1
EXHIBIT 1.1
6,000,000 Shares
PARADYNE NETWORKS, INC.
Common Stock
UNDERWRITING AGREEMENT
_____________ , 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 6,000,000 shares of the common stock, par
value $.001 per share, of the Company (the "FIRM Shares"), of which 4,000,000
shares are to be issued and sold by the Company and 2,000,000 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 900,000 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
4,000,000 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. 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 the
Closing Date (as
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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 a
period of 180 days after the date of the Prospectus without the prior written
consent of Xxxxxxxxx, Xxxxxx & 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 a period of 180 days after the date of the Prospectus.
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 the
date of the Prospectus without the prior written consent of Xxxxxxxxx, Xxxxxx &
Xxxxxxxx Securities Corporation other than a registration statement on Form S-8
under the Act with respect to up to (i) 6,000,000 shares of Common Stock to be
issued pursuant to the Company's Amended and Restated 1996 Equity Incentive
Plan, (ii) 1,000,000 shares of Common Stock to be issued pursuant to the
Company's 1999 Employee Stock Purchase Plan and (iii) 250,000 shares of Common
Stock to be issued pursuant to the Company's 1999 Non-Employee Directors' Stock
Plan. In addition, each Selling Stockholder agrees that, for a period of 180
days after the date of the Prospectus 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 180-day period.
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The Company shall, prior to or concurrently with the execution of this
Agreement, deliver an agreement (each, a "LOCK-UP AGREEMENT") executed by (i)
each Selling Stockholder, (ii) each of the directors and officers of the Company
who is not a Selling Stockholder and (iii) each stockholder listed on Annex I
hereto to the effect that such person will not, during the period commencing on
the date such person signs such agreement and ending 180 days after the date of
the Prospectus, without the prior written consent of Xxxxxxxxx, Lufkin &
Xxxxxxxx Securities Corporation, (A)(1) offer, pledge, sell, contract to sell,
sell any option or contract to purchase, purchase any option or contract to
sell, grant any option, right or warrant to purchase, 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, except shares
of Common Stock registered under the Act (other than on Form S-8 under the Act)
that are purchased in the open market subsequent to the Closing Date or (2)
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 (1) or (2) 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, or (B)
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. Notwithstanding the foregoing, each Lock-Up
Agreement executed by an individual, corporation or partnership that is not a
Selling Stockholder (each, an "EXECUTING STOCKHOLDER") may provide that (i) if
such Executing Stockholder is an individual, he or she may transfer any shares
either during his or her lifetime or upon death by gift, will, or intestacy to
any person or trust, or (ii) if such Executing Stockholder is a corporation or
partnership, it may transfer any or all shares of Common Stock it holds as a
distribution to its stockholders or partners, as the case may be; provided,
however, that in either such case it shall be a condition precedent to the
transfer of such shares that the transferee agrees in writing (in a form
acceptable to Xxxxxxxxx, Xxxxxx & Xxxxxxxx Securities Corporation and its
counsel) to be bound by the terms of such Executing Stockholder's Lock-Up
Agreement.
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.
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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 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.
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(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 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
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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 [June
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 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) Whether or not the transactions contemplated in this Agreement are
consummated or this Agreement is terminated, to pay or cause to be paid all
expenses incident to the performance of the Seller's obligations under this
Agreement, including: (i) 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 and all other 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
preparation and filing of the registration statement on Form 8-A relating to the
Common Stock and all costs and
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expenses incident to 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. The provisions of this Section 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.
(j) 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.
(k) 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.
(l) 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.
(m) 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:
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(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.
(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 financial statements of the Company. 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,
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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
statements referred to in Section 6(q) 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.
(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.
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(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.
(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
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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 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.
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(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 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
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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 (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. 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.
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(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 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
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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.
(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.
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SECTION 7. Representations and Warranties of the Selling Stockholders.
Each Selling Stockholder severally and not jointly represents and warrants 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. 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 Selline 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.
(b) 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 _________, 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.
(c) This Agreement has been duly authorized, executed and delivered by
or on behalf of such Selling Stockholder.
(d) 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.
(e) 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 contemplated hereby and thereby
and to deliver the Shares to be sold by such Selling Stockholder pursuant to
this Agreement.
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(f) 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.
(g) 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.
(h) 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.
(i) At any time during the period described in Section 5(d), if there
is any change in the information referred to in Section 7(h), such Selling
Stockholder will immediately notify you of such change.
(j) 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 meaning of Section 15 of the Act or Section 20 of the
Securities Exchange Act of 1934,
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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 the Act or Section 20 of the Exchange Act, to the
same extent as the foregoing indemnity
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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
defense of such action pursuant to this Section 8(f), but may employ separate
counsel and
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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 to, any pending or threatened
action in respect of which the indemnified party is or could
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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 judgments. Notwithstanding the provisions of this
Section 8, (i) no Underwriter shall be
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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, damages, liabilities or judgments referred to therein, then each QIU
Indemnifying Party,
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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(d)(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(d)(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(d) 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.
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:
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(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 Xxx, in his capacity as the President and Chief
Executive Officer of the Company and the Operating Subsidiary, and Xxxxxxx
Xxxxxx, in his capacity as the Chief Financial Officer of the Company and the
Operating Subsidiary, confirming the matters set forth in Sections 6(t), 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.
(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,
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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, 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 Xxxxxx, Kayden, Horstemeyer & Xxxxxx, L.L.P., special intellectual property
counsel for the Company, 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, Wiltshire & Grannis LLP, special FCC counsel for the Company and the
Operating Subsidiary, 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 Fraser & Xxxxxx, special Canadian counsel for Paradyne Canada, to the effect
set forth in Annex VI hereto.
(k) You shall have received on the Closing Date an opinion, 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 VII hereto.
(l) 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 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.
(m) 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.
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(n) The Company shall have delivered to you the agreements specified in
Section 2, which agreements shall be in full force and effect on the Closing
Date.
(o) The Shares shall have been duly listed for quotation on the Nasdaq
National Market.
(p) 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.
(q) 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).
(r) 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.
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
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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
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
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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:
(a) to 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
counsel to the Selling Stockholders incurred or made in connection herewith and
in connection with the transactions contemplated by the Registration Statement
and the Prospectus; and
(b) 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. 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 [NAME OF ATTORNEY-IN-FACT], [ADDRESS OF ATTORNEY-IN-FACT] 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 Company shall be liable
for all expenses which it has agreed to pay pursuant to Section 5(i). The
Sellers also agree, jointly and severally, to reimburse the several
Underwriters, 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
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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: Attorney-in-Fact
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
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By: XXXXXXXXX, LUFKIN & XXXXXXXX
SECURITIES CORPORATION
By:
----------------------------------------
Name:
Title:
By: BANCBOSTON XXXXXXXXX XXXXXXXX, INC.
Acting in its capacity as a Qualified
Independent Underwriter
By:
-----------------------------------------
Name:
Title:
-33-
34
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..............................
Total
35
SCHEDULE II
Selling Stockholders
Number of Firm Shares
Name Being Sold
---- ---------------------
TPG Partners, L.P............................................ 1,794,750
TPG Parallel I, L.P.......................................... 178,929
Communications GenPar Inc.................................... 26,321
36
Annex I
[ NAMES OF STOCKHOLDERS OF THE COMPANY WHO WILL BE REQUIRED TO SIGN LOCK UPS]
37
Annex II
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
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, to the effect
that:
III-1
39
Annex IV
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 (1) such counsel is familiar with the
Intellectual Property used by the Company and its subsidiaries in their business
and the manner of such use and has read the Registration Statement and the
Prospectus, including particularly the portions of the Registration Statement
and the Prospectus referring to any Intellectual Property, and (2) such counsel
is of the opinion that:
IV-1
40
Annex V
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, to the effect that
(1) such counsel has read the Registration Statement and the Prospectus,
including particularly the portions of the Registration Statement and the
Prospectus referring to the 1996 Act, the Communications Act and the Rules and
Regulations, and (2) such counsel is of the opinion that:
V-1
41
Annex VI
You shall have received on the Closing Date an opinion, dated the
Closing Date, of Fraser & Xxxxxx, special Canadian counsel for the Company, the
Operating Subsidiary and Paradyne Canada, to the effect that:
VI-1
42
Annex VII
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:
VII-1
