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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) October 13, 1999
Computer Network Technology Corporation
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(Exact name of registrant as specified in charter)
Minnesota 0-139944 41-1356476
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(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
605 North Highway 169, Suite 800, Minneapolis, MN 55441 (Address of
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principal executive offices) (Zip Code)
Registrant's telephone number, including area code (612) 797-6000
(Former name or former address, if changed since last report.)
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Item 5. Other Events.
The registrant has announced an agreement with Compaq Computer Corporation to
incorporate the registrant's technology into Compaq's Enterprise Network Storage
Architecture (ENSA) solutions. The announcement and the agreement are attached
hereto as Exhibit 99.1 and Exhibit 99.2 respectively.
FORWARD LOOKING INFORMATION
Information contained herein and in the Exhibits hereto may contain forward
looking statements that involve risks and uncertainties with respect to the fair
value of assets acquired, the amount of liabilities assumed and otherwise. These
forward looking statements include the words "believes", "expects",
"anticipates" and similar expressions. These forward looking statements involve
certain risks and uncertainties, including those related to general economic and
business conditions, changes in market conditions and competitive pressures.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
COMPUTER NETWORK TECHNOLOGY CORPORATION
Dated: October 13, 1999 By: /s/ Gregory T. Barnum
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Name: Gregory T. Barnum
Title: Chief Financial Officer
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EXHIBIT INDEX
99.1 Press Release.
99.2 Trademark License between Compaq Computer Corporation and Computer
Network Technology Corporation.
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EXHIBIT 99.1
[LOGO OF COMPUTER NETWORK TECHNOLOGY]
NEWS RELEASE
Contact:
Laurel Crewe; CNT
612-797-6721; [email protected]
Julie Redard; Copithorne & Bellows
617-450-4300; [email protected]
Karen Quatromoni; Compaq
508-467-4120; [email protected]
CNT AND COMPAQ SIGN TECHNOLOGY AGREEMENT
Technology to be Integrated into Compaq's ENSA Solutions
MINNEAPOLIS and HOUSTON - October 13, 1999 - Computer Network Technology
(CNT(R)) and Compaq Computer Corporation today announced a multi-million dollar
agreement to incorporate CNT technology into Compaq's Enterprise Network Storage
Architecture (ENSA) solutions. In collaboration with Compaq and Brocade
Communications Systems, Inc., CNT technology extends Fibre Channel to ATM wide
area distances.
"CNT is an industry leader in enabling SAN solutions over WANs," said Mark
Lewis, director of engineering, Online Storage at Compaq. "This agreement
expands on the successful relationship announced earlier this year between
Compaq and CNT. CNT's technology has delivered proven results for our customers,
and continues to be an important component in our Enterprise Network Storage
Architecture (ENSA) strategy to provide storage as a flexible, shared resource
throughout the enterprise.
"This partnership with Compaq is important validation of our technology," said
Mark Knittel, vice president of marketing and business development at Computer
Network Technology. "CNT is committed to being the leading WAN provider for SAN
solutions that leverage corporate investments wherever they are located and
taking advantage of advances in technology to deliver robust, reliable and
scalable solutions that meet today and tomorrow's requirements."
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Computer Network Technology Corporation (CNT)
605 North Highway 169, Suite 800 Minneapolis, Minnesota 55441
Tel: U.S. 800-638-8324 International 612-797-6600 Fax: 612-797-6800
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CNT and Compaq Sign Technology Agreement - Page 2
About Computer Network Technology (CNT)
Computer Network Technology (Nasdaq: CMNT), based in Minneapolis, Minn., is a
global company providing hardware, software and services for the implementation
of Storage Area Networking and Enterprise Application Integration solutions.
Organizations worldwide choose CNT to build and run their business-critical
networks and gain greater connectivity and access to information, without
sacrificing performance, security, or integrity. The Company's products are sold
worldwide through a direct sales force and a network of authorized distributors.
For more information, visit CNT's web site at http://www.cnt.com, or call
1-800-638-8324 (U.S.) or 612-797-6000 (International).
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All brand names and product names are trademarks or registered trademarks of
their respective companies.
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EXHIBIT 99.2
COMPAQ AND CNT CONFIDENTIAL
TRADEMARK LICENSE
For valuable consideration (see Exhibit A), Computer Network Technology
Corporation. ("CNT") hereby grants Compaq Computer Corporation ("Compaq") an
exclusive, fully paid-up, non-royalty bearing, world-wide, unrestricted license
to use and display the following CNT trademark (the "Licensed Work") in those
countries in which it has registrations, statutory or common law rights
pertaining to the same for the purposes specified below:
CNT's trademark "SANWORKS" in accordance with Compaq's own rules and
guidelines for the use and display of its logo and trademark, brand names
and sub-brands.
Compaq is permitted to use the Licensed Work for any purpose. However, until
issuance of trademark registration and assignment to Compaq is complete, CNT
reserves the right to review the use of the trademark as pertains to product
branding, publicity, marketing collateral and quality of the goods sold under
the Licensed Work for the purposes of assuring reasonable standards are being
met to maintain the value of the mark. Compaq agrees to cooperate in all such
reviews. Compaq, however, promises that it will not use "CNT" or "Computer
Network Technology" in direct association with any of its public uses of the
"SANWORKS" trademark or branding initiatives.
In furtherance of this Trademark License Agreement, CNT also agrees to abandon
its prosecution of trademark registration of the mark "CNT SANWORKS" and agrees
not to pursue such trademark registration in the future.
LICENSED WORK IS LICENSED "AS IS." CNT MAKES NO WARRANTIES OR REPRESENTATIONS OF
ANY KIND, EXPRESS OR IMPLIED, WITH RESPECT TO LICENSED WORK, AND CNT EXPRESSLY
DISCLAIMS ALL SUCH WARRANTIES, INCLUDING, BUT NOT LIMITED TO, THE IMPLIED
WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE,
NON-INFRINGEMENT, VALIDITY OF REGISTRATIONS OUTSIDE THE UNITED STATES AND THE
UNITED KINGDOM, AND TITLE.
CNT agrees to provide reasonable assistance to Compaq for the protection of
Compaq's interests in the mark.
CNT agrees to promptly grant to Compaq the power of attorney and other rights
required to prosecute the License Work in the U. S. Patent and Trademark Office,
and in any other country where CNT has filed for trademark registration of the
Licensed Work. Compaq agrees to pay all governmental fees associated with such
prosecution, and holds CNT harmless for any affect on the validity of trademark
registrations in the U.S. and the United Kingdom caused by actions taken by or
for Compaq under this power of attorney.
Upon issuance of a trademark registration by the United States Patent and
Trademark Office or the registration of the Licensed Work in any other country,
CNT agrees to notify Compaq of such registration(s) and CNT agrees to promptly
assign all rights, title, and interest in the Licensed Work, all registrations
and applications for registrations of the Licensed Work, and the goodwill
appurtenant thereto, to Compaq.
All goodwill arising out of Compaq's use of Licensed Work under this license
inures to the benefit of CNT. After the obligation to assign such rights arises
under the preceding paragraph, CNT shall take whatever measures are necessary to
effect any assignment of such rights that may be requested by Compaq. CNT agrees
not to use or attempt to register any trademarks or trade names which are
confusingly similar to Compaq's Licensed Work (except that this Agreement shall
not lessen or otherwise affect CNT's rights to use and protect the "CNT" and
"Computer Network Technology" trademarks) and agrees not to dispute the validity
of Compaq's claims in such trademarks or trade names. No other license of any
kind under any intellectual property, including Licensed Work, is granted
hereunder except as expressly set forth herein. This Agreement shall not be
construed to grant any rights by implication, estopple or any other similar
legal theory under any circumstance. The term of this Agreement shall extend
from signature by both parties below until the termination of this Agreement
pursuant to its terms. The validity, construction and performance of this
Agreement shall be governed by the substantive law of the State of Texas without
regard to the conflicts of law provisions thereof.
This Agreement may be executed in several counterparts, all of which taken
together shall constitute one agreement between the parties and each of which
shall be deemed an original.
The parties have caused this Agreement to be executed by their duly authorized
representatives.
COMPAQ COMPUTER CORPORATION COMPUTER NETWORK TECHNOLOGY CORPORATION
By: /s/ Howard D. Elias By: /s/ Mark R. Knittel
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Name: Howard D. Elias Name: Mark R. Knittel
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Title: Vice President and General Title: Vice President of Marketing
Manager Storage Products -------------------------------
Division
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Date: October 8, 1999 Date: October 8, 1999
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EXHIBIT A
Compaq's Obligations as Consideration to CNT for Grant of
Trademark License
For the Grant of Trademark License to the trademark "SANWORKS" , Computer
Network Technology Corporation expects to benefit from, and Compaq Computer
Corporation pledges to fulfill, the following business obligations:
I.
a)Compaq (Storage Products Division) will reimburse CNT for expenses to-date
associated with the filing for trademark registration for the trademarks
"SANWORKS" and "CNT SANWORKS," and for the additional expenses associated with
filing for trademark registrations for an alternate trademark, by a fixed fee
payment of two hundred and fifty thousand dollars ($250,000), payable within
ninety days of the effective date of this agreement.
b)Compaq (Storage Products Division) will increase its current engineering order
for units of CNT's "Open Systems Gateway" ("OSG") FibreChannel-to-ATM product
from four (4) to sixteen (16) units, for CNT shipment no sooner than September
30, 1999, at current pricing for engineering units.
c)Compaq will order from CNT a combination of products with a cumulative revenue
value to CNT of at least eleven million dollars ($11,000,000). Orders for OSG
Product Family (of which the FibreChannel-to-ATM OSG is the first member; other
successor, supplemental and derivative members are anticipated) must total at
least eight million dollars ($8,000,000). Such orders to be placed upon CNT for
delivery by the end of calendar year 2000 (December 31, 2000) (Term of
Obligation).
II.
The obligation detailed in I.c). above is incurred by Compaq upon its notice to
CNT that the FibreChannel-to-ATM OSG is certified as a result of the successful
exit of the Data Replication Manager solution over an ATM link (i.e. Compaq's
"Breckenridge Program") from the Solution (or System) Verification Test,
attached to Project Statement No. 2 to the Alliance Agreement No. 98-117 between
CNT and Compaq which is a requirement for the announcement of the general
commercial availability of its Data Replication Manager solution over an ATM
link. Compaq's fulfillment of this obligation is contingent upon CNT continuing
to offer OSG Family products at best OEM prices throughout the Term of
Obligation.
III.
A. In the event that: a. Compaq has not announced the general availability of
the Data Replication Manager solution over an ATM link (or any other solution
that employs an OSG Family product) during the Term of Obligation; or b. Compaq,
in its normal procurement activity, has not ordered the full amount of the
revenue
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obligation noted in I. c). above by the conclusion of the term of this
obligation, the following options shall apply to Compaq:
B. Prior to the end of the Term of Obligation, Compaq will place orders for OSG
family products to meet a minimum threshold obligation value of $4,000,000 and a
combination of the following options to meet its $11,000,000 obligation:
i) Place additional orders of CNT products to meet the $11,000,000 total
obligation, or;
ii) Pay cash equal to 50% of the balance of its obligation between
$4,000,001 and $8,000,000 and pay cash equal to 20% of the balance between
$8,000,001 and $11,000,000.
Any of these end-of-obligation-term options will have a 90 day payment or
delivery fulfillment period.
IV.
Compaq and CNT agree to review each quarter the purchases and forecasts with
respect to the revenue commitment of the Term of Obligation and negotiate a
higher purchase price for OSG Family Products for the next quarter's purchases.
Under this provision, the cumulative amount of additional expenditure in
purchased material at the higher price versus the best OEM discount (52%) shall
directly off-set the balance remaining in the minimum purchase requirement, if
any, and the remainder of the cash payment Option b), above, as determined at
the end of Term of Obligation settlement, if one is required.
V.
Change in Business Conditions during the Term of Obligation: If Compaq's
performance is handicapped by a Force Majeure condition of greater than 30 days
duration or by an adverse Change of Control affecting Compaq's Storage Products
Division's ability to execute its Plan involving this technology, then Compaq's
remaining obligations at the end of the Term or upon notice of Change of
Business Conditions is to fully compensate CNT for its existing inventory, work
in process and unavoidable cancellation charges with its suppliers.
VI.
If there is an unexpected Shift in Market Conditions beyond Compaq's reasonable
ability to influence, then Compaq's remaining obligations at the end of the Term
of Obligation shall be as stated below. A Shift in Market Conditions shall be
interpreted with reference to the Gartner Group Advisory, dated May 1999, for
Storage Infrastructure Product Forecasts, which is attached. The data
replication market segment is forecast to grow from approximately $557.2 Million
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in 1999 to approximately $729.4 Million in calendar year 2000. For the purposes
of this Agreement, the actual volume in the data replication segment as reported
by the Gartner Group Advisory in their first report publishing actual volumes
for this market segment for the year 2000, will be used to determine if there is
sufficient evidence to substantiate a claim of shift in Market Conditions. Then,
depending on the amount of shift, the following changes in Compaq's obligations
shall apply:
a) If the actual volume is greater than 80% of the forecasted volume, then
there is no change in Compaq's commitments.
b) If the actual volume if between 50% and 80% of the forecasted volume,
then Compaq's liability in section III. B. ii) shall be changed to reduce
the minimum threshold from $4,000,000 to $2,000,000 and the cash option is
reduced to pay cash equal to 12.5% (twelve and one half percent) of the
balance of its obligation between $2,000,001 and $8,000,000 and pay cash
equal to 10% (ten percent) of the balance between $8,000,001 and
$11,000,000.
c) If the actual volume is less than 50% of the forecasted volume, then
there is no minimum volume requirement and Compaq's liability to CNT is
limited to fully compensate CNT for its existing inventory, work in process
and unavoidable cancellation charges with its suppliers.
COMPAQ COMPUTER CORPORATION COMPUTER NETWORK
TECHNOLOGY CORPORATION
By: /s/ Howard D. Elias By: /s/ Mark R. Knitte
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