EXHIBIT 1.1
SONUS NETWORKS, INC.
COMMON STOCK
($0.001 PAR VALUE PER SHARE)
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UNDERWRITING AGREEMENT
September 23, 2003
Xxxxxxx, Xxxxx & Co.,
00 Xxxxx Xxxxxx,
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
Sonus Networks, Inc., a Delaware corporation (the "COMPANY"), proposes,
subject to the terms and conditions stated herein, to issue and sell to Xxxxxxx
Sachs & Co. (the "UNDERWRITER") an aggregate of 17,000,000 shares (the "SHARES")
of Common Stock, $0.001 par value per share (the "STOCK"), of the Company.
1. The Company represents and warrants to, and agrees with, the Underwriter
that:
(a) A registration statement on Form S-3 (File No. 333-61940) (the
"INITIAL REGISTRATION STATEMENT") in respect of the Shares has been filed with
the Securities and Exchange Commission (the "COMMISSION"); the Initial
Registration Statement and any post-effective amendment thereto, each in the
form heretofore delivered to you, have been declared effective by the Commission
in such form; other than a registration statement, if any, increasing the size
of the offering (a "RULE 462(b) REGISTRATION STATEMENT"), filed pursuant to Rule
462(b) under the Securities Act of 1933, as amended (the "ACT"), which became
effective upon filing, no other document with respect to the Initial
Registration Statement or document incorporated by reference therein has
heretofore been filed with the Commission; and no stop order suspending the
effectiveness of the Initial Registration Statement, any post-effective
amendment thereto or the Rule 462(b) Registration Statement, if any, has been
issued and no proceeding for that purpose has been initiated or threatened by
the Commission (the form of prospectus to be used in connection with the
issuance and sale of the Stock included in the Initial Registration Statement is
hereinafter called the "BASIC PROSPECTUS"; the form of prospectus supplement
included in the Initial Registration Statement, or, if the Company files with
the Commission a subsequent prospectus supplement to be used in connection with
the issuance and sale of the Shares in accordance with Rule 424(b) under the
Act, such subsequent prospectus supplement, is hereby called the "PROSPECTUS
SUPPLEMENT"; the Basic Prospectus, as supplemented by the Prospectus Supplement,
in the form in which it shall be filed with the Commission pursuant to Rule
424(b) under the Act, is hereinafter called the "PROSPECTUS"; any preliminary
Prospectus Supplement, together with the Basic Prospectus, is hereinafter called
a "PRELIMINARY PROSPECTUS"; the various parts of the Initial Registration
Statement and the Rule 462(b) Registration Statement, if any, including all
exhibits thereto and
including (i) the information contained in the Prospectus filed with the
Commission pursuant to Rule 424(b) under the Act in accordance with Section 5(a)
hereof and deemed by virtue of Rule 430A under the Act to be part of the Initial
Registration Statement at the time it was declared effective and (ii) the
documents incorporated by reference in the Prospectus contained in the Initial
Registration Statement at the time such part of the Initial Registration
Statement became effective, each as amended at the time such part of the Initial
Registration Statement became effective or such part of the Rule 462(b)
Registration Statement, if any, became or hereafter becomes effective, are
hereinafter collectively called the "REGISTRATION STATEMENT"; any reference
herein to the Registration Statement, Basic Prospectus, Prospectus Supplement,
Preliminary Prospectus or Prospectus shall be deemed to refer to and include the
documents incorporated by reference therein pursuant to Item 12 of Form S-3
under the Act, as of the date of such Registration Statement, Basic Prospectus,
Prospectus Supplement, Preliminary Prospectus or Prospectus, as the case may be;
any reference to any amendment or supplement to the Registration Statement,
Basic Prospectus, Prospectus Supplement, Preliminary Prospectus or Prospectus
shall be deemed to refer to and include any documents filed after the date of
such Registration Statement, Basic Prospectus, Prospectus Supplement,
Preliminary Prospectus or Prospectus, as the case may be, under the Securities
Exchange Act of 1934, as amended (the "EXCHANGE ACT"), and incorporated by
reference in such Registration Statement, Basic Prospectus, Prospectus
Supplement, Preliminary Prospectus or Prospectus, as the case may be; and any
reference to any amendment to the Registration Statement shall be deemed to
refer to and include any annual report of the Company filed pursuant to
Section 13(a) or 15(d) of the Exchange Act after the effective date of the
Initial Registration Statement that is incorporated by reference in the
Registration Statement);
(b) No order preventing or suspending the use of any Preliminary
Prospectus has been issued by the Commission, and each Preliminary Prospectus,
at the time of filing thereof, conformed in all material respects to the
requirements of the Act and the rules and regulations of the Commission
thereunder, and did not contain an untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading; PROVIDED, HOWEVER, that this representation and warranty
shall not apply to any statements or omissions made in reliance upon and in
conformity with information furnished in writing to the Company by you expressly
for use therein;
(c) The documents incorporated by reference in the Prospectus, when they
became effective or were filed with the Commission, as the case may be,
conformed in all material respects to the requirements of the Act or the
Exchange Act, as applicable, and the rules and regulations of the Commission
thereunder, and none of such documents contained an untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary to make the statements therein not misleading; and any further
documents so filed and incorporated by reference in the Prospectus or any
further amendment or supplement thereto, when such documents become effective or
are filed with the Commission, as the case may be, will conform in all material
respects to the requirements of the Act or the Exchange Act, as applicable, and
the rules and regulations of the Commission thereunder and will not contain an
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not misleading;
PROVIDED, HOWEVER, that this representation and warranty shall not apply to any
statements or omissions made in reliance upon and in conformity with information
furnished in writing to the Company by you expressly for use therein;
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(d) The Registration Statement conforms, and the Prospectus and any
further amendments or supplements to the Registration Statement or the
Prospectus will conform, in all material respects to the requirements of the Act
and the rules and regulations of the Commission thereunder and do not and will
not, as of the applicable effective date as to the Registration Statement and
any amendment thereto, and as of the applicable filing date as to the Prospectus
and any amendment or supplement thereto, contain an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading; PROVIDED, HOWEVER, that
this representation and warranty shall not apply to any statements or omissions
made in reliance upon and in conformity with information furnished in writing to
the Company by the Underwriter expressly for use therein;
(e) There are no contracts or other documents required to be described in
the Registration Statement or to be filed as exhibits to the Registration
Statement by the Act or by the rules and regulations thereunder which have not
been described or filed as required; the contracts so described in the
Prospectus to which the Company or any of its subsidiaries is a party have been
duly authorized, executed and delivered by the Company and its subsidiaries, as
are party thereto, constitute valid and binding agreements of the Company and
its subsidiaries, as are party thereto, are enforceable against the Company and
its subsidiaries, as are party thereto, in accordance with their respective
terms and are in full force and effect on the date hereof; to the best of the
Company's knowledge, the contracts so described in the Prospectus to which the
Company or any of its subsidiaries is a party are enforceable by the Company and
its subsidiaries, as are party thereto, against the other parties thereto in
accordance with their respective terms; and neither the Company nor any of its
subsidiaries, nor, to the best of the Company's knowledge, any other party is in
breach of or default under any of such contracts, except for such breaches or
defaults that, singly or in the aggregate, would not result in a material
adverse change in or affecting the business, assets, management, financial
condition or results of operations of the Company and its subsidiaries taken as
a whole;
(f) Neither the Company nor any of its subsidiaries has sustained since
the date of the latest audited financial statements included or incorporated by
reference in the Prospectus any material loss or interference with its business
from fire, explosion, flood or other calamity, whether or not covered by
insurance, or from any labor dispute or court or governmental action, order or
decree, otherwise than as set forth in the Prospectus; and, since the respective
dates as of which information is given in the Registration Statement and the
Prospectus, there has not been any change in the capital stock (other than
issuances of Stock pursuant to Company stock option, stock incentive or stock
purchase plans described in the Registration Statement and Prospectus) or
long-term debt (other than as described in the Registration Statement and
Prospectus) of the Company or any of its subsidiaries or any material adverse
change, or any development involving a prospective material adverse change, in
or affecting the business, assets, management, financial position or results of
operations of the Company and its subsidiaries taken as a whole;
(g) None of the Company and its subsidiaries owns any real property; each
of the Company and its subsidiaries has good and marketable title to all
personal property owned by it, 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 or any of its subsidiaries are held under valid, subsisting and
enforceable leases with such exceptions as are not material and do not interfere
with the use made and proposed to be made of such
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property and buildings by the Company and its subsidiaries; the Company and its
subsidiaries own or lease all such properties as are necessary to their
operations as now conducted, except where the failure to so own or lease would
not, singly or in the aggregate, result in a material adverse change in or
affecting the business, assets, management, financial condition or results of
operations of the Company and its subsidiaries taken as a whole;
(h) Each of the Company and its subsidiaries has been duly incorporated
and is validly existing as a corporation in good standing under the laws of its
respective jurisdiction of organization, each with full power and authority
(corporate and other) to own its properties and conduct its business as
described in the Prospectus, and has been duly qualified as a foreign
corporation for the transaction of business and is in good standing under the
laws of each other jurisdiction in which it owns or leases properties or
conducts any business so as to require such qualification, or is subject to no
material liability or disability by reason of the failure to be so qualified in
any such jurisdiction;
(i) The Company has an authorized capitalization as set forth in the
Prospectus, and all of the issued shares of capital stock of the Company have
been duly authorized and validly issued, are fully paid and non-assessable and
conform to the description of the Stock contained in the Prospectus; all of the
issued shares of capital stock of each subsidiary of the Company have been duly
authorized and validly issued, are fully paid and non-assessable and (except for
directors' qualifying shares) are owned directly or indirectly by the Company,
free and clear of all liens, encumbrances, equities or claims except such as are
described in the Prospectus; except as disclosed in or contemplated by the
Prospectus and the consolidated financial statements of the Company, and the
related notes thereto, included in the Prospectus, neither the Company nor any
subsidiary has outstanding any options to purchase, or any preemptive rights or
other rights to subscribe for or to purchase any securities or obligations
convertible into, or any contracts or commitments to issue or sell, shares of
its capital stock or any such options, rights, convertible securities or
obligations; and the description of the Company's stock option and stock
purchase plans and the options or other rights granted and exercised thereunder
set forth in the Prospectus accurately and fairly presents the information
required to be shown with respect to such plans, options and rights;
(j) The unissued Shares to be issued and sold by the Company to the
Underwriters hereunder have been duly authorized and, when issued and delivered
against payment therefor as provided herein, will be validly issued and fully
paid and non-assessable and will conform to the description of the Stock
contained in the Prospectus; no preemptive rights or other rights to subscribe
for or purchase exist with respect to the issuance and sale of the Shares by the
Company pursuant to this Agreement; except to the extent that the exercise
thereof is contemplated by this Agreement and other than (a) holders of the
Common Stock of the Company party to that certain Third Amended and Restated
Investor Rights Agreement, dated as of Xxxxx 0, 0000, (x) the purchaser of a
convertible subordinated note of the Company pursuant to that Registration
Rights Agreement, dated as of May 1, 2001, in connection with that certain
Securities Purchase Agreement of even date therewith, and (c) holders of the
Common Stock of the Company party to that certain Registration Rights Agreement,
dated as of July 31, 2001, entered into in connection with that Proceeds
Agreement of even date therewith, no stockholder of the Company has any right,
which has not been waived, to require the Company to register the sale of any
shares of capital stock owned by such stockholder under the Act in the public
offering contemplated by this Agreement; no stockholder of the Company ,other
than (a) holders of the Common Stock of the Company party to that certain Third
Amended and Restated Investor Rights Agreement, dated as of Xxxxx 0, 0000, (x)
the purchaser of a convertible subordinated note of the Company pursuant to that
Registration
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Rights Agreement, dated as of May 1, 2001, in connection with that certain
Securities Purchase Agreement of even date therewith, and (c) holders of the
Common Stock of the Company party to that certain Registration Rights Agreement,
dated as of July 31, 2001, entered into in connection with that Proceeds
Agreement of even date therewith, has any right to require the Company to
register the sale of any shares of capital stock owned by such stockholder under
the Act in the 180-day period after the date of the Prospectus other than as
described in the Prospectus; and no further approval or authority of the
stockholders or the Board of Directors of the Company will be required for the
issuance and sale of the Shares to be sold by the Company as contemplated
herein;
(k) The Company has full corporate power and authority to enter into this
Agreement; this Agreement has been duly authorized, executed and delivered by
the Company, constitutes a valid and binding obligation of the Company and is
enforceable against the Company in accordance with its terms;
(l) The issue and sale of the Shares by the Company and the compliance by
the Company with all of the provisions of this Agreement and the consummation of
the transactions herein contemplated will not conflict with or result in a
breach or violation of any of the terms or provisions of, or constitute a
default under, any material indenture, mortgage, deed of trust, loan agreement
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 is bound or to
which any of the property or assets of the Company or any of its subsidiaries is
subject, nor will such action result in any violation of the provisions of the
Certificate of Incorporation or By-laws of the Company or any statute or any
order, rule or regulation of any court or governmental agency or body having
jurisdiction over the Company or any of its subsidiaries or any of their
properties; and no consent, approval, authorization, order, filing, registration
or qualification of or with any such court or governmental agency or body is
required for the issue and sale of the Shares or the consummation by the Company
of the transactions contemplated by this Agreement, except the registration
under the Act of the Shares and such consents, approvals, authorizations,
filings, registrations or qualifications as may be required under state
securities or Blue Sky laws in connection with the purchase and distribution of
the Shares by you;
(m) Except as disclosed in the Prospectus, there are no legal or
governmental actions, suits or proceedings pending or, to the best of the
Company's knowledge, threatened to which the Company or any of its subsidiaries
is or may be a party or of which property owned or leased by the Company or any
of its subsidiaries is or may be the subject, which actions, suits or
proceedings are required to be described in the Registration Statement by the
Act or the rules and regulations thereunder or which might, singly or in the
aggregate, prevent or adversely affect the transactions contemplated by this
Agreement or result in a material adverse change in or affecting the business,
assets, management, financial position (after giving effect to the offering of
the Shares) or results of operations of the Company and its subsidiaries taken
as a whole; and, to the best of the Company's knowledge, no such proceedings are
threatened or contemplated by governmental authorities or others; no labor
disturbance by the employees of the Company or any of its subsidiaries exists
or, to the knowledge of the Company, is imminent which might be expected to
affect adversely the business, assets, management, financial position or results
of operations of the Company and its subsidiaries taken as a whole; and neither
the Company nor any of its subsidiaries is a party or subject to the provisions
of any injunction, judgment, decree or order of any court, regulatory body,
administrative agency or other governmental body;
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(n) Neither the Company nor any of its subsidiaries is in violation of its
Certificate of Incorporation or By-laws or any similar organizational documents
or in default in the performance or observance of any obligation, agreement,
covenant or condition contained in any indenture, mortgage, deed of trust, loan
agreement, lease or other agreement or instrument to which it is a party or by
which it or any of its properties may be bound except for such violations or
defaults that would not, singly or in the aggregate, result in a material
adverse change in or affecting the business, assets, management, financial
position or results of operations of the Company and its subsidiaries taken as a
whole;
(o) The statements set forth in the Prospectus under the caption
"Description of Capital Stock", insofar as they purport to constitute a summary
of the terms of the Stock and under the caption "Underwriting", insofar as they
purport to describe the provisions of the laws and documents referred to
therein, are accurate, complete and fair;
(p) The Company is not and, after giving effect to the offering and sale
of the Shares, will not be an "investment company", as such term is defined in
the Investment Company Act of 1940, as amended (the "INVESTMENT COMPANY ACT");
(q) Neither the Company nor any of its affiliates does business with the
government of Cuba or with any person or affiliate located in Cuba within the
meaning of Section 517.075, Florida Statutes;
(r) The Company and its subsidiaries possess all licenses, certificates,
authorizations or permits issued by the appropriate governmental or regulatory
agencies or authorities that are necessary to enable them to own, lease and
operate their respective properties and to carry on their respective businesses
as currently conducted and which are material to the Company and its
subsidiaries, and neither the Company nor any of its subsidiaries has received
any notice of proceedings relating to the revocation or modification of any such
license, certificate, authorization or permit which, singly or in the aggregate,
would be expected to materially and adversely affect the business, assets,
management, financial position or results of operations of the Company and its
subsidiaries taken as a whole;
(s) The consolidated financial statements and schedules of the Company,
and the related notes thereto, included in the Registration Statement and the
Prospectus present fairly in all material respects the financial position of the
Company as of the respective dates of such financial statements and schedules,
and the results of operations and cash flows of the Company for the respective
periods covered thereby; such statements, schedules and related notes have been
prepared in accordance with generally accepted accounting principles applied on
a consistent basis as certified by the independent public accountants named in
paragraph (t) below; no other financial statements or schedules are required to
be included in the Registration Statement; and the selected financial data set
forth in the Prospectus under the captions "Summary Financial Information,"
"Capitalization" and "Selected Financial Data" fairly present the information
set forth therein on the basis stated in the Registration Statement;
(t) Ernst & Young LLP, who have certified certain financial statements of
the Company and its subsidiaries, are independent public accountants as required
by the Act and the rules and regulations of the Commission thereunder;
(u) The Company and its subsidiaries are in compliance with any and all
applicable foreign, federal, state and local laws and regulations relating to
the protection of human health and safety, including without limitation those
relating to occupational safety and health, the
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environment or hazardous or toxic substances or wastes, pollutants or
contaminants, including without limitation those relating to the storage,
handling or transportation of hazardous or toxic materials (collectively,
"ENVIRONMENTAL LAWS"), except where such noncompliance with Environmental Laws
would not, singly or in the aggregate, be expected to have a material adverse
effect on the business, assets, management, financial position or results of
operations of the Company and its subsidiaries taken as a whole. The Company, in
its reasonable judgment, has concluded that, based upon facts and circumstances
existing as of the date hereof, any 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 permit, license or approval, any related constraints
on operating activities and any potential liabilities to third parties) would
not, singly or in the aggregate, reasonably be expected to have a material
adverse effect on the business, assets, management, financial position or
results of operation of the Company and its subsidiaries taken as a whole;
(v) Except as disclosed in the Prospectus, the Company and its
subsidiaries own or have the right to use all trademarks, trade names, patent
rights, copyrights, licenses, trade secrets, know-how, intellectual property and
other similar rights necessary to conduct their business as now conducted; the
Company has no knowledge of any infringement by the Company or any of its
subsidiaries of any trademark, trade name, patent, copyright, license, trade
secret, know-how, intellectual property or other similar rights of others; and
there are no claims of infringement being made against the Company or any of its
subsidiaries regarding trademark, trade name, patent, copyright, license, trade
secret, know-how, intellectual property or other similar rights which could,
singly or in the aggregate, have a material adverse effect on the business,
assets, management, financial position or results of operations of the Company
and its subsidiaries taken as a whole; the Company has no knowledge of any
infringement by any third party of the trademark, trade name, patent, copyright,
license, trade secret, know-how, intellectual property or other similar rights
of the Company or any of its subsidiaries; none of the technology employed by
the Company or any of its subsidiaries has been obtained or is being used by the
Company or any of its subsidiaries in violation of any contractual or fiduciary
obligation binding on the Company, its subsidiaries or any of their respective
directors or executive officers or, to the best of the Company's knowledge, any
of their respective employees or consultants or otherwise in violation of the
rights of any person; none of the Company, its subsidiaries and, to the best of
the Company's knowledge, any of its employees has received any written or, to
the Company's knowledge, oral communications alleging that the Company or any of
its subsidiaries has violated or, by conducting its business as proposed, would
violate any of the intellectual property or proprietary rights of any other
person except for such violations as would not, singly or in the aggregate, have
a material adverse effect on the business, assets, management, financial
position or results of operations of the Company and its subsidiaries taken as a
whole; neither the execution nor delivery of this Agreement, nor the operation
of the business of the Company and its subsidiaries by the employees of the
Company or its subsidiaries, nor the conduct of the business of the Company and
its subsidiaries as proposed, will, to the Company's knowledge, result in a
breach or violation of the terms, conditions or provisions of, or constitute a
default under, any contract, covenant or instrument under which any of such
employees is now obligated except for such breaches, violations or defaults as
would not, singly or in the aggregate, have a material adverse effect on the
business, assets, management, financial position or results of operations of the
Company and its subsidiaries taken as a whole; and the Company and its
subsidiaries have taken and will maintain reasonable measures to prevent the
unauthorized dissemination or publication of its confidential information or the
confidential information of third parties in its possession;
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(w) The Company and each of its subsidiaries have filed all necessary
federal, state, local and foreign income and franchise tax returns and have paid
all taxes shown as due thereon; and the Company has no knowledge of any tax
deficiencies which has been or might be asserted or threatened against the
Company or any of its subsidiaries which could, singly or in the aggregate,
materially and adversely affect the business, assets, management, financial
position or results of operations of the Company and its subsidiaries taken as a
whole;
(x) Each of the Company and its subsidiaries maintains insurance of the
types and in the amounts which it reasonably deems adequate for its business,
including, but not limited to, insurance covering real and personal property
owned or leased by the Company and its subsidiaries against theft, damage,
destruction, acts of vandalism and all other risks customarily insured against,
all of which insurance is in full force and effect;
(y) Neither the Company nor any of its subsidiaries has at any time during
the last five years (i) made any unlawful contribution to any candidate for
foreign office, or failed to disclose fully any contribution in violation of
law, or (ii) made any payment to any foreign, federal or state governmental
officer or official, or other person charged with similar public or quasi-public
duties, other than payments required or permitted by the laws of the United
States or any jurisdiction thereof;
(z) The Company has not taken and will not take, directly or indirectly
through any of its directors, officers or controlling persons, any action which
is designed to or which has constituted or which might reasonably be expected to
cause or result in stabilization or manipulation of the price of any security of
the Company to facilitate the sale or resale of the Shares;
(aa) The Company has filed a registration statement pursuant to
Section 12(g) of the Exchange Act to register the Stock, has filed an
application to list the Stock on the National Association of Securities Dealers
Automated Quotations National Market System ("NASDAQ") and has received
notification that the listing has been approved; and
(bb) The Company meets the standards of eligibility to register on Form S-3
pursuant to the standards for such Form S-3 as in effect prior to October 21,
1992.
2. Subject to the terms and conditions herein set forth, the Company agrees to
sell to the Underwriter, and the Underwriter agrees to purchase from the Company
at a purchase price per share of $7.42, all of the Shares.
3. We understand you propose to offer the Shares for sale upon the terms and
conditions set forth in the Prospectus.
4. (a) The Shares to be purchased by you hereunder, in definitive form, and
in such authorized denominations and registered in such names as Xxxxxxx, Xxxxx
& Co. may request upon at least forty-eight hours' prior notice to the Company
shall be delivered by or on behalf of the Company to Xxxxxxx, Sachs & Co.,
through the facilities of the Depository Trust Company ("DTC"), for your
account, against payment by or on behalf of the Underwriter of the purchase
price therefor by wire transfer of Federal (same-day) funds to the account
specified by the Company and the Custodian, to Xxxxxxx, Xxxxx & Co. at least
forty-eight hours in advance. The Company will cause the certificates
representing the Shares to be made available for checking and packaging at least
twenty-four hours prior to the Time of Delivery (as defined below) with respect
thereto at the office of DTC or its designated custodian (the
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"DESIGNATED OFFICE"). The time and date of such delivery and payment shall be,
with respect to the Shares, 9:30 a.m., New York City time, on September 26, 2003
or such other time and date as Xxxxxxx, Xxxxx & Co. and the Company may agree
upon in writing. Such time and date for delivery of the Shares is herein called
the "TIME OF DELIVERY".
(b) The documents to be delivered at the Time of Delivery by or on behalf
of the parties hereto pursuant to Section 7 hereof, including the cross receipt
for the Shares and any additional documents requested by the Underwriters
pursuant to Section 7 hereof, will be delivered at the offices of Xxxxxxx
XxXxxxxxx LLP, Xxxxxx, Xxxxxxxxxxxxx 00000 (the "CLOSING LOCATION"), and the
Shares will be delivered at the Designated Office, all at such Time of Delivery.
A meeting will be held at the Closing Location at 6:00 p.m., New York City time,
on the New York Business Day next preceding such Time of Delivery, at which
meeting the final drafts of the documents to be delivered pursuant to the
preceding sentence will be available for review by the parties hereto. For the
purposes of this Section 4, "NEW YORK BUSINESS DAY" shall mean each Monday,
Tuesday, Wednesday, Thursday and Friday which is not a day on which banking
institutions in New York are generally authorized or obligated by law or
executive order to close.
5. The Company agrees with the Underwriter:
(a) To prepare the Prospectus in a form approved by you and to file such
Prospectus pursuant to Rule 424(b) under the Act not later than the Commission's
close of business on the second business day following the execution and
delivery of this Agreement, or, if applicable, such earlier time as may be
required by Rule 430A(a)(3) under the Act; to make no further amendment or any
supplement to the Registration Statement or Prospectus prior to the Time of
Delivery which shall be disapproved by you promptly after reasonable notice
thereof; to advise you, promptly after it receives notice thereof, of the time
when any amendment to the Registration Statement has been filed or becomes
effective or any supplement to the Prospectus or any amended Prospectus has been
filed and to furnish you with copies thereof; to file promptly all reports and
any definitive proxy or information statements required to be filed by the
Company with the Commission pursuant to Section 13(a), 13(c), 14 or 15(d) of the
Exchange Act subsequent to the date of the Prospectus and for so long as the
delivery of a prospectus is required in connection with the offering or sale of
the Shares; to advise you, promptly after it receives notice thereof, of the
issuance by the Commission of any stop order or of any order preventing or
suspending the use of any Preliminary Prospectus or the Prospectus, of the
suspension of the qualification of the Shares for offering or sale in any
jurisdiction, of the initiation or threatening of any proceeding for any such
purpose, or of any request by the Commission for the amending or supplementing
of the Registration Statement or Prospectus or for additional information; and,
in the event of the issuance of any stop order or of any order preventing or
suspending the use of any Preliminary Prospectus or the Prospectus or suspending
any such qualification, promptly to use its best efforts to obtain the
withdrawal of such order;
(b) Promptly from time to time to take such action as you may reasonably
request to qualify the Shares for offering and sale under the securities laws of
such jurisdictions as you may reasonably request and to comply with such laws so
as to permit the continuance of sales and dealings therein in such jurisdictions
for as long as may be necessary to complete the distribution of the Shares,
provided that in connection therewith the Company shall not be required to
qualify as a foreign corporation or to file a general consent to service of
process in any jurisdiction;
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(c) Prior to 10:00 A.M., New York City time, on the New York Business Day
next succeeding the date of this Agreement and from time to time, to furnish you
with written and electronic copies of the Prospectus in New York City in such
quantities as you may reasonably request, and, if the delivery of a prospectus
is required under the Act at any time prior to the expiration of nine months
after the time of issue of the Prospectus in connection with the offering or
sale of the Shares and if at such time any event shall have occurred as a result
of which the Prospectus as then amended or supplemented would include an untrue
statement of a material fact or omit to state any material fact necessary in
order to make the statements therein, in the light of the circumstances under
which they were made when such Prospectus is delivered, not misleading, or, if
for any other reason it shall be necessary during such period to amend or
supplement the Prospectus or to file under the Exchange Act any document
incorporated by reference in the Prospectus in order to comply with the Act or
the Exchange Act, to notify you and upon your request to file such document and
to prepare and furnish without charge to you and to any dealer in securities as
many written and electronic copies as you may from time to time reasonably
request of an amended Prospectus or a supplement to the Prospectus which will
correct such statement or omission or effect such compliance, and in case you
are required under the Act to deliver a prospectus in connection with sales of
any of the Shares at any time nine months or more after the time of issue of the
Prospectus, upon your request but at your expense, to prepare and deliver to you
as many written and electronic copies as you may request of an amended or
supplemented Prospectus complying with Section 10(a)(3) of the Act;
(d) To make generally available to its securityholders as soon as
practicable, but in any event not later than eighteen months after the effective
date of the Registration Statement (as defined in Rule 158(c) under the Act), an
earnings statement of the Company and its subsidiaries (which need not be
audited) complying with Section 11(a) of the Act and the rules and regulations
thereunder (including, at the option of the Company, Rule 158);
(e) During the period beginning from the date hereof and continuing to and
including the date sixty (60) days after the date of the Prospectus, not to
offer, sell, contract to sell or otherwise dispose of, except as provided
hereunder any securities of the Company that are substantially similar to the
Shares, including but not limited to any securities that are convertible into or
exchangeable for, or that represent the right to receive, Stock or any such
substantially similar securities (other than (i) pursuant to employee stock
option, stock incentive or stock purchase plans existing on, upon the exercise
of securities that represent the right to receive Stock outstanding as of, or
upon the conversion or exchange of convertible or exchangeable securities
outstanding as of, the date of this Agreement or (ii) the issuance of shares of
stock from escrow in connection with the acquisition of TTI, as described in the
Prospectus), without your prior written consent;
(f) To furnish to its stockholders within the time period prescribed by
the Exchange Act, and the rules and regulations thereunder, an annual report
(including a balance sheet and statements of income, stockholders' equity and
cash flows of the Company and its consolidated subsidiaries certified by
independent public accountants) and, within the time periods prescribed by the
Exchange Act and the rules and regulations thereunder (beginning with the fiscal
quarter ending after the effective date of the Registration Statement), to make
available to its stockholders consolidated summary financial information of the
Company and its subsidiaries for such quarter in reasonable detail;
(g) During a period of five years from the effective date of the
Registration Statement, to furnish to you upon request copies of all reports or
other communications
-10-
(financial or other) furnished to stockholders, and to deliver to you (i) as
soon as they are available, copies of any reports and financial statements
furnished to or filed with the Commission or any national securities exchange on
which any class of securities of the Company is listed; and (ii) subject to your
obligations under applicable law, such additional information concerning the
business and financial condition of the Company as you may from time to time
reasonably request (such financial statements to be on a consolidated basis to
the extent the accounts of the Company and its subsidiaries are consolidated in
reports furnished to its stockholders generally or to the Commission);
(h) To use the net proceeds received by it from the sale of the Shares
pursuant to this Agreement in the manner specified in the Prospectus under the
caption "Use of Proceeds" and in a manner such that the Company will not become
an "investment company" as that term is defined in the Investment Company Act;
(i) If the Company elects to rely upon Rule 462(b), the Company shall file
a Rule 462(b) Registration Statement with the Commission in compliance with
Rule 462(b) by 10:00 P.M., Washington, D.C. time, on the date of this Agreement,
and the Company shall at the time of filing either pay to the Commission the
filing fee for the Rule 462(b) Registration Statement or give irrevocable
instructions for the payment of such fee pursuant to Rule 111(b) under the Act;
(j) Not to grant options, warrants or other rights to purchase shares of
Stock that would become exercisable (other than in connection with a "change of
control" of the Company) during the period beginning on the date hereof and
continuing to and including the date 90 days after the date of the Prospectus,
other than (i) under the 2000 Employee Stock Purchase Plan, (ii) options or
rights granted, or that may be granted, in connection with the tender offer by
the Company as described in its Tender Offer Statement, as amended, on Schedule
TO originally filed with the Commission on October 16, 2002 and (iii) such
options, warrants or other rights granted to persons who, prior to such grant,
execute agreements in form and substance satisfactory to you; and
(k) Upon your request to furnish, or cause to be furnished, to you an
electronic version of the trademarks, servicemarks and corporate logo of the
Company for use on the website, if any, operated by you for the purpose of
facilitating the on-line offering of the Shares (the "License"); PROVIDED,
HOWEVER, that the License shall be non-exclusive, shall not provide for the
right to sub-license, shall be limited solely for the purpose described above,
is granted without any fee and may not be assigned or transferred to any person
and shall terminate upon consummation of the public offering contemplated by the
Prospectus.
6. The Company covenants and agrees with you that the Company will pay or
cause to be paid the following: (i) the fees, disbursements and expenses of the
Company's counsel and accountants in connection with the registration of the
Shares under the Act and all other expenses in connection with the preparation,
printing and filing of the Registration Statement, any Preliminary Prospectus
and the Prospectus and amendments and supplements thereto and the mailing and
delivering of copies thereof; (ii) the cost of printing or producing any
Agreement among Underwriters, this Agreement, any Blue Sky Memorandum, closing
documents (including any compilations thereof) and any other documents in
connection with the offering, purchase, sale and delivery of the Shares, and the
fees and disbursements of your counsel in connection with securing any required
review by the National Association of Securities Dealers, Inc. of the terms of
the sale of the Shares; (iii) all expenses in connection with the qualification
of the Shares for offering and sale under state securities laws as provided in
Section 5(b)
-11-
hereof, including the fees and disbursements of your counsel in connection with
such qualification and in connection with the Blue Sky survey; (iv) all fees and
expenses in connection with listing the Shares on the NASDAQ; (v) the filing
fees incident to securing any required review by the National Association of
Securities Dealers, Inc. of the terms of the sale of the Shares; (vi) the cost
of preparing stock certificates; (vii) the cost and charges of any transfer
agent or registrar; (viii) all other costs and expenses incident to the
performance of its obligations hereunder which are not otherwise specifically
provided for in this Section. It is understood, however, that, (x) except as
provided in this Section, and Sections 8 and 11 hereof, you will pay all of your
own costs and expenses, including the fees of your counsel, stock transfer taxes
on resale of any of the Shares by you, and any advertising expenses connected
with any offers they may make, and (y) other than with respect to filing or
similar fees, the maximum liability of the Company under clauses (ii) and (iii)
above shall be $20,000.
7. Your obligations hereunder, as to the Shares to be delivered at the Time of
Delivery, shall be subject, in your discretion, to the condition that all
representations and warranties and other statements of the Company herein are,
at and as of such Time of Delivery, true and correct, the condition that the
Company shall have performed all of its obligations hereunder theretofore to be
performed, and the following additional conditions:
(a) The Prospectus shall have been filed with the Commission pursuant to
Rule 424(b) within the applicable time period prescribed for such filing by the
rules and regulations under the Act and in accordance with Section 5(a) hereof;
if the Company has elected to rely upon Rule 462(b), the Rule 462(b)
Registration Statement shall have become effective by 10:00 P.M., Washington,
D.C. time, on the date of this Agreement; no stop order suspending the
effectiveness of the Registration Statement or any part thereof shall have been
issued and no proceeding for that purpose shall have been initiated or
threatened by the Commission; and all requests for additional information on the
part of the Commission shall have been complied with to your reasonable
satisfaction;
(b) Ropes & Xxxx LLP, counsel for the Underwriter, shall have furnished to
you their written opinion, addressed to you and dated such Time of Delivery, in
form and substance satisfactory to you and such counsel shall have received such
papers and information as they may reasonably request to enable them to pass
upon such matters;
(c) Xxxxxxx XxXxxxxxx LLP, counsel for the Company, shall have furnished
to you their written opinion, addressed to you and dated such Time of Delivery,
in form and substance satisfactory to you;
(d) On the date of the Prospectus at a time prior to the execution of this
Agreement, at 9:30 a.m., New York City time, on the effective date of any
post-effective amendment to the Registration Statement filed subsequent to the
date of this Agreement and also at the Time of Delivery, Ernst & Young LLP shall
have furnished to you a letter or letters, dated the respective dates of
delivery thereof, in form and substance satisfactory to you to the effect set
forth in Annex I hereto ;
(e) (i) Neither the Company nor any of its subsidiaries shall have
sustained since the date of the latest audited financial statements included or
incorporated by reference in the Prospectus any loss or interference with its
business from fire, explosion, flood or other calamity, whether or not covered
by insurance, or from any labor dispute or court or governmental action, order
or decree, otherwise than as set forth or contemplated in the Prospectus, and
(ii) since the respective dates as of which information is given in the
-12-
Prospectus there shall not have been any change in the capital stock or
long-term debt of the Company or any of its subsidiaries or any change, or any
development involving a prospective change, in or affecting the business,
assets, management, financial position, stockholders' equity or results of
operations of the Company and its subsidiaries taken as a whole, otherwise than
as set forth or contemplated in the Prospectus, the effect of which, in any such
case described in clause (i) or (ii), is in the judgment of the Representatives
so material and adverse as to make it impracticable or inadvisable to proceed
with the public offering or the delivery of the Shares being delivered at such
Time of Delivery on the terms and in the manner contemplated in the Prospectus;
(f) On or after the date hereof there shall not have occurred any of the
following: (i) a suspension or material limitation in trading in securities
generally on the New York Stock Exchange or on NASDAQ; (ii) a suspension or
material limitation in trading in the Company's securities on NASDAQ; (iii) a
general moratorium on commercial banking activities declared by either Federal
or New York or Massachusetts state authorities; or (iv) the outbreak or
escalation of hostilities involving the United States or the declaration by the
United States of a national emergency or war or (v) the occurrence of any other
calamity or crisis or any change in financial, political or economic conditions
in the United States or elsewhere; if the effect of any such event specified in
clause (iv) or (v) in your judgment makes it impracticable or inadvisable to
proceed with the public offering or the delivery of the Shares on the terms and
in the manner contemplated in the Prospectus as first amended or supplemented
relating to the Shares;
(g) The Stock shall have been duly listed for quotation on NASDAQ;
(h) The Company has obtained and delivered to the Underwriter executed
copies of an agreement from each of the directors and executive officers of the
Company, in form and substance previously agreed to by you and attached hereto
as Exhibit A;
(i) The Company shall have complied with the provisions of Section 5(c)
hereof with respect to the furnishing of prospectuses on the New York Business
Day next succeeding the date of this Agreement;
(j) The Company shall have furnished or caused to be furnished to you at
such Time of Delivery certificates of officers of the Company satisfactory to
you as to the accuracy of the representations and warranties of the Company
herein at and as of such Time of Delivery, as to the performance by the Company
of all of their respective obligations hereunder to be performed at or prior to
such Time of Delivery, as to the matters set forth in subsections (a) and (e) of
this Section and as to such other matters as you may reasonably request.
8. (a) The Company will indemnify and hold you harmless against any losses,
claims, damages or liabilities, joint or several, to which you may become
subject, under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon an
untrue statement or alleged untrue statement of a material fact contained in any
Preliminary Prospectus, the Registration Statement or the Prospectus, or any
amendment or supplement thereto, or arise out of or are based upon the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, and will
reimburse you for any legal or other expenses reasonably incurred by you in
connection with investigating or defending any such action or claim as such
expenses are incurred; PROVIDED, HOWEVER, that the Company shall not be liable
in any such case to the extent that any such loss, claim, damage or liability
arises out of or is based upon an untrue statement or alleged untrue statement
or omission or alleged
-13-
omission made in any Preliminary Prospectus, the Registration Statement or the
Prospectus or any such amendment or supplement in reliance upon and in
conformity with written information furnished to the Company by you expressly
for use therein.
(b) You will indemnify and hold harmless the Company against any losses,
claims, damages or liabilities to which the Company may become subject, under
the Act or otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon an untrue statement
or alleged untrue statement of a material fact contained in any Preliminary
Prospectus, the Registration Statement or the Prospectus, or any amendment or
supplement thereto, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, in each case to the
extent, but only to the extent, that such untrue statement or alleged untrue
statement or omission or alleged omission was made in any Preliminary
Prospectus, the Registration Statement or the Prospectus or any such amendment
or supplement in reliance upon and in conformity with written information
furnished to the Company by you expressly for use therein; and will reimburse
the Company for any legal or other expenses reasonably incurred by the Company
in connection with investigating or defending any such action or claim as such
expenses are incurred.
(c) Promptly after receipt by an indemnified party under subsection (a) or
(b) above of notice of the commencement of any action, suit or proceeding, such
indemnified party shall, if a claim in respect thereof is to be made against the
indemnifying party under such subsection, notify the indemnifying party in
writing of the commencement thereof; but the omission so to notify the
indemnifying party shall not relieve it from any liability which it may have to
any indemnified party otherwise than under such subsection. In case any such
action, suit or proceeding shall be brought against any indemnified party and it
shall notify the indemnifying party of the commencement thereof, the
indemnifying party shall be entitled to participate therein and, to the extent
that it shall wish, jointly with any other indemnifying party similarly
notified, to assume the defense thereof, with counsel satisfactory to such
indemnified party (who shall not, except with the consent of the indemnified
party, be counsel to the indemnifying party), and, after notice from the
indemnifying party to such indemnified party of its election so to assume the
defense thereof, the indemnifying party shall not be liable to such indemnified
party under such subsection for any legal expenses of other counsel or any other
expenses, in each case subsequently incurred by such indemnified party, in
connection with the defense thereof other than reasonable costs of
investigation. No indemnifying party shall, without the written consent of the
indemnified party, effect the settlement or compromise of, or consent to the
entry of any judgment with respect to, any pending or threatened action, suit,
proceeding or claim in respect of which indemnification or contribution may be
sought hereunder (whether or not the indemnified party is an actual or potential
party to such action, suit, proceeding or claim) unless such settlement,
compromise or judgment (i) includes an unconditional release of the indemnified
party from all liability arising out of such action, suit, proceeding or claim
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 any indemnified party.
(d) If the indemnification provided for in this Section 8 is unavailable
to or insufficient to hold harmless an indemnified party under subsection (a) or
(b) above in respect of any losses, claims, damages or liabilities (or actions
in respect thereof) referred to therein, then each indemnifying party shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages or liabilities (or actions in respect thereof)
in such proportion as is appropriate to reflect the relative benefits received
by the Company on the one hand and the Underwriter on the other from the
offering of the Shares. If, however, the
-14-
allocation provided by the immediately preceding sentence is not permitted by
applicable law or if the indemnified party failed to give the notice required
under subsection (c) above, then each indemnifying party shall contribute to
such amount paid or payable by such indemnified party in such proportion as is
appropriate to reflect not only such relative benefits but also the relative
fault of the Company on the one hand and the Underwriter on the other in
connection with the statements or omissions which resulted in such losses,
claims, damages or liabilities (or actions in respect thereof), as well as any
other relevant equitable considerations. The relative benefits received by the
Company on the one hand and the Underwriter on the other shall be deemed to be
in the same proportion as the total net proceeds from the offering (before
deducting expenses) received by the Company bear to the total underwriting
discounts and commissions received by the Underwriter, in each case as set forth
in the table on the cover page of the Prospectus. The relative fault 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 on the one hand
or the Underwriter on the other and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission. The Company and the Underwriter agree that it would not be just and
equitable if contributions pursuant to this subsection (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 above in this subsection
(d). The amount paid or payable by an indemnified party as a result of the
losses, claims, damages or liabilities (or actions in respect thereof) referred
to above in this subsection (d) shall be deemed to include any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this subsection (d), the Underwriter shall not be required to
contribute any amount in excess of the amount by which the total price at which
the Shares underwritten by it and distributed to the public were offered to the
public exceeds the amount of any damages which you have otherwise been required
to pay by reason of such untrue or alleged untrue statement or omission or
alleged omission. No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation.
(e) The obligations of the Company under this Section 8 shall be in
addition to any liability which the Company may otherwise have and shall extend,
upon the same terms and conditions, to each person, if any, who controls you
within the meaning of the Act; your obligations under this Section 8 shall be in
addition to any liability which you may otherwise have and shall extend, upon
the same terms and conditions, to each officer and director of the Company
(including any person who, with his or her consent, is named in the Registration
Statement as about to become a director of the Company) and to each person, if
any, who controls the Company within the meaning of the Act.
9. The respective indemnities, agreements, representations, warranties and
other statements of the Company and the Underwriter, as set forth in this
Agreement or made by or on behalf of them, respectively, pursuant to this
Agreement, shall remain in full force and effect, regardless of any
investigation (or any statement as to the results thereof) made by or on behalf
of the Underwriter or any controlling person of the Underwriter, or the Company,
or any officer or director or controlling person of the Company, and shall
survive delivery of and payment for the Shares.
10. If for any reason, any Shares are not delivered by or on behalf of the
Company as provided herein, the Company will reimburse you for all out-of-pocket
expenses approved in writing by you, including fees and disbursements of
counsel, in each case reasonably incurred
-15-
by you in making preparations for the purchase, sale and delivery of the Shares
not so delivered, but the Company shall then be under no further liability to
you with respect to Shares not so delivered except as provided in Sections 6 and
8 hereof.
11. All statements, requests, notices and agreements hereunder shall be in
writing, and if to the Underwriter shall be delivered or sent by mail, telex or
facsimile transmission to Xxxxxxx, Xxxxx & Co., Xxx Xxxxxxx Xxxxx, 0xx Xxxxx,
Xxx Xxxx, Xxx Xxxx 00000, Attention: Registration Department; and if to the
Company shall be delivered or sent by mail to the address of the Company set
forth in the Registration Statement, Attention: Secretary. Any such statements,
requests, notices or agreements shall take effect upon receipt thereof. Each
party to this Agreement may change such address for notices by sending to the
other parties to this Agreement written notice of a new address for such
purpose.
12. This Agreement shall be binding upon, and inure solely to the benefit of,
the Underwriter and the Company and, to the extent provided in Sections 8 and 9
hereof, the officers and directors of the Company and each person who controls
the Company or the Underwriter, and their respective heirs, executors,
administrators, successors and assigns, and no other person shall acquire or
have any right under or by virtue of this Agreement. No purchaser of any of the
Shares from the Underwriter shall be deemed a successor or assign by reason
merely of such purchase.
13. Time shall be of the essence of this Agreement. As used herein, the term
"business day" shall mean any day when the Commission's office in Washington,
D.C. is open for business.
14. This Agreement shall be governed by and construed in accordance with the
laws of the State of New York.
15. This Agreement may be executed by any one or more of the parties hereto in
any number of counterparts, each of which shall be deemed to be an original, but
all such counterparts shall together constitute one and the same instrument.
16. This Agreement constitutes the entire agreement and supersedes all other
prior and contemporaneous agreements and undertakings, both written and oral,
among the parties hereto with regard to the subject matter hereof.
-16-
If the foregoing is in accordance with your understanding, please sign and
return to us one for the Company and one for you plus one for each counsel and
the Custodian counterparts hereof, and upon the acceptance hereof by you, this
letter and such acceptance hereof shall constitute a binding agreement between
you and the Company.
Very truly yours,
Sonus Networks, Inc.
By: /s/ Xxxxxx X. Xxxxx
---------------------------------------
Name: Xxxxxx X. Xxxxx
Title: President and Chief Executive
Officer
Accepted as of the date hereof:
/s/ Xxxxxxx, Xxxxx & Co.
-----------------------------------
(Xxxxxxx, Sachs & Co.)
-17-
ANNEX I
Pursuant to Section 7(d) of the Underwriting Agreement, the accountants
shall furnish letters to you to the effect that:
(i) They are independent certified public accountants with respect
to the Company and its subsidiaries within the meaning of the Act and the
applicable published rules and regulations thereunder;
(ii) In their opinion, the financial statements and any
supplementary financial information and schedules (and, if applicable,
financial forecasts and/or pro forma financial information) examined by
them and included or incorporated by reference in the Registration
Statement or the Prospectus comply as to form in all material respects with
the applicable accounting requirements of the Act or the Exchange Act, as
applicable, and the related published rules and regulations thereunder;
and, if applicable, they have made a review in accordance with standards
established by the American Institute of Certified Public Accountants of
the consolidated interim financial statements, selected financial data, pro
forma financial information, financial forecasts and/or condensed financial
statements derived from audited financial statements of the Company for the
periods specified in such letter, as indicated in their reports thereon,
copies of which have been furnished to the representatives of the
Underwriters (the "Representatives") and are attached hereto;
(iii) They have made a review in accordance with standards
established by the American Institute of Certified Public Accountants of
the unaudited condensed consolidated statements of income, consolidated
balance sheets and consolidated statements of cash flows included in the
Prospectus and/or included in the Company's quarterly reports on Form 10-Q
incorporated by reference into the Prospectus as indicated in their reports
thereon copies of which are attached hereto; and on the basis of specified
procedures including inquiries of officials of the Company who have
responsibility for financial and accounting matters regarding whether the
unaudited condensed consolidated financial statements referred to in
paragraph (vi)(A)(i) below comply as to form in all material respects with
the applicable accounting requirements of the Act and the Exchange Act and
the related published rules and regulations, nothing came to their
attention that caused them to believe that the unaudited condensed
consolidated financial statements do not comply as to form in all material
respects with the applicable accounting requirements of the Act and the
Exchange Act and the related published rules and regulations;
(iv) The unaudited selected financial information with respect to
the consolidated results of operations and financial position of the
Company for the most recent fiscal years included or incorporated by
reference in Item 6 of the Company's Annual Report on Form 10-K for the
most recent fiscal year agrees with the corresponding amounts (after
restatement where applicable) in the audited consolidated financial
statements for such fiscal year which were included or incorporated by
reference in the Company's Annual Reports on Form 10-K for such fiscal
years;
(v) They have compared the information in the Prospectus under
selected captions with the disclosure requirements of Regulation S-K and on
the basis of limited procedures specified in such letter nothing came to
their attention as a result of the foregoing procedures that caused them to
believe that this information does not conform in all material respects
with the disclosure requirements of Items 301, 302, 402 and 503(d),
respectively, of Regulation S-K;
-1-
(vi) On the basis of limited procedures, not constituting an
examination in accordance with generally accepted auditing standards,
consisting of a reading of the unaudited financial statements and other
information referred to below, a reading of the latest available interim
financial statements of the Company and its subsidiaries, inspection of the
minute books of the Company and its subsidiaries since the date of the
latest audited financial statements included or incorporated by reference
in the Prospectus, inquiries of officials of the Company and its
subsidiaries responsible for financial and accounting matters and such
other inquiries and procedures as may be specified in such letter, nothing
came to their attention that caused them to believe that:
(A) (i) the unaudited condensed consolidated statements of
income, consolidated balance sheets and consolidated statements of
cash flows included in the Prospectus and/or included or incorporated
by reference in the Company's Quarterly Reports on Form 10-Q
incorporated by reference in the Prospectus do not comply as to form
in all material respects with the applicable accounting requirements
of the Exchange Act as it applies to Form 10-Q and the related
published rules and regulations, or (ii) any material modifications
should be made to the unaudited condensed consolidated statements of
income, consolidated balance sheets and consolidated statements of
cash flows included in the Prospectus or included in the Company's
Quarterly Reports on Form 10-Q incorporated by reference in the
Prospectus, for them to be conformity with generally accepted
accounting principles;
(B) any other unaudited income statement data and balance
sheet items included in the Prospectus do not agree with the
corresponding items in the unaudited consolidated financial statements
from which such data and items were derived, and any such unaudited
data and items were not determined on a basis substantially consistent
with the basis for the corresponding amounts in the audited
consolidated financial statements included or incorporated by
reference in the Company's Annual Report on Form 10-K for the most
recent fiscal year;
(C) the unaudited financial statements which were not
included in the Prospectus but from which were derived the unaudited
condensed financial statements referred to in clause (A) and any
unaudited income statement data and balance sheet items included in
the Prospectus and referred to in clause (B) were not determined on a
basis substantially consistent with the basis for the audited
financial statements included or incorporated by reference in the
Company's Annual Report on Form 10-K for the most recent fiscal year;
(D) any unaudited pro forma consolidated condensed financial
statements included or incorporated by reference in the Prospectus do
not comply as to form in all material respects with the applicable
accounting requirements of the Act and the published rules and
regulations thereunder or the pro forma adjustments have not been
properly applied to the historical amounts in the compilation of those
statements;
(E) as of a specified date not more than five days prior to
the date of such letter, there have been any changes in the
consolidated capital stock (other than issuances of capital stock upon
exercise of options and stock appreciation rights, upon earn-outs of
performance shares and upon conversions of convertible securities, in
each case which were outstanding on the date of the latest balance
sheet included or incorporated by reference in the Prospectus) or any
increase in the consolidated long-term debt of the Company and its
subsidiaries, or any decreases in consolidated net current assets or
stockholders' equity or other items specified by the Representatives,
or any increases in any items specified by the
-2-
Representatives, in each case as compared with amounts shown in the
latest balance sheet included or incorporated by reference in the
Prospectus, except in each case for changes, increases or decreases
which the Prospectus discloses have occurred or may occur or which are
described in such letter; and
(F) for the period from the date of the latest financial
statements included or incorporated by reference in the Prospectus to
the specified date referred to in clause (E) there were any decreases
in consolidated net revenues or operating profit or the total or per
share amounts of consolidated net income or other items specified by
the Representatives, or any increases in any items specified by the
Representatives, in each case as compared with the comparable period
of the preceding year and with any other period of corresponding
length specified by the Representatives, except in each case for
increases or decreases which the Prospectus discloses have occurred or
may occur or which are described in such letter; and
(vii) In addition to the examination referred to in their report(s)
included or incorporated by reference in the Prospectus and the limited
procedures, inspection of minute books, inquiries and other procedures
referred to in paragraphs (iii) and (vi) above, they have carried out
certain specified procedures, not constituting an examination in accordance
with generally accepted auditing standards, with respect to certain
amounts, percentages and financial information specified by the
Representatives which are derived from the general accounting records of
the Company and its subsidiaries, which appear in the Prospectus (excluding
documents incorporated by reference) or in Part II of, or in exhibits and
schedules to, the Registration Statement specified by the Representatives
or in documents incorporated by reference in the Prospectus specified by
the Representatives, and have compared certain of such amounts, percentages
and financial information with the accounting records of the Company and
its subsidiaries and have found them to be in agreement.
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EXHIBIT A
FORM OF LOCK-UP AGREEMENT
September , 2003
Xxxxxxx, Xxxxx & Co.
00 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Re: Sonus Networks, Inc. - Lock-Up Agreement
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Ladies and Gentlemen:
The undersigned understands that you (the "Underwriter") propose to
enter into an Underwriting Agreement with Sonus Networks, Inc., a Delaware (the
"Company"), providing for a public offering of the Common Stock of the Company
(the "Shares") pursuant to a Registration Statement on Form S-3 previously filed
with and declared effective by the Securities and Exchange Commission (the
"Commission").
In consideration of the agreement by the Underwriter to offer and sell
the Shares, and of other good and valuable consideration the receipt and
sufficiency of which is hereby acknowledged, the undersigned agrees that, during
the period beginning from the date of the final Prospectus covering the public
offering of the Shares and continuing to and including the date sixty (60) days
after the date of such final Prospectus, the undersigned will not offer, sell,
contract to sell, pledge, grant any option to purchase, make any short sale or
otherwise dispose of any shares of Common Stock of the Company, or any options
or warrants to purchase any shares of Common Stock of the Company, or any
securities convertible into, exchangeable for or that represent the right to
receive shares of Common Stock of the Company, whether now owned or hereinafter
acquired, owned directly by the undersigned (including holding as a custodian)
or with respect to which the undersigned has beneficial ownership within the
rules and regulations of the Commission (collectively the "Undersigned's
Shares").
The foregoing restriction is expressly agreed to preclude the
undersigned from engaging in any hedging or other transaction which is designed
to or which reasonably could be expected to lead to or result in a sale or
disposition of the Undersigned's Shares even if such Shares would be disposed of
by someone other than the undersigned. Such prohibited hedging or other
transactions would include without limitation any short sale or any purchase,
sale or grant of any right (including without limitation any put or call option)
with respect to any of the Undersigned's Shares or with respect to any security
that includes, relates to, or derives any significant part of its value from
such Shares.
Notwithstanding the foregoing, the undersigned may transfer the
Undersigned's Shares (i) as a BONA FIDE gift or gifts, provided that the donee
or donees thereof agree to be bound in writing by the restrictions set forth
herein, (ii) to any trust for the direct or indirect benefit of the undersigned
or the immediate family of the undersigned, provided that the trustee of the
trust agrees to be bound in writing by the restrictions set forth herein, and
provided further that any such transfer shall not involve a disposition for
value, or (iii) with the prior written consent of Xxxxxxx, Xxxxx & Co.. For
purposes of this Lock-Up Agreement, "immediate family" shall mean any
relationship by blood, marriage or adoption, not more remote than first cousin.
In addition, notwithstanding the foregoing, if the undersigned is a corporation,
the corporation may transfer the capital stock of the Company to any
wholly-owned subsidiary of such corporation; PROVIDED,
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HOWEVER, that in any such case, it shall be a condition to the transfer that the
transferee execute an agreement stating that the transferee is receiving and
holding such capital stock subject to the provisions of this Agreement and there
shall be no further transfer of such capital stock except in accordance with
this Agreement, and provided further that any such transfer shall not involve a
disposition for value. The undersigned now has, and, except as contemplated by
clause (i), (ii), or (iii) above, for the duration of this Lock-Up Agreement
will have, good and marketable title to the Undersigned's Shares, free and clear
of all liens, encumbrances, and claims whatsoever. The undersigned also agrees
and consents to the entry of stop transfer instructions with the transfer agent
and registrar of the Company against the transfer of the Undersigned's Shares
except in compliance with the foregoing restrictions.
The undersigned understands that the Company and the Underwriter are
relying upon this Lock-Up Agreement in proceeding toward consummation of the
offering. The undersigned further understands that this Lock-Up Agreement is
irrevocable and shall be binding upon the undersigned's heirs, legal
representatives, successors, and assigns.
Very truly yours,
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Exact Name of Director or Officer
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Authorized Signature
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Title
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