
contemplated herein.
2. In accordance with Section 7(a) of the Underwriting Agreement,
the Underwriters severally confirm and the Company acknowledges that the
statements with respect to the public offering of the Senior Notes by
the Underwriters set forth in the last paragraph on the cover page of,
and the information contained in the paragraphs entitled "Miscellaneous"
under the caption "Underwriting" in, the Prospectus Supplement are
correct and constitute the only information concerning such Underwriters
furnished in writing to the Company by or on behalf of the Underwriters
specifically for inclusion in the Registration Statement, Prospectus and
Prospectus Supplement.
3. Notices to Underwriters:
Xxxxxx Brothers Inc.
Three World Financial Center
New York, New York 10285
Attention: World Financial Center
Xxxxxxx Xxxxx Barney Inc.
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Legal Department
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