{"id":43727,"date":"2015-09-17T11:25:58","date_gmt":"2015-09-17T16:25:58","guid":{"rendered":"https:\/\/content.findlaw-admin.com\/ability-legal\/contracts\/uncategorized\/stock-purchase-and-sale-agreement-lineo-inc-and-caldera.html"},"modified":"2015-09-17T11:25:58","modified_gmt":"2015-09-17T16:25:58","slug":"stock-purchase-and-sale-agreement-lineo-inc-and-caldera","status":"publish","type":"corporate_contracts","link":"https:\/\/corporate.findlaw.com\/contracts\/planning\/stock-purchase-and-sale-agreement-lineo-inc-and-caldera.html","title":{"rendered":"Stock Purchase and Sale Agreement &#8211; Lineo Inc. and Caldera Systems Inc."},"content":{"rendered":"<pre>\n                        STOCK PURCHASE AND SALE AGREEMENT\n\n\n      THIS STOCK PURCHASE AND SALE AGREEMENT (this 'Agreement') is made and\nentered into as of this 6th day of January, 2000 by and between Lineo, Inc., a\nUtah corporation ('Lineo'), and Caldera Systems, Inc., a Utah corporation\n('Caldera Systems').\n\n      WHEREAS, Lineo and Caldera Systems have agreed in principle to provide\neach other with certain marketing and other services pursuant to a strategic\nalliance agreement, and Lineo and Caldera Systems each wishes to purchase from\nthe other shares of common stock;\n\n      NOW THEREFORE, in consideration of the foregoing and the mutual covenants\nand agreements hereinafter set forth, the parties hereto agree as follows:\n\nSECTION 1.  PURCHASE AND SALE OF SHARES\n\n1.1   PURCHASE OF LINEO STOCK.\n\n      Upon the terms and subject to the conditions herein, in reliance on the\nrepresentations and warranties set forth in Sections 2 and 4 hereof, Caldera\nSystems hereby purchases from Lineo, and Lineo hereby issues and sells to\nCaldera Systems 3,238,437 shares of the Common Stock of Lineo, representing\n16.75% of the issued and outstanding shares of capital stock of Lineo on a\nfully-diluted basis as of the date hereof (the 'Lineo Shares').\n\n1.2   PURCHASE OF CALDERA SYSTEMS STOCK.\n\n      Upon the terms and subject to the conditions herein, in reliance on the\nrepresentations and warranties set forth in Sections 3 and 4 hereof, Lineo\nhereby purchases from Caldera Systems, and Caldera Systems hereby issues and\nsells to Lineo, 1,250,000 shares of the Common Stock of Caldera Systems,\nrepresenting 3.35% of the issued and outstanding shares of capital stock of\nCaldera Systems on a fully-diluted basis as of the date hereof (the 'Caldera\nSystems Shares').\n\n1.3   CLOSING.\n\n      The closing of the purchases and sales of the Lineo Shares and the Caldera\nSystems Shares contemplated by Sections 1.1 and 1.2 above (the 'Closing') shall\ntake place at 10:00 a.m. on the date hereof, or at such other time and date as\nthe parties hereto mutually agree (the 'Closing Date').\n\nSECTION 2.  REPRESENTATIONS AND WARRANTIES OF LINEO\n\n      In order to induce Caldera Systems to enter into this Agreement, Lineo\nrepresents and warrants to Caldera Systems the following, except as set forth on\na Schedule of Exceptions furnished by Lineo to Caldera Systems (the 'Lineo\nSchedule of Exceptions'), specifically identifying the relevant subparagraph(s)\nhereof, which exceptions shall be deemed to be representations and warranties as\nif made hereunder:\n\n2.1   ORGANIZATION AND CORPORATE POWER.\n\n      Lineo is a corporation duly organized and validly existing under the laws\nof the State of Utah, and is qualified to do business as a foreign corporation\nin each jurisdiction in which the failure to be so qualified would have a\nmaterial adverse effect on its assets, liabilities, financial condition,\nbusiness, or results of\n\n\n   2\noperations (a 'Material Adverse Effect'). Lineo has all required corporate power\nand corporate authority to carry on its business as presently conducted, to\nenter into and perform this Agreement and the agreements contemplated hereby to\nwhich it is a party and to carry out the transactions contemplated hereby and\nthereby, including the issuance of the Lineo Shares. Lineo is not in material\nviolation of any term of its Articles of Incorporation (the 'Lineo Articles of\nIncorporation'), or Bylaws (the 'Lineo Bylaws').\n\n2.2   AUTHORIZATION AND NON-CONTRAVENTION.\n\n      The execution, delivery and performance by Lineo of this Agreement and\neach other agreement, document and instrument to be executed and delivered by\nLineo pursuant to or as contemplated by this Agreement, including, without\nlimitation, the issuance and delivery of the Lineo Shares, have been duly\nauthorized, by all necessary corporate action on behalf of Lineo. This Agreement\nand each such other agreement, document, and instrument, when executed and\ndelivered, will constitute valid and binding obligations of Lineo, enforceable\nin accordance with their respective terms, except as may be limited by\napplicable law and public policy and subject to (i) applicable bankruptcy,\ninsolvency, reorganization, moratorium and other laws of general application\naffecting enforcement of creditors' rights generally and (ii) general principles\nof equity and\/or laws relating to the availability of specific performance,\ninjunctive relief or other equitable remedies, whether such enforceability is\nconsidered in a proceeding in equity or at law. The execution and delivery by\nLineo of this Agreement and each other agreement, document and instrument to be\nexecuted and delivered by Lineo pursuant hereto or as contemplated hereby and\nthe performance by Lineo of the transactions contemplated hereby and thereby,\nincluding, without limitation, the offer, sale, issuance and delivery of the\nLineo Shares, do not and will not: (A) violate, conflict with or result in a\ndefault (whether after the giving of notice, lapse of time or both) under any\nmaterial contract, mortgage, indenture, contract, instrument or obligation to\nwhich Lineo is a party or by which it or its assets are bound, or any provision\nof the Lineo Articles of Incorporation or Lineo Bylaws, or cause the creation of\nany material lien, charge or encumbrance upon any of the assets of Lineo; (B) to\nLineo's knowledge, violate or result in a violation of, or constitute a default\nunder, any provision of any material law, regulation or rule, or any judgment,\norder, writ, decree or statute of, or any restriction imposed by, any court or\ngovernmental agency applicable to Lineo; (C) require from Lineo any notice to,\ndeclaration or filing with, or consent or approval of any governmental authority\nor third party other than such filings as have been made prior to the Closing\nand\/or as may be required to secure an exemption from qualification of the offer\nand sale of the Lineo Shares under the Securities Act of 1933, as amended (the\n'Securities Act'), and applicable state securities and blue sky laws; or (D)\naccelerate any obligation under, or give rise to a right of termination,\nsuspension, revocation or impairment of, any material agreement, permit, license\nor authorization applicable to any of Lineo's, operations, assets or properties,\nor by which Lineo is bound.\n\n2.3   CAPITALIZATION.\n\n      As of the Closing, the authorized capital stock of Lineo will consist of\n100,000,000 shares of Common Stock, of which 18,000,000 shares will be issued\nand outstanding. As of the Closing, other than the shares described in the\npreceding sentence and options to purchase 1,333,950 shares of the common stock\nof Lineo granted to employees and members of the Board of Directors of Lineo\npursuant to Lineo's Stock Option Plan, Lineo has not issued any warrants,\noptions, rights (including, without limitation, conversion or preemptive rights\nand rights of first refusal), proxy or stockholder agreements or agreements of\nany kind for the purchase or acquisition from Lineo of any shares of capital\nstock or other securities, including, without limitation, any securities\nconvertible into or exercisable or exchangeable for such shares or any warrants,\noptions or other rights to acquire any such convertible securities. As of the\nClosing, and after giving effect to the transactions contemplated hereby, all of\nthe outstanding shares of capital stock of Lineo and each of its Subsidiaries\nwill have been duly and validly authorized and issued, fully paid and\nnonassessable and not subject to any preemptive rights and will have been\noffered, issued, sold and delivered\n\n\n   3\nin compliance with applicable federal and state securities laws. There are no\npreemptive rights, rights of first refusal, put or call rights or obligations or\nanti-dilution rights with respect to the issuance, sale or redemption of Lineo's\ncapital stock or other securities. Lineo is not a party or subject to any\nagreement or understanding, and, to the best of Lineo's knowledge, there is no\nagreement or understanding between any persons that affects or relates to the\nvoting or giving of written consents with respect to any security or the voting\nby a director of Lineo.\n\n2.4   VALID ISSUANCE OF LINEO SHARES.\n\n      The Lineo Shares, when issued, sold and delivered in accordance with the\nterms of this Agreement for the consideration expressed herein, will be duly and\nvalidly issued, fully paid and non-assessable, and will be free of restrictions\non transfer other than restrictions on transfer under this Agreement and under\napplicable state and federal securities laws.\n\n2.5   SUBSIDIARIES.\n\n      Lineo does not own or control, directly or indirectly, any interest in any\nother corporation, partnership, limited liability company, association or other\nbusiness entity. Lineo is not a participant in any joint venture, partnership or\nsimilar arrangement.\n\n2.6   CONTRACTS AND OTHER COMMITMENTS.\n\n      Lineo has not and\/or is not bound by any contract, agreement, lease,\ncommitment, or proposed transaction, judgment, order, writ or decree, written or\noral, absolute or contingent, other than contracts entered into in the ordinary\ncourse of business. For the purpose of this paragraph, employment and consulting\ncontracts and license agreements and any other agreements relating to Lineo's\nacquisition or disposition of Intellectual Property (other than standard\nend-user license agreements) shall not be considered to be contracts entered\ninto in the ordinary course of business.\n\n2.7   RELATED-PARTY TRANSACTIONS.\n\n      No employee, officer, stockholder or director of Lineo or member of his or\nher immediate family is indebted to Lineo, nor is Lineo indebted (or committed\nto make loans or extend or guarantee credit) to any of them, other than (i) for\npayment of salary for services rendered, (ii) reimbursement for reasonable\nexpenses incurred on behalf of Lineo, and (iii) for other standard employee\nbenefits made generally available to all employees (including stock option\nagreements outstanding under any stock option plan approved by the Board of\nDirectors of Lineo or such Subsidiary). To the best of Lineo's knowledge, none\nof such persons has any direct or indirect ownership interest in any firm or\ncorporation with which Lineo is affiliated or with which Lineo has a business\nrelationship, or any firm or corporation that competes with Lineo, except that\nemployees, stockholders, officers or directors of Lineo and members of their\nimmediate families may own stock in publicly-traded companies that may compete\nwith Lineo. To the best of Lineo's, no officer, director or stockholder or any\nmember of their immediate families is, directly or indirectly, interested in any\nmaterial contract with Lineo (other than such contracts as relate to any such\nperson's ownership of capital stock or other securities of Lineo).\n\n\n\n   4\n\n2.8   REGISTRATION RIGHTS.\n\n      Lineo is presently not under any obligation and has not granted any rights\nto register under the Securities Act any of its presently outstanding securities\nor any of its securities that may subsequently be issued.\n\n2.9   PERMITS.\n\n      Lineo has all franchises, permits, licenses, and any similar authority\nnecessary for the conduct of its business as now being conducted by it, the lack\nof which could materially and adversely affect the business, properties,\nprospects or financial condition of Lineo, and believes it can obtain, without\nundue burden or expense, any similar authority for the conduct of its business\nas presently planned to be conducted. Lineo is not in default in any material\nrespect under any of such franchises, permits, licenses or other similar\nauthority.\n\n2.10  LITIGATION.\n\n      There is no action, suit, proceeding or investigation pending or, to the\nbest of Lineo's knowledge, currently threatened against Lineo that questions the\nvalidity of this Agreement, or the right of Lineo to enter into this Agreement,\nor to consummate the transactions contemplated hereby, or that might result,\neither individually or in the aggregate, in any material adverse change in the\nassets, business, properties, prospects, or financial condition of Lineo, or in\nany material change in the current equity ownership of Lineo.\n\n2.11  RETURNS AND COMPLAINTS.\n\n      Lineo has not received any customer complaints concerning alleged defects\nin its products (or the design thereof) that, if true, would materially\nadversely affect the operations or financial condition of Lineo.\n\n2.12  DISCLOSURE.\n\n      Lineo has provided Caldera Systems with all the information reasonably\navailable to it without undue expense that Caldera Systems has requested for\ndeciding whether to purchase the Lineo Shares and all information that Lineo\nbelieves is reasonably necessary to enable Caldera Systems to make such\ndecision.\n\n2.13  OFFERING.\n\n      Subject, in part, to the truth and accuracy of Caldera Systems's\nrepresentations set forth in this Agreement, the offer, sale and issuance of the\nLineo Shares as contemplated by this Agreement are exempt from the registration\nrequirements of the Securities Act, and neither Lineo, nor any authorized agent\nacting on its behalf will take any action hereafter that would cause the loss of\nsuch exemption.\n\n2.14  TITLE TO PROPERTY AND ASSETS; LEASES.\n\n      Except (i) as reflected in the Lineo Financial Statements (defined in\nparagraph 2.15), (ii) for liens for current taxes not yet delinquent, (iii) for\nliens imposed by law and incurred in the ordinary course of business for\nobligations not past due to carriers, warehousemen, laborers, materialmen and\nthe like, (iv) for liens in respect of pledges or deposits under workers'\ncompensation laws or similar legislation or (v) for minor defects in title, none\nof which, individually or in the aggregate, materially interferes with the use\nof such property, Lineo has good and marketable title to its property and assets\nfree and clear of all mortgages, liens, claims and encumbrances. With respect to\nthe property and assets it leases, Lineo is in compliance\n\n\n   5\n\nwith such leases and, to the best of its knowledge, holds a valid leasehold\ninterest free of any liens, claims or encumbrances, subject to clauses (i)-(v)\nabove.\n\n2.15  FINANCIAL STATEMENTS.\n\n      Lineo has made available to Caldera Systems its unaudited trial balance\nsheet (which includes assets and liabilities, ending balances, revenues and\nexpenses, and the balance of stockholders' equity) at October 31, 1999 for the\nfiscal year then ended (the 'Lineo Financial Statements'). The Lineo Financial\nStatements have been prepared in accordance with generally accepted accounting\nprinciples applied on a consistent basis throughout the periods indicated. The\nLineo Financial Statements fairly present the financial condition and operating\nresults of Lineo as of the dates, and for the periods, indicated therein. Except\nas set forth in the Lineo Financial Statements, Lineo has no material\nliabilities, contingent or otherwise, other than (i) liabilities incurred in the\nordinary course of business subsequent to October 31, 1999 and (ii) obligations\nunder contracts and commitments incurred in the ordinary course of business and\nnot required under generally accepted accounting principles to be reflected in\nthe Lineo Financial Statements, which in both cases, individually or in the\naggregate, are not material to the financial condition or operating results of\nLineo. Except as disclosed in the Lineo Financial Statements, Lineo is not a\nguarantor or indemnitor of any indebtedness of any other person, firm or\ncorporation. Lineo maintains and will continue to maintain a standard system of\naccounting established and administered in accordance with generally accepted\naccounting principles.\n\n2.16  CHANGES.\n\n      Since October 31, 1999, there has not been any event or condition of any\ntype that has materially and adversely affected the business, properties or\nfinancial condition of Lineo or any of its Subsidiaries.\n\n2.17  INTELLECTUAL PROPERTY.\n\n      To the best of Lineo's knowledge, Lineo, and its products have not\ninfringed and do not infringe the copyrights of any third party. To the best of\nLineo's knowledge, Lineo has not misappropriated and is not misappropriating any\ntrade secrets or proprietary confidential information of any third party, and\nthe products of Lineo do not include or embody any trade secret or proprietary\nconfidential information misappropriated by Lineo from any third party. To the\nbest of Lineo's knowledge, Lineo and its products have not infringed and do not\ninfringe any patents, trademarks, service marks, or trade names of any third\nparty. Each item of Intellectual Property owned by or licensed to Lineo\nimmediately prior to the Closing hereunder will be owned by or licensed to Lineo\non identical terms and conditions immediately subsequent to the Closing\nhereunder (i.e., identical to any applicable terms and conditions immediately\nprior to the Closing).\n\n            (i) To the best of Lineo's knowledge, none of Lineo and its\n      directors and officers (and employees with responsibility for Intellectual\n      Property matters) has ever received any charge, complaint, claim, demand,\n      or notice alleging any such infringement, misappropriation, or violation\n      by Lineo of Intellectual Property (including any claim that Lineo must\n      license or refrain from using any Intellectual Property rights of any\n      third party). To the best of Lineo's knowledge and the knowledge of\n      directors and officers (and employees with responsibility for Intellectual\n      Property matters) of Lineo, no third party has infringed, misappropriated,\n      or otherwise violated any Intellectual Property rights of Lineo.\n\n            (ii) Within thirty days of the date of Closing, Lineo will provide\n      to Caldera Systems a schedule (the 'IP Schedule') identifying (a) each\n      patent which has been issued or assigned to Lineo,\n\n\n   6\n\n      (b) each pending patent application which has been filed by or for Lineo,\n      (c) each trademark or service mark registration issued or assigned to\n      Lineo, (d) each pending trademark or service mark application which has\n      been filed by or for Lineo, (e) each copyright registration issued or\n      assigned to Lineo, (f) each pending copyright application which has been\n      filed by or for Lineo, and (g) each license which Lineo has granted to any\n      third party with respect to any of Lineo's Intellectual Property excluding\n      licenses to end users of Company products granted in the ordinary course\n      of business. Lineo will deliver to Caldera Systems correct and complete\n      copies of all such patents, registrations, applications, and licenses (as\n      amended to date). The Lineo IP Schedule will also identify each trade name\n      and each unregistered trademark or service mark owned or claimed by Lineo\n      in connection with its business. With respect to each patent, application,\n      and registration (each an 'IP item') identified in the Lineo IP Schedule:\n\n                  (A) Lineo possess all right, title, and interest in and to the\n            IP item, free and clear of any mortgage, lien, claim, license, or\n            other encumbrance;\n\n                  (B) to the best of Lineo's knowledge, the IP item is not\n            subject to any outstanding injunction, judgment, order, decree,\n            ruling, or charge;\n\n                  (C) to the best of Lineo's knowledge, no action, suit,\n            proceeding, hearing, investigation, charge, complaint, claim, or\n            demand is pending or, to the best of Lineo's or its Subsidiaries'\n            knowledge, and the knowledge of the directors and officers (and\n            employees with responsibility for Intellectual Property matters) of\n            Lineo and its Subsidiaries, is threatened which challenges the\n            legality, validity, enforceability, use, or ownership of the IP\n            item; and\n\n                  (D) Lineo has never agreed to indemnify any Person for or\n            against any interference, infringement, misappropriation, or other\n            conflict with respect to the IP item.\n\n            (iii) The Lineo IP Schedule will identify each item of Intellectual\n      Property that any third party owns and licenses to Lineo, excluding\n      licenses to commercially available software products (e.g., Windows,\n      Microsoft Office, etc.) used by Lineo as an end user. Lineo will deliver\n      with the IP Schedule to Caldera Systems correct and complete copies of all\n      agreements applicable to such licenses (as amended to date). The term\n      'license' is intended to include 'sublicense.' With respect to each such\n      license and agreement required to be identified in the Lineo IP Schedule,\n      to the best of Lineo's knowledge;\n\n                  the  license  and  agreement  are  legal,  valid,   binding,\nenforceable, and in full force and effect;\n\n                  the license and agreement will continue to be legal, valid,\nbinding, enforceable, and in full force and effect on identical terms on the day\nimmediately following the Closing;\n\n                  no party to the agreement is in breach or default, and no\nevent has occurred which with notice or lapse of time would constitute a breach\nor default or permit termination, modification, or acceleration thereunder;\n\n                  no party  to the  agreement  has  repudiated  any  provision\nthereof;\n\n                  the  license is not subject to any  outstanding  injunction,\njudgment, order, decree, ruling, or charge; and\n\n   7\n\n                  no action, suit, proceeding, hearing, investigation, charge,\ncomplaint, claim, or demand is pending or is threatened which challenges the\nlegality, validity, or enforceability of the license or agreement.\n\n            (iv) To the best of Lineo's knowledge and to the knowledge of the\n      directors and officers (and employees with responsibility for Intellectual\n      Property matters) of Lineo, Lineo will not infringe, misappropriate, or\n      otherwise violate any Intellectual Property rights of third parties as a\n      result of the continued operation of its businesses as presently conducted\n      and as presently proposed to be conducted.\n\n2.18  MANUFACTURING AND MARKETING RIGHTS.\n\n      Except as set forth on the Lineo Schedule of Exceptions, Lineo has not\ngranted rights to manufacture, produce, assemble, license, market or sell its\nproducts to any other person and is not bound by any agreement that affects\nLineo's exclusive right to develop, manufacture, assemble, distribute, market or\nsell its products.\n\n2.19  EMPLOYEES; EMPLOYEE COMPENSATION.\n\n      To the best of Lineo's knowledge, the relationships between Lineo and its\nemployees are good and no labor dispute or claims are pending or threatened.\nNone of Lineo's employees belongs to any union or collective bargaining unit. To\nthe best of Lineo's knowledge, Lineo has complied in all material respects with\nall applicable state and federal laws related to employment. To the best of\nLineo's knowledge, no employee of Lineo is or will be in violation of any\njudgment, decree or order, or any term of any employment contract, patent\ndisclosure agreement, or other contract or agreement relating to the\nrelationship of any such employee with Lineo, or any other party because of the\nnature of the business conducted or presently proposed to be conducted by Lineo\nor to the use by the employee of his or her best efforts with respect to such\nbusiness. Lineo is not a party to or bound by any currently effective employment\ncontract, deferred compensation agreement, incentive plan, profit sharing plan,\nretirement agreement or other employee compensation agreement. Lineo is not\naware that any officer or key employee, or that any group of key employees,\nintends to terminate their employment with Lineo, nor does Lineo have a present\nintention to terminate the employment of any of the foregoing. Subject to\ngeneral principles related to wrongful termination of employees, the employment\nof each officer and employee of Lineo is terminable at the will of Lineo.\n\n\n   8\n\n2.20  TAX RETURNS, PAYMENTS, AND ELECTIONS.\n\n      Lineo has timely filed all tax returns and reports (federal, state and\nlocal) as required by law. These returns and reports are true and correct in all\nmaterial respects. Lineo has paid all taxes and other assessments due, except\nthose contested by it in good faith. Lineo has not elected, pursuant to the\nInternal Revenue Code of 1986, as amended ('Code'), to be treated as an S\ncorporation or a collapsible corporation pursuant to Section 1362(a) or Section\n341(f) of the Code, nor has it made any other elections pursuant to the Code\n(other than elections that relate solely to methods of accounting, depreciation\nor amortization) that would have a material effect on the business, properties,\nprospects or financial condition of Lineo. Lineo has never had any tax\ndeficiency proposed or assessed against it and has not executed any waiver of\nany statute of limitations on the assessment or collection of any tax or\ngovernmental charge. None of Lineo's income tax returns (federal or otherwise)\nand none of its state income or franchise tax or sales or use tax returns has\never been audited by governmental authorities. Lineo has made adequate\nprovisions on its books of account for all taxes, assessments and governmental\ncharges with respect to its business, properties and operations for such period.\nLineo has withheld or collected from each payment made to each of its employees,\nthe amount of all taxes, including, but not limited to, federal income taxes,\nFederal Insurance Contribution Act taxes and Federal Unemployment Tax Act taxes\nrequired to be withheld or collected therefrom, and has paid the same to the\nproper tax receiving officers or authorized depositaries.\n\n2.21  ENVIRONMENTAL AND SAFETY LAWS.\n\n      Lineo is not in violation of any applicable statute, law or regulation\nrelating to the environment or occupational health and safety, and no material\nexpenditures are or will be required in order to comply with any such existing\nstatute, law or regulation.\n\nSECTION 3.  REPRESENTATIONS AND WARRANTIES OF CALDERA SYSTEMS\n\n      In order to induce Lineo to enter into this Agreement, Caldera Systems\nrepresents and warrants to Lineo the following, except as set forth on a\nSchedule of Exceptions furnished by Caldera Systems to Lineo (the 'Caldera\nSystems Schedule of Exceptions'), specifically identifying the relevant\nsubparagraph(s) hereof, which exceptions shall be deemed to be representations\nand warranties as if made hereunder:\n\n3.1   ORGANIZATION AND CORPORATE POWER.\n\n      Each of Caldera Systems and its Subsidiaries is a corporation duly\norganized and validly existing under the laws of the State of Utah, and is\nqualified to own and operate its properties and assets, to do business as a\nforeign corporation in each jurisdiction in which the failure to be so qualified\nwould have a Material Adverse Effect. Each of Caldera Systems and its\nSubsidiaries has all required corporate power and corporate authority to carry\non its business as presently conducted, to enter into and perform this Agreement\nand the agreements contemplated hereby to which it is a party and to carry out\nthe transactions contemplated hereby and thereby, including the issuance of the\nCaldera Systems Shares. Caldera Systems is not in material violation of any term\nof its Articles of Incorporation, as amended as of the date hereof (the 'Caldera\nSystems Articles of Incorporation'), or Bylaws, as amended as of the date hereof\n(the 'Caldera Systems Bylaws').\n\n\n   9\n\n3.2   AUTHORIZATION AND NON-CONTRAVENTION.\n\n      The execution, delivery and performance by Caldera Systems of this\nAgreement and each other agreement, document and instrument to be executed and\ndelivered by Caldera Systems pursuant to or as contemplated by this Agreement,\nincluding, without limitation, the issuance and delivery of the Caldera Systems\nShares, have been duly authorized, or will be duly authorized prior to the\nClosing, by all necessary corporate action on behalf of Caldera Systems. This\nAgreement and each such other agreement, document, and instrument, when executed\nand delivered, will constitute valid and binding obligations of Caldera Systems,\nenforceable in accordance with their respective terms, except as may be limited\nby applicable law and public policy and subject to (i) applicable bankruptcy,\ninsolvency, reorganization, moratorium and other laws of general application\naffecting enforcement of creditors' rights generally and (ii) general principles\nof equity and\/or laws relating to the availability of specific performance,\ninjunctive relief or other equitable remedies, whether such enforceability is\nconsidered in a proceeding in equity or at law. The execution and delivery by\nCaldera Systems of this Agreement and each other agreement, document and\ninstrument to be executed and delivered by Caldera Systems pursuant hereto or as\ncontemplated hereby and the performance by Caldera Systems of the transactions\ncontemplated hereby and thereby, including, without limitation, the offer, sale,\nissuance and delivery of the Caldera Systems Shares, do not and will not: (A)\nviolate, conflict with or result in a default (whether after the giving of\nnotice, lapse of time or both) under any material contract, mortgage, indenture,\ncontract, instrument or obligation to which Caldera Systems or any of its\nSubsidiaries is a party or by which it or its assets are bound, or any provision\nof the Caldera Systems Articles of Incorporation or Caldera Systems Bylaws, or\ncause the creation of any material lien, charge or encumbrance upon any of the\nassets of Caldera Systems or any of its Subsidiaries; (B) to Caldera Systems's\nknowledge, violate or result in a violation of, or constitute a default under,\nany provision of any material law, regulation or rule, or any judgment, order,\nwrit, decree or statute of, or any restriction imposed by, any court or\ngovernmental agency applicable to Caldera Systems or any of its Subsidiaries;\n(C) require from Caldera Systems any notice to, declaration or filing with, or\nconsent or approval of any governmental authority or third party other than such\nfilings as have been made prior to the Closing and\/or as may be required to\nsecure an exemption from qualification of the offer and sale of the Caldera\nSystems Shares under the Securities Act, and applicable state securities and\nblue sky laws; or (D) accelerate any obligation under, or give rise to a right\nof termination, suspension, revocation or impairment of, any material agreement,\npermit, license or authorization applicable to any of Caldera Systems's, or any\nof its Subsidiaries', business, operations, assets or properties, to which\nCaldera Systems, or any of its Subsidiaries, is a party or by which Caldera\nSystems is bound.\n\n3.3   CAPITALIZATION.\n\n      As of the Closing, without giving effect to the transactions contemplated\nhereby, the authorized capital stock of Caldera Systems will consist of\n75,000,000 shares of common stock, of which 20,144,904 shares will be issued and\noutstanding and 25,000,000 shares of preferred stock of which 6,596,146 shares\nhave been designated Series A Preferred Stock, all of which are issued and\noutstanding, and 5,000,000 shares have been designated Series B Preferred Stock,\nall of which are isssued and outstanding. As of the Closing, other than the\nshares described in the preceding sentence, (ii) the conversion privileges of\nthe Series A Preferred Stock and the Series B Preferred Stock of Caldera, and\n(iii) currently outstanding options to purchase 5,288,882 shares of the common\nstock of Caldera granted to employees and members of the Board of Directors of\nCaldera pursuant to Caldera's 1998 Stock Option Plan and 1999 Omnibus Stock\nIncentive Plan, Caldera Systems has not issued any warrants, options, rights\n(including, without limitation, conversion or preemptive rights and rights of\nfirst refusal), proxy or stockholder agreements or agreements of any kind for\nthe purchase or acquisition from Caldera Systems, or any of its Subsidiaries, of\nany shares of its, or any of its Subsidiaries', capital stock or other\nsecurities, including, without limitation, any securities convertible into or\nexercisable or exchangeable for such shares or any warrants, options or other\nrights to acquire any\n\n   10\n\nsuch convertible securities. As of the Closing, and after giving effect to the\ntransactions contemplated hereby, all of the outstanding shares of capital stock\nof Caldera Systems and each of its Subsidiaries will have been duly and validly\nauthorized and issued, fully paid and nonassessable and not subject to any\npreemptive rights and will have been offered, issued, sold and delivered in\ncompliance with applicable federal and state securities laws. Except as set\nforth in the Caldera Systems Articles of Incorporation and in that certain\nAmended and Restated Investor Rights Agreement, dated as of December 30, 1999,\namong Caldera Systems and the shareholders of Caldera Systems who are party\nthereto (the 'Caldera Systems Investor Rights Agreement'), there are no\npreemptive rights, rights of first refusal, put or call rights or obligations or\nanti-dilution rights with respect to the issuance, sale or redemption of Caldera\nSystems's capital stock or other securities. Caldera Systems is not a party or\nsubject to any agreement or understanding, and, to the best of Caldera Systems's\nknowledge, there is no agreement or understanding between any persons that\naffects or relates to the voting or giving of written consents with respect to\nany security or the voting by a director of Caldera Systems.\n\n3.4   VALID ISSUANCE OF CALDERA SYSTEMS SHARES.\n\n      The Caldera Systems Shares, when issued, sold and delivered in accordance\nwith the terms of this Agreement for the consideration expressed herein, will be\nduly and validly issued, fully paid and non-assessable, and will be free of\nrestrictions on transfer other than restrictions on transfer under this\nAgreement and under applicable state and federal securities laws.\n\n3.5   SUBSIDIARIES.\n\n      Caldera Systems does not own or control, directly or indirectly, any\ninterest in any other corporation, partnership, limited liability company,\nassociation or other business entity. Caldera Systems is not a participant in\nany joint venture, partnership or similar arrangement.\n\n3.6   CONTRACTS AND OTHER COMMITMENTS.\n\n      Neither Caldera Systems nor any of its Subsidiaries has and\/or is bound by\nany contract, agreement, lease, commitment, or proposed transaction, judgment,\norder, writ or decree, written or oral, absolute or contingent, other than\ncontracts entered into in the ordinary course of business. For the purpose of\nthis paragraph, employment and consulting contracts and license agreements and\nany other agreements relating to Caldera Systems's or any of its Subsidiary's\nacquisition or disposition of Intellectual Property (other than standard\nend-user license agreements) shall not be considered to be contracts entered\ninto in the ordinary course of business.\n\n3.7   RELATED-PARTY TRANSACTIONS.\n\n      No employee, officer, stockholder or director of Caldera Systems or any of\nits Subsidiaries or member of his or her immediate family is indebted to Caldera\nSystems, nor is Caldera Systems or any Subsidiary indebted (or committed to make\nloans or extend or guarantee credit) to any of them, other than (i) for payment\nof salary for services rendered, (ii) reimbursement for reasonable expenses\nincurred on behalf of Caldera Systems or such Subsidiary, and (iii) for other\nstandard employee benefits made generally available to all employees (including\nstock option agreements outstanding under any stock option plan approved by the\nBoard of Directors of Caldera Systems or such Subsidiary). To the best of\nCaldera Systems's or such Subsidiary's knowledge, none of such persons has any\ndirect or indirect ownership interest in any firm or corporation with which\nCaldera Systems or such Subsidiary is affiliated or with which Caldera Systems\nor such Subsidiary has a business relationship, or any firm or corporation that\ncompetes with Caldera Systems or such Subsidiary, except that employees,\nstockholders, officers or directors of Caldera\n\n\n   11\n\nSystems or such Subsidiary and members of their immediate families may own stock\nin publicly-traded companies that may compete with Caldera Systems or such\nSubsidiary. To the best of Caldera Systems's or such Subsidiary's knowledge, no\nofficer, director or stockholder or any member of their immediate families is,\ndirectly or indirectly, interested in any material contract with Caldera Systems\nor such Subsidiary (other than such contracts as relate to any such person's\nownership of capital stock or other securities of Caldera Systems or such\nSubsidiary).\n\n3.8   REGISTRATION RIGHTS.\n\n      Except as set forth in the Caldera Systems Investor Rights Agreement,\nCaldera Systems is presently not under any obligation and has not granted any\nrights to register under the Securities Act any of its presently outstanding\nsecurities or any of its securities that may subsequently be issued.\n\n3.9   PERMITS.\n\n      Each of Caldera Systems and its Subsidiaries has all franchises, permits,\nlicenses, and any similar authority necessary for the conduct of its business as\nnow being conducted by it, the lack of which could materially and adversely\naffect the business, properties, prospects or financial condition of Caldera\nSystems or any such Subsidiary, and believes it can obtain, without undue burden\nor expense, any similar authority for the conduct of its business as presently\nplanned to be conducted. Neither Caldera Systems nor any Subsidiary is in\ndefault in any material respect under any of such franchises, permits, licenses\nor other similar authority.\n\n3.10  LITIGATION.\n\n      There is no action, suit, proceeding or investigation pending or, to the\nbest of Caldera Systems's or any of its Subsidiary's knowledge, currently\nthreatened against Caldera Systems or any of its Subsidiary's that questions the\nvalidity of this Agreement, or the right of Caldera Systems to enter into this\nAgreement, or to consummate the transactions contemplated hereby, or that might\nresult, either individually or in the aggregate, in any material adverse change\nin the assets, business, properties, prospects, or financial condition of\nCaldera Systems or any of its Subsidiaries, or in any material change in the\ncurrent equity ownership of Caldera Systems or any of its Subsidiaries.\n\n3.11  RETURNS AND COMPLAINTS.\n\n      Neither Caldera Systems nor any of its Subsidiaries has received any\ncustomer complaints concerning alleged defects in its products (or the design\nthereof) that, if true, would materially adversely affect the operations or\nfinancial condition of Caldera Systems or any of its Subsidiaries.\n\n3.12  DISCLOSURE.\n\n      Caldera Systems has provided Lineo with all the information reasonably\navailable to it without undue expense that Lineo has requested for deciding\nwhether to purchase the Caldera Systems Shares and all information that Caldera\nSystems believes is reasonably necessary to enable Lineo to make such decision.\n\n\n   12\n\n3.13  OFFERING.\n\n      Subject, in part, to the truth and accuracy of Lineo's representations set\nforth in this Agreement, the offer, sale and issuance of the Caldera Systems\nShares as contemplated by this Agreement are exempt from the registration\nrequirements of the Securities Act, and neither Caldera Systems, any of its\nSubsidiaries, nor any authorized agent acting on its behalf will take any action\nhereafter that would cause the loss of such exemption.\n\n3.14  TITLE TO PROPERTY AND ASSETS; LEASES.\n\n      Except (i) as reflected in the Caldera Systems Financial Statements\n(defined in paragraph 3.15), (ii) for liens for current taxes not yet\ndelinquent, (iii) for liens imposed by law and incurred in the ordinary course\nof business for obligations not past due to carriers, warehousemen, laborers,\nmaterialmen and the like, (iv) for liens in respect of pledges or deposits under\nworkers' compensation laws or similar legislation or (v) for minor defects in\ntitle, none of which, individually or in the aggregate, materially interferes\nwith the use of such property, each of Caldera Systems and its Subsidiaries has\ngood and marketable title to its property and assets free and clear of all\nmortgages, liens, claims and encumbrances. With respect to the property and\nassets it leases, each of Caldera Systems and its Subsidiaries is in compliance\nwith such leases and, to the best of its knowledge, holds a valid leasehold\ninterest free of any liens, claims or encumbrances, subject to clauses (i)-(v)\nabove.\n\n3.15  FINANCIAL STATEMENTS.\n\n      Caldera Systems has delivered to Lineo its audited financial statements\n(balance sheet and profit and loss statement, statement of stockholders' equity\nand statement of cash flows, including notes thereto) at October 31, 1999 and\nfor the fiscal year then ended (the 'Caldera Systems Financial Statements'). The\nCaldera Systems Financial Statements have been prepared in accordance with\ngenerally accepted accounting principles applied on a consistent basis\nthroughout the periods indicated. The Caldera Systems Financial Statements\nfairly present the financial condition and operating results of Caldera Systems\nas of the dates, and for the periods, indicated therein. Except as set forth in\nthe Caldera Systems Financial Statements, neither Caldera Systems nor any of its\nSubsidiaries has any material liabilities, contingent or otherwise, other than\n(i) liabilities incurred in the ordinary course of business subsequent to\nOctober 31, 1999 and (ii) obligations under contracts and commitments incurred\nin the ordinary course of business and not required under generally accepted\naccounting principles to be reflected in the Caldera Systems Financial\nStatements, which in both cases, individually or in the aggregate, are not\nmaterial to the financial condition or operating results of Caldera Systems or\nany of its Subsidiaries. Except as disclosed in the Caldera Systems Financial\nStatements, neither Caldera Systems nor any of its Subsidiaries is a guarantor\nor indemnitor of any indebtedness of any other person, firm or corporation.\nCaldera Systems and each of its Subsidiaries maintains and will continue to\nmaintain a standard system of accounting established and administered in\naccordance with generally accepted accounting principles.\n\n3.16  CHANGES.\n\n      Since October, 1999, there has not been any event or condition of any type\nthat has materially and adversely affected the business, properties or financial\ncondition of Caldera Systems or any of its Subsidiaries.\n\n   13\n\n3.17  INTELLECTUAL PROPERTY.\n\n      To the best of Caldera Systems's and its Subsidiaries' knowledge, Caldera\nSystems, its Subsidiaries and their products have not infringed and do not\ninfringe the copyrights of any third party. To the best of Caldera Systems's and\nits Subsidiaries' knowledge, neither Caldera Systems nor its Subsidiaries has\nmisappropriated or is misappropriating any trade secrets or proprietary\nconfidential information of any third party, and the products of Caldera Systems\nand its Subsidiaries do not include or embody any trade secret or proprietary\nconfidential information misappropriated by Caldera Systems or its Subsidiaries\nfrom any third party. To the best of Caldera Systems's and its Subsidiaries'\nknowledge, each of Caldera Systems and its Subsidiaries and their respective\nproducts have not infringed and do not infringe any patents, trademarks, service\nmarks, or trade names of any third party. Each item of Intellectual Property\nowned by or licensed to Caldera Systems and its Subsidiaries immediately prior\nto the Closing hereunder will be owned by or licensed to Caldera Systems and the\nSubsidiary on identical terms and conditions immediately subsequent to the\nClosing hereunder (i.e., identical to any applicable terms and conditions\nimmediately prior to the Closing).\n\n            (i) To the best of Caldera Systems's and its Subsidiaries'\n      knowledge, none of Caldera Systems or its Subsidiaries or their directors\n      and officers (and employees with responsibility for Intellectual Property\n      matters) has ever received any charge, complaint, claim, demand, or notice\n      alleging any such infringement, misappropriation, or violation by Caldera\n      Systems or its Subsidiaries of Intellectual Property (including any claim\n      that Caldera Systems and its Subsidiaries must license or refrain from\n      using any Intellectual Property rights of any third party). To the best of\n      Caldera Systems's and its Subsidiaries' knowledge and the knowledge of\n      directors and officers (and employees with responsibility for Intellectual\n      Property matters) of Caldera Systems and its Subsidiaries, no third party\n      has infringed, misappropriated, or otherwise violated any Intellectual\n      Property rights of Caldera Systems and its Subsidiaries.\n\n            (ii) The Caldera Systems Schedule of Exceptions identifies (a) each\n      patent which has been issued or assigned to Caldera Systems or any of its\n      Subsidiaries, (b) each pending patent application which has been filed by\n      or for Caldera Systems or any of its Subsidiaries, (c) each trademark or\n      service mark registration issued or assigned to Caldera Systems or any of\n      its Subsidiaries, (d) each pending trademark or service mark application\n      which has been filed by or for Caldera Systems or any its Subsidiaries,\n      (e) each copyright registration issued or assigned to Caldera Systems or\n      any of its Subsidiaries, (f) each pending copyright application which has\n      been filed by or for Caldera Systems or any of its Subsidiaries, and (g)\n      each license which Caldera Systems and its Subsidiaries has granted to any\n      third party with respect to any of Caldera Systems's Intellectual Property\n      excluding licenses to end users of Company products granted in the\n      ordinary course of business. Caldera Systems has delivered to Lineo\n      correct and complete copies of all such patents, registrations,\n      applications, and licenses (as amended to date). The Caldera Systems\n      Schedule of Exceptions also identifies each trade name and each\n      unregistered trademark or service mark owned or claimed by any of Caldera\n      Systems and its Subsidiaries in connection with any of their businesses.\n      With respect to each IP item identified in the Caldera Systems Schedule of\n      Exceptions:\n\n                  (A) Caldera Systems and its Subsidiaries possess all right,\n            title, and interest in and to the IP item, free and clear of any\n            mortgage, lien, claim, license, or other encumbrance;\n\n                  (B) to the best of Caldera Systems's and its Subsidiaries'\n            knowledge, the IP item is not subject to any outstanding injunction,\n            judgment, order, decree, ruling, or charge;\n\n   14\n\n                  (C) to the best of Caldera Systems's or its Subsidiaries'\n            knowledge, no action, suit, proceeding, hearing, investigation,\n            charge, complaint, claim, or demand is pending or, to the best of\n            Caldera Systems's or its Subsidiaries' knowledge, and the knowledge\n            of the directors and officers (and employees with responsibility for\n            Intellectual Property matters) of Caldera Systems and its\n            Subsidiaries, is threatened which challenges the legality, validity,\n            enforceability, use, or ownership of the IP item; and\n\n                  (D) none of Caldera Systems and its Subsidiaries has ever\n            agreed to indemnify any Person for or against any interference,\n            infringement, misappropriation, or other conflict with respect to\n            the IP item.\n\n            (iii) The Caldera Systems Schedule of Exceptions identifies each\n      item of Intellectual Property that any third party owns and licenses to\n      any of Caldera Systems and its Subsidiaries, excluding licenses to\n      commercially available software products (e.g., Windows, Microsoft Office,\n      etc.) used by any of Caldera Systems and its Subsidiaries as an end user.\n      Caldera Systems has delivered to Lineo correct and complete copies of all\n      agreements applicable to such licenses (as amended to date). The term\n      'license' is intended to include 'sublicense.' With respect to each such\n      license and agreement required to be identified in the Caldera Systems\n      Schedule of Exceptions, to the best of Caldera Systems's or its\n      Subsidiaries' knowledge;\n\n                  the license and agreement are legal, valid, binding,\nenforceable, and in full force and effect;\n\n                  the license and agreement will continue to be legal, valid,\nbinding, enforceable, and in full force and effect on identical terms on the day\nimmediately following the Closing;\n\n                  no party to the agreement is in breach or default, and no\nevent has occurred which with notice or lapse of time would constitute a breach\nor default or permit termination, modification, or acceleration thereunder;\n\n                  no party to the agreement has repudiated any provision\nthereof;\n\n                  the license is not subject to any outstanding injunction,\njudgment, order, decree, ruling, or charge; and\n\n                  no action, suit, proceeding, hearing, investigation, charge,\ncomplaint, claim, or demand is pending or is threatened which challenges the\nlegality, validity, or enforceability of the license or agreement.\n\n            (iv) To the best of Caldera Systems's and its Subsidiaries'\n      knowledge and to the knowledge of the directors and officers (and\n      employees with responsibility for Intellectual Property matters) of\n      Caldera Systems and its Subsidiaries, neither Caldera Systems nor any of\n      its Subsidiaries will infringe, misappropriate, or otherwise violate any\n      Intellectual Property rights of third parties as a result of the continued\n      operation of its businesses as presently conducted and as presently\n      proposed to be conducted.\n\n3.18  MANUFACTURING AND MARKETING RIGHTS.\n\n      Except as set forth on the Caldera Systems Schedule of Exceptions, neither\nCaldera Systems nor any of its Subsidiaries has granted rights to manufacture,\nproduce, assemble, license, market or sell its products\n\n\n   15\n\nto any other person and is not bound by any agreement that affects Caldera\nSystems's or such Subsidiary's exclusive right to develop, manufacture,\nassemble, distribute, market or sell its products.\n\n3.19  EMPLOYEES; EMPLOYEE COMPENSATION.\n\n      To the best of Caldera Systems's and its Subsidiary's knowledge, the\nrelationships between Caldera Systems and its Subsidiaries and their respective\nemployees are good and no labor dispute or claims are pending or threatened.\nNone of Caldera Systems's or any of its Subsidiary's employees belongs to any\nunion or collective bargaining unit. To the best of Caldera Systems's and its\nSubsidiaries' knowledge, Caldera Systems and each of its Subsidiaries has\ncomplied in all material respects with all applicable state and federal laws\nrelated to employment. To the best of Caldera Systems's and it Subsidiary's\nknowledge, no employee of Caldera Systems or any such Subsidiary is or will be\nin violation of any judgment, decree or order, or any term of any employment\ncontract, patent disclosure agreement, or other contract or agreement relating\nto the relationship of any such employee with Caldera Systems, any of its\nSubsidiaries, or any other party because of the nature of the business conducted\nor presently proposed to be conducted by Caldera Systems or any of its\nSubsidiaries or to the use by the employee of his or her best efforts with\nrespect to such business. Caldera Systems is not a party to or bound by any\ncurrently effective employment contract, deferred compensation agreement,\nincentive plan, profit sharing plan, retirement agreement or other employee\ncompensation agreement. Neither Caldera Systems nor any of its Subsidiaries is\naware that any officer or key employee, or that any group of key employees,\nintends to terminate their employment with Caldera Systems or any of its\nSubsidiaries, nor does Caldera Systems or any of its Subsidiaries have a present\nintention to terminate the employment of any of the foregoing. Subject to\ngeneral principles related to wrongful termination of employees, the employment\nof each officer and employee of Caldera Systems and each of its Subsidiaries is\nterminable at the will of Caldera Systems or such Subsidiary, as applicable.\n\n\n   16\n\n3.20  TAX RETURNS, PAYMENTS, AND ELECTIONS.\n\n      Caldera Systems and each of its Subsidiaries has timely filed all tax\nreturns and reports (federal, state and local) as required by law. These returns\nand reports are true and correct in all material respects. Caldera Systems and\neach of its Subsidiaries has paid all taxes and other assessments due, except\nthose contested by it in good faith. Neither Caldera Systems nor any of its\nSubsidiaries has elected pursuant to the Code, to be treated as an S corporation\nor a collapsible corporation pursuant to Section 1362(a) or Section 341(f) of\nthe Code, nor has it made any other elections pursuant to the Code (other than\nelections that relate solely to methods of accounting, depreciation or\namortization) that would have a material effect on the business, properties,\nprospects or financial condition of Caldera Systems or any of its Subsidiaries.\nNeither Caldera Systems nor any of its Subsidiaries has ever had any tax\ndeficiency proposed or assessed against it and has not executed any waiver of\nany statute of limitations on the assessment or collection of any tax or\ngovernmental charge. None of Caldera Systems's or any Subsidiary's income tax\nreturns (federal or otherwise) and none of its state income or franchise tax or\nsales or use tax returns has ever been audited by governmental authorities.\nCaldera Systems and each of its Subsidiaries has made adequate provisions on its\nbooks of account for all taxes, assessments and governmental charges with\nrespect to its business, properties and operations for such period. Caldera\nSystems and each of its Subsidiaries has withheld or collected from each payment\nmade to each of its employees, the amount of all taxes, including, but not\nlimited to, federal income taxes, Federal Insurance Contribution Act taxes and\nFederal Unemployment Tax Act taxes required to be withheld or collected\ntherefrom, and has paid the same to the proper tax receiving officers or\nauthorized depositaries.\n\n3.21  ENVIRONMENTAL AND SAFETY LAWS.\n\n            Neither Caldera Systems nor any of its Subsidiaries is in violation\nof any applicable statute, law or regulation relating to the environment or\noccupational health and safety, and no material expenditures are or will be\nrequired in order to comply with any such existing statute, law or regulation.\n\n\n   17\n\nSECTION 4.  ADDITIONAL REPRESENTATIONS AND WARRANTIES OF THE PARTIES\n\n      (a) Each party purchasing securities hereunder represents to the other\nthat (i) it has such knowledge and experience in financial and business matters\nand in private placement transactions of securities of companies in a similar\nstage of development as the other party that it is capable of evaluating the\nmerits and risks of the investment contemplated by such purchasing party under\nthis Agreement and making an informed investment decision with respect thereto,\n(ii) it is able to bear the economic risk of such investment and can afford to\nsustain a substantial loss on such investment, (iii) it is an 'accredited\ninvestor' as such term is defined in Rule 501 under the Securities Act, (iv) it\nis purchasing the securities purchased by it hereunder for its own account, for\ninvestment only and not with a view to, or any present intention of, effecting a\nresale ordistribution of or selling or granting any participation in such\nsecurities or any part thereof, (v) it realizes that the basis for any exemption\npursuant to which the securities such party is purchasing hereunder have been\nissued may not be present if, notwithstanding the representations made by such\nparty hereunder, such party has in mind merely acquiring the securities is is\npurchasing hereunder for a fixed or determinable period in the future, or for a\nmarket rise, or for sale if the market does not rise and (vi) it does not have\nany contract, undertaking, agreement or arrangement with any person to sell,\ntransfer or grant participations to such person or to any third person, with\nrespect to such securities. Each party acknowledges that the securities\npurchased by it hereunder have not been registered under the Securities Act or\nthe securities laws of any state or other jurisdiction in reliance on an\nexemption from registration thereunder and reliance on such exemption by the\nissuer of such securities is predicated on the representations and warranties\nset forth in this Agreement. Furthermore, each party purchasing securities\nhereunder acknowledges that such securities cannot be disposed of unless they\nare subsequently registered under the Securities Act and any applicable state\nlaws or an exemption from such registration is available.\n\n      (b) Each party understands that the securities have not been registered\nunder the Securities Act, that there is no public market for the securities, and\nthat it must bear the economic risk of investment for an indefinite period of\ntime. In particular, such party is aware that the securities purchased by it\nhereunder may not be sold pursuant to Rule 144 promulgated under the Securities\nAct unless all of the conditions of that Rule are met. Among the conditions for\nuse of Rule 144 may be the availability of current information to the public\nabout the issuer of such securities. Such information is not now available and\nsuch issuer has no present plans to make such information available.\n\n      (c) Each party represents that there are no claims for investment banking\nfees, brokerage commissions, finder's fees or similar compensation (exclusive of\nprofessional fees to lawyers and accountants) in connection with the\ntransactions contemplated by this Agreement based on any arrangement or\nagreement made by or on behalf of such party. Such party (the 'Indemnifying\nParty') agrees to indemnify and to hold harmless the other from any liability\nfor any commission or compensation in the nature of a finder's fee (and the cost\nand expenses of defending against such liability or asserted liability) for\nwhich such Indemnifying Party or any of its officers, partners, employees or\nrepresentatives is responsible.\n\n      (d) Each party believes it has received all the information it considers\nnecessary or appropriate for deciding whether to purchase the securities\npurchased by it hereunder. Such party further represents that it has had an\nopportunity to ask questions and receive answers from the party issuing such\nsecurities regarding the terms and conditions of the offering of such securities\nand the business, properties, prospects and financial condition of such issuer\nand to obtain additional information (to the extent such issuer possessed such\ninformation or could acquire it without unreasonable effort or expense)\nnecessary to verify the accuracy of any information furnished to such party or\nto which such party had access. The foregoing, however, does not limit or modify\nthe representations and warranties of such issuer in Section 2 or 3, as\napplicable, of this Agreement or the right of such party to rely thereon.\n\n\n   18\n\nSECTION 5.  CONDITIONS TO CLOSING\n\n5.1   CONDITIONS OF CALDERA SYSTEMS'S OBLIGATIONS AT CLOSING.\n\n      The obligations of Caldera Systems under this Agreement are subject to the\nfulfillment on or before the Closing of each of the following conditions, the\nwaiver of which shall not be effective against Caldera Systems unless it\nconsents in writing thereto:\n\n      (a)   REPRESENTATIONS AND WARRANTIES.\n\n            The representations and warranties of Lineo and its Subsidiaries\n      contained in Section 2 shall be true on and as of the Closing with the\n      same effect as though such representations and warranties had been made on\n      and as of the date of the Closing.\n\n      (b)   PERFORMANCE.\n\n            Lineo shall have performed and complied with all agreements,\n      obligations and conditions contained in this Agreement that are required\n      to be performed or complied with by it on or before the Closing.\n\n      (c)   QUALIFICATIONS.\n\n            All authorizations, approvals or permits, if any, of any\n      governmental authority or regulatory body of the United States or of any\n      state that are required in connection with the lawful issuance and sale of\n      the L:ineo Shares pursuant to this Agreement shall be duly obtained and\n      effective as of the Closing.\n\n      (d)   PROCEEDINGS AND DOCUMENTS.\n\n            All corporate and other proceedings in connection with the\n      transactions contemplated at the Closing and all documents incident\n      thereto shall be reasonably satisfactory in form and substance to Caldera\n      Systems's counsel, which shall have received all such counterpart original\n      and certified or other copies of such documents as it may reasonably\n      request.\n\n5.2   CONDITIONS OF LINEO'S OBLIGATIONS AT CLOSING.\n\n      The obligations of Lineo under this Agreement are subject to the\nfulfillment on or before the Closing of each of the following conditions, the\nwaiver of which shall not be effective against Lineo unless it consents in\nwriting thereto:\n\n      (a)   REPRESENTATIONS AND WARRANTIES.\n\n            The representations and warranties of Caldera Systems and its\n      Subsidiaries contained in Section 3 shall be true on and as of the Closing\n      with the same effect as though such representations and warranties had\n      been made on and as of the date of the Closing.\n\n      (b)   PERFORMANCE.\n\n   19\n\n            Caldera Systems and its Subsidiaries shall have performed and\n      complied with all agreements, obligations and conditions contained in this\n      Agreement that are required to be performed or complied with by it on or\n      before the Closing.\n\n      (c)   QUALIFICATIONS.\n\n            All authorizations, approvals or permits, if any, of any\n      governmental authority or regulatory body of the United States or of any\n      state that are required in connection with the lawful issuance and sale of\n      the Caldera Systems Shares pursuant to this Agreement shall be duly\n      obtained and effective as of the Closing.\n\n      (d)   PROCEEDINGS AND DOCUMENTS.\n\n            All corporate and other proceedings in connection with the\n      transactions contemplated at the Closing and all documents incident\n      thereto shall be reasonably satisfactory in form and substance to Lineo's\n      counsel, which shall have received all such counterpart original and\n      certified or other copies of such documents as it may reasonably request.\n\nSECTION 6.  POST-CLOSING COVENANTS OF CALDERA SYSTEMS\n\n6.1   FINANCIAL STATEMENTS.\n\n            Caldera Systems shall deliver to Lineo:\n\n            (a) as soon as available, but in any event within 45 days after the\n      end of each quarterly accounting period in each fiscal year, unaudited\n      statements of income and cash flows of Caldera Systems for such quarterly\n      period and for the period from the beginning of the fiscal year to the end\n      of such quarter, and unaudited balance sheets of Caldera Systems as of the\n      end of such quarterly period, setting forth in each case comparisons to\n      the corresponding period in the preceding fiscal year, and all such\n      statements shall be prepared in accordance with generally accepted\n      accounting principles, consistently applied, subject to the absence of\n      footnote disclosures and to normal year-end adjustments for recurring\n      accruals, and shall be certified by Caldera Systems's chief financial\n      officer;\n\n            (b) within 90 days after the end of each fiscal year, audited\n      statements of income and cash flows of Caldera Systems for such fiscal\n      year, and audited balance sheets of Caldera Systems as of the end of such\n      fiscal year, setting forth in each case comparisons to the preceding\n      fiscal year, all prepared in accordance with generally accepted accounting\n      principles, consistently applied, and accompanied by, with respect to the\n      consolidated portions of such statements, an opinion containing no\n      exceptions or qualifications (except for qualifications regarding\n      specified contingent liabilities) of an independent accounting firm of\n      recognized national standing; and\n\n            (c) prompt notification of any matter or matters which would\n      reasonably be expected to, individually or in the aggregate, have a\n      material adverse effect on the financial condition, operating results,\n      business, assets, operations, employee relations or customer or supplier\n      relations of Caldera Systems.\n\n      Each of the financial statements referred to in subparagraphs (a) and (b)\nshall be true and correct in all material respects as of the dates and for the\nperiods stated therein, subject in the case of the unaudited financial\nstatements to changes resulting from normal year-end adjustments for recurring\naccruals (none of\n\n   20\nwhich would, alone or in the aggregate, be materially adverse to the financial\ncondition, operating results, business, assets, operations, business prospects,\nemployee relations or customer or supplier relations of Caldera Systems).\n\n      6.2   CURRENT PUBLIC INFORMATION.\n\n            At all times after Caldera Systems has filed a registration\nstatement with the Securities and Exchange Commission pursuant to the\nrequirements of either the Securities Act or the Securities and Exchange Act of\n1934, as amended (the 'Exchange Act'), Caldera Systems shall file all reports\nrequired to be filed by it under the Securities Act and the Exchange Act and the\nrules and regulations adopted by the Securities and Exchange Commission\nthereunder and shall take such further action with respect to the provision of\ninformation as any holder or holders of Caldera Systems Shares may reasonably\nrequest, all to the extent required to enable such holders to sell Securities\npursuant to Rule 144 adopted by the Securities and Exchange Commission under the\nSecurities Act (as such rule may be amended from time to time) or any similar\nrule or regulation hereafter adopted by the Securities and Exchange Commission.\nUpon request, Caldera Systems shall deliver to any holder of Caldera Systems\nShares a written statement as to whether it has complied with such requirements.\n\nSECTION 7.  POST-CLOSING COVENANTS OF LINEO\n\n      7.1   FINANCIAL STATEMENTS.\n\n            Lineo shall deliver to Caldera Systems:\n\n            (a) audited financial statements for Lineo for the fiscal year ended\n      October 31, 1999 including balance sheet, profit and loss statement,\n      statement of stockholders' equity and statement of cash flows (including\n      notes thereto) which Lineo expects to be completed by January 31, 2000;\n\n            (b) as soon as available, but in any event within 45 days after the\n      end of each quarterly accounting period in each fiscal year, unaudited\n      statements of income and cash flows of Lineo for such quarterly period and\n      for the period from the beginning of the fiscal year to the end of such\n      quarter, and unaudited balance sheets of Lineo as of the end of such\n      quarterly period, setting forth in each case comparisons to the\n      corresponding period in the preceding fiscal year, and all such statements\n      shall be prepared in accordance with generally accepted accounting\n      principles, consistently applied, subject to the absence of footnote\n      disclosures and to normal year-end adjustments for recurring accruals, and\n      shall be certified by Lineo's chief financial officer;\n\n            (c) within 90 days after the end of each fiscal year, audited\n      statements of income and cash flows of Lineo for such fiscal year, and\n      audited balance sheets of Lineo as of the end of such fiscal year, setting\n      forth in each case comparisons to the preceding fiscal year, all prepared\n      in accordance with generally accepted accounting principles, consistently\n      applied, and accompanied by, with respect to the consolidated portions of\n      such statements, an opinion containing no exceptions or qualifications\n      (except for qualifications regarding specified contingent liabilities) of\n      an independent accounting firm of recognized national standing; and\n\n            (d) prompt notification of any matter or matters which would\n      reasonably be expected to, individually or in the aggregate, have a\n      material adverse effect on the financial condition, operating results,\n      business, assets, operations, employee relations or customer or supplier\n      relations of Lineo.\n\n\n   21\n\n      Each of the financial statements referred to in subparagraphs (a), (b) and\n(c) shall be true and correct in all material respects as of the dates and for\nthe periods stated therein, subject in the case of the unaudited financial\nstatements to changes resulting from normal year-end adjustments for recurring\naccruals (none of which would, alone or in the aggregate, be materially adverse\nto the financial condition, operating results, business, assets, operations,\nbusiness prospects, employee relations or customer or supplier relations of\nLineo).\n\n      7.2   CURRENT PUBLIC INFORMATION.\n\n            At all times after Lineo has filed a registration statement with the\nSecurities and Exchange Commission pursuant to the requirements of either the\nSecurities Act or the Exchange Act, Lineo shall file all reports required to be\nfiled by it under the Securities Act and the Exchange Act and the rules and\nregulations adopted by the Securities and Exchange Commission thereunder and\nshall take such further action with respect to the provision of information as\nany holder or holders of Lineo Shares may reasonably request, all to the extent\nrequired to enable such holders to sell Securities pursuant to Rule 144 adopted\nby the Securities and Exchange Commission under the Securities Act (as such rule\nmay be amended from time to time) or any similar rule or regulation hereafter\nadopted by the Securities and Exchange Commission. Upon request, Lineo shall\ndeliver to any holder of Lineo Shares a written statement as to whether it has\ncomplied with such requirements.\n\n      7.3   LINEO IP SCHEDULE.\n\n            Lineo shall deliver the IP Schedule to Caldera Systems within thirty\ndays of the date of this Agreement.\n\nSECTION 8.  GENERAL\n\n8.1   AMENDMENTS, WAIVERS AND CONSENTS.\n\n      For the purposes of this Agreement and all agreements executed pursuant\nhereto, no course of dealing between or among any of the parties hereto and no\ndelay on the part of any party hereto in exercising any rights hereunder or\nthereunder shall operate as a waiver of the rights hereof and thereof. No\ncovenant or other provision hereof may be waived otherwise than by a written\ninstrument signed by the party or parties so waiving such covenant or other\nprovision. No amendment to this Agreement may be made without the written\nconsent of all of the parties hereto.\n\n8.2   LEGEND ON SECURITIES.\n\n      The parties acknowledge and agree that the following legend shall be typed\non each certificate evidencing any of the securities issued hereunder held at\nany time by a party:\n\nTHE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES\nACT OF 1933, AS AMENDED (THE 'ACT'), OR ANY STATE SECURITIES OR BLUE SKY LAWS\nAND MAY NOT BE OFFERED, SOLD, TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE\nASSIGNED EXCEPT (1) PURSUANT TO A REGISTRATION STATEMENT WITH RESPECT TO SUCH\nSECURITIES WHICH IS EFFECTIVE UNDER THE ACT OR (2) PURSUANT TO AN AVAILABLE\nEXEMPTION FROM REGISTRATION UNDER THE ACT AND UNDER APPLICABLE STATE SECURITIES\nAND BLUE SKY LAWS RELATING TO THE DISPOSITION OF SECURITIES, PROVIDED THAT AN\nOPINION OF COUNSEL TO SUCH EFFECT IS PROVIDED TO\n\n\n   22\n\nTHE ISSUER OF SUCH SECURITIES, IN FORM SATISFACTORY TO SUCH ISSUER, IN\nCONNECTION THEREWITH.\n\n8.3   GOVERNING LAW.\n\n      This Agreement shall be deemed to be a contract made under, and shall be\nconstrued in accordance with, the laws of the State of Utah, as applied to\nagreements among Utah residents entered into and to be performed entirely within\nUtah, without giving effect to conflict of laws principles thereof.\n\n8.4   SECTION HEADINGS.\n\n      The descriptive headings in this Agreement have been inserted for\nconvenience only and shall not be deemed to limit or otherwise affect the\nconstruction or interpretation of any provision thereof or hereof.\n\n8.5   COUNTERPARTS.\n\n      This Agreement may be executed in any number of counterparts, each of\nwhich when so executed and delivered shall be taken to be an original; but such\ncounterparts shall together constitute but one and the same document.\n\n8.6   ENTIRE AGREEMENT.\n\n      This Agreement, including the exhibits, documents and instruments referred\nto herein or therein, constitutes the entire agreement, and supersedes all other\nprior agreements and understandings, both written and oral, among the parties\nwith respect to the subject matter hereof.\n\n8.7   SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS\n\n      The warranties, representations and covenants of Lineo and Caldera Systems\ncontained in or made pursuant to this Agreement shall survive the execution and\ndelivery of this Agreement and the Closing.\n\n8.8   SUCCESSORS AND ASSIGNS.\n\n      Except as otherwise provided herein, the terms and conditions of this\nAgreement shall inure to the benefit of and be binding upon the respective\nsuccessors and assigns of the parties (including permitted transferees of any\nsecurities issued hereunder). Nothing in this Agreement, express or implied, is\nintended to confer upon any party other than the parties hereto or their\nrespective successors and assigns any rights, remedies, obligations or\nliabilities under or by reason of this Agreement, except as expressly provided\nin this Agreement.\n\n8.9   NOTICES.\n\n      Unless otherwise provided, all notices and other communications required\nor permitted under this Agreement shall be in writing and shall be mailed by\nUnited States first-class mail, postage prepaid, sent by facsimile or delivered\npersonally by hand or by a nationally recognized courier addressed to the party\nto be notified at the address or facsimile number indicated for such person at\nthe address set forth below, or at such other address or facsimile number as\nsuch party may designate by ten (10) days' advance written notice to the other\nparties hereto:\n\n                  If to Caldera Systems:  Caldera Systems, Inc.\n\n\n   23\n\n                                          240 West Center Street\n                                          Orem, Utah 84057\n                                          Attention:  President\n\n                  If to Lineo:            Lineo, Inc.\n                                          383 South 520 West\n                                          Lindon, Utah 84042\n                                          Attention:  Chief Financial Officer\n\nAll such notices and other written communications shall be effective on the date\nof mailing, confirmed facsimile transfer or delivery.\n\n8.10  ATTORNEYS' FEES.\n\n      If any action at law or in equity is necessary to enforce or interpret the\nterms of this Agreement, the prevailing party shall be entitled to be reimbursed\nby the non-prevailing party for reasonable attorneys' fees, costs and\ndisbursements, in addition to any other relief to which such party may be\nentitled.\n\n8.11  SEVERABILITY.\n\n      If one or more provisions of this Agreement are held to be unenforceable\nunder applicable law, such provision shall be excluded from this Agreement and\nthe balance of the Agreement shall be interpreted as if such provision were so\nexcluded and shall be enforceable in accordance with its terms.\n\n\nSECTION 9   DEFINITIONS\n\n      For the purposes of this Agreement, each of the following terms shall have\nthe meaning set forth opposite such term below:\n\n      'knowledge' of a person shall mean actual knowledge of such person after\n(i) with respect to representations, warranties and statements made by or with\nrespect to Caldera Systems, inquiry of the officers and directors of Caldera\nSystems and those management-level employees of Caldera Systems who have\nresponsibility for the area of inquiry and (ii) with respect to representations,\nwarranties and statements made by or with respect to Lineo, inquiry of the\nofficers and directors of Lineo and those management-level employees of Lineo\nwho have responsibility for the area of inquiry.\n\n      'Intellectual Property' shall mean (a) all inventions (whether patentable\nor unpatentable and whether or not reduced to practice), all improvements\nthereto, and all patents, patent applications, and patent disclosures, together\nwith all reissuances, continuations, continuations-in-part, revisions,\nextensions, and reexaminations thereof, (b) all trademarks, service marks, trade\ndress, logos, trade names, and corporate names, together with all translations,\nadaptations, derivations, and combinations thereof and including all goodwill\nassociated therewith, and all applications, registrations, and renewals in\nconnection therewith, (c) all copyrightable works, all copyrights, and all\napplications, registrations, and renewals in connection therewith, (d) all mask\nworks and all applications, registrations, and renewals in connection therewith,\n(e) all trade secrets and confidential business information (including ideas,\nresearch and development, know-how, formulas, compositions, manufacturing and\nproduction processes and techniques, technical data, designs, drawings,\nspecifications, customer and supplier lists, pricing and cost information, and\nbusiness and marketing plans and proposals), (f) all computer software\n(including data and related documentation), (g)\n\n\n   24\n\nall other proprietary rights, and (h) all copies and tangible embodiments\nthereof (in whatever form or medium).\n\n      'Subsidiary' shall mean any corporation with respect to which a specified\nparty (or a Subsidiary thereof) owns a majority of the common stock or has the\npower to vote or direct the voting of sufficient securities to elect a majority\nof the directors. 'Subsidiaries' shall mean, for purposes of this Agreement,\neach Subsidiary of a party, collectively and individually.\n\n   25\n      IN WITNESS WHEREOF, the parties have caused this Agreement to be duly\nexecuted and delivered by their proper and duly authorized officers as of the\nday and year first above written.\n\n                                     Lineo, Inc.,\n                                     a Utah corporation\n\n\n                                    By: \/s\/ BRYAN SPARKS\n                                        ----------------------------------------\n                                        Bryan Sparks, President and CEO\n\n\n\n                                     Caldera Systems, Inc.,\n                                     a Utah corporation\n\n\n                                     By: \/s\/ RANSOM LOVE\n                                        ----------------------------------------\n                                       Ransom Love, President and CEO\n\n<\/pre>\n","protected":false},"template":"","meta":{"_acf_changed":false,"_stopmodifiedupdate":true,"_modified_date":"","_cloudinary_featured_overwrite":false},"corporate_contracts_companies":[6993],"corporate_contracts_industries":[9513],"corporate_contracts_types":[9622,9627],"class_list":["post-43727","corporate_contracts","type-corporate_contracts","status-publish","hentry","corporate_contracts_companies-caldera-systems-inc","corporate_contracts_industries-technology__software","corporate_contracts_types-planning","corporate_contracts_types-planning__purchase"],"acf":[],"_links":{"self":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts\/43727","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts"}],"about":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/types\/corporate_contracts"}],"wp:attachment":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/media?parent=43727"}],"wp:term":[{"taxonomy":"corporate_contracts_companies","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_companies?post=43727"},{"taxonomy":"corporate_contracts_industries","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_industries?post=43727"},{"taxonomy":"corporate_contracts_types","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_types?post=43727"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}