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JNI Corporation
4,500,000 Shares
Plus an option to purchase from certain
Selling Stockholders up to 675,000 additional
Securities to cover over-allotments
Common Stock
($0.001 par value)
UNDERWRITING AGREEMENT
New York, New York
October __, 2000
Salomon Smith Barney Inc.
Bear, Stearns & Co. Inc.
Chase Securities Inc.
As Representatives of the several Underwriters,
c/o Salomon Smith Barney Inc.
388 Greenwich Street
New York, New York 10013
Ladies and Gentlemen:
JNI Corporation, a corporation organized under the laws of the
State of Delaware (the "Company"), proposes to sell to the several underwriters
named in Schedule I hereto (the "Underwriters"), for whom you (the
"Representatives") are acting as representatives, 1,000,000 shares (the "Company
Securities") of Common Stock, $0.001 par value per share ("Common Stock"), of
the Company, and the persons named in Schedule II hereto (the "Firm Securities
Selling Stockholders") propose to sell to the several Underwriters 3,500,000
shares of Common Stock (said shares to be issued and sold by the Company and
shares to be sold by the Selling Stockholders collectively being hereinafter
called the "Underwritten Securities"). The persons named in Schedule III and
Schedule IV hereto (the "Option Securities Selling Stockholders"; the Option
Securities Selling Stockholders, together with the Firm Securities Selling
Stockholders, being hereafter call "Selling Stockholders") also propose to grant
to the Underwriters an option to purchase up to 675,000 additional shares of
Common Stock to cover over-allotments (the "Option Securities"; the Option
Securities, together with the Underwritten Securities, being hereinafter called
the "Securities"). To the extent there are no additional Underwriters listed on
Schedule I other than you, the term Representatives as used herein shall mean
you, as Underwriters, and the terms Representatives and Underwriters shall mean
either the singular or plural as the context requires. In addition, to the
extent that there is not more than one Selling Stockholder named in Schedule II,
Schedule III and Schedule IV, the term Selling Stockholder shall mean either the
singular or plural. The use of the neuter in this Agreement shall include the
feminine and masculine wherever appropriate. Certain terms used herein are
defined in Section 17 hereof.
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1. REPRESENTATIONS AND WARRANTIES.
(i) The Company represent and warrants to, and agrees
with, each Underwriter as set forth below in this Section 1.
(a) The Company has prepared and filed with the
Commission a registration statement (file number 333-45934 on Form S-1),
including a related preliminary prospectus, for registration under the Act of
the offering and sale of the Securities. The Company may have filed one or more
amendments thereto, including a related preliminary prospectus, each of which
has previously been furnished to you. The Company will next file with the
Commission either (1) prior to the Effective Date of such registration
statement, a further amendment to such registration statement (including the
form of final prospectus) or (2) after the Effective Date of such registration
statement, a final prospectus in accordance with Rules 430A and 424(b). In the
case of clause (2), the Company has included in such registration statement, as
amended at the Effective Date, all information (other than Rule 430A
Information) required by the Act and the rules thereunder to be included in such
registration statement and the Prospectus. As filed, such amendment and form of
final prospectus, or such final prospectus, shall contain all Rule 430A
Information, together with all other such required information, and, except to
the extent the Representatives shall agree in writing to a modification, shall
be in all substantive respects in the form furnished to you prior to the
Execution Time or, to the extent not completed at the Execution Time, shall
contain only such specific additional information and other changes (beyond that
contained in the latest Preliminary Prospectus) as the Company has advised you,
prior to the Execution Time, will be included or made therein.
(b) On the Effective Date, the Registration
Statement did or will, and when the Prospectus is first filed (if required) in
accordance with Rule 424(b) and on the Closing Date (as defined herein) and on
any date on which Option Securities are purchased, if such date is not the
Closing Date (a "settlement date"), the Prospectus (and any supplements thereto)
will, comply in all material respects with the applicable requirements of the
Act and the rules thereunder; on the Effective Date and at the Execution Time,
the Registration Statement did not or will not contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein not misleading; and, on the
Effective Date, the Prospectus, if not filed pursuant to Rule 424(b), will not,
and on the date of any filing pursuant to Rule 424(b) and on the Closing Date
and any settlement date, the Prospectus (together with any supplement thereto)
will not, include any untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading; PROVIDED, HOWEVER,
that the Company and the Selling Stockholders make no representations or
warranties as to the information contained in or omitted from the Registration
Statement, or the Prospectus (or any supplement thereto) in reliance upon and in
conformity with information furnished in writing to the Company by or on behalf
of any Underwriter through the Representatives specifically for inclusion in the
Registration Statement or the Prospectus (or any supplement thereto).
(c) The Company has been duly incorporated and
is validly existing as a corporation in good standing under the laws of the
jurisdiction in which it is chartered or organized with corporate power and
authority to own or lease, as the case may be, and to operate its properties and
conduct its business as described in the Prospectus, and is duly qualified to do
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business as a foreign corporation and is in good standing under the laws of each
jurisdiction which requires such qualification, except where the failure to be
so qualified or to be in good standing would not have a material adverse effect
on the condition (financial or otherwise), prospects, earnings, business or
properties of the Company whether or not arising from transactions in the
ordinary course of business, except as set forth in or contemplated by the
Prospectus (exclusive of any supplement thereto). The jurisdictions where the
Company is qualified to do business as a foreign corporation are listed on
Exhibit A hereto.
(d) The Company's authorized equity
capitalization is as set forth in the Prospectus; the capital stock of the
Company conforms in all material respects to the description thereof contained
in the Prospectus; the outstanding shares of Common Stock (including the
Securities being sold hereunder by the Selling Stockholders) have been duly and
validly authorized and issued and are fully paid and nonassessable; the
Securities being sold hereunder by the Company have been duly and validly
authorized, and, when issued and delivered to and paid for by the Underwriters
pursuant to this Agreement, will be fully paid and nonassessable; the Securities
being sold by the Selling Stockholders are duly listed, and admitted and
authorized for trading, on the Nasdaq National Market and the Securities being
sold hereunder by the Company are duly listed, and admitted and authorized for
trading, subject to official notice of issuance, on the Nasdaq National Market;
the certificates for the Securities are in valid and sufficient form; the
holders of outstanding shares of capital stock of the Company are not entitled
to preemptive or other rights to subscribe for the Securities; and, except as
set forth in the Prospectus, no options, warrants or other rights to purchase,
agreements or other obligations to issue, or rights to convert any obligations
into or exchange any securities for, shares of capital stock of or ownership
interests in the Company are outstanding.
(e) There is no franchise, contract or other
document of a character required to be described in the Registration Statement
or Prospectus, or to be filed as an exhibit thereto, which is not described or
filed as required; and the statements in the Prospectus under the heading
"Business - Intellectual Property and Licenses" fairly summarize the matters
therein described.
(f) This Agreement has been duly authorized,
executed and delivered by the Company and constitutes a valid and binding
obligation of the Company enforceable in accordance with its terms, except as
the enforceability thereof may be limited by bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium or other similar laws affecting the
enforcement of creditors' rights generally and by general equitable principles.
(g) The Company is not and, after giving effect
to the offering and sale of the Securities and the application of the proceeds
thereof as described in the Prospectus, will not be an "investment company" as
defined in the Investment Company Act of 1940, as amended.
(h) No consent, approval, authorization, filing
or order of any court or governmental agency or body is required in connection
with the transactions contemplated herein, except such as have been obtained
under the Act and such as may be required under the blue sky laws of any
jurisdiction in connection with the purchase and distribution of the Securities
by the Underwriters in the manner contemplated herein and in the Prospectus.
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(i) Neither the issue and sale of the Securities
nor the consummation of any other of the transactions herein contemplated nor
the fulfillment of the terms hereof will conflict with, result in any breach or
violation or imposition of any lien, charge or encumbrance upon any property or
assets of the Company pursuant to (1) the charter or by-laws of the Company, (2)
the terms of any indenture, contract, lease, mortgage, deed of trust, note
agreement, loan agreement or other agreement, obligation, condition, covenant or
instrument to which the Company is a party or bound or to which its property is
subject, or (3) any statute, law, rule, regulation, judgment, order or decree
applicable to the Company of any court, regulatory body, administrative agency,
governmental body, arbitrator or other authority having jurisdiction over the
Company or any of its properties, except, in the case of clauses (2) and (3), as
would not have a material adverse effect on the condition (financial or
otherwise), prospects, earnings, business or properties of the Company, whether
or not arising from transactions in the ordinary course of business, except as
set forth in or contemplated by the Prospectus (exclusive of any supplement
thereto).
(j) No holders of securities of the Company
have rights to the registration of such securities under the Registration
Statement, except for rights of former stockholders of Jaymark, Inc.,
pursuant to that certain Reorganization Agreement, which have been complied
with or effectively waived.
(k) The historical financial statements and
schedule of the Company included in the Prospectus and the Registration
Statement present fairly in all material respects the financial condition,
results of operations and cash flows of the Company as of the dates and for the
periods indicated, comply as to form with the applicable accounting requirements
of the Act and have been prepared in conformity with generally accepted
accounting principles applied on a consistent basis throughout the periods
involved (except as otherwise noted therein). The selected financial data set
forth under the caption "Selected Financial Data" in the Prospectus and
Registration Statement fairly present, on the basis stated in the Prospectus and
the Registration Statement, the information included therein.
(l) No action, suit or proceeding by or before
any court or governmental agency, authority or body or any arbitration involving
the Company or its property is pending or, to the best knowledge of the Company,
threatened that (1) could reasonably be expected to have a material adverse
effect on the performance of this Agreement or the consummation of any of the
transactions contemplated hereby or (2) could reasonably be expected to have a
material adverse effect on the condition (financial or otherwise), prospects,
earnings, business or properties of the Company, whether or not arising from
transactions in the ordinary course of business, except as set forth in or
contemplated in the Prospectus (exclusive of any supplement thereto).
(m) The Company owns or leases all such
properties as are necessary to the conduct of its operations as presently
conducted, except as would not have a material adverse effect on the condition
(financial or otherwise), prospects, earnings, business or properties of the
Company, whether or not arising from transactions in the ordinary course of
business, except as set forth in or contemplated by the Prospectus (exclusive of
any supplement thereto).
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(n) The Company is not in violation or default
of (1) any provision of its charter or bylaws, (2) the terms of any indenture,
contract, lease, mortgage, deed of trust, note agreement, loan agreement or
other agreement, obligation, condition, covenant or instrument that is material
to the Company to which it is a party or bound or to which its property is
subject, or (3) any statute, law, rule, regulation, judgment, order or decree of
any court, regulatory body, administrative agency, governmental body, arbitrator
or other authority having jurisdiction over the Company or any of its
properties, as applicable, except, in the case of clauses (2) and (3), as would
not have a material adverse effect on the condition (financial or otherwise),
prospects, earnings, business or properties of the Company, whether or not
arising from transactions in the ordinary course of business, except as set
forth in or contemplated by the Prospectus (exclusive of any supplement
thereto).
(o) PricewaterhouseCoopers LLP, who have
certified certain financial statements of the Company and delivered their report
with respect to the audited financial statements and schedule included in the
Prospectus and the Registration Statement, are independent public accountants
with respect to the Company within the meaning of the Act and the applicable
published rules and regulations thereunder.
(p) There are no transfer taxes or other similar
fees or charges under Federal law or the laws of any state, or any political
subdivision thereof, required to be paid in connection with the execution and
delivery of this Agreement or the issuance by the Company or sale by the Company
of the Securities.
(q) The Company has filed all foreign, federal,
state and local tax returns that are required to be filed or has requested
extensions thereof, except in any case in which the failure so to file would not
have a material adverse effect on the condition (financial or otherwise),
prospects, earnings, business or properties of the Company, whether or not
arising from transactions in the ordinary course of business, except as set
forth in or contemplated in the Prospectus (exclusive of any supplement thereto)
and has paid all taxes required to be paid by it and any other assessment, fine
or penalty levied against it, to the extent that any of the foregoing is due and
payable, except for such assessment, fine or penalty that is currently being
contested in good faith or as would not have a material adverse effect on the
condition (financial or otherwise), prospects, earnings, business or properties
of the Company, whether or not arising from transactions in the ordinary course
of business, except as set forth in or contemplated in the Prospectus (exclusive
of any supplement thereto).
(r) No labor problem or dispute with the
employees of the Company exists or, to the Company's knowledge, is threatened or
imminent, and the Company is not aware of any existing or imminent labor
disturbance by the employees of any of its principal suppliers, contractors or
customers, that could have a material adverse effect on the condition (financial
or otherwise), prospects, earnings, business or properties of the Company,
whether or not arising from transactions in the ordinary course of business,
except as set forth in or contemplated in the Prospectus (exclusive of any
supplement thereto).
(s) The Company is insured by insurers of
recognized financial responsibility against such losses and risks and in such
amounts as are prudent and customary in the business in which it is engaged; all
policies of insurance insuring the Company or its
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business, assets, employees, officers and directors are in full force and
effect; the Company is in compliance with the terms of such policies and
instruments in all material respects; and there are no claims by the Company
under any such policy or instrument as to which any insurance company is denying
liability or defending under a reservation of rights clause; the Company has not
been refused any insurance coverage sought or applied for; and the Company has
no reason to believe that it will not be able to renew its existing insurance
coverage as and when such coverage expires or to obtain similar coverage from
similar insurers as may be necessary to continue its business at a cost that
would not have a material adverse effect on the condition (financial or
otherwise), prospects, earnings, business or properties of the Company, whether
or not arising from transactions in the ordinary course of business, except as
set forth in or contemplated in the Prospectus (exclusive of any supplement
thereto).
(t) The Company possesses all licenses,
certificates, permits and other authorizations issued by the appropriate
federal, state or foreign regulatory authorities necessary to conduct its
business, and the Company has not received any notice of proceedings relating to
the revocation or modification of any such certificate, authorization or permit
which, singly or in the aggregate, if the subject of an unfavorable decision,
ruling or finding, would have a material adverse effect on the condition
(financial or otherwise), prospects, earnings, business or properties of the
Company, whether or not arising from transactions in the ordinary course of
business, except as set forth in or contemplated in the Prospectus (exclusive of
any supplement thereto).
(u) The Company maintains a system of internal
accounting controls sufficient to provide reasonable assurance that (1)
transactions are executed in accordance with management's general or specific
authorizations; (2) transactions are recorded as necessary to permit preparation
of financial statements in conformity with generally accepted accounting
principles and to maintain asset accountability; (3) access to assets is
permitted only in accordance with management's general or specific
authorization; and (4) the recorded accountability for assets is compared with
the existing assets at reasonable intervals and appropriate action is taken with
respect to any differences.
(v) The Company has not taken, directly or
indirectly, any action that has constituted or that was designed to or might
reasonably be expected to cause or result in, under the Exchange Act or
otherwise, the stabilization or manipulation of the price of any security of the
Company to facilitate the sale or resale of the Securities.
(w) The Company is (1) in compliance with any
and all applicable foreign, federal, state and local laws and regulations
relating to the protection of human health and safety, the environment or
hazardous or toxic substances or wastes, pollutants or contaminants
("Environmental Laws"), (2) has received and is in compliance with all permits,
licenses or other approvals required of them under applicable Environmental Laws
to conduct its business, and (3) has not received notice of any actual or
potential liability for the investigation or remediation of any disposal or
release of hazardous or toxic substances or wastes, pollutants or contaminants,
except where such non-compliance with Environmental Laws, failure to receive
required permits, licenses or other approvals, or liability would not,
individually or in the aggregate, have a material adverse change in the
condition (financial or otherwise), prospects, earnings, business or properties
of the Company, whether or not arising from transactions in the
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ordinary course of business, except as set forth in or contemplates in the
Prospectus (exclusive of any supplement thereto). Except as set forth in the
Prospectus, the Company has not been named as a "potentially responsible party"
under the Comprehensive Environmental Response, Compensation, and Liability Act
of 1980, as amended.
(x) The Company has fulfilled its obligations,
if any, under the minimum funding standards of Section 302 of the United States
Employee Retirement Income Security Act of 1974 ("ERISA") and the regulations
and published interpretations thereunder with respect to each "plan" (as defined
in Section 3(3) of ERISA and such regulations and published interpretations) in
which employees of the Company are eligible to participate and each plan is in
compliance in all material respects with the presently applicable provisions of
ERISA and such regulations and published interpretations. The Company has not
incurred any unpaid liability to the Pension Benefit Guaranty Corporation (other
than for the payment of premiums in the ordinary course) or to any such plan
under Title IV of ERISA.
(y) The Company owns, possesses, licenses or has
other rights to use, on reasonable terms, all patents, patent applications,
trade and service marks, trade and service mark registrations, trade names,
copyrights, licenses, inventions, trade secrets technology, know-how and other
intellectual property (collectively, the "Intellectual Property") necessary for
the conduct of the Company's business as now conducted or as proposed in the
Prospectus to be conducted. Except as set forth in the Prospectus, (1) to the
Company's knowledge, there are no rights of third parties to any such
Intellectual Property; (2) to the Company's knowledge, there is no material
infringement by third parties of any such Intellectual Property; (3) there is no
pending or, to the Company's knowledge, threatened action, suit, proceeding or
claim by others challenging the Company's rights in or to any such Intellectual
Property, and the Company is unaware of any facts which would form a reasonable
basis for any such claim; (4) to the Company's knowledge, there is no pending or
threatened action, suit, proceeding or claim by others challenging the validity
or scope of any such Intellectual Property, and the Company is unaware of any
facts which would form a reasonable basis for any such claim; (5) there is no
pending or, to the Company's knowledge, threatened action, suit, proceeding or
claim by others that the Company infringes or otherwise violates any patent,
trademark, copyright, trade secret or other proprietary rights of others, and
the Company is unaware of any other fact which would form a reasonable basis for
any such claim; (6) to the Company's knowledge, there is no U.S. patent or
published U.S. patent application which contains claims that dominate or may
dominate any Intellectual Property described in the Prospectus as being owned by
or licensed to the Company or that interferes with the issued or pending claims
of any such Intellectual Property; and (7) there is no prior art of which the
Company is aware that may render any U.S. patent held by the Company invalid or
any U.S. patent application held by the Company unpatentable which has not been
disclosed to the U.S. Patent and Trademark Office.
(z) The statements contained in the Prospectus
under the captions "Risk Factors" and "Business - Intellectual Property and
Licenses," insofar as such statements summarize legal matters, agreements,
documents, or proceedings discussed therein, are accurate and fair summaries of
such legal matters, agreements, documents or proceedings.
(aa) Except as disclosed in the Registration
Statement and the Prospectus, the Company (1) does not have any material lending
or other relationship with any
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bank or lending affiliate of Salomon Smith Barney Holdings Inc. and (2) does not
intend to use any of the proceeds from the sale of the Securities hereunder to
repay any outstanding debt owed to any affiliate of Salomon Smith Barney Holding
Inc.
Any certificate signed by any officer of the Company and
delivered to the Representatives or counsel for the Underwriters in
connection with the offering of the Securities shall be deemed a
representation and warranty by the Company, as to matters covered thereby, to
each Underwriter.
(ii) Each Selling Stockholder, severally and not
jointly, represents and warrants to, and agrees with, each Underwriter that:
(a) Such Selling Stockholder is the record and
beneficial owner of the Securities to be sold by it hereunder free and clear of
all liens, encumbrances, equities and claims and has duly endorsed such
Securities in blank, and, assuming that each Underwriter acquires its interest
in the Securities it has purchased from such Selling Stockholder without notice
of any adverse claim (within the meaning of Section 8-105 of the New York
Uniform Commercial Code ("UCC")), each Underwriter that has purchased such
Securities delivered on the Closing Date to The Depository Trust Company or
other securities intermediary by making payment therefor as provided herein, and
that has had such Securities credited to the securities account or accounts of
such Underwriters maintained with The Depository Trust Company or such other
securities intermediary will have acquired a security entitlement (within the
meaning of Section 8-102(a)(17) of the UCC) to such Securities purchased by such
Underwriter, and no action based on an adverse claim (within the meaning of
Section 8-105 of the UCC) may be asserted against such Underwriter with respect
to such Securities.
(b) Such Selling Stockholder has not taken,
directly or indirectly, any action designed to or which has constituted or which
might reasonably be expected to cause or result, under the Exchange Act or
otherwise, in stabilization or manipulation of the price of any security of the
Company to facilitate the sale or resale of the Securities.
(c) Certificates in negotiable form for such
Selling Stockholder's Securities have been placed in custody, for delivery
pursuant to the terms of this Agreement, under a Custody Agreement and Power of
Attorney duly authorized (if applicable) executed and delivered by such Selling
Stockholder, in the form heretofore furnished to you (the "Custody Agreement")
with U.S. Stock Transfer Corporation, as Custodian (the "Custodian"); the
Securities represented by the certificates so held in custody for each Selling
Stockholder are subject to the interests hereunder of the Underwriters; the
arrangements for custody and delivery of such certificates, made by such Selling
Stockholder hereunder and under the Custody Agreement, are not subject to
termination by any acts of such Selling Stockholder, or by operation of law,
whether by the death or incapacity of such Selling Stockholder or the occurrence
of any other event; and if any such death, incapacity or any other such event
shall occur before the delivery of such Securities hereunder, certificates for
the Securities will be delivered by the Custodian in accordance with the terms
and conditions of this Agreement and the Custody Agreement as if such death,
incapacity or other event had not occurred, regardless of whether or not the
Custodian shall have received notice of such death, incapacity or other event.
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(d) No consent, approval, authorization or order
of any court or governmental agency or body is required for the consummation by
such Selling Stockholder of the transactions contemplated herein, except such as
may have been obtained under the Act and such as may be required under the blue
sky laws of any jurisdiction in connection with the purchase and distribution of
the Securities by the Underwriters and such other approvals as have been
obtained.
(e) Neither the sale of the Securities being
sold by such Selling Stockholder nor the consummation of any other of the
transactions herein contemplated by such Selling Stockholder or the fulfillment
of the terms hereof by such Selling Stockholder will conflict with, result in a
breach or violation of, or constitute a default under any law or the terms of
any indenture or other agreement or instrument to which such Selling Stockholder
is a party or bound, or any judgment, order or decree applicable to such Selling
Stockholder of any court, regulatory body, administrative agency, governmental
body or arbitrator having jurisdiction over such Selling Stockholder.
(f) With respect to the Selling Stockholders
listed on Schedule V hereto only, such Selling Stockholder believes that the
representations and warranties of the Company contained in this Section 1 are
true and correct, and has no knowledge of any material fact or material
information related to the Company which is not disclosed in the Registration
Statement or the Prospectus.
Any certificate signed by any Selling Stockholder and
delivered to the Representatives or counsel for the Underwriters in connection
with the offering of the Securities shall be deemed a representation and
warranty by such Selling Stockholder, as to matters covered thereby, to each
Underwriter.
2. PURCHASE AND SALE.
(i) Subject to the terms and conditions and in reliance
upon the representations and warranties herein set forth, the Company and the
Firm Securities Selling Stockholders agree, severally and not jointly, to sell
to each Underwriter, and each Underwriter agrees, severally and not jointly, to
purchase from the Company and the Firm Securities Selling Stockholders, at a
purchase price of $[_________] per share, the amount of the Underwritten
Securities set forth opposite such Underwriter's name in Schedule I hereto.
(ii) Subject to the terms and conditions and in reliance
upon the representations and warranties herein set forth, the Option Securities
Selling Stockholders named in Schedule III and Schedule IV hereto hereby grant
an option to the several Underwriters to purchase, severally and not jointly, up
to 675,000 Option Securities at the same purchase price per share as the
Underwriters shall pay for the Underwritten Securities. Said option may be
exercised only to cover over-allotments in the sale of the Underwritten
Securities by the Underwriters. Said option may be exercised in whole or in part
at any time (but not more than once) on or before the 30th day after the date of
the Prospectus upon written or telegraphic notice by the Representatives to the
Company and such Option Securities Selling Stockholders setting forth the number
of shares of the Option Securities as to which the several Underwriters are
exercising the option and the settlement date. The maximum aggregate number of
Option Securities to be sold by the Option Securities Selling Stockholders is
675,000. The maximum
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number of Option Securities which each Option Securities Selling Stockholder
agrees to sell is set forth in Schedule III or Schedule IV hereto. In the event
that the Underwriters exercise less than their full over-allotment option, the
number of Option Securities to be sold by each Option Securities Selling
Stockholder listed on Schedule III or Schedule IV shall be, as nearly as
practicable, in the same proportion as the maximum number of Option Securities
to be sold by each Option Securities Selling Stockholder and the number of
Option Securities to be sold. The number of Option Securities to be purchased by
each Underwriter shall be the same percentage of the total number of shares of
the Option Securities to be purchased by the several Underwriters as such
Underwriter is purchasing of the Underwritten Securities, subject to such
adjustments as you in your absolute discretion shall make to eliminate any
fractional shares.
3. DELIVERY AND PAYMENT. Delivery of and payment for the
Underwritten Securities and the Option Securities (if the option provided for in
Section 2(ii) hereof shall have been exercised on or before the third Business
Day prior to the Closing Date) shall be made at 10:00 AM, New York City time, on
[_________], 2000, or at such time on such later date not more than three
Business Days after the foregoing date as the Representatives shall designate,
which date and time may be postponed by agreement among the Representatives, the
Company and the Firm Securities Selling Stockholders or as provided in Section 9
hereof (such date and time of delivery and payment for the Securities being
herein called the "Closing Date"). Delivery of the Securities shall be made to
the Representatives for the respective accounts of the several Underwriters
against payment by the several Underwriters through the Representatives of the
respective aggregate purchase prices of the Securities being sold by the Company
and each of the Selling Stockholders to or upon the order of the Company and
Custodian on behalf of the Selling Stockholders by wire transfer payable in
same-day funds to the accounts specified by the Company and the Custodian.
Delivery of the Underwritten Securities and the Option Securities shall be made
through the facilities of The Depository Trust Company unless the
Representatives shall otherwise instruct.
Each Selling Stockholder will pay all applicable state
transfer taxes, if any, involved in the transfer to the several Underwriters of
the Securities to be purchased by them from such Selling Stockholder and the
respective Underwriters will pay any additional stock transfer taxes involved in
further transfers.
If the option provided for in Section 2(ii) hereof is
exercised after the third Business Day prior to the Closing Date, the Option
Securities Selling Stockholders named in Schedule III and Schedule IV hereto
will deliver the Option Securities (at the expense of the Company) to the
Representatives, at 388 Greenwich Street, New York, New York, on the date
specified by the Representatives (which shall be within three Business Days
after exercise of said option) for the respective accounts of the several
Underwriters, against payment by the several Underwriters through the
Representatives of the purchase price thereof to or upon the order of the
Custodian on behalf of the Option Securities Selling Stockholders named in
Schedule III and Schedule IV by wire transfer payable in same-day funds to the
accounts specified by the Custodian. If settlement for the Option Securities
occurs after the Closing Date, such Option Securities Selling Stockholders will
deliver to the Representatives on the settlement date for the Option Securities,
and the obligation of the Underwriters to purchase the Option Securities shall
be conditioned upon receipt of, supplemental opinions, certificates and letters
confirming as of
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such date the opinions, certificates and letters delivered on the Closing Date
pursuant to Section 6 hereof.
4. OFFERING BY UNDERWRITERS. It is understood that the several
Underwriters propose to offer the Securities for sale to the public as set forth
in the Prospectus.
5. AGREEMENTS.
(i) The Company agrees with the several Underwriters
that:
(a) The Company will use its reasonable best
efforts to cause the Registration Statement, if not effective at the Execution
Time, and any amendment thereof, to become effective. Prior to the termination
of the offering of the Securities, the Company will not file any amendment of
the Registration Statement or supplement to the Prospectus or any Rule 462(b)
Registration Statement unless the Company has furnished you a copy for your
review prior to filing and will not file any such proposed amendment or
supplement to which you reasonably object. Subject to the foregoing sentence, if
the Registration Statement has become or becomes effective pursuant to Rule
430A, or filing of the Prospectus is otherwise required under Rule 424(b), the
Company will cause the Prospectus, properly completed, and any supplement
thereto to be filed with the Commission pursuant to the applicable paragraph of
Rule 424(b) within the time period prescribed and will provide evidence
satisfactory to the Representatives of such timely filing. The Company will
promptly advise the Representatives (1) when the Registration Statement, if not
effective at the Execution Time, shall have become effective, (2) when the
Prospectus, and any supplement thereto, shall have been filed (if required) with
the Commission pursuant to Rule 424(b) or when any Rule 462(b) Registration
Statement shall have been filed with the Commission, (3) when, prior to
termination of the offering of the Securities, any amendment to the Registration
Statement shall have been filed or become effective, (4) of any request by the
Commission or its staff for any amendment of the Registration Statement, or any
Rule 462(b) Registration Statement, or for any supplement to the Prospectus or
for any additional information, (5) of the issuance by the Commission of any
stop order suspending the effectiveness of the Registration Statement or the
institution or threatening of any proceeding for that purpose and (6) of the
receipt by the Company of any notification with respect to the suspension of the
qualification of the Securities for sale in any jurisdiction or the institution
or threatening of any proceeding for such purpose. The Company will use its
reasonable best efforts to prevent the issuance of any such stop order or the
suspension of any such qualification and, if issued, to obtain as soon as
possible the withdrawal thereof.
(b) If, at any time when a prospectus relating
to the Securities is required to be delivered under the Act, any event occurs as
a result of which the Prospectus as then supplemented would include any untrue
statement of a material fact or omit to state any material fact 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 to amend the Registration
Statement or supplement the Prospectus to comply with the Act or the rules
thereunder, the Company promptly will (1) notify the Representatives of any such
event, (2) prepare and file with the Commission, subject to the second sentence
of paragraph (i)(a) of this Section 5, an amendment or supplement which will
correct such statement or omission or effect such
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compliance and (3) supply any supplemented Prospectus to you in such quantities
as you may reasonably request.
(c) As soon as practicable, the Company will
make generally available to its security holders and to the Representatives an
earnings statement or statements of the Company which will satisfy the
provisions of Section 11(a) of the Act and Rule 158 under the Act.
(d) The Company will furnish to the
Representatives and counsel for the Underwriters signed copies of the
Registration Statement (including exhibits thereto) and to each other
Underwriter a copy of the Registration Statement (without exhibits thereto) and,
so long as delivery of a prospectus by an Underwriter or dealer may be required
by the Act, as many copies of each Preliminary Prospectus and the Prospectus and
any supplement thereto as the Representatives may reasonably request.
(e) The Company will arrange, if necessary, for
the qualification of the Securities for sale under the laws of such
jurisdictions as the Representatives may designate and will maintain such
qualifications in effect so long as required for the distribution of the
Securities; provided that in no event shall the Company be obligated to qualify
to do business in any jurisdiction where it is not now so qualified or to take
any action that would subject it to service of process in suits, or subject it
to taxes, other than those arising out of the offering or sale of the
Securities, in any jurisdiction where it is not now so subject.
(f) The Company will not, without the prior
written consent of Salomon Smith Barney Inc., offer, sell, contract to sell,
pledge, or otherwise dispose of, (or enter into any transaction which is
designed to, or might reasonably be expected to, result in the disposition
(whether by actual disposition or effective economic disposition due to cash
settlement or otherwise) by the Company or any affiliate of the Company or any
person in privity with the Company or any affiliate of the Company) directly or
indirectly, including the filing (or participation in the filing) of a
registration statement with the Commission in respect of, or establish or
increase a put equivalent position or liquidate or decrease a call equivalent
position within the meaning of Section 16 of the Exchange Act, any other shares
of Common Stock or any securities convertible into, or exercisable, or
exchangeable for, shares of Common Stock; or publicly announce an intention to
effect any such transaction, for a period of 90 days after the date of the
Underwriting Agreement, provided, however, that the Company may issue and sell
Common Stock pursuant to any employee stock option plan, stock ownership plan or
dividend reinvestment plan of the Company in effect at the Execution Time and
may issue Common Stock issuable upon the conversion of securities or the
exercise of warrants outstanding at the Execution Time.
(g) The Company will not take, directly or
indirectly, any action designed to or which has constituted or which might
reasonably be expected to cause or result, under the Exchange Act or otherwise,
in stabilization or manipulation of the price of any security of the Company to
facilitate the sale or resale of the Securities.
(h) The Company agrees to pay the costs and
expenses relating to the following matters: (1) the preparation, printing or
reproduction and filing with the Commission
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of the Registration Statement (including financial statements and exhibits
thereto), each Preliminary Prospectus, the Prospectus, and each amendment or
supplement to any of them; (2) the printing (or reproduction) and delivery
(including postage, air freight charges and charges for counting and packaging)
of such copies of the Registration Statement, each Preliminary Prospectus, the
Prospectus, and all amendments or supplements to any of them, as may, in each
case, be reasonably requested for use in connection with the offering and sale
of the Securities; (3) the preparation, printing, authentication, issuance and
delivery of certificates for the Securities, including any stamp or transfer
taxes in connection with the original issuance and sale of the Securities; (4)
the printing (or reproduction) and delivery of this Agreement, any blue sky
memorandum and all other agreements or documents printed (or reproduced) and
delivered in connection with the offering of the Securities; (5) the
registration of the Securities under the Exchange Act and the listing of the
Securities on the Nasdaq National Market; (6) any registration or qualification
of the Securities for offer and sale under the securities or blue sky laws of
the several states (including filing fees and the reasonable fees and expenses
of counsel for the Underwriters relating to such registration and
qualification); (7) any filings required to be made with the National
Association of Securities Dealers, Inc. (including filing fees and the
reasonable fees and expenses of counsel for the Underwriters relating to such
filings); (8) the transportation and other expenses incurred by or on behalf of
Company representatives in connection with presentations to prospective
purchasers of the Securities; (9) the fees and expenses of the Company's
accountants and the fees and expenses of counsel (including local and special
counsel) for the Company and the Selling Stockholders; and (10) all other costs
and expenses incident to the performance by the Company and the Selling
Stockholders of their obligations hereunder.
(ii) Each Selling Stockholder agrees with the several
Underwriters that:
(a) Except for the Securities to be sold by such
Selling Stockholder hereunder, such Selling Stockholder will not, without the
prior written consent of Salomon Smith Barney Inc., offer, sell, contract to
sell, pledge or otherwise dispose of, (or enter into any transaction which is
designed to, or might reasonably be expected to, result in the disposition
(whether by actual disposition or effective economic disposition due to cash
settlement or otherwise) by the Company or any affiliate of the Company or any
person in privity with the Company or any affiliate of the Company), directly or
indirectly, or file (or participate in the filing of) a registration statement
with the Commission in respect of, or establish or increase a put equivalent
position or liquidate or decrease a call equivalent position within the meaning
of Section 16 of the Exchange Act or publicly announce an intention to effect
any such transaction with respect to any shares of capital stock of the Company
defined as "Buyer's Common Shares" by that certain Reorganization Agreement, for
a period of (a) 180 days after the date of this Agreement for 50% of Buyer's
Common Shares held by each holder of Buyer's Common Shares and (b) for a period
of 360 days after the date of this Agreement for 50% of Buyer's Common Shares
held by each holder of Buyer's Common Shares.
(b) Such Selling Stockholder will not take any
action designed to or which has constituted or which might reasonably be
expected to cause or result, under the Exchange Act or otherwise, in
stabilization or manipulation of the price of any security of the Company to
facilitate the sale or resale of the Securities.
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<PAGE>
(c) Such Selling Stockholder will advise you
promptly, and if requested by you, will confirm such advice in writing, so long
as delivery of a prospectus relating to the Securities by an underwriter or
dealer may be required under the Act, of (1) any material change in the
Company's condition (financial or otherwise), prospects, earnings, business or
properties, (2) any change in information in the Registration Statement or the
Prospectus relating to such Selling Stockholder or (3) any new material
information relating to the Company or relating to any matter stated in the
Prospectus which comes to the attention of such Selling Stockholder.
(d) Such Selling Stockholder will pay all costs
and expenses incidental to the performance by such Selling Stockholder of his,
her or its obligations hereunder except to the extent Section 5(i)(h)
contemplates that such expenses will be paid by the Company.
6. CONDITIONS TO THE OBLIGATIONS OF THE UNDERWRITERS. The
obligations of the Underwriters to purchase the Underwritten Securities and the
Option Securities, as the case may be, shall be subject to the accuracy of the
representations and warranties on the part of the Company and the Selling
Stockholders contained herein as of the Execution Time, the Closing Date and any
settlement date pursuant to Section 3 hereof, to the accuracy of the statements
of the Company and the Selling Stockholders made in any certificates pursuant to
the provisions hereof, to the performance by the Company and the Selling
Stockholders of their respective obligations hereunder and to the following
additional conditions:
(i) If the Registration Statement has not become
effective prior to the Execution Time, unless the Representatives agree in
writing to a later time, the Registration Statement will become effective not
later than (1) 6:00 PM New York City time on the date of determination of the
public offering price, if such determination occurred at or prior to 3:00 PM New
York City time on such date or (2) 9:30 AM on the Business Day following the day
on which the public offering price was determined, if such determination
occurred after 3:00 PM New York City time on such date; if filing of the
Prospectus, or any supplement thereto, is required pursuant to Rule 424(b), the
Prospectus, and any such supplement, will be filed in the manner and within the
time period required by Rule 424(b); and no stop order suspending the
effectiveness of the Registration Statement shall have been issued and no
proceedings for that purpose shall have been instituted or threatened.
(ii) The Company shall have requested and caused Latham &
Watkins, counsel for the Company, to have furnished to the Representatives their
opinion, dated the Closing Date and addressed to the Representatives, to the
effect that:
(a) the Company has been duly incorporated and
is validly existing in good standing under the laws of the State of Delaware,
with corporate power and authority to own, lease and operate its properties and
to conduct its business as described in the Registration Statement and the
Prospectus. Based solely on certificates from public officials and verbal bring
down, such counsel shall confirm that the Company is qualified to do business in
each jurisdiction listed on Exhibit A hereto.
(b) the authorized capital stock of the Company
is as set forth in the Prospectus under the heading "Capitalization;" the
outstanding shares of Common Stock
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<PAGE>
(including the Securities being sold hereunder by the Selling Stockholders) have
been duly authorized and validly issued and are fully paid and nonassessable;
(c) the Securities being sold hereunder by the
Company have been duly authorized, and, when issued and delivered to and paid
for by the Underwriters in accordance with the terms of this Agreement, will be
validly issued, fully paid and nonassessable; the form of certificate used to
evidence the Securities is in due and proper form and complies with all of the
statutory requirements under the laws of the State of Delaware; to the best of
such counsel's knowledge, the holders of outstanding shares of capital stock of
the Company are not entitled to preemptive or other rights to subscribe for the
Securities; and, except as set forth in the Registration Statement and
Prospectus, to the best of such counsel's knowledge, no options, warrants or
other rights to purchase agreements or other obligations calling for the
issuance of, any shares of capital stock of the Company or any security or other
instrument that by its terms is convertible into, exercisable for, or
exchangeable for capital stock of the Company are outstanding;
(d) to the best of such counsel's knowledge,
based solely on docket searches in the jurisdictions set forth on Annex II to
their opinion for the Company, inquiries of and certificates from officers of
the Company and inquiries of attorneys within the firm who perform legal
services for the Company, there are no actions, suits, or proceedings pending or
threatened against the Company before any court, governmental agency, or any
arbitrator; and to the best of such counsel's knowledge, there is no contract or
other document of a character required to be described in the Registration
Statement or Prospectus, or to be filed as an exhibit thereto, which is not
described or filed as required;
(e) the statements in the Prospectus under the
heading "Business-Intellectual Property and Licenses" and "Description of
Capital Stock" insofar as they summarize legal matters, documents or proceedings
are accurate in all material respects;
(f) the Registration Statement has become
effective under the Act; any required filing of the Prospectus, and any
supplements thereto, pursuant to Rule 424(b) has been made in accordance with
Rule 424(b) and Rule 430A under the Act; to the best of such counsel's
knowledge, no stop order suspending the effectiveness of the Registration
Statement has been issued and no proceedings for that purpose have been
instituted or threatened; and the Registration Statement and the Prospectus
comply as to form in all material respects with the applicable requirements of
the Act and the rules thereunder; it being understood, however, that such
counsel need not express any opinion with respect to the financial statements,
schedules or other financial data included in the Registration Statement or the
Prospectus;
(g) this Agreement has been duly authorized,
executed and delivered by the Company;
(h) the Company is not and, after giving effect
to the sale of the Securities and the application of the proceeds thereof as
described in the Prospectus, will not be, an "investment company" as defined in
the Investment Company Act of 1940, as amended;
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<PAGE>
(i) no consent, approval, authorization, filing
with or order of any federal, California or Delaware court or governmental
agency or body is required for the consummation of the issuance and sale of the
Securities by the Company pursuant hereto, except such as have been obtained
under the Act and such as may be required under the state securities laws of any
jurisdiction in connection with the purchase and distribution of the Securities
by the Underwriters;
(j) neither the issue and sale of the Company
Securities, nor the consummation of any other of the transactions herein
contemplated nor the fulfillment of the terms hereof will, (1) violate the
certificate of incorporation or by-laws of the Company, (2) result in the breach
of or a default under any indenture, contract, lease, mortgage, deed of trust,
note agreement, loan agreement or other agreement, obligation, condition,
covenant or instrument filed, or incorporated by reference, as an exhibit to the
Registration Statement, or (3) breach or otherwise violate any existing
obligation of the Company under any court or administrative order, judgment or
decree specifically directed to the Company of which such counsel has knowledge,
or (4) violate applicable provisions of the General Corporation Law of the State
of Delaware or any statute or regulation of the State of California of the
United States known to us to be applicable to the Company (other than federal or
state securities laws, which are specifically addressed elsewhere herein); and
(k) to the best of such counsel's knowledge, no
holders of securities of the Company have rights to the registration of
securities under the Registration Statement other than rights arising under that
certain Reorganization Agreement that have been complied with or effectively
waived.
Such counsel also shall state that they have participated in
conferences with officers and other representatives of the Company, the
representatives of the independent public accountants of the Company, and the
representatives of the Underwriters, at which the contents of the Registration
Statement and the prospectus and related matters were discussed and, although
such counsel is not passing upon, and does not assume responsibility for, the
accuracy, completeness or fairness of the statements contained in the
Registration Statement and the Prospectus and has not made any independent check
or verification thereof, during the course of such representation (except as
otherwise stated in paragraphs (b) and (e) of this Section 6(ii)), no facts came
to counsel's attention that caused them to believe that on the Effective Date,
or the date the Registration Statement was last deemed amended, the Registration
Statement 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, or that the Prospectus, as of its date or as of the
Closing Date, contained an untrue statement of a material fact or omitted to
state a material fact necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading; it being
understood that such counsel expresses no belief with respect to the financial
statements, schedules and other financial data included in the Registration
Statement or the Prospectus.
In rendering such opinion, such counsel may rely (A) as to matters
involving the application of laws of any jurisdiction other than the States of
California and Delaware or the Federal laws of the United States, to the extent
they deem proper and specified in such opinion, upon the opinion of other
counsel of good standing whom they believe to be reliable and who are
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<PAGE>
satisfactory to counsel for the Underwriters and (B) as to matters of fact, to
the extent they deem proper, on certificates of responsible officers of the
Company and public officials. References to the Prospectus in this paragraph
(ii) include any supplements thereto at the Closing Date.
(iii) The Selling Stockholders shall have requested and
caused Latham & Watkins, or other counsel for the Selling Stockholders
reasonably acceptable to the Representatives, to have furnished to the
Representatives their opinion dated the Closing Date and addressed to the
Representatives, to the effect that:
(a) this Agreement and the Custody Agreement and
Power of Attorney have been duly executed and delivered by the Selling
Stockholders, the Custody Agreement is valid and binding on the Selling
Stockholders and each Selling Stockholder has full legal right and authority to
sell, transfer and deliver in the manner provided in this Agreement and the
Custody Agreement the Securities being sold by such Selling Stockholder
hereunder;
(b) assuming that each Underwriter acquires its
interest in the Securities it has purchased from such Selling Stockholder
without notice of any adverse claim (within the meaning of Section 8-105 of the
UCC), each Underwriter that has purchased such Securities delivered on the
Closing Date to The Depository Trust Company or other securities intermediary by
making payment therefor as provided herein, and that has had such Securities
credited to the securities account or accounts of such Underwriters maintained
with The Depository Trust Company or such other securities intermediary will
have acquired a security entitlement (within the meaning of Section 8-102(a)(17)
of the UCC) to such Securities purchased by such Underwriter, and no action
based on an adverse claim (within the meaning of Section 8-105 of the UCC) may
be asserted against such Underwriter with respect to such Securities;
(c) no consent, approval, authorization or order
of any court or governmental agency or body is required for the consummation by
any Selling Stockholder of the transactions contemplated herein, except such as
may have been obtained under the Act and such as may be required under the blue
sky laws of any jurisdiction in connection with the purchase and distribution of
the Securities by the Underwriters and such other approvals (specified in such
opinion) as have been obtained; and
(d) neither the sale of the Securities being
sold by any Selling Stockholder nor the consummation of any other of the
transactions herein contemplated by any Selling Stockholder or the fulfillment
of the terms hereof by any Selling Stockholder will conflict with, result in a
breach or violation of, or constitute a default under any law or the terms of
any indenture or other agreement or instrument known to such counsel and to
which any Selling Stockholder is a party or bound, or any judgment, order or
decree known to such counsel to be applicable to any Selling Stockholder of any
court, regulatory body, administrative agency, governmental body or arbitrator
having jurisdiction over any Selling Stockholder.
In rendering such opinion, such counsel may rely (A) as to
matters involving the application of laws of any jurisdiction other than the
States of California and Delaware or the Federal laws of the United States, to
the extent they deem proper and specified in such opinion, upon the opinion of
other counsel of good standing whom they believe to be reliable and who are
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satisfactory to counsel for the Underwriters, and (B) as to matters of fact, to
the extent they deem proper, on certificates of the Selling Stockholders and
public officials.
(iv) The Representatives shall have received from
O'Melveny & Myers LLP, counsel for the Underwriters, such opinion or opinions,
dated the Closing Date and addressed to the Representatives, with respect to the
issuance and sale of the Securities, the Registration Statement, the Prospectus
(together with any supplement thereto) and other related matters as the
Representatives may reasonably require, and the Company and each Selling
Stockholder shall have furnished to such counsel such documents as they request
for the purpose of enabling them to pass upon such matters.
(v) The Company shall have furnished to the
Representatives a certificate of the Company, signed by the Chairman of the
Board or the President and the principal financial or accounting officer of the
Company, dated the Closing Date, to the effect that the signers of such
certificate have carefully examined the Registration Statement, the Prospectus,
any supplements to the Prospectus and this Agreement and that:
(a) the representations and warranties of the
Company in this Agreement are true and correct in all material respects on and
as of the Closing Date with the same effect as if made on the Closing Date and
the Company has complied with all the agreements and satisfied all the
conditions on its part to be performed or satisfied at or prior to the Closing
Date;
(b) no stop order suspending the effectiveness
of the Registration Statement has been issued and no proceedings for that
purpose have been instituted or, to the Company's knowledge, threatened; and
(c) since the date of the most recent financial
statements included in the Prospectus (exclusive of any supplement thereto),
there has been no material adverse effect on the condition (financial or
otherwise), prospects, earnings, business or properties of the Company whether
or not arising from transactions in the ordinary course of business, except as
set forth in or contemplated in the Prospectus (exclusive of any supplement
thereto).
(vi) Each Selling Stockholder shall have furnished to the
Representatives a certificate, signed by such Selling Stockholder or his, her or
its attorney-in-fact on behalf of such Selling Stockholder, dated the Closing
Date, to the effect that the signer of such certificate has carefully examined
the Registration Statement, the Prospectus, any supplement to the Prospectus and
this Agreement and that the representations and warranties of such Selling
Stockholder in this Agreement are true and correct in all material respects on
and as of the Closing Date to the same effect as if made on the Closing Date.
(vii) The Company shall have requested and caused
PricewaterhouseCoopers LLP to have furnished to the Representatives letters, at
the Execution Time and at the Closing Date, dated respectively as of the
Execution Time and as of the Closing Date, in form and substance satisfactory to
the Representatives, confirming that they are independent accountants within the
meaning of the Act and the applicable rules and regulations adopted by the
Commission thereunder and that they have performed a review of the unaudited
interim financial
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information of the Company for the six-month period ended June 30, 2000 and as
at June 30, 2000, in accordance with Statement on Auditing Standards No. 71, and
stating in effect that:
(a) in their opinion the audited financial
statements and financial statement schedule included in the Registration
Statement and the Prospectus and reported on by them comply as to form in all
material respects with the applicable accounting requirements of the Act and the
related rules and regulations adopted by the Commission;
(b) on the basis of a reading of the latest
unaudited financial statements made available by the Company; their limited
review, in accordance with standards established under Statement on Auditing
Standards No. 71, of the unaudited interim financial information for the
six-month period ended June 30, 1999 and 2000, and as at June 30, 2000; carrying
out certain specified procedures (but not an examination in accordance with
generally accepted auditing standards) which would not necessarily reveal
matters of significance with respect to the comments set forth in such letter; a
reading of the minutes of the meetings of the stockholders, directors and the
compensation and audit committees of the Company; and inquiries of certain
officials of the Company who have responsibility for financial and accounting
matters of the Company as to transactions and events subsequent to December 31,
1999, nothing came to their attention which caused them to believe that:
(1) any unaudited financial statements
included in the Registration Statement and the
Prospectus do not comply as to form in all material
respects with applicable accounting requirements of
the Act and with the related rules and regulations
adopted by the Commission with respect to
registration statements on Form S-1; and said
unaudited financial statements are not in conformity
with generally accepted accounting principles applied
on a basis substantially consistent with that of the
audited financial statements included in the
Registration Statement and the Prospectus;
(2) with respect to the period
subsequent to June 30, 2000, there were any changes,
at a specified date not more than five days prior to
the date of the letter, in the long-term debt of the
Company or capital stock of the Company or decreases
in the stockholders' equity of the Company as
compared with the amounts shown on the June 30, 2000
consolidated balance sheet included in the
Registration Statement and the Prospectus, or for the
period from July 1, 2000 to such specified date there
were any decreases, as compared with the period from
January 1, 2000 to June 30, 2000 in the net revenues
and operating income of the Company, except in all
instances for changes or decreases set forth in such
letter, in which case the letter shall be accompanied
by an explanation by the Company as to the
significance thereof unless said explanation is not
deemed necessary by the Representatives;
(3) the information included in the
Registration Statement and Prospectus in response to
Regulation S-K, Item 301 (Selected Financial Data),
Item 302 (Supplementary Financial Information), and
Item 402
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(Executive Compensation) is not in conformity with
the applicable disclosure requirements of Regulation
S-K; or
(4) the unaudited amounts of revenues
for the quarter ended September 30, 2000 do not agree
with the amounts set forth in the unaudited financial
statements for the same period or were not determined
on a basis substantially consistent with that of the
corresponding amounts in the audited financial
statements included in the Registration Statement and
the Prospectus.
(c) they have performed certain other specified
procedures as a result of which they determined that certain information of an
accounting, financial or statistical nature (which is limited to accounting,
financial or statistical information derived from the general accounting records
of the Company) set forth in the Registration Statement and the Prospectus,
including the information set forth under the captions "Selected Financial Data"
and in the Prospectus and the financial statements included in the Registration
Statement, agrees with the accounting records of the Company, excluding any
questions of legal interpretation.
References to the Prospectus in this paragraph (vii) include any supplement
thereto at the date of the letter.
(viii) Subsequent to the Execution Time or, if earlier, the
dates as of which information is given in the Registration Statement (exclusive
of any amendment thereof) and the Prospectus (exclusive of any supplement
thereto), there shall not have been (i) any change or decrease specified in the
letter or letters referred to in paragraph (vii) of this Section 6 or (ii) any
change, or any development involving a prospective change, in or affecting the
condition (financial or otherwise), earnings, business or properties of the
Company, whether or not arising from transactions in the ordinary course of
business, except as set forth in or contemplated in the Prospectus (exclusive of
any supplement thereto) the effect of which, in any case referred to in clause
(i) or (ii) above, is, in the sole judgment of the Representatives, so material
and adverse as to make it impractical or inadvisable to proceed with the
offering or delivery of the Securities as contemplated by the Registration
Statement (exclusive of any amendment thereof) and the Prospectus (exclusive of
any supplement thereto).
(ix) Prior to the Closing Date, the Company and the
Selling Stockholders shall have furnished to the Representatives such further
information, certificates and documents as the Representatives may reasonably
request.
(x) The Securities shall have been listed and admitted
and authorized for trading on the Nasdaq National Market, and satisfactory
evidence of such actions shall have been provided to the Representatives.
(xi) At the Execution Time, the Company shall have
furnished to the Representatives a letter substantially in the form of Exhibit B
hereto from each officer and director of the Company and holders of 5% or more
of the Company's equity securities addressed to the Representatives and a letter
substantially in the form of Exhibit C hereto from
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each of the stockholders of the Company who received Buyer's Common Shares in
connection with the Reorganization Agreement.
If any of the conditions specified in this Section 6 shall not
have been fulfilled in all material respects when and as provided in this
Agreement, or if any of the opinions and certificates mentioned above or
elsewhere in this Agreement shall not be in all material respects reasonably
satisfactory in form and substance to the Representatives and counsel for the
Underwriters, this Agreement and all obligations of the Underwriters hereunder
may be canceled at, or at any time prior to, the Closing Date by the
Representatives. Notice of such cancellation shall be given to the Company and
each Selling Stockholder in writing or by telephone or facsimile confirmed in
writing.
The documents required to be delivered by this Section 6 shall
be delivered at the office of Latham & Watkins, counsel for the Company, at 701
"B" Street, Suite 2100, San Diego, California 92101, on the Closing Date.
7. REIMBURSEMENT OF UNDERWRITERS' EXPENSES. If the sale of the
Securities provided for herein is not consummated because any condition to the
obligations of the Underwriters set forth in Section 6 hereof is not satisfied,
because of any termination pursuant to Section 10 hereof or because of any
refusal, inability or failure on the part of the Company or any Selling
Stockholders to perform any agreement herein or comply with any provision hereof
other than by reason of a default by any of the Underwriters, the Company will
reimburse the Underwriters severally through Salomon Smith Barney on demand for
all out-of-pocket expenses (including reasonable fees and disbursements of
counsel) that shall have been incurred by them in connection with the proposed
purchase and sale of the Securities. If the Company is required to make any
payments to the Underwriters under this Section 7 because of any Selling
Stockholder's refusal, inability or failure to satisfy any condition to the
obligations of the Underwriters set forth in Section 6, the Selling Stockholders
pro rata in proportion to the percentage of Securities to be sold by each shall
reimburse the Company on demand for all amounts so paid.
8. INDEMNIFICATION AND CONTRIBUTION.
(i) The Company agrees to indemnify and hold harmless
each Underwriter, the directors, officers, employees and agents of each
Underwriter and each person who controls any Underwriter within the meaning
of either the Act or the Exchange Act against any and all losses, claims,
damages or liabilities, joint or several, to which they or any of them may
become subject under the Act, the Exchange Act or other Federal or state
statutory law or regulation, at common law or otherwise, insofar as such
losses, claims, damages or liabilities (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 Securities as originally filed or in any amendment thereof, or in any
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, and agrees to
reimburse each such indemnified party, as incurred, for any legal or other
expenses reasonably incurred by them in connection with investigating or
defending any
-21-
<PAGE>
such loss, claim, damage, liability or action; provided, however, that the
Company will 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 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 the Representatives
specifically for inclusion therein; PROVIDED FURTHER, that with respect to
any untrue statement or omission of material fact made in any Preliminary
Prospectus, the indemnity agreement contained in this Section 8(i) shall not
inure to the benefit of any Underwriter from whom the person asserting any
such loss, claim, damage or liability purchased the securities concerned, to
the extent that any such loss, claim, damage or liability of such Underwriter
occurs under the circumstance where it shall have been determined by a court
of competent jurisdiction by final and nonappealable judgment that (w) the
Company had previously furnished copies of the Prospectus to the
Representatives, (x) delivery of the Prospectus was required by the Act to be
made to such person, (y) the untrue statement or omission of a material fact
contained in the Preliminary Prospectus was corrected in the Prospectus and
(z) there was not sent or given to such person, at or prior to the written
confirmation of the sale of such securities to such person, a copy of the
Prospectus. This indemnity agreement will be in addition to any liability
which the Company may otherwise have.
(ii) Each of the Selling Stockholders, severally and
not jointly, agrees to indemnify and hold harmless each Underwriter, the
directors, officers, employees and agents of each Underwriter and each person
who controls any Underwriter within the meaning of either the Act or the
Exchange Act against any and all losses, claims, damages or liabilities,
joint or several, to which they or any of them may become subject under the
Act, the Exchange Act or other Federal or state statutory law or regulation,
at common law or otherwise, insofar as such losses, claims, damages or
liabilities (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 Securities as
originally filed or in any amendment thereof, or in any 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, but only with reference to
written information relating to such Selling Stockholder furnished to the
Company by or on behalf of such Selling Stockholder specifically for
inclusion in the documents referred to in the foregoing indemnity, and agrees
to reimburse each such indemnified party, as incurred, for any legal or other
expenses reasonably incurred by them in connection with investigating or
defending any such loss, claim, damage, liability or action; provided,
however, that with respect to Selling Stockholder will not be liable in any
such case to the extent that any such untrue statement or alleged untrue
statement or omission or alleged omission made in any Preliminary Prospectus,
the indemnity agreement contained in this Section 8(ii) shall not inure to
the benefit of any Underwriter from whom the person asserting any such loss,
claim, damage or liability purchased the securities concerned, to the extent
that any such loss, claim, damage or liability of such Underwriter occurs
under the circumstance where it shall have been determined by a court of
competent jurisdiction by final and nonappealable judgment that (w) the
Company had previously furnished copies of the Prospectus to the
Representatives, (x) delivery of the Prospectus was required by the Act to be
made to such person, (y) the untrue statement or
-22-
<PAGE>
omission of a material fact contained in the Preliminary Prospectus was
corrected in the Prospectus and (z) there was not sent or given to such person,
at or prior to the written confirmation of the sale of such securities to such
person, a copy of the Prospectus. This indemnity agreement will be in addition
to any liability which such Selling Stockholder may otherwise have.
(iii) Each Underwriter, severally and not jointly, agrees
to indemnify and hold harmless the Company, each of its directors, each of its
officers who signs the Registration Statement, and each person who controls the
Company within the meaning of either the Act or the Exchange Act and each
Selling Stockholder, to the same extent as the foregoing indemnities to each
Underwriter, but only with reference to written information relating to such
Underwriter furnished to the Company by or on behalf of such Underwriter through
the Representatives specifically for inclusion in the documents referred to in
the foregoing indemnities. This indemnity agreement will be in addition to any
liability which any Underwriter may otherwise have. The Company and each Selling
Stockholder acknowledge that the statements set forth in the last paragraph of
the cover page regarding delivery of the Securities and, under the heading
"Underwriting," (1) the list of Underwriters and their respective participation
in the sale of the Securities, (2) the paragraph related to concessions and
reallowances, (3) the paragraph that includes a table showing the underwriting
discounts and commissions to be paid to the Underwriters by the Company and the
Selling Stockholders in connection with the Offering, (4) the paragraphs related
to stabilization, syndicate covering transactions, passive market making and
penalty bids and the effect thereof and (5) the paragraph regarding making a
Prospectus available in electronic format and Internet distributions of shares
in any Preliminary Prospectus and the Prospectus constitute the only information
furnished in writing by or on behalf of the several Underwriters for inclusion
in any Preliminary Prospectus or the Prospectus.
(iv) Promptly after receipt by an indemnified party under
this Section 8 of notice of the commencement of any action, such indemnified
party will, if a claim in respect thereof is to be made against the indemnifying
party under this Section 8, notify the indemnifying party in writing of the
commencement thereof; but the failure so to notify the indemnifying party (1)
will not relieve it from liability under paragraph (i), (ii) or (iii) above
unless and to the extent it did not otherwise learn of such action and such
failure results in the forfeiture by the indemnifying party of substantial
rights and defenses and (2) will not, in any event, relieve the indemnifying
party from any obligations to any indemnified party other than the
indemnification obligation provided in paragraph (i), (ii) or (iii). The
indemnifying party shall be entitled to appoint counsel of the indemnifying
party's choice at the indemnifying party's expense to represent the indemnified
party in any action for which indemnification is sought (in which case the
indemnifying party shall not thereafter be responsible for the fees and expenses
of any separate counsel retained by the indemnified party or parties except as
set forth below); provided, however, that such counsel shall be satisfactory to
the indemnified party. Notwithstanding the indemnifying party's election to
appoint counsel to represent the indemnified party in an action, the indemnified
party shall have the right to employ separate counsel (including local counsel),
and the indemnifying party shall bear the reasonable fees, costs and expenses of
such separate counsel if (1) the use of counsel chosen by the indemnifying party
to represent the indemnified party would present such counsel with a conflict of
interest, (2) the actual or potential defendants in, or targets of, any such
action include both the indemnified party and the indemnifying party and the
indemnified party shall have reasonably
-23-
<PAGE>
concluded that there may be legal defenses available to it and/or other
indemnified parties which are different from or additional to those available to
the indemnifying party, (3) the indemnifying party shall not have employed
counsel satisfactory to the indemnified party to represent the indemnified party
within a reasonable time after notice of the institution of such action or (4)
the indemnifying party shall authorize the indemnified party to employ separate
counsel at the expense of the indemnifying party. An indemnifying party will
not, without the prior written consent of the indemnified parties, settle or
compromise or consent to the entry of any judgment with respect to any pending
or threatened claim, action, suit or proceeding in respect of which
indemnification or contribution may be sought hereunder (whether or not the
indemnified parties are actual or potential parties to such claim or action)
unless such settlement, compromise or consent includes an unconditional release
of each indemnified party from all liability arising out of such claim, action,
suit or proceeding.
(v) In the event that the indemnity provided in
paragraph (i), (ii) or (iii) of this Section 8 is unavailable to or
insufficient to hold harmless an indemnified party for any losses, claims,
damages and liabilities (including legal or other expenses reasonably
incurred in connection with investigating or defending same) contemplated by
such paragraphs, the Company, the Selling Stockholders and the Underwriters
severally agree to contribute to the aggregate losses, claims, damages and
liabilities (including legal or other expenses reasonably incurred in
connection with investigating or defending same) (collectively "Losses") to
which the Company, the Selling Stockholders and one or more of the
Underwriters may be subject in such proportion as is appropriate to reflect
the relative benefits received by the Company and the Selling Stockholders on
the one hand and by the Underwriters on the other from the offering of the
Securities; provided, however, that in no case shall any Underwriter (except
as may be provided in any agreement among underwriters relating to the
offering of the Securities) be responsible for any amount in excess of the
underwriting discount or commission applicable to the Securities purchased by
such Underwriter hereunder. If the allocation provided by the immediately
preceding sentence is unavailable for any reason, the Company, the Selling
Stockholders and the Underwriters severally shall contribute in such
proportion as is appropriate to reflect not only such relative benefits but
also the relative fault of the Company and the Selling Stockholders on the
one hand and of the Underwriters on the other in connection with the
statements or omissions which resulted in such Losses as well as any other
relevant equitable considerations. Benefits received by the Company and the
Selling Stockholders shall be deemed to be equal to the total net proceeds
from the offering (before deducting expenses) received by it, and benefits
received by the Underwriters shall be deemed to be equal to the total
underwriting discounts and commissions, in each case as set forth on the
cover page of the Prospectus. Relative fault shall be determined by reference
to, among other things, whether any untrue or any alleged untrue statement of
a material fact or the omission or alleged omission to state a material fact
relates to information provided by the Company or the Selling Stockholders on
the one hand or the Underwriters on the other, the intent of the parties and
their relative knowledge, access to information and opportunity to correct or
prevent such untrue statement or omission. The Company, the Selling
Stockholders and the Underwriters agree that it would not be just and
equitable if contribution were determined by pro rata allocation or any other
method of allocation which does not take account of the equitable
considerations referred to above. Notwithstanding the provisions of this
paragraph (v), 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
-24-
<PAGE>
misrepresentation. For purposes of this Section 8, each person who controls an
Underwriter within the meaning of either the Act or the Exchange Act and each
director, officer, employee and agent of an Underwriter shall have the same
rights to contribution as such Underwriter, and each person who controls the
Company within the meaning of either the Act or 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 the applicable terms and conditions of this
paragraph (v).
(vi) The liability of each Selling Stockholder under such
Selling Stockholder's representations and warranties contained in Section 1
hereof and under the indemnity and contribution agreements contained in this
Section 8 shall be limited to an amount equal to the public offering price of
the Securities sold by such Selling Stockholder to the Underwriters. The Company
and the Selling Stockholders may agree, as among themselves and without limiting
the rights of the Underwriters under this Agreement, as to the respective
amounts of such liability for which they each shall be responsible.
9. DEFAULT BY AN UNDERWRITER. If any one or more Underwriters
shall fail to purchase and pay for any of the Securities agreed to be purchased
by such Underwriter or Underwriters hereunder and such failure to purchase shall
constitute a default in the performance of its or their obligations under this
Agreement, the remaining Underwriters shall be obligated severally to take up
and pay for (in the respective proportions which the amount of Securities set
forth opposite their names in Schedule I hereto bears to the aggregate amount of
Securities set forth opposite the names of all the remaining Underwriters) the
Securities which the defaulting Underwriter or Underwriters agreed but failed to
purchase; provided, however, that in the event that the aggregate amount of
Securities which the defaulting Underwriter or Underwriters agreed but failed to
purchase shall exceed 10% of the aggregate amount of Securities set forth in
Schedule I hereto, the remaining Underwriters shall have the right to purchase
all, but shall not be under any obligation to purchase any, of the Securities,
and if such nondefaulting Underwriters do not purchase all the Securities, this
Agreement will terminate without liability to any nondefaulting Underwriter, the
Selling Stockholders or the Company. In the event of a default by any
Underwriter as set forth in this Section 9, the Closing Date shall be postponed
for such period, not exceeding five Business Days, as the Representatives shall
determine in order that the required changes in the Registration Statement and
the Prospectus or in any other documents or arrangements may be effected.
Nothing contained in this Agreement shall relieve any defaulting Underwriter of
its liability, if any, to the Company, the Selling Stockholders and any
nondefaulting Underwriter for damages occasioned by its default hereunder.
10. TERMINATION. This Agreement shall be subject to termination in
the absolute discretion of the Representatives, by notice given to the Company
prior to delivery of and payment for the Securities, if at any time prior to
such time (1) trading in the Company's Common Stock shall have been suspended by
the Commission or the Nasdaq National Market or trading in securities generally
on the New York Stock Exchange or the Nasdaq National Market shall have been
suspended or limited or minimum prices shall have been established on either of
such Exchange or the Nasdaq National Market, (2) a banking moratorium shall have
been declared either by Federal or New York State authorities or (3) there shall
have occurred any outbreak or escalation of hostilities, declaration by the
United States of a national emergency or war, or other calamity or crisis the
effect of which on financial markets is such as to make it, in
-25-
<PAGE>
the sole judgment of the Representatives, impractical or inadvisable to proceed
with the offering or delivery of the Securities as contemplated by the
Prospectus (exclusive of any supplement thereto).
11. REPRESENTATIONS AND INDEMNITIES TO SURVIVE. The respective
agreements, representations, warranties, indemnities and other statements of the
Company or its officers, of each Selling Stockholder and of the Underwriters set
forth in or made pursuant to this Agreement will remain in full force and
effect, regardless of any investigation made by or on behalf of any Underwriter,
any Selling Stockholder or the Company or any of the officers, directors,
employees, agents or controlling persons referred to in Section 8 hereof, and
will survive delivery of and payment for the Securities. The provisions of
Sections 7 and 8 hereof shall survive the termination or cancellation of this
Agreement.
12. NOTICES. All communications hereunder will be in writing and
effective only on receipt, and, if sent to the Representatives, will be mailed,
delivered or telefaxed to the Salomon Smith Barney Inc. General Counsel fax no.:
(212) 816-7912 and confirmed to the General Counsel, Salomon Smith Barney Inc.,
at 388 Greenwich Street, New York, New York, 10013, Attention: General Counsel;
or, if sent to the Company, will be mailed, delivered or telefaxed to JNI
Corporation, 9775 Towne Center Drive, San Diego, California 92121, fax no. (858)
552-1428, Attention: Chief Financial Officer; or if sent to any Selling
Stockholder, will be mailed, delivered or telefaxed and confirmed to it at the
address set forth in Schedule II or Schedule III hereto, as applicable.
13. SUCCESSORS. This Agreement will inure to the benefit of and be
binding upon the parties hereto and their respective successors and the
officers, directors, employees, agents and controlling persons referred to in
Section 8 hereof, and no other person will have any right or obligation
hereunder.
14. APPLICABLE LAW. This Agreement will be governed by and
construed in accordance with the laws of the State of New York applicable to
contracts made and to be performed within the State of New York.
15. COUNTERPARTS. This Agreement may be signed in one or more
counterparts, each of which shall constitute an original and all of which
together shall constitute one and the same agreement.
16. HEADINGS. The section headings used herein are for convenience
only and shall not affect the construction hereof.
17. DEFINITIONS. The terms which follow, when used in this
Agreement, shall have the meanings indicated.
"Act" shall mean the Securities Act of 1933, as amended, and
the rules and regulations of the Commission promulgated thereunder.
"Business Day" shall mean any day other than a Saturday, a
Sunday or a legal holiday or a day on which banking institutions or
trust companies are authorized or obligated by law to close in New York
City.
-26-
<PAGE>
"Commission" shall mean the Securities and Exchange
Commission.
"Effective Date" shall mean each date and time that the
Registration Statement, any post-effective amendment or amendments
thereto and any Rule 462(b) Registration Statement became or become
effective.
"Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended, and the rules and regulations of the Commission promulgated
thereunder.
"Execution Time" shall mean the date and time that this
Agreement is executed and delivered by the parties hereto.
"Preliminary Prospectus" shall mean any preliminary prospectus
referred to in paragraph 1(i)(a) above and any preliminary prospectus
included in the Registration Statement at the Effective Date that omits
Rule 430A Information.
"Prospectus" shall mean the prospectus relating to the Securities
that is first filed pursuant to Rule 424(b) after the Execution Time or,
if no filing pursuant to Rule 424(b) is required, shall mean the form of
final prospectus relating to the Securities included in the Registration
Statement at the Effective Date.
"Registration Statement" shall mean the registration statement
referred to in paragraph 1(i)(a) above, including exhibits and financial
statements, as amended at the Execution Time (or, if not effective at
the Execution Time, in the form in which it shall become effective) and,
in the event any post-effective amendment thereto or any Rule 462(b)
Registration Statement becomes effective prior to the Closing Date,
shall also mean such registration statement as so amended or such Rule
462(b) Registration Statement, as the case may be. Such term shall
include any Rule 430A Information deemed to be included therein at the
Effective Date as provided by Rule 430A.
"Rule 424", "Rule 430A" and "Rule 462" refer to such rules
under the Act.
"Rule 430A Information" shall mean information with respect to
the Securities and the offering thereof permitted to be omitted from
the Registration Statement when it becomes effective pursuant to Rule
430A.
"Rule 462(b) Registration Statement" shall mean a registration
statement and any amendments thereto filed pursuant to Rule 462(b)
relating to the offering covered by the registration statement referred
to in Section 1(a) hereof.
-27-
<PAGE>
If the foregoing is in accordance with your understanding of
our agreement, please sign and return to us the enclosed duplicate
hereof, whereupon this letter and your acceptance shall represent a
binding agreement among the Company and the several Underwriters.
Very truly yours,
JNI Corporation
By:
------------------------------------
Name:
-------------------------------
Title:
------------------------------
The Firm Securities Selling Stockholders
listed on Schedule II attached hereto
By:
------------------------------------
Name:
-------------------------------
As Attorney-in-Fact for the Firm
Securities Selling Stockholders
By:
------------------------------------
Name:
-------------------------------
As Attorney-in-Fact for the Firm
Securities Selling Stockholders
By:
------------------------------------
Name:
-------------------------------
As Attorney-in-Fact for the Firm
Securities Selling Stockholders
-28-
<PAGE>
The Option Securities Selling Stockholders
listed on Schedule III attached hereto
By:
------------------------------------
Name:
-------------------------------
As Attorney-in-Fact for the Option
Securities Selling Stockholders
listed on Schedule III
By:
------------------------------------
Name:
-------------------------------
As Attorney-in-Fact for the Option
Securities Selling Stockholders
listed on Schedule III
The Option Securities Selling Stockholders
listed on Schedule IV attached hereto
By:
------------------------------------
Name:
-------------------------------
As Attorney-in-Fact for the Option
Securities Selling Stockholders
listed on Schedule IV
By:
------------------------------------
Name:
-------------------------------
As Attorney-in-Fact for the Option
Securities Selling Stockholders
listed on Schedule IV
-29-
<PAGE>
The foregoing Agreement is hereby confirmed and accepted as of the date first
above written.
Salomon Smith Barney Inc.
Bear, Stearns & Co. Inc.
Chase Securities Inc.
By: Salomon Smith Barney Inc.
By:
----------------------------------
Name:
-----------------------------
Title:
----------------------------
For themselves and the other
several Underwriters named in
Schedule I to the foregoing
Agreement.
-30-
<PAGE>
SCHEDULE I
<TABLE>
<CAPTION>
NUMBER OF UNDERWRITTEN
UNDERWRITERS SECURITIES TO BE PURCHASED
------------------------------------- --------------------------------
<S> <C>
Salomon Smith Barney Inc.
Bear, Stearns & Co. Inc.
Chase Securities Inc.
--------------------------------
Total.......................
================================
</TABLE>
Schedule I-1
<PAGE>
SCHEDULE II
<TABLE>
<CAPTION>
NUMBER OF MAXIMUM NUMBER OF
UNDERWRITTEN SECURITIES OPTION SECURITIES TO BE
FIRM SECURITIES SELLING STOCKHOLDERS: TO BE SOLD SOLD
------------------------------------- ----------------------- -----------------------
<S> <C> <C>
[name]
c/o Jaycor
Attention: Randy Johnson
3394 Carmel Mountain Road
San Diego, CA 92121
Fax No. (858) 720-4040.................
[name].................................
----------------------- -----------------------
Total..................
======================= =======================
</TABLE>
Schedule II-1
<PAGE>
SCHEDULE III
<TABLE>
<CAPTION>
OPTION SECURITIES NUMBER OF OPTION
SELLING STOCKHOLDERS: SECURITIES TO BE SOLD
------------------------------------- --------------------------------
<S> <C>
--------------------------------
Total.......................
================================
</TABLE>
Schedule III-1
<PAGE>
SCHEDULE IV
<TABLE>
<CAPTION>
OPTION SECURITIES SELLING NUMBER OF OPTION SECURITIES
STOCKHOLDERS: TO BE SOLD
------------------------------------- --------------------------------
<S> <C>
--------------------------------
Total.......................
================================
</TABLE>
Schedule IV-1
<PAGE>
SCHEDULE V
Certain Selling Stockholders
Terry M. Flanagan
Thomas K. Gregory
Charles McKnett
Eric P. Wenaas
John C. Stiska
Schedule V-1
<PAGE>
EXHIBIT A
JURISDICTIONS WHERE QUALIFICATION TO DO BUSINESS IS NECESSARY
California
[ADD OTHERS]
A-1
<PAGE>
[FORM OF LOCK-UP AGREEMENT] EXHIBIT B
JNI CORPORATION
PUBLIC OFFERING OF COMMON STOCK
September __ 2000
Salomon Smith Barney Inc.
Bear, Stearns & Co., Inc.
Chase Securities, Inc.
As Representatives of the several Underwriters,
c/o Salomon Smith Barney Inc.
388 Greenwich Street
New York, New York 10013
Ladies and Gentlemen:
This letter is being delivered to you in connection with the
proposed Underwriting Agreement (the "Underwriting Agreement"), between JNI
Corporation, a Delaware corporation (the "Company"), and each of you as
representatives of a group of Underwriters named therein, relating to an
underwritten public offering of Common Stock, $0.001 par value (the "Common
Stock"), of the Company.
In order to induce you and the other Underwriters to enter into
the Underwriting Agreement, the undersigned will not, without the prior written
consent of Salomon Smith Barney Inc., offer, sell, contract to sell, pledge or
otherwise dispose of, (or enter into any transaction which is designed to, or
might reasonably be expected to, result in the disposition (whether by actual
disposition or effective economic disposition due to cash settlement or
otherwise) by the Company or any affiliate of the Company or any person in
privity with the Company or any affiliate of the Company) directly or
indirectly, including the filing (or participation in the filing of) a
registration statement with the Securities and Exchange Commission in respect
of, or establish or increase a put equivalent position or liquidate or decrease
a call equivalent position within the meaning of Section 16 of the Securities
Exchange Act of 1934, as amended, and the rules and regulations of the
Securities and Exchange Commission promulgated thereunder with respect to, any
shares of capital stock of the Company or any securities convertible into, or
exercisable or exchangeable for such capital stock, or publicly announce an
intention to effect any such transaction, for a period of [_________] days after
the date of this Agreement, other than shares of Common Stock disposed of as
bona fide gifts approved by Salomon Smith Barney Inc.
B-1
<PAGE>
If for any reason the Underwriting Agreement shall be terminated
prior to the Closing Date (as defined in the Underwriting Agreement), the
agreement set forth above shall likewise be terminated.
Yours very truly,
[SIGNATURE OF OFFICER, DIRECTOR OR MAJOR
STOCKHOLDER]
[NAME AND ADDRESS OF OFFICER, DIRECTOR OR MAJOR
STOCKHOLDER]
B-2
<PAGE>
EXHIBIT C
FORM OF
LETTER AGREEMENT
Date September 15, 2000
Salomon Smith Barney Inc.
Bear, Steams & Co. Inc.
Chase Securities Inc.
as representatives of the several underwriters
c/o Salomon Smith Barney Inc.
388 Greenwich Street
New York, New York 10013
Ladies and Gentlemen:
This letter is being delivered to you, as representatives of the
underwriters, in connection with the proposed public offering (the "Offering")
of Common Stock of JNI Corporation ("Common Stock").
As you know, the Asset Acquisition Agreement and Plan of Reorganization
(the "Agreement") was entered into by JNI Corporation, Jaymark, Inc., Jaycor,
Inc., and California Tube Laboratories, Inc. on July 24, 2000. Section 6.5 of
the Agreement states that any shares of Common Stock received by the undersigned
in Jaymark's reorganization and not sold in the Offering will be subject to the
lock-up agreement required by the underwriters of the Offering.
The undersigned acknowledges and agrees that the undersigned will not,
without the prior written consent of Salomon Smith Barney Inc., dispose of or
hedge any shares of common stock of JNI that the undersigned received in the
reorganization, other than shares to be sold in the Offering, for (1) a period
of 180 days after completion of the Offering for one half of the shares and (2)
a period of 360 days after completion of the Offering for the remaining one half
of the shares. Salomon Smith Barney Inc. may release any of the securities
subject to these lock-up agreements at any time without notice.
By executing this letter, the undersigned hereby acknowledges and
agrees to the provisions of the preceding paragraph, that upon signing of the
underwriting agreement relating to the Offering Salomon Smith Barney Inc. will
be a third-party beneficiary of the Agreement and that no amendment,
modification or waiver of any provision of the Agreement, including Section 6
thereof, shall be made without the prior written consent of Salomon Smith Barney
Inc.
<PAGE>
If for any reason the underwriting agreement is terminated prior to the closing
date, the agreement set forth above will be terminated.
ACKNOWLEDGED AND AGREED TO
THIS ____ DAY OF SEPTEMBER, 2000
PRINTED NAME(S) PRINTED NAMES(S)
--------------------- --------------------
(AS APPEARS ON STOCK CERTIFICATE(S)) (AS APPEARS ON STOCK CERTIFICATE(S))
SIGNATURE SIGNATURE
-------------------------- --------------------------
-2-
