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EXHIBIT 1.1
5,500,000 Shares
PARADYNE NETWORKS, INC.
Common Stock
UNDERWRITING AGREEMENT
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__________, 1999
XXXXXXXXX, XXXXXX & XXXXXXXX
SECURITIES CORPORATION
BANCBOSTON XXXXXXXXX XXXXXXXX, INC.
XXXX XXXXXXXX INCORPORATED
XXXXXXX XXXXX & ASSOCIATES, INC.
As representatives of the
several Underwriters
named in Schedule I hereto
c/x Xxxxxxxxx, Lufkin & Xxxxxxxx
Securities Corporation
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
Paradyne Networks, Inc., a Delaware corporation (the "COMPANY"),
proposes to issue and sell to the several underwriters named in Schedule I
hereto (the "UNDERWRITERS"), and certain stockholders of the Company named in
Schedule II hereto (the "SELLING STOCKHOLDERS") severally propose to sell to
the several Underwriters, an aggregate of 5,500,000 shares of the common stock,
par value $.001 per share, of the Company (the "FIRM SHARES"), of which 500,000
shares are to be issued and sold by the Company and 5,000,000 shares are to be
sold by the Selling Stockholders, each Selling Stockholder selling the amount
set forth opposite such Selling Stockholder's name in Schedule II hereto. The
Selling Stockholders also propose to sell to the several Underwriters not more
than an additional 825,000 shares of the Company's common stock, par value
$.001 per share (the "ADDITIONAL SHARES"), if requested by the Underwriters as
provided in Section 2. The Firm Shares and the Additional Shares are
hereinafter referred to collectively as the "SHARES". The shares of common
stock of the Company to be outstanding after giving effect to the sales
contemplated hereby are
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hereinafter referred to as the "COMMON STOCK". The Company and the Selling
Stockholders are hereinafter sometimes referred to collectively as the
"SELLERS".
SECTION 1. Registration Statement and Prospectus. The Company has
prepared and filed with the Securities and Exchange Commission (the
"COMMISSION") in accordance with the provisions of the Securities Act of 1933,
as amended, and the rules and regulations of the Commission thereunder
(collectively, the "ACT"), a registration statement on Form S-1, including a
prospectus, relating to the Shares. The registration statement, as amended at
the time it became effective, including the information (if any) deemed to be
part of the registration statement at the time of effectiveness pursuant to
Rule 430A under the Act, is hereinafter referred to as the "REGISTRATION
STATEMENT"; and the prospectus in the form first used to confirm sales of
Shares is hereinafter referred to as the "PROSPECTUS". If the Company has filed
or is required pursuant to the terms hereof to file a registration statement
pursuant to Rule 462(b) under the Act registering additional shares of Common
Stock (a "RULE 462(b) REGISTRATION STATEMENT"), then, unless otherwise
specified, any reference herein to the term "Registration Statement" shall be
deemed to include such Rule 462(b) Registration Statement.
SECTION 2. Agreements to Sell and Purchase and Lock-Up Agreements. On
the basis of the representations and warranties contained in this Agreement,
and subject to its terms and conditions, (i) the Company agrees to issue and
sell 500,000 Firm Shares, (ii) each Selling Stockholder agrees, severally and
not jointly, to sell the number of Firm Shares set forth opposite such Selling
Stockholder's name in Schedule II hereto and (iii) each Underwriter agrees,
severally and not jointly, to purchase from each Seller at a price per Share of
$______ (the "PURCHASE PRICE") the number of Firm Shares (subject to such
adjustments to eliminate fractional shares as you may determine) that bears the
same proportion to the total number of Firm Shares to be sold by such Seller as
the number of Firm Shares set forth opposite the name of such Underwriter in
Schedule I hereto bears to the total number of Firm Shares.
On the basis of the representations and warranties contained in this
Agreement, and subject to its terms and conditions, each Selling Stockholder
agrees, severally and not jointly, to sell to the Underwriters at the Purchase
Price the number of Additional Shares (subject to such adjustments to eliminate
fractional shares as you may determine) equal to (i) the total number of
Additional Shares purchased by the Underwriters multiplied by (ii) a fraction,
the numerator of which is the number of Firm Shares set forth opposite such
Selling Stockholder's name in Schedule II hereto and the denominator of which
is the total number of Firm Shares sold by the Selling Stockholders. Additional
Shares may be purchased solely for the purpose of covering over-allotments made
in connection with the offering of the Firm Shares. The Underwriters may
exercise their right to purchase Additional Shares in whole or in part from
time to time by giving written notice thereof to the Attorneys (as defined
herein) within 30 days after the date of this Agreement. You shall give any
such notice on behalf of the Underwriters and such notice shall specify the
aggregate number of Additional Shares to be purchased pursuant to such exercise
and the date for payment and delivery thereof, which date shall be a business
day (i) no earlier than two business days after such notice has been given
(and, in any event, no earlier than
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the Closing Date (as hereinafter defined)) and (ii) no later than ten business
days after such notice has been given. If any Additional Shares are to be
purchased, each Underwriter, severally and not jointly, agrees to purchase from
the Selling Stockholders the number of Additional Shares (subject to such
adjustments to eliminate fractional shares as you may determine) which bears
the same proportion to the total number of Additional Shares to be purchased
from such Stockholder as the number of Firm Shares set forth opposite the name
of such Underwriter in Schedule I bears to the total number of Firm Shares.
Each Seller hereby agrees not to (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, 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 all or a portion
of the economic consequences associated with the ownership of any Common Stock
(regardless of whether any of the transactions described in clause (i) or (ii)
is to be settled by the delivery of Common Stock, or such other securities, in
cash or otherwise), except to the Underwriters pursuant to this Agreement, for
the period remaining under the Lock-Up Agreements delivered pursuant to the
Underwriting Agreement dated July 15, 1999 by and among the Company, Paradyne
Corporation, the Selling Stockholders named in Schedule II thereto, Xxxxxxxxx,
Xxxxxx & Xxxxxxxx Securities Corporation, BancBoston Xxxxxxxxx Xxxxxxxx, Inc.,
Xxxx Xxxxxxxx Incorporated and Xxxxxxx Xxxxx & Associates, Inc. for themselves
and as representatives of the several underwriters named in Schedule I thereto
and BancBoston Xxxxxxxxx Xxxxxxxx, Inc., as qualified independent underwriter
(the "Lock-Up Agreements") without the prior written consent of Xxxxxxxxx,
Lufkin & Xxxxxxxx Securities Corporation. Notwithstanding the foregoing, during
such period (i) the Company may grant stock options pursuant to the Company's
existing stock option plan, (ii) the Company may issue shares of Common Stock
upon the exercise of an option or warrant or the conversion of a security
outstanding on the date hereof and (iii) the Company may issue shares of Common
Stock in connection with acquisitions of other businesses, products or
technologies; provided, that, the recipient of the Common Stock in any such
acquisition shall agree in writing to be bound by all of the restrictions and
other provisions applicable to the Sellers under the preceding sentence for the
period remaining under the Lock-Up Agreements.
The Company also agrees not to file any registration statement with
respect to any shares of Common Stock or any securities convertible into or
exercisable or exchangeable for Common Stock for a period of 180 days after
July 15, 1999 without the prior written consent of Xxxxxxxxx, Xxxxxx & Xxxxxxxx
Securities Corporation. In addition, each Selling Stockholder agrees that, for
the period remaining under the Lock-Up Agreements without the prior written
consent of Xxxxxxxxx, Lufkin & Xxxxxxxx Securities Corporation, it will not
make any demand for, or exercise any right with respect to, the registration of
any shares of Common Stock or any securities convertible into or exercisable or
exchangeable for Common Stock which would cause the Company to file a
registration statement with the Commission prior to the expiration of such
period.
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The Company confirms, acknowledges and agrees that (i) it has
previously delivered Lock-Up Agreements executed by (A) each Selling
Stockholder, (B) each of the directors and officers of the Company who is not a
Selling Stockholder and (C) each stockholder listed on Annex I hereto and (ii)
all of the terms and conditions of each of the Lock-Up Agreements previously
delivered remain in full force and effect.
Each Selling Stockholder confirms, acknowledges and agrees that (i)
such Selling Stockholder previously executed and delivered a Lock-Up Agreement
to the Company and the Underwriters and (ii) all of the terms and conditions of
such Lock-Up Agreement remain in full force and effect.
The Company hereby confirms its engagement of BancBoston Xxxxxxxxx
Xxxxxxxx, Inc. as, and BancBoston Xxxxxxxxx Xxxxxxxx, Inc. hereby confirms its
agreement with the Company to render services as, a "qualified independent
underwriter," within the meaning of Section (b)(15) of Rule 2720 of the
National Association of Securities Dealers, Inc. (the "NASD") with respect to
the offering and sale of the Shares. BancBoston Xxxxxxxxx Xxxxxxxx, Inc.,
solely in its capacity as the qualified independent underwriter and not
otherwise, is referred to herein as the "QIU." As compensation for the services
of the QIU hereunder, the Company agrees to pay the QIU $5,000 on the Closing
Date. The price at which the Shares will be sold to the public shall not be
higher than the maximum price recommended by the QIU.
SECTION 3. Terms of Public Offering. The Sellers are advised by you
that the Underwriters propose (i) to make a public offering of their respective
portions of the Shares as soon after the execution and delivery of this
Agreement as in your judgment is advisable and (ii) initially to offer the
Shares upon the terms set forth in the Prospectus.
SECTION 4. Delivery and Payment. The Shares shall be represented by
definitive certificates, if requested by the Underwriters, and shall be issued
in such authorized denominations and registered in such names as Xxxxxxxxx,
Lufkin & Xxxxxxxx Securities Corporation shall request no later than two
business days prior to the Closing Date or the applicable Option Closing Date
(as defined below), as the case may be. The Shares shall be delivered by or on
behalf of the Sellers, with any transfer taxes thereon duly paid by the
respective Sellers, to Xxxxxxxxx, Lufkin & Xxxxxxxx Securities Corporation
through the facilities of The Depository Trust Company ("DTC"), for the
respective accounts of the several Underwriters, against payment to the Sellers
of the Purchase Price therefor by wire transfer of Federal or other funds
immediately available in New York City. The certificates representing the
Shares shall be made available for inspection not later than 9:30 A.M., New
York City time, on the business day prior to the Closing Date or the applicable
Option Closing Date, as the case may be, at the office of DTC or its designated
custodian (the "DESIGNATED OFFICE"). The time and date of delivery and payment
for the Firm Shares shall be 9:00 A.M., New York City time, on _______, 1999 or
such other time on the same or such other date as Xxxxxxxxx, Lufkin & Xxxxxxxx
Securities Corporation and the Company shall agree in writing. The time and
date of delivery and payment for the Firm Shares are hereinafter referred to as
the "CLOSING DATE". The time
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and date of delivery and payment for any Additional Shares to be purchased by
the Underwriters shall be 9:00 A.M., New York City time, on the date specified
in the applicable exercise notice given by you pursuant to Section 2 or such
other time on the same or such other date as Xxxxxxxxx, Lufkin & Xxxxxxxx
Securities Corporation and the Attorneys shall agree in writing. The time and
date of delivery and payment for any Additional Shares are hereinafter referred
to as the "OPTION CLOSING DATE".
The documents to be delivered on the Closing Date or any Option
Closing Date on behalf of the parties hereto pursuant to Section 10 of this
Agreement shall be delivered at the offices of Xxxxxx & Bird LLP, 0000 Xxxx
Xxxxxxxxx Xxxxxx, Xxxxxxx, Xxxxxxx 00000-0000 and the Shares shall be delivered
at the Designated Office, all on the Closing Date or such Option Closing Date,
as the case may be.
SECTION 5. Agreements of the Company. The Company agrees with you:
(a) To advise you promptly and, if requested by you, to confirm such
advice in writing, (i) of any request by the Commission for amendments to the
Registration Statement or amendments or supplements to the Prospectus or for
additional information, (ii) of the issuance by the Commission of any stop
order suspending the effectiveness of the Registration Statement or of the
suspension of qualification of the Shares for offering or sale in any
jurisdiction, or the initiation of any proceeding for such purposes, (iii) when
any amendment to the Registration Statement becomes effective, (iv) if the
Company is required to file a Rule 462(b) Registration Statement after the
effectiveness of this Agreement, when the Rule 462(b) Registration Statement
has become effective and (v) of the happening of any event during the period
referred to in Section 5(d) below which makes any statement of a material fact
made in the Registration Statement or the Prospectus untrue or which requires
any additions to or changes in the Registration Statement or the Prospectus in
order to make the statements therein not misleading. If at any time the
Commission shall issue any stop order suspending the effectiveness of the
Registration Statement, the Company will use its best efforts to obtain the
withdrawal or lifting of such order at the earliest possible time.
(b) To furnish to you five (5) signed copies of the Registration
Statement as first filed with the Commission and of each amendment to it,
including all exhibits, and to furnish to you and each Underwriter designated
by you such number of conformed copies of the Registration Statement as so
filed and of each amendment to it, without exhibits, as you may reasonably
request.
(c) To prepare the Prospectus, the form and substance of which shall
be satisfactory to you, and to file the Prospectus in such form with the
Commission within the applicable period specified in Rule 424(b) under the Act;
during the period specified in Section 5(d) below, not to file any further
amendment to the Registration Statement and not to make any amendment or
supplement to the Prospectus of which you shall not previously have been
advised or to which you shall reasonably object after being so advised; and,
during such period, to prepare and file with the Commission, promptly upon your
reasonable request, any amendment to the Registration Statement or
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amendment or supplement to the Prospectus which may be necessary or advisable
in connection with the distribution of the Shares by you, and to use its best
efforts to cause any such amendment to the Registration Statement to become
promptly effective.
(d) Prior to 10:00 A.M., New York City time, on the first business
day after the date of this Agreement and from time to time thereafter for such
period as in the opinion of counsel for the Underwriters a prospectus is
required by law to be delivered in connection with sales by an Underwriter or a
dealer, to furnish in New York City to each Underwriter and any dealer as many
copies of the Prospectus (and of any amendment or supplement to the Prospectus)
as such Underwriter or dealer may reasonably request.
(e) If during the period specified in Section 5(d), any event shall
occur or condition shall exist as a result of which, in the opinion of counsel
for the Underwriters, it becomes 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 counsel for the Underwriters, it is necessary to amend
or supplement the Prospectus to comply with applicable law, forthwith to
prepare and file with the Commission an appropriate amendment or supplement to
the Prospectus so that the statements in the Prospectus, as so amended or
supplemented, will not in the light of the circumstances when it is so
delivered, be misleading, or so that the Prospectus will comply with applicable
law, and to furnish to each Underwriter and to any dealer as many copies
thereof as such Underwriter or dealer may reasonably request.
(f) Prior to any public offering of the Shares, to cooperate with you
and counsel for the Underwriters in connection with the registration or
qualification of the Shares for offer and sale by the several Underwriters and
by dealers under the state securities or Blue Sky laws of such jurisdictions as
you may request, to continue such registration or qualification in effect so
long as required for distribution of the Shares and to file such consents to
service of process or other documents as may be necessary in order to effect
such registration or qualification; provided, however, that the Company shall
not be required in connection therewith to qualify as a foreign corporation in
any jurisdiction in which it is not now so qualified or to take any action that
would subject it to general consent to service of process or taxation other
than as to matters and transactions relating to the Prospectus, the
Registration Statement, any preliminary prospectus or the offering or sale of
the Shares, in any jurisdiction in which it is not now so subject.
(g) To mail and make generally available to its stockholders as soon
as practicable an earnings statement covering the twelve-month period ending
September 30, 2000 that shall satisfy the provisions of Section 11(a) of the
Act, and to advise you in writing when such statement has been so made
available.
(h) During the period of three years after the date of this
Agreement, to furnish to you as soon as available copies of all reports or
other communications furnished to the record holders of Common Stock or
furnished to or filed with the
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Commission or any national securities exchange on which any class of securities
of the Company is listed and such other publicly available information
concerning the Company and its subsidiaries as you may reasonably request.
(i) To use its best efforts to list for quotation the Shares on the
Nasdaq National Market and to maintain the listing of the Shares on the Nasdaq
National Market for a period of three years after the date of this Agreement.
(j) To use its best efforts to do and perform all things required or
necessary to be done and performed under this Agreement by the Company prior to
the Closing Date or any Option Closing Date, as the case may be, and to satisfy
all conditions precedent to the delivery of the Shares.
(k) If the Registration Statement at the time of the effectiveness of
this Agreement does not cover all of the Shares, to file a Rule 462(b)
Registration Statement with the Commission registering the Shares not so
covered in compliance with Rule 462(b) by 10:00 P.M., New York City time, on
the date of this Agreement and to pay to the Commission the filing fee for such
Rule 462(b) Registration Statement at the time of the filing thereof or to give
irrevocable instructions for the payment of such fee pursuant to Rule 111(b)
under the Act.
(l) The Company will, for so long as any of the Common Stock is
outstanding and if, in the reasonable judgment of any Underwriter, such
Underwriter or any of its affiliates (as defined in the Act) is required to
deliver a prospectus in connection with sales of Common Stock (i) periodically
amend the Registration Statement so that the information contained in the
Registration Statement complies with the requirements of Section 10(a) of the
Act, (ii) amend the Registration Statement or amend or supplement the
Prospectus when necessary to reflect any material changes in the information
provided therein and promptly file such amendment or supplement with the
Commission, (iii) provide such Underwriter with copies of each amendment or
supplement so filed and such other documents, including opinions of counsel and
"comfort" letters, as such Underwriter may reasonably request and (iv)
indemnify such Underwriter and if applicable, contribute to any amount paid or
payable by such Underwriter in a manner substantially identical to that
specified in Section 8 (with appropriate modifications).
SECTION 6. Representations and Warranties of the Company. The Company
and Paradyne Corporation, a Delaware corporation (the "OPERATING SUBSIDIARY"),
jointly and severally represent and warrant to each Underwriter that:
(a) The Registration Statement has become effective (other than any
Rule 462(b) Registration Statement to be filed by the Company after the
effectiveness of this Agreement); any Rule 462(b) Registration Statement filed
after the effectiveness of this Agreement will become effective no later than
10:00 P.M., New York City time, on the date of this Agreement; and no stop
order suspending the effectiveness of the Registration Statement is in effect,
and no proceedings for such purpose are pending before or threatened by the
Commission.
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(b) (i) The Registration Statement (other than any Rule 462(b)
Registration Statement to be filed by the Company after the effectiveness of
this Agreement), when it became effective, did not contain and, as amended, 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, (ii) the Registration Statement (other than
any Rule 462(b) Registration Statement to be filed by the Company after the
effectiveness of this Agreement) and the Prospectus comply and, as amended or
supplemented, if applicable, will comply in all material respects with the Act,
(iii) if the Company is required to file a Rule 462(b) Registration Statement
after the effectiveness of this Agreement, such Rule 462(b) Registration
Statement and any amendments thereto, when they become effective (A) 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 and (B) will comply in all material respects with the Act 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 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 any Underwriter furnished to the Company in
writing by such Underwriter through you expressly for use therein.
(c) The Company has no operations or assets and no contingent or
other liabilities, except (i) the capital stock of the Operating Subsidiary and
(ii) as otherwise disclosed in the consolidated financial statements referred
to in Section 6(r). The Operating Subsidiary is a direct, wholly-owned
subsidiary of the Company, and the Company has no other direct subsidiaries.
The Company's only other subsidiaries are Paradyne Canada Ltd., a corporation
organized under the laws of the Province of Ontario, Canada ("PARADYNE
CANADA"), Paradyne Worldwide Corp., a Delaware corporation ("PARADYNE
WORLDWIDE"), Paradyne Japan Corporation, a corporation organized under the laws
of Japan ("PARADYNE JAPAN"), Paradyne International Ltd., a company
incorporated under the Companies Act (United Kingdom) ("PARADYNE U.K."), Ark
Electronics Products, Inc., a Florida corporation ("ARK"), Paradyne GmbH, a
corporation organized under the laws of Germany ("PARADYNE GERMANY"),
Communications Equipment Corporation, a Delaware corporation
("COMMUNICATIONS"), Paradyne International, Inc., a Florida corporation
("PARADYNE INTERNATIONAL"), Paradyne Russia Limited, a company incorporated
under the Companies Act (United Kingdom) ("PARADYNE RUSSIA"), and Paradyne
International Sales Ltd., a corporation organized under the laws of Barbados,
and each such subsidiary is a direct, wholly-owned subsidiary of the Operating
Subsidiary. The Company has no significant subsidiaries (as defined in Rule
1-02 of the Commission's Regulation S-X) other than the Operating Subsidiary,
Paradyne Canada and Paradyne Worldwide. None of Paradyne Japan, Paradyne U.K.,
Ark, Paradyne Germany, Communications, Paradyne International or Paradyne
Russia is engaged in any active trade or business or has any operations or
significant assets, and the Company has established reserves in the
consolidated financial
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statements referred to in Section 6(r) for any contingent or other liabilities
of each such subsidiary in accordance with generally accepted accounting
principles applied on a basis consistent with the generally accepted accounting
principles otherwise used in the preparation of such consolidated financial
statements. Substantially all of the operations of the Company and its
subsidiaries that are conducted in Canada are conducted by or through Paradyne
Canada.
(d) No subsidiary of the Company is currently prohibited, directly or
indirectly, from (i) paying any dividends to the Company or, if such subsidiary
is an indirect subsidiary of the Company, to its parent, (ii) making any other
distribution on such subsidiary's capital stock, (iii) repaying any loans or
advances made to such subsidiary by the Company or another subsidiary of the
Company, or (iv) transferring any of such subsidiary's property or assets to
the Company or any other subsidiary of the Company, in each case except as
disclosed in the Registration Statement and the Prospectus.
(e) Each of the Company and its subsidiaries has been duly
incorporated, is validly existing as a corporation in good standing under the
laws of its jurisdiction of incorporation and has the corporate power and
authority to carry on its business as described in the Prospectus and to own,
lease and operate its properties, and each is duly qualified and is in good
standing as a foreign corporation authorized to do business in each
jurisdiction in which the nature of its business or its ownership or leasing of
property requires such qualification, except where the failure to be so
qualified would not, singly or in the aggregate, have a material adverse effect
on the business, prospects, financial condition or results of operations of the
Company and its subsidiaries, taken as a whole.
(f) There are no outstanding subscriptions, rights, warrants,
options, calls, convertible securities, commitments of sale or liens granted or
issued by the Company or any of its subsidiaries relating to or entitling any
person to purchase or otherwise to acquire any shares of the capital stock of
the Company or any of its subsidiaries, except as disclosed in the Registration
Statement and the Prospectus.
(g) All the outstanding shares of capital stock of the Company
(including the Shares to be sold by the Selling Stockholders) have been duly
authorized and validly issued and are fully paid, non-assessable and not
subject to any preemptive or similar rights; and the Shares to be issued and
sold by the Company have been duly authorized and, when issued and delivered to
the Underwriters against payment therefor as provided by this Agreement, will
be validly issued, fully paid and non-assessable, and the issuance of such
Shares will not be subject to any preemptive or similar rights.
(h) All of the outstanding shares of capital stock of each of the
Company's subsidiaries have been duly authorized and validly issued and are
fully paid and non-assessable, and are owned by the Company, directly or
indirectly through one or more subsidiaries, free and clear of any security
interest, claim, lien, encumbrance or adverse interest of any nature.
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(i) The authorized capital stock of the Company conforms as to legal
matters to the description thereof contained in the Prospectus.
(j) Neither the Company nor any of its subsidiaries is (i) in
violation of its respective charter or by-laws or (ii) in default in the
performance of any obligation, agreement, covenant or condition contained in
any indenture, loan agreement, mortgage, lease or other agreement or instrument
to which the Company or any of its subsidiaries is a party or by which the
Company or any of its subsidiaries or their respective property is bound,
except, in the case of clause (ii), for any default which, singly or in the
aggregate, would not have a material adverse effect on the business, prospects,
financial condition or results of operations of the Company and its
subsidiaries, taken as a whole.
(k) The execution, delivery and performance of this Agreement by the
Company and the Operating Subsidiary, the compliance by the Company and the
Operating Subsidiary with all the provisions hereof and the consummation of the
transactions contemplated hereby will not (i) require any consent, approval,
authorization or other order of, or qualification with, any court or
governmental body or agency (except such as may be required under the
securities or Blue Sky laws of the various states), (ii) conflict with or
constitute a breach of any of the terms or provisions of, or a default under,
the charter or by-laws of the Company or any of its subsidiaries or any
indenture, loan agreement, mortgage, lease or other agreement or instrument
that is material to the Company and its subsidiaries, taken as a whole, to
which the Company or any of its subsidiaries is a party or by which the Company
or any of its subsidiaries or their respective property is bound, (iii) violate
or conflict with any applicable law or any rule, regulation, judgment, order or
decree of any court or any governmental body or agency having jurisdiction over
the Company, any of its subsidiaries or their respective property or (iv)
result in the suspension, termination or revocation of any Authorization (as
defined below) of the Company or any of its subsidiaries or any other
impairment of the rights of the holder of any such Authorization.
(l) There are no legal or governmental proceedings pending or
threatened to which the Company or any of its subsidiaries is or could be a
party or to which any of their respective property is or could be subject that
are required to be described in the Registration Statement or the Prospectus
and are not so described; nor are there any statutes, regulations, contracts or
other documents that are required to be described in the Registration Statement
or the Prospectus or to be filed as exhibits to the Registration Statement that
are not so described or filed as required.
(m) Neither the Company nor any of its subsidiaries has violated any
foreign, federal, state or local law, regulation or order (including, without
limitation, any such law, regulation or order relating to the protection of
human health and safety, the environment or hazardous or toxic substances or
wastes, pollutants or contaminants ("ENVIRONMENTAL LAWS"), any provisions of
the Employee Retirement Income Security Act of 1974, as amended, or any
provisions of the Foreign Corrupt Practices Act, or the rules and regulations
promulgated thereunder), except for such violations which, singly
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or in the aggregate, would not have a material adverse effect on the business,
prospects, financial condition or results of operation of the Company and its
subsidiaries, taken as a whole.
(n) Each of the Company and its subsidiaries has such permits,
licenses, consents, exemptions, franchises, authorizations and other approvals
(each, an "AUTHORIZATION") of, and has made all filings with and notices to,
all governmental or regulatory authorities and self-regulatory organizations
and all courts and other tribunals, including, without limitation, under any
applicable Environmental Laws, as are necessary to own, lease, license and
operate its respective properties and to conduct its business, except where the
failure to have any such Authorization or to make any such filing or notice
would not, singly or in the aggregate, have a material adverse effect on the
business, prospects, financial condition or results of operations of the
Company and its subsidiaries, taken as a whole. Each such Authorization is
valid and in full force and effect and each of the Company and its subsidiaries
is in compliance with all the terms and conditions thereof and with the rules
and regulations of the authorities and governing bodies having jurisdiction
with respect thereto; and no event has occurred (including, without limitation,
the receipt of any notice from any authority or governing body) which allows
or, after notice or lapse of time or both, would allow, revocation, suspension
or termination of any such Authorization or results or, after notice or lapse
of time or both, would result in any other impairment of the rights of the
holder of any such Authorization; except where such failure to be valid and in
full force and effect or to be in compliance, the occurrence of any such event
or the presence of any such restriction would not, singly or in the aggregate,
have a material adverse effect on the business, prospects, financial condition
or results of operations of the Company and its subsidiaries, taken as a whole.
(o) There are no costs or liabilities associated with Environmental
Laws (including, without limitation, any capital or operating expenditures
required for clean-up, closure of properties or compliance with Environmental
Laws or any Authorization, any related constraints on operating activities and
any potential liabilities to third parties) which would, singly or in the
aggregate, have a material adverse effect on the business, prospects, financial
condition or results of operations of the Company and its subsidiaries, taken
as a whole.
(p) This Agreement has been duly authorized, executed and delivered
by the Company and the Operating Subsidiary.
(q) PricewaterhouseCoopers LLP are independent public accountants
with respect to the Company and its subsidiaries as required by the Act.
(r) The consolidated financial statements included in the
Registration Statement and the Prospectus (and any amendment or supplement
thereto), together with related schedules and notes, present fairly the
consolidated financial position, results of operations and changes in financial
position of the Company and its subsidiaries on the basis stated therein at the
respective dates or for the respective periods to which they
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apply; such statements and related schedules and notes have been prepared in
accordance with generally accepted accounting principles consistently applied
throughout the periods involved, except as disclosed therein; the supporting
schedules, if any, included in the Registration Statement present fairly in
accordance with generally accepted accounting principles the information
required to be stated therein; and the other financial and statistical
information and data set forth in the Registration Statement and the Prospectus
(and any amendment or supplement thereto) are, in all material respects,
accurately presented and, in the case of financial information, prepared on a
basis consistent with such financial statements and the books and records of
the Company.
(s) The Company is not and, after giving effect to the offering and
sale of the Shares and the application of the proceeds thereof as described in
the Prospectus, will not be, an "investment company" as such term is defined in
the Investment Company Act of 1940, as amended.
(t) Except as disclosed in the Registration Statement and the
Prospectus, there are no contracts, agreements or understandings between the
Company and any person granting such person the right to require the Company to
file a registration statement under the Act with respect to any securities of
the Company or to require the Company to include such securities with the
Shares registered pursuant to the Registration Statement.
(u) Since the respective dates as of which information is given in
the Prospectus other than as set forth in the Prospectus (exclusive of any
amendments or supplements thereto subsequent to the date of this Agreement),
(i) there has not occurred any material adverse change or any development
involving a prospective material adverse change in the condition, financial or
otherwise, or the earnings, business, management or operations of the Company
and its subsidiaries, taken as a whole, (ii) there has not been any material
adverse change or any development involving a prospective material adverse
change in the capital stock or in the long-term debt of the Company or any of
its subsidiaries and (iii) neither the Company nor any of its subsidiaries has
incurred any material liability or obligation, direct or contingent.
(v) 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 disclosed
in the Registration Statement and the Prospectus.
(w) The Company and its subsidiaries own or possess, or can acquire
on reasonable terms, all patents, patent rights, licenses, inventions,
copyrights, know-how
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(including trade secrets and other unpatented and/or unpatentable proprietary
or confidential information, systems or procedures), trademarks, service marks
and trade names ("INTELLECTUAL PROPERTY") currently employed by them in
connection with the business now operated by them except where the failure to
own or possess or otherwise be able to acquire such Intellectual Property would
not, singly or in the aggregate, have a material adverse effect on the
business, prospects, financial condition or results of operations of the
Company and its subsidiaries, taken as a whole. Except as disclosed in the
Registration Statement, neither the Company nor any of its subsidiaries (A) has
received any notice of infringement of or conflict with asserted rights of
others with respect to any Intellectual Property, except notice of any such
infringement or conflict which, singly or in the aggregate, if the subject of
an unfavorable decision, ruling or finding, would not have a material adverse
effect on the business, prospects, financial condition or results of operations
of the Company and its subsidiaries, taken as a whole, or (B) is infringing or
otherwise violating any Intellectual Property of others, except for any such
infringement or other violation which, singly or in the aggregate, would not
have a material adverse effect on the business, prospects, financial condition
or results of operations of the Company and its subsidiaries, taken as a whole.
There are no legal or governmental proceedings pending or threatened relating
to any Intellectual Property which, singly or in the aggregate, if the subject
of an unfavorable decision, ruling or finding, would have a material adverse
effect on the business, prospects, financial condition or results of operations
of the Company and its subsidiaries, taken as a whole. There are no contracts
or other documents relating to any Intellectual Property required to be filed
as an exhibit to the Registration Statement or required to be described in the
Registration Statement or the Prospectus that are not so filed or described as
required.
(x) 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 business in which they are
engaged; and neither the Company nor any of its subsidiaries (i) has received
notice from any insurer or agent of such insurer that substantial capital
improvements or other material expenditures will have to be made in order to
continue such insurance or (ii) 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 at a cost that would not
have a material adverse effect on the business, prospects, financial conditions
or results of operations of the Company and its subsidiaries, taken as a whole.
(y) No relationship, direct or indirect, exists between or among the
Company or any of its subsidiaries on the one hand, and the directors,
officers, stockholders, customers or suppliers of the Company or any of its
subsidiaries on the other hand, which is required by the Act to be described in
the Registration Statement or the Prospectus which is not so described.
(z) There is no (i) significant unfair labor practice complaint,
grievance or arbitration proceeding pending or threatened against the Company
or any of its subsidiaries before the National Labor Relations Board or any
state or local labor relations board, (ii) strike, labor dispute, slowdown or
stoppage pending or threatened
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against the Company or any of its subsidiaries or (iii) union representation
question existing with respect to the employees of the Company and its
subsidiaries, except for such actions specified in clause (i), (ii) or (iii)
above, which, singly or in the aggregate, would not have a material adverse
effect on the business, prospects, financial condition or results of operations
of the Company and its subsidiaries, taken as a whole. To the best of the
Company's knowledge, no collective bargaining organizing activities are taking
place with respect to the Company or any of its subsidiaries.
(aa) The Company and each of its subsidiaries maintains a system of
internal accounting controls sufficient to provide reasonable assurance that
(i) transactions are executed in accordance with management's general or
specific authorizations; (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles and to maintain asset accountability; (iii) access to
assets is permitted only in accordance with management's general or specific
authorization; and (iv) the recorded accountability for assets is compared with
the existing assets at reasonable intervals and appropriate action is taken
with respect to any differences.
(bb) All material tax returns required to be filed by the Company and
each of its subsidiaries in any jurisdiction have been filed, other than those
filings being contested in good faith, and all material taxes, including
withholding taxes, penalties and interest, assessments, fees and other charges
due pursuant to such returns or pursuant to any assessment received by the
Company or any of its subsidiaries have been paid, other than those being
contested in good faith and for which adequate reserves have been provided.
(cc) The Company and its subsidiaries have complied and are in
compliance with all foreign, federal, state and local statutes, executive
orders, proclamations, regulations, rules, directives, decrees, ordinances and
similar provisions having the force or effect of law and all judicial and
administrative orders, rulings, determinations and common law concerning the
importation of merchandise, the export or reexport of products, services and
technology, and the terms and conduct of international transactions applicable
to the Company and its subsidiaries in connection with the conduct of the
business of the Company and its subsidiaries (including, without limitation, as
the same relates to record keeping requirements) ("INTERNATIONAL TRADE LAWS AND
REGULATIONS"), except where failure to comply therewith would not, singly or in
the aggregate, have a material adverse effect on the business, prospects,
financial condition or results of operation of the Company and its
subsidiaries, taken as a whole; neither the Company nor any of its subsidiaries
has made or provided any material false statement or material omission to any
agency of any federal, state or local government, purchasers of products, or
foreign government or foreign agency, in connection with the exportation of
merchandise (including, without limitation, with respect to export licenses,
exceptions and other export authorizations and any filings required for or
related to exportation of any item), the importation of merchandise or other
approvals required by a foreign government or agency or any other requirement
relating to any International Trade Laws and Regulations.
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(dd) The Company has reviewed its operations and the operations of its
subsidiaries and any third parties with which the Company or any of its
subsidiaries has a material relationship to evaluate the extent to which the
business or operations of the Company or any of its subsidiaries will be
affected by the Year 2000 Problem (as defined below). As a result of such
review, the Company has no reason to believe, and does not believe, that the
Year 2000 Problem will have a material adverse effect on the business,
prospects, financial condition or results of operations of the Company and its
subsidiaries, taken as a whole. The "YEAR 2000 PROBLEM" as used herein means
any risk that the computer hardware or software used in the receipt,
transmission, storage, retrieval, retransmission or other utilization of data
or in the operation of mechanical or electrical systems of any kind will not,
in the case of dates or time periods occurring after December 31, 1999,
function at least as effectively as in the case of dates or time periods
occurring prior to January 1, 2000.
(ee) The Company and its subsidiaries have obtained all Authorizations
from the Federal Communications Commission ("FCC") and from state public
utility commissions ("PUCS"), and otherwise under the Telecommunications Act of
1996 (the "1996 ACT"), the Communications Act of 1934, as amended (the
"COMMUNICATIONS ACT"), and the rules and regulations under the 1996 Act and the
Communications Act (the "RULES AND REGULATIONS"), in each case necessary for
the conduct of the business of the Company and its subsidiaries as described in
the Registration Statement and the Prospectus. All such Authorizations have
been duly and validly issued and are in full force and effect and neither the
Company nor any of its subsidiaries is in violation of any of the terms and
conditions of any such Authorizations, except for any violation which, singly
or in the aggregate, would not have a material adverse effect on the business,
prospects, financial condition or results of operations of the Company and its
subsidiaries, taken as a whole.
(ff) There is no outstanding adverse judgment, decree or order that
has been issued by the FCC or any state PUC against the Company or any of its
subsidiaries or any action, proceeding or investigation pending or threatened
by the FCC or any state PUC against the Company or any of its subsidiaries
which, singly or in the aggregate, if the subject of an unfavorable decision,
ruling or finding, would have a material adverse effect on the business,
prospects, financial condition or results of operations of the Company and its
subsidiaries, taken as a whole.
(gg) Each certificate signed by any officer of the Company and
delivered to the Underwriters or counsel for the Underwriters shall be deemed
to be a representation and warranty by the Company to the Underwriters as to
the matters covered thereby.
(hh) Each document filed or to be filed by the Company pursuant to the
Exchange Act complied or will comply when so filed in all material respects
with the Exchange Act.
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SECTION 7. Representations and Warranties of the Selling
Stockholders. Each Selling Stockholder severally and not jointly represent and
warrant to each Underwriter that:
(a) Such Selling Stockholder has been duly incorporated or formed and
is validly existing as a corporation or partnership in good standing under the
laws of its jurisdiction of incorporation or formation.
(b) Such Selling Stockholder is the lawful owner of the Shares to be
sold by such Selling Stockholder pursuant to this Agreement. Immediately prior
to the delivery of the Firm Shares to be sold by such Selling Stockholder on
the Closing Date, such Selling Stockholder will have good and valid title to
such Firm Shares, free of all restrictions on transfer, liens, encumbrances,
security interests and claims whatsoever. Immediately prior to the delivery of
any Additional Shares to be sold by such Selling Stockholder on the Option
Closing Date, such Selling Stockholder will have good and valid title to such
Additional Shares, free of all restrictions on transfer, liens, encumbrances,
security interests and claims whatsoever.
(c) Such Selling Stockholder has, and on the Closing Date will have,
full legal right, power and authority, and all authorization and approval
required by law, to enter into this Agreement, the Custody Agreement signed by
such Selling Stockholder and Norwest Bank Minnesota, National Association, as
Custodian, relating to the deposit of the Shares to be sold by such Selling
Stockholder (the "CUSTODY AGREEMENT") and the Power of Attorney of such Selling
Stockholder appointing certain individuals as such Selling Stockholder's
attorneys-in-fact (the "ATTORNEYS") to the extent set forth therein, relating
to the transactions contemplated hereby and by the Registration Statement and
the Custody Agreement (the "POWER OF ATTORNEY") and to sell, assign, transfer
and deliver the Shares to be sold by such Selling Stockholder in the manner
provided herein and therein.
(d) This Agreement has been duly authorized, executed and delivered
by or on behalf of such Selling Stockholder.
(e) The Custody Agreement of such Selling Stockholder has been duly
authorized, executed and delivered by such Selling Stockholder and is a valid
and binding agreement of such Selling Stockholder, enforceable in accordance
with its terms.
(f) The Power of Attorney of such Selling Stockholder has been duly
authorized, executed and delivered by such Selling Stockholder and is a valid
and binding instrument of such Selling Stockholder, enforceable in accordance
with its terms, and, pursuant to such Power of Attorney, such Selling
Stockholder has, among other things, authorized the Attorneys, or any one of
them, to execute and deliver on such Selling Stockholder's behalf this
Agreement and any other document that they, or any one of them, may deem
necessary or desirable in connection with the transactions
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contemplated hereby and thereby and to deliver the Shares to be sold by such
Selling Stockholder pursuant to this Agreement.
(g) Upon delivery of and payment for the Shares to be sold by such
Selling Stockholder pursuant to this Agreement, good and valid title to such
Shares will pass to the Underwriters, free of all restrictions on transfer,
liens, encumbrances, security interests and claims whatsoever.
(h) The execution, delivery and performance of this Agreement and the
Custody Agreement and Power of Attorney of such Selling Stockholder by or on
behalf of such Selling Stockholder, the compliance by such Selling Stockholder
with all the provisions hereof and thereof and the consummation of the
transactions contemplated hereby and thereby will not (i) require any consent,
approval, authorization or other order of, or qualification with, any court or
governmental body or agency (except such as may be required under the
securities or Blue Sky laws of the various states), (ii) conflict with or
constitute a breach of any of the terms or provisions of, or a default under,
(A) the organizational documents of such Selling Stockholder or (B) any
indenture, loan agreement, mortgage, lease or other agreement or instrument to
which such Selling Stockholder is a party or by which such Selling Stockholder
or any property of such Selling Stockholder is bound, except, in the case of
clause (B), for any conflict, breach or default which, singly or in the
aggregate, is not material to such Selling Stockholder and its subsidiaries,
taken as a whole, or (iii) violate or conflict with any applicable law or any
rule, regulation, judgment, order or decree of any court or any governmental
body or agency having jurisdiction over such Selling Stockholder or any
property of such Selling Stockholder.
(i) The information in the Registration Statement under the captions
"Principal and Selling Stockholders" and "Certain Transactions - Divestiture by
Lucent" which specifically relates to such Selling Stockholder does not, and
will not on the Closing Date, contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or necessary
to make the statements therein, in the light of the circumstances under which
they were made, not misleading.
(j) At any time during the period described in Section 5(d), if there
is any change in the information referred to in Section 7(i), such Selling
Stockholder will immediately notify you of such change.
(k) Each certificate signed by or on behalf of such Selling
Stockholder and delivered to the Underwriters or counsel for the Underwriters
shall be deemed to be a representation and warranty by such Selling Stockholder
to the Underwriters as to the matters covered thereby.
SECTION 8. Indemnification. (a) The Company and the Operating
Subsidiary jointly and severally agree to indemnify and hold harmless each
Underwriter, its directors, its officers and each person, if any, who controls
any Underwriter within the
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meaning of Section 15 of the 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, liabilities and judgments (including, without limitation, any
legal or other expenses incurred in connection with investigating or defending
any matter, including any action, that could give rise to any such losses,
claims, damages, liabilities or judgments) caused by any untrue statement or
alleged untrue statement of a material fact contained in the Registration
Statement (or any amendment thereto), the Prospectus (or any amendment or
supplement thereto) or any preliminary prospectus, 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, liabilities or judgments are caused by any such
untrue statement or omission or alleged untrue statement or omission based upon
information relating to any Underwriter furnished in writing to the Company by
such Underwriter through you expressly for use therein; provided, however, that
the foregoing indemnity agreement with respect to any preliminary prospectus
shall not inure to the benefit of any Underwriter who failed to deliver a
Prospectus, as then amended or supplemented (so long as the Prospectus and any
amendments or supplements thereto was provided by the Company to the several
Underwriters in the requisite quantity and on a timely basis to permit proper
delivery on or prior to the Closing Date) to the person asserting any losses,
claims, damages, liabilities or judgments caused by any untrue statement or
alleged untrue statement of a material fact contained in such preliminary
prospectus, 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, if such material misstatement or omission or alleged
material misstatement or omission was cured in the Prospectus, as so amended or
supplemented, and such Prospectus was required by law to be delivered at or
prior to the written confirmation of sale to such person.
(b) Each Selling Stockholder agrees, severally and not jointly, to
indemnify and hold harmless each Underwriter, its directors, its officers and
each person, if any, who controls any Underwriter within the meaning of Section
15 of the Act or Section 20 of the Exchange Act, from and against any and all
losses, claims, damages, liabilities and judgments (including, without
limitation, any legal or other expenses incurred in connection with
investigating or defending any matter, including any action, that could give
rise to any such losses, claims, damages, liabilities or judgments) caused by
any untrue statement or alleged untrue statement of a material fact contained
in the Registration Statement (or any amendment thereto), the Prospectus (or
any amendment of supplement thereto) or any preliminary prospectus, 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, but only with reference to information relating to such Selling
Stockholder furnished in writing by or on behalf of such Selling Stockholder
expressly for use in the Registration Statement (or any amendment thereto), the
Prospectus (or any amendment or supplement thereto) or any preliminary
prospectus.
(c) Each Underwriter agrees, severally and not jointly, to indemnify
and hold harmless (i) the Company, its directors, its officers who sign the
Registration Statement and each person, if any, who controls the Company within
the meaning of Section 15 of
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the Act or Section 20 of the Exchange Act, to the same extent as the foregoing
indemnity from the Company to such Underwriter and (ii) each Selling
Stockholder and each person, if any, who controls such Selling Stockholder
within the meaning of Section 15 of the Act or Section 20 of the Exchange Act
to the same extent as the foregoing indemnity from such Selling Stockholder to
such Underwriter, but in the case of Sections 8(c)(i) and 8(c)(ii) only with
reference to information relating to such Underwriter furnished in writing to
the Company by such Underwriter through you expressly for use in the
Registration Statement (or any amendment thereto), the Prospectus (or any
amendment or supplement thereto) or any preliminary prospectus.
(d) The Company and the Operating Subsidiary, jointly and severally,
agree to indemnify and hold harmless each Selling Stockholder, its directors,
its officers and each person, if any, who controls any Selling Stockholder
within the meaning of Section 15 of the Act or Section 20 of the Exchange Act
from and against any and all losses, claims, damages, liabilities and judgments
(including, without limitation, any legal or other expenses incurred in
connection with investigating or defending any matter, including any action,
that could give rise to any such losses, claims, damages, liabilities or
judgments) caused by any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement (or any amendment
thereto), the Prospectus (or any amendment or supplement thereto) or any
preliminary prospectus, 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, liabilities or judgments are caused by any such untrue statement or
omission or alleged untrue statement or omission based upon information
relating to any Selling Stockholder furnished in writing to the Company by such
Selling Stockholder expressly for use therein.
(e) Each Selling Stockholder agrees, severally and not jointly, to
indemnify and hold harmless the Company, its directors, its officers who sign
the Registration Statement and each person, if any, who controls the Company
within the meaning of Section 15 of the Act or Section 20 of the Exchange Act,
to the same extent as the foregoing indemnity from the Company to such Selling
Stockholder, but only with reference to information relating to such Selling
Stockholder furnished in writing to the Company by such Selling Stockholder
expressly for use in the Registration Statement (or any amendment thereto), the
Prospectus (or any amendment or supplement thereto) or any preliminary
prospectus.
(f) In case any action shall be commenced involving any person in
respect of which indemnity may be sought pursuant to Section 8(a), 8(b), 8(c),
8(d) or 8(e) (the "INDEMNIFIED PARTY"), the indemnified party shall promptly
notify the person against whom such indemnity may be sought (the "INDEMNIFYING
PARTY") in writing and the indemnifying party shall assume the defense of such
action, including the employment of counsel reasonably satisfactory to the
indemnified party and the payment of all fees and expenses of such counsel, as
incurred (except that in the case of any action in respect of which indemnity
may be sought pursuant to both Section 8(a) or 8(b) on the one hand and Section
8(c) on the other hand, the Underwriter shall not be required to assume the
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defense of such action pursuant to this Section 8(f), but may employ separate
counsel and participate in the defense thereof, but the fees and expenses of
such counsel, except as provided below, shall be at the expense of such
Underwriter). Any indemnified party shall have the right to employ separate
counsel in any such action and participate in the defense thereof, but the fees
and expenses of such counsel shall be at the expense of the indemnified party
unless (i) the employment of such counsel shall have been specifically
authorized in writing by the indemnifying party, (ii) the indemnifying party
shall have failed to assume the defense of such action or employ counsel
reasonably satisfactory to the indemnified party or (iii) the named parties to
any such action (including any impleaded parties) include both the indemnified
party and the indemnifying party, and the indemnified party shall have been
advised by such counsel that there may be one or more legal defenses available
to it which are different from or additional to those available to the
indemnifying party (in which case the indemnifying party shall not have the
right to assume the defense of such action on behalf of the indemnified party).
In any such case, the indemnifying party shall not, in connection with any one
action or separate but substantially similar or related actions in the same
jurisdiction arising out of the same general allegations or circumstances, be
liable for (i) the fees and expenses of more than one separate firm of
attorneys (in addition to any local counsel) for all Underwriters, their
officers and directors and all persons, if any, who control any Underwriter
within the meaning of either Section 15 of the Act or Section 20 of the
Exchange Act, (ii) the fees and expenses of more than one separate firm of
attorneys (in addition to any local counsel) for the Company, its directors,
its officers who sign the Registration Statement and all persons, if any, who
control the Company within the meaning of either such Section and (iii) the
fees and expenses of more than one separate firm of attorneys (in addition to
any local counsel) for all Selling Stockholders and all persons, if any, who
control any Selling Stockholder within the meaning of either such Section, and
all such fees and expenses shall be reimbursed as they are incurred. In the
case of any such separate firm for the Underwriters, their officers and
directors and such control persons of any Underwriters, such firm shall be
designated in writing by Xxxxxxxxx, Xxxxxx & Xxxxxxxx Securities Corporation.
In the case of any such separate firm for the Company and such directors,
officers and control persons of the Company, such firm shall be designated in
writing by the Company. In the case of any such separate firm for the Selling
Stockholders and such control persons of any Selling Stockholders, such firm
shall be designated in writing by the Selling Stockholders holding a majority
of the outstanding shares of Common Stock held by the Selling Stockholders as a
group. The indemnifying party shall indemnify and hold harmless the indemnified
party from and against any and all losses, claims, damages, liabilities and
judgments by reason of any settlement of any action (i) effected with its
written consent or (ii) effected without its written consent if the settlement
is entered into more than 60 days after the indemnifying party shall have
received a request from the indemnified party for reimbursement for the fees
and expenses of counsel (in any case where such fees and expenses are at the
expense of the indemnifying party) and, prior to the date of such settlement,
the indemnifying party shall have failed to comply with such reimbursement
request. No indemnifying party shall, without the prior written consent of the
indemnified party, effect any settlement or compromise of, or consent to the
entry of judgment with respect
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to, any pending or threatened action in respect of which the indemnified party
is or could have been a party and indemnity or contribution may be or could
have been sought hereunder by the indemnified party, unless such settlement,
compromise or judgment (i) includes an unconditional release of the indemnified
party from all liability on claims that are or could have been the subject
matter of such action and (ii) does not include a statement as to or an
admission of fault, culpability or a failure to act, by or on behalf of the
indemnified party.
(g) To the extent the indemnification provided for in this Section 8
is unavailable to an indemnified party or insufficient in respect of any
losses, claims, damages, liabilities or judgments referred to therein, then
each indemnifying party, in lieu of indemnifying such indemnified party, shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages, liabilities and judgments (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Sellers and the Operating Subsidiary on the one hand and the Underwriters on
the other hand from the offering of the Shares or (ii) if the allocation
provided by clause 8(g)(i) above is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits referred
to in clause 8(g)(i) above but also the relative fault of the Sellers and the
Operating Subsidiary on the one hand and the Underwriters on the other hand in
connection with the statements or omissions which resulted in such losses,
claims, damages, liabilities or judgments, as well as any other relevant
equitable considerations. The relative benefits received by the Sellers and the
Operating Subsidiary on the one hand and the Underwriters on the other hand
shall be deemed to be in the same proportion as the total net proceeds from the
offering (after deducting underwriting discounts and commissions, but before
deducting expenses) received by the Sellers, and the total underwriting
discounts and commissions received by the Underwriters, bear to the total price
to the public of the Shares, in each case as set forth in the table on the
cover page of the Prospectus. The relative fault of the Sellers and the
Operating Subsidiary on the one hand and the Underwriters 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 the Company, the
Operating Subsidiary, or the Selling Stockholders on the one hand or the
Underwriters on the other hand and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission.
The Sellers, the Operating Subsidiary and the Underwriters agree that
it would not be just and equitable if contribution pursuant to this Section
8(g) were determined by pro rata allocation (even if the Underwriters were
treated as one entity for such purpose) or by any other method of allocation
which does not take account of the equitable considerations referred to in the
immediately preceding paragraph. The amount paid or payable by an indemnified
party as a result of the losses, claims, damages, liabilities or judgments
referred to in the immediately preceding paragraph shall be deemed to include,
subject to the limitations set forth above, any legal or other expenses
incurred by such indemnified party in connection with investigating or
defending any matter, including any action, that could have given rise to such
losses, claims, damages, liabilities or
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judgments. Notwithstanding the provisions of this Section 8, (i) no Underwriter
shall be required to contribute any amount in excess of the amount by which the
total price at which the Shares underwritten by it and distributed to the
public were offered to the public exceeds the amount of any damages which such
Underwriter has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission and (ii) the aggregate
liability of any Selling Stockholder pursuant to this Section 8 shall be
limited to the net proceeds from the offering of the Shares (before deducting
expenses) received by such Selling Stockholder. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations to contribute pursuant to this
Section 8(g) are several in proportion to the respective number of Shares
purchased by each of the Underwriters hereunder and not joint.
(h) The remedies provided for in this Section 8 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.
(i) Each Selling Stockholder hereby designates Paradyne Networks,
Inc., 0000 000xx Xxxxxx Xxxxx, Xxxxx, Xxxxxxx 00000, as its authorized agent,
upon which process may be served in any action which may be instituted in any
state or federal court in the State of New York by any Underwriter, any
director or officer of any Underwriter or any person controlling any
Underwriter asserting a claim for indemnification or contribution under or
pursuant to this Section 8 or Section 9, and each Selling Stockholder will
accept the jurisdiction of such court in such action, and waives, to the
fullest extent permitted by applicable law, any defense based upon lack of
personal jurisdiction or venue. A copy of any such process shall be sent or
given to such Selling Stockholder, at the address for notices specified in
Section 13.
SECTION 9. Indemnification of QIU. (a) The Company and the Operating
Subsidiary jointly and severally agree to indemnify and hold harmless the QIU,
its directors, its officers and each person, if any, who controls the QIU
within the meaning of Section 15 of the Act or Section 20 of the Exchange Act,
from and against any and all losses, claims, damages, liabilities and judgments
(including, without limitation, any legal or other expenses incurred in
connection with investigating or defending any matter, including any action,
that could give rise to any such losses, claims, damages, liabilities or
judgments) related to, based upon or arising out of (i) any untrue statement or
alleged untrue statement of a material fact contained in the Registration
Statement (or any amendment thereto), the Prospectus (or any amendment or
supplement thereto) or any preliminary prospectus, or 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 or (ii) the QIU's
activities as QIU under its engagement pursuant to Section 2, except in the
case of this clause (ii) insofar as any such losses, claims, damages,
liabilities or judgments are found in a final judgment by a court of competent
jurisdiction, not subject to further appeal, to have resulted solely from the
willful misconduct or gross negligence of the QIU.
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(b) In case any action shall be commenced involving any person in
respect of which indemnity may be sought pursuant to Section 9(a) or Section
9(b) (the "QIU INDEMNIFIED PARTY"), the QIU Indemnified Party shall promptly
notify the person against whom such indemnity may be sought (the "QIU
INDEMNIFYING PARTY") in writing and the QIU Indemnifying Party shall assume the
defense of such action, including the employment of counsel reasonably
satisfactory to the QIU Indemnified Party and the payment of all fees and
expenses of such counsel, as incurred. Any QIU Indemnified Party shall have the
right to employ separate counsel in any such action and participate in the
defense thereof, but the fees and expenses of such counsel shall be at the
expense of the QIU Indemnified Party unless (i) the employment of such counsel
shall have been specifically authorized in writing by the QIU Indemnifying
Party, (ii) the QIU Indemnifying Party shall have failed to assume the defense
of such action or employ counsel reasonably satisfactory to the QIU Indemnified
Party or (iii) the named parties to any such action (including any impleaded
parties) include both the QIU Indemnified Party and the QIU Indemnifying Party,
and the QIU Indemnified Party shall have been advised by such counsel that
there may be one or more legal defenses available to it which are different
from or additional to those available to the QIU Indemnifying Party (in which
case the QIU Indemnifying Party shall not have the right to assume the defense
of such action on behalf of the QIU Indemnified Party). In any such case, the
QIU Indemnifying Party shall not, in connection with any one action or separate
but substantially similar or related actions in the same jurisdiction arising
out of the same general allegations or circumstances, be liable for the fees
and expenses of more than one separate firm of attorneys (in addition to any
local counsel) for all QIU Indemnified Parties, which firm shall be designated
by the QIU, and all such fees and expenses shall be reimbursed as they are
incurred. The QIU Indemnifying Party shall indemnify and hold harmless the QIU
Indemnified Party from and against any and all losses, claims, damages,
liabilities and judgments by reason of any settlement of any action (i)
effected with its written consent or (ii) effected without its written consent
if the settlement is entered into more than twenty business days after the QIU
Indemnifying Party shall have received a request from the QIU Indemnified Party
for reimbursement for the fees and expenses of counsel (in any case where such
fees and expenses are at the expense of the QIU Indemnifying Party) and, prior
to the date of such settlement, the QIU Indemnifying Party shall have failed to
comply with such reimbursement request. The QIU Indemnifying Party shall not,
without the prior written consent of the QIU Indemnified Party, effect any
settlement or compromise of, or consent to the entry of judgment with respect
to, any pending or threatened action in respect of which the QIU Indemnified
Party is or could have been a party and indemnity or contribution may be or
could have been sought hereunder by the QIU Indemnified Party, unless such
settlement, compromise or judgment (i) includes an unconditional release of the
QIU Indemnified Party from all liability on claims that are or could have been
the subject matter of such action and (ii) does not include a statement as to
or an admission of fault, culpability or a failure to act, by or on behalf of
the QIU Indemnified Party.
(c) To the extent the indemnification provided for in this Section 9
is unavailable to a QIU Indemnified Party or insufficient in respect of any
losses, claims,
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damages, liabilities or judgments referred to therein, then each QIU
Indemnifying Party, in lieu of indemnifying such QIU Indemnified Party, shall
contribute to the amount paid or payable by such QIU Indemnified Party as a
result of such losses, claims, damages, liabilities and judgments (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Company and the Operating Subsidiary on the one hand and the QIU on the other
hand from the offering of the Shares or (ii) if the allocation provided by
clause 9(c)(i) above is not permitted by applicable law, in such proportion as
is appropriate to reflect not only the relative benefits referred to in clause
9(c)(i) above but also the relative fault of the Company and the Operating
Subsidiary on the one hand and the QIU on the other hand in connection with the
statements or omissions which resulted in such losses, claims, damages,
liabilities or judgments, as well as any other relevant equitable
considerations. The relative benefits received by the Company and the Operating
Subsidiary on the one hand and the QIU on the other hand shall be deemed to be
in the same proportion as the total net proceeds from the offering (after
deducting underwriting discounts and commissions, but before deducting
expenses) received by the Company as set forth in the table on the cover page
of the Prospectus, and the fee received by the QIU pursuant to Section 2, bear
to the sum of such total net proceeds and such fee. The relative fault of the
Company and the Operating Subsidiary on the one hand and the QIU 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
the Company or the Operating Subsidiary on the one hand or the QIU on the other
hand and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission and whether the
QIU's activities as QIU under its engagement pursuant to Section 2 involved any
willful misconduct or gross negligence on the part of the QIU.
The Company, the Operating Subsidiary and the QIU agree that it would
not be just and equitable if contribution pursuant to this Section 9(c) were
determined by pro rata allocation or by any other method of allocation which
does not take account of the equitable considerations referred to in the
immediately preceding paragraph. The amount paid or payable by a QIU
Indemnified Party as a result of the losses, claims, damages, liabilities or
judgments referred to in the immediately preceding paragraph shall be deemed to
include, subject to the limitations set forth above, any legal or other
expenses incurred by such QIU Indemnified Party in connection with
investigating or defending any matter, including any action, that could have
given rise to such losses, claims, damages, liabilities or judgments. No person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Act) shall be entitled to contribution from any person who was not guilty
of such fraudulent misrepresentation.
(d) The remedies provided for in this Section 9 are not exclusive and
shall not limit any rights or remedies which may otherwise be available to any
QIU Indemnified Party at law or in equity.
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SECTION 10. Conditions of Underwriters' Obligations. The several
obligations of the Underwriters to purchase the Firm Shares under this
Agreement are subject to the satisfaction of each of the following conditions:
(a) All the representations and warranties of the Company and the
Operating Subsidiary contained in this Agreement shall be true and correct on
the Closing Date with the same force and effect as if made on and as of the
Closing Date.
(b) If the Company is required to file a Rule 462(b) Registration
Statement after the effectiveness of this Agreement, such Rule 462(b)
Registration Statement shall have become effective by 10:00 P.M., New York City
time, on the date of this Agreement; and no stop order suspending the
effectiveness of the Registration Statement shall have been issued and no
proceedings for that purpose shall have been commenced or shall be pending
before or contemplated by the Commission.
(c) You shall have received on the Closing Date a certificate dated
the Closing Date, signed by Xxxxxx X. May, in his capacity as the President and
Chief Executive Officer of the Company and the Operating Subsidiary, and
Xxxxxxx X. Xxxxxx, in his capacity as the Chief Financial Officer of the
Company and the Operating Subsidiary, confirming the matters set forth in
Sections 6(u), 10(a) and 10(b) and that each of the Company and the Operating
Subsidiary has complied with all of the agreements and satisfied all of the
conditions herein contained and required to be complied with or satisfied by
the Company and the Operating Subsidiary, respectively, on or prior to the
Closing Date.
(d) Since the respective dates as of which information is given in the
Prospectus other than as set forth in the Prospectus (exclusive of any
amendments or supplements thereto subsequent to the date of this Agreement),
(i) there shall not have occurred any change or any development involving a
prospective change in the condition, financial or otherwise, or the earnings,
business, management or operations of the Company and its subsidiaries, taken
as a whole, (ii) there shall not have been any change or any development
involving a prospective change in the capital stock or in the long-term debt of
the Company or any of its subsidiaries and (iii) neither the Company nor any of
its subsidiaries shall have incurred any liability or obligation, direct or
contingent, the effect of which, in any such case described in clause 10(d)(i),
10(d)(ii) or 10(d)(iii), in your judgment, is material and adverse and, in your
judgment, makes it impracticable to market the Shares on the terms and in the
manner contemplated in the Prospectus.
(e) All the representations and warranties of each Selling Stockholder
contained in this Agreement shall be true and correct on the Closing Date with
the same force and effect as if made on and as of the Closing Date and you
shall have received on the Closing Date a certificate dated the Closing Date
from each Selling Stockholder to such effect and to the effect that such
Selling Stockholder has complied with all of the agreements and satisfied all
of the conditions herein contained and required to be complied with or
satisfied by such Selling Stockholder on or prior to the Closing Date.
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(f) You shall have received on the Closing Date an opinion
(satisfactory to you and counsel for the Underwriters), dated the Closing Date,
of Xxxxxx Godward LLP, counsel for the Company and the Operating Subsidiary, to
the effect set forth in Annex II hereto.
(g) You shall have received on the Closing Date an opinion
(satisfactory to you and counsel for the Underwriters), dated the Closing Date,
of Cleary, Gottlieb, Xxxxx & Xxxxxxxx, counsel for the Selling Stockholders
identified as "TPG Selling Stockholders" in Schedule II hereto, to the effect
set forth in Annex III hereto.
(h) You shall have received on the Closing Date an opinion
(satisfactory to you and counsel for the Underwriters), dated the Closing Date,
of Xxxxxxx Xxxx, counsel for the Selling Stockholders identified as "Sprout
Selling Stockholders" in Schedule II hereto, to the effect set forth in Annex
IV hereto.
(i) You shall have received on the Closing Date an opinion
(satisfactory to you and counsel for the Underwriters), dated the Closing Date,
of Xxxxxx, Kayden, Horstemeyer & Xxxxxx, L.L.P., special intellectual property
counsel for the Company, to the effect set forth in Annex V hereto.
(j) You shall have received on the Closing Date an opinion
(satisfactory to you and counsel for the Underwriters), dated the Closing Date,
of Xxxxxx, Wiltshire & Grannis LLP, special FCC counsel for the Company and the
Operating Subsidiary, to the effect set forth in Annex VI hereto.
(k) You shall have received on the Closing Date an opinion
(satisfactory to you and counsel for the Underwriters), dated the Closing Date,
of Fraser & Xxxxxx, special Canadian counsel for Paradyne Canada, to the effect
set forth in Annex VII hereto.
(l) You shall have received on the Closing Date an opinion
(satisfactory to you and counsel for the Underwriters), dated the Closing Date,
of Xxxxx X. Xxxxxxxx, Esq., Senior Vice President and Chief Legal and
Intellectual Property Officer of the Company, to the effect set forth in Annex
VIII hereto.
(m) You shall have received on the Closing Date an opinion
(satisfactory to you and counsel for the Underwriters), dated the Closing Date,
of Xxxxxxx X. Xxxxxxxxx, Esq., General Counsel for the TPG Selling
Stockholders, to the effect set forth in Annex IX hereto.
(n) You shall have received on the Closing Date an opinion, dated the
Closing Date, of Xxxxxx & Bird LLP, counsel for the Underwriters, as to the
matters referred to in paragraphs (iv), (vi), (ix) (but only with respect to
the statements under the captions "Description of Capital Stock" and
"Underwriting," other than the final two paragraphs under the caption
"Underwriting") and (xvi) of Annex II hereto and the penultimate
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27
paragraph of Annex II hereto. In giving its opinion with respect to the matters
covered by the penultimate paragraph of Annex II hereto, counsel for the
Underwriters may state that its opinion and belief are based upon its
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.
(o) 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 PricewaterhouseCoopers,
LLP, independent public accountants, containing the information and statements
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.
(p) The Shares shall have been duly listed for quotation on the
Nasdaq National Market.
(q) The Company, the Operating Subsidiary and the Selling
Stockholders shall not have failed on or prior to the Closing Date to perform
or comply with any of the agreements herein contained and required to be
performed or complied with by the Company, the Operating Subsidiary or the
Selling Stockholders on or prior to the Closing Date.
(r) You shall have received on the Closing Date, a certificate of
each Selling Stockholder who is not a U.S. Person (as defined under applicable
U.S. federal tax legislation) to the effect that such Selling Stockholder is
not a U.S. Person, which certificate may be in the form of a properly completed
and executed United States Treasury Department Form W-8 (or other applicable
form or statement specified by Treasury Department regulations in lieu
thereof).
(s) You shall have received on the Closing Date such additional
documents (including, without limitation, opinions of counsel, certificates and
agreements) as you may reasonably request.
The several obligations of the Underwriters to purchase any Additional
Shares hereunder are subject to the delivery to you on the applicable Option
Closing Date of such documents (including, without limitation, opinions of
counsel, certificates and agreements) as you may reasonably request with
respect to the good standing of the Company and the Operating Subsidiary, the
due authorization and issuance of such Additional Shares and other matters
related to the issuance of such Additional Shares.
SECTION 11. Effectiveness of Agreement and Termination. This Agreement
shall become effective upon the execution and delivery of this Agreement by the
parties hereto.
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This Agreement may be terminated at any time on or prior to the
Closing Date by you by written notice to the Sellers if any of the following
has occurred: (i) any outbreak or escalation of hostilities or other national
or international calamity or crisis or change in economic conditions or in the
financial markets of the United States or elsewhere that, in your judgment, is
material and adverse and, in your judgment, makes it impracticable to market
the Shares on the terms and in the manner contemplated in the Prospectus, (ii)
the suspension or material limitation of trading in securities or other
instruments on the New York Stock Exchange, the American Stock Exchange, the
Chicago Board of Options Exchange, the Chicago Mercantile Exchange, the Chicago
Board of Trade or the Nasdaq National Market or limitation on prices for
securities or other instruments on any such exchange or the Nasdaq National
Market, (iii) the suspension of trading of any securities of the Company on any
exchange or in the over-the-counter market, (iv) the enactment, publication,
decree or other promulgation of any federal or state statute, regulation, rule
or order of any court or other governmental authority which in your opinion
materially and adversely affects, or will materially and adversely affect, the
business, prospects, financial condition or results of operations of the
Company and its subsidiaries, taken as a whole, (v) the declaration of a
banking moratorium by either federal or New York State authorities or (vi) the
taking of any action by any federal, state or local government or agency in
respect of its monetary or fiscal affairs which in your opinion has a material
adverse effect on the financial markets in the United States.
If on the Closing Date or on an Option Closing Date, as the case may
be, any one or more of the Underwriters shall fail or refuse to purchase the
Firm Shares or Additional Shares, as the case may be, which it has or they have
agreed to purchase hereunder on such date and the aggregate number of Firm
Shares or Additional Shares, as the case may be, which such defaulting
Underwriter or Underwriters agreed but failed or refused to purchase is not
more than one-tenth of the total number of Firm Shares or Additional Shares, as
the case may be, to be purchased on such date by all Underwriters, each
non-defaulting Underwriter shall be obligated severally, in the proportion
which the number of Firm Shares set forth opposite its name in Schedule I bears
to the total number of Firm Shares which all the non-defaulting Underwriters
have agreed to purchase, or in such other proportion as you may specify, to
purchase the Firm Shares or Additional Shares, as the case may be, which such
defaulting Underwriter or Underwriters agreed but failed or refused to purchase
on such date; provided that in no event shall the number of Firm Shares or
Additional Shares, as the case may be, which any Underwriter has agreed to
purchase pursuant to Section 2 be increased pursuant to this Section 11 by an
amount in excess of one-ninth of such number of Firm Shares or Additional
Shares, as the case may be, without the written consent of such Underwriter. If
on the Closing Date any Underwriter or Underwriters shall fail or refuse to
purchase Firm Shares and the aggregate number of Firm Shares with respect to
which such default occurs is more than one-tenth of the aggregate number of
Firm Shares to be purchased by all Underwriters and arrangements satisfactory
to you, the Company and the Selling Stockholders for purchase of such Firm
Shares are not made within 48 hours after such default, this Agreement will
terminate without liability on the part of any non-defaulting Underwriter, the
Company, the Operating Subsidiary or the Selling Stockholders. In any such case
which does not result in termination of this Agreement, either you or the
Sellers shall
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have the right to postpone the Closing Date, but in no event for longer than
seven days, in order that the required changes, if any, in the Registration
Statement and the Prospectus or any other documents or arrangements may be
effected. If, on an Option Closing Date, any Underwriter or Underwriters shall
fail or refuse to purchase Additional Shares and the aggregate number of
Additional Shares with respect to which such default occurs is more than
one-tenth of the aggregate number of Additional Shares to be purchased on such
date, the non-defaulting Underwriters shall have the option to (i) terminate
their obligation hereunder to purchase such Additional Shares or (ii) purchase
not less than the number of Additional Shares that such non-defaulting
Underwriters would have been obligated to purchase on such date in the absence
of such default. Any action taken under this paragraph shall not relieve any
defaulting Underwriter from liability in respect of any default of any such
Underwriter under this Agreement.
SECTION 12. Agreements of the Selling Stockholders. Each Selling
Stockholder agrees with you and the Company to do and perform all things to be
done and performed by such Selling Stockholder under this Agreement prior to
the Closing Date and to satisfy all conditions precedent to the delivery of the
Shares to be sold by such Selling Stockholder pursuant to this Agreement.
SECTION 13. Expenses. (a) Whether or not the transactions contemplated
in this Agreement are consummated or this Agreement is terminated, the Company
will pay or cause to be paid all expenses incident to the performance of Sellers
obligations under this Agreement, including: (i) all fees and expenses in
connection with the preparation, printing, filing and distribution of the
Registration Statement (including financial statements and exhibits), any
preliminary prospectus, the Prospectus and all amendments and supplements to
any of the foregoing, including the mailing and delivering of copies thereof to
the Underwriters and dealers in the quantities specified herein, (ii) all costs
and expenses related to the transfer and delivery of the Shares to the
Underwriters, including any transfer or other taxes payable thereon, (iii) all
costs of printing or producing this Agreement and any other agreements or
documents in connection with the offering, purchase, sale or delivery of the
Shares, (iv) all expenses in connection with the registration or qualification
of the Shares for offer and sale under the securities or Blue Sky laws of the
several states and all costs of printing or producing any Preliminary and
Supplemental Blue Sky Memoranda in connection therewith (including the filing
fees and fees and disbursements of counsel for the Underwriters in connection
with such registration or qualification and memoranda relating thereto), (v)
the filing fees and disbursements of counsel for the Underwriters in connection
with the review and clearance of the offering of the Shares by the National
Association of Securities Dealers, Inc., (vi) all fees and expenses in
connection with the listing of the Shares on the Nasdaq National Market, (vii)
the cost of printing certificates representing the Shares, (viii) the costs and
charges of any transfer agent, registrar and/or depositary, (ix) the fees and
expenses of the QIU (including, without limitation, the fees and disbursements
of counsel to the QIU) and (x) all other costs and expenses incident to the
performance of the obligations of the Company and the Selling Stockholders
hereunder for which provision is not otherwise made in this Section.
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(b) Each Selling Stockholder will pay or to cause to be paid (i) all
transfer taxes payable in connection with the transfer of the Shares to be sold
by such Selling Stockholder to the Underwriters and (ii) the fees,
disbursements and expenses of their respective counsel incurred or made in
connection herewith and in connection with the transactions contemplated by the
Registration Statement and the Prospectus.
(c) The Company will pay or cause to be paid the fees, disbursements
and expenses of the Company's counsel and the Company's accountants in
connection with the registration and delivery of the Shares under the Act.
(d) The provisions of this Section 13 shall not supersede or otherwise
affect any agreement that the Company and the Selling Stockholders may
otherwise have for allocation of such expenses among themselves.
SECTION 14. Miscellaneous. Notices given pursuant to any provision of
this Agreement shall be addressed as follows: (i) if to the Company or the
Operating Subsidiary, to Paradyne Networks, Inc., 0000 000xx Xxxxxx Xxxxx,
Xxxxx, Xxxxxxx 00000, Attention: General Counsel, (ii) if to the Selling
Stockholders, to Xxxxxx X. May and Xxxxxxx X. Xxxxxx, Paradyne Networks, Inc.,
0000 000xx Xxxxxx Xxxxx, Xxxxx, Xxxxxxx 00000 and (iii) if to any Underwriter
or to you, to you c/x Xxxxxxxxx, Xxxxxx & Xxxxxxxx Securities Corporation, 000
Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Syndicate Department, or in
any case to such other address as the person to be notified may have requested
in writing.
The respective indemnities, contribution agreements, representations,
warranties and other statements of the Company, the Selling Stockholders and
the several Underwriters set forth in or made pursuant to this Agreement shall
remain operative and in full force and effect, and will survive delivery of and
payment for the Shares, regardless of (i) any investigation, or statement as to
the results thereof, made by or on behalf of any Underwriter, the officers or
directors of any Underwriter, any person controlling any Underwriter, any QIU
Indemnified Party, the Company, the officers or directors of the Company, any
person controlling the Company, any Selling Stockholder or any person
controlling such Selling Stockholder, (ii) acceptance of the Shares and payment
for them hereunder and (iii) termination of this Agreement.
If for any reason the Shares are not delivered by or on behalf of any
Seller as provided herein (other than as a result of any termination of this
Agreement pursuant to Section 11), the Sellers agree, jointly and severally, to
reimburse the several Underwriters for all out-of-pocket expenses (including,
without limitation, the fees and disbursements of counsel) incurred by them.
Notwithstanding any termination of this Agreement, the Sellers shall be liable
for all expenses which they have agreed to pay pursuant to Section 13. The
Sellers also agree, jointly and severally, to reimburse the several
Underwriters,
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their directors and officers, any persons controlling any of the Underwriters
and the QIU Indemnified Parties for any and all fees and expenses (including,
without limitation, the fees disbursements of counsel) incurred by them in
connection with enforcing their rights hereunder (including, without
limitation, pursuant to Sections 8 and 9).
Except as otherwise provided, this Agreement has been and is made
solely for the benefit of and shall be binding upon the Company, the Selling
Stockholders, the Underwriters, the Underwriters' directors and officers, any
controlling persons referred to herein, the QIU Indemnified Parties, the
Company's directors and officers who sign the Registration Statement and their
respective successors and assigns, all as and to the extent provided in this
Agreement, and no other person shall acquire or have any right under or by
virtue of this Agreement. The term "successors and assigns" shall not include a
purchaser of any of the Shares from any of the several Underwriters merely
because of such purchase.
This Agreement shall be governed and construed in accordance with the
laws of the State of New York.
This Agreement may be signed in various counterparts which together
shall constitute one and the same instrument.
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Please confirm that the foregoing correctly sets forth the agreement
between the Company and the several Underwriters.
Very truly yours,
PARADYNE NETWORKS, INC.
By:
----------------------------------
Name:
Title:
PARADYNE CORPORATION
By:
----------------------------------
Name:
Title:
THE SELLING STOCKHOLDERS
NAMED IN SCHEDULE II HERETO,
ACTING SEVERALLY
By:
----------------------------------
Name:
Title:
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XXXXXXXXX, LUFKIN & XXXXXXXX
SECURITIES CORPORATION
BANCBOSTON XXXXXXXXX XXXXXXXX, INC.
XXXX XXXXXXXX INCORPORATED
XXXXXXX XXXXX & ASSOCIATES, INC.
Acting severally on behalf of
themselves and the several
Underwriters named in
Schedule I hereto
By: XXXXXXXXX, LUFKIN & XXXXXXXX
SECURITIES CORPORATION
By:
---------------------------------
Name:
Title:
BANCBOSTON XXXXXXXXX XXXXXXXX, INC.
Acting in its capacity as a Qualified
Independent Underwriter
By:
---------------------------------
Name:
Title:
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SCHEDULE I
Number of Firm Shares
Underwriters to be Purchased
------------ ---------------------
Xxxxxxxxx, Lufkin & Xxxxxxxx
Securities Corporation.............................
BancBoston Xxxxxxxxx Xxxxxxxx Inc...........................
Xxxx Xxxxxxxx Incorporated..................................
Xxxxxxx Xxxxx & Associates, Inc.............................
[NAMES OF OTHER UNDERWRITERS]
Total
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SCHEDULE II
Selling Stockholders
Number of Firm Shares
Name Being Sold
---- ---------------------
TPG SELLING STOCKHOLDERS:
TPG Partners, L.P., a Delaware
limited partnership.................................................
TPG Parallel I, L.P., a Delaware
limited partnership.................................................
Communications GenPar, Inc.,
a Texas corporation.................................................
SPROUT SELLING STOCKHOLDERS:
Sprout Capital VII, L.P., a Delaware
limited partnership.................................................
Sprout Growth II, L.P., a Delaware
limited partnership.................................................
DLJ First ESC L.P., a Delaware
limited partnership.................................................
The Sprout CEO Fund, L.P., a Delaware
limited partnership.................................................
DLJ Capital Corporation, a Delaware
corporation.........................................................
36
Annex I
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[Names of Stockholders of Company Subject to Lock-Ups]
I-1
37
Annex II
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You shall have received on the Closing Date an opinion (satisfactory
to you and counsel for the Underwriters), dated the Closing Date, of Xxxxxx
Godward LLP, counsel for the Company and the Operating Subsidiary, to the
effect that:
II-1
38
Annex III
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You shall have received on the Closing Date an opinion (satisfactory
to you and counsel for the Underwriters), dated the Closing Date, of Cleary,
Gottlieb, Xxxxx & Xxxxxxxx, counsel for the TPG Selling Stockholders, to the
effect that:
III-1
39
Annex IV
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You shall have received on the Closing Date an opinion (satisfactory
to you and counsel for the Underwriters), dated the Closing Date, of Xxxxxxx
Xxxx, counsel for the Sprout Selling Stockholders, to the effect that:
IV-1
40
Annex V
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You shall have received on the Closing Date an opinion (satisfactory
to you and counsel for the Underwriters), dated the Closing Date, of Xxxxxx,
Kayden, Horstemeyer & Xxxxxx, L.L.P., special intellectual property counsel for
the Company, to the effect that:
V-1
41
Annex VI
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You shall have received on the Closing Date an opinion (satisfactory
to you and counsel for the Underwriters), dated the Closing Date, of Xxxxxx,
Wiltshire & Grannis LLP, special communications counsel for the Company, to the
effect that:
VI-1
42
Annex VII
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You shall have received on the Closing Date an opinion, dated the
Closing Date, of Fraser & Xxxxxx, special Canadian counsel for Paradyne Canada,
to the effect that:
VII-1
43
Annex VIII
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You shall have received on the Closing Date an opinion (satisfactory
to you and counsel for the Underwriters), dated the Closing Date, of Xxxxx X.
Xxxxxxxx, Esq., Senior Vice President and Chief Legal and Intellectual Property
Officer of the Company, to the effect that:
VIII-1
44
Annex IX
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You shall have received on the Closing Date an opinion (satisfactory
to you and counsel for the Underwriters), dated the Closing Date, of Xxxxxxx X.
Xxxxxxxxx, Esq., General Counsel of the TPG Selling Stockholders, to the effect
that:
IX-1
