3,000,000 SHARES
CELLNET FUNDING, LLC
CELLNET DATA SYSTEMS, INC.
___% EXCHANGEABLE LIMITED LIABILITY
COMPANY PREFERRED SECURITIES
UNDERWRITING AGREEMENT
__________, 1998
_____________, 1998
Xxxxxx Xxxxxxx & Co. Incorporated
0000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Sirs and Mesdames:
CellNet Funding, LLC, a Delaware limited liability corporation
("FUNDING"), and CellNet Data Systems, Inc. (the "COMPANY"), propose to issue
and sell to Xxxxxx Xxxxxxx & Co. Incorporated (the "UNDERWRITER") 3,000,000
shares of Funding's ___% Exchangeable Limited Liability Company Preferred
Securities, liquidation preference $25.00 per preferred security (the "FIRM
PREFERRED SECURITIES") which will be mandatorily redeemable on May 1, 2010,
as set forth in the Agreement of Limited Liability Company of Funding (the
"LLC AGREEMENT"). Funding and the Company also propose to issue and sell to
you not more than an additional 450,000 shares of Funding's ___% Exchangeable
Limited Liability Company Preferred Securities, liquidation preference $25.00
per preferred security (the "ADDITIONAL PREFERRED SECURITIES"), which will be
mandatorily redeemable on May 1, 2010, if and to the extent that you shall
have determined to exercise the right to purchase such Additional Preferred
Securities granted to you in Section 2 hereof. The Firm Preferred Securities
and the Additional Preferred Securities are hereinafter collectively referred
to as the "PREFERRED SECURITIES." The Preferred Securities will be
exchangeable at the option of the holder thereof into shares of Common Stock,
par value $.001 per share (the "COMMON STOCK"), of the Company.
The Preferred Securities will be guaranteed by the Company (the
"GUARANTEE"), to the extent set forth in the Prospectus (as defined below), with
respect to distributions and amounts payable upon liquidation or redemption
pursuant to the Guarantee Agreement (the "GUARANTEE AGREEMENT") to be dated as
of the Closing Date (as defined below). Funding will purchase, with a portion
of the proceeds of the issuance and sale of the Preferred Securities, and pledge
pursuant to an Escrow Agreement (the "ESCROW AGREEMENT") to be dated as of the
Closing Date among Funding, the Company and The Bank of New York, as escrow
agent (the "ESCROW AGENT"), U.S. Treasury strips (the "TREASURY STRIPS") as
security for payment in full of the dividends on the Preferred Securities
through and including August 1, 2001. From the Closing Date to a date (the
"FUNDING DATE") that is no more than six months after the Closing Date, Funding
will invest the entire proceeds of the issuance and sale of the Preferred
Securities, less the amount used to purchase Treasury Strips, in U.S. government
securities. On the Funding Date, Funding will use the earnings on and principal
of such U.S. government securities to pay the purchase price of $_____ million
(plus an amount equal to 85% of the aggregate liquidation preference of any
Additional Preferred Securities purchased by you pursuant to Section 2 hereof)
of preferred stock of the Company, par
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value $_____ per share (the "ORIGINAL CELLNET PREFERRED STOCK" and, together
with the Additional CellNet Preferred Stock (as defined below), the "CELLNET
PREFERRED STOCK"), which will be mandatorily redeemable at the option of
Funding two business days prior to May 1, 2010, as set forth in the
Certificate of Designation, Rights and Preferences of the CellNet Preferred
Stock (the "CERTIFICATE OF DESIGNATION"). In the event such earnings and
principal do not equal $______ million (plus an amount equal to 85% of the
aggregate liquidation preference of any Additional Preferred Securities
purchased by you pursuant to Section 2 hereof), the Company [will distribute
shares of Common Stock to Funding in a number that will be sufficient, when
sold by Funding in the open market, to eliminate such cash shortfall]. The
Preferred Securities and the shares of Common Stock issuable upon exchange of
the Preferred Securities (the "CELLNET EXCHANGE COMMON SHARES") are
collectively referred to herein as the "SECURITIES."
The Company has filed with the Securities and Exchange Commission
(the "COMMISSION") a registration statement, including a prospectus, relating
to the Securities and the Guarantee. The registration statement as amended
at the time it becomes effective, including (x) the exhibits thereto and the
documents incorporated by reference therein pursuant to Item 12 of Form S-3
under the Securities Act and (y) the information (if any) deemed to be part
of the registration statement at the time of effectiveness pursuant to Rule
430A under the Securities Act of 1933, as amended (the "SECURITIES ACT"), is
hereinafter referred to as the "REGISTRATION STATEMENT"; the prospectus in
the form first used to confirm sales of Preferred Securities is hereinafter
referred to as the "PROSPECTUS." If the Company has filed an abbreviated
registration statement to register additional Preferred Securities pursuant
to Rule 462(b) under the Securities Act (the "RULE 462 REGISTRATION
STATEMENT"), then any reference herein to the term "REGISTRATION STATEMENT"
shall be deemed to include such Rule 462 Registration Statement.
1. REPRESENTATIONS AND WARRANTIES. Each of Funding and the Company, jointly
and severally, represents and warrants to and agrees with you that:
(a) The Registration Statement has become effective; no stop
order suspending the effectiveness of the Registration Statement is in
effect, and no proceedings for such purpose are pending before or to the
knowledge of Funding or the Company, threatened by the Commission.
(b) (i) Each of Funding and the Company meets the requirements
for use of Form S-3 under the Securities Act, (ii) the Registration
Statement, when it became effective, did not contain and, as amended or
supplemented, if applicable, will not contain any 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, (iii)
the Registration Statement and the Prospectus comply and, as amended or
supplemented, if applicable, will comply in all material respects with the
Securities Act and the applicable rules and regulations of the Commission
thereunder and (iv) the Prospectus does not contain and, as amended or
supplemented, if applicable, will not contain any untrue statement of a
material fact or omit
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to state a material fact necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading,
except that the representations and warranties set forth in this
paragraph do not apply to statements or omissions in the Registration
Statement or the Prospectus based upon information relating to you
furnished to the Company in writing by you expressly for use therein.
(c) The documents incorporated by reference in the Prospectus
pursuant to Item 12 of Form S-3 under the Securities Act, at the time they
were filed with the Commission, complied in all material respects with the
requirements of the Securities Exchange Act of 1934, as amended, and the
rules and regulations of the Commission thereunder.
(d) Funding has been duly organized, is validly existing as a limited
liability company in good standing under the laws of the State of Delaware
and has the power and authority to own its property and to conduct its
business as described in the Prospectus.
(e) The Company has been duly incorporated, is validly existing as a
corporation in good standing under the laws of the State of Delaware, has
the corporate power and authority to own its property and to conduct its
business as described in the Prospectus and is duly qualified to transact
business and is in good standing in each jurisdiction in which the conduct
of its business or its ownership or leasing of property requires such
qualification, except to the extent that the failure to be so qualified or
be in good standing would not have a material adverse effect on the Company
and its subsidiaries, taken as a whole, or any Subsidiary (as defined
below), singly.
(f) Each of CellNet Data Services, Inc., a Delaware corporation,
CellNet Data Services (KC), Inc., a Delaware corporation, CellNet Data
Services (MSP), Inc., a Delaware corporation, CellNet Data Services (SL),
Inc., a Delaware corporation, CN Frequency (KC), Inc., a Delaware
corporation, CN Frequency (SL), Inc., a Delaware corporation, and CN WAN
Corp., a Delaware corporation (each, a "SUBSIDIARY" and, collectively, the
"SUBSIDIARIES"), which are the only significant subsidiaries of the Company
as defined in Rule 1-02 of Regulation S-X, has been duly incorporated, is
validly existing as a corporation in good standing under the laws of the
jurisdiction of its incorporation, has the corporate power and authority to
own its property and to conduct its business as described in the Prospectus
and is duly qualified to transact business and is in good standing in each
jurisdiction in which the conduct of its business or its ownership or
leasing of property requires such qualification, except to the extent that
the failure to be so qualified or be in good standing would not have a
material adverse effect on the Company and its subsidiaries, taken as a
whole.
(g) This Agreement has been duly authorized, executed and
delivered by each of Funding and the Company.
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(h) The Escrow Agreement has been duly authorized by each of Funding
and the Company and, when executed and delivered by each of Funding and the
Company, will be a valid and binding agreement of each of Funding and the
Company, enforceable against each of them in accordance with its terms,
except as (x) the enforceability thereof may be limited by the effect of
any applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws now or hereafter in effect relating to or affecting creditors'
rights generally and (y) the availability of equitable remedies may be
limited by equitable principles of general applicability.
(i) Upon the delivery to the Escrow Agent of the certificates or
instruments, if any, representing the Treasury Strips, the pledge and grant
of a security interest in the Treasury Strips for the benefit of the Escrow
Agent and the holders of the Preferred Securities will constitute a
perfected security interest in the Treasury Strips with first priority
against all creditors of the Company and Funding.
(j) The Preferred Securities are duly authorized by the LLC Agreement
and, when issued and delivered to and paid for by you in accordance with
the terms of this Agreement and the LLC Agreement, will be validly issued
and fully paid, and will not be subject to any preemptive or similar
rights.
(k) Once duly and validly issued in accordance with the LLC
Agreement, the Preferred Securities will entitle the holders of the
Preferred Securities to the benefits of the LLC Agreement.
(l) The holders of the Preferred Securities are members of Funding
and as such have no liability for the obligations of Funding in excess of
(a) their respective obligations to pay for their Preferred Securities, (b)
their respective obligations to make other payments as members as provided
for in the LLC Agreement, (c) their respective obligations to repay to
Funding (1) any distribution received by any of the holders of the
Preferred Securities in violation of the Delaware Limited Liability Company
Act and (2) any amount arising out of an obligation or liability under
other applicable law, and (d) their respective shares of the assets and
undistributed profits of Funding.
(m) The Certificate of Formation of Funding (the "CERTIFICATE OF
FORMATION") has been duly filed with the Secretary of State of the State of
Delaware and with all other offices, if any, where such filings are
required and copies of such Certificate of Formation have been delivered to
you.
(n) The LLC Agreement has been duly executed and is a valid and
binding agreement of the Company, in its capacity as manager and holder of
the common limited liability company securities, and _________________, in
his capacity as provisional member, enforceable against the Company, in its
capacity as manager and holder of the common limited liability company
securities, and _____________, in his capacity as
5
provisional member, in accordance with its terms, and copies of such LLC
Agreement have been delivered to you.
(o) The CellNet Preferred Stock has been duly authorized by the
Company and, when issued and delivered to and paid for in accordance with
the terms of the Certificate of Designation and this Agreement, will be
validly issued, fully paid and non-assessable and will not be subject to
any preemptive or similar rights.
(p) The additional shares of the CellNet Preferred Stock (the
"ADDITIONAL CELLNET PREFERRED STOCK") that may be issued in payment of
dividends in respect of the CellNet Preferred Stock have been duly
authorized and reserved by the Company and, when issued and delivered in
accordance with the terms of the Certificate of Designation, will be
validly issued, fully paid and non-assessable and will not be subject to
any preemptive or similar rights.
(q) The terms of the CellNet Preferred Stock as specified in the
Certificate of Designation are legal, valid and enforceable against the
Company.
(r) The Certificate of Designation creating the CellNet Preferred
Stock will have been duly filed with the Secretary of State of the State of
Delaware and with all other offices where such filings are required, on or
before the Closing Date (as defined below).
(s) The authorized capital stock and securities of the Company or
Funding, as the case may be, conform as to legal matters to the
descriptions thereof in the Prospectus.
(t) The shares of Common Stock outstanding on the date hereof have
been duly authorized and are validly issued, fully paid and non-assessable.
(u) The CellNet Exchange Common Shares and the shares of the Common
Stock payable as dividends on the Preferred Securities or as dividends on
the CellNet Preferred Stock (together with the CellNet Exchange Common
Shares, the "CELLNET COMMON SHARES") have been duly authorized and validly
reserved for issuance upon exchange of the Preferred Securities or payment
as dividends on the Preferred Securities by all necessary corporate action
of the Company and, when duly issued by the Company upon such exchange or
payment, will be validly issued, fully paid and non-assessable and will not
be subject to preemptive or similar rights.
(v) The Guarantee Agreement has been duly authorized by the Company
and Funding and, when validly executed and delivered by the Company and
Funding, will be a valid and binding obligation of the Company, enforceable
against the Company in accordance with its terms, except as (x) the
enforceability thereof may be limited by the effect of any applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws now or
hereafter in effect relating to or affecting creditors' rights generally
and (y) the
6
availability of equitable remedies may be limited by equitable principles
of general applicability.
(w) The execution and delivery by Funding and the Company of, and the
performance by Funding and the Company of their respective applicable
obligations under, this Agreement, the Escrow Agreement, the Guarantee
Agreement, the Preferred Securities (in the case of Funding), the LLC
Agreement, the CellNet Preferred Stock (in the case of the Company) and the
Certificate of Designation (in the case of the Company) (all of the
foregoing being referred to herein collectively as the "TRANSACTION
DOCUMENTS") and the issuance, sale and delivery of the Preferred
Securities, the Original CellNet Preferred Stock, the Additional CellNet
Preferred Stock, when issued, and the CellNet Common Shares, when issued,
will not contravene any provision of applicable law or the certificate of
incorporation or by-laws or the Certificate of Formation or the LLC
Agreement, as the case may be, either of Funding or the Company, or any
agreement or other instrument binding upon Funding or the Company or any of
its subsidiaries that is material to the Company and its subsidiaries,
taken as a whole, or any judgment, order or decree of any governmental
body, agency or court having jurisdiction over Funding, the Company or any
of its subsidiaries, and no consent, approval, authorization or order of,
or qualification with, any governmental body or agency is required for the
performance by Funding or the Company of their respective obligations under
the Transaction Documents and the issuance, sale and delivery of the
Preferred Securities, the Original CellNet Preferred Stock, the Additional
CellNet Preferred Stock, when issued, and the CellNet Common Shares, when
issued, except such as may be required by the securities or Blue Sky laws
of the various states in connection with the offer and sale of the
Preferred Securities.
(x) Each preliminary prospectus filed as part of the
registration statement as originally filed or as part of any amendment
thereto, or filed pursuant to Rule 424 under the Securities Act, complied
when so filed in all material respects with the Securities Act and the
applicable rules and regulations of the Commission thereunder.
(y) There has not occurred any material adverse change, or any
development involving a prospective material adverse change, in the
condition, financial or otherwise, or in the earnings, business or
operations of Funding or the Company and its subsidiaries, taken as a
whole, from that set forth in the Prospectus (exclusive of any amendments
or supplements thereto subsequent to the date of this Agreement) except for
any such change which has been disclosed to you and to the disclosure of
which in the Prospectus you have agreed.
(z) There are no legal or governmental proceedings pending or, to the
knowledge of the Company or Funding, threatened to which Funding, the
Company or any of its subsidiaries is a party or to which any of the
properties of Funding, the Company or any of its subsidiaries is subject
that are required to be described in the Registration Statement or the
Prospectus and are not so described and none of such proceedings is
reasonably likely
7
to have a material adverse effect on the Company and its subsidiaries,
taken as a whole, or on the power or ability of Funding or the Company to
perform their respective obligations under the Transaction Documents or
to consummate the transactions contemplated by the Prospectus.
(aa) Neither Funding nor the Company is, and after giving effect to
the offering and sale of the Preferred Securities and the application of
the proceeds thereof as described in the Prospectus, neither Funding nor
the Company will be, an "investment company," as such term is defined in
the Investment Company Act of 1940, as amended.
(ab) Each of Funding, the Company and its subsidiaries has all
necessary consents, authorizations, approvals, orders, certificates and
permits of and from, and has made all declarations and filings with, all
federal, state, local and other governmental authorities, all
self-regulatory organizations and all courts and other tribunals, to own,
lease, license and use its properties and assets and to conduct its
business in the manner described in the Prospectus, except to the extent
that the failure to obtain such consents, authorizations, approvals,
orders, certificates or permits or make such declarations or filings would
not have a material adverse effect on Funding or the Company and its
subsidiaries, taken as a whole, or any Subsidiary, singly.
(ac) Each of Funding, the Company and its subsidiaries (i) are in
compliance with any and all applicable foreign, federal, state and local
laws and regulations relating to the protection of human health and safety,
the protection of the environment, hazardous or toxic substances or wastes,
pollutants or contaminants ("ENVIRONMENTAL LAWS"), (ii) have received all
permits, licenses or other approvals required of them under applicable
Environmental Laws to conduct their respective businesses and (iii) are in
compliance with all terms and conditions of any such permit, license or
approval, except where such noncompliance with Environmental Laws, failure
to receive required permits, licenses or other approvals or failure to
comply with the terms and conditions of such permits, licenses or approvals
would not, singly or in the aggregate, have a material adverse effect on
Funding or the Company and its subsidiaries, taken as a whole, except as
described in or contemplated by the Prospectus.
(ad) Each of Funding and the Company has reasonably concluded that the
costs and liabilities associated with the Environmental Laws (including,
without limitation, any capital or operating expenditures required for
clean-up, closure of properties or compliance with Environmental Laws or
any permit, license or approval, any related constraints on operating
activities and any potential liabilities to third parties) would not,
singly or in the aggregate, have a material adverse effect on Funding or
the Company and its subsidiaries, taken as a whole.
(ae) Subsequent to the respective dates as of which information is
given in the Registration Statement and the Prospectus, (1) neither Funding
nor the Company and its
8
subsidiaries has incurred any material liability or obligation, direct
or contingent, or entered into any material transaction not in the
ordinary course of business; (2) neither Funding nor the Company has
purchased (except, in the case of the Company, for the repurchase of
shares of Common Stock from employees, officers, directors, consultants
or other persons providing services to the Company or any of its
subsidiaries pursuant to agreements under which the Company has the
option to repurchase such shares of Common Stock upon the occurrence of
certain events such as the termination of employment or other
service-providing relationship) any of its outstanding capital stock,
nor declared, paid or otherwise made any dividend or distribution of
any kind on its capital stock other than ordinary and customary
dividends; and (3) there has not been any material change in the
capital stock, short-term debt or long-term debt of Funding or the
Company and its consolidated subsidiaries taken as a whole, except in
each case as described in the Prospectus.
(af) The Company and its Subsidiaries have good and
marketable title in fee simple to all real property and good and
marketable title to all personal property owned by them which is
material to the business of the Company and its subsidiaries, in each
case free and clear of all liens, encumbrances and defects except such
as are described in the Prospectus or such as do not materially affect
the value of such property and do not interfere with the use made and
proposed to be made of such property by the Company and its
subsidiaries; and any real property and buildings held under lease by
the Company and its subsidiaries are held by them under valid,
subsisting and enforceable leases with such exceptions as are not
material and do not interfere with the use made and proposed to be made
of such property and buildings by the Company and its subsidiaries, in
each case except as described in or contemplated by the Prospectus.
(ag) The Company and its subsidiaries own or possess, or can acquire
on reasonable terms, all licenses, inventions, copyrights, know-how
(including trade secrets and other unpatented and/or unpatentable
proprietary or confidential information, systems or procedures),
trademarks, service marks and trade names, and to the Company's knowledge,
all patents and patent rights, necessary to carry on its business in all
material respects as described in the Prospectus and, except as set forth
in the Prospectus, neither the Company nor any of its subsidiaries has
received any correspondence relating to any of the foregoing or notice of
infringement of or conflict with asserted rights of others with respect to
any of the foregoing which the Company believes would, singly or in the
aggregate, result in any material adverse change in the condition,
financial or otherwise, or in the earnings, business or operations of the
Company and its subsidiaries, taken as a whole.
(ah) No material labor dispute with the employees of the Company or
any of its subsidiaries exists, except as described in or contemplated by
the Prospectus, or, to the knowledge of the Company, is imminent; and the
Company is not aware of any existing, threatened or imminent labor
disturbance by the employees of any of its principal suppliers,
manufacturers or contractors that could result in any material adverse
change in the
9
condition, financial or otherwise, or in the earnings, business or
operations of the Company and its subsidiaries, taken as a whole.
(ai) The Company and each of its subsidiaries are insured by
insurers of recognized financial responsibility against such losses and
risks and in such amounts as are prudent and customary in the
businesses in which they are engaged; neither the Company nor any such
subsidiary has been refused any insurance coverage sought or applied
for; and neither the Company nor any such subsidiary has any reason to
believe that it will not be able to renew its existing insurance
coverage as and when such coverage expires or to obtain similar
coverage from similar insurers as may be necessary to continue its
business at a cost that would not materially and adversely affect the
condition, financial or otherwise, or the earnings, business or
operations of the Company and its subsidiaries, taken as a whole,
except as described in or contemplated by the Prospectus.
(aj) Each of Funding and the Company and its subsidiaries possess all
certificates, authorizations and permits issued by the appropriate federal,
state or foreign regulatory authorities necessary to conduct their
respective businesses, except to the extent that the failure to possess
such certificates, authorizations and permits would not have a material
adverse effect on Funding or the Company and its subsidiaries, taken as a
whole, or any Subsidiary singly, and neither Funding, the Company nor any
such subsidiary has received any notice of proceedings relating to the
revocation or modification of any such certificate, authorization or permit
which, singly or in the aggregate, if the subject of an unfavorable
decision, ruling or finding, would result in a material adverse change in
the condition, financial or otherwise, or in the earnings, business or
operations of Funding or the Company and its subsidiaries, taken as a
whole, except as described in or contemplated by the Prospectus.
(ak) The Company and each of its subsidiaries maintain a system of
internal accounting controls sufficient to provide reasonable assurance
that (1) transactions are executed in accordance with management's general
or specific authorizations; (2) transactions are recorded as necessary to
permit preparation of financial statements in conformity with generally
accepted accounting principles and to maintain asset accountability; (3)
access to assets is permitted only in accordance with management's general
or specific authorization; and (4) the recorded accountability for assets
is compared with the existing assets at reasonable intervals and
appropriate action is taken with respect to any differences.
(al) The terms of the Preferred Securities and the CellNet Preferred
Stock conform in all material respects to the descriptions thereof
contained in the Prospectus under the headings "Description of the
Preferred Securities" and "Description of CellNet Preferred Stock,"
respectively.
10
(am) Each of Funding and the Company is, and immediately after the
Closing Date will be, solvent. As used herein, the term "solvent" means,
with respect to Funding or the Company, as the case may be, on a particular
date, that on such date (A) the fair market value of the assets of Funding
or the Company, as the case may be, is greater than the respective total
amount of liabilities (including contingent liabilities) of Funding or the
Company, as the case may be, (B) the present fair salable value of the
assets of Funding or the Company, as the case may be, is greater than the
amount that will be required to pay the respective probable liabilities of
Funding or the Company, as the case may be, on its debts as they become
absolute and matured, (C) Funding or the Company, as the case may be, is
able to pay its debts and other liabilities, including contingent
obligations, as they mature and (D) Funding or the Company, as the case may
be, does not have an unreasonably small capital.
(an) There are no holders of securities (debt or equity) of the
Company or any of its subsidiaries, or holders of rights, options, or
warrants to obtain securities of the Company or any of its subsidiaries,
who have the right, during the [90] day period after the date of this
Agreement, to require the Company to register securities held by them under
the Securities Act, other than holders who have waived such right for the
[90] day period after the date of the Prospectus and who have waived their
rights with respect to the inclusion of their securities in the
Registration Statement.
(ao) Each of Funding and the Company has complied with all provisions
of Section 517.075, Florida Statutes relating to doing business with the
Government of Cuba or with any person or affiliate located in Cuba.
2. AGREEMENTS TO SELL AND PURCHASE. The Company hereby agrees to
sell to you, and upon the basis of the representations and warranties herein
contained, but subject to the conditions hereinafter stated, you agree to
purchase from the Company 3,000,000 shares of Preferred Securities at $______
per Preferred Security (the "PURCHASE PRICE").
On the basis of the representations and warranties contained in
this Agreement, and subject to its terms and conditions, the Company agrees
to sell to you the Additional Preferred Securities, and you shall have a one
time right to purchase up to 450,000 Additional Preferred Securities at the
Purchase Price. If you elect to exercise such option, you shall so notify the
Company in writing not later than 30 days after the date of this Agreement,
which notice shall specify the number of Additional Preferred Securities to
be purchased by you and the date on which such shares are to be purchased.
Such date may be the same as the Closing Date (as defined below) but not
earlier than the Closing Date nor later than ten business days after the date
of such notice. Additional Preferred Securities may be purchased as provided
in Section 4 hereof solely for the purpose of covering overallotments made in
connection with the offering of the Firm Preferred Securities.
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The Company hereby agrees that, without your prior written consent,
it will not, during the period ending [90] days after the date of the
Prospectus, (i) offer, pledge, sell, contract to sell, sell any option or
contract to purchase, purchase any option or contract to sell, grant any
option, right or warrant to purchase, lend, or otherwise transfer or dispose
of, directly or indirectly, any shares of Common Stock or any securities
convertible into or exercisable or exchangeable for Common Stock or (ii)
enter into any swap or other arrangement that transfers to another, in whole
or in part, any of the economic consequences of ownership of the Common
Stock, whether any such transaction described in clause (i) or (ii) above is
to be settled by delivery of Common Stock or such other securities, in cash
or otherwise. The foregoing sentence shall not apply to (A) the issuance of
the CellNet Exchange Common Shares pursuant to the Certificate of
Designation, (B) the issuance by the Company of shares of Common Stock upon
the exercise of an option or warrant or the conversion of a security
outstanding on the date hereof of which the Underwriter has been advised in
writing, (C) transactions relating to shares of Common Stock or other
securities acquired in open market transactions after the completion of the
offering of the Preferred Securities hereunder or (D) shares or options to
acquire shares of Common Stock which may be issued or granted from time to
time by the Company pursuant to the Company's 1992 Stock Option Plan, the
Company's 1994 Stock Plan or the Company Employee Stock Purchase Plan.
3. TERMS OF PUBLIC OFFERING. The Company is advised by you that you
propose to make a public offering of the Preferred Securities as soon after the
Registration Statement and this Agreement have become effective as in your
judgment is advisable. The Company is further advised by you that the Preferred
Securities are to be offered to the public initially at $_____________ per
Preferred Security (the "PUBLIC OFFERING PRICE") and to certain dealers selected
by you at a price that represents a concession not in excess of $______ per
Preferred Security under the Public Offering Price, and that you may allow, and
such dealers may reallow, a concession, not in excess of $_____ per Preferred
Security, to you or to certain other dealers.
4. PAYMENT AND DELIVERY. Payment for the Firm Preferred Securities
shall be made to Funding in Federal or other funds immediately available in New
York City against delivery of such Firm Preferred Securities for your account at
10:00 a.m., New York City time, on ____________, 1998, or at such other time on
the same or such other date, not later than _________, 1998, as shall be
designated in writing by you. The time and date of such payment are hereinafter
referred to as the "CLOSING DATE."
Payment for any Additional Preferred Securities shall be made to
Funding in Federal or other funds immediately available in New York City against
delivery of such Additional Preferred Securities for your account at 10:00 a.m.,
New York City time, on the date specified in the notice described in Section 2
or at such other time on the same or on such other date, in any event not later
than _______, 1998, as shall be designated in writing by you. The time and date
of such payment are hereinafter referred to as the "OPTION CLOSING DATE."
Certificates for the Firm Preferred Securities and Additional
Preferred Securities shall be in definitive form and registered in such names
and in such denominations as you shall request
12
in writing not later than one full business day prior to the Closing Date or
the Option Closing Date, as the case may be. The certificates evidencing the
Firm Preferred Securities and Additional Preferred Securities shall be
delivered to you on the Closing Date or the Option Closing Date, as the case
may be, with any transfer taxes payable in connection with the transfer of
the Preferred Securities to you duly paid, against payment of the Purchase
Price therefor.
5. CONDITIONS TO YOUR OBLIGATION. The obligations of Funding and
the Company to sell the Preferred Securities to you and your obligation to
purchase and pay for the Preferred Securities on the Closing Date are subject to
the condition that the Registration Statement shall have become effective not
later than [_____] (New York City time) on the date hereof.
Your obligation is subject to the following further conditions:
(a) Subsequent to the execution and delivery of this Agreement
and prior to the Closing Date:
(i) there shall not have occurred any downgrading, nor
shall any notice have been given of any intended or potential
downgrading or of any review for a possible change that does not
indicate the direction of the possible change, in the rating accorded
any of Funding or the Company's securities, as the case may be, by any
"nationally recognized statistical rating organization," as such term
is defined for purposes of Rule 436(g)(2) under the Securities Act;
and
(ii) there shall not have occurred any change, or any
development involving a prospective change, in the condition,
financial or otherwise, or in the earnings, business or operations of
Funding or the Company and its subsidiaries, taken as a whole, from
that set forth in the Prospectus (exclusive of any amendments or
supplements thereto subsequent to the date of this Agreement) that, in
your judgment, is material and adverse and that makes it, in your
judgment, impracticable to market the Preferred Securities on the
terms and in the manner contemplated in the Prospectus.
(b) You shall have received on the Closing Date certificates,
dated the Closing Date and signed by an executive officer of Funding and
the Company, to the effect set forth in Section 5(a)(i) above and to the
effect that the representations and warranties of each of Funding and the
Company contained in this Agreement are true and correct as of the Closing
Date and that each of Funding and the Company have complied with all of the
agreements and satisfied all of the conditions on their respective parts to
be performed or satisfied hereunder on or before the Closing Date.
The officers signing and delivering such certificates may rely
upon the best of their knowledge as to proceedings threatened.
13
(c) You shall have received on the Closing Date an opinion of
Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx, outside counsel for Funding and the
Company, dated the Closing Date, in the form of Exhibit B hereto.
(d) You shall have received on the Closing Date an opinion of
Wilkinson, Barker, Xxxxxx & Xxxxx, regulatory counsel for the Company,
dated the Closing Date, in the form of Exhibit C hereto.
(e) You shall have received on the Closing Date an opinion of
Fish & Xxxxxxxxxx, intellectual property counsel for the Company, dated the
Closing Date, in the form of Exhibit D hereto.
(f) You shall have received on the Closing Date an opinion of
Shearman & Sterling, counsel for the Underwriter, dated the Closing Date,
with respect to the Prospectus and such other related matters as you may
reasonably request, and such counsel shall have received such documents and
information as they may reasonably request to enable them to pass upon such
matters.
(g) You shall have received, on each of the date hereof and the
Closing Date, a letter dated the date hereof or the Closing Date, as the
case may be, in form and substance satisfactory to you, from Deloitte &
Touche LLP, independent public accountants, containing statements and
information of the type ordinarily included in accountants' "comfort
letters" to underwriters with respect to the financial statements and
certain financial information contained in the Registration Statement and
the Prospectus; PROVIDED that the letter delivered on the Closing Date
shall use a "cut-off date" not earlier than the date hereof.
(h) The "lockup" agreements, each substantially in the form of
Exhibit A hereto, between you and certain securityholders, officers and
directors of the Company relating to sales and certain other dispositions
of Common Stock or certain other securities, delivered to you on or before
the date hereof, shall be in full force and effect on the Closing Date.
(i) You shall have received written waivers from each holder of
securities (debt or equity) of the Company or any of its subsidiaries, or
holders of rights, options, or warrants to obtain securities of the Company
or any of its subsidiaries, who have the right, during the [90] day period
after the date of this Agreement, to require the Company to register
securities held by them under the Securities Act waiving such right for the
[90] day period after the date of the Prospectus.
(j) The LLC Agreement, the Certificate of Designation and each
other Transaction Document relating to the Preferred Securities or the
CellNet Preferred Stock shall be completely satisfactory, in form and
substance, to you.
14
(k) No stop order suspending the effectiveness of the
Registration Statement shall be in effect and no proceedings for such
purpose shall be pending before, or to the knowledge of Funding or the
Company or to your knowledge, threatened by the Commission.
(l) The Preferred Securities have received approval for listing,
subject to official notice of issuance, on Nasdaq by the Nasdaq Stock
Market, Inc.
Your obligation to purchase Additional Preferred Securities hereunder
is subject to the delivery to you on the Option Closing Date of such documents
as you may reasonably request with respect to the good standing of Funding and
the Company, the due authorization and issuance of the Additional Preferred
Securities and other matters related to the issuance of the Additional Preferred
Securities.
6. COVENANTS OF FUNDING AND THE COMPANY. In further consideration
of the agreements of the Underwriter herein contained, the Company covenants
with each Underwriter as follows:
(a) To furnish to you, without charge, two signed copies 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 you in New York City, without
charge, prior to 10:00 a.m. New York City time on the business day next
succeeding the date of this Agreement and during the period mentioned in
Section 6(c) below, as many copies of the Prospectus and any supplements
and amendments thereto or to the Registration Statement as you may
reasonably request.
(b) Before amending or supplementing the Registration Statement
or the Prospectus, to furnish to you a copy of each such proposed amendment
or supplement and not to file any such proposed amendment or supplement to
which you reasonably object, and to file with the Commission within the
applicable period specified in Rule 424(b) under the Securities Act any
prospectus required to be filed pursuant to such Rule.
(c) If, during such period after the first date of the public
offering of the Preferred Securities as in the opinion of your counsel the
Prospectus is required by law to be delivered in connection with sales by
you or a dealer, any event shall occur or condition exist as a result of
which it is necessary to amend or supplement the Prospectus in order to
make the statements therein, in the light of the circumstances when the
Prospectus is delivered to a purchaser, not misleading, or if, in the
opinion of your counsel, it is necessary to amend or supplement the
Prospectus to comply with applicable law, forthwith to prepare, file with
the Commission and furnish, at its own expense, to you and to the dealers
(whose names and addresses you will furnish to the Company) to which
Preferred Securities may have been sold by you and to any other dealers
upon request, either amendments or supplements to the Prospectus so that
the statements in the Prospectus as so amended or supplemented will not,
15
in the light of the circumstances when the Prospectus is delivered to a
purchaser, be misleading or so that the Prospectus, as amended or
supplemented, will comply with law.
(d) To endeavor to qualify the Preferred Securities for offer
and sale under the securities or Blue Sky laws of such jurisdictions as you
shall reasonably request.
(e) To make generally available to the Company's security
holders and to you as soon as practicable an earning statement covering the
twelve month period ending July 1, 1999 that satisfies the provisions of
Section 11(a) of the Securities Act and the rules and regulations of the
Commission thereunder.
(f) Not to agree to amend or waive the "lock-up" period as
provided for in the "lock-up agreements" to be entered into pursuant to
Section 5(h).
(g) Whether or not the transactions contemplated in this
Agreement are consummated or this Agreement is terminated, to pay or cause
to be paid all expenses incident to the performance of its obligations
under this Agreement, including: (i) the fees, disbursements and expenses
of the Company's and Funding's counsel and the Company's accountants in
connection with the registration and delivery of the Preferred Securities
under the Securities Act and all other fees or expenses in connection with
the preparation and filing of the Registration Statement, any preliminary
prospectus, the Prospectus and amendments and supplements to any of the
foregoing, including all printing costs associated therewith, and the
mailing and delivery of copies thereof to you and dealers, in the
quantities hereinabove specified, (ii) all costs and expenses related to
the transfer and delivery of the Preferred Securities to you, including any
transfer or other taxes payable thereon and all costs and expenses related
to the preparation, issuance and delivery of the CellNet Preferred Stock,
(iii) the cost of printing or producing any Blue Sky or Legal Investment
memorandum in connection with the offer and sale of the Preferred
Securities under state securities laws and all expenses in connection with
the qualification of the Preferred Securities for offer and sale under
state securities laws as provided in Section 6(d) hereof, including filing
fees and the reasonable fees and disbursements of your counsel in
connection with such qualification and in connection with the Blue Sky or
Legal Investment memorandum, (iv) all filing fees and the reasonable fees
and disbursements of your counsel incurred in connection with the review
and qualification of the offering of the Preferred Securities by the
National Association of Securities Dealers, Inc., (v) all fees and expenses
in connection with the preparation and filing of the registration statement
on Form 8-A relating to the Preferred Securities and all costs and expenses
incident to listing the Preferred Securities and Exchange Common Shares on
the Nasdaq National Market, (vi) the cost of printing certificates
representing the Preferred Securities, (vii) the costs and charges of any
transfer agent, Escrow Agent, registrar or depositary, (viii) the costs and
expenses of the Company and Funding relating to investor presentations on
any "road show" undertaken in connection with the marketing of the offering
of the Preferred Securities, including, without limitation, expenses
associated with the production of road show slides and graphics, fees and
expenses of any consultants
16
engaged in connection with the road show presentations with the prior
approval of the Company or Funding, travel and lodging expenses of the
representatives and officers of the Company and any such consultants, and
the cost of any aircraft chartered in connection with the road show, and
(ix) all other costs and expenses incident to the performance of the
obligations of the Company hereunder for which provision is not otherwise
made in this Section. It is understood, however, that as provided in this
Section, Section 7 entitled "Indemnity and Contribution", and the last
paragraph of Section 9 below, you will pay all of your costs and expenses,
including fees and disbursements of your counsel, stock transfer taxes
payable on resale of any of the Preferred Securities by them and any
advertising expenses connected with any offers you may make.
7. INDEMNITY AND CONTRIBUTION. (a) Each of Funding and the Company
agrees to indemnify and hold harmless the Underwriter and each person, if any,
who controls the Underwriter within the meaning of either Section 15 of the
Securities Act or Section 20 of the Securities Exchange Act of 1934, as amended
(the "EXCHANGE ACT"), from and against any and all losses, claims, damages and
liabilities (including, without limitation, any legal or other expenses
reasonably incurred in connection with defending or investigating any such
action or claim) caused by any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement or any amendment thereof,
any preliminary prospectus or the Prospectus (as amended or supplemented if
Funding or the Company shall have furnished any amendments or supplements
thereto), or caused by any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, except insofar as such losses, claims, damages or
liabilities are caused by any such untrue statement or omission or alleged
untrue statement or omission based upon information relating to the Underwriter
furnished to Funding or the Company in writing by the Underwriter expressly for
use therein; PROVIDED, HOWEVER, that the foregoing indemnity agreement with
respect to any preliminary prospectus shall not inure to the benefit of the
Underwriter from whom the person asserting any such losses, claims, damages or
liabilities purchased Preferred Securities, or any person controlling the
Underwriter, if a copy of the Prospectus (as then amended or supplemented if the
Company shall have furnished any amendments or supplements thereto) was not sent
or given by the Underwriter to such person, if required by law so to have been
delivered, at or prior to the written confirmation of the sale of the Preferred
Securities to such person, and if the Prospectus (as so amended or supplemented)
would have cured the defect giving rise to such loss, claim, damage or
liability.
(b) The Underwriter agrees to indemnify and hold harmless Funding,
the Company, their respective directors and officers who sign the Registration
Statement and each person, if any, who controls Funding and the Company, as the
case may be, within the meaning of either Section 15 of the Securities Act or
Section 20 of the Exchange Act to the same extent as the foregoing indemnity
from Funding and the Company to the Underwriter, but only with reference to
information relating to the Underwriter furnished to Funding or the Company in
writing by the Underwriter expressly for use in the Registration Statement, any
preliminary prospectus, the Prospectus or any amendments or supplements thereto.
17
(c) In case any proceeding (including any governmental investigation)
shall be instituted involving any person in respect of which indemnity may be
sought pursuant to Section 7(a) or 7(b), such person (the "INDEMNIFIED PARTY")
shall promptly notify the person against whom such indemnity may be sought (the
"INDEMNIFYING PARTY") in writing and the indemnifying party, upon request of the
indemnified party, shall retain counsel reasonably satisfactory to the
indemnified party to represent the indemnified party and any others the
indemnifying party may designate in such proceeding and shall pay the fees and
disbursements of such counsel related to such proceeding. In any such
proceeding, any indemnified party shall have the right to retain its own
counsel, but the fees and expenses of such counsel shall be at the expense of
such indemnified party unless (i) the indemnifying party and the indemnified
party shall have mutually agreed to the retention of such counsel or (ii) the
named parties to any such proceeding (including any impleaded parties) include
both the indemnifying party and the indemnified party and representation of both
parties by the same counsel would be inappropriate due to actual or potential
differing interests between them. It is understood that the indemnifying party
shall not, in respect of the legal expenses of any indemnified party in
connection with any proceeding or related proceedings in the same jurisdiction,
be liable for the fees and expenses of more than one separate firm (in addition
to any local counsel) for all such indemnified parties and that all such fees
and expenses shall be reimbursed as they are incurred. Such firm shall be
designated in writing by Xxxxxx Xxxxxxx & Co. Incorporated, in the case of
parties indemnified pursuant to Section 7(a), and by the Company or Funding, in
the case of parties indemnified pursuant to Section 7(b). The indemnifying
party 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 from and against any loss or liability 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 the second
and third sentences of this paragraph, 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 of any pending or threatened proceeding in respect of which any
indemnified party is or could have been a party and indemnity could have been
sought hereunder by such indemnified party, unless such settlement includes an
unconditional release of such indemnified party from all liability on claims
that are the subject matter of such proceeding.
(d) To the extent the indemnification provided for in Section 7(a) or
7(b) is unavailable to an indemnified party or insufficient in respect of any
losses, claims, damages or liabilities referred to therein, then each
indemnifying party under such paragraph, in lieu of indemnifying such
indemnified party thereunder, shall contribute to the amount paid or payable by
such indemnified party as a result of such losses, claims, damages or
liabilities (i) in such proportion as is appropriate to reflect the relative
benefits received by Funding and the Company on the one hand and the Underwriter
on the other hand from the offering of the Preferred Securities or (ii) if the
allocation provided by clause 7(d)(i) above is not permitted by applicable law,
in such proportion
18
as is appropriate to reflect not only the relative benefits referred to in
clause 7(d)(i) above but also the relative fault of Funding and the Company
on the one hand and of the Underwriter on the other hand in connection with
the statements or omissions that resulted in such losses, claims, damages or
liabilities, as well as any other relevant equitable considerations. The
relative benefits received by Funding and the Company on the one hand and the
Underwriter on the other hand in connection with the offering of the
Preferred Securities shall be deemed to be in the same respective proportions
as the net proceeds from the offering of the Preferred Securities (before
deducting expenses) received by Funding and the Company and the total
underwriting discounts and commissions received by the Underwriter, in each
case as set forth in the table on the cover of the Prospectus, bear to the
aggregate Public Offering Price of the Preferred Securities. The relative
fault of Funding and the Company on the one hand and the Underwriter on the
other hand shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information supplied by
Funding or the Company or by the Underwriter and the parties' relative
intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission.
(e) Funding, the Company and the Underwriter agree that it would
not be just or equitable if contribution pursuant to this Section 7 were
determined by PRO RATA allocation (even if the Underwriter were treated as
one entity for such purpose) or by any other method of allocation that does
not take account of the equitable considerations referred to in Section 7(d).
The amount paid or payable by an indemnified party as a result of the
losses, claims, damages and liabilities referred to in the immediately
preceding paragraph shall be deemed to include, subject to the limitations
set forth above, any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending any such
action or claim. Notwithstanding the provisions of this Section 7, the
Underwriter shall not be required to contribute any amount in excess of the
amount by which the total price at which the Preferred Securities
underwritten by it and distributed to the public were offered to the public
exceeds the amount of any damages that the Underwriter has otherwise been
required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The remedies provided for in this Section 7
are not exclusive and shall not limit any rights or remedies which may
otherwise be available to any indemnified party at law or in equity.
(f) The indemnity and contribution provisions contained in this
Section 7 and the representations, warranties and other statements of Funding
and the Company contained in this Agreement shall remain operative and in full
force and effect regardless of (i) any termination of this Agreement, (ii) any
investigation made by or on behalf of the Underwriter or any person controlling
the Underwriter or by or on behalf of Funding, the Company, their respective
officers or directors or any person controlling Funding or the Company and (iii)
acceptance of and payment for any of the Preferred Securities.
19
8. TERMINATION. This Agreement shall be subject to termination by
notice given by you to the Company, if (a) after the execution and delivery of
this Agreement and prior to the Closing Date (i) trading generally shall have
been suspended or materially limited on or by, as the case may be, any of the
New York Stock Exchange, the American Stock Exchange, the National Association
of Securities Dealers, Inc., the Chicago Board of Options Exchange, the Chicago
Mercantile Exchange or the Chicago Board of Trade, (ii) trading of any
securities of the Company shall have been suspended on any exchange or in any
over-the-counter market, (iii) a general moratorium on commercial banking
activities in New York shall have been declared by either Federal or New York
State authorities or (iv) there shall have occurred any outbreak or escalation
of hostilities or any change in financial markets or any calamity or crisis
that, in your judgment, is material and adverse and (b) in the case of any of
the events specified in clauses 8(a)(i) through 8(a)(iv), such event, singly or
together with any other such event, makes it, in your judgment, impracticable to
market the Preferred Securities on the terms and in the manner contemplated in
the Prospectus.
9. EFFECTIVENESS; REIMBURSEMENT. This Agreement shall become
effective upon the execution and delivery hereof by the parties hereto.
If this Agreement shall be terminated by you because of any failure
or refusal on the part of Funding or the Company to comply with the terms or
to fulfill any of the conditions of this Agreement, or if for any reason
Funding or the Company shall be unable to perform their respective
obligations under this Agreement, Funding and the Company will severally
reimburse you for all out-of-pocket expenses (including the fees and
disbursements of your counsel) reasonably incurred by you in connection with
this Agreement or the offering contemplated hereunder.
10. COUNTERPARTS. This Agreement may be signed in two or more
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
11. APPLICABLE LAW. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of New York.
20
12. HEADINGS. The headings of the sections of this Agreement have
been inserted for convenience of reference only and shall not be deemed a part
of this Agreement.
Very truly yours,
CELLNET DATA SYSTEMS, INC.
By:
------------------------------------
Name:
Title:
CELLNET FUNDING, LLC
By:
------------------------------------
Name:
Title:
Accepted as of the date hereof
Xxxxxx Xxxxxxx & Co. Incorporated
By:
------------------------------------
Name:
Title:
21
EXHIBIT A
FORM OF LOCK-UP LETTER
_____________, 1998
Xxxxxx Xxxxxxx & Co. Incorporated
0000 Xxxxxxxx
Xxx Xxxx, XX 00000
Dear Sirs and Mesdames:
The undersigned [stockholder] [warrantholder] of CellNet Data Systems,
Inc., a Delaware corporation ("CELLNET"), understands that CellNet and CellNet
Funding, LLC, a newly formed Delaware limited liability company ("FUNDING"),
propose to enter into an underwriting agreement (the "UNDERWRITING AGREEMENT")
with you providing for the issuance and sale to you of an aggregate of 3,000,000
of Funding's ___% Exchangeable Limited Liability Company Preferred Securities,
liquidation preference $25.00 per Preferred Security (the "FIRM PREFERRED
SECURITIES"), which will be mandatorily redeemable on May 1, 2010, and, at your
election, solely to cover over-allotments, if any, in connection with the
offering (the "OFFERING") of the Firm Preferred Securities, up to an additional
450,000 of Funding's ___% Exchangeable Limited Liability Company Preferred
Securities, liquidation preference $25.00 per Preferred Security (together with
the Firm Preferred Securities, the "PREFERRED SECURITIES"), which will be
mandatorily redeemable on May 1, 2010. The Preferred Securities will be
exchangeable at the option of the holder thereof into shares of Common Stock,
par value $.001 per share (the "COMMON STOCK"), of CellNet.
To induce you to continue your efforts in connection with the Public
Offering, the undersigned hereby agrees that, without your written consent, it
will not, during the period commencing on the date hereof and ending [90 days
after the date of the final prospectus relating to the Public Offering (the
"PROSPECTUS"), (1) offer, pledge, sell, contract to sell, sell any option or
contract to purchase, purchase any option or contract to sell, grant any option,
right or warrant to purchase, lend, or otherwise transfer or dispose of,
directly or indirectly, any shares of Common Stock or any securities convertible
into or exercisable or exchangeable for Common Stock (provided that such shares
or securities are either now owned by the undersigned or are hereafter acquired
prior to or in connection with the offering of Preferred Securities) or
(2) enter into any swap or other arrangement that transfers to another, in whole
or in part, any of the economic consequences of ownership of the Common Stock,
whether any such transaction described in clause (1) or (2) above is to be
settled by delivery of Common Stock or such other securities, in cash or
otherwise. The foregoing sentence shall not apply to transactions relating to
shares of Common Stock or other
A-2
securities acquired in open market transactions after the completion of the
offering of the Preferred Securities hereunder. In addition, the undersigned
agrees that, without your prior written consent, it will not, during the
period commencing on the date hereof and ending [90] days after the date of
the Prospectus, make any demand for or exercise any right with respect to,
the registration of any shares of Common Stock or any security convertible
into or exercisable or exchangeable for Common Stock.
Very truly yours,
_________________________
(Name)
_________________________
(Address)
EXHIBIT B
FORM OF OPINION OF
XXXXXX XXXXXXX XXXXXXXX & XXXXXX
Pursuant to Section 5(c) of the Underwriting Agreement, Xxxxxx Xxxxxxx
Xxxxxxxx & Xxxxxx, counsel for Funding and the Company, shall furnish an opinion
to the effect that:
(i) Funding has been duly organized, is validly existing as a limited
liability company in good standing under the laws of the State of Delaware
and has the power and authority to own its property and to conduct its
business as described in the Prospectus.
(ii) The Company has been duly incorporated, is validly existing as a
corporation in good standing under the laws of the State of Delaware, has
the corporate power and authority to own its property and to conduct its
business as described in the Prospectus and is duly qualified to transact
business and is in good standing in each jurisdiction in which the conduct
of its business or its ownership or leasing of property requires such
qualification, except to the extent that the failure to be so qualified or
be in good standing would not have a material adverse effect on the Company
and its subsidiaries taken as a whole, or any Subsidiary, singly.
(iii) Each of CellNet Data Services, Inc., a Delaware corporation,
CellNet Data Services (KC), Inc., a Delaware corporation, CellNet Data
Services (MSP), Inc., a Delaware corporation, CellNet Data Services (SL),
Inc., a Delaware corporation, CN Frequency (KC), Inc., a Delaware
corporation, CN Frequency (SL), Inc., a Delaware corporation, and CN WAN
Corp., a Delaware corporation, has been duly incorporated, is validly
existing as a corporation in good standing under the laws of the
jurisdiction of its incorporation, has the corporate power and authority to
own its property and to conduct its business as described in the Prospectus
and is duly qualified to transact business and is in good standing in each
jurisdiction in which the conduct of its business or its ownership or
leasing of property requires such qualification, except to the extent that
the failure to be so qualified or be in good standing would not have a
material adverse effect on the Company and its subsidiaries taken as a
whole.
(iv) This Agreement has been duly authorized, executed and delivered
by each of Funding and the Company.
(v) The Escrow Agreement has been duly authorized by each of Funding
and the Company and, when executed and delivered by each of Funding and the
Company, will be a valid and binding agreement of each of Funding and the
Company, enforceable against each of them in accordance with its terms,
except as (x) the enforceability thereof may be
B-2
limited by the effect of any applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws now or hereafter in effect
relating to or affecting creditors' rights generally and (y) the
availability of equitable remedies may be limited by equitable principles
of general applicability.
(vi) The pledge and grant of a security interest in the Treasury
Strips for the benefit of the Escrow Agent and the holders of the Preferred
Securities constitutes a perfected security interest in the Treasury Strips
with first priority against all creditors of the Company and Funding.
(vii) The Preferred Securities are duly authorized by the LLC
Agreement and, when issued and delivered to and paid for by the Underwriter
in accordance with the terms of this Agreement and the LLC Agreement, will
be validly issued and fully paid, and will not be subject to any preemptive
or similar rights.
(viii) Once duly and validly issued in accordance with the LLC
Agreement, the Preferred Securities will entitle the holders of the
Preferred Securities to the benefits of the LLC Agreement.
(ix) The holders of the Preferred Securities are members of Funding
and as such have no liability for the obligations of Funding in excess of
(a) their respective obligations to pay for their Preferred Securities, (b)
their respective obligations to make other payments as members as provided
for in the LLC Agreement, (c) their respective obligations to repay to
Funding (1) any distribution received by any of the holders of the
Preferred Securities in violation of the Delaware Limited Liability Company
Act and (2) any amount arising out of an obligation or liability under
other applicable law, and (d) their respective shares of the assets and
undistributed profits of Funding.
(x) The Certificate of Formation of Funding has been duly filed with
the Secretary of State of the State of Delaware and with all other offices,
if any, where such filings are required and copies of such Certificate have
been delivered to you.
(xi) The LLC Agreement has been duly executed and is a valid and
binding agreement of the Company, in its capacity as manager and holder of
the common limited liability company securities, and _________________, in
his capacity as provisional member, enforceable against the Company, in its
capacity as manager and holder of the common limited liability company
securities, and _____________, in his capacity as provisional member, in
accordance with its terms, and copies of such Agreement have been delivered
to you.
B-3
(xii) The CellNet Preferred Stock has been duly authorized by the
Company and, when issued and delivered to and paid for in accordance with
the terms of the Certificate of Designation and this Agreement, will be
validly issued, fully paid and non-assessable and will not be subject to
any preemptive or similar rights.
(xiii) The additional shares of the CellNet Preferred Stock that
may be issued in payment of dividends in respect of the CellNet Preferred
Stock, have been duly authorized and reserved by the Company and, when
issued and delivered in accordance with the terms of the Certificate of
Designation, will be validly issued, fully paid and non-assessable and will
not be subject to any preemptive or similar rights.
(xiv) The terms of the CellNet Preferred Stock as specified in the
Certificate of Designation are legal, valid and enforceable against the
Company.
(xv) The Certificate of Designation creating the CellNet Preferred
Stock has been duly filed with the Secretary of State of the State of
Delaware and with all other offices where such filings are required, on or
before the Closing Date.
(xvi) The authorized capital stock and securities of the Company
or Funding, as the case may be, conform as to legal matters to the
descriptions thereof in the Prospectus.
(xvii) The shares of Common Stock outstanding on the date hereof
have been duly authorized and are validly issued, fully paid and
non-assessable.
(xviii) The CellNet Exchange Common Shares and the shares of the
Common Stock payable as dividends on the Preferred Securities or as
dividends on the CellNet Preferred Stock have been duly authorized and
validly reserved for issuance upon exchange of the Preferred Securities or
payment as dividends on the Preferred Securities by all necessary corporate
action of the Company and, when duly issued by the Company upon such
exchange or payment, will be validly issued, fully paid and non-assessable
and will not be subject to preemptive or similar rights.
(xix) The Guarantee Agreement has been duly authorized by the
Company and Funding and, when validly executed and delivered by the Company
and Funding, will be a valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms, except as
(x) the enforceability thereof may be limited by the effect of any
applicable bankruptcy, insolvency, reorganization, moratorium or similar
laws now or hereafter in effect relating to or affecting creditors' rights
generally and (y) the availability of equitable remedies may be limited by
equitable principles of general applicability.
B-4
(xx) The execution and delivery by Funding and the Company of, and the
performance by Funding and the Company of their respective applicable
obligations under, this Agreement, the Escrow Agreement, the Guarantee
Agreement, the Preferred Securities (in the case of Funding), the LLC
Agreement, the CellNet Preferred Stock (in the case of the Company) and the
Certificate of Designation (in the case of the Company) and the issuance,
sale and delivery of the Preferred Securities, the Original CellNet
Preferred Stock, the Additional CellNet Preferred Stock, when issued, and
the CellNet Common Shares, when issued, will not contravene any provision
of applicable law or the certificate of incorporation or by-laws or the
Certificate of Formation or the LLC Agreement, as the case may be, either
of Funding or the Company, or any agreement or other instrument binding
upon Funding or the Company or any of its subsidiaries that is material to
the Company and its subsidiaries, taken as a whole, or any judgment, order
or decree of any governmental body, agency or court having jurisdiction
over Funding, the Company or any of its subsidiaries, and no consent,
approval, authorization or order of, or qualification with, any
governmental body or agency is required for the performance by Funding or
the Company of their respective obligations under the Transaction Documents
and the issuance, sale and delivery of the Preferred Securities, the
Original CellNet Preferred Stock, the Additional CellNet Preferred Stock,
when issued, and the CellNet Common Shares, when issued, except such as may
be required by the securities or Blue Sky laws of the various states in
connection with the offer and sale of the Preferred Securities.
(xxi) The statements (1) in the Prospectus under the captions
"Risk Factors -- Possible Termination of Contracts", "Risk Factors -- Risk
Factors Related to Certain United States Federal Income Tax
Considerations", "Business -- Proprietary Rights", "Business -- Current
Utility Service Agreements", "Business -- Recent Developments",
"Description of the Preferred Securities", "Description of CellNet
Preferred Stock", "Description of Capital Stock" and "Certain United States
Federal Income Tax Considerations", (2) in the Form 10-K under "Management
-- Incentive Stock Plans", "Management -- Employment Contracts and Change
of Control Arrangements" and "Certain Transactions", and (3) in the
Registration Statement in Items 14 and 15, in each case insofar as such
statements constitute summaries of the legal matters, documents or
proceedings referred to therein, fairly present the information called for
with respect to such legal matters, documents and proceedings and fairly
summarize the matters referred to therein in all material respects.
(xxii) To such counsel's knowledge, there is no legal or
governmental proceeding pending or threatened to which Funding or the
Company or any of its subsidiaries is a party or to which any of the
properties of Funding or the Company or any of its subsidiaries is subject
that are required to be described in the Registration Statement or the
Prospectus and are not so described, and none of such proceedings is
reasonably likely to have a material adverse effect on the Company and its
subsidiaries, taken as a whole, or on the power or ability of Funding or
the Company to perform their respective obligations under the
B-5
Transaction Documents or to consummate the transactions contemplated by the
Prospectus and, to such counsel's knowledge there is no statute,
regulation, contract or other document that is required to be described in
the Registration Statement or the Prospectus or, in the case of any such
contract or document, to be filed as an exhibit to the Registration
Statement, that is not described or filed as required.
(xxiii) Neither Funding nor the Company is, and after giving effect
to the offering and sale of the Preferred Securities and the application of
the proceeds thereof as described in the Prospectus, neither Funding nor
the Company will be, an "investment company" as such term is defined in the
Investment Company Act of 1940, as amended.
(xxiv) The terms of the Preferred Securities and the CellNet
Preferred Stock conform in all material respects to the descriptions
thereof contained in the Prospectus under the headings "Description of
Preferred Securities" and "Description of CellNet Preferred Stock",
respectively.
(xxv) (x) Such counsel is of the opinion that (a) the Registration
Statement and Prospectus and (b) documents incorporated by reference in the
Prospectus (except in each case for financial statements, financial data
and schedules included therein as to which such counsel need not express
any opinion) comply as to form in all material respects, respectively, with
the Securities Act and the rules and regulations of the Commission
thereunder and the Securities and Exchange Act of 1934 and the rules and
regulations of the Commission thereunder, as of the dates they were filed
with the Commission. In addition, while such counsel has not performed any
independent check or verification of the information contained in the
Registration Statement, such counsel has participated in the drafting and
preparation of the Registration Statement and nothing has come to the
attention of such counsel that leads them to believe that (i) except for
financial statements, financial data and schedules as to which such counsel
need not express any belief, the Registration Statement and the prospectus
included therein at the time the Registration Statement became effective
contained any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading and (ii) the Prospectus contains any
untrue statement of a material fact or omits to state a material fact
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading; (y) such counsel
does not know of any contract or other document of a character required to
be filed as an exhibit to the Registration Statement that is not so filed.
With respect to subparagraph (xxv) above, Xxxxxx Xxxxxxx Xxxxxxxx &
Xxxxxx may state that its opinion and belief is based upon their participation
in the preparation of the Registration Statement and Prospectus and any
amendments or supplements thereto and review and discussion of the contents
thereof, but are without independent check or verification except as specified.
C-1
EXHIBIT C
FORM OF OPINION OF WILKINSON, BARKER, XXXXXX & XXXXX
Pursuant to Section 5(d) of the Underwriting Agreement, Wilkinson,
Barker, Xxxxxx & Xxxxx, regulatory counsel for the Company, shall furnish an
opinion to the effect that:
The statements in the Form 10-K and the Prospectus under the captions
"Risk Factors -- Access to Radio Frequency Spectrum; Regulation by the
Federal Communications Commission," "Business -- Recent Developments" and
"Business -- Spectrum Regulation," in each case insofar as such statements
constitute summaries of the legal matters, documents or proceedings
referred to therein, fairly present and summarize such legal matters,
documents and proceedings.
D-1
EXHIBIT D
FORM OF OPINION OF FISH & XXXXXXXXXX
Pursuant to Section 5(e) of the Underwriting Agreement, Fish &
Xxxxxxxxxx, intellectual property counsel for the Company, shall furnish an
opinion to the effect that:
(i) there are no legal or governmental actions, claims or proceedings
pending or threatened against the Company relating to patent rights of the
Company or alleging that the Company is infringing or otherwise violating any
patents or trade secrets owned by others and the Company has not received any
communication in which it is alleged that the Company is infringing or violating
the patent rights of third parties; and
(ii) the statements in the Form 10-K and the Prospectus under the
captions "Risk Factors -- Uncertainty of Protection of Copyrights, Patents and
Proprietary Rights", "Business -- Proprietary Rights" and "Business -- Legal
Proceedings," in each case insofar as such statements constitute summaries of
the legal matters, documents or proceedings referred to therein, fairly present
and summarize such legal matters, documents and proceedings.
