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__________ Shares of Common Stock
COMPUTER NETWORK TECHNOLOGY CORPORATION
UNDERWRITING AGREEMENT
October [__], 2000
BEAR, ▇▇▇▇▇▇▇ & CO. INC.
▇▇ ▇▇▇▇▇ SECURITIES CORPORATION
WIT SOUNDVIEW CORPORATION
as Representatives of the
several Underwriters named in
Schedule I attached hereto
c/o Bear, ▇▇▇▇▇▇▇ & Co. Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇.▇. ▇▇▇▇▇
Dear Sirs:
COMPUTER NETWORK TECHNOLOGY CORPORATION, a corporation
organized and existing under the laws of Minnesota (the "Company"), proposes,
subject to the terms and conditions stated herein, to issue and sell to the
several underwriters named in Schedule I hereto (the "Underwriters") an
aggregate of _______ shares (the "Firm Shares") of the Company's common stock,
par value $.01 per share (the "Common Stock") and, for the sole purpose of
covering over-allotments in connection with the sale of the Firm Shares, at the
option of the Underwriters, up to an additional ______ shares (the "Additional
Shares") of Common Stock. The Firm Shares and any Additional Shares purchased by
the Underwriters are referred to herein as the "Shares". The Shares are more
fully described in the Registration Statement referred to below.
1. Representations and Warranties of the Company. The Company
represents and warrants to, and agrees with, the Underwriters that:
(a) The Company has filed with the Securities and
Exchange Commission (the "Commission") a registration statement, and may have
filed supplement or supplements or an amendment or amendments thereto, on Form
S-3 (No. 333-80841), for the registration of the Shares under the Securities Act
of 1933, as amended (the "Act"). Such registration statement, including the
prospectus, prospectus supplement, financial statements and schedules, exhibits
and all other documents filed as a part thereof, as amended at the time of
effectiveness of the registration statement, including any information deemed to
be a part thereof as of the time of effectiveness pursuant to paragraph (b) of
Rule 430A or Rule 434 of the Rules and Regulations of the Commission under the
Act (the "Regulations"), is herein called the "Registration Statement" and the
prospectus and prospectus
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supplement, in the forms filed with the Commission pursuant to Rule 424(b) of
the Regulations or filed as part of the Registration Statement at the time of
effectiveness if no Rule 424(b) or Rule 434 filing is required, is herein called
the "Prospectus". The term "preliminary prospectus" as used herein means a
preliminary prospectus as described in Rule 430 of the Regulations. Any
reference herein to the Registration Statement, any preliminary prospectus or
the Prospectus shall be deemed to refer to and include the documents
incorporated by reference therein pursuant to Item 12 of Form S-3 that were
filed under the Securities Exchange Act of 1934, as amended (the "Exchange Act")
on or before the effective date of the Registration Statement, the date of such
preliminary prospectus or the date of the Prospectus, as the case may be, and
any reference herein to the terms "amend", "amendment" or "supplement" with
respect to the Registration Statement, any preliminary prospectus or the
Prospectus shall be deemed to refer to and include: (i) the filing of any
document under the Exchange Act after the effective date of the Registration
Statement, the date of such preliminary prospectus or the date of the
Prospectus, as the case may be, which is incorporated therein by reference; and
(ii) any such document so filed.
(b) At the time of the effectiveness of the
Registration Statement or the effectiveness of any post-effective amendment to
the Registration Statement, when the Prospectus is first filed with the
Commission pursuant to Rule 424(b) or Rule 434 of the Regulations, when any
supplement to or amendment of the Prospectus is filed with the Commission, when
any document filed under the Exchange Act is filed and at the Closing Date and
the Additional Closing Date, if any, (as hereinafter respectively defined), the
Registration Statement and the Prospectus and any amendments thereof and
supplements thereto complied or will comply in all material respects with the
applicable provisions of the Act and the Regulations and the Exchange Act and
the respective rules and regulations thereunder and does not or will not contain
an untrue statement of a material fact and does not or will not omit to state
any material fact required to be stated therein or necessary in order to make
the statements therein (i) in the case of the Registration Statement as amended
or supplemented, not misleading; and (ii) in the case of the Prospectus, in
light of the circumstances under which they were made, not misleading. When any
related preliminary prospectus was first filed with the Commission (whether
filed as part of the registration statement for the registration of the Shares
or any amendment thereto or pursuant to Rule 424(a) of the Regulations) and when
any amendment thereof or supplement thereto was first filed with the Commission,
such preliminary prospectus and any amendments thereof and supplements thereto
complied in all material respects with the applicable provisions of the Act and
the Regulations and the Exchange Act and the respective rules and regulations
thereunder and did not contain an untrue statement of a material fact and did
not omit to state any material fact required to be stated therein or necessary
in order to make the statements therein in light of the circumstances under
which they were made not misleading. The Prospectus and any preliminary
prospectus delivered to the Underwriters for use in connection with the offering
was identical to the electronically transmitted copies thereof filed with the
Commission pursuant to ▇▇▇▇▇, except to the extent permitted by Regulation S-T.
No representation and warranty is made in this subsection (b), however, with
respect to any information contained in or omitted from the Registration
Statement or the Prospectus or any related preliminary prospectus or any
amendment thereof or supplement thereto in reliance upon and in conformity with
information furnished in writing to the Company by or on behalf of any
Underwriter through you as herein stated expressly for use in connection with
the preparation thereof. If Rule 434 is used, the Company will comply with the
requirements of Rule 434.
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(c) KPMG LLP, who have certified the financial
statements and supporting schedules included in the Registration Statement, are
independent public accountants as required by the Act and the Regulations.
(d) Subsequent to the respective dates as of which
information is given in the Registration Statement and the Prospectus, except as
set forth in the Registration Statement and the Prospectus, there has been no
change in the capital stock of the Company (other than those resulting from the
grant and exercise of stock options in the ordinary course of business) or the
long-term indebtedness of the Company and its subsidiaries, and there has been
no material adverse change or any development involving a prospective material
adverse change in the business, prospects, properties, operations, condition
(financial or other) or results of operations of the Company and its
subsidiaries taken as a whole, whether or not arising from transactions in the
ordinary course of business, and since the date of the latest balance sheet
presented in the Registration Statement and the Prospectus, neither the Company
nor any of its subsidiaries has incurred or undertaken any liabilities or
obligations, direct or contingent, which are material to the Company and its
subsidiaries taken as a whole, except for liabilities or obligations that are
reflected in the Registration Statement and the Prospectus.
(e) This Agreement and the transactions contemplated
herein have been duly and validly authorized by the Company and this Agreement
has been duly and validly executed and delivered by the Company.
(f) The execution, delivery, and performance of this
Agreement and the consummation of the transactions contemplated hereby do not
and will not: (i) conflict with or result in a breach of any of the terms and
provisions of, or constitute a default (or an event that with notice or lapse of
time, or both, would constitute a default) under, require approval or consent
under, or result in the creation or imposition of any lien, charge or
encumbrance upon any property or assets of the Company or any of its
subsidiaries pursuant to, the terms of (A) any agreement, instrument, contract,
indenture, mortgage, lease, license, arrangement or understanding to which the
Company or any of its subsidiaries is a party, or to which any of such
corporations or their respective properties or assets is subject, that is
material to the Company or any of its subsidiaries taken as a whole
(collectively, "Material Contracts") or (B) any governmental franchise, license,
permit heretofore issued to the Company or any of its subsidiaries; or (ii)
violate or conflict with any provision of the certificate of incorporation or
by-laws of the Company or any of its subsidiaries or any judgment, decree,
order, statute, rule or regulation of any court or any public, governmental or
regulatory agency or body having jurisdiction over the Company or any of its
subsidiaries or any of their respective properties or assets. No consent,
approval, authorization, order, registration, filing, qualification, license or
permit of or with any court or any public, governmental or regulatory agency or
body having jurisdiction over the Company or any of its subsidiaries or any of
their respective properties or assets is required for the execution, delivery
and performance of this Agreement or the consummation of the transactions
contemplated hereby, including the issuance, sale and delivery of the Shares to
be issued, sold and delivered by the Company hereunder, except the registration
under the Act of the Shares and such consents, approvals, authorizations,
orders, registrations, filings, qualifications, licenses and permits as may be
required under state securities or Blue Sky laws in connection with the purchase
and distribution of the Shares by the Underwriters.
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(g) All of the outstanding shares of Common Stock are
duly and validly authorized and issued, fully paid and nonassessable and were
not issued and are not now in violation of or subject to any preemptive rights.
The Shares, when issued, delivered and sold in accordance with this Agreement,
will be duly and validly issued and outstanding, fully paid and nonassessable,
and will not have been issued in violation of or be subject to any preemptive or
similar rights; and, except as described in or expressly contemplated by the
Prospectus, there are no outstanding rights (including, without limitation,
preemptive rights), warrants or options to acquired, or instruments convertible
into or exchangeable for, any shares of capital stock or other equity interests
in the Company, or any contract, commitment, agreement, understanding or
arrangement of any kind relating to the issuance of any capital stock of the
Company and its subsidiaries. The Company had, at July 31, 2000, an authorized
and outstanding capitalization as set forth in the Registration Statement and
the Prospectus. The Common Stock, the Firm Shares and the Additional Shares
conform to the descriptions thereof contained in the Registration Statement and
the Prospectus.
(h) Each of the Company and its subsidiaries has been
duly organized and is validly existing as a corporation in good standing under
the laws of its jurisdiction of incorporation. Each of the Company and its
subsidiaries is duly qualified and in good standing as a foreign corporation in
each jurisdiction in which the character or location of its properties (owned,
leased or licensed) or the nature or conduct of its business makes such
qualification necessary, except for those failures to be so qualified or in good
standing that will not in the aggregate have a material adverse effect, or any
development involving a prospective material adverse effect, on the business,
prospects, properties, operations, condition (financial or other), partner's
equity or results of operations on the Company and its subsidiaries taken as a
whole (a "Material Adverse Effect"). Each of the Company and its subsidiaries
has all requisite power and authority, and all necessary consents, approvals,
authorizations, orders, registrations, qualifications, licenses and permits of
and from all public, regulatory or governmental agencies and bodies, to own,
lease and operate its properties and conduct its business as now being conducted
and as described in the Registration Statement and the Prospectus, and no such
consent, approval, authorization, order, registration, qualification, license or
permit contains a materially burdensome restriction not adequately disclosed in
the Registration Statement and the Prospectus. No statutes, regulations,
contracts or other documents apply to the Company that are required to be
described in the Registration Statement or Prospectus or to be filed as exhibits
to the Registration Statement that are not described or filed as required.
(i) Except as described in the Prospectus, there is
no litigation or governmental proceeding to which the Company or any of its
subsidiaries is a party or to which any property of the Company or any of its
subsidiaries is subject or which is pending or, to the knowledge of the Company,
contemplated, threatened against or otherwise affecting the Company or any of
its subsidiaries that might result in any Material Adverse Effect on the Company
and its subsidiaries taken as a whole or that is required to be disclosed in the
Registration Statement and the Prospectus.
(j) The Company has not taken and will not take,
directly or indirectly, any action designed to cause or result in, or which
constitutes or that might reasonably be expected to constitute, the
stabilization or manipulation of the price of the shares of Common Stock to
facilitate the sale or resale of the Shares.
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(k) The financial statements, including the notes
thereto, and supporting schedules included in the Registration Statement and the
Prospectus present fairly the financial position of the Company and its
consolidated subsidiaries as of the dates indicated and the results of
operations of the Company and consolidated subsidiaries for the periods
specified; except as otherwise stated in the Registration Statement, said
financial statements have been prepared in conformity with United States
generally accepted accounting principles ("GAAP") applied on a consistent basis;
and the supporting schedules included in the Registration Statement present
fairly the information required to be stated therein. The selected financial
data and the summary financial data included in the Prospectus present fairly
the information shown therein and have been compiled on a basis consistent with
that of the financial statements included in the Registration Statement. No
other financial statements are required by Form S-3 or otherwise to be included
in the Registration Statement or the Prospectus other than those included
therein.
(l) Except as described in the Prospectus, no holder
of securities of the Company or any of its subsidiaries has any rights to the
registration of such securities of the Company because of the filing of the
Registration Statement or otherwise in connection with the sale of the Shares
contemplated hereby.
(m) The Company is not, and upon consummation of the
transactions contemplated hereby will not be, subject to registration as an
"investment company" under the Investment Company Act of 1940, as amended.
(n) The conditions for use of Form S-3, as set forth
in the General Instructions thereto, have been satisfied.
(o) The documents incorporated or deemed to be
incorporated by reference in the Prospectus, at the time they were or hereafter
are filed with the Commission, complied and will comply in all material respects
with the requirements of the Exchange Act and the rules and regulations of the
Commission under the Exchange Act, and, when read together with the other
information in the Prospectus, at the time the Registration Statement and any
amendments thereto become effective and at the Closing Date, 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, in the light of
the circumstances under which they were made, not misleading.
(p) Except as described in the Prospectus, the
Company owns or possesses or reasonably believes it can acquire on reasonable
terms, adequate patents, patent rights, licenses, inventions, copyrights
(including trade secrets and other unpatented or unpatentable proprietary or
confidential information, systems or procedures, but excluding any required
regulatory licensees or approvals), trademarks, service marks, trade names or
other intellectual property, or that it can contract on reasonable terms with
third parties who can acquire such intellectual property necessary to carry on
the business now operated, or proposed to be operated, by the Company
(collectively, "Intellectual Property"), and the Company has not received any
notice and is not otherwise aware of any infringement of or conflict with
asserted rights of others with respect to any Intellectual Property or of any
facts or circumstances that would
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render any Intellectual Property invalid or inadequate to protect the interest
of the Company and that infringement or conflict (if subject of any unfavorable
decision, ruling or finding) or invalidity or inadequacy, individually or in the
aggregate, would have a Material Adverse Effect on the Company or any of its
subsidiaries, taken as a whole.
(q) No relationship, direct or indirect, exists
between or among the Company, on the one hand, and the directors, officers,
stockholders, customers or suppliers of the Company, on the other hand, that is
required by the Act to be described in the Registration Statement and the
Prospectus that is not so described.
(r) The Company is in compliance with all
environmental, safety or similar laws or regulations applicable to it or its
business or property relating to the protection of human health and safety, the
environment or hazardous or toxic substances or wastes, pollutants or
contaminants and the disposal of hazardous or toxic substances, wastes,
pollutants and contaminants, except those which, individually or in the
aggregate, would not have or reasonably be expected to have a Material Adverse
Effect on the Company or any of its subsidiaries, taken as a whole.
(s) Neither the Company nor any of its subsidiaries,
nor to the knowledge of the Company, any other party, is in violation or breach
of, or in default under (nor has an event occurred that with notice, lapse of
time or both, would constitute a default under), any Material Contract, and each
Material Contract is in full force and effect, and is the legal, valid and
binding obligation of the Company, or such subsidiary, as the case may be, and
(subject to applicable bankruptcy, insolvency and other laws affecting the
enforceability of creditors' rights generally) is enforceable as to the Company,
or such subsidiary, as the case may be, in accordance with its terms.
(t) The Company and its subsidiaries maintain systems
of internal accounting controls sufficient to provide reasonable assurances
that: (i) transactions are executed in accordance with management's general or
specific authorization; (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with GAAP and to maintain
accountability for assets; (iii) the access to the respective assets of the
Company and each such subsidiary, as the case may be, is permitted only in
accordance with management's general or specific authorization; and (iv) the
recorded accountability for assets is compared with existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
(u) There are no existing or, to the knowledge of the
Company, threatened labor disputes with the employees of the Company or any of
its subsidiaries that are likely, individually or in the aggregate, to have a
Material Adverse Effect on the Company and its subsidiaries taken as a whole.
(v) The Company has filed all material federal, state
and foreign income and franchise tax returns required to be filed as of the date
hereof and have paid all taxes shown as due thereon, except to the extent such
taxes are (A) currently payable without penalty or interest or (B) being
contested in good faith, and there is no tax deficiency that has been asserted
against the Company or its subsidiaries.
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2. Purchase, Sale and Delivery of the Shares.
(a) On the basis of the representations, warranties,
covenants and agreements herein contained, but subject to the terms and
conditions herein set forth, the Company agrees to sell to the Underwriters and
the Underwriters, severally and not jointly, agree to purchase from the Company,
at a purchase price per share of $_______, the number of Firm Shares set forth
opposite the respective names of the Underwriters in Schedule I hereto plus any
additional number of Shares which such Underwriter may become obligated to
purchase pursuant to the provisions of Section 9 hereof.
(b) Payment of the purchase price for, and delivery
of certificates for, the Shares shall be made at the office of ▇▇▇▇▇▇▇▇ &
▇▇▇▇▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, or at
such other place as shall be agreed upon by you and the Company, at 10:00 A.M.
on the third or fourth business day (as permitted under Rule 15c6-1 under the
Exchange Act) (unless postponed in accordance with the provisions of Section 9
hereof) following the date of this Agreement (or, if the Company has elected to
rely upon Rule 430A of the Regulations, the third or fourth business day (as
permitted under Rule 15c6-1 under the Exchange Act) after the determination of
the initial public offering price of the Shares), or such other time not later
than ten business days after such date as shall be agreed upon by you and the
Company (such time and date of payment and delivery being herein called the
"Closing Date"). Payment shall be made to the Company by wire transfer in same
day funds, against delivery to you for the respective accounts of the
Underwriters of certificates for the Shares to be purchased by them.
Certificates for the Shares shall be registered in such name or names and in
such authorized denominations as you may request in writing at least two full
business days prior to the Closing Date. The Company will permit you to examine
and package such certificates for delivery at least one full business day prior
to the Closing Date.
(c) In addition, the Company hereby grants to the
Underwriters the option to purchase up to Additional Shares at the same purchase
price per share to be paid by the Underwriters to the Company for the Firm
Shares as set forth in this Section 2, for the sole purpose of covering
over-allotments in the sale of Firm Shares by the Underwriters. This option may
be exercised once at any time, in whole or in part, on or before the thirtieth
day following the date of the Prospectus, by written notice by you to the
Company. Such notice shall set forth the aggregate number of Additional Shares
as to which the option is being exercised and the date and time, as reasonably
determined by you, when the Additional Shares are to be delivered (such date and
time being herein sometimes referred to as the "Additional Closing Date");
provided, however, that the Additional Closing Date shall not be earlier than
the Closing Date or earlier than the second full business day after the date on
which the option shall have been exercised nor later than the eighth full
business day after the date on which the option shall have been exercised
(unless such time and date are postponed in accordance with the provisions of
Section 9 hereof). Certificates for the Additional Shares shall be registered in
such name or names and in such authorized denominations as you may request in
writing at least two full business days prior to the Additional Closing Date.
The Company will permit you to examine and package such certificates for
delivery at least one full business day prior to the Additional Closing Date.
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The number of Additional Shares to be sold to each Underwriter
shall be the number that bears the same ratio to the aggregate number of
Additional Shares being purchased as the number of Firm Shares set forth
opposite the name of such Underwriter in Schedule I hereto (or such number
increased as set forth in Section 9 hereof) bears to _________, subject,
however, to such adjustments to eliminate any fractional shares as you in your
sole discretion shall make.
Payment for the Additional Shares shall be made by wire
transfer in same day funds and the closing for the additional shares shall be
held at the offices of ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, or such other location as may be mutually
acceptable, upon delivery of the certificates for the Additional Shares to you
for the respective accounts of the Underwriters.
3. Offering. Upon your authorization of the release of the
Firm Shares, the Underwriters propose to offer the Shares for sale to the public
upon the terms set forth in the Prospectus.
4. Covenants of the Company. The Company covenants and agrees
with the Underwriters that:
(a) If the Registration Statement has not yet been
declared effective, then the Company will use its best efforts to cause the
Registration Statement and any amendments thereto to become effective as
promptly as possible, and if Rule 430A is used or the filing of the Prospectus
is otherwise required under Rule 424(b) or Rule 434, the Company will file the
Prospectus (properly completed if Rule 430A has been used) pursuant to Rule
424(b) or Rule 434 within the prescribed time period and will provide evidence
satisfactory to you of such timely filing. If the Company elects to rely on Rule
434, the Company will prepare and file a term sheet that complies with the
requirements of Rule 434.
The Company will notify you immediately (and, if
requested by you, will confirm such notice in writing) (i) when the Registration
Statement and any amendments thereto become effective, (ii) of any request by
the Commission for any amendment of or supplement to the Registration Statement
or the Prospectus or for any additional information, (iii) of the mailing or the
delivery to the Commission for filing of any amendment of or supplement to the
Registration Statement or the Prospectus, (iv) of the issuance by the Commission
of any stop order suspending the effectiveness of the Registration Statement or
any post-effective amendment thereto or of the initiation, or the threatening,
of any proceedings therefor, (v) of the receipt of any comments from the
Commission, and (vi) of the receipt by the Company of any notification with
respect to the suspension of the qualification of the Shares for sale in any
jurisdiction or the initiation or threatening of any proceeding for that
purpose. If the Commission shall propose or enter a stop order at any time, the
Company will make every reasonable effort to prevent the issuance of any such
stop order and, if issued, to obtain the lifting of such order as soon as
possible. The Company will not file any amendment to the Registration Statement
or any amendment of or supplement to the Prospectus (including the prospectus
required to be filed pursuant to Rule 424(b)or Rule 434) that differs from the
prospectus on file at the time of the effectiveness of the Registration
Statement before or after the effective date of the Registration Statement or
file any document under the Exchange Act if such document would be deemed to be
incorporated by reference into the
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Prospectus to which you shall reasonably object in writing after being timely
furnished in advance a copy thereof.
(b) If at any time when a prospectus relating to the
Shares is required to be delivered under the Act any event shall have occurred
as a result of which the Prospectus as then amended or supplemented would, in
the reasonable judgment of the Underwriters or the Company include an 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, or if it shall be
necessary at any time to amend or supplement the Prospectus or Registration
Statement to comply with the Act or the Regulations, or to file under the
Exchange Act so as to comply therewith any document incorporated by reference in
the Registration Statement or the Prospectus or in any amendment thereof or
supplement thereto, the Company will notify you promptly and prepare and file
with the Commission an appropriate amendment or supplement (in form and
substance reasonably satisfactory to you) that will correct such statement or
omission or that will effect such compliance and will use its best efforts to
have any amendment to the Registration Statement declared effective as soon as
possible.
(c) The Company will promptly deliver to you two
copies of the Registration Statement, including exhibits and all documents
incorporated by reference therein and all amendments thereto, and the Company
will promptly deliver to each of the Underwriters such number of copies of any
preliminary prospectus, the Prospectus, the Registration Statement, and all
amendments of and supplements to such documents, if any, and all documents
incorporated by reference in the Registration Statement and Prospectus or any
amendment thereof or supplement thereto, without exhibits, as you may reasonably
request.
(d) The Company will endeavor in good faith, in
cooperation with you, at or prior to the time of effectiveness of the
Registration Statement, to qualify the Shares for offering and sale under the
securities laws relating to the offering or sale of the Shares of such
jurisdictions (domestic or foreign) as you may designate and to maintain such
qualification in effect for so long as required for the distribution thereof;
except that in no event shall the Company be obligated in connection therewith
to qualify as a foreign corporation or to execute a general consent to service
of process.
(e) The Company will make generally available (within
the meaning of Section 11(a) of the Act) to its security holders and to you as
soon as practicable, but not later than 45 days after the end of its fiscal
quarter in which the first anniversary date of the date of this Agreement
occurs, an earning statement (in form complying with the provisions of Rule 158
of the Regulations) covering a period of at least 12 consecutive months
beginning after the effective date of the Registration Statement.
(f) During the period of 90 days from the date of the
Prospectus, the Company will not, without the prior written consent of Bear,
▇▇▇▇▇▇▇ & Co. Inc., issue, sell, offer or agree to sell, grant any option for
the sale of, or otherwise dispose of, directly or indirectly, any Common Stock
(or any securities convertible into, exercisable for or exchangeable for Common
Stock), and the Company will obtain the undertaking of each of its officers and
directors and such of its shareholders as have been heretofore designated by you
and listed on Schedule II attached hereto not to engage in any of the
aforementioned transactions on their own
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behalf, other than the Company's sale of Shares hereunder and the Company's
grant of stock options to employees and the issuance of Common Stock upon the
exercise of presently outstanding stock options.
(g) During a period of three years from the date of
this Agreement, the Company will furnish to you copies of (i) all reports to its
shareholders; and (ii) all reports, financial statements and proxy or
information statements filed by the Company with the Commission or any national
securities exchange.
(h) The Company will apply the proceeds from the sale
of the Shares as set forth under "Use of Proceeds" in the Prospectus.
(i) The Company will use its best efforts to cause
the Shares to be listed on the Nasdaq National Market system for inclusion in
the National Association of Securities Dealers Automated Quotation National
Market System.
(k) The Company, during the period when the
Prospectus is required to be delivered under the Act or the Exchange Act, will
file all documents required to be filed with the Commission pursuant to Section
13, 14 or 15 of the Exchange Act within the time periods required by the
Exchange Act and the rules and regulations thereunder.
5. Payment of Expenses. Whether or not the transactions
contemplated in this Agreement are consummated or this Agreement is terminated,
the Company hereby agrees to pay all costs and expenses incident to the
performance of the obligations of the Company hereunder, including those in
connection with (i) preparing, printing, duplicating, filing and distributing
the Registration Statement, as originally filed and all amendments thereof
(including all exhibits thereto), any preliminary prospectus, the Prospectus and
any amendments or supplements thereto (including, without limitation, fees and
expenses of the Company's accountants and counsel), the underwriting documents
(including this Agreement, the Agreement Among Underwriters and the Selling
Agreement, if any) and all other documents related to the public offering of the
Shares (including those supplied to the Underwriters in quantities as
hereinabove stated); (ii) the issuance, transfer and delivery of the Shares to
the Underwriters, including any transfer or other taxes payable thereon; (iii)
the qualification of the Shares under state or foreign securities or Blue Sky
laws, including the costs of printing and mailing a preliminary and final "Blue
Sky Survey" and the fees of counsel for the Underwriters and such counsel's
disbursements in relation thereto; (iv) quotation of the Shares on the National
Association of Securities Dealers Automated Quotation National Market System,
(v) filing fees of the Commission and the National Association of Securities
Dealers, Inc.; (vi) the cost of printing certificates representing the Shares;
(vii) the cost and charges of any transfer agent or registrar; and (viii) cost
and expenses (including the out-of-pocket expenses of the Underwriters)
associated with the Company's "road show" and any internet broadcasts thereof
(if any).
6. Conditions of Underwriters' Obligations. The obligations of
the Underwriters to purchase and pay for the Firm Shares and the Additional
Shares, if any, as provided herein, shall be subject to the accuracy of the
representations and warranties of the Company herein contained, as of the date
hereof and as of the Closing Date (for purposes of this Section 6 "Closing Date"
shall refer to the Closing Date for the Firm Shares and any Additional Closing
Date, if different, for the Additional Shares), to the absence from any
certificates, opinions, written statements
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or letters furnished to you or to ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇ ("Underwriters' Counsel") pursuant to this
Section 6 of any misstatement or omission, to the performance by the Company of
its obligations hereunder, and to the following additional conditions:
(a) The Registration Statement shall have become
effective not later than (if pricing pursuant to Rule 430A) 5:30 P.M., New York
time, on the date of this Agreement or at such later time and date as shall have
been consented to in writing by you; if the Company shall have elected to rely
upon Rule 430A or Rule 434 of the Regulations, the Prospectus shall have been
filed with the Commission in a timely fashion in accordance with Section 4(a)
hereof; and, at or prior to the Closing Date no stop order suspending the
effectiveness of the Registration Statement or any post-effective amendment
thereof shall have been issued and no proceedings therefor shall have been
initiated or threatened by the Commission.
(b) At the Closing Date you shall have received the
opinion of ▇▇▇▇▇▇▇, Street and Deinard Professional Association, counsel for the
Company, dated the Closing Date addressed to the Underwriters and in form and
substance satisfactory to Underwriters' Counsel, to the effect that:
(i) Each of the Company, Real ▇▇▇▇▇▇.▇▇▇,
Inc. and IntelliFrame Corporation (the "U.S. Subsidiaries") has been
duly organized and is validly existing as a corporation in good
standing under the laws of its jurisdiction of incorporation. Each of
the Company and the U.S. Subsidiaries is duly qualified and in good
standing as a foreign corporation in each jurisdiction in which the
character or location of its properties (owned, leased or licensed) or
the nature or conduct of its business makes such qualification
necessary, except for those failures to be so qualified or in good
standing which will not in the aggregate have a material adverse effect
on the Company and its subsidiaries taken as a whole. Each of the
Company and the U.S. Subsidiaries has all requisite corporate authority
to own, lease and license its respective properties and conduct its
business as now being conducted and as described in the Registration
Statement and the Prospectus. All of the issued and outstanding capital
stock of each of the U.S. Subsidiaries has been duly and validly issued
and is fully paid and nonassessable and were not issued in violation of
preemptive rights and, is owned directly or indirectly by the Company,
free and clear of any lien, encumbrance, claim, security interest,
restriction on transfer, shareholders' agreement, voting trust or other
defect of title whatsoever.
(ii) The Company has an authorized capital
stock as set forth in the Registration Statement and the Prospectus.
All of the outstanding shares of Common Stock which have been issued
since the closing of the Company's issuance of common stock on Form S-2
(Registration No. 33-41985)(the "S-2 Issuance") are duly and validly
authorized and issued, are fully paid and nonassessable and were not
issued in violation of or subject to any preemptive rights. The Shares
to be delivered on the Closing Date have been duly and validly
authorized and, when delivered by the Company in accordance with this
Agreement, will be duly and validly issued, fully paid and
nonassessable and will not
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have been issued in violation of or subject to any preemptive rights.
The Common Stock, the Firm Shares and the Additional Shares conform to
the descriptions thereof contained in the Registration Statement and
the Prospectus.
(iii) The Common Stock currently outstanding
is listed, and the Shares to be sold under this Agreement to the
Underwriters are duly authorized for quotation on the National
Association of Securities Dealers Automated Quotation National Market
System.
(iv) This Agreement has been duly and
validly authorized, executed and delivered by the Company.
(v) To such counsel's knowledge, there is no
litigation or governmental or other action, suit, proceeding or
investigation before any court or before or by any public, regulatory
or governmental agency or body pending or to the best of such counsel's
knowledge, threatened against, or involving the properties or business
of, the Company or any of its subsidiaries, which is of a character
required to be disclosed in the Registration Statement and the
Prospectus, which has not been properly disclosed therein.
(vi) The execution, delivery and performance
of this Agreement and the consummation of the transactions contemplated
hereby by the Company do not and will not (A) conflict with or result
in a breach of any of the terms and provisions of, or constitute a
default (or an event that with notice or lapse of time, or both, would
constitute a default) under, or result in the creation or imposition of
any lien, charge or encumbrance upon any property or assets of the
Company or any of its subsidiaries pursuant to, any Material Contract
or permit known to such counsel to which the Company or any of its
subsidiaries is a party or by which any of such corporations or their
respective properties or assets may be bound, (B) violate or conflict
with any provision of the certificate of incorporation or by-laws of
the Company or any of the U.S. Subsidiaries, or (C) to the best
knowledge of such counsel, violate or conflict with any judgment,
decree, order, statute, rule or regulation of any court or any public,
governmental or regulatory agency or body having jurisdiction over the
Company or any of its subsidiaries or any of their respective
properties or assets, except where such violation would not have a
Material Adverse Effect on the Company its subsidiaries taken as a
whole. No consent, approval, authorization, order, registration,
filing, qualification, license or permit of or with any court or any
public, governmental, or regulatory agency or body having jurisdiction
over the Company or any of its subsidiaries or any of their respective
properties or assets is required for the execution, delivery and
performance of this Agreement or the consummation of the transactions
contemplated hereby, except for (1) such as may be required under state
securities or Blue Sky laws in connection with the purchase and
distribution of the Shares by the Underwriters (as to which such
counsel need express no opinion), (2) such as have been made or
obtained under the Act and (3) such as will not, if not obtained, have
a Material Adverse Effect on the Company and its subsidiaries taken as
a whole or on the consummation of the transactions comtemplated hereby.
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(vii) The Registration Statement and the
Prospectus and any amendments thereof or supplements thereto (other
than the financial statements and schedules and other financial data
included or incorporated by reference therein, as to which no opinion
need be rendered) comply as to form in all material respects with the
requirements of the Act and the Regulations. The documents filed under
the Exchange Act and incorporated by reference in the Registration
Statement and the Prospectus or any amendment thereof or supplement
thereto (other than the financial statements and schedules and other
financial data included or incorporated by reference therein, as to
which no opinion need be rendered) when they became effective or were
filed with the Commission, as the case may be, complied as to form in
all material respects with the Act or the Exchange Act, as applicable,
and the rules and regulations of the Commission thereunder; and they
have no reason to believe that any of such documents, when such
documents became effective or were so filed, as they case may be,
contained, in the case of a registration statement that became
effective under the Act, 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, or, in the
case of other documents that were filed under the Exchange Act with the
Commission, an untrue statement of a material fact or omitted to state
a material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made when such
documents were so filed, not misleading.
(viii) The Registration Statement is
effective under the Act, and, to the best knowledge of such counsel, no
stop order suspending the effectiveness of the Registration Statement
or any post-effective amendment thereof has been issued and no
proceedings therefor have been initiated or threatened by the
Commission and all filings required by Rule 424(b) of the Regulations
have been made.
(ix) In addition, such opinion or a separate
disclosure letter shall also contain a statement that such counsel has
participated in conferences with officers and representatives of the
Company, representatives of the independent public accountants for the
Company and the Underwriters at which the contents and the Prospectus
and related matters were discussed and, no facts have come to the
attention of such counsel that would lead such counsel to believe that
either the Registration Statement at the time it became effective
(including the information deemed to be part of the Registration
Statement at the time of effectiveness pursuant to Rule 430A(b) or Rule
434, if applicable), or any amendment thereof made prior to the Closing
Date as of the date of such amendment, contained an untrue statement of
a material fact or omitted to state any material fact required to be
stated therein or necessary to make the statements therein not
misleading or that the Prospectus as of its date (or any amendment
thereof or supplement thereto made prior to the Closing Date as of the
date of such amendment or supplement) and as of the Closing Date
contained or contains an untrue statement of a material fact or omitted
or omits to state any material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading (it being understood that
such counsel need express no belief or opinion with
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respect to the financial statements and schedules and other
financial data included or incorporated by reference therein).
In rendering such opinion, such counsel may rely (A) as to
matters involving the application of laws other than the laws of the United
States and jurisdictions in which they are admitted, to the extent such counsel
deems proper and to the extent specified in such opinion, if at all, upon an
opinion or opinions (in form and substance reasonably satisfactory to
Underwriters' Counsel) of other counsel reasonably acceptable to Underwriters'
Counsel, familiar with the applicable laws; (B) as to matters of fact, to the
extent they deem proper, on certificates of responsible officers of the Company
and certificates or other written statements of officers of departments of
various jurisdictions having custody of documents respecting the corporate
existence or good standing of the Company and its subsidiaries, provided that
copies of any such statements or certificates shall be delivered to
Underwriters' Counsel. The opinion of such counsel for the Company shall state
that the opinion of any such other counsel is in form satisfactory to such
counsel and, in their opinion, you and they are justified in relying thereon.
(c) All proceedings taken in connection with
the sale of the Firm Shares and the Additional Shares as herein
contemplated shall be reasonably satisfactory in form and substance to
you and to Underwriters' Counsel, and the Underwriters shall have
received from said Underwriters' Counsel a favorable opinion, dated as
of the Closing Date with respect to the issuance and sale of the
Shares, the Registration Statement and the Prospectus and such other
related matters as you may reasonably require, and the Company shall
have furnished to Underwriters' Counsel such documents as they request
for the purpose of enabling them to pass upon such matters.
(d) At the Closing Date you shall have
received a certificate of the Chairman, President and Chief Executive
Officer of the Company, dated the Closing Date to the effect that: (i)
the condition set forth in subsection (a) of this Section 6 has been
satisfied; (ii) as of the date hereof the representations and
warranties of the Company set forth in Section 1 hereof are accurate
and are true and correct in all material respects on the Closing Date;
(iii) as of the Closing Date the obligations of the Company to be
performed hereunder on or prior thereto have been duly performed; and
(iv) subsequent to the respective dates as of which information is
given in the Registration Statement and the Prospectus, the Company and
its subsidiaries have not sustained any material loss or interference
with their respective businesses or properties from fire, flood,
hurricane, accident or other calamity, whether or not covered by
insurance, or from any labor dispute or any legal or governmental
proceeding, and there has not been any material adverse change, or any
development involving a material adverse change, in the business
prospects, properties, operations, condition (financial or otherwise),
or results of operations of the Company and its subsidiaries taken as a
whole, except in each case as described in or contemplated by the
Prospectus.
(e) At the time this Agreement is executed
and at the Closing Date, you shall have received a letter, from KPMG
LLP, independent public accountants for the Company, dated,
respectively, as of the date of this Agreement and as of the Closing
Date addressed to the Underwriters and in form and substance
satisfactory to you, to the effect that: (i) they are independent
certified public accountants with respect to the Company within the
meaning of the Act and the Regulations and stating that the answer to
Item 10 of the Registration Statement is correct insofar as it relates
to them; (ii) stating that, in their opinion, the financial statements
and schedules of the Company included and incorporated by reference in
the Registration Statement and the Prospectus and covered by their
opinion therein comply as to form in all material respects with the
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applicable accounting requirements of the Act and the Exchange Act and
the applicable published rules and regulations of the Commission
thereunder; (iii) on the basis of procedures consisting of a reading of
the latest available unaudited interim consolidated financial
statements of the Company, and its subsidiaries, a reading of the
minutes of meetings and consents of the shareholders and boards of
directors of the Company and its subsidiaries and the committees of
such boards subsequent to July 31, 2000, inquiries of officers and
other employees of the Company and its subsidiaries who have
responsibility for financial and accounting matters of the Company and
its subsidiaries with respect to transactions and events subsequent to
July 31, 2000 and other specified procedures and inquiries to a date
not more than five days prior to the date of such letter, nothing has
come to their attention that would cause them to believe that: (A) the
unaudited consolidated financial statements and schedules of the
Company presented in the Registration Statement and the Prospectus do
not comply as to form in all material respects with the applicable
accounting requirements of the Act and, if applicable, the Exchange Act
and the applicable published rules and regulations of the Commission
thereunder or that such unaudited consolidated financial statements are
not fairly presented in conformity with generally accepted accounting
principles except to the extent certain footnote disclosures have been
omitted in accordance with applicable rules of the Commission under the
Exchange Act applied on a basis substantially consistent with that of
the audited consolidated financial statements included and incorporated
by reference in the Registration Statement and the Prospectus; (B) with
respect to the period subsequent to July 31, 2000 there were, as of the
date of the most recent available monthly consolidated financial
statements of the Company and its subsidiaries, if any, and as of a
specified date not more than five days prior to the date of such
letter, any changes in the capital stock or increase in long-term
indebtedness of the Company or any decrease in the consolidated net
current assets or stockholders' equity of the Company, in each case as
compared with the amounts shown in the most recent balance sheet
presented in the Registration Statement and the Prospectus, except for
changes or decreases that the Registration Statement and the Prospectus
disclose have occurred or may occur or that are set forth in such
letter; or (C) that during the period from July 31, 2000 to the date of
the most recent available monthly consolidated financial statements of
the Company and its subsidiaries, if any, and to a specified date not
more than five days prior to the date of such letter, there was any
decrease, as compared with the corresponding period in the prior fiscal
year (based on June 30, 1999), in total revenues, or total or per share
net income, except for decreases that the Registration Statement and
the Prospectus disclose have occurred or may occur or that are set
forth in such letter; and (iv) stating that they have compared specific
dollar amounts, numbers of shares, percentages of revenues and
earnings, and other financial information pertaining to the Company and
its subsidiaries set forth in the Registration Statement and the
Prospectus, which have been specified by you prior to the date of this
Agreement, to the extent that such amounts, numbers, percentages, and
information may be derived from the general accounting and financial
records of the Company and its subsidiaries or from schedules furnished
by the Company, and excluding any questions requiring an interpretation
by legal counsel, with the results obtained from the application of
specified readings, inquiries, and other appropriate procedures
specified by you set forth in such letter, and found them to be in
agreement.
(f) Prior to the Closing Date the Company
shall have furnished to you such further information, certificates and
documents as you may reasonably request.
(g) You shall have received from each person
who is a director or officer of the Company or such shareholder as have
been heretofore designated by you and listed on Schedule II hereto an
agreement to the effect that such person will not, directly or
indirectly, without the prior written consent of Bear, ▇▇▇▇▇▇▇ & Co.
Inc., offer,
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sell, offer or agree to sell, grant any option to purchase or otherwise
dispose (or announce any offer, sale, grant of an option to purchase or
other disposition) of any shares of Common Stock (or any securities
convertible into, exercisable for or exchangeable or exercisable for
shares of Common Stock) for a period of 90 days after the date of the
Prospectus.
(h) At the Closing Date, the Shares shall have been
approved for quotation on the National Association of Securities
Dealers Automated Quotation National Market System.
If any of the conditions specified in this Section 6 shall not
have been fulfilled when and as required by this Agreement, or if any
of the certificates, opinions, written statements or letters furnished
to you or to Underwriters' Counsel pursuant to this Section 6 shall not
be in all material respects reasonably satisfactory in form and
substance to you and to Underwriters' Counsel, all obligations of the
Underwriters hereunder may be cancelled by you at, or at any time prior
to, the Closing Date and the obligations of the Underwriters to
purchase the Additional Shares may be cancelled by you at, or at any
time prior to, the Additional Closing Date. Notice of such cancellation
shall be given to the Company in writing, or by telephone, telex or
telegraph, confirmed in writing.
7. Indemnification.
(a) The Company agrees to indemnify and hold harmless
each Underwriter and each person, if any, who controls any Underwriter
within the meaning of Section 15 of the Act or Section 20(a) of the
Exchange Act, against any and all losses, liabilities, claims, damages
and expenses whatsoever as incurred (including, but not limited to,
attorneys' fees and any and all expenses whatsoever incurred in
investigating, preparing or defending against any litigation, commenced
or threatened, or any claim whatsoever, and any and all amounts paid in
settlement of any claim or litigation), joint or several, to which they
or any of them may become subject under the Act, the Exchange Act or
otherwise, insofar as such losses, liabilities, claims, damages or
expenses (or actions in respect thereof) arise out of or are based upon
any untrue statement or alleged untrue statement of a material fact
contained in the registration statement for the registration of the
Shares, as originally filed or any amendment thereof, or any related
preliminary prospectus or the Prospectus, or in any supplement thereto
or amendment thereof, 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;
provided, however, that the Company will not be liable in any such case
to the extent but only to the extent that any such loss, liability,
claim, damage or expense arises out of or is based upon any such untrue
statement or alleged untrue statement or omission or alleged omission
made therein in reliance upon and in conformity with written
information furnished to the Company by or on behalf of any Underwriter
through you expressly for use therein. This indemnity agreement will be
in addition to any liability that the Company may otherwise have
including under this Agreement.
(b) Each Underwriter severally, and not jointly, agrees
to indemnify and hold harmless the Company, each of the directors of
the Company, each of the officers of the Company who shall have signed
the Registration Statement, and each other person, if any, who controls
the Company within the meaning of Section 15 of the Act or Section
20(a) of the Exchange Act, against any losses, liabilities, claims,
damages and expenses whatsoever as incurred (including, but not limited
to, attorneys' fees and any and all expenses whatsoever incurred in
investigating, preparing or defending against any litigation, commenced
or threatened, or any claim whatsoever, and any and all
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amounts paid in settlement of any claim or litigation), jointly or
several, to which they or any of them may become subject under the Act,
the Exchange Act or otherwise, insofar as such losses, liabilities,
claims, damages or expenses (or actions in respect thereof) arise out
of or are based upon any untrue statement or alleged untrue statement
of a material fact contained in the registration statement for the
registration of the Shares, as originally filed or any amendment
thereof, or any related preliminary prospectus or the Prospectus, or in
any amendment thereof 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 any such loss, liability, claim, damage or expense arises
out of or is based upon any such untrue statement or alleged untrue
statement or omission or alleged omission made therein in reliance upon
and in conformity with written information furnished to the Company by
or on behalf of any Underwriter through you expressly for use therein;
provided, however, that in no case shall any Underwriter be liable or
responsible for any amount in excess of the underwriting discount
applicable to the Shares purchased by such Underwriter hereunder. This
indemnity will be in addition to any liability which any Underwriter
may otherwise have including under this Agreement. The Company
acknowledges that the statements set forth in the last paragraph of the
cover page and in the paragraphs under the caption "Underwriting" in
the Prospectus constitute the only information furnished in writing by
or on behalf of any Underwriter expressly for use in the registration
statement relating to the Shares as originally filed or in any
amendment thereof, any related preliminary prospectus or the Prospectus
or in any amendment thereof or supplement thereto, as the case may be.
(c) Promptly after receipt by an indemnified party
under subsection (a) or (b) above of notice of the commencement of any
action, such indemnified party shall, if a claim in respect thereof is
to be made against the indemnifying party under such subsection, notify
each party against whom indemnification is to be sought in writing of
the commencement thereof (but the failure so to notify an indemnifying
party shall not relieve it from any liability that it may have under
this Section 7, unless and to the extent it did not learn of such
action and such failure results in the forfeiture by the indemnifying
party of substantial rights and defenses). In case any such action is
brought against any indemnified party, and it notifies an indemnifying
party of the commencement thereof, the indemnifying party will be
entitled to participate therein, and to the extent it may elect by
written notice delivered to the indemnified party promptly after
receiving the aforesaid notice from such indemnified party, to assume
the defense thereof with counsel satisfactory to such indemnified
party. Notwithstanding the foregoing, the indemnified party or parties
shall have the right to employ its or their own counsel in any such
case, but the fees and expenses of such counsel shall be at the expense
of such indemnified party or parties unless (i) the employment of such
counsel shall have been authorized in writing by one of the
indemnifying parties in connection with the defense of such action,
(ii) the indemnifying parties shall not have employed counsel to have
charge of the defense of such action within a reasonable time after
notice of commencement of the action or (iii) such indemnified party or
parties shall have reasonably concluded that there may be defenses
available to it or them which are different from or additional to those
available to one or all of the indemnifying parties (in which case the
indemnifying parties shall not have the right to direct the defense of
such action on behalf of the indemnified party or parties), in any of
which events such fees and expenses shall be borne by the indemnifying
parties. It is understood that the indemnifying party or parties shall
not be liable for the reasonable fees, disbursements and other charges
of more than one counsel (in addition to local counsel) separate from
their own counsel for all such indemnified party or parties in
connection with any one action or separate but similar or related
actions in the same jurisdiction arising out of the same general
allegations or
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circumstances. Anything in this subsection to the contrary
notwithstanding, an indemnifying party shall not be liable for any
settlement of any claim or action effected without its written consent;
provided, however, that such consent was not unreasonably withheld.
8. Contribution. In order to provide for contribution in
circumstances in which the indemnification provided for in Section 7
hereof is for any reason held to be unavailable from any indemnifying
party or is insufficient to hold harmless a party indemnified
thereunder, the Company and the Underwriters shall contribute to the
aggregate losses, claims, damages, liabilities and expenses of the
nature contemplated by such indemnification provision (including any
investigation, legal and other expenses incurred in connection with,
and any amount paid in settlement of, any action, suit or proceeding or
any claims asserted, but after deducting in the case of losses, claims,
damages, liabilities and expenses suffered by the Company any
contribution received by the Company from persons, other than the
Underwriters, who may also be liable for contribution, including
persons who control the Company within the meaning of Section 15 of the
Act or Section 20(a) of the Exchange Act, officers of the Company who
signed the Registration Statement and directors of the Company) as
incurred to which the Company and one or more of the Underwriters may
be subject, in such proportions as is appropriate to reflect the
relative benefits received by the Company and the Underwriters from the
offering of the Shares or, if such allocation is not permitted by
applicable law or indemnification is not available as a result of the
indemnifying party not having received notice as provided in Section 7
hereof, in such proportion as is appropriate to reflect not only the
relative benefits referred to above but also the relative fault of the
Company and the Underwriters in connection with the statements or
omissions that resulted in such losses, claims, damages, liabilities or
expenses, as well as any other relevant equitable considerations. The
relative benefits received by the Company and the Underwriters shall be
deemed to be in the same proportion as (x) the total proceeds from the
offering (net of underwriting discounts and commissions but before
deducting expenses) received by the Company and (y) the underwriting
discounts and commissions received by the Underwriters, respectively,
in each case as set forth in the table on the cover page of the
Prospectus. The relative fault of the Company and of the Underwriters
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 Underwriters and the parties' relative
intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. The Company and the Underwriters
agree that it would not be just and equitable if contribution pursuant
to this Section 8 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 that does not take account of the equitable
considerations referred to above. Notwithstanding the provisions of
this Section 8, (i) in no case shall any Underwriter be liable or
responsible for any amount in excess of the underwriting discount
applicable to the Shares purchased by such Underwriter hereunder, and
(ii) 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. Notwithstanding the provisions of this Section 8 and
the preceding sentence, no Underwriter shall be required to contribute
any amount in excess of the amount by which the total price at which
the Shares underwritten by it and distributed to the public were
offered to the public exceeds the amount of any damages that such
Underwriter has otherwise been required to pay by reason of such untrue
or alleged untrue statement or omission or alleged omission. For
purposes of this Section 8, each person, if any, who controls an
Underwriter within the meaning of Section 15 of the Act or Section
20(a) of the Exchange Act shall have the same rights to contribution as
such Underwriter, and each person, if any, who controls the Company
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within the meaning of Section 15 of the Act or Section 20(a) of the
Exchange Act, each officer of the Company who shall have signed the
Registration Statement and each director of the Company shall have the
same rights to contribution as the Company, subject in each case to
clauses (i) and (ii) of this Section 8. Any party entitled to
contribution will, promptly after receipt of notice of commencement of
any action, suit or proceeding against such party in respect of which a
claim for contribution may be made against another party or parties,
notify each party or parties from whom contribution may be sought, but
the omission to so notify such party or parties shall not relieve the
party or parties from whom contribution may be sought from any
obligation it or they may have under this Section 8 or otherwise unless
and to the extent it did not learn of such action and such failure
results in the forfeiture by the contributing party of substantial
rights and defenses. No party shall be liable for contribution with
respect to any action or claim settled without its consent; provided,
however, that such consent was not unreasonably withheld.
9. Default by an Underwriter.
(a) If any Underwriter or Underwriters shall default in
its or their obligation to purchase Firm Shares or Additional Shares
hereunder, and if the Firm Shares or Additional Shares with respect to
which such default relates do not (after giving effect to arrangements,
if any, made by you pursuant to subsection (b) below) exceed in the
aggregate 10% of the number of Firm Shares or Additional Shares, to
which the default relates shall be purchased by the non-defaulting
Underwriters in proportion to the respective proportions which the
numbers of Firm Shares set forth opposite their respective names in
Schedule I hereto bear to the aggregate number of Firm Shares set forth
opposite the names of the non-defaulting Underwriters.
(b) In the event that such default relates to more than
10% of the Firm Shares or Additional Shares, as the case may be, you
may in your discretion arrange for yourself or for another party or
parties (including any non-defaulting Underwriter or Underwriters who
so agree) to purchase such Firm Shares or Additional Shares, as the
case may be, to which such default relates on the terms contained
herein. In the event that within five calendar days after such a
default you do not arrange for the purchase of the Firm Shares or
Additional Shares, as the case may be, to which such default relates as
provided in this Section 9, this Agreement or, in the case of a default
with respect to the Additional Shares, the obligations of the
Underwriters to purchase and of the Company to sell the Additional
Shares shall thereupon terminate, without liability on the part of the
Company with respect thereto (except in each case as provided in
Section 5, 7(a) and 8 hereof) or the Underwriters, but nothing in this
Agreement shall relieve a defaulting Underwriter or Underwriters of its
or their liability, if any, to the other Underwriters and the Company
for damages occasioned by its or their default hereunder.
(c) In the event that the Firm Shares or Additional
Shares to which the default relates are to be purchased by the
non-defaulting Underwriters, or are to be purchased by another party or
parties as aforesaid, you or the Company shall have the right to
postpone the Closing Date or Additional Closing Date, as the case may
be for a period, not exceeding five business days, in order to effect
whatever changes may thereby be made necessary in the Registration
Statement or the Prospectus or in any other documents and arrangements,
and the Company agrees to file promptly any amendment or supplement to
the Registration Statement or the Prospectus that, in the opinion of
Underwriters' Counsel, may thereby be made necessary or advisable. The
term "Underwriter" as used in this Agreement shall include any party
substituted under this Section 9 with like effect as if it had
originally been a party to this Agreement with respect to such Firm
Shares and Additional Shares.
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10. Survival of Representations and Agreements. All
representations and warranties, covenants and agreements of the Underwriters and
the Company contained in this Agreement, including the agreements contained in
Section 5, the indemnity agreements contained in Section 7 and the contribution
agreements contained in Section 8, shall remain operative and in full force and
effect regardless of any investigation made by or on behalf of any Underwriter
or any controlling person thereof or by or on behalf of the Company, any of its
officers and directors or any controlling person thereof, and shall survive
delivery of and payment for the Shares to and by the Underwriters. The
representations contained in Section 1 and the agreements contained in Sections
5, 7, 8 and 11(d) hereof shall survive the termination of this Agreement,
including termination pursuant to Section 9 or 11 hereof.
11. Effective Date of Agreement; Termination.
(a) This Agreement shall become effective, upon the
later of when (i) you and the Company shall have received notification of the
effectiveness of the Registration Statement or (ii) the execution of this
Agreement. If either the initial public offering price or the purchase price per
Share has not been agreed upon prior to 5:00 P.M., New York time, on the fifth
full business day after the date of this Agreement, this Agreement shall
thereupon terminate without liability to the Company or the Underwriters except
as herein expressly provided. Until this Agreement becomes effective as
aforesaid, it may be terminated by the Company by notifying you or by you
notifying the Company. Notwithstanding the foregoing, the provisions of this
Section 11 and of Sections 1, 5, 7 and 8 hereof shall at all times be in full
force and effect.
(b) You shall have the right to terminate this
Agreement at any time prior to the Closing Date or the obligations of the
Underwriters to purchase the Additional Shares at any time prior to the
Additional Closing Date, as the case may be, if (A) any domestic or
international event or act or occurrence has materially disrupted, or in your
reasonable opinion will in the immediate future materially disrupt, the market
for the Company's securities or securities in general; or (B) if trading on the
New York Stock Exchange or the Nasdaq National Market, or trading in the
securities of the Company, shall have been suspended, or minimum or maximum
prices for trading shall have been fixed, or maximum ranges for prices for
securities shall have been required, on the New York or American Stock Exchanges
by the New York Stock Exchange or the American Stock Exchange or by order of the
Commission or any other governmental authority having jurisdiction; or (C) if a
banking moratorium has been declared by a state or federal authority or if any
new restriction materially adversely affecting the distribution of the Firm
Shares or the Additional Shares, as the case may be, shall have become
effective; if applicable or (D) if any downgrading in the rating of the
Company's debt securities by any "nationally recognized statistical
rating-organization" (as defined for purposes of Rule 436(g) under the Act; or
(E) (i) if the United States becomes engaged in hostilities or there is an
escalation of hostilities involving the United States or there is a declaration
of a national emergency or war by the United States or (ii) if there shall have
been such change in political, financial or economic conditions if the effect of
any such event in (i) or (ii) as in your judgment makes it impracticable or
inadvisable to proceed with the offering, sale and delivery of the Firm Shares
or the Additional Shares, as the case may be, on the terms contemplated by the
Prospectus.
(c) Any notice of termination pursuant to this
Section 11 shall be by telephone, telex, or telegraph, confirmed in writing by
letter.
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(d) If this Agreement shall be terminated pursuant to
any of the provisions hereof (otherwise than pursuant to (i) notification by you
as provided in Section 11(a) hereof or (ii) Section 9(b) or 11(b) hereof), or if
the sale of the Shares provided for herein is not consummated because any
condition to the obligations of the Underwriters set forth herein is not
satisfied or because of any refusal, inability or failure on the part of the
Company to perform any agreement herein or comply with any provision hereof, the
Company will, subject to demand by you, reimburse the Underwriters for all
out-of-pocket expenses (including the fees and expenses of their counsel),
incurred by the Underwriters in connection herewith.
12. Notices. All communications hereunder, except as may be
otherwise specifically provided herein, shall be in writing and, if sent to any
Underwriter, shall be mailed, delivered, or telexed or telegraphed and confirmed
in writing, to such Underwriter c/o Bear, ▇▇▇▇▇▇▇ & Co. Inc., ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇, ▇.▇. ▇▇▇▇▇, Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇; if sent to the Company, shall
be mailed, delivered, or telegraphed and confirmed in writing to the Company,
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇.
13. Parties. This Agreement shall insure solely to the benefit
of, and shall be binding upon, the Underwriters and the Company and the
controlling persons, directors, officers, employees and agents referred to in
Section 7 and 8, and their respective successors and assigns, and no other
person shall have or be construed to have any legal or equitable right, remedy
or claim under or in respect of or by virtue of this Agreement or any provision
herein contained. The term "successors and assigns" shall not include a
purchaser, in its capacity as such, of Shares from any of the Underwriters.
14. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York, but without
regard to principles of conflicts of law.
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If the foregoing correctly sets forth the understanding
between you and the Company, please so indicate in the space provided below for
that purpose, whereupon this letter shall constitute a binding agreement among
us.
Very truly yours,
Computer Network Technology Corporation
By:
------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
Accepted as of the date first above written
BEAR, ▇▇▇▇▇▇▇ & CO. INC.
▇▇ ▇▇▇▇▇ SECURITIES CORPORATION
WIT SOUNDVIEW CORPORATION
On behalf of themselves and the other
Underwriters named in Schedule I hereto.
Bear, ▇▇▇▇▇▇▇ & Co. Inc.
By:
-------------------------------------------------
Name:
-------------------------------------------------
Title:
------------------------------------------------
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SCHEDULE I
Number of Firm
Name of Underwriter Shares to be Purchased
--------------------------------------------------------------------------------
Bear, ▇▇▇▇▇▇▇ & Co. Inc
▇▇ ▇▇▇▇▇ Securities Corporation
Wit SoundView Corporation
Total. . . . .
----------------
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SCHEDULE II
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