\nExhibits
\nExhibit A — Certificate of Merger
\nExhibit A-1 — Certificate of Incorporation
\nExhibit 1.4(b) — Excluded Assets
\nExhibit 1.4(c)(i)(B) — Assumed Liabilities
\nExhibit 1.3(b) — Escrow Agreement
\nExhibit 1.13(b) — Officers
\nExhibit 1.13(c)A — Form of Newco Amended and Restated Certificate of Incorporation
\nExhibit 1.13(c)B — Form of Newco Amended and Restated Bylaws
\nExhibit 1.4(a)(i) — Non US-Contributed Companies and Contributed Assets
\nExhibit 4.11A — Form of Voting Agreement
\nExhibit 4.11B — SCO Affiliates Who Executed Voting Agreements
\nExhibit 4.12 — Sales Representative and Support Agreement
\nExhibit 4.13B — Stockholder Agreement
\nExhibit 4.18A — SCO Key Employees
\nExhibit 4.18B — Form of Key Employee Term Sheet
\nExhibit 5.13B — Caldera Affiliates Who Executed Voting Agreements
\nExhibit 6.5 — Opinion of Counsel of Caldera and Newco
\nExhibit 7.6 — Opinion of Counsel of SCO and Contributing Companies
\nExhibit 13.15A — Contributed Assets
\nExhibit 13.15B — Contributed Contracts
\nExhibit 13.15C — Contributed Subsidiaries
\nExhibit 13.15D — Group Products
\nExhibit 13.15E — Permitted Encumbrances<\/p>\nSchedules
\n — Caldera Disclosure Letter
\n — SCO Disclosure Letter
\n<\/c><\/c><\/s><\/table>\n
8<\/p>\n
AGREEMENT AND PLAN OF REORGANIZATION<\/p>\n
THIS AGREEMENT AND PLAN OF REORGANIZATION (this “Agreement”) is
\nentered into as of August 1, 2000, by and among Caldera Systems, Inc., a
\nDelaware corporation including for all purposes Caldera Surviving Corporation,
\n(“Caldera”), Caldera Holding, Inc., a Delaware corporation (“Newco”) and The
\nSanta Cruz Operation, Inc., a California corporation (“SCO”). The terms defined
\nin Section 13.15 of this Agreement shall have the meanings therein specified in
\nthis Agreement.<\/p>\n
RECITALS<\/p>\n
A. The parties intend that, subject to the terms and conditions
\nof this Agreement, (i) a new Delaware corporation referred to herein as Newco
\nhas been formed by Caldera solely for the purpose of the transactions
\ncontemplated hereunder; (ii) a newly formed, wholly owned subsidiary of Newco
\n(“Merger Sub”) will be merged with and into Caldera, with Caldera being the
\nsurviving corporation of such merger (the “Merger”), and all outstanding Caldera
\nsecurities will be converted, on a share for share basis, into Newco securities
\nhaving identical rights, preferences and privileges, with Newco assuming any and
\nall outstanding options and other rights to purchase shares of capital stock of
\nCaldera (with all such Newco securities issued to former Caldera security
\nholders initially representing the Caldera Percentage Interest in Newco), all on
\nthe terms set out in this Agreement and in the Certificate of Merger
\nsubstantially in the form of Exhibit A hereto (the “Certificate of Merger”) and
\nthe applicable provisions of Delaware Law; (iii) SCO and certain of its
\nsubsidiaries as herein specified will contribute to Newco, all on the terms
\nherein specified, all of the Contributed Stock of the Contributed Companies
\n(with each of the Contributed Companies thereby becoming a wholly owned
\nsubsidiary of Newco) and the Contributed Assets in consideration for the
\nissuance by Newco to SCO of shares of Common Stock of Newco, $0.001 par value
\n(“Newco Common Stock”), and (iv) Newco will assume all options to acquire common
\nstock of SCO held by the Employees (other than David McCrabb, Jack Moyer and Jim
\nWilt) hired or retained by Caldera (the “Optionees”) and such options will be
\nconverted into options to purchase Newco Common Stock (“Newco Options”) as set
\nforth herein, which Newco Common Stock issued to SCO and Newco Options will
\nrepresent in the aggregate a fully diluted equity interest in Newco equal to the
\ndifference between 100% and the Caldera Percentage Interest. The transactions
\ndescribed in subpart (iii) and (iv) of the foregoing sentence are collectively
\nthe “SCO Transaction.”<\/p>\n
B. The Newco Common Stock and the Newco Options issued in the
\nMerger and in the SCO Transaction will be registered under the Securities Act,
\npursuant to a Newco registration statement on Form S-4 or Form S-8, as set forth
\nherein.<\/p>\n
C. For federal income tax purposes, it is intended that (i) the
\nMerger qualify as a reorganization under the provisions of Section 368(a) of the
\nInternal Revenue Code and (ii) that the Merger and the portion of the SCO
\nTransaction described in Recital A (iii) above qualify as an exchange under the
\nprovisions of Section 351 of the Internal Revenue Code.<\/p>\n
NOW, THEREFORE, the parties hereto hereby agree as follows:<\/p>\n
9<\/p>\n
1. Plan of Reorganization.<\/p>\n
1.1 The Organization of Newco and Merger Sub. Caldera has formed
\nNewco under the laws of the State of Delaware for the purposes of the
\ntransactions contemplated by the Merger and in accordance with the terms of this
\nAgreement. Newco currently has no outstanding securities and has conducted no
\nbusiness and, prior to the Effective Time, will not issue any securities, will
\nconduct no business or operations, will have no assets and will enter into no
\nagreements nor incur any obligations or Liabilities, except as required or
\ncontemplated by this Agreement or necessary to perform its obligations
\nhereunder. As soon as practicable after the date hereof, Newco shall form the
\nMerger Sub as a wholly owned subsidiary, which will conduct no business prior to
\nClosing except as expressly contemplated hereunder.<\/p>\n
1.2 The Merger. At the Closing, subject to the terms and
\nconditions of this Agreement, Caldera will execute and deliver and will file
\nwith the Secretary of State of the State of Delaware in accordance with relevant
\nprovisions of the Delaware Law, a Certificate of Merger providing for the Merger
\nof Merger Sub with and into Caldera, with Caldera being the surviving
\ncorporation upon the effectiveness of the Merger and thereby becoming a wholly
\nowned subsidiary of Newco, pursuant to this Agreement, the Certificate of Merger
\nand in accordance with applicable provisions of the Delaware Law as follows:<\/p>\n
(a) Conversion of Caldera Common Stock. Each share of the
\nCommon Stock of Caldera (“Caldera Common Stock”) that is issued and outstanding
\nimmediately prior to the Effective Time will by virtue of the Merger and at the
\nEffective Time, and without any further action on the part of Caldera, Newco or
\nany holder of Caldera Common Stock, be converted into one share (the “Caldera
\nRatio”) of validly issued, fully paid and nonassessable Newco Common Stock.<\/p>\n
(b) Conversion of Caldera Options.<\/p>\n
(i) Conversion. At the Effective Time, each of the
\nthen outstanding options to purchase shares of Caldera Common Stock
\n(collectively, the “Caldera Options”) (consisting of all outstanding options
\ngranted under the stock option plans of Caldera or the Caldera Subsidiaries,
\nincluding but not limited to its 1998 Stock Option Plan and its 1999 Omnibus
\nStock Incentive Plan (collectively, the “Caldera Plans”), and any individual
\nnon-Plan options), will, by virtue of the Merger, and without any further action
\non the part of any holder thereof, be assumed by Newco and converted into an
\noption to purchase an equivalent number of shares of Newco Common Stock, at an
\nexercise price per share equal to the per share exercise price of such Caldera
\nOption in effect at the Effective Time. The term, exercisability, vesting
\nschedule, status as an “incentive stock option” under Section 422 of the
\nInternal Revenue Code, if applicable, and all other terms and conditions of the
\nCaldera Options will be unchanged and all references in any option agreement
\ngoverning such option to Caldera shall be deemed to refer to Newco, where
\nappropriate. Continuous service as an employee or consultant with Caldera or any
\nof the Caldera Subsidiaries will be credited to an optionee of Caldera for
\npurposes of determining the number of shares of Newco Common Stock vested and
\nexercisable under the assumed Caldera Option after the Closing.<\/p>\n
2
\n 10<\/p>\n
(ii) Stock Rights. At the Effective Time, Newco
\nwill assume all of Caldera’s obligations under Caldera’s 2000 Employee Stock
\nPurchase Plan (the “Caldera Stock Purchase Plan”) and each of the then
\noutstanding rights to purchase shares of Caldera Common Stock under such plan
\n(collectively, the “Caldera Stock Purchase Plan Rights”), will by virtue of the
\nMerger, and without any further action on the part of any holder thereof, be
\nassumed and converted into a right to purchase the same number of shares of
\nNewco Common Stock on the next “purchase date” (as such term is defined in the
\nCaldera Stock Purchase Plan) following the Effective Time at a purchase price
\nper share determined in accordance with the Caldera Stock Purchase Plan.<\/p>\n
(c) Cancellation of Caldera-Owned Shares. Each share of
\nCaldera Common Stock held in the treasury of Caldera or any of which are owned
\nby Newco, Caldera, or any direct or indirect wholly owned subsidiary of Newco or
\nCaldera immediately prior to the Effective Time shall be cancelled and
\nextinguished without any conversion thereof.<\/p>\n
1.3 SCO Transaction.<\/p>\n
(a) Issuance of Newco Common Stock. At the Effective Time
\nand subject to the terms and conditions of this Agreement, Newco will, in
\nconsideration for the contribution and transfer of the Contributed Stock and
\nContributed Assets to Newco as contemplated by this Agreement, perform the
\nfollowing:<\/p>\n
(i) Consideration. Issue to SCO that number of
\nissued, fully paid and nonassessable shares of Newco Common Stock equal to The
\nSCO Percentage Interest, less (a) the number of shares of Newco Common Stock
\nissuable upon exercise of the Newco Options pursuant to Section 1.3(a)(iii)
\nbelow and (b) the Escrow Shares issued to SCO and placed directly into escrow by
\nCaldera pursuant to Section 1.3(b) below, with such number of shares to be
\nappropriately adjusted in the event of any Caldera stock split, stock
\ncombination, reclassification or other similar capital change (the “First SCO
\nCertificate”) and pay SCO cash consideration equal to seven million dollars
\n($7,000,000) (the “Cash Consideration”), by wire transfer of immediately
\navailable funds or upon the cancellation of SCO’s outstanding indebtedness to
\nCaldera.<\/p>\n
(ii) [Intentionally Omitted.]<\/p>\n
(iii) Assumption and Conversion of SCO Options. At
\nthe Effective Time, each of the then outstanding options to purchase shares of
\nSCO Common Stock held by the Optionees (collectively, the “SCO Options”)
\n(consisting of all outstanding options granted under the stock option plans of
\nSCO or the SCO Subsidiaries, and any individual non-plan options held by the
\nOptionees), will, by virtue of the Merger, and without any further action on the
\npart of any holder thereof, be assumed by Newco and converted into an option to
\npurchase one share of Newco Common Stock for each two shares of SCO Common Stock
\nsubject to a SCO Option at the Effective Time (the “SCO Ratio”) at an exercise
\nprice per share of Newco Common Stock equal to the exercise price per share of
\nsuch assumed SCO Option immediately prior to the Effective Time divided by the
\nSCO Ratio, rounded up to the nearest cent. Except as set forth in the preceding
\nsentence, the term, exercisability, vesting schedule, and all other terms and
\nconditions of the SCO Options will be unchanged and all references in any option
\nagreement<\/p>\n
3
\n 11<\/p>\n
governing such option to SCO shall be deemed to refer to Newco, where
\nappropriate; provided, however, that the outstanding SCO Options previously
\ndesignated as “incentive stock options” under Section 422 of the Internal
\nRevenue Code may, as a result of the foregoing adjustments, be converted into
\nnon-statutory stock options. Continuous service as an employee or consultant
\nwith SCO or any of the SCO Subsidiaries will be credited to the Optionee for
\npurposes of determining the number of shares of Newco Common Stock vested and
\nexercisable under the assumed SCO Option after the Closing. If the foregoing
\ncalculation results in a Newco Option, which is issued for a SCO Option, being
\nexercisable for a fraction of a share of Newco Common Stock, then the number of
\nshares of Newco Common Stock subject to such option will be rounded down to the
\nnearest whole number of shares, with no cash being payable for such resulting
\nfractional share.<\/p>\n
(b) Escrow. As soon as practicable after the Effective
\nTime, and subject to and in accordance with the provisions of Section 10 and the
\nEscrow Agreement, a form of which is attached as Exhibit 1.3(b) (the “Escrow
\nAgreement”), Caldera shall deliver to the Escrow Agent on behalf of SCO a
\ncertificate representing ten percent (10%) of the SCO Percentage Interest (the
\n“Escrow Shares”). The Escrow Shares distributed to the Escrow Agent shall be
\nheld in escrow and shall be available to transfer to Caldera for certain damages
\nas provided in Section 10. To the extent not transferred to Caldera for such
\ndamages, the Escrow Shares shall be released to SCO, all as provided in Section
\n10 and the Escrow Agreement.<\/p>\n
(c) Termination of Newco Options. All shares of Common
\nStock underlying Newco Options assumed pursuant to Section 1.3(a)(iii) which
\nterminate without being exercised by the Optionees shall be issued by Caldera to
\nSCO on a quarterly basis.<\/p>\n
1.4 Contribution and Transfer of Contributed Stock and
\nContributed Assets.<\/p>\n
(a) Contribution and Transfer. Subject to the terms and
\nconditions of this Agreement and in consideration for the issuance by Newco of
\nNewco Common Stock as provided above, the Contributing Companies shall at the
\nEffective Time, for good and valuable consideration, the receipt and sufficiency
\nof which are hereby acknowledged on behalf of each of the Contributing
\nCompanies, contribute and transfer and deliver to Newco or cause to be
\ncontributed, transferred and delivered to Newco, and at the Effective Time Newco
\nshall accept the contribution and transfer from the Contributing Companies of
\nall right, title and interest in and to the Contributed Stock and Contributed
\nAssets. Notwithstanding the preceding, the Contributed Assets and Contributed
\nCompanies which are located outside of the United States shall be purchased and
\nsold by and among the Newco and SCO entities located in such countries in
\nexchange for stock or cash consideration as the parties shall agree before the
\nEffective Time. Such payment shall be included within and shall not change the
\ntotal amount of The SCO Percentage Interest and the Cash Consideration. The
\nparties shall execute, or cause to be executed, Bills of Transfer relevant to
\ntheir particular jurisdiction reflecting the transfer of any such Contributed
\nAssets which shall reflect the purchase price allocation as agreed. Such amounts
\nshall be reported as the purchase price for all foreign Tax reporting purposes
\nin each relevant jurisdiction and no party shall have a position inconsistent
\ntherewith.<\/p>\n
(b) Excluded Assets.<\/p>\n
4
\n 12<\/p>\n
(i) Excluded Assets. SCO is not selling and Caldera
\nshall not acquire from SCO any of the following assets or any interest therein
\n(collectively, the “Excluded Assets”):<\/p>\n
(A) any assets related solely to the SCO
\nRetained Business;<\/p>\n
(B) any cash and cash equivalents and any
\naccounts receivable (the “Cash Equivalents”) of the Contributing Companies and
\nthe Contributed Companies;<\/p>\n
(C) those assets set forth on Exhibit
\n1.4(b).<\/p>\n
(ii) Net Cash Equivalents. “Net Cash Equivalent”
\nshall mean the net book value of any cash and cash equivalents held by any of
\nthe Contributed Companies, including but not limited to accounts receivable,
\naccounts payable and third party debt obligations. To the extent the Net Cash
\nEquivalents of any Contributed Company are or are expected to be positive as of
\nthe Effective Time, either SCO will withdraw that value from the Contributed
\nCompany at or before the Effective Time or Caldera will cause that value to be
\npaid or credited to SCO at or promptly after the Effective Time. To the extent
\nthe Net Cash Equivalents of any Contributed Company are negative as of the
\nEffective Time, SCO will pay or credit such amount to Caldera at or promptly
\nafter the Effective Time. The payment or credits will be treated as either a
\ndividend by the Contributed Company or as an adjustment to the Cash
\nConsideration as the parties may agree.<\/p>\n
(c) Assumption and Exclusion of Liabilities.<\/p>\n
(i) Assumed Liabilities. As a result of the
\ntransfer to Newco of the Contributed Stock, Newco will as a matter of law own
\nall of the outstanding equity capital of the Contributed Companies, which
\nContributed Companies and their respective Contributed Subsidiaries
\n(collectively, the “Contributed Company Group”) in turn shall remain liable for
\ntheir respective Liabilities. In addition, subject to the terms and conditions
\nof this Agreement, Newco (or a subsidiary of Newco designated by Newco and
\nacceptable to SCO) shall, at the Effective Time, assume, and thereafter pay,
\nperform and discharge when due those (and only those) Liabilities of the
\nContributing Companies and\/or their direct and indirect subsidiaries (excluding
\nthe Liabilities of the Contributed Company Group, which are governed by the
\nfirst sentence of this Section 1.4(c)(i)) that are expressly listed in the
\nfollowing subparagraphs of this Section 1.4(c)(i) (collectively, the “Assumed
\nLiabilities”) and no other Liabilities of the Contributing Companies whatsoever:<\/p>\n
(A) all Liabilities of the Contributing
\nCompanies under all Contributed Contracts;<\/p>\n
(B) all Liabilities of the Contributing
\nCompanies that are included in the Closing Group Account or that are listed on
\nExhibit 1.4(c)(i)(B) attached hereto; and<\/p>\n
5
\n 13<\/p>\n
(C) those Tax liabilities for which Newco
\nis responsible pursuant to Section 12 below.<\/p>\n
(ii) Excluded Liabilities Not Assumed. Except for
\nthe Liabilities of the Contributed Company Group (which will remain the sole
\nresponsibility of the applicable member of the Contributed Company Group) and
\nexcept for the Assumed Liabilities expressly described above in Section 1.4(c),
\nNewco shall not assume, pay, perform or discharge, or otherwise have any
\nobligation, responsibility or liability whatsoever for, any and all Liabilities
\nof SCO or its direct and indirect subsidiaries (whether now existing or
\nhereafter arising), and said companies shall retain, and shall be solely
\nresponsible and liable for paying, performing and discharging when due, all such
\nLiabilities (collectively, the “Excluded Liabilities”).<\/p>\n
(iii) Intercompany Accounts. One or more
\nContributed Companies is likely to owe intercompany debt to SCO. The amount of
\nany such intercompany debt remaining after payment by Newco to SCO of any Net
\nCash Equivalents will be treated as an Excluded Liability and will be cancelled
\nby SCO.<\/p>\n
(d) Asset Contribution. The SCO will, and will cause each
\nof the other Contributing Companies to, take all actions and sign and deliver
\nany and all instruments and documents (including Bills of Transfer for each
\nrelevant jurisdiction) reasonably necessary or appropriate to fully effect and
\nperfect the transfer to Newco of any and all of the Contributed Stock and
\nContributed Assets held by either of them and any Contributed Contracts to which
\nthey are a party.<\/p>\n
(e) Unassignable Assets. Notwithstanding any other
\nprovision of this Agreement or any of the Ancillary Agreements, to the extent
\nthat any of the Contributed Assets are not assignable or otherwise transferable
\nby the Contributing Companies to Newco without the consent, approval or waiver
\nof another party thereto or any third party (including any governmental agency),
\nor if such assignment or transfer would constitute a breach thereof or of any
\nother material contract binding upon the transferor or any of its Affiliates, or
\na violation of any applicable law, then neither this Agreement nor such
\nAncillary Agreements shall constitute an assignment or transfer (or an attempted
\nassignment or transfer) thereof until such consent, approval or waiver of such
\nparty or parties has been duly obtained.<\/p>\n
With respect to each such Contributed Asset whose assignment or
\ntransfer to Newco requires the consent, approval or waiver of another party
\nthereto or any third party, Newco and SCO shall cooperate and use their mutual
\nreasonable, commercial efforts to obtain such consent, approval or waiver of
\nsuch other party or parties or such third party to such assignment or transfer
\nas promptly as practicable prior to the Effective Time; and each agrees to
\nsupply relevant information to such party or parties or such third party in
\norder to facilitate such objective. Notwithstanding the foregoing, nothing
\ncontained herein shall obligate Newco or any Contributing Company to expend or
\npay any amount to third parties to obtain any consents, approvals or waivers, or
\nto make alternative arrangements available; provided that where the Contributing
\nCompanies are unable to effectively assign or otherwise transfer to Newco nor
\nany Contributed Asset without constituting a breach due to such lack of third
\nparty consent, the Contributing Companies shall make available to Newco the net
\neconomic benefits (such as<\/p>\n
6
\n 14<\/p>\n
inbound royalty payments, net of actual costs), if any, received by the
\nContributing Companies from and after the Effective Time with respect to any
\nsuch Contributed Asset.<\/p>\n
(f) No Fraudulent Conveyance. The Contributing Companies
\nare not entering into this Agreement or any Ancillary Agreement with the intent
\nto defraud, delay or hinder their respective creditors and the consummation of
\nthe transactions contemplated by this Agreement, and the Ancillary Agreements
\nreferenced in this Agreement will not have any such effect. Except for the
\nAssumed Liabilities, the transfer of the Contributed Stock and Contributed
\nAssets pursuant hereto will not give rise to any right of any creditor of the
\nContributing Companies to assert any claim whatsoever against Newco or any of
\nthe Contributed Stock and Contributed Assets in the hands of Newco or any of
\nNewco’s respective successors and assigns following the Effective Time which
\nwould have a Material Adverse Effect on Newco. SCO and its consolidated
\nsubsidiaries, taken as a group are Solvent, and will continue to be Solvent
\nimmediately following the transfer of the Contributed Stock and Contributed
\nAssets pursuant to this Agreement. Neither SCO nor any of its consolidated
\nsubsidiaries nor any of the Contributed Stock and Contributed Assets is subject
\nto, or the subject of, any Insolvency Proceeding or Insolvency Action. No writ
\nof attachment, execution or similar process has been ordered, executed or filed
\nagainst any of the Contributed Stock and Contributed Assets. There is not any
\nreason to expect that any of the aforementioned actions, or any similar action,
\nwill take place or be taken, and there are no grounds for any of the
\naforementioned actions or like action. The parties agree that the securities
\nissued by Newco to SCO and the Optionees and the other obligations on Newco’s
\npart to be performed under the terms of this Agreement and the Ancillary
\nAgreements constitute full and fair equivalent consideration for the Contributed
\nStock and Contributing Assets exchanged therefor and the covenants, agreements
\nand performances of the Contributing Companies under this Agreement and the
\nAncillary Agreements.<\/p>\n
1.5 Closing Matters. Unless this Agreement has been terminated as
\nprovided in Section 8 below, the closing of the transactions contemplated by
\nthis Agreement (the “Closing”) (i) will take place at the offices of Brobeck,
\nPhleger & Harrison LLP at Two Embarcadero Place, 2200 Geng Road, Palo Alto,
\nCalifornia 94303 on a date (the “Closing Date”) and at a time to be mutually
\nagreed upon by the parties, which date shall be as soon as practicable after the
\nCaldera Stockholders Meeting and SCO Stockholders Meeting and, in any event, no
\nlater than the third business day after all conditions to Closing set forth
\nherein shall have been satisfied or waived, unless another place, time and date
\nis mutually selected by SCO and Caldera and (ii) will take place concurrently
\nwith the Effective Time.<\/p>\n
1.6 Dissenter’s Rights. It shall be the sole responsibility of
\nSCO to disclose any dissenter’s rights which SCO stockholders have with respect
\nto the SCO Transaction; these rights shall be disclosed to Caldera in writing no
\nlater than the date of filing the Proxy\/Prospectus.<\/p>\n
1.7 Newco Plans. Newco shall assume, effective as of the Closing,
\nthe Caldera Plans, Caldera Stock Purchase Plan and non-plan grants and awards,
\nas amended through the Effective Time (collectively, the “Newco Plans”). Newco
\nshall also reserve a sufficient number of shares of Newco Common Stock for
\nissuance pursuant to the SCO Options assumed by Newco pursuant to Section
\n1.3(a)(ii) herein.<\/p>\n
7
\n 15<\/p>\n
1.8 Registration on Form S-8. Newco will cause the Newco Common
\nStock issuable upon exercise of outstanding awards under the Newco Plans or upon
\nexercise of the SCO Options assumed by Newco (collectively, the “Stock Rights”)
\nand the shares reserved for issuance pursuant to future awards under the Newco
\nPlans to be registered on Form S-8 (the “Form S-8”) promulgated by the SEC prior
\nto, but in no event later than, 10 days after the Effective Time and Newco will
\nuse its reasonable best efforts to maintain the effectiveness of such
\nregistration statement or registration statements for so long as any such Stock
\nRights shall remain outstanding.<\/p>\n
1.9 Effects of the Caldera Merger. At the Effective Time: (a) the
\nseparate existence of Merger Sub will cease and Merger Sub will be merged with
\nand into Caldera, with Caldera being the surviving corporation of the Merger
\n(the “Caldera Surviving Corporation”), pursuant to the terms of this Agreement
\nand the Certificate of Merger; (b) the Certificate of Incorporation of the
\nCaldera Surviving Corporation shall be in the form attached as Exhibit A-1 to
\nthe Certificate of Merger; (c) the Bylaws of Caldera immediately prior to the
\nEffective Time will be the Bylaws of the Caldera Surviving Corporation; (d) the
\ndirectors and officers of Caldera immediately prior to the Effective Time will
\nbe the directors and officers of the Caldera Surviving Corporation; (e) each
\nshare of the Common Stock of Merger Sub outstanding immediately prior to the
\nEffective Time will be converted into one share of Common Stock of the Caldera
\nSurviving Corporation; (f) each share of Caldera Common Stock, each Caldera
\nOption, and each Caldera Stock Purchase Plan Right outstanding immediately prior
\nto the Effective Time will be converted, as provided above in this Section
\n1.2(b). The Merger will, from and after the Effective Time, have all of the
\neffects provided by applicable law, including, without limitation, the Delaware
\nLaw.<\/p>\n
1.10 Tax-Free Reorganization. The parties adopt this Agreement
\n(to the extent it relates to the Merger) as a plan of reorganization and intend
\nthe Merger to be a tax-free reorganization under Section 368(a)(1)(A) of the
\nInternal Revenue Code by virtue of the provisions of Section 368(a)(2)(E) of the
\nInternal Revenue Code. The Newco Common Stock issued in the Merger will be
\nissued solely in exchange for the Caldera Common Stock, and no other transaction
\nother than the Merger represents, provides for or is intended to be an
\nadjustment to the consideration paid for the Caldera Common Stock. No
\nconsideration that could constitute “other property” within the meaning of
\nSection 356(b) of the Internal Revenue Code is being transferred by Newco for
\nthe Caldera Common Stock in the Merger. The parties shall not take a position on
\nany tax return inconsistent with this Section 1.10. In addition, Newco hereby
\nrepresents, and will represent as of the Effective Time, that it intends to
\ncontinue Caldera’s historic businesses or use a significant portion of Caldera’s
\nbusiness assets in a trade or business. None of the parties shall cause a
\ntransaction, without offsetting compensation to the other party, that would
\nresult in income to SCO under the Subpart F provisions of the Internal Revenue
\nCode.<\/p>\n
1.11 Tax-Free Section 351 Transaction. The contribution and
\ntransfer of the Contributed Stock and Contributed Assets to Newco in exchange
\nfor Newco Common Stock, together with the Merger, are intended to constitute an
\nexchange within the meaning of Section 351 of the Internal Revenue Code. The
\nNewco Common Stock issued to SCO therein will be issued solely in exchange for
\nthe Contributed Stock and Contributed Assets transferred in<\/p>\n
8
\n 16<\/p>\n
the SCO Transaction and no consideration (other than the cash consideration)
\nthat could constitute other property within the meaning of Internal Revenue Code
\nSection 351(b) is being transferred by Newco to SCO. The parties shall not take
\na position on any tax return inconsistent with this Section 1.11.<\/p>\n
1.12 HSR Filings. Caldera, SCO and Newco will as promptly as
\npracticable prepare and file the applicable notices and forms (if any) required
\nto be filed by them under the HSR Act or comparable laws of non-U.S.
\ngovernmental entities, and comply promptly with any appropriate requests from
\nthe Federal Trade Commission, the United States Department of Justice or any
\nother Governmental Antitrust Authority for additional information and
\ndocumentary material. The parties hereto will not take any action that will have
\nthe effect of delaying, impairing or impeding the termination of any waiting
\nperiod or the receipt of any required approvals of a Government Antitrust
\nAuthority. Without limiting the generality of the parties’ undertakings pursuant
\nto this Section 1.12, the parties shall use their reasonable best efforts to
\nprevent the entry in a judicial or administrative proceeding brought under any
\nantitrust law by any Governmental Antitrust Authority or any other party of any
\npermanent or preliminary injunction or other order that would make consummation
\nof the SCO Transaction or the Merger in accordance with the terms of this
\nAgreement unlawful under appropriate anti-trust laws or that would prevent or
\ndelay such consummation as a consequence of such laws. Each party hereto shall
\npromptly inform the other of any material communication between such party and
\nthe Federal Trade Commission, the Department of Justice or any other
\nGovernmental Antitrust Authority regarding any of the transactions contemplated
\nhereby. If any party or any Affiliate of such party receives a request for
\nadditional information or for documents or any material from any such
\nGovernmental Antitrust Authority with respect to the transactions contemplated
\nhereby, then such party shall endeavor in good faith to make or cause to be
\nmade, as soon as reasonably practicable and after consultation with the other
\nparties, an appropriate response in compliance with such request. Further, no
\nwritten materials shall be submitted by any party to the Federal Trade
\nCommission, the Department of Justice or any other Governmental Antitrust
\nAuthority in connection with HSR Act compliance or the merger control
\nregulations of any other state or country, nor shall any oral communications be
\ninitiated with such governmental entities by any party, without prior disclosure
\nto and coordination with the other parties and its counsel. Each party hereto
\nwill cooperate in connection with reaching any understandings, undertakings or
\nagreements (oral or written) involving the Federal Trade Commission, the
\nDepartment of Justice or any other Governmental Antitrust Authority in
\nconnection with the transactions contemplated hereby.<\/p>\n
1.13 Board of Directors and Officers of Newco; Newco Certificate
\nof Incorporation and Bylaws.<\/p>\n
(a) Board of Directors. At the Effective Time, Newco will
\nhave a Board of Directors consisting of nine directors. At the Effective Time,
\nthe directors of Newco shall consist of the current Caldera directors plus Doug
\nMichels and one other individual to be named by SCO, nominees of SCO. At the
\nEffective Time, Ralph J. Yarro shall be the Chairman of the Board of Newco.<\/p>\n
(b) Officers. At the Effective Time, the officers of Newco
\nshall be as set forth on Exhibit 1.13(b).<\/p>\n
9
\n 17<\/p>\n
(c) Certificate of Incorporation and Bylaws. Attached
\nhereto as Exhibits 1.13(c)A and 1.13(c)B are the respective forms of Amended and
\nRestated Certificate of Incorporation and Bylaws of Newco to be in effect at the
\nEffective Time.<\/p>\n
1.14 Registration on Form S-4. The Newco Common Stock to be
\nissued in the Merger to Caldera stockholders and the Newco Common Stock to be
\nissued in the SCO Transaction to SCO and pursuant to the assumption of SCO
\nOptions shall be registered under the Securities Act on Form S-4. As promptly as
\npracticable after the date hereof, Newco, with the cooperation of Caldera and
\nSCO, shall prepare and file with the SEC a Form S-4 registration statement (the
\n“Form S-4”), together with the prospectus\/joint proxy statement to be included
\ntherein (the “Prospectus\/Proxy Statement”) and any other documents required by
\nthe Securities Act or the Exchange Act in connection with the Merger and the SCO
\nTransaction.<\/p>\n
2 Representations and Warranties of SCO.<\/p>\n
Except as set forth in the respectively referenced provisions of
\nthe SCO Disclosure Letter delivered by SCO on behalf of itself and any other
\nContributing Companies (collectively, “Representing SCO Entities”) to Caldera
\nconcurrently herewith and certified by an officer of SCO, on behalf of all of
\nthe Representing SCO Entities, respectively, to be true, accurate and complete
\nto the best of his\/her knowledge (the “SCO Disclosure Letter”), SCO on behalf of
\neach and all of the Representing SCO Entities, hereby represents and warrants to
\nCaldera that as of the date hereof:<\/p>\n
2.1 Organization; Good Standing; Qualification and Power. The
\nContributed Subsidiaries are all of the subsidiaries of the Contributed
\nCompanies or any of their direct or indirect subsidiaries. Each of the
\nContributed Companies, and the Contributed Subsidiaries and each of the
\nContributing Companies is a corporation duly organized, validly existing and in
\ngood standing under the laws of the jurisdiction of its formation, has all
\nrequisite corporate power and authority to own, lease and operate any and all of
\nthe Group Assets held by such company and for the Conduct of the Group Business
\nas now being conducted by such company, and is duly qualified and in good
\nstanding to do business in each jurisdiction in which the nature of its business
\nor the ownership or leasing of its properties makes such qualification
\nnecessary, other than in such jurisdictions where the failure so to qualify
\nwould not have a Material Adverse Effect on the Group Business. SCO has
\ndelivered to Caldera or its counsel complete and correct copies of the charter
\ndocuments of the Contributed Companies and the Contributed Subsidiaries. Except
\nfor the Contributed Subsidiaries, none of the Contributed Companies nor any of
\nthe Contributed Subsidiaries owns, directly or indirectly, any capital stock or
\nother equity interest of any corporation or has any direct or indirect equity or
\nownership interest in any other business, whether organized as a corporation,
\npartnership, joint venture or otherwise.<\/p>\n
2.2 Capital Structure.<\/p>\n
(a) Stock and Options. The authorized, issued and as of
\nthe date of July 28, 2000, the outstanding capital stock of the Contributed
\nCompanies and the Contributed Subsidiaries is set forth in Section 2.2(a) of the
\nSCO Disclosure Letter. Except as specified in Section 2.2(a) of the SCO
\nDisclosure Letter, no shares of the capital stock of the Contributed Companies
\nor of any of the Contributed Subsidiaries are held by any of them in its
\ntreasury or<\/p>\n
10
\n 18<\/p>\n
reserved for issuance upon the exercise of options or warrants. Except as
\nspecified in Section 2.2(a) of the SCO Disclosure Letter, all outstanding shares
\nof the capital stock of the Contributed Companies on July 28, 2000 are set forth
\nin Section 2.2(a) of the SCO Disclosure Letter and are validly issued, fully
\npaid and nonassessable and free and clear of any Encumbrances and not subject to
\npreemptive rights under any statute, pursuant to the Certificate of
\nIncorporation or Bylaws or Memorandum and Articles of Incorporation (or similar
\ngoverning documents in each relevant jurisdiction) of the Contributed Companies,
\nor pursuant to any agreement or document to which any of them is a party or by
\nwhich any of them is bound. All outstanding shares of the capital stock of each
\nof the Contributed Subsidiaries are validly issued, fully paid and nonassessable
\nand are owned by a Contributed Company, or one of the Contributed Subsidiaries,
\nfree and clear of any Encumbrances. SCO has provided Caldera with a correct and
\ncomplete list of each of the SCO Options as of July 28, 2000, including the name
\nof the Optionees, the plan pursuant to which such SCO Options were issued (if
\napplicable), the number of shares covered by such SCO Options, the per share
\nexercise price of such SCO Options, and the vesting schedule applicable to such
\nSCO Options, including the number of shares vested as of such date and will
\nprovide a final list of such information on the Closing Date. All the
\noutstanding SCO Options have been issued in compliance with all applicable
\nfederal and state securities laws. Doug Michels owns and has the right to vote
\nshares representing approximately 10% of the capital stock of SCO as of the date
\nof this Agreement.<\/p>\n
(b) No Other Commitments. Except as set forth in Section
\n2.2(b) of the SCO Disclosure Letter there are no options, warrants, calls,
\nrights, commitments, conversion rights or agreements of any character to which
\nthe Contributed Companies is a party or by which any of them is bound obligating
\nthem to issue, deliver or sell, or cause to be issued, delivered or sold, any
\nshares of its capital stock, or securities convertible into or exchangeable for
\nshares of its capital stock, or obligating any of them to grant, extend or enter
\ninto any such option, warrant, call, right, commitment, conversion right or
\nagreement. There is no voting trust, proxy or other agreement or understanding
\nto which SCO or any of its respective direct or indirect subsidiaries is a party
\nwith respect to the voting of the capital stock of any member of the Contributed
\nCompany Group. All shares of capital stock of any member of the Contributed
\nCompany Group are held free and clear of any Encumbrances.<\/p>\n
(c) Registration Rights. Neither the Contributed Companies
\nnor the Contributing Companies is under any obligation to register under the
\nSecurities Act (or equivalent or similar legislation in each relevant
\njurisdiction) any of the presently outstanding securities of the Contributed
\nCompanies or any securities of the Contributed Companies that may be
\nsubsequently issued.<\/p>\n
(d) Caldera Ownership. Except as set forth in Section
\n2.2(d) of the SCO Disclosure Letter, none of SCO or any of its direct or
\nindirect subsidiaries owns, or will own immediately prior to the Effective Time,
\nany Caldera Common Stock.<\/p>\n
2.3 Authority.<\/p>\n
(a) Corporate Action. Subject to approval of this
\nAgreement and the Ancillary Agreements by SCO’s stockholders, SCO and each of
\nthe Contributing Companies have all requisite corporate power and authority to
\nenter into this Agreement and the Ancillary<\/p>\n
11
\n 19<\/p>\n
Agreements, to perform its obligations hereunder and thereunder, and to
\nconsummate the transactions contemplated by this Agreement and the Ancillary
\nAgreements. The Board of Directors of SCO has, as of the date of this Agreement,
\nunanimously (i) approved and declared advisable this Agreement and the Ancillary
\nAgreements and has approved the SCO Transaction and the other transactions
\ncontemplated hereby, (ii) determined that the SCO Transaction is consistent with
\nand in furtherance of the long-term business strategy of SCO and fair to, and in
\nthe best interests of, SCO and its stockholders and (iii) determined to
\nrecommend that the stockholders of SCO adopt and approve this Agreement and
\napprove the SCO Transaction. Prior to the Effective Time, this Agreement and the
\nAncillary Agreements will be approved by the Board of Directors of each of the
\nother Contributing Companies. This Agreement has been and, prior to the
\nEffective Time, the Ancillary Agreements will be, duly executed and delivered by
\nthe Contributing Company party to such agreement. Subject to receiving such
\nstockholder approval, this Agreement is, or, in the case of each of the
\nAncillary Agreements will be, a valid and binding obligation of the Contributing
\nCompany party to such agreement, each enforceable against the Contributing
\nCompany party to such agreement in accordance with its terms, except as
\nenforceability may be limited by bankruptcy and other similar laws and general
\nprinciples of equity.<\/p>\n
(b) No Conflict. Neither the execution, delivery and
\nperformance of this Agreement and the Ancillary Agreements nor the consummation
\nof the transactions contemplated hereby or thereby, nor compliance with the
\nprovisions hereof, will (i) conflict with, or result in any violations of, or
\ncause a default (with or without notice or lapse of time, or both) under, or
\ngive rise to a right of termination, amendment, cancellation or acceleration of
\nany obligation contained in, or the loss of any material benefit under, or
\nresult in the creation of any Encumbrance upon any of the Group Assets or
\nContributed Stock under, any term, condition or provision of (x) the Certificate
\nof Incorporation or Bylaws or equivalent organizational documents of any of the
\nContributing Companies or the Contributed Companies or any of the Contributed
\nSubsidiaries or (y) any of the Contributed Contracts or any other loan or credit
\nagreement, note, bond, mortgage, indenture, lease or other material agreement,
\njudgment, order, decree, statute, law, ordinance, rule or regulation applicable
\nto the Contributed Companies, the Contributed Companies’ Property, the
\nContributed Stock or the Contributed Assets, other than any such conflicts,
\nviolations, defaults, rights or Encumbrances which, individually or in the
\naggregate, would not have a Material Adverse Effect on the Group Business; or
\n(ii) require the affirmative vote of the holders of greater than a majority of
\nthe issued and outstanding capital stock of any member of the Contributing
\nCompanies or any member of the Contributed Company Group.<\/p>\n
(c) Governmental Consents. Except (i) as set forth in
\nSection 2.3(c) of the SCO Disclosure Letter; (ii) such filings, authorizations,
\norders and approvals as may be required under state takeover laws; (iii) such
\nfilings and notifications as may be necessary under the HSR Act; (iv) the
\nfilings, authorizations, orders, notifications, and approvals contemplated by
\nthis Agreement or the Ancillary Agreements; and (v) such other governmental or
\nthird party consents, filings, authorizations, orders and approvals which, if
\nnot obtained or made, would not have a Material Adverse Effect on Newco or have
\na material adverse effect on the ability of the Contributing Companies to
\nconsummate the transactions contemplated by this Agreement or the Ancillary
\nAgreements, no consent, approval, order or authorization of, or registration,<\/p>\n
12
\n 20<\/p>\n
declaration or filing with, any governmental entity is required to be obtained
\nby the Contributing Companies or any member of the Contributed Company Group in
\nconnection with the execution and delivery of this Agreement or the Ancillary
\nAgreements by SCO or the performance of the Contributing Companies and the
\nContributed Companies of the respective obligations herein pertaining to such
\ncompany.<\/p>\n
2.4 SEC Documents.<\/p>\n
(a) SEC Reports. SCO has delivered to Caldera or its
\ncounsel correct and complete copies of the final version of each report,
\nschedule, registration statement and definitive proxy statement filed by SCO
\nwith the SEC on or after July 1, 1995 with respect to the Group Business or the
\nGroup Assets (the “SCO SEC Documents”), which are the material documents (other
\nthan preliminary proxy material) that SCO was required to file with the SEC on
\nor after July 1, 1995 with respect to the Group Business or the Group Assets. As
\nof their respective dates or, in the case of registration statements, their
\neffective dates, none of the SCO SEC Documents (including all exhibits and
\nschedules thereto and documents incorporated by reference therein) contained any
\nuntrue statement of a material fact or omitted to state a material fact required
\nto be stated therein or necessary in order to make the statements therein, in
\nlight of the circumstances under which they were made, not misleading as of such
\ntime of filing, and there is no requirement under the Securities Act or the
\nExchange Act, as the case may be, to have amended any such filing, except for
\nsuch requirements as were fulfilled by the filing of such SCO SEC Documents, the
\nSCO SEC Documents complied, when filed, in all material respects with the then
\napplicable requirements of the Securities Act or the Exchange Act, as the case
\nmay be, and the rules and regulations promulgated by the SEC thereunder, and SCO
\nhas filed in all material respects all documents and agreements that were
\nrequired to be filed as exhibits to the SCO SEC Documents.<\/p>\n
(b) SCO Financial Statements; Absence of Undisclosed
\nLiabilities. The audited consolidated financial statements dated as of and for
\nthe period ending September 30, 1999 and the unaudited consolidated financial
\nstatements dated as of and for the period ending June 30, 2000 of SCO and its
\nconsolidated subsidiaries (the “SCO Consolidated Financial Statements”) complied
\nas to form in all material respects with the then applicable accounting
\nrequirements and the published rules and regulations of the SEC with respect
\nthereto, were prepared in accordance with GAAP applied on a consistent basis
\nduring the periods involved (except as may have been indicated in the notes
\nthereto) and fairly present (subject, in the case of the unaudited statements,
\nto normal year-end audit adjustments) the consolidated financial position of SCO
\nand its respective consolidated subsidiaries as at the respective dates thereof
\nand the consolidated results of its operations and cash flows for the respective
\nperiods then ended. SCO has no liabilities or obligations of any nature (matured
\nor unmatured, fixed or contingent) which are, individually or in the aggregate,
\nof a nature required to be disclosed on the face of a consolidated balance sheet
\nfor SCO and its consolidated subsidiaries prepared in accordance with GAAP and
\nwhich would have a Material Adverse Effect on the Group Business, except for
\nsuch liabilities or obligations as (i) were accrued or provided for in the
\nconsolidated balance sheet at June 30, 2000 included in the SCO Consolidated
\nFinancial Statements as of the date thereof (the “SCO Consolidated Financial
\nStatements Balance Sheet Date”) or (ii) are of a normally recurring nature and
\nwere incurred after the SCO Consolidated Financial Statements Balance<\/p>\n
13
\n 21<\/p>\n
Sheet Date in the ordinary course of business consistent with past practice. All
\nliabilities and valuation accounts established and reflected in the SCO
\nConsolidated Financial Statements are, to SCO’s Knowledge, reasonably adequate.
\nAt the SCO Consolidated Financial Statements Balance Sheet Date, there were no
\nmaterial loss contingencies arising from the conduct of the business of SCO and
\nits consolidated subsidiaries which are required to be provided for or
\ndisclosed, but are not provided for or disclosed, in the SCO Consolidated
\nFinancial Statements.<\/p>\n
(c) Group Financial Statements; Absence of Undisclosed
\nLiabilities. Attached as Schedule 2.4(c)(1) to the SCO Disclosure Letter are the
\naudited combined financial statements of the Group Business dated as of and for
\nthe period ended June 30, 2000 including a combined balance sheets as of June
\n30, 2000 (the “2000 Group Balance Sheet”) and a combined balance sheet for
\nSeptember 30, 1999 and 1998, together with combined statements of operations,
\ncash flows, and Group Business equity for the two years and nine months in the
\nperiod ended September 30, 1999 (collectively the “Group Financial Statements”).
\nThe Group Financial Statements comply in all material respects with the then
\napplicable accounting requirements and rules and regulations of the SEC with
\nrespect thereto, and present fairly, in all material respects, the combined
\nfinancial position of the Group Business as of September 30, 1999 and June 30,
\n2000, and the combined results of its operations and its cash flows for each of
\nthe two years and nine months in the period ended September 30, 1999, in
\nconformity with GAAP. The Contributed Company Group and the Contributing
\nCompanies (with respect to the Group Business) have no Liabilities of any nature
\n(matured or unmatured, fixed or contingent) which (i) are related to or arose in
\nconnection with the Group Business; (ii) individually or in the aggregate, are
\nof a nature required to be recorded on the face of or disclosed in the notes to
\nthe Group Financial Statements; and (iii) are material to the Group Business
\ntaken as a whole, except for such Liabilities as (A) were accrued, provided for
\nor disclosed in the Group Financial Statements or (B) are of a normally
\nrecurring nature and were incurred after June 30, 2000 (the “Group Financial
\nStatements Balance Sheet Date”), in the ordinary course of business consistent
\nwith past practice. All liabilities and valuation accounts established and
\nreflected in the Group Financial Statements are, to SCO’s Knowledge, reasonably
\nadequate. To SCO’s Knowledge, at the Group Financial Statements Balance Sheet
\nDate, there were no material loss contingencies which are not properly provided
\nfor or disclosed in the Group Financial Statements.<\/p>\n
2.5 Disclosure; Information Supplied. No representation or
\nwarranty made by SCO in this Agreement, nor any final financial statement,
\ncertificate or exhibit prepared and furnished or to be prepared and furnished by
\nit, or its representatives pursuant hereto or in connection with the
\ntransactions contemplated hereby, contains any untrue statement of a material
\nfact, or omits to state a material fact necessary to make the statements or
\nfacts contained herein or therein, taken as a whole, not misleading in light of
\nthe circumstances under which they were furnished. None of the information
\nsupplied or to be supplied by SCO for inclusion or incorporation by reference in
\nthe Form S-4 and Prospectus\/Proxy Statement will, at the time the information is
\nsupplied contain, after giving effect to any supplement or amendment thereto,
\nany untrue statement of a material fact or omit to state any material fact
\nrequired to be stated therein or necessary to make the statements therein in
\nlight of the circumstances under which they are made, not materially misleading.<\/p>\n
14
\n 22<\/p>\n
2.6 Compliance with Applicable Laws. Except as disclosed in the
\nSCO SEC Documents filed prior to the date hereof, the Group Business is not
\nbeing conducted and no Contributed Company is in violation of any law,
\nordinance, regulation, rule or order of any governmental entity where such
\nviolation would have a Material Adverse Effect on the Group Business. Except as
\ndisclosed in the SCO SEC Documents filed prior to the date hereof, neither SCO,
\nany Contributing Company, nor any member of the Contributed Company Group has
\nbeen notified in writing by any governmental entity that any investigation or
\nreview with respect to the Contributed Companies or any of the Contributed
\nSubsidiaries, any of the Group Assets or the Group Business is pending or
\nthreatened, nor has any governmental entity notified any of them in writing of
\nits intention to conduct the same. The Group Assets include all permits,
\nlicenses and franchises from governmental entities required for the Conduct of
\nthe Group Business, except for those whose absence would not have a Material
\nAdverse Effect on the Group Business and those which would terminate as a
\nconsequence of the SCO Transaction.<\/p>\n
2.7 Litigation. Except as would not reasonably be expected to
\nhave a Material Adverse Effect on the Group Business or as set forth in Section
\n2.7 of the SCO Disclosure Letter or as disclosed in the SCO SEC Documents, there
\nis no suit, action, arbitration, demand, investigation, claim or proceeding
\npending or, to SCO’s Knowledge, threatened against the Contributed Company
\nGroup, any of the Contributing Companies or the Group Assets; nor is there any
\njudgment, decree, injunction, ruling or order of any governmental entity,
\nstatutory body or arbitrator or settlement or compromise agreement outstanding
\nagainst the Contributed Company Group or any of the Contributing Companies or
\nthe Group Assets. SCO has delivered or made available to Caldera or its counsel
\ncorrect and complete copies of all material correspondence prepared by its
\ncounsel for SCO auditors in connection with the last two completed audits of
\nSCO’s Financial Statements and the audit of the Group Financial Statements and
\nany such correspondence since the date of the last such audit. No member of the
\nContributed Company Group and none of the Contributing Companies is a party to
\nany decree, judgment, order or arbitration award (or agreement entered into in
\nany administrative, judicial, investigative or arbitration proceeding with any
\ngovernmental authority) with respect to the Group Assets, Employees, or Group
\nBusiness that could reasonably be expected to have a Material Adverse Effect on
\nthe Group Business. Except for violations as would not have a Material Adverse
\nEffect on the Group Business, none of the Contributing Companies nor any member
\nof the Contributed Company Group is in violation of any decree, judgement, order
\nor arbitration award that names such company, or any of such companies, as a
\nparty or that otherwise, to SCO’s Knowledge, involves such company or any of the
\nGroup Assets, or in violation of any law, ordinance, statute, regulation or EU
\ndirective or decree, order, judgment or ruling of any governmental authority to
\nwhich the Group Assets or the Contributed Stock are subject, including, without
\nlimitation, laws, rules and regulations relating to occupational health and
\nsafety, equal employment opportunities, fair employment practices, and sex,
\nrace, religious, disability and age discrimination. To SCO’s Knowledge, there is
\nno claim, action, suit, arbitration, mediation, investigation or other
\nproceeding of any nature pending or, threatened, at law or in equity, by way of
\narbitration or before any court, tribunal, governmental department, statutory
\nbody, commission, board or agency that: (i) may adversely affect, contest or
\nchallenge any party’s authority, right or ability to perform its obligations
\nunder this Agreement or any of the Ancillary Agreements; (ii) challenges or
\ncontests the Contributing Companies’ or the Contributed Companies’ right, title
\nor ownership of any of the Group Assets or the Contributed<\/p>\n
15
\n 23<\/p>\n
Stock or seeks to impose an Encumbrance (other than a Group Permitted
\nEncumbrance) on, or a transfer of title or ownership of, any of the Group Assets
\nor the Contributed Stock; (iii) asserts that any action taken by any employee,
\nconsultant or contractor of the Contributed Companies or Contributing Companies
\nin connection with the Group Business infringes or misappropriates any
\nIntellectual Property Rights of any third party; (iv) seeks to enjoin, prevent
\nor hinder operation of the Group Business; (v) seeks to enjoin, prevent, or
\nhinder the consummation of any of the transactions contemplated by this
\nAgreement or any of the Ancillary Agreements; (vi) would impair or have an
\nadverse affect on Newco’s right or ability to use or exploit any of the Group
\nAssets; (vii) involves or relates to any potentially material claim against
\nContributing Companies or the Group Assets by any creditor thereof; or (viii)
\ninvolves any claim of fraudulent conveyance or any similar claim, except in
\ncases (ii), (iii), (iv), (vi) and (vii) where such proceeding could not
\nreasonably be expected to have a Material Adverse Effect on Newco.<\/p>\n
2.8 ERISA and Other Compliance.<\/p>\n
(a) Section 2.8 of the SCO Disclosure Letter lists each
\nemployment, severance, compensation or other similar contract, arrangement or
\npolicy and each plan or arrangement (written or oral, contractual or
\ndiscretionary) providing for insurance coverage (including any self-insured
\narrangements), workers’ benefits, vacation benefits, severance benefits,
\ndisability or permanent health insurance benefits, death benefits,
\nhospitalization or other medical benefits, retirement benefits, deferred
\ncompensation, profit-sharing, bonuses, commissions, stock options, stock
\npurchase, phantom stock, stock appreciation, save as you earn or other forms of
\nincentive compensation or post-retirement insurance, compensation or benefits
\nfor employees, consultants or directors (other than workers compensation,
\nunemployment compensation and other government mandated programs) which both (A)
\nis entered into, maintained or contributed to, as the case may be, by any member
\nof the Contributed Company Group or any of the Contributing Companies, and (B)
\ncovers any Employee (collectively as the “Group Benefit Arrangements”). Each
\nGroup Benefit Arrangement maintained by any member of the Contributed Company
\nGroup has been maintained in compliance with its terms and with the requirements
\nprescribed by any and all statutes, orders, rules and regulations which are
\napplicable to such Group Benefit Arrangement except as would not have a Material
\nAdverse Effect on the Group Business. Section 2.8(a) of the SCO Disclosure
\nLetter also identifies each “employee benefit plan,” as defined in Section 3(3)
\nof ERISA (“Employee Benefit Plan”), in which any of the Employees participate
\n(collectively, the “Group Employee Plans”). Copies of all Group Benefit
\nArrangements have been made available to Caldera or its counsel. All
\ncontributions or premiums currently due and payable with respect to any of the
\nGroup Employee Plans have been made as required under ERISA or have been accrued
\non the 2000 Group Balance Sheet or will be made prior to the Effective Time. Any
\nContributed Company Employee Plan intended to be qualified under Section 401(a)
\nof the Code has either obtained from the Internal Revenue Service a favorable
\ndetermination letter as to its qualified status under the Code, including all
\namendments to the Code effected by the Tax Reform Act of 1986, or has applied to
\nthe Internal Revenue Service for such a determination letter prior to the
\nexpiration of the requisite period under applicable Treasury Regulations or
\nInternal Revenue Service pronouncements in which to apply for such determination
\nletter and to make any amendments necessary to obtain a favorable determination
\nor has been established under a standardized prototype plan for which an
\nInternal Revenue Service opinion letter has been obtained by the<\/p>\n
16
\n 24<\/p>\n
plan sponsor and is valid as to the adopting employer. Each Contributed Company
\nhas made available upon Newco’s request the most recent Internal Revenue Service
\ndetermination or opinion letter issued with respect to each such Contributed
\nCompany Employee Plan, and nothing has occurred since the issuance of each such
\nletter which could reasonably be expected to cause the loss of the tax-qualified
\nstatus of any Contributed Company Employee Plan subject to Code Section 401(a).<\/p>\n
(b) None of the Group Employee Plans maintained by any of
\nthe Contributing Companies or any member of the Contributed Company Group (i) is
\na multiemployer plan, within the meaning of Section 3(37) or 4001(a)(3) of ERISA
\n(a “Multiemployer Plan”), or a single employer pension plan, within the meaning
\nof Section 4001(a)(15) of ERISA, for which Newco could incur liability under
\nSection 4063 or 4064 of ERISA (a “Multiple Employer Plan”), or (ii) provides or
\npromises to provide retiree medical or life insurance benefits except in
\nconnection with (a) benefit coverage mandated by applicable law, including
\nwithout limitation, coverage provided pursuant to Section 4980B of the Code; (b)
\ndeath or disability benefits under any of the Group Benefit Arrangements; (c)
\nbenefits arising in connection with a separation or severance program, plan or
\narrangement; and (d) life insurance benefits for any employee who dies while in
\nservice with any of the Contributing Companies or any member of the Contributed
\nCompany Group. None of the Contributing Companies or any member of the
\nContributed Company Group has incurred or will incur prior to or as of the
\nEffective Time any material liability under, arising out of or by operation of
\nTitle IV of ERISA (other than liability for premiums to the Pension Benefit
\nGuaranty Corporation arising in the ordinary course), including any liability in
\nconnection with (i) the termination or reorganization of any employee pension
\nbenefit plan subject to Title IV of ERISA or (ii) with withdrawal from any
\nMultiemployer Plan or Multiple Employer Plan.<\/p>\n
(c) The appropriate Contributing Company or Contributed
\nCompany has timely provided, or will have provided prior to the Effective Time,
\nto Employees entitled thereto all required notices and made coverage available
\npursuant to Section 4980B of the Internal Revenue Code and the Consolidated
\nOmnibus Budget Reconciliation Act of 1985, as amended (“COBRA”), with respect to
\nany “qualifying event” (as defined in Section 4980B(f)(3) of the Internal
\nRevenue Code). The appropriate Contributing Company or Contributed Company will
\ntimely provide to Employees entitled thereto all required notices and make
\ncoverage available pursuant to Internal Revenue Code Section 4980B and COBRA
\nwith respect to any “qualifying event” (as defined in Section 4980B(f)(3) of the
\nInternal Revenue Code) occurring prior to and including the Effective Time. No
\nmaterial Tax payable on account of Section 4980B of the Internal Revenue Code
\nhas been incurred by the Contributing Companies or any of the Contributed
\nCompanies with respect to any current Employees (or its beneficiaries).<\/p>\n
(d) The consummation of the transactions contemplated by
\nthis Agreement will not (i) entitle any current or former employee or other
\nservice provider of the Contributed Companies or the Contributing Companies to
\nseverance benefits or any other payment or (ii) accelerate the time of payment
\nor vesting (including any SCO Option or unvested shares of SCO Common Stock), or
\nincrease the amount of compensation due any such employee or other service
\nprovider. No payment or benefit payable or which may become payable by any of
\nthe Contributed Companies or by any of the Contributing Companies with respect
\nto any<\/p>\n
17
\n 25<\/p>\n
current or former employee, or other current or former service provider shall
\nconstitute a “parachute payment” (as defined in Section 280G(b)(2) of the
\nInternal Revenue Code). Within five (5) business days following the date of this
\nAgreement, SCO shall identity in Section 2.8 of the SCO Disclosure Letter all
\npersons on the Section 11.1 Schedule who SCO reasonably believes are, as of the
\ndate of this Agreement, “disqualified individuals” (within the meaning of
\nSection 280G of the Code and the regulations promulgated thereunder) with
\nrespect to the Contributing Companies or the Contributed Companies. Within five
\n(5) business days prior to the expected Closing Date, SCO shall revise Section
\n2.8 of the SCO Disclosure Letter to reflect any additional information which SCO
\nreasonably believes would impact the determination of persons who are of such
\ndate “disqualified individuals” (within the meaning of Section 280G of the Code
\nand the regulations promulgated thereunder).<\/p>\n
(e) To SCO’s Knowledge, no Employee who is a key developer
\nof a Group Product is subject to any agreement, obligation, order or other legal
\nhindrance that impedes or might impede such Employee from devoting his or her
\nfull business time to the affairs of Newco after the Effective Time.<\/p>\n
(f) None of the Contributed Companies are indebted to any
\nexecutive officer or director of any such Contributed Company, whether by loan,
\nadvance or otherwise, other than for salaries accrued but not yet payable and
\nreimbursable out-of-pocket expenses incurred in the ordinary course of business
\nconsistent with past practice and not yet payable, nor, except as described in
\nSection 2.8(f) to the SCO Disclosure Letter or except as disclosed in the 2000
\nGroup Balance Sheet or the SCO SEC Documents, is any officer, director, employee
\nor shareholder so indebted to any of SCO or any of the Contributed Companies,
\nnor does any Employee have any right to force SCO or any Contributing Company to
\nrepurchase any stock.<\/p>\n
(g) The Contributed Company Group and the Contributing
\nCompanies are in compliance in all material respects with all currently
\napplicable laws and regulations, domestic or foreign, respecting employment,
\ndiscrimination in employment, terms and conditions of employment, wages, hours,
\ngovernmental and administrative contribution requirements and occupational
\nsafety and health and employment practices, and is not engaged in any unfair
\nlabor practice with respect to the Employees in each of the countries where the
\nContributed Company Group and the Contributing Companies have employees. The
\nContributed Company Group and the Contributing Companies have withheld all
\namounts required by law or by agreement to be withheld from the wages, salaries,
\nand other payments to Employees; and is not liable for any arrears of wages or
\nany taxes or any penalty for failure to comply with any of the foregoing. The
\nContributing Company Group and the Contributing Companies are not liable for any
\npayment to any trust or other fund or to any governmental or administrative
\nauthority, with respect to unemployment compensation benefits, social security
\nor other benefits or obligations for Employees (other than routine payments to
\nbe made in the normal course of business and consistent with past practice).
\nThere are no pending claims against the Contributed Company Group and the
\nContributing Companies under any workers compensation plan, policy, statute or
\nregulation or any other plan or policy to which the Contributed Company Group
\nand\/or any Contributing Company are parties or for long term disability. There
\nare no controversies or disputes pending or, to the knowledge of the Contributed
\nCompany Group and the Contributing Companies, threatened, between the
\nContributed Company Group and the Contributing<\/p>\n
18
\n 26<\/p>\n
Companies and any of their respective employees, which controversies have or
\ncould reasonably be expected to result in an action, suit, proceeding, claim,
\narbitration or investigation before any agency, court or tribunal, foreign or
\ndomestic. None of the Contributed Company Group or the Contributing Companies is
\na party to any collective bargaining agreement or other labor union contract nor
\ndoes the Contributed Company Group and the Contributing Companies know of any
\nactivities or proceedings of any labor union to organize any such Employees. To
\nSCO’s knowledge, no Employees of the Contributed Company Group and the
\nContributing Companies are in violation of any term of any employment contract,
\npatent disclosure agreement, enforceable noncompetition agreement, or any
\nenforceable restrictive covenant to a former employer relating to the right of
\nany such Employee to be employed by SCO because of the nature of the business
\nconducted or presently proposed to be conducted by SCO or to the use of trade
\nsecrets or proprietary information of others.<\/p>\n
(h) Section 2.8(h) of the SCO Disclosure Letter lists,
\nwith respect to any member of the Contributed Company Group or any of the
\nContributing Companies, all employee benefit plans, programs or arrangements for
\nemployees who work outside the United States (“Foreign Employee Plans”). Except
\nas disclosed in Section 2.8(h) of the SCO Disclosure Letter, no member of the
\nContributed Company Group or any of the Contributing Companies maintains any
\nForeign Employee Plans other than those required by applicable law. SCO has
\nfurnished or made available to Caldera a copy of each of the Foreign Employee
\nPlans. Each Foreign Employee Plan has been operated and administered in
\naccordance with its terms and applicable laws, rules and regulations.<\/p>\n
2.9 Absence of Certain Changes or Events. Except as disclosed in
\nSection 2.9 of the SCO Disclosure Letter, since the Group Financial Statements
\nBalance Sheet Date there has not occurred:<\/p>\n
(a) any change or event which could reasonably be expected
\nto have a Material Adverse Effect on the Group Business;<\/p>\n
(b) any amendments or changes in the Certificate of
\nIncorporation or Bylaws (or similar or equivalent governing documents on each
\nrelevant jurisdiction) of any member of the Contributed Company Group;<\/p>\n
(c) any damage, destruction or loss to or of the Group
\nAssets not covered by insurance, which would have a Material Adverse Effect on
\nthe Group Business;<\/p>\n
(d) any redemption, repurchase or other acquisition of
\nshares of any member of the Contributed Company Group, or any declaration,
\nsetting aside or payment of any dividend or other distribution by any
\nContributing Company or any member of the Contributed Company Group to any
\nentity other than a member of the Contributed Company Group (whether in cash,
\nstock or property) of the Group Assets or any proceeds generated by the conduct
\nof the Group Business;<\/p>\n
(e) any material increase in or modification of the
\ncompensation or benefits payable, or to become payable, by the Contributed
\nCompanies to the Employees, except<\/p>\n
19
\n 27<\/p>\n
in the ordinary course of the business, consistent with past practice or except
\nas necessary to respond to third party solicitation of Employees,<\/p>\n
(f) other than as required by applicable statute or
\ngovernmental regulation, any material increase in or modification of any Group
\nBenefit Arrangement (including, but not limited to, the granting of stock
\noptions, the acceleration of the vesting schedules in effect for outstanding
\nstock options, restricted stock awards or stock appreciation rights) that will
\nbecome binding upon Newco upon consummation of the transactions contemplated
\nherein, for or with respect to any of the Employees, other than increases or
\nmodifications occurring after the date hereof, which are authorized pursuant to
\nSection 4.3 below;<\/p>\n
(g) any sale of a material amount of the Group Assets, or
\nany acquisition by any member of the Contributed Company Group of a material
\namount of assets;<\/p>\n
(h) any stock\/share capital being allotted or issued or
\nagreed to be allotted or issued or any alteration in any term of any outstanding
\ncapital stock or rights to acquire capital stock, share or loan capital of any
\nmember of the Contributed Company Group, including, but not limited to,
\nacceleration of the vesting or any change in the terms of any outstanding stock
\noptions;<\/p>\n
(i) (A) any incurrence, assumption or guarantee by any
\nmember of the Contributed Company Group of any debt of any person, other than
\nany member of the Contributed Company Group, for borrowed money in an amount
\nexceeding $250,000 in the aggregate; (B) issuance or sale by any member of the
\nContributed Company Group of any securities convertible into or exchangeable for
\ntheir respective debt securities; or (C) issuance or sale of options or other
\nrights to acquire from SCO or the Contributed Company Group, directly or
\nindirectly, debt securities of any member of the Contributed Company Group, or
\nany securities convertible into or exchangeable for any such debt securities;<\/p>\n
(j) any creation or assumption by a Contributing Company
\nor a member of the Contributed Company Group of any Encumbrance (other than
\nGroup Permitted Encumbrances) on any Group Asset in excess of $250,000
\nindividually or in the aggregate, other than to refinance a liability reflected
\nin the SCO Financial Statements or the Group Financial Statements in the
\nordinary course of business;<\/p>\n
(k) any making by any member of the Contributed Company
\nGroup of any loan, advance or capital contribution to or investment in any
\nperson other than to refinance a liability reflected in the SCO Financial
\nStatements or the Group Financial Statements and other than (i) loans, advances
\nor capital contributions made in the ordinary course of the business, and (ii)
\nother loans and advances, where the aggregate amount of any such items
\noutstanding at any time does not exceed $250,000;<\/p>\n
(l) any amendment of, relinquishment, termination or
\nnon-renewal by the Contributing Companies or the Contributed Company Group of
\nany Contributed Contract, other than in the ordinary course of business
\nconsistent with past practice;<\/p>\n
20
\n 28<\/p>\n
(m) any transfer or grant of a right under Intellectual
\nProperty Rights included in the Group Assets, except in the ordinary course of
\nbusiness, consistent with past practice,<\/p>\n
(n) any labor dispute with, or charge of unfair labor
\npractice by, SCO (relating to Employees) or any member of the Contributed
\nCompany Group (other than routine individual grievances), any activity or
\nproceeding by a labor union or representative thereof to organize any Employees
\nor, to SCO’s Knowledge, any campaign being conducted to solicit authorization
\nfrom Employees to be represented by such labor union, where such dispute,
\npractice, activity, proceeding, or campaign would have a Material Adverse Effect
\non the Group Business;<\/p>\n
(o) any change in accounting methods;<\/p>\n
(p) any agreement by any member of the Contributed Company
\nGroup to take any of the actions described in the preceding clauses (a) through
\n(o) (other than the transactions contemplated by this Agreement or the Ancillary
\nAgreements).<\/p>\n
2.10 Full Force and Effect. Each of the Contributed Contracts and
\nGroup Governmental Permits is in full force and effect and is not subject to any
\nbreach or default thereunder by any Contributing Company or any member of the
\nContributed Company Group or, to SCO’s Knowledge, any other party thereto,
\nexcept for those Contributed Contracts and Group Governmental Permits, the
\nabsence of which would not have a Material Adverse Effect on the Group Business.<\/p>\n
2.11 Agreements. Section 2.11 of the SCO Disclosure Letter lists
\nall the contracts as of the date hereof of the type described below to which any
\nmember of the Contributed Company Group is a party and which is material to the
\nGroup Business (herein, the “Material Contributed Contracts”) (and copies of all
\nsuch Material Contributed Contracts have been identified to and made available
\nfor review by Caldera or its counsel):<\/p>\n
(a) contract with or commitment to any labor union which
\nwould have a Material Adverse Effect on the Group Business;<\/p>\n
(b) continuing contract for the future purchase, sale or
\nmanufacture of products, material, supplies, equipment or services requiring
\npayment to or from any member of the Contributed Company Group or any
\nContributing Company, the non-continuance of which would have a Material Adverse
\nEffect on the Group Business, or in which any member of the Contributed Company
\nGroup or any Contributing Company has granted or received manufacturing rights,
\nmost favored nations pricing provisions or exclusive marketing rights relating
\nto the Group Products, other than purchase contracts with vendors who are not
\nthe top ten (10) vendors of any member of the Contributed Company Group or of
\nany Contributing Companies (as measured by purchases from them in the most
\nrecently ended fiscal year);<\/p>\n
(c) contract providing for the development of technology
\nused or incorporated in any Group Products currently distributed in connection
\nwith the Group Business or which requires any member of the Contributed Company
\nGroup to perform specified<\/p>\n
21
\n 29<\/p>\n
development work for a third party, the non-continuance of which would have a
\nMaterial Adverse Effect on the Group Business;<\/p>\n
(d) joint venture contract or agreement or other agreement
\nwhich is reasonably expected to involve a sharing of profits or losses in any
\none year in excess of $100,000 individually or in the aggregate from any joint
\nenterprise with any party (other than any member of the Contributed Company
\nGroup);<\/p>\n
(e) indenture, mortgage, promissory note, loan agreement,
\nguarantee or other agreement or commitment for the borrowing of money, for a
\nline of credit or for a leasing transaction of a type required to be capitalized
\n(other than those reflected in the SCO Financial Statements or the Group
\nFinancial Statements, or those pursuant to which payments by any member of the
\nContributed Company Group will not exceed $50,000 individually or $250,000 in
\nthe aggregate);<\/p>\n
(f) agreement or arrangement for the sale of any Group
\nAssets having a value individually or in the aggregate exceeding $100,000 (other
\nthan those entered into in the ordinary course of business consistent with past
\npractice);<\/p>\n
(g) agreement which would restrict Newco from engaging in
\nany material aspect of the Group Business or from selling any of the material
\nGroup Products in any material geographic area (including any agreement pursuant
\nto which any of them has granted exclusive rights in the Group Products to a
\nthird party);<\/p>\n
(h) SCO IP Rights Agreement (as defined in Section 2.15
\nbelow), other than agreements entered into with customers in the ordinary course
\nof business; or<\/p>\n
(i) agreement between or among SCO and any member of the
\nContributed Company Group regarding inter-company loans, revenue or cost or Tax
\nsharing, ownership or license of SCO IP Rights for Group Products, or
\nintercompany royalties or dividends.<\/p>\n
2.12 No Defaults. Notwithstanding Section 1.4(c), there exists no
\nevent (including closing of the transactions contemplated by this Agreement),
\ncondition or occurrence which, after notice or lapse of time, or both, would
\nconstitute a default by the Contributing Companies who are parties thereto under
\nany Contributed Contract in any manner which would have a Material Adverse
\nEffect on the Group Business.<\/p>\n
2.13 Certain Agreements. Neither the execution and delivery of
\nthis Agreement or the Ancillary Agreements, nor the consummation of the
\ntransactions contemplated hereby and thereby, will, (i) result in any payment in
\nan amount exceeding $50,000 individually or $250,000 in the aggregate
\n(including, without limitation, severance, unemployment compensation, golden
\nparachute, bonus or otherwise) becoming due by any member of the Contributed
\nCompany Group (or by any Contributing Company, with respect to the Group
\nBusiness) or to any Employee(s) or other current or former service provider
\nunder any Group Benefit Arrangement or otherwise, (ii) increase any benefits
\notherwise payable by Newco under any Group Benefit Arrangement by more than
\n$50,000 individually or $250,000 in the<\/p>\n
22
\n 30<\/p>\n
aggregate, or (iii) result in the acceleration of the time of payment or vesting
\nof any such benefits.<\/p>\n
2.14 Taxes(a). SCO and each of its subsidiaries have properly
\ncompleted and timely filed, or caused to be properly completed and timely filed,
\nall Tax returns required to be filed by them and have paid, or caused to be
\npaid, all Taxes that are shown on such Tax returns as due and payable. All Taxes
\nof SCO and its subsidiaries for all periods through June 30, 2000, have been
\nfully paid (except for Taxes that are adequately provided for or reflected in
\nthe SCO Consolidated Financial Statements). Since June 30, 2000, no material Tax
\nliability has been assessed, or is, to SCO’s Knowledge, proposed to be assessed,
\nincurred or accrued (other than liabilities for Taxes arising in the ordinary
\ncourse of business) against SCO or any of its subsidiaries. To SCO’s Knowledge,
\nneither SCO nor any of its subsidiaries has received any notification that any
\nmaterial issues have been raised (or are currently pending) by the Internal
\nRevenue Service or any other taxing authority, including, without limitation,
\nany sales tax authority, in connection with any of the Tax returns referred to
\nin the first sentence of this Section 2.14, and no unexpired waivers of statutes
\nof limitations have been given or requested with respect to Tax returns or Taxes
\nof SCO and its consolidated subsidiaries. No taxing authority is currently
\nconducting an audit or investigation of any of the aforesaid Tax returns or to
\nSCO’s Knowledge is about to conduct such an audit or investigation with respect
\nto such Tax returns. Any deficiencies asserted or assessments (including
\ninterest and penalties) made as a result of any examination by the Internal
\nRevenue Service or by appropriate national, state, provincial or departmental
\nauthorities of the Tax returns with respect to SCO and any of its subsidiaries
\nhave been paid or adequately provided for in the SCO Consolidated Financial
\nStatements, and, to SCO’s Knowledge, no proposed (but unassessed) additional
\nTaxes have been asserted and no Tax liens have been filed against SCO or any of
\nits subsidiaries other than for Taxes not yet due and payable. Neither SCO nor
\nany member of the Contributed Company Group (i) has made an election to be
\ntreated as a “consenting corporation” under Section 341(f) of the Internal
\nRevenue Code or (ii) is a “personal holding company” within the meaning of
\nSection 542 of the Internal Revenue Code;<\/p>\n
(b) If any of the capital assets of the UK Contributed
\nCompanies were disposed of for a consideration equal to the book value of that
\nasset in or adopted for the purposes of the SCO Consolidated Financial
\nStatements, no liability to corporation tax on chargeable gains or balancing
\ncharge under the Capital Allowances Act 1990 would arise (for this purpose there
\nshall be disregarded any relief or allowance available to the UK Contributed
\nCompanies (other than amounts falling to be deducted from the consideration
\nreceivable under section 38 of the TCGA)). No chargeable gain or balancing
\ncharge would arise on the disposal by the Contributing Company of any asset
\nacquired since the SCO Consolidated Financial Statements Date for a
\nconsideration equal to the consideration actually given for the acquisition of
\nsuch asset (disregarding any indexation relief);<\/p>\n
(c) The UK Contributed Companies have not entered into any
\ntransaction, contract or arrangement, whether verbal or written and whether made
\nwithin or outside the UK, under which it has or may become liable to pay or to
\naccount for stamp duty or stamp duty reserve tax and which liability remains
\nunsatisfied;<\/p>\n
23
\n 31<\/p>\n
(d) The UK Contributed Companies have not entered into any
\nindemnity, guarantee, covenant, charge or other agreement under which they have
\nagreed to, or can be procured to pay a sum equivalent to or by reference to
\nanother person’s liability to Tax, nor do any other circumstances exist whereby
\nthe Contributed Companies would have to make such a payment;<\/p>\n
(e) All reliefs assumed as an asset or otherwise taken
\ninto account in the SCO Consolidated Financial Statements are available to be
\nutilized by the UK Contributed Companies at Closing;<\/p>\n
(f) The UK Contributing Companies have never been members
\nof a group of companies for UK tax purposes other than a group comprising only
\nthe UK Contributing Companies;<\/p>\n
(g) The provisions of Part XV of the UK Value Added Tax
\nRegulations 1995 (capital goods scheme) do not apply to any of the UK
\nContributed Assets;<\/p>\n
(h) No election has been nor will before Closing be made
\npursuant to paragraph 2 of Schedule 10 to the Value Added Tax Act 1994 (“VATA
\n1994”) in relation to any of the UK Properties or any part of any of them;<\/p>\n
(i) All UK value added tax payable upon the importation of
\ngoods, and all excise duties payable to HM Customs and Excise payable in respect
\nof the UK Contributed Assets have been paid in full, and none of the UK
\nContributed Assets is liable to confiscation, forfeiture or distress;<\/p>\n
(j) All documents (other than those which have ceased to
\nhave any legal effect) to which the UK Contributed Companies or any member of
\nthe UK Contributed Companies group of companies is a party and which are
\nmaterial to the title of the UK Contributed Assets have been duly stamped and no
\nsuch documents which are outside the UK would attract stamp duty if they were
\nbought into the UK;<\/p>\n
(k) All National Insurance and sums payable by the UK
\nContributed Companies to the UK Inland Revenue under the PAYE system have been
\nduly and properly paid. Proper records have been maintained in respect of all
\nsuch matters.<\/p>\n
(l) There is no unsatisfied liability to capital transfer
\ntax or inheritance tax attached or attributable to any of the UK Contributed
\nAssets and none of the UK Contributed Assets are, or are likely to be, subject
\nto an Inland Revenue charge as mentioned in Section 237 of the Inheritance Tax
\nAct 1984; and<\/p>\n
(m) No person is liable to capital transfer tax or
\ninheritance tax attributable to the value of any of the UK Contributed Assets in
\nconsequence no person has the power under Section 212 of the Inheritance Tax Act
\n1984 to raise the amount of such tax by the sale or mortgage of or by a charge
\non any of the UK Contributed Assets.<\/p>\n
24
\n 32<\/p>\n
2.15 Intellectual Property.<\/p>\n
(a) The Contributed Companies and, insofar as it relates
\nto the Group Business, the Contributing Companies own, or have the right to use,
\nsell or license such Intellectual Property Rights as are necessary or required
\nfor the Conduct of the Group Business (such Intellectual Property Rights being
\nhereinafter collectively referred to as the “SCO IP Rights”) and such ownership
\nor rights to use, sell or license are reasonably sufficient for the Conduct of
\nthe Group Business, except for any failure to own or have the right to use, sell
\nor license that would not have a Material Adverse Effect on the Group Business.<\/p>\n
(b) All SCO IP Rights are owned free and clear of any
\nEncumbrances (other than Group Permitted Encumbrances).<\/p>\n
(c) The execution, delivery and performance of this
\nAgreement and the consummation of the transactions contemplated hereby will not
\nconstitute a material breach of any material instrument or material agreement in
\nrespect of any SCO IP Rights licensed by or to any Contributing Company or
\nContributed Company (the “SCO IP Rights Agreements”), will not cause the
\nforfeiture or termination or give rise to a right of forfeiture or termination
\nof any SCO IP Right or materially impair the right of Newco to use, sell or
\nlicense any SCO IP Right or portion thereof (except where such breach,
\nforfeiture, termination or impairment would not have a Material Adverse Effect
\non the Group Business).<\/p>\n
(d) There are no royalties, honoraria, fees or other
\npayments payable by any member of the Contributed Company Group or any
\nContributing Company to any person by reason of the ownership, use, license,
\npurchase, sale or disposition or acquisition of any of the SCO IP Rights in an
\namount exceeding $100,000 in any one year.<\/p>\n
(e) To SCO’s Knowledge, no third party is infringing or
\nmisappropriating any of the SCO IP Rights.<\/p>\n
(f) To SCO’s Knowledge, (i) neither the manufacture,
\nmarketing, license, sale or intended use of any Group Product violates any
\nlicense or agreement relating thereto or infringes any Intellectual Property
\nRight of any other party, (ii) there is no pending or threatened claim or
\nlitigation contesting the validity, ownership or right to use, sell, license or
\ndispose of any SCO IP Right, and (iii) no third party has notified the
\nContributing Companies or the Contributed Company Group that any SCO IP Right,
\nor the proposed use, sale, license or disposition thereof, conflicts or will
\nconflict with the rights of any other party, nor is there any basis therefor,
\nexcept for any violations, infringements, claims or litigation that would not
\nhave a Material Adverse Effect on the Group Business.<\/p>\n
(g) The Contributing Companies and the Contributed Company
\nGroup have taken reasonable and practicable steps designed to safeguard and
\nmaintain the secrecy and confidentiality of, and its proprietary rights in, all
\nmaterial trade secrets or other confidential information constituting SCO IP
\nRights. To SCO’s Knowledge, no current or prior officers, employees or
\nconsultants of the Contributing Companies or the Contributed Company Group claim
\nan ownership interest in or have a lien on any SCO IP Rights or any form of
\ncompensation out of the ordinary course of business as a result of having been
\ninvolved in the development of<\/p>\n
25
\n 33<\/p>\n
such property while so employed, or retained, or otherwise. To SCO’s Knowledge,
\nall development employees of the SCO IP Rights, and all other officers,
\nemployees and consultants of the Contributed Company Group have executed and
\ndelivered an agreement regarding the protection of proprietary information and
\nthe assignment to his\/her employer or principal of the SCO IP Rights arising
\nfrom the services performed by such persons, except where this absence of such
\nagreement would not have a Material Adverse Effect on the Group Business.<\/p>\n
(h) Section 2.15(h) of the SCO Disclosure Letter lists
\neach license, sublicense, agreement or other permission pursuant to which SCO or
\nthe Contributed Business Group is entitled to use third party IP Rights
\n(excluding shrink wrap licenses to commercially available software sold at
\nretail) as of the date hereof, the absence of which would have a Material
\nAdverse Effect on the Group Business that a third party owns and that SCO or the
\nContributed Business Group uses pursuant to a license, sublicense, agreement or
\nother permission, and describes and identifies such license, sublicense,
\nagreement or other permission (excluding shrink wrap licenses to commercially
\navailable software sold at retail). Such license, sublicense, agreement or
\npermission covering the item is legal, valid, binding, enforceable and in full
\nforce and effect and will continue to be legal, valid, binding, enforceable and
\nin full force and effect on identical terms to Newco’s benefit immediately
\nfollowing the Effective Time, except where it would not have a Material Adverse
\nEffect on Newco, and such license, sublicense, agreement or permission does not
\nrestrict the ability to market any material Group Product in any material
\njurisdiction or with respect to any material market or industry, and neither SCO
\nnor the Contributed Company Group is in breach or default of any such license,
\nsublicense, agreement or permission in a manner which would have a Material
\nAdverse Effect on the Group Business. No person other than the Contributing
\nCompanies holds any license or other right to manufacture, modify, or create
\nderivative works of any of the Group Products, other than OEM agreements that
\nwould not have a Material Adverse Effect on the Group Business. No person (other
\nthan Newco) will be or become entitled to receive a copy of source code of any
\nsoftware included among the Group Assets as a result of this Agreement, any
\nAncillary Agreement or any other agreement or transaction contemplated by this
\nAgreement. Except as disclosed in Section 2.15(h) of the SCO Disclosure Letter,
\nto SCO’s Knowledge, no person holds or has been granted access to any copy of
\nsource code of any software included among the Group Assets unless such person
\nhas agreed in writing (i) to hold such source code in confidence and take
\nreasonable steps to preserve the secrecy of such source code, and (ii) not to
\nuse such source code for any purpose except (A) to support such person’s
\ninternal use of such source code or (B) to modify such source code solely for
\nthe purpose of internally using such modifications. None of SCO or the
\nContributed Companies have knowingly taken or knowingly failed to take any
\naction that, directly or indirectly, has caused any Intellectual Property Rights
\nin source code of material Group Products to enter the public domain, such as
\nwould have a Material Adverse Effect on the Group Business.<\/p>\n
2.16 Fees and Expenses. Except for the fees and expenses set
\nforth in SCO’s engagement letter with Chase HQ, a copy of which has been
\nprovided to Caldera, no member of the Contributed Company Group and none of the
\nContributing Companies has paid or become obligated to pay any fee or commission
\nto any broker, finder or intermediary in connection with the transactions
\ncontemplated by this Agreement and the Ancillary Agreements.<\/p>\n
26
\n 34<\/p>\n
2.17 Insurance. The members of the Contributed Company Group
\nmaintain fire and casualty, general liability, business interruption, directors
\nand officers, product liability and sprinkler and water damage insurance that
\nthey believe to be reasonable for its respective businesses.<\/p>\n
2.18 Ownership of Property. Except for Group Permitted
\nEncumbrances, the Contributed Company Group and the Contributing Companies own,
\nor at the Effective Time will own, the Contributed Company Assets, free and
\nclear of all Encumbrances. All real and personal property included in the Group
\nAssets is in good working condition and suitable for its intended use, subject
\nto ordinary wear and tear. To SCO’s Knowledge, no member of the Contributed
\nCompany Group is in violation in any material respect with any zoning, building
\nor safety ordinance, regulation or requirement or other law or regulation
\napplicable to the operation of its respective owned or leased properties.<\/p>\n
2.19 Environmental Matters.<\/p>\n
(a) During the period that the Contributed Companies and
\nthe Contributing Companies (with respect to the Group Assets or any real estate
\nleased thereunder) have leased or owned its respective properties or owned or
\noperated its respective facilities, there have been, to SCO’s Knowledge, no
\ndisposals, releases or threatened releases of Hazardous Materials on, from,
\nunder or about such properties or facilities which would cause a Material
\nAdverse Effect on Newco. To SCO’s Knowledge there is no presence, disposals,
\nreleases or threatened releases of Hazardous Materials on, from, under or about
\nany of such properties or facilities, which may have occurred prior to said
\nMember of the Contributed Company Group or the Contributing Companies (with
\nrespect to the Group Assets or any real estate leased thereunder) having taken
\npossession of any of such properties or facilities, where such Hazardous
\nMaterials would cause a Material Adverse Effect on Newco.<\/p>\n
(b) None of the properties or facilities which are Group
\nAssets is or has been the subject of an Environmental Violation, which would
\ncause a Material Adverse Effect on Newco. During the time that a Member of the
\nContributed Company Group or the Contributing Companies (with respect to the
\nGroup Assets or any real estate leased thereunder) owned or leased its
\nrespective properties and facilities, none of said companies and, to SCO’s
\nKnowledge, no third party, used, generated, manufactured or stored on, under or
\nabout such properties or facilities or transported to or from such properties or
\nfacilities any Hazardous Materials (except those Hazardous Materials associated
\nwith general office use or janitorial supplies) in a manner which would result
\nin a Material Adverse Effect on Newco.<\/p>\n
(c) During the time that any member of the Contributed
\nCompany Group and the Contributing Companies (with respect to the Group Assets
\nor any real estate leased thereunder) owned or leased its respective properties
\nand facilities, to SCO’s Knowledge, there has been no litigation brought or
\nthreatened against any such Company, or any settlement reached by any such
\nCompany with, any party or parties concerning the presence, disposal, release or
\nthreatened release of any Hazardous Materials on, from or under any of such
\nproperties or facilities or relating to any alleged Environmental Violation,
\nexcept for litigation or settlement which would not have a Material Adverse
\nEffect on Newco.<\/p>\n
27
\n 35<\/p>\n
2.20 Interested Party Transactions. Except as disclosed in the
\nSCO SEC Documents, no officer or director of a Contributing Company, or any
\n“affiliate” or “associate” (as those terms are defined in Rule 405 promulgated
\nunder the Securities Act) of a Contributing Company has, either directly or
\nindirectly, a material interest in: (i) any person or entity which purchases
\nfrom or sells, licenses or furnishes to the Contributed Company Group in
\nconnection with the Group Business, any goods, property, technology or
\nintellectual or other property rights or services; or (ii) any Contributed
\nContract; which, in the case of either subpart (i) or (ii) would have a Material
\nAdverse Effect on the Group Business.<\/p>\n
2.21 Fairness Opinion. SCO’s Board of Directors has received an
\nopinion dated as of the date hereof from Chase HQ to the effect that, as of the
\ndate hereof, the terms of the transactions contemplated by this Agreement and
\nthe Ancillary Agreements are fair to SCO from a financial point of view.<\/p>\n
2.22 Title to and Condition and Sufficiency of Group Assets. A
\nmember of the Contributed Company Group and\/or a Contributing Company owns or at
\nthe Closing will own the Group Assets and have good and marketable title
\nthereto, free and clear of all Encumbrances whatsoever, other than the Group
\nPermitted Encumbrances. The Group Assets transferred to Newco constitute all
\nassets, properties, rights, contracts and Intellectual Property Rights that are
\nnecessary or required for the Conduct of the Group Business as currently
\nconducted, without (i) the need to purchase, license or acquire any other
\nmaterial asset or property; (ii) violating any contractual rights of any third
\nparty; or (iii) infringing, misappropriating or misusing any software or
\nIntellectual Property Rights of any third party, except for such assets,
\nproperties, rights, contracts, software and Intellectual Property Rights, the
\nabsence of which, individually or in the aggregate, would not have a Material
\nAdverse Effect on the Group Business. Title to all Group Assets is freely
\ntransferable to and, with respect to the Contributed Assets and Contributed
\nStock, will be transferred to Newco free and clear of all Encumbrances, other
\nthan Group Permitted Encumbrances. Such transfer of the Contributed Assets and
\nContributed Stock can occur without obtaining the consent or approval of any
\nperson, except where the failure to transfer the Group Asset would not have a
\nMaterial Adverse Effect on Newco. At the Closing, the Contributing Companies
\nwill contribute, transfer and deliver to Newco all right, title and interest in
\nand to all Contributed Assets and Contributed Stock, free and clear of all
\nEncumbrances, other than Group Permitted Encumbrances.<\/p>\n
2.23 No Restrictive Agreements. Other than this Agreement and the
\nAncillary Agreements, neither any Member of the Contributed Company Group nor
\nSCO nor any of the Group Assets is bound, or materially and adversely affected
\nby, any judgment, injunction, order, decree, contract, covenant or agreement
\n(noncompete or otherwise) that restricts or prohibits (or purports to restrict
\nor prohibit) the Conduct of the Group Business or from competing for the sale of
\nthe Group Products anywhere in the world (including without limitation any
\ncontracts, covenants or agreements restricting the geographic area in which the
\nGroup Business may sell, license, market, distribute or support any Group
\nProducts) or restricting the markets, customers or industries that Newco may
\naddress after the Closing in the Conduct of the Group Business (collectively,
\n“Group Restrictive Agreements”), in a manner, in any of the foregoing cases,
\nwhich will have a Material Adverse Effect on Newco.<\/p>\n
28
\n 36<\/p>\n
2.24 Supplier and Customer Relationships. To SCO’s Knowledge, (i)
\nthe Contributed Company Group has good commercial working relationships with the
\ncustomers for the Group Business, and (ii) since January 1, 2000 no customer of,
\nor supplier to the Group Business has cancelled or otherwise terminated any
\nmaterial relationship concerning the Group Business with the Contributed Company
\nGroup or SCO (with respect to the Group), or materially decreased or limited its
\npurchases or provision of materials supplied to the Group Business or under any
\nMaterial Contributed Contract from the corresponding period in 1999, where any
\nof the foregoing actions would cause a Material Adverse Effect on the Group
\nBusiness, and to SCO’s Knowledge, no such customer or supplier has threatened to
\ntake any such action.<\/p>\n
2.25 Product and Inventory Status.<\/p>\n
(a) Product Quality, Warranty Claims. All Group Products
\nmanufactured, sold, licensed, leased or delivered in connection with the Group
\nBusiness conform in all material respects to applicable contractual commitments,
\nexpress and implied warranties, and, to SCO’s Knowledge, there is no material
\nLiability (nor any basis for any present or future action, suit, proceeding,
\nhearing, investigation, charge, complaint, claim or demand giving rise to any
\nmaterial Liability) for replacement or repair thereof or other damages in
\nconnection therewith, except for such conformance as would not have a Material
\nAdverse Effect on Newco.<\/p>\n
(b) Inventory. To SCO’s Knowledge, its inventories
\nrecorded on the 2000 Group Balance Sheet consist primarily of materials used in
\noperating system software products, related supplies and packaging materials,
\nall of which are merchantable, fit for the purpose for which they were procured
\nor manufactured, and are in a condition and quantity usable in the ordinary
\ncourse of business and to SCO’s Knowledge, none of these inventories are
\nobsolete, damaged or defective, except in each case where the failure of these
\ninventories to be so would not have a Material Adverse Effect on Newco or where
\na sufficient provision with respect to the possibility of such failure is
\nincluded in the 2000 Group Balance Sheet.<\/p>\n
2.26 Affirmative Vote.<\/p>\n
The affirmative vote of a majority of the votes that holders of
\nthe outstanding shares of SCO’s common stock are entitled to vote with respect
\nto the SCO Transaction is the only vote of the holders of any class or series of
\nSCO’s capital stock necessary to approve this Agreement and the transactions
\ncontemplated hereby.<\/p>\n
2.27 State Takeover Statutes.<\/p>\n
To SCO’s knowledge, no state takeover statute or similar statute
\nor regulation applies to or purports to apply to the SCO Transaction, the
\nAgreement, the Ancillary Agreements, or the transactions contemplated hereby and
\nthereby.<\/p>\n
2.28 Competition and Fair Trading Laws. No Contributed Company
\nor, in relation to the Group Business, Contributing Company is a party to (or
\nconcerned in) any agreement, arrangement, concerted practice or course of
\nconduct which: (i) is registrable under applicable laws in any relevant
\njurisdictions; or (ii) contravenes any such laws; or (iii) falls<\/p>\n
29
\n 37<\/p>\n
within Article 81 and\/or Articles 82 of the EC Treaty; or (iv) falls within
\nArticle 53 and\/or Article 54 of the Agreement on the European Economic Area; or
\n(v) contravenes, or is likely to contravene, the prohibitions of the Competition
\nAct 1998; or (vi) otherwise infringes the competition legislation or practice of
\nany other jurisdiction.<\/p>\n
No Contributed Company and, in relation to the Group Business, no
\nContributing Company has received or is likely to receive any process, notice or
\nother communication (formal or informal) by or on behalf of the Commission of
\nthe European Communities, the EFTA Surveillance Authority or any other authority
\nhaving jurisdiction in competition matters in relation to any aspect of the
\nGroup Business or any agreement, arrangement, concerted practice or course of
\nconduct to which any of them is, or is alleged to be, a party in relation to the
\nGroup Business.<\/p>\n
No Contributed Company and, in relation to the Group Business, no
\nContributing Company is subject to any order or judgment given by any court or
\ngovernmental or regulatory authority, or party to any undertaking or assurance
\ngiven to any such court or authority, in relation to competition matters which
\nis still in force.<\/p>\n
2.29 Grants. None of the Contributed Companies have taken any
\naction, agreed to take any action or failed to take any action as a result of
\nwhich any investment or other grant paid for use in the Contributed Companies is
\nliable to be refunded in whole or in part (whether as a result of the
\ntransaction contemplated by this Agreement or the Ancillary Agreements).<\/p>\n
3. Representations and Warranties of Caldera and Newco.<\/p>\n
Except as set forth in the respectively referenced provisions of
\nthe Caldera Disclosure Letter, delivered by Caldera on behalf of Caldera and
\neach Caldera Subsidiary (collectively, the “Caldera Group”), to SCO concurrently
\nherewith and certified by an officer of Caldera, on behalf of the Caldera Group,
\nrespectively, to be true, accurate and complete to the best of his knowledge
\n(the “Caldera Disclosure Letter”), Caldera, on behalf of the Caldera Group,
\nhereby represents and warrants to SCO that as of the date hereof:<\/p>\n
3.1 Organization; Good Standing; Qualification and Power. The
\nCaldera Subsidiaries are all of the subsidiaries of Caldera or any of its direct
\nor indirect subsidiaries. Caldera and each of the Caldera Subsidiaries is a
\ncorporation duly organized, validly existing and in good standing under the laws
\nof the jurisdiction of its formation, has all requisite corporate power and
\nauthority to own, lease and operate any and all of the Caldera Assets held by
\nsuch company and for the Conduct of the Caldera Business as now being conducted,
\nand is duly qualified and in good standing to do business in each jurisdiction
\nin which the nature of its business or the ownership or leasing of its
\nproperties makes such qualification necessary, other than in such jurisdictions
\nwhere the failure so to qualify would not have a Material Adverse Effect on
\nCaldera. Caldera has delivered to SCO or its counsel complete and correct copies
\nof the Certificate of Incorporation and Bylaws of Caldera as amended to the date
\nhereof and will deliver to SCO or its counsel prior to the Effective Time the
\nequivalent charter documents of Caldera and each of its Subsidiaries as amended
\nto the Closing. Except for the Caldera<\/p>\n
30
\n 38<\/p>\n
Subsidiaries, neither Caldera nor any of the Caldera Subsidiaries owns, directly
\nor indirectly, any capital stock or other equity interest of any corporation or
\nhas any direct or indirect equity or ownership interest in any other business,
\nwhether organized as a corporation, partnership, joint venture or otherwise.<\/p>\n
3.2 Capital Structure.<\/p>\n
(a) Stock and Options. The authorized and issued and as of
\nthe date of July 28, 2000 the outstanding capital stock of Caldera, the Caldera
\nSubsidiaries and Newco is set forth in Section 3.2(a) of the Caldera Disclosure
\nLetter. Except as specified in Section 3.2(a) of the Caldera Disclosure Letter,
\nno shares of the capital stock of Caldera or of any of the Caldera Subsidiaries
\nare held by any of them in its treasury or reserved for issuance upon the
\nexercise of options or warrants. All outstanding shares of the capital stock of
\nCaldera on July 28, 2000 are set forth in Section 3.2(a) of the Caldera
\nDisclosure Letter and are validly issued, fully paid and nonassessable free and
\nclear of any Encumbrances and not subject to preemptive rights pursuant to any
\nstatute, pursuant to the Certificate of Incorporation or Bylaws of Caldera, or
\npursuant to any agreement or document to which any of them is a party or by
\nwhich any of them is bound. All outstanding shares of the capital stock of each
\nof the Caldera Subsidiaries are validly issued, fully paid and nonassessable and
\nare owned by Caldera, or one of the Caldera Subsidiaries, free and clear of any
\nEncumbrances. The Caldera Significant Stockholders who will execute Voting
\nAgreements collectively own and have the right to vote shares representing
\napproximately 70% of the capital stock of Caldera as of the date of this
\nAgreement.<\/p>\n
(b) No Other Commitments. Except as set forth in Section
\n3.2(b) of the Caldera Disclosure Letter, there are no options, warrants, calls,
\nrights, commitments, conversion rights or agreements of any character to which
\nCaldera or any of its respective direct and indirect subsidiaries, is a party or
\nby which any of them is bound obligating them to issue, deliver or sell, or
\ncause to be issued, delivered or sold, any shares of its capital stock, or
\nsecurities convertible into or exchangeable for shares of its capital stock, or
\nobligating any of them to grant, extend or enter into any such option, warrant,
\ncall, right, commitment, conversion right or agreement. There is no voting
\ntrust, proxy or other agreement or understanding to which Caldera or any of its
\nrespective direct or indirect subsidiaries is a party with respect to the voting
\nof the capital stock of any member of the Caldera Group. All shares of capital
\nstock of any member of the Caldera Group are held free and clear of any
\nEncumbrances.<\/p>\n
(c) Registration Rights. Except as disclosed in the
\nCaldera SEC Documents, neither Caldera nor any of its respective subsidiaries is
\nunder any obligation to register under the Securities Act any of its presently
\noutstanding securities or any securities that may be subsequently issued which
\noffering would have a Material Adverse Effect on Newco.<\/p>\n
3.3 Authority.<\/p>\n
(a) Corporate Action. Subject to approval of this
\nAgreement and the Ancillary Agreements by the stockholders of Caldera, Caldera
\nhas all requisite corporate power and authority to enter into this Agreement and
\nthe Ancillary Agreements, to perform its obligations hereunder and thereunder,
\nand to consummate the transactions contemplated by this Agreement and the
\nAncillary Agreements. The Board of Directors of Newco and Caldera have,<\/p>\n
31
\n 39<\/p>\n
as of the date of this Agreement, unanimously (i) determined that the Merger is
\nconsistent with and in furtherance of the long-term business strategy of Caldera
\nand is fair to, and in the best interests of, Caldera and its stockholders; (ii)
\nhas approved this Agreement, the Ancillary Agreements, the Merger, the SCO
\nTransactions and other transactions contemplated hereby and thereby; and (iii)
\nhas determined to recommend that the stockholders of Caldera approve the SCO
\nTransaction. This Agreement and the Voting Agreements have been, and prior to
\nthe Effective Time, the other Ancillary Agreements will be, duly executed and
\ndelivered by Newco and Caldera. Subject to receiving such stockholder approval,
\nthis Agreement and the Voting Agreements are, and at the Closing the other
\nAncillary Agreements will be, valid and binding obligations of Newco and
\nCaldera, enforceable against Newco and Caldera in accordance with their
\nrespective terms, except as enforceability may be limited by bankruptcy and
\nother similar laws and general principles of equity.<\/p>\n
(b) No Conflict. Neither the execution, delivery and
\nperformance of this Agreement and the Ancillary Agreements nor the consummation
\nof the transactions contemplated hereby or thereby nor compliance with the
\nprovisions hereof will (i) conflict with, or result in any violations of, or
\ncause a default (with or without notice or lapse of time, or both) under, or
\ngive rise to a right of termination, amendment, cancellation or acceleration of
\nany obligation contained in, or the loss of any material benefit under, or
\nresult in the creation of any Encumbrance upon the any of the Caldera Assets
\nunder, any term, condition or provision of (x) the Certificate of Incorporation
\nor Bylaws of Caldera or the equivalent organizational documents of any of the
\nCaldera Subsidiaries or (y) any loan or credit agreement, note, bond, mortgage,
\nindenture, lease or other material agreement, judgment, order, decree, statute,
\nlaw, ordinance, rule or regulation applicable to Caldera, Caldera’s property or
\nthe Caldera Assets, other than any such conflicts, violations, defaults, rights
\nor Encumbrances which, individually or in the aggregate, would not have a
\nMaterial Adverse Effect on Caldera; or (ii) require the affirmative vote of the
\nholders of greater than a majority of the issued and outstanding capital stock
\nof Caldera.<\/p>\n
(c) Governmental Consents. Except (i) as set forth in
\nSection 3.3(c) of the Caldera Disclosure Letter; (ii) such filings,
\nauthorizations, orders and approvals as may be required under state takeover
\nlaws; (iii) such filings and notifications as may be necessary under the HSR
\nAct; (iv) the filings, authorizations, orders, notifications, and approvals
\ncontemplated by this Agreement or the Ancillary Agreements; and (v) such other
\ngovernmental or third party consents, filings, authorizations, orders and
\napprovals which, if not obtained or made, would not have a Material Adverse
\nEffect on Newco or have a material adverse effect on the ability of Caldera to
\nconsummate the transactions contemplated by this Agreement or the Ancillary
\nAgreements, no consent, approval, order or authorization of, or registration,
\ndeclaration or filing with, any governmental entity is required to be obtained
\nby the Caldera Group in connection with the execution and delivery of this
\nAgreement or the Ancillary Agreements by Caldera, Newco, and the Merger Sub or
\nthe performance by them of its respective obligations hereunder or thereunder.<\/p>\n
3.4 SEC Documents.<\/p>\n
(a) SEC Reports. Caldera has delivered to SCO or its
\ncounsel correct and complete copies of the final version of each report,
\nschedule, registration statement and<\/p>\n
32
\n 40<\/p>\n
definitive proxy statement filed by Caldera with the SEC on or after March 20,
\n2000 (the “Caldera SEC Documents”), which are the material documents (other than
\npreliminary material) that Caldera was required to file with the SEC on or after
\nMarch 20, 2000 with respect, in whole or in part, to Caldera or the Caldera
\nAssets. As of their respective dates or, in the case of registration statements,
\ntheir effective dates, none of the Caldera SEC Documents (including all exhibits
\nand schedules thereto and documents incorporated by reference therein) contained
\nany untrue statement of a material fact or omitted to state a material fact
\nrequired to be stated therein or necessary in order to make the statements
\ntherein, in light of the circumstances under which they were made, not
\nmisleading, and there is no requirement under the Securities Act or the Exchange
\nAct, as the case may be, to have amended any such filing. The Caldera SEC
\nDocuments complied, when filed, in all material respects with the then
\napplicable requirements of the Securities Act or the Exchange Act, as the case
\nmay be, and the rules and regulations promulgated by the SEC thereunder. Caldera
\nhas filed all documents and agreements that were required to be filed as
\nexhibits to the Caldera SEC Documents.<\/p>\n
(b) Caldera Financial Statements; Absence of Undisclosed
\nLiabilities. The audited consolidated financial statements, dated as of and for
\nthe period ended, October 31, 1999, and the unaudited consolidated financial
\nstatements, dated as of and for the period ending April 30, 2000, of Caldera and
\nits consolidated subsidiaries (“Caldera Financial Statements”) complied as to
\nform in all material respects with the then applicable accounting requirements
\nand the published rules and regulations of the SEC with respect thereto, were
\nprepared in accordance with GAAP applied on a consistent basis during the
\nperiods involved (except as may have been indicated in the notes thereto) and
\nfairly present (subject, in the case of the unaudited statements, to normal
\nyear-end audit adjustments) the consolidated financial position of the Caldera
\nGroup as at the respective dates thereof and the consolidated results of its
\noperations and cash flows for the respective periods then ended. Caldera has no
\nliabilities or obligations of any nature (matured or unmatured, fixed or
\ncontingent) which are, individually or in the aggregate, of a nature required to
\nbe disclosed on the face of a consolidated balance sheet for Caldera and its
\nconsolidated subsidiaries prepared in accordance with GAAP and which are
\nmaterial to the Caldera Business, except for such liabilities or obligations as
\n(i) were accrued or were provided for in the consolidated balance sheet dated
\nApril 30, 2000 included in the Caldera Financial Statements as of the date
\nthereof (the “Caldera Financial Statements Balance Sheet Date”) or (ii) are of a
\nnormally recurring nature and were incurred after the Caldera Financial
\nStatements Balance Sheet Date in the ordinary course of business consistent with
\npast practice. All liabilities and valuation accounts established and reflected
\nin the Caldera Financial Statements are to Caldera’s Knowledge reasonably
\nadequate. At the Caldera Financial Statements Balance Sheet Date, there were no
\nmaterial loss contingencies which are not adequately provided for in the Caldera
\nFinancial Statements.<\/p>\n
3.5 Disclosure; Information Supplied. No representation or
\nwarranty made by Caldera in this Agreement, nor any financial statement,
\ncertificate or exhibit prepared and furnished or to be prepared and furnished by
\nCaldera or its respective representatives pursuant hereto or in connection with
\nthe transactions contemplated hereby, when taken together, contains any untrue
\nstatement of a material fact, or omits to state a material fact necessary to
\nmake the statements or facts contained herein or therein, taken as a whole not
\nmisleading in light of the circumstances under which they were furnished. None
\nof the information supplied or to be<\/p>\n
33
\n 41<\/p>\n
supplied by Caldera for inclusion or incorporation by reference in the Form S-4
\nand Prospectus\/Proxy Statement will, at the time the information is supplied
\ncontain, after giving effect to any supplement or amendment thereto, no untrue
\nstatement of a material fact or omit to state any material fact required to be
\nstated therein or necessary to make the statements therein, in light of the
\ncircumstances under which they are made, not materially misleading. The
\nProspectus\/Proxy Statement will in all material respects comply as to form with
\nthe provisions of the Exchange Act and the rules and regulations promulgated by
\nthe SEC thereunder.<\/p>\n
3.6 Vote Required. The affirmative vote of a majority of the
\nshares of Caldera Common Stock that cast votes regarding the Merger and the SCO
\nTransaction in person or by proxy at the Caldera Stockholders Meeting is the
\nonly vote of the holders of any class or series of Caldera’s capital stock
\nnecessary to approve this Agreement and the transactions contemplated hereby.<\/p>\n
3.7 Litigation. Except as disclosed in the Caldera SEC Documents
\nfiled prior to the date hereof, or as would not reasonably be expected to have a
\nMaterial Adverse Effect on Caldera, there is no suit, action, arbitration,
\ndemand, claim or proceeding pending or, to Caldera’s Knowledge, threatened
\nagainst Caldera or the Caldera Assets; nor is there any judgment, decree,
\ninjunction, ruling or order of any governmental entity or arbitrator or
\nsettlement agreement outstanding against Caldera or any of the Caldera Assets.
\nCaldera has delivered or made available to SCO or its counsel correct and
\ncomplete copies of all material correspondence prepared by its counsel for
\nCaldera’s auditors in connection with the last two completed audits of Caldera’s
\nfinancial statements and any such correspondence since the date of the last such
\naudit. No member of the Caldera Group is a party to any decree, order or
\narbitration award (or agreement entered into in any administrative, judicial or
\narbitration proceeding with any governmental authority) with respect to the
\nCaldera Assets, Caldera Employees, or the Caldera Business that could reasonably
\nbe expected to have a Material Adverse Effect on Caldera. Except for violations
\nas would not have a Material Adverse Effect on Caldera, none of the members of
\nthe Caldera Group is in violation of any decree, order or arbitration award that
\nnames such company, or any of such companies, as a party or that otherwise, to
\nCaldera’s Knowledge, involves such company or any of such company’s assets, or
\nof any law, ordinance, statute, or governmental authority to which the Caldera
\nAssets are subject, including, without limitation, laws, rules and regulations
\nrelating to occupational health and safety, equal employment opportunities, fair
\nemployment practices, and sex, race, religious and age discrimination. There is
\nno claim, action, suit, arbitration, mediation, investigation or other
\nproceeding of any nature pending or, to Caldera’s Knowledge, threatened, at law
\nor in equity, by way of arbitration or before any court, governmental
\ndepartment, commission, board or agency that: (i) may adversely affect, contest
\nor challenge any party’s authority, right or ability to perform its obligations
\nunder this Agreement or any of the Ancillary Agreements; (ii) challenges or
\ncontests Caldera’s right, title or ownership of any of the Caldera Assets or
\nseeks to impose an Encumbrance (other than a Caldera Permitted Encumbrance) on,
\nor a transfer of title or ownership of, any of the Caldera Assets; (iii) asserts
\nthat any action taken by any employee, consultant or contractor of Caldera in
\nconnection with the Group Business infringes or misappropriates any Intellectual
\nProperty Rights of any third party; (iv) seeks to enjoin, prevent or hinder
\noperation of the Caldera Business or the consummation of any of the transactions
\ncontemplated by this Agreement or any of the Ancillary Agreements; (v) would
\nimpair or have<\/p>\n
34
\n 42<\/p>\n
an adverse affect on Newco’s right or ability to use or exploit any of the
\nCaldera Assets; or (vi) involves or relates to any potentially material claim
\nagainst Caldera by any creditor of Caldera or involves any claim of fraudulent
\nconveyance or any similar claim, except in cases (ii), (iii) and (v) where such
\nproceeding could not reasonably be expected to have a Material Adverse Effect on
\nNewco.<\/p>\n
3.8 Valid Issuance. The Newco Common Stock that is being issued
\nhereunder in connection with the SCO Transaction, when issued and delivered in
\naccordance with the terms of this Agreement for the consideration expressed
\nherein, will be duly authorized and validly issued, fully paid, and
\nnonassessable.<\/p>\n
3.9 Absence of Certain Changes or Events. Except as disclosed on
\nSection 3.9 of the Caldera Disclosure Letter, since the Caldera Financial
\nStatements Balance Sheet Date there has not occurred:<\/p>\n
(a) any change or event which could reasonably be expected
\nto have a Material Adverse Effect on Caldera; provided, however, that in no
\nevent will a change in the trading price of Caldera Common Stock be deemed a
\nMaterial Adverse Effect on Caldera;<\/p>\n
(b) any amendments or changes in the Certificate of
\nIncorporation or Bylaws (or equivalent governing documents in each relevant
\njurisdiction) of any member of the Caldera Group;<\/p>\n
(c) any damage, destruction to or loss of Caldera assets
\nnot covered by insurance, which would have a Material Adverse Effect on Caldera;<\/p>\n
(d) any redemption, repurchase or other acquisition of
\nshares of any member of the Caldera Group (other than pursuant to arrangements
\nwith terminated employees or consultants in the ordinary course of business,
\nconsistent with past practice), or any declaration, setting aside or payment of
\nany dividend or other distribution (whether in cash, stock or property) with
\nrespect to the capital stock of any member of the Caldera Group or, with respect
\nto dividends or other distributions of cash or property arising from the Caldera
\nBusiness;<\/p>\n
(e) any material increase in or modification of the
\ncompensation or benefits payable or to become payable by Caldera to the Caldera
\nemployees, except in the ordinary course of the business, consistent with past
\npractice and except as necessary to respond to third party solicitation of
\nCaldera employees;<\/p>\n
(f) other than as required by applicable statute or
\ngovernmental regulation, any material increase in or modification of any Caldera
\nGroup Benefit Arrangement (including, but not limited to, the granting of stock
\noptions, the acceleration of the vesting schedule in effect for any outstanding
\nstock options, restricted stock awards or stock appreciation rights) that will
\nbecome binding upon Newco upon consummation of the transactions contemplated
\nherein, for or with respect to any of the Caldera Employees, other than (i) in
\nthe ordinary course of the business, consistent with past practice, or to
\nrespond to third party solicitation of Caldera Employees, and (ii) if occurring
\nafter the date hereof, which is authorized pursuant to Section 5.3 below;<\/p>\n
35
\n 43<\/p>\n
(g) any sale of a material amount of the Caldera Assets,
\nor any acquisition by any member of the Caldera Group of a material amount of
\nassets, other than in the ordinary course of the business, consistent with past
\npractice;<\/p>\n
(h) any alteration in any term of any outstanding capital
\nstock or rights to acquire capital stock of any member of the Caldera Group,
\nincluding, but not limited to, acceleration of the vesting or any change in the
\nterms of any outstanding stock options;<\/p>\n
(i) other than in the ordinary course of business,
\nconsistent with past practice, (A) any incurrence, assumption or guarantee by
\nany member of the Caldera Group of any debt of any person, other than any member
\nof the Caldera Group, for borrowed money in an amount exceeding $250,000 in the
\naggregate; (B) issuance or sale by any member of the Caldera Group of any
\nsecurities convertible into or exchangeable for its respective debt securities;
\nor (C) issuance or sale of options or other rights to acquire from the Caldera
\nGroup, directly or indirectly, debt securities of any member of the Caldera
\nGroup, or any securities convertible into or exchangeable for any such debt
\nsecurities;<\/p>\n
(j) any creation or assumption by any member of the
\nCaldera Group of any Encumbrance (other than Caldera Permitted Encumbrances) on
\nany Caldera Asset in excess of $250,000 individually or in the aggregate, other
\nthan to refinance a liability reflected in the Caldera Financial Statements in
\nthe ordinary course of business;<\/p>\n
(k) any making by any member of the Caldera Group of any
\nloan, advance or capital contribution to or investment in any person other than
\nto refinance a liability reflected in the Caldera Financial Statements and other
\nthan (i) loans, advances or capital contributions made in the ordinary course of
\nthe business, and (ii) other loans and advances, where the aggregate amount of
\nall such items outstanding at any time does not exceed $250,000;<\/p>\n
(l) any amendment of, relinquishment, termination or
\nnon-renewal by Caldera of any of the Caldera Contracts, other than in the
\nordinary course of business consistent with past practice;<\/p>\n
(m) any transfer or grant of a right under the Caldera IP
\nRights, other than those transferred or granted in the ordinary course of
\nbusiness, consistent with past practice;<\/p>\n
(n) any labor dispute with, or charge of unfair labor
\npractice by, any member of the Caldera Group (other than routine individual
\ngrievances), any activity or proceeding by a labor union or representative
\nthereof to organize any Caldera employees or, to Caldera’s Knowledge, any
\ncampaign being conducted to solicit authorization from Caldera employees to be
\nrepresented by such labor union, where such dispute, practice, activity,
\nproceeding, or campaign would have a Material Adverse Effect on Caldera;<\/p>\n
(o) any change to accounting methods; or<\/p>\n
(p) any agreement by any member of the Caldera Group to
\ntake any of the actions described in the preceding clauses (a) through (o)
\n(other than the transactions contemplated by this Agreement or the Ancillary
\nAgreements).<\/p>\n
36
\n 44<\/p>\n
3.10 Taxes. The Caldera Group has properly completed and filed,
\nor caused to be properly completed and filed, all Tax returns required to be
\nfiled by the Caldera Group and has paid, or caused to be paid, all Taxes that
\nare shown on such Tax returns as due and payable. All Taxes of the Caldera Group
\nfor all periods through June 30, 2000, have been fully paid (except for Taxes
\nthat are adequately provided for or reflected in the Caldera Financial
\nStatements). Since June 30, 2000, no material Tax liability has been assessed,
\nor is, to Caldera’s Knowledge, proposed to be assessed, incurred or accrued
\n(other than liabilities for Taxes arising in the ordinary course of business)
\nagainst any member of the Caldera Group. To Caldera’s Knowledge, no member of
\nthe Caldera Group has received notification that any material issues have been
\nraised (or are currently pending) by the Internal Revenue Service or any other
\ntaxing authority, including, without limitation, any sales tax authority, in
\nconnection with any of the Tax returns referred to in the first sentence of this
\nSection 3.10, and no unexpired waivers of statutes of limitations have been
\ngiven or requested with respect to Tax returns or Taxes of any member of the
\nCaldera Group. No taxing authority is currently conducting an audit or
\ninvestigation of any of the aforesaid Tax returns or, to Caldera’s Knowledge, is
\nabout to conduct such an audit with respect to such Tax returns. Any
\ndeficiencies asserted or assessments (including interest and penalties) made as
\na result of any examination by the Internal Revenue Service or by appropriate
\nnational, state or departmental authorities of the Tax returns with respect to
\nSCO and any of its subsidiaries have been paid or adequately provided for in the
\nCaldera Financial Statements, and to Caldera’s Knowledge no proposed (but
\nunassessed) additional Taxes have been asserted and no Tax liens have been filed
\nagainst Caldera or any of the Caldera Assets other than for Taxes not yet due
\nand payable. Neither Caldera, nor any member of the Caldera Group (i) has made
\nan election to be treated as a “consenting corporation” under Section 341(f) of
\nthe Internal Revenue Code or (ii) is a “personal holding company” within the
\nmeaning of Section 542 of the Internal Revenue Code.<\/p>\n
3.11 Intellectual Property.<\/p>\n
(a) Caldera owns, or has the right to use, sell or license
\nsuch Intellectual Property Rights as are necessary or required for the Conduct
\nof the Caldera Business (such Intellectual Property Rights being hereinafter
\ncollectively referred to as the “Caldera IP Rights”) and such ownership or
\nrights to use, sell or license are reasonably sufficient for the Conduct of the
\nCaldera Business, except for any failure to own or have the right to use, sell
\nor license that would not have a Material Adverse Effect on Caldera.<\/p>\n
(b) All Caldera IP Rights are owned free and clear of any
\nEncumbrances.<\/p>\n
(c) To Caldera’s Knowledge, (i) neither the manufacture,
\nmarketing, license, sale or intended use of any product currently licensed or
\nsold by Caldera or any of the Caldera Subsidiaries or currently under
\ndevelopment by Caldera or any of the Caldera Subsidiaries violates any license
\nor agreement relating thereto or infringes any Intellectual Property Right of
\nany other party, (ii) there is no pending or threatened claim or litigation
\ncontesting the validity, ownership or right to use, sell, license or dispose of
\nany Caldera IP Right and (iii) no third party has notified Caldera that any
\nCaldera IP Right or the proposed use, sale, license or disposition thereof,
\nconflicts or will conflict with the rights of any other party, nor is there any
\nbasis therefor except for any violations, infringements, claims or litigation
\nthat would not have a Material Adverse Effect on Caldera.<\/p>\n
37
\n 45<\/p>\n
3.12 Fees and Expenses. Except for the fees and expenses set
\nforth in Caldera’s engagement letter with Broadview, a copy of which has been
\nprovided to SCO, neither Caldera, Newco nor any of the Caldera Subsidiaries has
\npaid or become obligated to pay any fee or commission to any broker, finder or
\nintermediary in connection with the transactions contemplated by this Agreement
\nand the Ancillary Agreements.<\/p>\n
3.13 Environmental Matters.<\/p>\n
(a) During the period that Caldera has leased or owned its
\nrespective properties or owned or operated its respective facilities, there have
\nbeen, to Caldera’s Knowledge, no disposals, releases or threatened releases of
\nHazardous Materials on, from, under or about such properties or facilities which
\nwould cause a Material Adverse Effect on Newco. To Caldera’s Knowledge there is
\nno presence, disposals, releases or threatened releases of Hazardous Materials
\non, from, under or about any of such properties or facilities, which may have
\noccurred prior to Caldera having taken possession of any of such properties or
\nfacilities where such Hazardous Materials would cause a Material Adverse Effect
\non Newco.<\/p>\n
(b) None of the properties or facilities of Caldera is or
\nhas been the subject of an Environmental Damage, which would cause a Material
\nAdverse Effect on Newco. During the time that Caldera has owned or leased its
\nrespective properties and facilities, none of Caldera nor, to Caldera’s
\nKnowledge, any third party, has used, generated, manufactured or stored on,
\nunder or about such properties or facilities or transported to or from such
\nproperties or facilities any Hazardous Materials (except those Hazardous
\nMaterials associated with general office use or janitorial supplies) in a manner
\nwhich would result in a Material Adverse Effect on Newco.<\/p>\n
(c) During the time that any members of the Caldera Group
\nhave owned or leased its respective properties and facilities, to Caldera’s
\nKnowledge, there has been no litigation brought or threatened against any of
\nthem by, or any settlement reached by any of them with, any party or parties
\nconcerning the presence, disposal, release or threatened release of any
\nHazardous Materials on, from or under any of such properties or facilities or
\nrelating to any alleged Environmental Violation, except for litigation or
\nsettlement which would not have a Material Adverse Effect on Newco.<\/p>\n
3.14 Fairness Opinion. Caldera’s Board of Directors has received
\nan opinion dated as of the date hereof from Broadview to the effect that, as of
\nthe date hereof, the Caldera Ratio is fair to Caldera from a financial point of
\nview.<\/p>\n
3.15 Tax Representations. Caldera, Newco and the Caldera
\nSignificant Stockholders are aware of no plan or intention by Caldera or Newco
\nor any corporation related to Caldera immediately after the Effective Time to
\nrepurchase any Newco capital stock issued pursuant to this Agreement from any
\nperson or entity that is or will become a Newco stockholder by reason of the
\ntransactions contemplated by this Agreement. Caldera has not redeemed any shares
\nof its capital stock or paid any extraordinary dividend in contemplation of the
\nMerger.<\/p>\n
38
\n 46<\/p>\n
4. SCO Covenants.<\/p>\n
4.1 Advice of Changes.<\/p>\n
During the period from the date hereof until the earlier of the
\nEffective Time or the termination of this Agreement in accordance with its
\nterms, SCO will promptly advise Caldera in writing, (i) of any event occurring
\nsubsequent to the date hereof that would reasonably be likely to render any
\nrepresentation or warranty contained in Section 2 of this Agreement, if made on
\nor as of the date of such event or the Effective Time, untrue or inaccurate,
\n(ii) of any event that would reasonably be likely to have a Material Adverse
\nEffect on the Group Business, and (iii) of any material breach by SCO of any
\ncovenant or agreement contained in this Agreement; provided, however, that the
\ndelivery of, or failure to deliver, any notice pursuant to this Section 4.1
\nshall not limit or otherwise affect the remedies available hereunder. Prior to
\nthe Effective Date, the SCO Board of Directors shall take all requisite action
\nunder each of the SCO stock plans to preclude the accelerated vesting of any
\noutstanding SCO Options or unvested shares of SCO Common Stock for all
\nDesignated Employees; provided, however that such actions shall not be required
\nwith respect to SCO Options granted to Employees whose options are subject to
\nacceleration pursuant to existing severance or change of control agreements.<\/p>\n
4.2 Maintenance of Business. During the period from the date
\nhereof until the earlier of the Effective Time or the termination of this
\nAgreement in accordance with its terms, the Contributed Company Group and the
\nContributing Companies will use reasonable efforts to carry on and preserve the
\nGroup Business and relationships with customers, suppliers, employees and others
\nrelated to Group Business in substantially the same manner as it has prior to
\nthe date hereof.<\/p>\n
4.3 Conduct of Business. During the period from the date hereof
\nuntil the earlier of the Effective Time or the termination of this Agreement in
\naccordance with its terms, the Contributed Company Group and SCO will continue
\nto conduct the Group Business and maintain business relationships related to the
\nGroup Business in the ordinary and usual course consistent with past practice
\nand, except as otherwise disclosed herein or in the SCO Disclosure Letter, they
\nwill not, without the prior written consent of Caldera, which consent shall not
\nbe unreasonably withheld, take any of the following actions where it would cause
\na Material Adverse Effect on the Group Business:<\/p>\n
(a) cause any of the Contributed Companies to borrow any
\nmoney except for amounts that are not in the aggregate material to the financial
\ncondition of the Group Business, taken as a whole;<\/p>\n
(b) cause any of the Group Assets to become subject to any
\nEncumbrance, except for Group Permitted Encumbrances;<\/p>\n
(c) dispose of any of Group Assets except immaterial
\namounts of Group Assets in the ordinary course of business, consistent with past
\npractice;<\/p>\n
39
\n 47<\/p>\n
(d) grant any exclusive license to any of the SCO IP
\nRights or grant any other license to SCO IP Rights except in the ordinary course
\nof business, consistent with past practice;<\/p>\n
(e) materially amend or terminate any of the Material
\nContributed Contracts;<\/p>\n
(f) cause any of the Contributed Companies to declare, set
\naside or pay any cash or stock dividend or other distribution in respect of
\ncapital stock, or redeem or otherwise acquire any of its capital stock;<\/p>\n
(g) permit any of the Contributed Companies to issue or
\nallot or agree to issue or allot capital stock, shares or loan capital;<\/p>\n
(h) cause any of the Contributed Companies to make any
\nloans or grant any guarantees, except (A) advances that are not material in
\namount or (B) loans pursuant to any Section 401(a) Plan;<\/p>\n
(i) waive or release any material claim against a third
\nparty;<\/p>\n
(j) cause any member of the Contributed Company Group to
\nmerge, consolidate or reorganize with or acquire any entity that is not a member
\nof the Contributed Company Group, except as set forth in the SCO Disclosure
\nLetter and except as otherwise set forth in the last sentence of Section 4.14(a)
\nor Section 1.4(a) hereof;<\/p>\n
(k) amend the Certificate of Incorporation or Bylaws (or
\nequivalent governing documents in each relevant jurisdiction) of any of the
\nContributed Companies;<\/p>\n
(l) implement any layoffs or reductions in the work force;<\/p>\n
(m) fail to pay or withhold any material Tax related to
\nthe Group Business when due to be paid or withheld;<\/p>\n
(n) change accounting methods;<\/p>\n
(o) agree to take, or permit any of its subsidiaries to
\ntake or agree to take, or enter into negotiations with respect to, any of the
\nactions described in the preceding clauses in this Section 4.3.<\/p>\n
Notwithstanding the foregoing, nothing in this Section 4.3 hereof
\nshall restrict or limit the conduct of any business of SCO or its direct or
\nindirect subsidiaries other than the Group Business and other than with respect
\nto the Group Assets and nothing herein shall restrict or limit the conduct of
\nany business of the Contributed Company Group or with respect to the Group
\nAssets other than as set forth in this Section 4.3.<\/p>\n
4.4 SCO Corporate Approvals. SCO will call the SCO Stockholders
\nMeeting to be held within 40 days after the Form S-4 shall have been declared
\neffective by the SEC, to submit the SCO Transaction and related matters for the
\nconsideration and approval of the SCO<\/p>\n
40
\n 48<\/p>\n
stockholders. Subject to Section 8.1(i) and (j), the Prospectus\/Proxy Statement
\nwill include a statement to the effect that SCO’s Board of Directors is
\nrecommending that SCO stockholders vote in favor of the SCO Transaction. The
\nBoard of Directors of SCO shall submit this Agreement and the SCO Transaction to
\nSCO’s stockholders whether or not at any time subsequent to the date hereof such
\nBoard determines that it can no longer make such recommendation. Such meeting
\nwill be called, held and conducted, and any proxies will be solicited, in
\ncompliance with applicable law. SCO agrees to vote in favor of the contribution
\nto Newco of the Contributed Stock and Contributing Assets at each meeting of
\nstockholders, or written consent in lieu thereof, of the Contributing Companies.
\nWithout limiting the foregoing, SCO shall vote in favor of the SCO Transaction
\nat each and every stockholders meeting, or with respect to any written consent
\nin lieu thereof, at which any proposal regarding any such transactions,
\nincluding the contribution and transfer of the Contributed Stock and Contributed
\nAssets, is considered. The Boards of Directors of each the Contributing
\nCompanies (including SCO) and the Contributed Company Group have approved the
\nSCO Transaction and this Agreement.<\/p>\n
4.5 Letter of SCO’s Accountants. SCO shall use its reasonable
\nbest efforts to cause to be delivered to Caldera a letter of
\nPriceWaterhouseCoopers LLP, dated a date within two business days before the
\ndate on which the Form S-4 shall become effective and addressed to Caldera, in
\nform and substance reasonably satisfactory to Caldera and customary in scope and
\nsubstance for letters delivered by independent public accountants in connection
\nwith registration statements similar to the Form S-4.<\/p>\n
4.6 Prospectus\/Proxy Statement. SCO will mail to its stockholders
\nin a timely manner, for the purpose of considering and voting upon the SCO
\nTransaction at the SCO Stockholders Meeting, the Prospectus\/Proxy Statement.
\nSCO, Caldera and Newco will prepare and file the Prospectus\/Proxy Statement with
\nthe SEC as promptly as practicable, and each will use its respective best
\nreasonable efforts to cause the Form S-4 to become effective as soon after such
\nfiling as practicable. In this regard, SCO, Caldera and Newco will advise each
\nother promptly as to the time at which the Form S-4 becomes effective and of the
\nissuance by the SEC of any stop order suspending the effectiveness of the Form
\nS-4 or the initiation of any proceedings for such purpose and each will use its
\nrespective reasonable best efforts to prevent the issuance of any stop order and
\nto obtain as soon as possible the lifting thereof, if issued. Until the
\nEffective Time, SCO will advise Caldera and Newco promptly of any requirement of
\nthe SEC for any amendment or supplement of the Form S-4 or for additional
\ninformation, and will not at any time file any amendment of or supplement to the
\nprospectus contained therein (or to the prospectus filed pursuant to Rule 424(b)
\nof the SEC) (the “Prospectus”) which shall not have been previously submitted to
\nCaldera in reasonable time prior to the proposed filing thereof or to which
\nCaldera shall reasonably object or which is not in compliance in all material
\nrespects with the Securities Act and the rules and regulations issued by the SEC
\nthereunder. None of the information relating to SCO (or, to SCO’s Knowledge, any
\nother person, contained in any document, certificate or other writing furnished
\nor to be furnished by SCO) included in (i) the Prospectus\/Proxy Statement at the
\ntime the Prospectus\/Proxy Statement is mailed, at the time of the SCO
\nStockholders Meeting or at the Effective Time, as then amended or supplemented,
\nor (ii) the Form S-4 at the time the Form S-4 becomes effective or at the
\nEffective Time, as then amended or supplemented, will contain any untrue
\nstatement of a material fact or will omit to<\/p>\n
41
\n 49<\/p>\n
state any material fact required to be stated therein or necessary to make the
\nstatements therein, in light of the circumstances in which they were made, not
\nmisleading or necessary to correct any statement which has become false or
\nmisleading in any earlier communication. From and after the date the Form S-4
\nbecomes effective and until the Effective Time, if any event known to SCO occurs
\nas a result of which the Prospectus\/Proxy Statement or Form S-4 would include an
\nuntrue statement of a material fact or omit to state a material fact required to
\nbe stated therein or necessary to make the statements therein not misleading, or
\nif it is necessary at any time to amend the Form S-4 or the Prospectus\/Proxy
\nStatement to comply with the Securities Act, SCO will promptly notify Caldera
\nand Newco and an amended or supplemented Form S-4 or Prospectus\/Proxy Statement
\nwill be prepared by SCO, Caldera and Newco which will correct such statement or
\nomission and will use its reasonable best efforts to cause any such amendment to
\nbecome effective as promptly as possible. The Prospectus\/ Proxy Statement, as it
\nrelates to SCO and information relating to the Group Business, will comply as to
\nform in all material respects with the requirements of the Exchange Act and the
\nrules and regulations thereunder in effect at the time the Prospectus\/Proxy
\nStatement is mailed.<\/p>\n
4.7 Regulatory Approvals. As promptly as reasonably practicable,
\nSCO will itself, and will cause each member of the Contributed Company Group, to
\nexecute and file, or join in the execution and filing, of any application or
\nother document that may be necessary in order to obtain the authorization,
\napproval or consent of any governmental body, federal, state, provincial, local
\nor foreign, which may be reasonably required, or which Caldera or Newco may
\nreasonably request, in connection with the consummation of the transactions
\ncontemplated by this Agreement. SCO will itself, and will cause each member of
\nthe Contributed Company Group, to use its reasonable efforts to promptly obtain
\nall such authorizations, approvals and consents and will cooperate fully with
\nthe other parties in promptly seeking to obtain such authorizations, approvals
\nand consents.<\/p>\n
4.8 Necessary Consents. SCO will itself, and will cause each
\nContributing Company and each member of the Contributed Company Group to, use
\nits reasonable efforts to obtain the consents required in connection with the
\nMaterial Contributed Contracts, and to take such other actions as may be
\nnecessary or appropriate for the consummation of the transactions contemplated
\nhereby and to allow Newco to Conduct the Group Business after the Effective
\nTime.<\/p>\n
4.9 Access to Information. From the date hereof until the
\nEffective Time, SCO will itself, and will cause the Contributed Company Group,
\nto allow Caldera and its agents reasonable access to the files, books, records,
\ntechnology and offices of SCO and the Contributed Company Group reasonably
\nrequested by Caldera, but only to the extent necessary and relating to the Group
\nBusiness, including, without limitation, any and all information relating to
\nContributed Company Group’s Taxes, commitments, contracts, leases, licenses and
\nreal, personal, intellectual and intangible property and financial condition.
\nSCO shall use its reasonable efforts to cause its accountants to cooperate with
\nCaldera and its agents in making available to Caldera all financial information
\nreasonably requested, including, without limitation, the right to examine all
\nworking papers pertaining to all Tax returns and financial statements prepared
\nor audited by such accountants. No information or knowledge obtained by any
\nparty hereto in any investigation pursuant to this Section 4.9 will affect or be
\ndeemed to modify any<\/p>\n
42
\n 50<\/p>\n
representation or warranty contained herein or the conditions to the obligations
\nof the parties to consummate the Merger and the SCO Transaction. All information
\nobtained by Caldera and its agents pursuant to this Section 4.9 shall be kept
\nconfidential in accordance with the confidentiality agreement, between Caldera
\nand SCO (the “Nondisclosure Agreement”).<\/p>\n
4.10 Satisfaction of Conditions Precedent. SCO will itself, and
\nwill cause the Contributing Companies and the Contributed Company Group, to use
\nreasonable efforts to satisfy or cause to be satisfied all the conditions
\nprecedent that are set forth in Section 8 and to cause the Merger, the SCO
\nTransaction and the other transactions contemplated by this Agreement to be
\nconsummated. Without limiting the foregoing, in connection with the agreements
\nto be reached by the parties subsequent to the date hereof and prior to the
\nEffective Time, the parties agree to negotiate in good faith to reach agreement
\non all matters to be included in such agreements promptly after the signing of
\nthis Agreement.<\/p>\n
4.11 Voting Agreement. SCO will use its reasonable best efforts
\nto obtain Voting Agreements in the form attached as Exhibit 4.11A (the “Voting
\nAgreement”), executed by the SCO affiliates listed on Exhibit 4.11B.<\/p>\n
4.12 Sales Representative and Support Agreement. The Sales
\nRepresentative and Support Agreement in the form attached as Exhibit 4.12 (the
\n“Sales Representative and Support Agreement”) shall be executed as of the
\nEffective Time.<\/p>\n
4.13 Stockholders Agreement. The Stockholders Agreement in the
\nform attached as Exhibit 4.13 (the “Stockholders Agreement”) shall be executed
\nas of the Effective Time.<\/p>\n
4.14 No Other Negotiations.<\/p>\n
(a) SCO shall, and shall cause each Contributing Company
\nand each member of the Contributed Company Group and their respective officers,
\ndirectors or employees and any investment bankers, attorneys or other advisors
\nand representatives retained by any of them to, cease any and all existing
\nactivities, discussions and negotiations with any parties conducted heretofore
\nwith respect to any SCO Alternative Proposal (as defined below). From and after
\nthe date hereof until the earlier of the Effective Time or the termination of
\nthis Agreement in accordance with its terms, SCO shall not authorize or permit
\nany Contributing Company or any member of the Contributed Company Group (or any
\nof their respective officers, directors or employees or any investment bankers,
\nattorneys or other advisors or representatives retained by any of them),
\ndirectly or indirectly, (i) to solicit, initiate or encourage the submission of
\nany SCO Alternative Proposal, (ii) to engage in discussions or negotiations
\nregarding, provide non-public information with respect to, or to take any other
\naction intended, designed or reasonably likely to facilitate any inquiries or
\nthe making of any proposal or offer that constitutes, or would reasonably be
\nexpected to lead to, any SCO Alternative Proposal, (iii) to enter into any
\nletter of intent, agreement in principle, agreement involving a business
\ncombination or other similar agreement with any person with respect to any SCO
\nAlternative Proposal, or (iv) to make or authorize any statement, recommendation
\nor solicitation in support of any SCO Alternative Proposal. For purposes of this
\nAgreement, “SCO Alternative Proposal” means any proposal or offer from any
\nperson or “group” (as defined under Section 13(d) of the<\/p>\n
43
\n 51<\/p>\n
Exchange Act and the rules and regulations thereunder) for any direct or
\nindirect (a) acquisition, purchase, sale or other disposition of a material
\namount of the Group Assets (other than in the ordinary course and disposal of
\nworn or obsolete items consistent with past practice), (b) acquisition,
\npurchase, sale or other disposition of any of the outstanding voting securities
\nof any member of the Contributed Company Group (other than pursuant to the
\nexercise of outstanding stock options), or (c) merger, consolidation, business
\ncombination, sale of any of the assets, recapitalization, liquidation,
\ndissolution or similar transaction involving any member of the Contributed
\nCompany Group, other than the transactions contemplated by this Agreement.
\nNotwithstanding the foregoing or any other provision of this Agreement, other
\nthan actions relating to the Contributed Company Group, the Group Assets or the
\nGroup Business, SCO shall not be restricted or limited in any way from entering
\ninto discussions, negotiations or agreements of any kind or from taking any
\nother actions of any kind, including, without limitation, transactions relating
\nto the sale of any of its or its direct or indirect subsidiaries (other than any
\nmember(s) of the Contributed Company Group), equity securities (other than the
\nContributed Stock), or assets (other than Group Assets), or the merger,
\nconsolidation, business combination, recapitalization, liquidation, dissolution
\nor similar transaction involving the Retained SCO Business.<\/p>\n
(b) Notwithstanding Section 4.14(a), prior to obtaining
\nthe approval of the stockholders of SCO of this Agreement and the SCO
\nTransaction by the requisite vote under applicable law (the “SCO Stockholder
\nApproval”), SCO may in response to an unsolicited bona fide SCO Alternative
\nProposal, participate in discussions or negotiations with, furnish information
\nto a third party making such proposal (provided that SCO shall have entered into
\na confidentiality agreement with such third party with terms no less favorable
\nthan in the letter with Caldera), make or authorize a statement or
\nrecommendation in support of such proposal, if all of the following events shall
\nhave occurred: (i) such third party has made a bona fide written offer or
\nproposal to the Board of Directors of SCO to consummate a SCO Alternative
\nProposal which offer or proposal identifies a price or range of values to be
\npaid for the outstanding securities or assets of SCO, the Contributing Companies
\nor the Contributed Company Group, (ii) if consummated, based on the written
\nadvice of investment bankers of nationally recognized reputation, such Board of
\nDirectors has determined that it is financially more favorable to the
\nstockholders of SCO than the terms of the transactions contemplated by this
\nAgreement, (iii) such Board of Directors has determined, after consultation with
\ninvestment bankers of nationally recognized reputation, that such third party is
\nfinancially capable of consummating such SCO Alternative Proposal (if the SCO
\nAlternative Proposal is for cash); (iv) such Board of Directors has determined,
\nafter consultation with outside legal counsel, that failure to take such action
\nwould be inconsistent with the fiduciary duties of the Board of Directors to SCO
\nstockholders under applicable law; and (v) Caldera shall have been notified by
\nSCO in writing of such SCO Alternative Proposal, including its principal
\nfinancial and other material terms and conditions, including the identity of the
\nperson making such proposal (it being understood that any amendment to the price
\nexchange ratio, identity or principal financial or other material terms shall
\nrequire an additional notice).<\/p>\n
(c) In addition to the obligations set forth in Section
\n4.14(a), SCO, as promptly as practicable, shall advise Caldera orally and in
\nwriting of any request for non-public information which SCO reasonably believes
\ncould lead to a SCO Alternative Proposal, or of any<\/p>\n
44
\n 52<\/p>\n
SCO Alternative Proposal, the principal financial and other material terms and
\nconditions of such SCO Alternative Proposal, and the identity of the person
\nmaking any such request or SCO Alternative Proposal. SCO will keep Caldera
\ninformed in all material respects of the status and details (including material
\namendments) of any such SCO Alternative Proposal.<\/p>\n
4.15 Books and Records. If, in order to properly prepare
\ndocuments required to be filed with governmental authorities (including taxing
\nauthorities) or its financial statements, it is necessary that any party hereto
\nbe furnished with additional information relating to the Group Assets or any
\nmember of the Contributed Company Group, and such information is in the
\npossession of a Contributing Company, then SCO, for itself and the other
\nContributing Companies, agree to use its good faith efforts to promptly furnish
\nsuch information to the party needing such information. This Section 4.15 shall
\nsurvive Closing for two years except for records relating to preparation or
\naudit of tax returns, for which this Section 4.15 will survive until the
\nexpiration of the applicable Tax statute of limitations.<\/p>\n
4.16 [Intentionally Omitted.].<\/p>\n
4.17 Modification of Joint Contributed Agreements and Shared
\nContributed Assets. SCO will provide to Caldera a list of the Contributed
\nContracts and the contracts to which the Contributed Companies are a party which
\ncreate rights or obligations of both the Group Business and the SCO Retained
\nBusiness (the “Joint Contributed Agreements”). As soon as feasible after the
\ndate hereof, SCO and Caldera will negotiate to agree upon a mutually acceptable
\narrangement between SCO and Newco and, if required, other parties with respect
\nto the treatment of such contracts. SCO will provide a list of the Contributed
\nAssets which would be impracticable to operate separately by either SCO or
\nCaldera (the “Shared Contributed Assets”). As soon as feasible after the date
\nhereof, SCO and Caldera will negotiate to agree upon a mutually acceptable
\narrangement, which shall allocate costs in proportion to the benefits received,
\nbetween SCO and Newco with respect to such Shared Contributed Contracts.<\/p>\n
4.18 Key Employee Employment Agreements. SCO will use its best
\nefforts to cause (without having to incur any cost) each of the Key Employees
\nlisted on Exhibit 4.18A to execute employment agreements which reflect the terms
\nset forth in the Key Employee Term Sheet, a form of which is attached hereto as
\nExhibit 4.18B.<\/p>\n
4.19 SCO IP Rights. As soon as feasible after the date hereof SCO
\nand Caldera shall confirm whether the Intellectual Property Rights and
\nIntangible Assets required for the production, development, marketing and
\nsupport of the Group Products are included in the Intellectual Property Rights
\nincluded in the Group Assets duly transferred to Newco pursuant hereto. If
\nadditional items not so transferred are discovered, then the Group Assets shall
\nbe expanded to include, and there shall be duly assigned to Newco by the
\nappropriate Contributing Company, all such additional Intellectual Property
\nRights and Intangible Assets required for the production of the Group Products.
\nIf the Intellectual Property Rights and Intangible Assets included or added to
\nthe Group Assets are also required for the production of the products produced
\nby SCO and its subsidiaries (other than the Group Products) then Newco (or its
\nsubsidiary, which receives said Intellectual Property Rights and Intangible
\nAssets constituting Group Assets) shall provide SCO, or its designated
\nsubsidiary, with a fully paid, non-exclusive, perpetual, irrevocable license to
\nuse such Intellectual Property Rights and Intangible Assets for<\/p>\n
45
\n 53<\/p>\n
the purpose of producing such other products. SCO agrees that if Caldera
\ndetermines, in its sole judgment to register the copyrights assigned to it
\npursuant to the Copyright Assignments, then SCO shall take all reasonable
\nactions to assist Caldera to register such copyrights.<\/p>\n
4.20 Directors’ and Officers’ Liability Insurance. SCO shall use
\nits commercially reasonable efforts to maintain directors’ and officers’
\nliability insurance as SCO shall have in effect from time to time, covering the
\nacts or omissions on or before the Effective Time of those Employees who are or
\nhave been directors and officers of SCO or its subsidiaries and who become
\nemployees of Newco as of the Effective Time. SCO will not voluntarily seek to
\nincrease the deductible nor decrease the limits under such insurance, provided
\nhowever such action shall be governed by the insurance marketplace on
\ncommercially reasonable and available terms, and SCO will endeavor to give
\nwritten notice to Caldera prior to any cancellation or non-renewal of the SCO
\ncoverage.<\/p>\n
4.21 Closing Group Account. SCO shall deliver to Newco the assets
\nand liabilities section of a balance sheet of the Group Business as of the
\nClosing Date (the “Closing Group Account”) within thirty days following the
\nClosing Date. Newco shall cooperate by providing access to data and personnel,
\nas reasonably required by SCO to prepare the Closing Group Account. The Closing
\nGroup Account shall be prepared in the same manner as the 2000 Group Balance
\nSheet and in compliance with the representations and warranties contained in
\nSection 2.4(c) hereof.<\/p>\n
4.22 SCO Retained Business. SCO shall use its reasonable best
\nefforts to transfer or sell all of the Excluded Assets from the Contributed
\nCompanies prior to the Effective Time or as soon as practicable thereafter;
\nprovided, however, that to the extent that any Excluded Assets pursuant to
\nSection 1.4(b)(ii) are included as assets on the Closing Group Account, Caldera
\nshall pay to SCO an amount, in cash, equal to amount of such assets or transfer
\nthe assets after the Effective Time, as the parties may agree.<\/p>\n
4.23 Taking of Necessary Action; Further Action. If, at any time
\nafter the Closing Date, any further action is necessary or desirable to carry
\nout the purposes of this Agreement and to vest Caldera with full right, title
\nand possession to the Contributed Assets and Contributed Companies, the officers
\nand directors of SCO are fully authorized in the name SCO or otherwise to take,
\nand will take, all such lawful and necessary and\/or desirable action.<\/p>\n
4.24 Accounting Treatments. SCO and Caldera shall use their
\nreasonable best efforts to gain favorable accounting treatment for the Sales
\nRepresentative and Support Agreement, including, if necessary, revising the
\nterms of such agreement set forth in Exhibit 4.12.<\/p>\n
5. Caldera and Newco Covenants.<\/p>\n
5.1 Advice of Changes.<\/p>\n
(a) During the period from the date hereof until the
\nearlier of the Effective Time or the termination of this Agreement in accordance
\nwith its terms, Caldera will promptly advise SCO in writing (i) of any event
\noccurring subsequent to the date hereof that would<\/p>\n
46
\n 54<\/p>\n
reasonably be likely to render any representation or warranty of Caldera or
\nNewco contained in Section 3 of this Agreement, if made on or as of the date of
\nsuch event or the Effective Time, untrue or inaccurate, (ii) of any event that
\nwould reasonably be likely to have a Material Adverse Effect on Caldera, and
\n(iii) of any material breach by Caldera or Newco of any covenant or agreement
\ncontained in this Agreement; provided, however, that the delivery of, or failure
\nto deliver, any notice pursuant to this Section 5.1(a) shall not limit or
\notherwise affect the remedies available hereunder.<\/p>\n
(b) Ten days prior to the Effective Time, Caldera will
\ndeliver to SCO a certificate from Caldera’s transfer agent indicating the number
\nof shares of Common Stock outstanding at the end of business on the eleventh day
\npreceding the Effective Time and a certificate from Caldera’s Secretary
\nindicating the number of shares of Caldera Common Stock issuable upon exercise
\nor conversion of any outstanding options, warrants or convertible debentures
\noutstanding on such date. Caldera will deliver to SCO by the fifteenth business
\nday after the Effective Time a certificate from Caldera’s transfer agent
\nindicating the number of shares of Common Stock outstanding at the end of
\nbusiness on the day of the Closing (calculated without regard to the shares of
\nCommon Stock issued with respect to the First SCO Certificate) and a certificate
\nfrom Caldera’s Secretary indicating the number of shares of Caldera Common Stock
\nissuable upon exercise or conversion of any outstanding options at the end of
\nbusiness on the day of the Closing.<\/p>\n
5.2 Maintenance of Business. During the period from the date
\nhereof until the earlier of the Effective Time or the termination of this
\nAgreement in accordance with its terms, Caldera will use its best efforts to
\ncarry on and preserve its business and its relationships with customers,
\nsuppliers, employees and others in substantially the same manner as it has prior
\nto the date hereof.<\/p>\n
5.3 Conduct of Business. During the period from the date hereof
\nuntil the earlier of the Effective Time or the termination of this Agreement in
\naccordance with its terms, Caldera will continue to conduct its business and
\nmaintain its business relationships in the ordinary and usual course and
\nconsistent with past practice and, except as otherwise disclosed herein or in
\nthe Caldera Disclosure Letter, it will not, without the prior written consent of
\nSCO, which consent shall not be unreasonably withheld or delayed, take any of
\nthe following actions where it would cause a Material Adverse Effect on Caldera:<\/p>\n
(a) borrow any money except for (A) amounts that are not
\nin the aggregate material to the financial condition of Caldera and its
\nsubsidiaries, taken as a whole or (B) pursuant to existing credit facilities;<\/p>\n
(b) cause any of the material Caldera Assets to become
\nsubject to any Encumbrance, except for Caldera Permitted Encumbrances and except
\nfor Caldera Encumbrances arising under credit facilities existing as of the date
\nhereof;<\/p>\n
(c) dispose of any of Caldera Assets which are material to
\nthe Caldera Business;<\/p>\n
47
\n 55<\/p>\n
(d) issue capital stock representing more than a 10%
\ninterest in the total outstanding securities of Caldera;<\/p>\n
(e) merge, consolidate or reorganize with, or acquire any
\nentity, except for transactions in which the aggregate consideration is below
\n$15 million;<\/p>\n
(f) amend the Certificate of Incorporation or Bylaws of
\nCaldera or any of its subsidiaries or as otherwise expressly contemplated by
\nthis Agreement);<\/p>\n
(g) agree to take, or permit any Caldera entity to take or
\nagree to take, or enter into negotiations with respect to, any of the actions
\ndescribed in the preceding clauses in this Section 5.3(g).<\/p>\n
Notwithstanding the foregoing, nothing in this Section 5.3 shall
\nrestrict or limit the conduct of any business of Caldera or its direct or
\nindirect subsidiaries or the use or disposition of the Caldera Assets, other
\nthan as set forth in this Section 5.3.<\/p>\n
5.4 Stockholder Approval. Caldera will call the Caldera
\nStockholders Meeting, to be held within 40 days after the Form S-4 shall have
\nbeen declared effective by the SEC, to submit the Merger, the SCO Transaction
\nand any related matters for the consideration and approval of the Caldera
\nstockholders. The Prospectus\/Proxy Statement will include a statement to the
\neffect that Caldera’s Board of Directors is recommending that Caldera
\nstockholders vote in favor of the Merger and the SCO Transaction. Such meeting
\nwill be called, held and conducted, and any proxies will be solicited, in
\ncompliance with applicable law.<\/p>\n
5.5 Letter of Caldera’s Accountants. Caldera shall use its
\nreasonable best efforts to cause to be delivered to SCO a letter of Arthur
\nAndersen LLP, dated a date within two business days before the date on which the
\nForm S-4 shall become effective and addressed to each of the Contributing
\nCompanies, in form and substance reasonably satisfactory to SCO and customary in
\nscope and substance for letters delivered by independent public accountants in
\nconnection with registration statements similar to the Form S-4.<\/p>\n
5.6 Prospectus\/Proxy Statement. Caldera will mail to its
\nstockholders in a timely manner, for the purpose of considering and voting upon
\nthe Merger and the SCO Transaction at the Caldera Stockholders Meeting, the
\nProspectus\/Proxy Statement. SCO, Caldera and Newco will prepare and file the
\nProspectus\/Proxy Statement with the SEC as promptly as practicable, and each
\nwill use its respective best reasonable efforts to cause the Form S-4 to become
\neffective as soon after such filing as practicable. In this regard, SCO, Caldera
\nand Newco will advise each other promptly as to the time at which the Form S-4
\nbecomes effective and of the issuance by the SEC of any stop order suspending
\nthe effectiveness of the Form S-4 or the initiation of any proceedings for such
\npurpose and each will use its respective reasonable best efforts to prevent the
\nissuance of any stop order and to obtain as soon as possible the lifting
\nthereof, if issued. Until the Effective Time, Caldera and Newco will advise SCO
\npromptly of any requirement of the SEC for any amendment or supplement of the
\nForm S-4 or for additional information, and will not at any time file any
\namendment of or supplement to the prospectus contained therein (or to the
\nprospectus filled pursuant to Rule 424(b) of the SEC) which shall not have been
\npreviously submitted to SCO in reasonable<\/p>\n
48
\n 56<\/p>\n
time prior to the proposed filing thereof or to which SCO shall reasonably
\nobject or which is not in compliance in all material respects with the
\nSecurities Act and the rules and regulations issued by the SEC thereunder. None
\nof the information relating to Caldera or Newco (or, to Caldera’s or Newco’s
\nknowledge, any other person, contained in any document, certificate or other
\nwriting furnished or to be furnished by Caldera) included in (i) the
\nProspectus\/Proxy Statement by Newco and\/or Caldera at the time the
\nProspectus\/Proxy Statement is mailed, at the time of the Caldera Stockholders
\nMeeting to vote on the Merger and the SCO Transaction or at the Effective Time,
\nas then amended or supplemented, or (ii) the Form S-4 at the time the Form S-4
\nbecomes effective, as then amended or supplemented, will contain any untrue
\nstatement of a material fact or will omit to state any material fact required to
\nbe stated therein or necessary to make the statements therein, in light of the
\ncircumstances in which they were made, not misleading or necessary to correct
\nany statement which has become false or misleading in any earlier communication
\nwith respect to the solicitation of proxies for the Caldera Stockholder Meeting.
\nFrom and after the date the Form S-4 becomes effective and until the Effective
\nTime, if any event known to Caldera or Newco occurs as a result of which the
\nProspectus\/Proxy Statement or Form S-4 would include an untrue statement of a
\nmaterial fact or omit to state a material fact required to be stated therein or
\nnecessary to make the statements therein not misleading, or if it is necessary
\nat any time to amend the Form S-4 or the Prospectus\/Proxy Statement to comply
\nwith the Securities Act, Caldera and Newco will promptly notify SCO and SCO,
\nCaldera and Newco will prepare an amended or supplemented Form S-4 or
\nProspectus\/Proxy Statement which will correct such statement or omission and
\nwill use its reasonable best efforts to cause any such amendment to become
\neffective as promptly as possible. The Prospectus\/Proxy Statement, as it relates
\nto Caldera and Newco, will comply as to form in all material respects with the
\nrequirements of the Exchange Act and the rules and regulations thereunder in
\neffect at the time the Prospectus\/Proxy Statement is mailed.<\/p>\n
5.7 State Securities Law Compliance. Caldera and Newco shall use
\ntheir respective reasonable best efforts to qualify the Newco Options to be
\ngranted upon cancellation of the Cancelled SCO Options to be assumed by Caldera
\npursuant hereto under the state securities or “blue sky” laws of every
\njurisdiction of the United States in which (a) the records of Caldera or SCO as
\nof the Effective Time, indicate that a holder of such options resides and (b) a
\nNasdaq Stock Market or other exemption from the qualification requirements under
\nsuch laws is unavailable.<\/p>\n
5.8 Regulatory Approvals. As promptly as reasonably practicable,
\nCaldera and Newco will execute and file, or join in the execution and filing, of
\nany application or other document that may be necessary in order to obtain the
\nauthorization, approval or consent of any governmental body, federal, state,
\nprovincial, local or foreign which may be reasonably required, or which SCO may
\nreasonably request, in connection with the consummation of the transactions
\ncontemplated by this Agreement. Caldera and Newco will each use its respective
\nreasonable efforts to promptly obtain all such authorizations, approvals and
\nconsents and will cooperate fully with the other parties in promptly seeking to
\nobtain all such authorizations, approvals, and consents.<\/p>\n
5.9 Necessary Consents. Caldera and Newco will each use its
\nrespective reasonable efforts to obtain the written consents under the Material
\nCaldera Contracts and to take<\/p>\n
49
\n 57<\/p>\n
such other actions as may be necessary or appropriate to allow the consummation
\nof the transactions contemplated hereby and to allow Caldera and Newco to carry
\non Caldera’s business and the Group Business after the Effective Time.<\/p>\n
5.10 Access to Information. From the date hereof until the
\nEffective Time, Caldera and Newco will allow the Contributing Companies and its
\nagents reasonable access to the files, books, records, technology and offices of
\nCaldera or Newco reasonably requested by the Contributing Companies including,
\nwithout limitation, any and all information relating to Taxes, commitments,
\ncontracts, leases, licenses and real, personal, intellectual and intangible
\nproperty and financial condition. Caldera will use its reasonable efforts to
\ncause its accountants to cooperate with the Contributing Companies and its
\nagents in making available to such parties all financial information reasonably
\nrequested, including, without limitation, the right to examine all working
\npapers pertaining to all Tax returns and financial statements prepared or
\naudited by such accountants. No information or knowledge obtained by any party
\nhereto in any investigation pursuant to this Section will affect or be deemed to
\nmodify any representation or warranty contained herein or the conditions to the
\nobligations of the parties to consummate the Merger and the SCO Transaction. All
\ninformation obtained by the Contributing Companies or its agents pursuant to
\nthis Section shall be kept confidential in accordance with the Nondisclosure
\nAgreement.<\/p>\n
5.11 Books and Records. If, in order properly to prepare
\ndocuments required to be filed with governmental authorities (including taxing
\nauthorities) or its financial statements, it is necessary that any party hereto
\nbe furnished with additional information relating to the Group Assets, and such
\ninformation is in the possession of Newco or Caldera, then Caldera and Newco on
\nbehalf of themselves and each member of the Caldera Group (including the
\nContributed Companies) agree to use its good faith efforts to promptly furnish
\nsuch information to the party needing such information. This Section 5.11 shall
\nsurvive Closing for two years except for records relating to preparation of and
\naudit of tax returns, for which this Section 5.11 will survive until the
\nexpiration of the applicable Tax statute of limitations.<\/p>\n
5.12 Satisfaction of Conditions Precedent. Caldera and Newco will
\neach use their respective reasonable best efforts to satisfy or cause to be
\nsatisfied all the conditions precedent that are set forth in Section 7 and to
\ncause the Merger, the SCO Transaction and the other transactions contemplated by
\nthis Agreement to be consummated. Without limiting the foregoing, in connection
\nwith the agreements to be reached by the parties subsequent to the date hereof
\nand prior to the Effective Time, the parties agree to negotiate in good faith to
\nreach agreement on all matters to be included in such agreements promptly after
\nthe signing of this Agreement.<\/p>\n
5.13 Voting Agreement. Caldera will use its reasonable best
\nefforts to obtain Voting Agreements in the form attached as Exhibit 4.11A
\nexecuted by the Caldera affiliates listed on Exhibit 5.13B.<\/p>\n
50
\n 58<\/p>\n
5.14 Sales Representative and Support Agreement. The Sales
\nRepresentative and Support Agreement shall be executed as of the Effective Time.<\/p>\n
5.15 Stockholders Agreement. The Stockholders Agreement shall be
\nexecuted as of the Effective Time.<\/p>\n
5.16 Caldera Employee Plans.<\/p>\n
(a) Newco will adopt the employee benefit plans maintained
\nby Caldera (the “Caldera Employee Plans”) and will use reasonable efforts to
\nprovide the Caldera Employee Plans to the transferring Employees as is provided
\nto Caldera’s employees who are similarly situated as soon as practicable. To the
\nextent that Newco does not have Caldera Employee Plans in effect in a
\njurisdiction where there are transferring Employees, Newco shall adopt plans
\nproviding comparable benefits to the Caldera Employee Plans for said
\ntransferring Employees. From and after the Effective Time Newco shall provide
\nall transferring Employees with the opportunity to participate in any employee
\nstock option or other incentive compensation plan of Newco and its affiliates on
\nsubstantially the same terms and subject to substantially the same conditions as
\nare available to similarly situated employees of Caldera or Newco. Prior to the
\nEffective Time, Caldera, Newco and SCO shall mutually agree upon an integration
\nplan relating to the Merger and the SCO Transaction which shall include, among
\nother things, provisions relating to compensation and other equity incentives
\nfor Employees. In addition, at the Effective Time, Newco shall use its best
\nefforts to enter into employment agreements which reflect the terms set forth in
\nthe Key Employee Term Sheets (the form of which is attached hereto as Exhibit
\n4.18B) with the Key Employees who are identified on Exhibit 4.18A attached
\nhereto.<\/p>\n
(b) Waiting Periods, Premiums and Deductibles. Newco shall
\ntake all steps necessary to cause each Caldera Employee Plan to waive any
\n“waiting period” or other requirement with respect to duration of employment
\nwith Newco which would prevent a transferring Employee or beneficiary thereof
\nwho is otherwise eligible to participate in such Caldera Employee Plan from
\nparticipating in such Caldera Employee Plan immediately following the Effective
\nTime. Newco shall credit each transferring Employee with all deductible payments
\nand co-payments paid by such transferring Employee under any Group Employee Plan
\nprior to the Effective Time during the current plan year for purposes of
\ndetermining the extent to which any such transferring Employee has satisfied any
\ndeductible or maximum out-of-pocket limitation under any Caldera Employee Plan
\nfor such plan year.<\/p>\n
(c) Recognition of Prior Service. Newco shall take all
\nsteps necessary to cause each Caldera Employee Plan to recognize each
\ntransferring Employee’s length of service under comparable employee benefit
\nplans maintained by SCO for purposes of eligibility, participation, vesting and
\nbenefit accrual in such Caldera Employee Plan as if such transferring Employee
\nhad been employed by Newco for such period.<\/p>\n
(d) Waiver of Restrictions. Newco shall take all steps
\nnecessary to cause each Caldera Employee Plan which is an “employee welfare
\nbenefit plan” under Section 3(1) of ERISA to waive any restrictions or
\nlimitations with respect to “pre-existing conditions” or prior medical history
\nwhich would apply to transferring Employee or beneficiary thereof who is<\/p>\n
51
\n 59<\/p>\n
otherwise eligible to participate in such Caldera Employee Plan from
\nparticipating in such Caldera Employee Plan without restriction or limitation.<\/p>\n
5.17 Indemnification and Insurance — Caldera.<\/p>\n
(a) The Certificate of Incorporation and Bylaws of Newco
\nand Caldera shall contain the provisions with respect to indemnification and
\nlimitation of liability for monetary damages set forth in the Certificate of
\nIncorporation and Bylaws of Caldera on the date hereof.<\/p>\n
(b) From and after the Effective Time, Newco and Caldera
\nshall honor, in all respects, all of the indemnity agreements entered into prior
\nto the date hereof by Caldera, with its respective officers and directors,
\nwhether or not such persons continue in their positions with Newco or Caldera
\nfollowing the Effective Time. Following the Effective Time, Caldera’s form of
\nindemnification agreement shall be adopted as the form of indemnification
\nagreement for Newco and the Caldera Surviving Corporation shall be afforded the
\nopportunity to enter into such indemnification agreement, and shall be covered
\nby such directors’ and officers’ liability insurance policies as Newco shall
\nhave in effect from time to time.<\/p>\n
(c) After the Effective Time, Newco and Caldera will,
\njointly and severally, to the fullest extent permitted under applicable law,
\nindemnify and hold harmless, each present and former director or officer of
\nCaldera or any of its subsidiaries (collectively, the “Indemnified Parties”)
\nagainst any costs or expenses (including attorneys’ fees), judgments, fines,
\nlosses, claims, damages, liabilities and amounts paid in settlement in
\nconnection with any claim, action, suit, proceeding or investigation, whether
\ncivil, criminal administrative or investigative, to the extent arising out of or
\npertaining to any action or omission in his or her capacity as a director or
\nofficer of Caldera arising out of or pertaining to the transactions contemplated
\nby this Agreement or the transactions contemplated hereby for a period of six
\nyears after the date of this Agreement. In the event of any such claim, action,
\nsuit, proceeding or investigation (whether arising before or after the Effective
\nTime), (a) any counsel retained for the defense of the Indemnified Parties for
\nany period after the Effective Time will be reasonably satisfactory to the
\nIndemnified Parties, (b) after the Effective Time, Caldera will pay the
\nreasonable fees and expenses of such counsel, promptly after statements therefor
\nare received, and (c) Caldera will cooperate in the defense of any such matter;
\nprovided, however, that Caldera will not be liable for any settlement effected
\nwithout its written consent (which consent will not be unreasonably withheld);
\nand provided, further, that, in the event that any claim or claims for
\nindemnification are asserted or made within such six-year period, all rights to
\nindemnification in respect of any such claim or claims will continue until the
\ndisposition of any and all such claims. The Indemnified Parties as a group may
\nbe defended by only one law firm (in addition to local counsel) with respect to
\nany single action, unless there is, under applicable standards of professional
\nconduct, a conflict on any significant issue between the positions of any two or
\nmore Indemnified Parties.<\/p>\n
(d) For the entire period from and after the Effective
\nTime until at least six years after the Effective Time, Newco will cause Caldera
\nto use its commercially reasonable efforts to maintain in effect directors’ and
\nofficers’ liability insurance covering those persons who are currently covered
\nby Caldera’s directors’ and officers’ liability insurance policy (a copy<\/p>\n
52
\n 60<\/p>\n
of which has been heretofore delivered or made available to SCO) of at least the
\nsame coverage and amounts, containing terms that are no less advantageous with
\nrespect to claims arising at or before the Effective Time than Caldera’s
\npolicies in effect immediately prior to the Effective Time to those applicable
\nto the then current directors and officers of Newco and Caldera; provided,
\nhowever, that in no event shall Newco or Caldera be required to expend in excess
\nof 150% of the annual premium currently paid by Caldera for such coverage in
\nwhich event Newco shall purchase such coverage as is available for such 150% of
\nsuch annual premium.<\/p>\n
(e) Newco and Caldera shall pay all expenses, including
\nattorneys’ fees, that may be incurred by any Indemnified Parties in enforcing
\nthe indemnity and other obligations provided for in this Section 5.17.<\/p>\n
(f) In the event Newco or Caldera or any of its respective
\nsuccessors or assigns (a) consolidates with or merges into any other person or
\nentity and shall not be the continuing or surviving corporation or entity of
\nsuch consolidation or merger, or (b) transfers or conveys all or a substantial
\nportion of its properties or assets to any person or entity, then, and in each
\nsuch case, to the extent necessary to effectuate the purposes of this Section
\n5.17, proper provision shall be made so that the successors and the assigns of
\nNewco and Caldera assume the obligations set forth in this Section 5.17.<\/p>\n
(g) The provisions of this Section 5.17 shall survive the
\nEffective Time and are intended to be for the benefit of, and shall be
\nenforceable by, each officer and director of Caldera SCO and the Contributed
\nCompany Group described in Sections 5.17 and his or her heirs and
\nrepresentatives.<\/p>\n
5.18 Indemnification and Insurance — Employees.<\/p>\n
(a) The Certificate of Incorporation and Bylaws of Newco
\nshall contain the provisions with respect to indemnification and limitation of
\nliability for monetary damages set forth in the Certificate of Incorporation and
\nBylaws of Caldera as of the date hereof which provisions shall not be amended,
\nrepealed or otherwise modified for a period of ten years from the Effective Time
\nin any manner that would adversely affect the rights thereunder of individuals
\nwho at the Effective Time were directors, officers, employees or agents of (i)
\nthe Contributed Companies or (ii) of SCO (A) to the extent involved in the Group
\nBusiness and (B) provided they become Employees, officers or directors of Newco
\n(“Group Persons”), unless such modification is required by law.<\/p>\n
(b) From and after the Effective Time, Newco shall honor,
\nin all respects, all of the indemnity agreements entered into prior to the date
\nhereof by SCO or any member of the Contributed Company Group with any Group
\nPersons, whether or not such persons continue in its positions with Newco
\nfollowing the Effective Time. Following the Effective Time, Caldera’s form of
\nindemnification agreement shall be adopted as the form of indemnification
\nagreement for Newco and all continuing officers and directors of Newco shall be
\nafforded the opportunity to enter into such indemnification agreement, and shall
\nbe covered by such directors’ and officers’ liability insurance policies as
\nNewco shall have in effect from time to time.<\/p>\n
53
\n 61<\/p>\n
(c) After the Effective Time, Newco will, jointly and
\nseverally, to the fullest extent permitted under applicable law, indemnify and
\nhold harmless, subject to Section 5.18(g), each of the Group Persons against any
\ncosts or expenses (including attorneys’ fees), judgments, fines, losses, claims,
\ndamages, liabilities and amounts paid in settlement in connection with any
\nclaim, action, suit, proceeding or investigation, whether civil, criminal
\nadministrative or investigative, to the extent arising out of or pertaining to
\nany action or omission in his or her capacity as a director or officer of SCO or
\nany of the Contributed Companies arising out of or pertaining to the
\ntransactions contemplated by this Agreement for a period of six years after the
\nClosing Date. Notwithstanding the foregoing, the parties agree that claims
\nagainst the Group Persons shall first be made against any directors’ and
\nofficers’ liability insurance, if any, then maintained by SCO or any of the
\nContributed Companies that provides coverage for such Group Persons. In the
\nevent of any such claim, action, suit, proceeding or investigation (whether
\narising before or after the Effective Time), (a) any counsel retained for the
\ndefense of the Group Persons for any period after the Effective Time will be
\nreasonably satisfactory to the Group Persons, (b) after the Effective Time,
\nNewco will, subject to Section 5.18(g), pay the reasonable fees and expenses of
\nsuch counsel, promptly after statements therefor are received, and (c) Newco
\nwill cooperate in the defense of any such matter; provided, however, that Newco
\nwill not be liable for any settlement effected without its written consent
\n(which consent will not be unreasonably withheld); and provided, further, that,
\nin the event that any claim or claims for indemnification are asserted or made
\nwithin such six-year period, all rights to indemnification in respect of any
\nsuch claim or claims will continue until the disposition of any and all such
\nclaims. The Group Persons as a group may be defended by only one law firm (in
\naddition to local counsel) with respect to any single action unless there is,
\nunder applicable standards of professional conduct, a conflict on any
\nsignificant issue between the positions of any two or more Group Persons.<\/p>\n
(d) Newco shall pay all expenses, including attorneys’
\nfees, that may be incurred by any Group Persons in enforcing the indemnity and
\nother obligations provided for its benefit in this Section 5.18.<\/p>\n
(e) In the event Newco or any of its respective successors
\nor assigns (i) consolidates with or merges into any other person or entity and
\nshall not be the continuing or surviving corporation or entity of such
\nconsolidation or merger, or (ii) transfers or conveys all or a substantial
\nportion of its properties or assets to any person or entity, then, and in each
\nsuch case, to the extent necessary to effectuate the purposes of this Section
\n5.18 proper provision shall be made so that the successors and the assigns of
\nNewco assume the obligations set forth in this Section 5.18.<\/p>\n
(f) The provisions of this Section 5.18 shall survive the
\nEffective Time and are intended to be for the benefit of, and shall be
\nenforceable by, each of the Group Persons and his or her heirs and
\nrepresentatives.<\/p>\n
(g) Notwithstanding any provision of this Section 5.18 to
\nthe contrary, Newco shall not assume and shall have no Liability relating to
\nclaims made by SCO optionees arising out of the repurchase, sale, exchange or
\ncancellation of SCO capital stock or options in connection with the SCO
\nTransaction (other than its obligations under Section 1.3(a)(ii)) or
\nspecifically relating to matters arising out of the SCO Retained Business.<\/p>\n
54
\n 62<\/p>\n
5.19 Distribution to SCO Shareholders.<\/p>\n
Caldera and Newco acknowledge that SCO may wish to distribute to
\nthe shareholders of SCO all or part of its Newco Common Stock. Six (6) months
\nfrom the Closing Date, SCO shall be entitled to make such a distribution;
\nprovided, however, that after such six (6) month period, SCO will not distribute
\nto its shareholders more than 25% of the shares of Newco Common Stock acquired
\nby SCO pursuant to this agreement during a six (6) month period. Newco will
\nfacilitate such distribution by using its reasonable best efforts to take such
\nactions as may be required under the federal securities laws and regulations in
\norder for such shares of Newco Common Stock being distributed to the SCO
\nShareholders to be registered with the Securities and Exchange Commission. At
\nthe time of such registrations, Newco and SCO will enter into an agreement
\ncontaining customary indemnification provisions which shall be substantially
\nequivalent to the indemnification provisions in the promissory note issued by
\nSCO to Caldera as of the date hereof.<\/p>\n
6. Conditions Precedent to Obligations of SCO.<\/p>\n
The obligations of SCO and the other Contributing Companies
\nhereunder are subject to the fulfillment or satisfaction on or before the
\nClosing of each of the following conditions (any one or more of which may be
\nwaived by SCO on behalf of all said entities, but only in a writing signed by
\nSCO):<\/p>\n
6.1 Accuracy of Representations and Warranties. The
\nrepresentations and warranties of Caldera and Newco contained in this Agreement
\n(i) shall have been true and correct as of the date of this Agreement and (ii)
\non and as of the Closing Date with the same force and effect as if they had been
\nmade on the Closing Date, except (A) in each case and in the aggregate does not
\nconstitute a Material Adverse Effect on Caldera and (B) for those
\nrepresentations and warranties that address matters only as of a particular date
\n(which shall remain true and correct as of such particular date), and SCO shall
\nreceive a certificate to such effect executed on behalf of Caldera and Newco by
\na duly authorized officer of Caldera and of Newco.<\/p>\n
6.2 Covenants. Caldera and Newco shall have performed and
\ncomplied in all material respects with all of its respective covenants in this
\nAgreement required to be complied with prior to the Effective Time; and SCO
\nshall receive a certificate to such effect executed by a duly authorized officer
\nof Caldera and of Newco at the Effective Time.<\/p>\n
6.3 Compliance with Law. There shall be no order, decree or
\nruling by any governmental agency which would prohibit or render illegal the
\ntransactions contemplated by this Agreement.<\/p>\n
6.4 Form S-4. The Form S-4 shall have become effective under the
\nSecurities Act and shall not be the subject of any stop-order and the
\nProspectus\/Proxy Statement shall on the Effective Time not be subject to any
\nproceedings commenced seeking a stop-order or overtly threatened by the SEC.<\/p>\n
55
\n 63<\/p>\n
6.5 Opinion of Caldera and Newco’s Counsel. SCO shall have
\nreceived from Brobeck, Phleger & Harrison LLP, counsel to Caldera and Newco, an
\nopinion in the form of Exhibit 6.5 attached hereto, with such assumptions and
\nqualifications as are customary for such opinions.<\/p>\n
6.6 Stockholder Approval. The principal terms of this Agreement,
\nthe Merger and the SCO Transaction shall have been approved and adopted by the
\nCaldera stockholders and the principal terms of this Agreement and the SCO
\nTransaction shall have been approved and adopted by the SCO stockholders, in
\naccordance with California law and its Articles of Incorporation and Bylaws.<\/p>\n
6.7 Tax Opinion. SCO shall have received an opinion in form and
\nsubstance satisfactory to SCO , from its counsel, to the effect that the SCO
\nTransaction will be treated as a transfer of property to Newco by the
\nContributing Companies governed by Section 351 of the Internal Revenue Code. In
\nrendering such opinion, counsel shall be entitled to rely on representations of
\nthe parties and of Caldera stockholders as reasonably requested by counsel in
\nconnection with such tax opinion, and the opinion may contain such assumptions
\nand qualifications as are customary for such opinions. The parties agree to
\ncooperate with counsel by providing the representations referred to above and
\nCaldera shall use its best efforts to obtain the requested stockholder
\nrepresentations.<\/p>\n
6.8 Designees to the Board of Directors of Newco. The Board of
\nDirectors of Newco shall have taken appropriate action to elect Doug Michels and
\nanother individual designated by SCO to the Board of Directors of Newco,
\neffective upon the Effective Time.<\/p>\n
6.9 Nasdaq Listing. The Newco Common Stock to be issued in the
\nMerger and in the SCO Transaction shall have been approved for quotation on the
\nNasdaq Stock Market, subject to notice of issuance.<\/p>\n
6.10 HSR Act. All waiting periods (and any extensions thereof)
\nunder the HSR Act applicable to transactions contemplated hereby shall have
\nexpired or shall have been terminated.<\/p>\n
6.11 Ancillary Agreements. Caldera and Newco shall have executed
\nand delivered counterparts of each of the Ancillary Agreements to which they are
\na party.<\/p>\n
6.12 Delivery of Newco Shares. Newco shall have delivered the
\nFirst SCO Certificate to SCO.<\/p>\n
7. Conditions Precedent to Obligations of Caldera and Newco.<\/p>\n
The obligations of Caldera, Merger Sub and Newco hereunder are
\nsubject to the fulfillment or satisfaction on or before the Closing of each of
\nthe following conditions (any one or more of which may be waived by Caldera on
\nbehalf of all such parties, but only in a writing signed by Caldera):<\/p>\n
56
\n 64<\/p>\n
7.1 Accuracy of Representations and Warranties. The
\nrepresentations and warranties of SCO contained in this Agreement (i) shall have
\nbeen true and correct as of the date of this Agreement and (ii) shall be true
\nand correct as of the Closing Date with the same force and effect as if they had
\nbeen made on the Closing Date, except (A) in each case and in the aggregate as
\ndoes not constitute a Material Adverse Effect on the Group Business and (B) for
\nthose representations and warranties that address matters only as of a
\nparticular date (which shall remain true and correct as of such particular
\ndate), and Caldera shall receive a certificate to such effect executed on behalf
\nof SCO by a duly authorized officer of SCO.<\/p>\n
7.2 Covenants. SCO and the Contributing Companies shall have
\nperformed and complied in all material respects with all of its respective
\ncovenants in this Agreement required to be complied with prior to the Effective
\nTime; and Caldera shall receive a certificate to such effect signed on behalf of
\nSCO by a duly authorized officer of SCO.<\/p>\n
7.3 Compliance with Law. There shall be no order, decree or
\nruling by any court or governmental agency which would prohibit or render
\nillegal the transactions contemplated by this Agreement.<\/p>\n
7.4 Consents. There shall have been obtained on or before the
\nEffective Time all permits, consents and authorizations as set forth on Section
\n7.4 of the SCO Disclosure Letter, where the failure to obtain same has resulted,
\nor reasonably would be expected to result, in a Material Adverse Effect on the
\nGroup Business.<\/p>\n
7.5 Form S-4. The Form S-4 shall have become effective under the
\nSecurities Act and shall not be the subject of any stop-order or proceedings
\nseeking a stop-order and the Prospectus\/Proxy Statement shall at the Effective
\nTime not be subject to any proceedings seeking a stop-order commenced or overtly
\nthreatened by the SEC.<\/p>\n
7.6 Opinion of Counsel to SCO. Caldera shall have received from
\nWilson Sonsini Goodrich & Rosati, Professional Corporation, counsel to SCO and
\nthe Contributing Companies, an opinion in the form of Exhibit 7.6 attached
\nhereto, with such assumptions and qualifications as are customary for such
\nopinions.<\/p>\n
7.7 Caldera Stockholder Approval. The principal terms of this
\nAgreement, the Merger and the SCO Transaction shall have been approved and
\nadopted by the Caldera stockholders and the principal terms of this Agreement
\nand the SCO Transaction (including the contribution and transfer of the
\nContributed Assets) shall have been approved and adopted by the SCO Stockholders
\neach in accordance with Delaware Law and their respective Certificates of
\nIncorporation and Bylaws.<\/p>\n
7.8 Tax Opinion. Caldera and Newco shall have received an opinion
\nin form and substance satisfactory to them from their counsel, to the effect
\nthat the Merger will be treated for federal income tax purposes as a tax-free
\nreorganization within the meaning of Section 368 of the Internal Revenue Code.
\nIn rendering such opinion, counsel shall be entitled to rely on representations
\nof the parties and of Caldera stockholders as reasonably requested by counsel in
\nconnection with such tax opinion, and the opinion may contain such assumptions
\nand qualifications as are customary for such opinions. The parties agree to
\ncooperate with counsel by<\/p>\n
57
\n 65<\/p>\n
providing the representations referred to above and Caldera shall use its best
\nefforts to obtain the requested stockholder representations.<\/p>\n
7.9 HSR Act. All waiting periods (and any extensions thereof)
\nunder the HSR Act applicable to the transactions contemplated hereby shall have
\nexpired or shall have been terminated.<\/p>\n
7.10 Ancillary Agreements. The Contributing Companies shall have
\nexecuted and delivered counterparts of each of the Ancillary Agreements to which
\nthey are a party.<\/p>\n
7.11 Key Employee Term Sheets. Each of the Key Employees set
\nforth on Exhibit 4.18A shall have executed their respective Key Employee Term
\nSheet.<\/p>\n
8. Termination of Agreement.<\/p>\n
8.1 Termination. This Agreement may be terminated at any time
\nprior to the Effective Time, whether before or after approval of the Merger by
\nthe stockholders of Caldera or SCO:<\/p>\n
(a) by mutual written agreement of SCO and Caldera;<\/p>\n
(b) by SCO, if there has been a material breach by Caldera
\nor Newco of any representation or warranty set forth in this Agreement on the
\npart of Caldera or Newco, and, as a result of such breach the conditions set
\nforth in Section 6.1 would not then be satisfied and such breach is not cured
\nwithin thirty (30) days after notice thereof from SCO to Caldera (except that no
\ncure period shall be provided for a breach by Caldera or Newco which by its
\nnature cannot be cured);<\/p>\n
(c) by SCO, if there has been a material breach by Caldera
\nor Newco of any covenant or agreement set forth in this Agreement to be
\nperformed by Caldera or Newco or a material breach by the Caldera Significant
\nStockholders of any covenant or agreement set forth in the Voting Agreement and
\nas a result of such breach, the conditions set forth in Section 6.2 would not
\nthen be satisfied and such breach is not cured within thirty (30) days after
\nwritten notice thereof from SCO to Caldera (except that no cure period shall be
\nprovided for a breach by Caldera or Newco which by its nature cannot be cured);<\/p>\n
(d) by Caldera, if there has been a material breach by SCO
\nof any representation or warranty set forth in this Agreement on its part, and
\nas a result of such breach the conditions set forth in Section 7.1 would not
\nthen be satisfied and such breach is not cured within thirty (30) days after
\nwritten notice thereof from Caldera to SCO (except that no cure period shall be
\nprovided for a breach by SCO which by its nature cannot be cured);<\/p>\n
(e) by Caldera, if there has been a material breach by SCO
\nof any covenant or agreement set forth in this Agreement to be performed by SCO,
\nand as a result of such breach, the conditions set forth in Section 7.2 would
\nnot then be satisfied and such breach is not cured within thirty (30) days after
\nwritten notice thereof from Caldera to SCO (except that no cure period shall be
\nprovided for a breach by SCO or SCO which by its nature cannot be cured);<\/p>\n
58
\n 66<\/p>\n
(f) by Caldera or SCO, if the Merger and the SCO
\nTransaction shall not have been consummated on or before the Final Date for any
\nreason, provided that, the right to terminate this Agreement under this Section
\n8.1(f) shall not be available to any party whose wrongful action or failure to
\nact or whose breach of this Agreement or any Ancillary Document, is the cause of
\nsuch non-consummation;<\/p>\n
(g) by Caldera or SCO, if a permanent injunction or other
\norder by any federal or state court would make illegal or otherwise restrain or
\nprohibit the consummation of the Merger and\/or the SCO Transaction shall have
\nbeen issued and shall have become final and nonappealable;<\/p>\n
(h) by Caldera or SCO, if the stockholders of SCO do not
\napprove the SCO Transaction at a duly convened SCO Stockholders Meeting or any
\nadjournment thereof by reason of the failure to obtain the required vote (a “SCO
\nStockholder Rejection”); provided, that the right to terminate this Agreement
\nunder this Subsection (h) shall not be available to SCO where the failure to
\nobtain SCO stockholder approval shall have been caused by any breach of this
\nAgreement or any Ancillary Document by SCO;<\/p>\n
(i) by Caldera, if (a) the Board of Directors of SCO shall
\nhave withdrawn (or modified in a manner adverse to the SCO Stockholder Approval
\nor the consummation of the SCO Transaction) its approval or recommendation of
\nthe SCO Transaction or this Agreement, (b) SCO shall have failed to include in
\nthe Proxy Statement\/Prospectus the recommendation of the Board of Directors of
\nSCO in favor of approval of the SCO Transaction or this Agreement, (c) the Board
\nof Directors of SCO shall have recommended any SCO Alternative Proposal, which
\nmeets the criteria of 4.14(b)(i)-(v), or (d) the Board of Directors of SCO shall
\nhave resolved to do any of the foregoing (collectively, a “Change in SCO Board
\nRecommendation”);<\/p>\n
(j) by Caldera or SCO at any time prior to the SCO
\nStockholder Approval, if the Board of Directors of SCO shall have recommended or
\naccepted a SCO Alternative Proposal provided that SCO is not in breach of
\nSection 4.14;<\/p>\n
(k) by Caldera or SCO, if the stockholders of Caldera do
\nnot approve the SCO Transaction at a duly convened Caldera Stockholders Meeting
\nor any adjournment thereof by reason of the failure to obtain the required vote;
\nprovided, that the right to terminate this Agreement under this Subsection (k)
\nshall not be available to Caldera where the failure to obtain Caldera
\nStockholder Approval shall have been caused by any breach of this Agreement or
\nany Ancillary Document by Caldera; or<\/p>\n
(l) by SCO, if (a) the Board of Directors of Caldera shall
\nhave withdrawn (or modified in a manner adverse to the Caldera Stockholder
\nApproval) its approval or recommendation of the SCO Transaction, the Merger or
\nthis Agreement, (b) Caldera shall have failed to include in the Proxy
\nStatement\/Prospectus the recommendation of the Board of Directors of Caldera in
\nfavor of approval of the SCO Transaction, the Merger or this Agreement, (c) the
\nBoard of Directors of SCO shall have resolved to do any of the foregoing.<\/p>\n
As used herein, the “Final Date” shall be February 28, 2001; and
\nexcept that if a temporary, preliminary or permanent injunction or other order
\nby any Federal or state court<\/p>\n
59
\n 67<\/p>\n
which would prohibit or otherwise restrain consummation of the Merger and\/or the
\nSCO Transaction shall have been issued and shall remain in effect on February
\n28, 2001, and such injunction shall not have become final and non-appealable,
\neither party, by giving the other written notice thereof on or prior to February
\n28, 2001, may extend the time for consummation of the Merger and\/or the SCO
\nTransaction up to and including the earlier of the date such injunction shall
\nbecome final and non-appealable or March 31, 2001, so long as such party shall,
\nat its own expense, use its reasonable best efforts to have such injunction
\ndissolved.<\/p>\n
8.2 Notice of Termination. Any termination of this Agreement
\nunder Section 8.1 above will be effected by the delivery of notice of the
\nterminating party to the other party hereto of such termination, specifying the
\ngrounds therefore.<\/p>\n
8.3 Liability. If this Agreement is terminated pursuant to
\nSection 8.1, the parties shall have no further obligation or liability to each
\nother except that the parties will remain liable for: (i) the payment of the
\nTermination Fee, if any, payable under Section 8.4 below; (ii) damages resulting
\nfrom their intentional fraud or willful breach of this Agreement (which will not
\nbe limited by Section 8.4); and (iii) obligations under the parties’
\nnondisclosure agreement. Sections 13.1 – 13.13 of this Agreement will survive
\nany termination of this Agreement.<\/p>\n
8.4 Termination Fee.<\/p>\n
(a) Termination Fee.<\/p>\n
(i) If this Agreement is terminated by Caldera
\npursuant to Section 8.1(i), then SCO shall promptly pay to Caldera (by wire
\ntransfer or cashier’s check) a nonrefundable fee equal to 3 1\/2% of the number
\nof shares of Newco Common Stock equal to the SCO Percentage Interest multiplied
\nby the average closing price of the Caldera Common Stock for the ten (10) days
\nfollowing the public announcement of this Agreement (the “Termination Fee”)
\nwithin two (2) business days following delivery of the notice of termination by
\nCaldera pursuant to Section 8.2;<\/p>\n
(ii) If this Agreement is terminated by SCO
\npursuant to Section 8.1(l), then Caldera shall promptly pay to SCO (by wire
\ntransfer or cashier’s check) the Termination Fee within two (2) business days
\nfollowing delivery of the notice of termination by SCO pursuant to Section 8.2;
\nand<\/p>\n
(iii) If (A) this Agreement is terminated by SCO or
\nCaldera pursuant to Section 8.1(h) after a SCO Alternative Proposal has been
\npublicly disclosed or by Caldera pursuant to Section 8.1(c) as the result of a
\nbreach by SCO of Section 4.14 and (B) within 6 months of termination of this
\nAgreement SCO shall enter into an agreement for a SCO Alternative Proposal which
\nis subsequently consummated or within 12 months of termination of this Agreement
\nSCO shall consummate a SCO Alternative Proposal, then SCO shall pay to Caldera
\n(by wire transfer or cashier’s check) the Termination Fee within two (2)
\nbusiness days upon the consummation of such SCO Alternative Proposal.<\/p>\n
60
\n 68<\/p>\n
(b) SCO and Caldera acknowledge that the agreements
\ncontained in this Section 8.4 are an integral part of the transactions
\ncontemplated by this Agreement, and that, without these agreements, neither SCO
\nnor Caldera would enter into this Agreement; accordingly, if either Caldera or
\nSCO fail to timely pay the amounts due pursuant to this Section 8.4, and, in
\norder to obtain such payment, the other party commences a suit which results in
\na judgment against SCO or Caldera, as the case may be for the amounts set forth
\nin this Section 8.4 and such judgment is not set aside or reversed, such party
\nshall pay the other party’s reasonable costs and expenses (including attorneys’
\nfees and expenses) in connection with such suit, together with interest on the
\namounts set forth in this Section 8.4 at the prime rate as published in The Wall
\nStreet Journal on the date such payment was required to be made.<\/p>\n
9. Survival of Representations.<\/p>\n
9.1 Survival of Representations. Except as otherwise expressly
\nprovided herein, all representations, warranties and covenants of the parties
\ncontained in this Agreement will remain operative and in full force and effect,
\nregardless of any investigation made by or on behalf of the parties to this
\nAgreement, until the second anniversary of the Effective Time, whereupon such
\nrepresentations, warranties and covenants will expire (except for covenants and
\nother provisions hereof that by its express terms survive for a longer period);
\nprovided however that all representations and warranties and covenants relating
\nto Tax matters shall survive for the period of the applicable statute of
\nlimitations.<\/p>\n
10. Escrow and Indemnification.<\/p>\n
10.1 Escrow Fund. In accordance with Section 1.3(b) hereof,
\nCaldera shall deliver to the Escrow Agent Shares of Newco Common Stock equal to
\nan aggregate of ten percent (10%) of the SCO Percentage Interest (the “Escrow
\nFund”). The Escrow Fund shall be held by the Escrow Agent for a period of one
\nyear from the Effective Time pursuant to the terms set forth in the Escrow
\nAgreement. The Escrow Fund shall be available to compensate Caldera Surviving
\nCorporation and Newco pursuant to the Indemnification obligations of SCO.<\/p>\n
10.2 Indemnification by SCO. SCO agrees, notwithstanding any
\nprovision of Section 1.4 hereof to the contrary, to indemnify Newco and Caldera
\nagainst, and to hold Newco and Caldera harmless from, all Loss arising out of
\nany of the following (even if included in the Assumed Liabilities as otherwise
\nbeing or allegedly being a Liability of one of the Contributed Companies or of
\nthe Contributed Subsidiaries):<\/p>\n
(a) any of the Excluded Liabilities, except as may be
\nprovided in Section 12;<\/p>\n
(b) any demand, claim, debt, suit, cause of action,
\narbitration, investigation or other proceeding made or asserted by any
\nContributing Company or any stockholder, creditor, or Affiliate of any
\nContributing Company or by any receiver or trustee in bankruptcy of any
\nContributing Company of the property or assets of any Contributing Company,
\nasserting that the transfer of the Contributed Stock and Contributed Assets to
\nNewco hereunder constitutes a fraudulent conveyance, fraudulent transfer or a
\npreference under any applicable foreign, state or federal law, including but not
\nlimited to the United States Bankruptcy<\/p>\n
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\n 69<\/p>\n
Code, or any breach by any Contributing Company of its representations and
\ncovenants in Section 1.4(e) hereof or any Liabilities related to non-compliance
\nwith bulk transfer laws in connection with the SCO Transaction;<\/p>\n
(c) the SCO Retained Business;<\/p>\n
(d) any material Liability omitted from the Group
\nFinancial Statements that was required by GAAP to be included or reflected
\ntherein (collectively, the “Omitted Balance Sheet Liabilities”);<\/p>\n
(e) any claim or cause of action brought by any SCO
\nemployee relating in any way to the terms and conditions of the employee’s
\nemployment with SCO or the termination thereof, which arises prior to the
\nClosing Date, regardless of when such claim or cause of action may be discovered
\nor brought;<\/p>\n
(f) any breach of the representations and warranties in
\nSection 2 hereof.<\/p>\n
10.3 Notwithstanding Section 10.2, all liabilities for Taxes
\nshall be subject only to the separate tax indemnification provisions of Section
\n12.<\/p>\n
10.4 Limitations on Indemnification. SCO shall not have any
\nliability under this Section 10 unless the aggregate amount of Loss attributable
\nexceeds $1,000,000, and, in such event, SCO shall be required to pay the entire
\namount of such Loss from the first dollar thereof. SCO shall not have liability
\nfor any Loss in excess of the amount determined by multiplying (i) the number of
\nshares of Newco Common Stock equal to ten percent (10%) of the SCO Percentage
\nInterest by (ii) the Caldera Closing Price, except that as such Losses relate to
\nthe SCO IP Rights, SCO shall not have liability for any Loss in excess of the
\namount determined by multiplying (i) the number of Shares of Newco Common Stock
\nequal to fifty percent (50%) of the SCO Percentage Interest by (ii) the Caldera
\nClosing Price. Notwithstanding the preceding sentence, there shall be no
\nlimitations on liability pursuant to this Section 10 relating to intentional
\nfraud or misrepresentation by SCO.<\/p>\n
10.5 Indemnification Procedures.<\/p>\n
(a) Claim Procedure. If Caldera or Newco has or claims to
\nhave incurred or suffered Losses for which it is or may be entitled to
\nindemnification, compensation or reimbursement under this Section 10 (the
\n“Indemnitee”), such Indemnitee may, on or prior to the first anniversary of the
\nEffective Time, deliver a claim notice (a “Claim Notice”) to SCO. Each Claim
\nNotice shall (i) state that such Indemnitee believes that it is entitled to
\nindemnification, compensation or reimbursement under this Section 10, (ii)
\ncontain a brief description of the circumstances supporting such Indemnitee’s
\nbelief that such Indemnitee is so entitled to indemnification, compensation or
\nreimbursement and (iii) contain a non-binding, preliminary estimate of the
\namount of Loss such Indemnitee claims to have so incurred or suffered (the
\n“Claimed Amount”).<\/p>\n
(b) Response Notice. Within twenty (20) business days
\nafter receipt by SCO of a Claim Notice, SCO may deliver to the Indemnitee who
\ndelivered the Claim Notice a<\/p>\n
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\n 70<\/p>\n
written response (the “Response Notice”) in which SCO: (i) agrees that the full
\nClaimed Amount is to be paid to the Indemnitee; (ii) agrees that a part, but not
\nall, of the Claimed Amount is to be paid to the Indemnitee; or (iii) indicates
\nthat no part of the Claimed Amount is to be paid to the Indemnitee. Any part of
\nthe Claimed Amount that SCO does not agree should be paid to the Indemnitee
\nshall be the “Contested Amount.” If a Response Notice is not delivered to
\nCaldera within such twenty (20) business day period, then SCO shall be deemed to
\nhave agreed that the full Claimed Amount is to be paid to the Indemnitee.<\/p>\n
(c) Payment of Claimed Amount. If SCO delivers a Response
\nNotice agreeing that some or all of the Claimed Amount is to be paid to the
\nIndemnitee (the “Agreed Amount”), SCO shall pay the Indemnitee in cash, within
\ntwenty (20) business days from the date of the Response Notice, any portion of
\nthe Agreed Amount that is not satisfied by delivery of Escrow Shares pursuant to
\nthe terms of the Escrow Agreement. Such payment shall be deemed to be made in
\nfull satisfaction of the claim described in such Claim Notice, provided,
\nhowever, that if such claim involves ongoing Losses, then such payment shall be
\ndeemed to be made in full satisfaction only of the Losses incurred as of the
\ndate specified in such Claim Notice.<\/p>\n
(d) Settlement. If SCO delivers a Response Notice
\nindicating that there is a Contested Amount, SCO and the Indemnitee shall
\nattempt in good faith for a period of thirty (30) days from the date of the
\nResponse Notice to resolve the dispute related to the Contested Amount. If the
\nIndemnitee and SCO resolve such dispute, such resolution shall be binding on SCO
\nand all of the Indemnitees and a settlement agreement shall be signed by the
\nIndemnitee and SCO containing the terms of such resolution.<\/p>\n
(e) Third Party Claims.<\/p>\n
(i) Within fifteen (15) days after receipt of
\nnotice of commencement of any action by any third party evidenced by service of
\nprocess or other legal pleading, or with reasonable promptness after the
\nassertion in writing of any claim by a third party, Caldera shall give SCO
\nwritten notice thereof together with a copy of such claim, process or other
\nlegal pleading, and SCO shall have the right to undertake the defense, thereof
\nthrough a legal representative of SCO’s own choosing.<\/p>\n
(ii) In the event that SCO, by the thirtieth day
\nafter receipt of notice of any such claim (or, if earlier, by the tenth day
\npreceding the day on which an answer or other pleading must be served in order
\nto prevent judgment by default in favor of the person asserting such claim),
\ndoes not elect to defend against such claim, Caldera (upon further notice to
\nSCO) will have the right to undertake the defense, compromise or settlement of
\nsuch claim on behalf of and for the account and risk of SCO subject to the right
\nof SCO to assume the defense of such claims at any time prior to settlement,
\ncompromise or final determination thereof. The reasonable costs of defense of
\nany third party action or claim by Caldera shall be paid from the Escrow Shares.<\/p>\n
(iii) Notwithstanding Sections 11.5(e)(i) and (ii),
\nCaldera shall have the right to retain control of the defense of any third party
\naction or claim described in Section 11.5(e)(i) which involves potential Losses
\nin excess of the value of the Escrow Shares remaining in the Escrow Account or
\ncould reasonably be expected to materially affect Caldera’s<\/p>\n
63
\n 71<\/p>\n
on-going operations. In such event, SCO shall have the right to be present at
\nthe negotiation, defense and settlement of such action or claim. Caldera shall
\nnot agree to any settlement of any such action or claim without the consent of
\nSCO, which shall not be unreasonably withheld.<\/p>\n
(f) Satisfaction. In the event SCO incurs liability for
\nLosses which is not satisfied by delivery of shares from the Escrow Fund, SCO
\nmay elect to pay the amount due either in cash or by delivering shares of Newco
\nCommon Stock. For this purpose, the Newco Common Stock will be valued at the
\naverage closing price of the Caldera Common Stock for the ten days following the
\npublic announcement of this Agreement, as adjusted for stock splits, stock
\ndividends, changes in the Caldera Ratio and other recapitalizations.<\/p>\n
11. Employee Matters.<\/p>\n
11.1 Right to Offer Employment.<\/p>\n
(a) Employees. Schedule 11.1 of the SCO Disclosure Letter
\ncontains a preliminary list (the “Preliminary List”) of each Contributed Company
\nemployee or consultant and each other employee or consultant of SCO or the Group
\nBusiness who works in, or provides services in connection with or is assigned to
\nthe Group Business or any of the Group Assets (each a “Potential Employee”).
\nWithin five (5) days after the date hereof, SCO shall deliver to Newco a final
\nlist of the Potential Employees (the “Final List”), which list shall identify
\nthose Potential Employees who are active employees of the Group Business as of
\nthat date, including those on vacation, sick leave, maternity or parental leave,
\ndisability leave, family leave or personal leave of absence, who work full or
\npart time, and which shall separately identify those employees who are on a
\nworkers’ compensation-related or disability leave or long-term sick leave. The
\nFinal List shall contain, with respect to each Potential Employee, a true and
\naccurate list of all locations at which Potential Employees are working as of
\nsuch date, together with the date of hire, location of employment, years of
\nemployment or service, current annual base salary or base wage, and of all other
\ncompensation arrangements for such Potential Employees, including bonuses,
\ncommissions or other compensation arrangements or benefit plans whether oral or
\nwritten, contractual or discretionary. Within sixteen (16) days of receipt of
\nthe Final List, Caldera shall deliver to SCO a list that identifies: (i) those
\nPotential Employees of the Group Business to whom it shall make offers of
\nemployment and (ii) those Potential Employees of the Contributed Companies that
\nit expects to retain, each pursuant to Section 11.1(e) (the “Designated
\nEmployees”). For purposes of this Agreement, “Employees” means only those
\nDesignated Employees given offers of employment or retained by Newco pursuant to
\nSection 11.1(e). For a period of two years from the Closing Date, neither Newco,
\nany of its subsidiaries nor their employees (including former employees of SCO)
\nmay employ, make offers of employment to or otherwise solicit any employees of
\nSCO as of the date hereof who are not Designated Employees.<\/p>\n
(b) The parties acknowledge and agree that in those
\njurisdictions in which the EC Directive 77\/187 (the Acquired Rights Directive)
\n(the “Employment Regulations”) apply, the contracts of employment of the
\nDesignated Employees designated as “Employees” pursuant to Section 11.1(e) will
\nhave effect from the Effective Time (which shall be the “time of transfer” for
\nthe purposes of the Employment Regulations) as if originally made between Newco
\nand each such Employee. If any contract of employment is not disclosed by SCO in
\nthe Final List or any<\/p>\n
64
\n 72<\/p>\n
other contract of employment of any employee other than an Employee is in effect
\nas if originally made between Newco and the employee concerned as a result of
\nthe Employment Regulations: (i) Newco may, upon becoming aware of any such
\ncontract, terminate it forthwith; and (ii) SCO and each Group Business shall
\nindemnify and hold harmless Newco against any costs, claims, liabilities and
\nexpenses of any nature (including legal expenses on an indemnity basis) arising
\nout of such termination and against sums payable to or on behalf of such
\nemployee in respect of his employment whether arising before or after the
\nClosing.<\/p>\n
(c) Newco shall credit Employees with their then current
\naccrued vacation with SCO or the Contributed Companies. All other emoluments and
\noutgoings (including and without limitation, wages, salaries, bonuses,
\ncommissions, withholding taxes, social security contributions, pension
\ncontributions) and other costs and expenses of, and all other obligations in
\nrespect of, the Employees in respect of the period to, and including, the
\nClosing shall be discharged by SCO and any relevant Group Business. SCO and each
\nGroup Business shall indemnify and keep indemnified Newco against all
\nliabilities arising from any failure by SCO and any Group Business so to
\ndischarge.<\/p>\n
(d) SCO and each Group Business shall indemnify and hold
\nharmless Newco from and against all losses, costs, claims, demands, actions,
\nfines, penalties, awards, liabilities and expenses (including legal expenses on
\nan indemnity basis) (i) which are attributable to any act, omission, breach or
\ndefault by SCO or any Group Business prior to the Closing in respect of any of
\nthe obligations of SCO or any Group Business (in either case, whether arising
\nunder common law, statute, custom or otherwise) to or in relation to any of its
\nemployees or former employees (including but not limited to any liability
\narising out of the termination or dismissal of any Potential Employee or former
\nemployee and which Newco may incur or suffer as a result of succeeding to SCO or
\nany Group Business as the employer of any Potential Employee); or (ii) in
\nconnection or as a result of any claim or demand by a Potential Employee on the
\ngrounds that the Potential Employee has suffered any loss, harm or damage in
\nrelation to pension rights caused by the transactions set forth in this
\nAgreement (including without limitation the calculation of any transfer value of
\naccrued rights on transfer) to the Potential Employees; or (iii) in connection
\nor as a result of any claim or demand by a Potential Employee that the identity
\nof Newco is to the Potential Employee’s detriment, whether or not such claim or
\nclaims arises or arise prior to, on or after the Closing.<\/p>\n
(e) Offers of Employment. Effective at the Effective Time,
\nNewco shall offer to employ any of the Designated Employees of the Group
\nBusiness (other than Designated Employees of the Contributed Companies) subject
\nto Newco’s standard terms, conditions and policies of employment and the terms
\nof this Agreement, and shall offer such Designated Employees as it determines,
\nin its sole discretion, to hire (i) salary consistent with the salary earned by
\nsuch Potential Employees prior to the Effective Time but only to the extent such
\nsalary is not in excess of industry norms (taking into account the geographic
\nlocation of the Employees); and (ii) participation in incentive compensation
\narrangements consistent with the incentive compensation arrangements of
\nemployees of Caldera in comparable positions. This Section 11.1(b) shall not be
\nconstrued to create any third party beneficiary rights or any other rights of
\nany kind in any Designated Employee and no Designated Employee shall have any
\ncause of action as a third party beneficiary. Such offers of employment that
\nwill be extended by<\/p>\n
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\n 73<\/p>\n
Newco to Employees will be on the same basis of time commitment (full or part
\ntime) as such Employee was employed immediately prior to the Effective Time. In
\naddition, SCO shall cause the termination of any Potential Employees of the
\nContributed Companies who are not Designated Employees prior to the Effective
\nTime. Unless the parties otherwise agree, on the date of the Closing, SCO shall
\nnotify each Employee who accepts an offer of employment extended by Newco as of
\nthe Effective Time, in a writing reasonably satisfactory to Newco, that such
\nEmployee’s employment with SCO or any of its direct or indirect subsidiaries is
\nthen terminated. For a period of two years from the Closing Date, neither SCO
\nnor any of its subsidiaries nor any of its employees may employ, make offers of
\nemployment to or otherwise solicit any of the employees of Newco or any of its
\nsubsidiaries as of the date hereof or any of the Designated Employees.<\/p>\n
(f) Severance. SCO shall be responsible for any and all
\nseverance that may become due as a result of the transaction contemplated by
\nthis Agreement for all employees except for those Employees hired by Newco
\npursuant to Section 11.1(b); provided, however, that if Caldera does not make a
\nreasonable offer of employment to a Designated Employee then Caldera shall be
\nresponsible for any and all severance that may become due as a result of the
\ntransaction or the termination of such employee.<\/p>\n
11.2 Termination of Employment.<\/p>\n
(a) SCO agrees to comply with the provisions of the WARN
\nAct and any other federal, state, provincial or local or foreign statute or
\nregulation or EU Directive regulation regarding termination of employment, plant
\nclosing or layoffs and to perform all obligations required of SCO with respect
\nto the cessation of any operations of the Group Business or any other business
\nof SCO or its subsidiaries, or the termination, re-assignment, re-location or
\nchange in position as terms and conditions of employment of any Employee (or
\nother employee of them) who does not accept Newco’s offer of employment.<\/p>\n
(b) In the United States, SCO shall (i) provide
\ncontinuation health care coverage to all employees of the Group Business and
\ntheir qualified beneficiaries who incur a qualifying event prior to the
\nEffective Time, who are not given offers of employment by Newco or who do not
\naccept Newco’s offer of employment pursuant to Section 11.1(b) in accordance
\nwith the continuation health care coverage requirements of COBRA and (ii)
\nprovide COBRA continuation coverage to any former employee of the Contributed
\nCompany Group who was previously employed in the Group Business (collectively,
\nthe “Former Employees”) and its qualified beneficiaries to whom, at the
\nEffective Time, such continuation coverage was being provided or to whom SCO was
\nunder an obligation to provide such continuation coverage at the election of
\nsuch Former Employee or qualified beneficiary.<\/p>\n
11.3 Cooperation. SCO, Caldera and Newco agree, for themselves
\nand its affected subsidiaries, to cooperate fully with respect to the actions
\nwhich are necessary or reasonably desirable to accomplish the transactions
\ncontemplated hereunder, including, without limitation, the provision of records
\nand information as each may reasonably request and in order to meet the
\nnotification and consultation requirements of the Acquired Rights Directive in
\naccordance with the relevant regulations or laws adopting such directive in all
\nrelevant<\/p>\n
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\n 74<\/p>\n
jurisdictions, or any other similar notification and consultation obligation the
\nmaking of all appropriate filings under ERISA and the Internal Revenue Code.<\/p>\n
12. Tax Matters.<\/p>\n
12.1 Transaction Taxes; Representation; Transaction Tax
\nIndemnity. SCO and Caldera shall bear equally any and all sales, use, excise,
\nvalue added, registration, stamp, property, documentary, transfer, withholding
\nand similar taxes, levies and duties (including all real estate transfer taxes,
\nbut not any real estate transfer taxes that would be triggered as a result of a
\nchange in control of a corporation) incurred, or that may be payable to any
\ntaxing authority, with respect to the sale, transfer, or delivery of the
\nContributed Stock and Assets and the assumption of the Assumed Liabilities,
\nincluding any such taxes, levies and duties imposed in connection with such
\ntransactions (collectively, “Transaction Taxes”); provided, however, that
\nCaldera shall not be responsible for any Transaction Taxes in excess of
\n$300,000. Newco and SCO agree to cooperate in minimizing the amount of any
\nTransaction Taxes and in the filing of all necessary documentation and all Tax
\nreturns, reports and forms (“Returns”) with respect to all Transaction Taxes,
\nincluding any available pre-sale filing procedures.<\/p>\n
Notwithstanding any other provision of this Agreement, the
\nUnixware source code, object code and related documentation (“Unixware
\nSoftware”) or other software shall remain the property of SCO until (i)
\nexpeditiously delivered to Newco at SCO’s facility in Murray Hill, New Jersey,
\n(ii) transferred by remote telecommunication from SCO’s place of business, to or
\nthrough Newco’s computer with no tangible personal property transferred to
\nNewco, such as storage media, except for user manuals, or (iii) installed by SCO
\non Newco’s computer without the transfer of title or possession of storage media
\nor any tangible personal property other than user manuals. Newco agrees that it
\nwill not transfer the Unixware Software or other software on tangible media into
\nCalifornia.<\/p>\n
12.2 Treatment of Indemnity Payments. All payments made by SCO or
\nNewco, as the case may be, to or for the benefit of the other party pursuant to
\nany indemnification obligations under this Agreement shall, to the extent
\nappropriate under applicable Tax law, be treated for Tax purposes as adjustments
\nto the value of the Contributed Stock and Contributed Assets.<\/p>\n
12.3 Indemnity for Taxes.<\/p>\n
(a) Except as otherwise provided in this Section 12.3,
\nfrom and after the Closing, SCO shall timely pay and indemnify and save Newco
\nand its Affiliates and Caldera harmless from any liability for, or arising out
\nof or based upon, or relating to any Tax (including, without limitation, any
\nobligation to contribute to the payment of a Tax determined on a consolidated
\nbasis or otherwise with respect to a group of corporations that includes or
\nincluded SCO) (i) of SCO or any member of the affiliated group of corporation
\n(as defined in Section 1504 of the Code or otherwise) of which SCO is a member
\n(other than any member of the Contributed Company Group or with respect to any
\nTax relating to the income, business, assets, property or operations of the
\nGroup Business) for any taxable period; (ii) relating to the income, business,
\nassets, property or operations of the Group Business or of the Contributed
\nCompany Group to the extent that such liability for Tax is not reflected in the
\nSCO Disclosure<\/p>\n
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\n 75<\/p>\n
Letter or the Group Financial Statements and is either (A) in respect of any
\ntaxable period that ends prior to the Closing Date or in respect of any taxable
\nperiod that includes, but does not end on the Closing Date, the portion of such
\nperiod ending on the Closing Date or (B) with respect to an excess loss account
\nin the stock of any Contributed Company or from a deferred intercompany
\ntransaction (including any such transaction resulting from a distribution or
\ndeemed distribution of Newco Common Stock by any Contributing Company) entered
\ninto on or prior to the Closing Date and is triggered as a result of the
\nContributed Company Group ceasing to be affiliated with SCO; (iii) under Subpart
\nF of the Code attributable to transactions undertaken by SCO or any of its
\naffiliates before or after the Effective Time; or (iv) as a result of a breach
\nof any representation, warranty, covenant or agreement made herein by SCO.<\/p>\n
(b) Notwithstanding anything contained in this Section
\n12.3(b), SCO shall not be obligated to indemnify Newco for any Tax (including,
\nwithout limitation, any obligation to contribute to the payment of a Tax
\ndetermined on a consolidated basis with respect to a group of corporations that
\nincludes or included SCO) by reason of an election or deemed election (including
\nany protective election) with respect to transactions described in this
\nAgreement made or filed post-Closing by Newco or any member of the Contributed
\nCompanies under Section 338 of the Internal Revenue Code. Further, no Section
\n338 election shall be made with respect to any of the transactions described in
\nthis Agreement.<\/p>\n
(c) Except to the extent otherwise provided in this
\nSection 12.3(c), Newco shall timely pay and indemnify and save SCO and its
\nAffiliates harmless from any liability for, or arising out of or based upon or
\nrelating to any Tax (including, without limitation, any obligation to contribute
\nto the payment of a Tax determined on a consolidated basis with respect to a
\ngroup of corporations that includes or included SCO) (i) relating to the income,
\nbusiness, assets, property or operations of the Group Business by Newco and its
\nAffiliates or any member of the Contributed Company Group in respect of all
\ntaxable periods beginning after the Closing Date, or, in the case of any taxable
\nperiod that includes but does not end on the Closing Date, the portion of such
\nperiod commencing on the day following the Closing Date; (ii) to the extent such
\nliability for Tax is reflected in the Group Financial Statements or the SCO
\nDisclosure Letter and such liability is for Tax relating to the income,
\nbusiness, assets, property or operations of the Group Business or of any member
\nof the Contributed Company Group; (iii) under Subpart F of the Code attributable
\nto transactions undertaken by Newco or Caldera or any of their Affiliates after
\nthe Effective Time; or (iv) as a result of a breach of any representation,
\nwarranty, covenant or agreement made herein by Newco, Caldera or Merger Sub.<\/p>\n
(d) If, as a result of any action, suit, investigation,
\naudit, claim, assessment or amended Tax Return, there is any change after the
\nClosing Date in an item of income, gain, loss, deduction or credit that results
\nin an increase in a Tax liability for which SCO would otherwise be liable
\npursuant to paragraph (a) of this Section 12.3, and such change results in a
\ndecrease in the Tax liability of Newco or any Affiliate or successor thereof for
\nany taxable year or period beginning after the Closing Date or for the portion
\nof any Straddle Period beginning after the Closing Date (assuming for purposes
\nof this sentence that Newco and its Affiliates are liable for income tax at the
\nhighest applicable corporate federal, state, local and\/or foreign rates), SCO
\nshall not be liable pursuant to such paragraph (a) with respect to such increase
\nto the extent of such decrease. If, as a result of any action, suit,
\ninvestigation, audit,<\/p>\n
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\n 76<\/p>\n
claim, assessment or amended Tax Return, there is any change after the Closing
\nDate in an increase in an item of income, gain, loss, deduction, or credit that
\nresults in an increase in a Tax liability for which Newco would otherwise be
\nliable pursuant to paragraph (c) of this Section 12.3, and such change results
\nin a decrease in the Tax liability of SCO or any Affiliate or successor thereof
\n(other than Newco) for any taxable year or period ending on or before the
\nClosing Date or for the portion of any Straddle Period ending on the Closing
\ndate (other than by reason of a carryback of losses or deductions), Newco shall
\nnot be liable pursuant to such paragraph (c) with respect to such increase to
\nthe extent of such decrease.<\/p>\n
(e) For purposes of this Section 12.3, it shall be assumed
\nthat SCO and its Affiliates are liable for income tax at the highest applicable
\ncorporate federal, state, local and\/or foreign rates, without reduction on
\naccount of net operating losses or other tax attributes.<\/p>\n
12.4 Other Tax Matters.<\/p>\n
(a) SCO, Newco and Caldera will cooperate fully with each
\nother in connection with the preparation of all returns and reports of Taxes,
\ninformation returns, and all audit examinations of, or claims or assertions
\nagainst, any member of the Contributed Company Group, in each case including but
\nnot limited to the furnishing or making available of records, books of account
\nor other materials and appropriate personnel necessary or helpful to the defense
\nagainst the assertions of any taxing authority. SCO shall, within ninety days
\nafter the Effective Time, deliver to Newco a schedule listing the tax basis of
\neach of the Contributed Stock and Assets, along with copies of supporting
\ncalculations, information and records.<\/p>\n
(b) Except as provided in Section 12.4(c), in the event
\nand to the extent that SCO or any member of an affiliated group of corporations
\n(as defined in Section 1504 of the Internal Revenue Code or otherwise) of which
\nSCO is a member (other than any member of the Contributed Company Group)
\nreceives a refund or credit of Taxes for any taxable period that ends prior to
\nthe Effective Time or in respect of any period that includes, but does not end
\non, the Effective Time, the portion of such period ending on the Effective Time
\n(the “Pre-Closing Period”) which is attributable to the carry back of losses,
\ncredits or similar items from any Tax return of any member of the Contributed
\nCompany Group, and in any case, in respect of any taxable period that begins
\nafter the Effective Time or in respect of any period that includes, but does not
\nend on the Effective Time, the portion of such period commencing on the day
\nfollowing the Effective Time (the “Post-Closing Period”), SCO shall pay to
\nNewco, net of any additional Tax payable by SCO or its Affiliates by reason of
\nsuch carryback, the amount of such refund or credit (including any interest
\nreceived thereon) or Tax reduction. In the event that any refund or credit of
\nTaxes or Tax reductions for which a payment has been made pursuant to this
\nSection 12.4(b) subsequently is reduced or disallowed, the Contributed Companies
\nand Newco shall indemnify and hold harmless SCO and its Affiliates for any Tax
\nliability, including interest and penalties, assessed by reason of such
\nreduction or disallowance.<\/p>\n
(c) In the event that an indemnified party receives a
\nrefund or credit relating to Taxes for which the other party is required to
\nindemnify the first party pursuant to Section 12.3 of this Agreement (including,
\nbut not limited to VAT refunds), such indemnified party agrees to pay to the
\nindemnifying party the amount of such refund or credit (including any interest
\nreceived thereon). In the event that any refund or credit of Taxes for which a
\npayment<\/p>\n
69
\n 77<\/p>\n
has been made pursuant to this Section 12.4(c) subsequently is reduced or
\ndisallowed, the indemnifying party shall indemnify and hold harmless the
\nindemnified party for any Tax liability, including interest and penalties,
\nassessed by reason of such reduction or disallowance.<\/p>\n
(d) If any claim for Tax relating to the Group Business or
\nthe Contributed Company Group is asserted against SCO or any Affiliate for any
\nPre-Closing Period, SCO shall promptly notify Newco in writing of such fact. SCO
\nand its duly appointed representatives shall have the sole right to negotiate,
\nresolve, settle or contest any such claim for Tax; provided, however, that they
\nshall deal fairly and in good faith with respect to any claim for Tax which
\nwould require a payment by Newco to SCO or its Affiliates under Section 12.3(c)
\nor this Section 12.4 and provided further, that with respect to any claim which
\nwould require a payment by Newco or have a Material Adverse Effect on the Group
\nBusiness, no settlement will be agreed to without Newco’s prior written consent.
\nSuch consent shall not be unreasonably withheld. Newco shall bear the legal and
\naccounting costs and expenses incurred in contesting a matter for which it has
\nwithheld its consent. If any claim for Tax relating to the Contributed Company
\nGroup for any Post-Closing Period comes to the attention of SCO, SCO will notify
\nNewco promptly of such claims and will cooperate fully with Newco and the
\nContributed Company Group in the resolution of such claim. A failure to promptly
\nnotify pursuant to this Section 12.4(d) shall not preclude another party’s
\nindemnification obligation.<\/p>\n
(e) SCO shall prepare any Tax returns (including any
\namendments thereto) of the members of the Contributed Company Group for all
\ntaxable periods that end, with respect to the Contributed Company Group, on or
\nbefore the Effective Time (including any short period ending on the Effective
\nTime) and which are due either before or after the Effective Time and shall
\ndeliver to Newco for signing by the appropriate party and filing, any Tax
\nreturns of the members of the Contributed Company Group (including any
\namendments thereto) with respect to any such period that have not been filed
\nprior to the Effective Time. SCO shall deliver any such tax return or the
\nportion thereof relating to the Group Business to Newco at least fifteen days
\nprior to the date such tax return is due to be filed (taking into account any
\napplicable extensions). SCO shall report for federal income tax purposes the
\noperations of the Group Business and the Contributed Company Group for any short
\nperiod ending on the Effective Time, and shall be responsible for the filing of,
\nthe consolidated tax returns of SCO’s consolidated group which will include the
\nincome of the Group Business and the Contributed Company Group through the
\nEffective Time and Newco will pay to SCO any amounts relating to such tax
\nreturns required by Section 12.3(c) prior to the filing of such tax returns. In
\norder appropriately to apportion any taxes relating to a period that includes
\n(but that would not, but for this Section 12.4(e) end on the Effective Time),
\nthe parties hereto will, to the extent permitted by applicable law, elect with
\nthe relevant taxing authority to treat for all purposes the Effective Time as
\nthe last day of a taxable period of any member of the Contributed Company Group.
\nSCO shall, in respect of such returns, and Newco and the Contributed Company
\nGroup for returns with respect to the Post-Closing Period shall determine the
\nincome, gain, expenses, losses, deductions and credits of the Group Business and
\nthe Contributed Company Group in a manner (i) consistent with prior practice and
\nactual operations in a manner that apportions such income, gain, expenses, loss,
\ndeductions and credits equitably from period to period and (ii) consistent with
\nprior years.<\/p>\n
70
\n 78<\/p>\n
(f) The provisions of this Section 12 with respect to the
\nconsolidated groups or consolidated returns that include SCO or its Affiliates
\nother than a Contributed Company shall apply mutatis mutandis with respect to
\ncombined or unitary groups or returns thereof.<\/p>\n
(g) Newco and SCO shall make (or indemnify the payor
\nagainst) payments of estimated taxes (including amounts due with extensions) for
\nwhich they are responsible under this Agreement in a timely manner. A payment or
\nindemnity obligation under this Section 12 which is not made or satisfied when
\ndue shall accrue interest at the rate applicable to late payments of the
\npertinent Tax. Notwithstanding anything in this Section 12 to the contrary, a
\nparty shall not have to bear the cost of a Tax liability more than once (e.g., a
\npayment of an estimated tax shall be credited against any payment due when the
\nreturn is filed).<\/p>\n
(h) Except as provided in paragraph 12.4(e), for purposes
\nof allocating a Tax for which a party is otherwise responsible under Section
\n12.3 or this Section 12.4, the portion of those Taxes that are attributable to
\nthe operations of the Group Business or of any member of the Contributed Company
\nGroup for a relevant period (the “Interim Period”) shall be (i) in the case of a
\nTax that is not based on a net income, the total amount of such Tax for the
\nInterim Period in question multiplied by a fraction, the numerator of which is
\nthe number of days in the Interim Period and the denominator of which is the
\ntotal number of days in such period, and (ii) in the case of a Tax that is based
\non net income, the Tax that is due shall be an amount as equitably determined by
\nthe parties based upon a hypothetical closing of the books.<\/p>\n
(i) If Newco, a Contributed Company or any of its
\nrespective Affiliates receive any notice of the assertion of any Tax liability
\nrelating to a member of the Contributed Company Group for which SCO may be
\nliable under this Agreement, Newco shall give prompt written notice thereof to
\nSCO.<\/p>\n
(j) After the Closing, Newco and the Contributed Companies
\nwill provide reasonable access to all relevant Newco and Contributed Company
\nGroup books, records, agreements and memoranda, and provide such assistance to
\nSCO as SCO and its Affiliates shall reasonably request, with respect to any
\nfederal, foreign, state, provincial or local Tax matters pertaining to the
\nmembers of the Contributed Company Group for taxable periods or transactions on
\nor prior to the Effective Time. Newco will notify SCO prior to disposition of
\nsuch Tax records, if such disposition will take place within ten years after the
\nEffective Time. After the Closing, the parties will provide reasonable access to
\nall relevant SCO and Contributed Companies’ books, records, agreements,
\nmemoranda and tax returns, and provide copies of such information and such
\nassistance to the other party as it shall reasonably request, with respect to
\nany federal, foreign, state, provincial or local Tax matters pertaining to the
\nContributed Assets and the Contributed Company Group for taxable periods or
\ntransactions on or prior to the Effective Time.<\/p>\n
(k) Notwithstanding anything in this Agreement to the
\ncontrary, SCO and Newco covenant and agree (unless there has been a final
\ndetermination as defined in Section 1313(a) of the Code or any other event which
\nconclusively establishes a contrary position) for all Tax purposes, including
\nall Tax Returns and any Tax examinations, proceedings or controversies, to (and
\nto cause any Affiliate or successor to its assets or businesses to) take<\/p>\n
71
\n 79<\/p>\n
each of the positions set forth below (and not to take any position inconsistent
\ntherewith) and to use good faith and reasonable best efforts to defend such
\npositions:<\/p>\n
(i) The Merger (A) will qualify as a tax-free
\nreorganization described in Section 368(a) of the Code and (B) when taken
\ntogether with the SCO Transaction, will qualify as a tax free transfer of the
\nstock of Caldera to Newco governed by Section 351(a) of the Code.<\/p>\n
(ii) The SCO Transaction will, when taken together
\nwith the Merger, qualify as a transfer of the Contributed Stock and Contributed
\nAssets to Newco governed by Section 351 of the Code.<\/p>\n
(l) SCO and Newco agree to report to the other any
\ncommunication from or with the Internal Revenue Service or any other Taxing
\nAuthority which relates in any way to the characterization of the transactions
\ngoverned by this Agreement. Each of SCO and Newco will file with its Federal
\nincome tax return for the taxable year in which the Merger and SCO Transaction
\noccurs (which tax return shall be timely filed) the information required by
\nTreas. Reg. sec. 1.351-3 and 1.368-3 and to provide each other upon request with
\na statement to the effect that such party has complied with this requirement
\nafter filing. SCO, the Contributed Companies, and Newco also will maintain such
\npermanent records as are required by Treas. Reg. sec. 1.351-3(c) and 1.368-3.<\/p>\n
(m) Neither Caldera nor Newco has any plan or intention to
\nterminate the existence of Newco; to dispose of the assets contributed to Newco,
\nexcept in the ordinary course of business or in a contribution to the capital of
\na wholly-owned subsidiary of Newco; to reacquire any stock to be issued in the
\ntransactions contemplated by this Agreement; or to take any other action that
\nwould reasonably be expected to cause the Merger and the SCO Transaction not to
\nbe treated as a tax-free exchange under Section 351 of the Code. Neither Caldera
\nnor Newco knows of any plan or intention of any Caldera Significant Stockholder
\nto dispose of any Newco shares issued in the transactions contemplated by this
\nAgreement. SCO knows of no plan or intention to terminate the existence of Newco
\nor to dispose of the assets contributed to Newco, except in the ordinary course
\nof business or in a contribution to the capital of a wholly-owned subsidiary of
\nNewco. SCO has no plan or intention to dispose of any Newco shares issued in the
\ntransactions contemplated by this Agreement, except for distributions of Newco
\nstock to SCO’s shareholders, or to take any other action that would reasonably
\nbe expected to cause the merger and the SCO Transaction not to be treated as an
\nexchange under Section 351 of the Code.<\/p>\n
12.5 Tax Representations. Newco, Caldera and the Caldera
\nSignificant Stockholder covenant and represent that Caldera, Newco and the
\nCaldera Significant Stockholder shall make such representations and covenants as
\ntheir respective counsel shall reasonably request prior to the closing for
\npurposes of establishing the qualification under Section 351 of the SCO
\nTransaction and the qualification of the Merger as a Section 368 transaction.
\nAny such representations shall be considered to be part of this Section 12.5(a).<\/p>\n
13. Miscellaneous.<\/p>\n
72
\n 80<\/p>\n
13.1 Governing Law; Venue.<\/p>\n
(a) Governing Law. The internal laws of the State of New
\nYork (irrespective of its choice of law principles) will govern the validity of
\nthis Agreement, the construction of its terms and the interpretation and
\nenforcement of the rights and duties of the parties hereto, except that the
\nfiduciary duties of the directors and managers of parties hereto and its
\nAffiliates shall be governed by the law of the jurisdiction of such company’s
\nformation.<\/p>\n
(b) Venue. The parties agree that any dispute regarding
\nthe interpretation or validity of, or otherwise arising out of this Agreement,
\nshall be subject to the exclusive jurisdiction of the California State Courts in
\nand for Santa Clara County, California or, in the event of federal jurisdiction,
\nthe United States District Court for the Northern District of California sitting
\nin Santa Clara County, California, and each party hereby agrees to submit to the
\npersonal and exclusive jurisdiction and venue of such courts and not to seek the
\ntransfer of any case or proceeding out of such courts.<\/p>\n
13.2 Assignment; Binding upon Successors and Assigns. None of the
\nparties hereto may assign any of its rights or obligations hereunder without the
\nprior written consent of the other parties hereto; provided, however, that the
\nsale or other transfer of the stock of any Contributing Company shall not be
\ndeemed an assignment provided that this Agreement remains enforceable against
\nthe Contributing Company after such stock sale or transfer. Subject to the
\npreceding sentence, this Agreement will be binding upon and inure to the benefit
\nof the parties hereto and its respective successors and permitted assigns.<\/p>\n
13.3 Severability. If any provision of this Agreement, or the
\napplication thereof, will for any reason and to any extent be invalid or
\nunenforceable, the remainder of this Agreement and application of such provision
\nto other persons or circumstances will be interpreted so as reasonably to effect
\nthe intent of the parties hereto. The parties further agree to replace such void
\nor unenforceable provision of this Agreement with a valid and enforceable
\nprovision that will achieve, to the greatest extent possible, the economic,
\nbusiness and other purposes of the void or unenforceable provision.<\/p>\n
13.4 Counterparts. This Agreement may be executed in any number
\nof counterparts, each of which will be an original as regards any party whose
\nsignature appears thereon and all of which together will constitute one and the
\nsame instrument. This Agreement will become binding when one or more
\ncounterparts hereof, individually or taken together, will bear the signatures of
\nall the parties reflected hereon as signatories.<\/p>\n
13.5 Other Remedies. Except as otherwise provided herein, any and
\nall remedies herein expressly conferred upon a party will be deemed cumulative
\nwith and not exclusive of any other remedy conferred hereby or by law on such
\nparty, and the exercise of any one remedy will not preclude the exercise of any
\nother. The parties agree that specific performance is an appropriate remedy for
\na breach of its respective obligations under this Agreement.<\/p>\n
13.6 Amendment and Waivers. Any term or provision of this
\nAgreement may be amended by the parties hereto at anytime by execution of an
\ninstrument in writing signed on<\/p>\n
73
\n 81<\/p>\n
behalf of each of SCO and Caldera. At any time prior to the Closing, the
\nobservance of any term of this Agreement may be waived (either generally or in a
\nparticular instance and either retroactively or prospectively) only by a writing
\nsigned by the party or parties to be bound thereby. The waiver by a party of any
\nbreach hereof or default in the performance hereof will not be deemed to
\nconstitute a waiver of any other default or any succeeding breach or default.
\nDelay in exercising any right under this Agreement shall not constitute a waiver
\nof such right. This Agreement may be amended by the parties hereto at any time
\nbefore or after approval of such party’s stockholders, but, after such approval,
\nno amendment will be made which by applicable law requires the further approval
\nof a party’s stockholders without obtaining such further approval.<\/p>\n
13.7 Expenses. Except as herein expressly provided to the
\ncontrary in this Agreement or the Ancillary Agreements, each party will bear its
\nrespective fees and expenses incurred with respect to the negotiation,
\npreparation and performance of this Agreement and the transactions contemplated
\nhereby.<\/p>\n
13.8 Attorneys’ Fees. Should suit be brought to enforce or
\ninterpret any part of this Agreement, the prevailing party will be entitled to
\nrecover, as an element of the costs of suit and not as damages, reasonable
\nattorneys’ fees to be fixed by the court (including, without limitation, costs,
\nexpenses and fees on any appeal). The prevailing party will be entitled to
\nrecover its costs of suit, regardless of whether such suit proceeds to final
\njudgment.<\/p>\n
13.9 Notices. All notices and other communications pursuant to
\nthis Agreement shall be in writing and deemed to be sufficient if contained in a
\nwritten instrument and shall be deemed given if delivered personally,
\ntelecopied, sent by nationally-recognized overnight courier or mailed by
\nregistered or certified mail (return receipt requested), postage prepaid, to the
\nparties at the following address (or at such other address for a party as shall
\nbe specified by like notice):<\/p>\n
If to SCO to: The SCO, Inc.
\n 425 Encinal
\n Santa Cruz, California<\/p>\n
Attention: Chief Executive Officer
\n and Law and Corporate Affairs
\n Telecopier: (831) 427-5454<\/p>\n
With a copy to: Wilson, Sonsini, Goodrich & Rosati
\n 650 Page Mill Road
\n Palo Alto, California 94304
\n Attention: Michael Danaher
\n Telecopier: (650) 493-6811<\/p>\n
74
\n 82<\/p>\n
And if to Caldera or Newco to: Caldera Systems, Inc.
\n 240 West Center Street
\n Orem, Utah 84057
\n Attention: Chief Executive Officer
\n Telecopier: (801) 765-1313<\/p>\n
With a copy to: Brobeck, Phleger & Harrison LLP
\n 370 Interlocken Boulevard, Suite 500
\n Broomfield, Colorado 80021
\n Attention: John E. Hayes, III
\n Telecopier: (303) 410-2199<\/p>\n
All such notices and other communications shall be deemed to have
\nbeen received (a) in the case of personal delivery, on the date of such
\ndelivery, (b) in the case of a telecopy, when the party receiving such copy
\nshall have confirmed receipt of the communication, (c) in the case of delivery
\nby nationally-recognized overnight courier, on the business day following
\ndispatch, and (d) in the case of mailing, on the third business day following
\nsuch mailing.<\/p>\n
13.10. Construction of Agreement. This Agreement has been
\nnegotiated by the respective parties hereto and its attorneys and the language
\nhereof will not be construed for or against either party. A reference to a
\nSection or an exhibit will mean a Section in, or exhibit to, this Agreement
\nunless otherwise explicitly set forth. The titles and headings herein are for
\nreference purposes only and will not in any manner limit the construction of
\nthis Agreement which will be considered as a whole.<\/p>\n
13.11. No Joint Venture. Nothing contained in this Agreement will
\nbe deemed or construed as creating a joint venture or partnership between any of
\nthe parties hereto. No party is by virtue of this Agreement authorized as an
\nagent, employee or legal representative of any other party. No party will have
\nthe power to control the activities and operations of any other and its status
\nis, and at all times, will continue to be, that of independent contractors with
\nrespect to each other. No party will have any power or authority to bind or
\ncommit any other. No party will hold itself out as having any authority or
\nrelationship in contravention of this Section.<\/p>\n
13.12. Further Assurances. Each party agrees to cooperate fully
\nwith the other parties and to execute such further instruments, documents and
\nagreements and to give such further written assurances as may be reasonably
\nrequested by any other party to evidence and reflect the transactions described
\nherein and contemplated hereby and to carry into effect the intents and purposes
\nof this Agreement and the Ancillary Agreements.<\/p>\n
13.13. Absence of Third Party Beneficiary Rights. Except as
\nprovided in Sections 5.17 and 5.18, no provisions of this Agreement are
\nintended, nor will be interpreted, to provide or create any third party
\nbeneficiary rights of any kind in any holder of the stock of Caldera, Newco, any
\nContributing Company or a member of the Contributed Company Group or any
\nEmployee, client, customer, Affiliate, stockholder, partner or any party hereto
\nor any other person or entity, and, except as so provided, all provisions hereof
\nwill be personal solely between the parties to this Agreement and no other
\nperson or entity shall have any cause of action as a third party beneficiary of
\nthis Agreement.<\/p>\n
75
\n 83<\/p>\n
13.14. Public Announcement. Upon execution of this Agreement,
\nCaldera and SCO promptly will issue a joint press release approved by both
\nparties announcing the Merger and the SCO Transaction. Thereafter, Caldera or
\nSCO may issue such press releases, and make such other disclosures regarding the
\nMerger and the SCO Transaction, as they may each determine (after consultation
\nwith legal counsel) to be required under applicable securities laws or the rules
\nof the Nasdaq Stock Market; Caldera and SCO shall confer with the other party
\nprior to any press release or disclosure relating to the Merger or SCO
\nTransaction.<\/p>\n
13.15. Certain Defined Terms. As used in this Agreement, the
\nfollowing terms shall have the following meanings.<\/p>\n
“2000 Group Balance Sheet” is defined in Section 2.4(c).<\/p>\n
“Affiliate” means, with respect to a specified person, any other
\nperson that directly or indirectly controls, is controlled by, or is under
\ncommon control with, such specified person or which hold at least a 10%
\nownership interest in said person.<\/p>\n
“Agreed Amount” is defined in Section 10.5(c).<\/p>\n
“Ancillary Agreements” means, collectively, the Stockholder
\nAgreement, the Escrow Agreement, the Bills of Transfer, the Sales Representative
\nand Support Agreement, the agreements relating to the Patent Assignment, the
\nCopyright Assignment and the Trademark Assignment, the Web-Top Sublicense and
\nthe Voting Agreements.<\/p>\n
“Assumed Liabilities” is defined in Section 1.4(c)(i).<\/p>\n
“Bills of Transfer” means each of the Bills of Transfer for each
\nrespective jurisdiction for the Contributed Assets and Contributed Companies (or
\nother documents of transfer) to be executed and delivered by the holders of such
\nContributed Assets and Newco or its subsidiaries at the Effective Time in the
\nforms reasonably acceptable to SCO and Newco.<\/p>\n
“CERCLA” is the Comprehensive Environmental Response,
\nCompensation and Liability Act of 1980, 42 U.S.C. Sec. 9601 et seq., as amended.<\/p>\n
“Certificate of Merger” is defined in Recital A.<\/p>\n
“Claim Notice” is defined in Section 10.5(a).<\/p>\n
“Claimed Amount” is defined in Section 10.5(a).<\/p>\n
“Closing” has the meaning specified for such term in Section 1.5.<\/p>\n
“Closing Date” is defined in Section 1.5.<\/p>\n
“Closing Group Account” is defined in Section 4.21.<\/p>\n
“COBRA” is defined in Section 2.8(c).<\/p>\n
76
\n 84<\/p>\n
“Conduct of the Group Business” means the conduct in all material
\nrespects of the Group Business as conducted on the date hereof and at Closing.<\/p>\n
“Contested Amount” is defined in Section 10.5(b).<\/p>\n
“Contributed Assets” shall mean those assets, including real
\nproperty assets, that are owned, leased or licensed by the Contributing
\nCompanies that are (a) listed on Exhibit 13.15A attached hereto, (b)
\nIntellectual Property Rights used in the production, development, support or
\nmarketing of the Group Products, or (c) used in the Group Business, and (d) all
\nContributed Contracts to which any of the Contributing Companies is a party, but
\nin all cases excluding the Excluded Assets.<\/p>\n
“Contributed Companies” means The Santa Cruz Operation Limited;
\nThe Santa Cruz Operation (France) SARL; The Santa Cruz Operation (Deutschland)
\nGmbH; The Santa Cruz Operation (Italia) Srl; The Santa Cruz Operation Pty.
\nLimited; SCO Canada, Co.; The Santa Cruz Operation de Mexico, S. De R.L. De C.
\nV.; The Santa Cruz Operation (Asia) Ltd.; SCO Foreign Sales Corporation; SCO,
\nKabushiki Kaisha; The Santa Cruz Operation Latin America, Inc.; Nihon SCO
\nLimited; SCO do Brazil Limitada; SCO Software (China) Company, Ltd.; and Unix
\nSystem Technologies China Company, Ltd. (USTC).<\/p>\n
“Contributed Company Group” has the meaning in Section 1.4(c)(i).<\/p>\n
“Contributed Company Property” shall mean all of the assets,
\nreal, personal, tangible and intangible, owned, leased, licensed or otherwise
\nheld by any member of the Contributed Company Group.<\/p>\n
“Contributed Contracts” means all agreements, contracts,
\nunderstandings, arrangements, commitments, mortgages, indentures, leases,
\nlicenses, permits, franchises, instruments, notes, bonds, indemnities,
\nguarantees, loan agreements, credit agreements, representations, warranties,
\ndeeds, assignments, powers of attorney, certificates, purchase orders, work
\norders, insurance policies, benefit plans, covenants, assurances or undertakings
\nof any nature which are used in the Group Business including but not limited to
\nthose listed on Exhibit 13.15B attached hereto subject in the case of Joint
\nContributed Agreements to the provisions of Section 4.17, excluding the Excluded
\nAssets.<\/p>\n
“Contributed Stock” means all of the capital stock of the
\nContributed Companies.<\/p>\n
“Contributed Subsidiaries” means the direct or indirect
\nsubsidiaries of the Contributed Companies identified in Exhibit 13.15C attached
\nhereto.<\/p>\n
“Contributing Companies” means SCO and any subsidiary of SCO
\n(other than the Contributed Companies) which may own any interest in the
\nContributed Stock and Assets to be conveyed to Newco or that is liable for any
\nAssumed Liability to be assumed by Newco under the term of this Agreement.<\/p>\n
“Copyright Assignment” means a form of assignment mutually
\nacceptable to Caldera and SCO assigning all copyrights included in the
\nContributed Assets.<\/p>\n
77
\n 85<\/p>\n
“Caldera Assets” are the tangible and intangible, real and
\npersonal assets owned, leased or licensed by Caldera.<\/p>\n
“Caldera Balance Sheet” is defined in Section 3.14.<\/p>\n
“Caldera Business” is the business of Caldera as carried on
\nimmediately prior to the SCO Transaction, including without limitation Caldera’s
\nbusiness of developing, manufacturing, marketing, licensing, distributing,
\nusing, operating, installing, servicing, supporting, maintaining, repairing or
\notherwise using or commercially exploiting all or any aspect of any or all of
\nthe Caldera Products or Caldera Assets.<\/p>\n
“Caldera Closing Price” means the average closing price that
\nCaldera Common Stock for the five day period ending on the trading day prior to
\nthe Closing.<\/p>\n
“Caldera Common Stock” is defined in Section 1.2(a).<\/p>\n
“Caldera Contracts” means all agreements, contracts,
\nunderstandings, arrangements, commitments, mortgages, indentures, leases,
\nlicenses, permits, franchises, instruments, notes, bonds, indemnities,
\nguarantees, loan agreements, credit agreements, representations, warranties,
\ndeeds, assignments, powers of attorney, certificates, purchase orders, work
\norders, insurance policies, benefit plans, covenants, assurances or undertakings
\nof any nature to which Caldera or the Caldera Subsidiaries are a party.<\/p>\n
“Caldera Disclosure Letter” is defined in the preamble of Section
\n3.<\/p>\n
“Caldera Employees” are the employees of Caldera.<\/p>\n
“Caldera Employee Plans” is defined in Section 5.16(a).<\/p>\n
“Caldera Financial Statements” is defined in Section 3.4(b).<\/p>\n
“Caldera Financial Statements Balance Sheet Date” is defined in
\nSection 3.4(b).<\/p>\n
“Caldera Group” is defined in the Preamble of Section 3.<\/p>\n
“Caldera IP Rights” is defined in Section 3.15(a).<\/p>\n
“Caldera IP Rights Agreements” is defined in Section 3.15(c).<\/p>\n
“Caldera’s Knowledge” or “Known to Caldera”. A particular fact or
\nother matter shall be deemed to be within “Caldera’s Knowledge” or “Known to
\nCaldera” if any officer of Caldera has current actual knowledge of such fact or
\nother matter.<\/p>\n
“Caldera Options” is defined in Section 1.2(b)(i).<\/p>\n
“Caldera Percentage Interest” means 72% of the fully diluted
\nequity interest in Newco (taking into account all options, warrants and
\nconvertible debentures on an as-converted basis).<\/p>\n
78
\n 86<\/p>\n
“Caldera Permitted Encumbrance” means Encumbrances (a) as
\ndisclosed as an Encumbrance in the Caldera Disclosure Schedule (b) Encumbrances
\nfor liabilities reflected in the Caldera Financial Statements, (c) liens for
\ncurrent taxes not yet delinquent, (d) liens imposed by law and incurred in the
\nordinary course of business to carriers, warehousemen, laborers, material men
\nand the like not yet due, (e) immaterial imperfections of title set forth in the
\nCaldera Disclosure Letter (f) Encumbrances which are not material in amount or
\nwhich will not materially interfere with the use of the Caldera Assets for the
\nConduct of the Caldera Business.<\/p>\n
“Caldera Plans” is defined in Section 1.2(b)(i).<\/p>\n
“Caldera Products” means the operating system software and other
\nproducts marketed or sold by Caldera and all of software products currently
\nunder development by or for Caldera or for use or sale or license by Caldera (in
\neach case together with all of the software, products, and other items listed on
\nCaldera’s products price list) and all derivative works, upgrades,
\nmodifications, enhancements and configurations of any of the foregoing and all
\nsoftware and components included in any configuration of any of the foregoing,
\nand all development tools, utilities and diagnostics used to develop any of the
\nforegoing in each case (whether or not ever commercially offered or
\nprice-listed, and whether or not in development).<\/p>\n
“Caldera Ratio” is defined in Section 1.2(a).<\/p>\n
“Caldera Restrictive Agreements” is defined in Section 3.23.<\/p>\n
“Caldera SEC Documents” is defined in Section 3.4(a).<\/p>\n
“Caldera Significant Stockholder” means Ray Noorda, The Canopy
\nGroup, Inc. And MTI Technology Corporation.<\/p>\n
“Caldera Stock Purchase Plan” is defined in Section 1.2(b)(ii).<\/p>\n
“Caldera Stock Purchase Plan Rights” is defined in Section
\n1.2(b)(ii).<\/p>\n
“Caldera Stockholder Approval” is defined in Section 5.20(b).<\/p>\n
“Caldera Subsidiary” shall mean any direct or indirect subsidiary
\nof Caldera listed on Exhibit 13.15G attached hereto.<\/p>\n
“Caldera Surviving Corporation” is defined in Section 1.9.<\/p>\n
“Delaware Law” means the Delaware General Corporation Law, as in
\neffect from time to time.<\/p>\n
“Disposal,” “release,” and “threatened release” shall have the
\ndefinitions assigned thereto by the CERCLA.<\/p>\n
“Dollars” or “$” means U.S. dollars.<\/p>\n
79
\n 87<\/p>\n
“Effective Time” shall mean the effective time and date that the
\nCertificate of Merger is deemed filed with the Secretary of State of the State
\nof Delaware in accordance with the relevant provisions of the Delaware Law.<\/p>\n
“Employee” and “Employees” is defined in Section 11.1(a).<\/p>\n
“Employee Benefit Plan” is defined in Section 2.8(a).<\/p>\n
“Encumbrance” means any pledge, lien, collateral assignment,
\nsecurity interest, mortgage, deed of trust, title retention, conditional sale or
\nother security arrangement, or any charge, adverse claim of title, ownership or
\nuse, or any other encumbrance of any kind.<\/p>\n
“Environmental Damage” means any actual or alleged Liability
\n(including without limitation Liability for investigatory costs, cleanup costs,
\ngovernmental response costs, natural resources damages, property damages,
\npersonal injuries or penalties) arising out of, based on or relating to (i) the
\npresence, discharge, emission or release into the environment of any Hazardous
\nSubstance or (ii) facts or circumstances forming the basis of any violation, or
\nalleged violation, of any Environmental Law.<\/p>\n
“Environmental Laws” means all federal, state, provincial, local
\nand international laws and regulations relating to pollution, the protection of
\nhuman health or the environment (including without limitation ambient air,
\nsurface water, ground water, land surface or subsurface strata), including
\nwithout limitation laws and regulations relating to emissions, discharges,
\nreleases or threatened releases of Hazardous Substances, or otherwise relating
\nto the manufacture, processing, distribution, use, treatment, storage, disposal,
\ntransport or handling of Hazardous Substances.<\/p>\n
“ERISA” means the Employee Retirement Income Security Act of
\n1974, as amended, and the rulings and regulations promulgated thereunder.<\/p>\n
“Escrow Agreement” is defined in Section 1.3(b).<\/p>\n
“Escrow Shares” is defined in Section 1.3(b).<\/p>\n
“Exchange Act” is the Security Exchange Act of 1934, as amended.<\/p>\n
“Excluded Assets” is defined in Section 1.4(b).<\/p>\n
“Excluded Liabilities” is defined in Section 1.4(c)(ii).<\/p>\n
“Final Date” is defined in the last paragraph of Section 8.1.<\/p>\n
“Final List” is defined in Section 12.1(a).<\/p>\n
“First SCO Certificate” is defined in Section 1.3(a)(i).<\/p>\n
“Foreign Employee Plans” is defined in Section 2.8(h).<\/p>\n
80
\n 88<\/p>\n
“Form S-4” is defined in Section 1.14.<\/p>\n
“Form S-8” is defined in Section 1.7.<\/p>\n
“Former Employees” is defined in Section 11.2(b).<\/p>\n
“GAAP” means United States generally accepted accounting
\nprinciples and practices as in effect from time to time and applied consistently
\nthroughout the periods involved.<\/p>\n
“Governmental Antitrust Authority” means any federal, state,
\nlocal or non-U.S. governmental or quasi-governmental authority charged with the
\nadministration or enforcement of antitrust, competition or merger control laws
\nor regulations.<\/p>\n
“Governmental Permits” means all municipal, state, local, federal
\nand other governmental franchises, permits, licenses, agreements, waivers and
\nauthorizations from, issued or granted by, any jurisdiction.<\/p>\n
“Group Assets” shall mean the Contributed Assets and all
\nContributed Company Property, considered collectively.<\/p>\n
“Group Benefit Arrangements” is defined in Section 2.8(a).<\/p>\n
“Group Business” means the business of SCO and its direct and
\nindirect subsidiaries with respect to (i) the Group Products, as reflected in
\nthe 2000 Group Balance Sheet, including without limitation the business of
\ndeveloping, manufacturing, marketing, licensing, distributing, using, operating,
\ninstalling, servicing, supporting, maintaining, repairing or otherwise using or
\ncommercially exploiting all or any aspect of any or all of the Group Products or
\nof any Intangible Assets or Intellectual Property Rights related to any of the
\nGroup Products, and (ii) the professional services division, but excluding the
\nSCO Retained Business.<\/p>\n
“Group Employee Plans” is defined in Section 2.8(a).<\/p>\n
“Group Financial Statements” has the meaning given in Section
\n2.4(c).<\/p>\n
“Group Financial Statements Balance Sheet Date” is defined in
\nSection 2.4(c).<\/p>\n
“Group Governmental Permits” means those Governmental Permits
\nrequired for the Conduct of the Group Business (including without limitation the
\nmanufacture or sale of the Group Products) that are held by any member of the
\nContributed Company Group or held, in whole or in part, primarily by a
\nContributing Company and required for the Conduct of the Group Business, or
\nnecessary for the use or operation of any of the Group Assets (including without
\nlimitation the Real Property Assets) or the manufacture or sale of any of the
\nGroup Products, to the extent legally transferable in accordance with this
\nAgreement.<\/p>\n
“Group Permitted Encumbrance” means Encumbrances (a) as disclosed
\nas an encumbrance in Exhibit 13.15E attached hereto (b) Encumbrances for
\nLiabilities reflected in the Group Financial Statements, (c) liens for taxes not
\nyet delinquent, (d) liens imposed by law and incurred in the ordinary course of
\nbusiness to carriers, warehousemen, laborers, material men and<\/p>\n
81
\n 89<\/p>\n
the like not yet due and payable, (e) immaterial imperfections of title set
\nforth in the SCO Disclosure Letter (f) Encumbrances which are not material in
\namount or which will not materially interfere with the use of the Group Assets
\nfor the Conduct of the Group Business.<\/p>\n
“Group Persons” is defined in Section 5.18(a).<\/p>\n
“Group Products” means the operating system software and other
\nproducts listed in the Group product list attached hereto as Exhibit 13.15D
\nmarketed or sold by any member of the Contributed Company Group or the
\nContributing Companies and all software under development for or licensed by the
\nGroup Business (together with all derivative works, upgrades, modifications,
\nenhancements and configurations of any of the foregoing now existing or under
\ndevelopment and all software and components included in any configuration of any
\nof the foregoing, and all development and QA tools, utilities and diagnostics
\nused to develop any of the foregoing, in each case whether or not ever
\ncommercially offered or price-listed, and whether or not in development).<\/p>\n
“Group Restrictive Agreements” is defined in Section 2.23.<\/p>\n
“Hazardous Materials” means: (i) any pollutant, contaminant,
\ntoxic, hazardous or noxious substance or waste which is regulated by the laws of
\nany state, local, provincial, federal or other governmental authority or
\njurisdiction, and includes but is not limited to (a) any oil or petroleum
\ncompounds, flammable substances, explosives, radioactive materials, or any other
\nmaterials or pollutants which pose a hazard to persons or cause any real
\nproperty to be in violation of any Environmental Laws, (b) to the extent so
\nregulated, asbestos or any asbestos-containing material of any kind or
\ncharacter, (c) polychlorinated biphenyls, as regulated by the Toxic Substances
\nControl Act, 15 U.S.C. sec. 2601 et seq., (or equivalent or similar legislation
\nin other relevant jurisdictions) (d) any material or substances designated as
\n“hazardous substances” pursuant to (1) Section 311 of the Clean Water Act, 33
\nU.S.C. sec. 1251 et seq., (or equivalent or similar legislation in other
\nrelevant jurisdictions) or (2) Section 101 of CERCLA, (or equivalent or similar
\nlegislation in other relevant jurisdictions) (e) “chemical substance,” “new
\nchemical substance,” or “hazardous chemical substance or mixture” pursuant to
\nSections 3, 6 and 7 of the Toxic Substances Control Act, 15 U.S.C. sec. 2601 et
\nseq., (or equivalent or similar legislation in other relevant jurisdictions) and
\n(f) any “hazardous waste” pursuant to Section 1004 of the Resource Conservation
\nand Recovery Act, 42 U.S.C. sec. 6901 et seq. (or equivalent or similar
\nlegislation in other relevant jurisdictions)<\/p>\n
“HSR ACT” means the Hart-Scott-Rodino Antitrust Improvements Act
\nof 1976, as amended, and the rules and regulations promulgated thereunder.<\/p>\n
“Indemnified Parties” is defined in Section 5.17(c).<\/p>\n
“Indemnitee” is defined in Section 10.5(a).<\/p>\n
“Insolvency Action” means, with respect to a person, any or all
\nof the following: (i) the voluntary or involuntary filing, with respect to such
\nperson, of a petition for relief, or any other effort to seek relief, under any
\nInsolvency Proceeding; (ii) such person or any of its assets otherwise becoming
\nthe subject of an Insolvency Proceeding; (iii) the formal or informal<\/p>\n
82
\n 90<\/p>\n
dissolution, liquidation or winding up of such person, or any efforts to
\ninitiate or carry out such dissolution, liquidation or winding up; (iv) the
\nappointment of (or efforts or attempts to appoint) a receiver, liquidator,
\nsequestrator, trustee, custodian or other similar officer with respect to such
\nperson or any part of its assets or properties; or (v) any composition of the
\nindebtedness of such person or any assignment for the benefit of such person’s
\ncreditors.<\/p>\n
“Insolvency Proceeding” means any or all of the following
\nactions, events or proceedings: (i) any voluntary or involuntary case, contested
\nmatter or other proceeding under the United States Bankruptcy Code, as amended,
\nand any successor law or laws thereto; or (ii) any case, action or other
\nproceeding under any bankruptcy, insolvency, debt reorganization or similar law
\n(whether now or hereafter in effect) of any state, country or other
\njurisdiction.<\/p>\n
“Intangible Assets” means, collectively, all intangible assets,
\nproperties and rights required for the development of the Group Products,
\nconstituting software (in both source code and binary code form), technology,
\nworks of authorship, manuals, logbooks, notebooks, user’s guides, programmers’
\nnotes, documentation, know-how, trade secrets and training materials (for both
\ntraining of customers and of service personnel).<\/p>\n
“Intellectual Property Rights” means, collectively, all of the
\nfollowing worldwide intangible legal rights including those existing or acquired
\nby ownership, license or other legal operation, whether or not filed, perfected,
\nregistered or recorded and whether now or hereafter existing, filed, issued or
\nacquired: (i) patents, patent applications, and patent rights, including any and
\nall continuations, continuations-in-part, divisions, reissues, reexaminations or
\nextensions thereof; (ii) inventions (whether patentable or not in any country),
\ninvention disclosures, industrial designs, improvements, trade secrets,
\nproprietary information, know-how, technology and technical data; (iii) rights
\nassociated with works of authorship (including without limitation audiovisual
\nworks), including without limitation copyrights, copyright applications and
\ncopyright registrations, moral rights, database rights, mask work rights, mask
\nwork applications and mask work registrations; (iv) rights in trade secrets
\n(including without limitation rights in industrial property, customer, vendor
\nand prospect lists and all associated information or databases and other
\nconfidential or proprietary information), and all rights relating to the
\nprotection of the same including without limitation rights under nondisclosure
\nagreements; (v) any other proprietary rights in technology, including software,
\nall source and object code, algorithms, architecture, structure, display
\nscreens, layouts, inventions, development tools and all documentation and media
\nconstituting, describing or relating to the above, including, without
\nlimitation, manuals, memoranda, records, business information, or trade marks,
\ntrade dress or names, anywhere in the world; (vi) any rights analogous to those
\nset forth in the preceding clauses and any other proprietary rights relating to
\nintangible property, including without limitation brand names, trademarks,
\nservice marks, domain names, trademark and service mark registrations and
\napplications therefor, trade names, rights in trade dress and packaging and all
\ngoodwill associated with the same; and (vii) all rights to sue or make any
\nclaims for any past, present or future infringement, misappropriation or
\nunauthorized use of any of the foregoing rights and the right to all income,
\nroyalties, damages and other payments that are now or may hereafter become due
\nor payable with respect to any of the foregoing rights, including without
\nlimitation damages for past, present or future infringement, misappropriation or
\nunauthorized use thereof; and (viii) rights under license agreements for the
\nforegoing.<\/p>\n
83
\n 91<\/p>\n
“Intercompany Accounts” means the net amounts payable by or owing
\nto the Group Business as of the Effective Time as a consequence of the Conduct
\nof the Group Business, in the ordinary course, (i) pursuant any general services
\nagreement between the Contributed Company Group, on the one hand, and SCO and
\nits direct or indirect subsidiaries (other than the Contributed Company Group)
\non the other hand, or (ii) as a consequence of reimbursements by SCO of amounts
\npaid by it for the Conduct of the Business in the ordinary course; provided,
\nhowever that in no event shall the Group Business be responsible for amounts
\nattributable to the SCO Retained Business.<\/p>\n
“Interim Period” is defined in Section 12.5(h).<\/p>\n
“Internal Revenue Code” means the Internal Revenue Code of 1986,
\nas amended, and the rulings and regulations promulgated thereunder.<\/p>\n
“Joint Contributed Agreements” is defined in Section 4.17.<\/p>\n
“Key Employees” means those individuals identified in Exhibit
\n4.18A attached hereto.<\/p>\n
“Key Employee Term Sheets” means the Key Employee Term Sheets in
\nthe form attached hereto as Exhibit 4.18B.<\/p>\n
“Liabilities” (or when used with reference to a single item
\ndescribed below, “Liability”) means debts, liabilities and obligations (whether
\npecuniary or not, including without limitation obligations to perform or forbear
\nfrom performing acts or services), fines or penalties, whether accrued or fixed,
\nabsolute or contingent, matured or unmatured, determined or determinable, known
\nor unknown, including without limitation those arising under any law, action or
\ngovernmental order, liabilities for Taxes and those arising under any contract,
\nagreement, arrangement, commitment or undertaking of any kind whatsoever
\n(whether written or oral, express or implied), including, without limitation,
\nthose arising under any Contributed Contract.<\/p>\n
“Loss” means and includes any and all Liability, loss, damage,
\nclaim, expense, cost, fine, fee, penalty, obligation, or injury, including,
\nwithout limitation, those resulting from any and all claims, actions, suits,
\ndemands, assessments, investigations, judgments, orders, awards, arbitrations,
\nsettlements or other proceedings, together with reasonable costs and expenses,
\nincluding the reasonable attorneys’ and experts’ fees, court costs, arbitration
\ncosts, filing fees and other legal costs and expenses relating thereto, together
\nwith interest accrued on each of the foregoing amounts from the date the same
\nwas incurred at the lower of (i) the prime rate as published by The Wall Street
\nJournal or (ii) the highest rate of interest permitted under applicable law;
\nprovided, however, that in determining the amount of any Loss, there shall be
\ndeducted any Tax overlaps attributable to the events giving rise to the Loss.<\/p>\n
“Material Adverse Effect on Caldera” means any event, change or
\neffect would have a material adverse effect on the business, tangible and
\nintangible assets, financial condition, and results of operations of Caldera and
\nthe Caldera Subsidiaries, Caldera together with the Caldera Subsidiaries, as a
\nwhole, or prevent in any material respect the performance by Caldera<\/p>\n
84
\n 92<\/p>\n
and its subsidiaries of the actions anticipated by this Agreement and the
\nAncillary Agreements to be taken by them on or before the Closing; provided
\nhowever that none of the following shall be deemed to be a Material Adverse
\nEffect on Caldera: (i) changes in market price or trading volume of Caldera
\ncommon stock or (b) changes attributable to the public announcement or pendency
\nof the transactions contemplated hereby.<\/p>\n
“Material Adverse Effect on Newco” means any event, change or
\neffect would have a material adverse effect on the business, tangible and
\nintangible assets, financial condition, and future operations of Newco and its
\nsubsidiaries, Newco together with its subsidiaries as a whole, after the
\nEffective Time or prevent in any material respect Newco from taking the actions
\nanticipated by this Agreement and the Ancillary Agreements to be taken by Newco
\nand its subsidiaries on and after the Effective Time.<\/p>\n
“Material Adverse Effect on the Group Business” means any event,
\nchange or effect which would have a material adverse effect on the business,
\ntangible and intangible assets, financial condition, and results of operations
\nof the Group Business, taking such Group Business as a whole, or prevent in any
\nmaterial respect the performance by SCO and its subsidiaries of the actions
\nanticipated by this Agreement and the Ancillary Agreements to be taken by them
\non or before the Closing; provided however that none of the following shall be
\ndeemed to be a Material Adverse Effect on the Group Business: (i) changes in
\nmarket price or trading volume of SCO common stock or (b) changes attributable
\nto the public announcement or pendency of the transactions contemplated hereby.<\/p>\n
“Material Contributed Contracts” is defined in the Preamble of
\nSection 2.11.<\/p>\n
“Material Caldera Contracts” is defined in Section 3.11.<\/p>\n
“Merger” is defined in Recital A.<\/p>\n
“Merger Sub” is defined in Recital A.<\/p>\n
“Multiemployer Plan” is defined in Section 2.8(b).<\/p>\n
“Multiple Employer Plan” is defined in Section 2.8(b).<\/p>\n
“Newco” means Caldera Holding Inc., a Delaware corporation.<\/p>\n
“Newco Common Stock” is defined in Recital A.<\/p>\n
“Newco Offer” is defined in Recital A.<\/p>\n
“Newco Options” is defined in Recital A.<\/p>\n
“Newco Plans” is defined in Section 1.6.<\/p>\n
“Newco Rights Agreement” is defined in Section 1.12.<\/p>\n
“Nondisclosure Agreement” is defined in Section 4.9.<\/p>\n
85
\n 93<\/p>\n
“Omitted Balance Sheet Liabilities” is defined in Section
\n10.1(e).<\/p>\n
“Optionees” is defined in Recital A.<\/p>\n
“Patent Assignment” is defined in Section 7.15.<\/p>\n
“Person” means any individual, partnership, limited liability
\ncompany, firm, corporation, association, trust, unincorporated organization or
\nother entity, as well as any syndicate or group that would be deemed to be a
\nperson under Section 13(d)(3) of the Securities Exchange Act of 1934, as
\namended.<\/p>\n
“Post-Closing Period” is defined in Section 12.5(b).<\/p>\n
“Potential Employee” is defined in Section 11.1.<\/p>\n
“Pre-Closing Period” is defined in Section 12.5(b).<\/p>\n
“Preliminary List” is defined in Section 11.1(a).<\/p>\n
“Prospectus” is defined in Section 5.6.<\/p>\n
“Prospectus\/Proxy Statement” is defined in Section 1.14.<\/p>\n
“Real Property Assets” shall mean all real property assets
\nrequired for the Conduct of the Group Business.<\/p>\n
“Representing SCO Entities” is defined in the Preamble of Section
\n2.<\/p>\n
“Response Notice” is defined in Section 10.5(b).<\/p>\n
“Returns” is defined in Section 12.1.<\/p>\n
“SEC” is the Securities and Exchange Commission.<\/p>\n
“Securities Act” is the Securities Act of 1933, as amended.<\/p>\n
“Shared Contributed Contracts” is defined in Section 4.17.<\/p>\n
“Solvent” shall mean, with respect to any person on a particular
\ndate, that on such date (a) the fair value of the property of such person is
\ngreater than the total amount of liabilities, including contingent liabilities,
\nof such person; (b) the present fair salable value of the assets of such person
\nis not less than the amount that will be required to pay the probable liability
\nof such person on its debts as they become absolute and matured; (c) such person
\ndoes not intend to, and does not believe that it will, incur debts or
\nliabilities beyond such person’s ability to pay as such debts and liabilities
\nmature; and (d) such person is not engaged in a business or transaction, and is
\nnot about to engage in a business or transaction, for which such person’s
\nproperty would constitute an unreasonably small capital. The amount of
\ncontingent liabilities (such as litigation, guarantees and pension plan
\nliabilities) at any time shall be computed as the amount that, in light<\/p>\n
86
\n 94<\/p>\n
of all the facts and circumstances existing at the time, represents the amount
\nthat can reasonably be expected to become an actual or matured liability.<\/p>\n
“Stock Rights” is defined in Section 1.7.<\/p>\n
“Stockholder Agreement” is defined in Section 4.18.<\/p>\n
“SCO” means The SCO, Inc., a Delaware corporation.<\/p>\n
“SCO Alternative Proposal” is defined in Section 4.14(a).<\/p>\n
“SCO Closing Price” means the average closing price of SCO Common
\nStock for the five day period ending on the trading day prior to the Closing.<\/p>\n
“SCO Consolidated Financial Statements” is defined in Section
\n2.4(b).<\/p>\n
“SCO Consolidated Financial Statements Balance Sheet” is defined
\nin Section 2.4(b).<\/p>\n
“SCO Disclosure Letter” is defined in Section 2.<\/p>\n
“SCO IP Rights” is defined in Section 2.15(a).<\/p>\n
“SCO IP Rights Agreements” is defined in Section 2.15(c).<\/p>\n
“SCO’s Knowledge” or “Known to SCO.” A particular fact or other
\nmatter shall be deemed to be within “SCO’s Knowledge” or “Known to SCO” if any
\nexecutive officer of SCO or a Contributed Company or any executive officer of
\nSCO responsible for the Group Business has current actual knowledge of such fact
\nor other matter after reasonable investigation.<\/p>\n
“SCO Options” is defined in Section 1.3(ii).<\/p>\n
“SCO Per Share Value” is defined in Section 1.3(a)(ii).<\/p>\n
“SCO Percentage Interest” means a fully diluted equity interest
\nin Newco (taking into account all options, warrants and convertible debentures
\non an as-converted basis) equal to 100% less the Caldera Percentage Interest.<\/p>\n
“SCO Ratio” is defined in Section 1.3(a)(ii).<\/p>\n
“SCO Retained Business” means the business of SCO that does not
\nconstitute the Group Business consisting of the Tarantella business.<\/p>\n
“SCO SEC Documents is defined in Section 2.4(a).<\/p>\n
“SCO Stockholder Rejection” is defined in Section 8.1(h).<\/p>\n
“SCO Transaction” shall have the meaning described in Recital A
\nhereto.<\/p>\n
87
\n 95<\/p>\n
“Tax” or “Taxes” means all taxes of any kind whatsoever (whether
\npayable directly or by withholding), including without limitation franchise,
\nincome, gross receipts, personal property, real property, ad valorem, value
\nadded, sales, use, documentary, stamp, intangible personal property, withholding
\nor other taxes, together with any interest and penalties, additions to tax or
\nadditional amounts with respect thereto imposed by any taxing authority.<\/p>\n
“Termination Fee” is defined in Section 8.4(a)(i).<\/p>\n
“Threshold Amount” is defined in Section 10.1(e).<\/p>\n
“Trademark Assignment” is defined in Section 7.15.<\/p>\n
“Transaction Taxes” is defined in Section 12.1.<\/p>\n
“UK” means the United Kingdom of Great Britain and Northern
\nIreland.<\/p>\n
“Unforeseen Tax Liabilities” is defined in Section 10.1(e).<\/p>\n
“Voting Agreement” is defined in Section 5.15.<\/p>\n
“WebTop Sublicense” means a mutually agreeable license agreement
\nbetween SCO and Caldera providing for the license of the WebTop Product from
\nCaldera to SCO.<\/p>\n
13.16. Entire Agreement. This Agreement and the exhibits hereto
\nconstitute the entire understanding and agreement of the parties hereto with
\nrespect to the subject matter hereof and supersede all prior and contemporaneous
\nagreements or understandings, inducements or conditions, express or implied,
\nwritten or oral, between the parties with respect hereto other than the
\nNondisclosure Agreement, which shall remain in full force and effect. The
\nexpress terms hereof control and supersede any course of performance or usage of
\nthe trade inconsistent with any of the terms hereof.<\/p>\n
[REMAINDER OF PAGE LEFT BLANK]<\/p>\n
88
\n 96<\/p>\n
IN WITNESS WHEREOF, the parties hereto have executed this
\nAgreement and Plan of Reorganization as of the date first above written.<\/p>\n
THE SANTA CRUZ OPERATION, INC.
\n a California corporation<\/p>\n
By: \/s\/ Douglas Michels
\n —————————————
\n Douglas Michels
\n President and Chief Executive Officer<\/p>\n
CALDERA SYSTEMS, INC.
\n a Delaware corporation<\/p>\n
By: \/s\/ Ransom Love
\n —————————————
\n Ransom Love
\n President and Chief Executive Officer<\/p>\n
CALDERA HOLDING INC.
\n a Delaware corporation<\/p>\n
By: \/s\/ Ransome Love
\n —————————————
\n Ransom Love
\n President and Chief Executive Officer<\/p>\n
[SIGNATURE PAGE TO AGREEMENT AND PLAN OF REORGANIZATION]<\/p>\n
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