ASSET PURCHASE AGREEMENT BY
AND BETWEEN THE SANTA CRUZ OPERATION, INC. AND NOVELL,
INC. Dated as of September 19, 1995
TABLE OF
CONTENTS
ARTICLE I
THE ACQUISITION 1
1.1 Purchase of
Assets
1
1.2 Payments 2
1.3 Transfer of Customers 3
1.4
Non-Assignment of Certain Items 4
1.5 Transitional Contracts
4
1.6 License Back of Assets 5
1.7 Closing 5
ARTICLE
II
REPRESENTATIONS AND WARRANTIES OF SELLER 6
2.1
Organization, Standing and Power 6
2.2 Authority 6
2.3
Financial Statements 7
2.4 Compliance with Law 7
2.5 No
Defaults
8
2.6 Litigation 8
2.7 Absence of Certain Changes
8
2.8 Agreements 8
2.9 Tax Returns and Reports 9
2.10
Technology 10
2.11 Title to Properties, Absence of Liens and
Encumbrances
11
2.12 Governmental Authorizations and Licenses
12
2.13 Environmental Matters 12
2.14 Customers 12
2.15
Proprietary Information and Inventions and
Confidentiality Agreements
12
2.16 Inventory 13
2.17
Investment Intent 13
2.18 Reliance on Seller's Representations
13
2.19 Receipt of Information 13
2.20 Accredited Investor
13
2.21 Restricted Securities 14
2.22 Legends 14
2.23 No
Implied Representations
14
ARTICLE III
REPRESENTATIONS AND
WARRANTIES OF BUYER 14
3.1 Organization, Standing and Power
15
3.2 Authority 15
3.3 Capitalization 16
3.4 SEC
Documents; Buyer Financial Statements
16
3.5 Compliance with Law
17
3.6 No Defaults 17
3.7 Litigation 17
3.8 Absence of
Certain Changes
17
3.9 Agreements 18
3.10 Tax Returns and
Reports
18
3.11 Technology 19
3.12 Governmental Authorizations
and Licenses
19
3.13 Environmental Matters 19
3.14 Proprietary
Information and Inventions and Confidentiality Agreements
19
3.15 Status of Shares 19
3.16 No Implied Representations
19
ARTICLE IV
CERTAIN COVENANTS 20
4.1 Conduct of
Business of Seller
20
4.2 Conduct of Business of Buyer 20
4.3
No Solicitation 21
4.4 Access to Information 21
4.5
Confidentiality 21
4.6 Expenses 21
4.7 Public Disclosure
22
4.8 Consents 22
4.9 Commercially Reasonable Efforts
22
4.10 Notification of Certain Matters 22
4.11 Delivery of
Schedules
22
4.12 Additional Documents and Further Assurances
23
4.13 Treatment of Employees of the Business 23
4.14 Tax
Returns
23
4.15 Bulk Sales 24
4.16 SVRX Licenses 24
4.17
Audited Financials 25
4.18 Development of Merged Product
25
4.19 License of Networking Services 25
ARTICLE
V
CONDITIONS TO THE ACQUISITION 25
5.1 Conditions to
Obligations of Each Party to Effect the Acquisition
25
5.2
Additional Conditions to Obligations of Seller 26
5.3 Additional
Conditions to the Obligations of Buyer
27
ARTICLE
VI
CERTAIN CORPORATE GOVERNANCE MATTERS 27
6.1 Nomination of
Director to Buyer's Board of Directors
27
6.2 Right to
Maintain
28
6.3 Right of First Refusal on Change of Control
28
6.4 Registration Rights 31
6.5 Standstill Agreement
38
(a) Standstill 38
(b) Exceptions to Standstill Provision 39
(c)
Notice of Securities Purchases and Sales 39
(d) Acts in
Concert with Others 39
(e) Restrictions on Transfer of Securities
39
6.6 Buyer's Right of First Refusal 40
ARTICLE
VII
TERMINATION, AMENDMENT AND WAIVER 42
7.1 Termination
42
7.2 Effect of Termination 43
7.3 Amendment 43
7.4
Extension; Waiver 43
ARTICLE VIII
INDEMNIFICATION
8.1
Survival of Representations, Warranties and Agreements 44
8.2
Indemnification 44
8.3 Procedure for Indemnification with Respect
to Third-Party Claims
44
ARTICLE IX
GENERAL PROVISIONS
45
9.1 Notices 45
9.2 Survival 46
9.3 Interpretation
47
9.4 Counterparts 47
9.5 Entire Agreement 47
9.6
Severability 47
9.7 Other Remedies 47
9.8 Governing Law
47
9.9 Rules of Construction 47
Amendment 2
Buy-out of licensee's royalty obligation
INDEX OF
EXHIBITS
Exhibit Description
-------
-----------
Exhibit 5.1.(c) Form of Proposed operating Agreement,
including
Exhibit A and Exhibit B thereto and Eiger
Development
INDEX OF SCHEDULES
Schedule 1.1(a)
Assets
Schedule 1.1(b) Excluded Assets
Schedule 1.1(c) Assumed
Liabilities
Schedule 1.2(b) Royalties relating to UnixWare
product
Schedule 6.3(a) Change of Control Parties
ASSET
PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT (the
"Agreement") is made and entered into as of September 19, 1995 by
and between The Santa Cruz Operation, Inc., a California
corporation ("Buyer") and Novell, Inc., a Delaware corporation
("Seller").
RECITALS
A. Seller is engaged in the
business of developing a line of software products currently
known as Unix and UnixWare, the sale of binary and source code
licenses to various versions of Unix and UnixWare, the support of
such products and the sale of other products ("Auxiliary Products") which are directly
related to Unix and UnixWare (collectively, the
"Business").
B. The Boards of Directors of each of Seller and
Buyer believe it is in the best interests of each company and
their respective stockholders that Buyer acquire certain of the
assets of, and assume certain of the liabilities of Seller
comprising the Business (the "Acquisition").
C. In connection
with the Acquisition Buyer will issue to Seller 6,127,500 shares
of Common Stock of Buyer (the "Shares").
D. In connection
with the acquisition by Seller of the Shares, Buyer and Seller
desire to set forth certain agreements with respect to
the governance of Buyer following the closing of the
Acquisition.
NOW, THEREFORE, in consideration of the
covenants, promises and representations set forth herein, and for
other good and valuable consideration, the parties agree as
follows:
ARTICLE I
THE ACQUISITION
1.1 Purchase
of Assets
(a) Purchase and Sale of Assets. On the terms and
subject to the conditions set forth in this Agreement, Seller
will sell, convey, transfer, assign and deliver to Buyer and
Buyer will purchase and acquire from Seller on the Closing Date
(as defined in Section 1.7), all of Seller's right, title and
interest in and to the assets and properties of Seller relating
to the Business (collectively the "Assets") identified on Section
1.1 (a) hereto. Notwithstanding the foregoing, the Assets to be
so purchased shall not include those assets (the "Excluded
Assets") set forth on Schedule 1.1 (b):
(b) Assumption of
Liabilities. At the Closing, Buyer shall assume those obligations
and liabilities of Seller set forth on Schedule 1.1(c) hereto
(collectively, the "Assumed Liabilities").
(c) Liabilities
Not Assumed. Other than the Assumed Liabilities, Buyer shall not
assume, nor shall Buyer or any affiliate of Buyer be deemed
to have assumed or guaranteed, any other liability or obligation
of any nature of Seller, or claims of such liability or
obligation, whether accrued, matured or unmatured, liquidated or
unliquidated, fixed or contingent, known or unknown arising out
of (i) acts or occurrences related to any of the Assets, prior to
the Closing Date, or (ii) any other liability or obligation of
Seller which is not an Assumed Liability (collectively, the
"Unassumed Liabilities"). Seller will remain responsible for all
Unassumed Liabilities.
(d) Right of First Refusal. The parties agree that, within a reasonable time after the Closing Date, they will enter into a separate agreement whereby Buyer will have a right of first refusal to purchase from Seller (i) all appropriate copies of publications relating to the Business and in the possession, custody or control of Seller's technical library located at its facility in Florham Park, New Jersey and (ii) physical assets, including lab equipment and financial accounting server(s), owned by Seller and used in the Business. Each such item will be valued at net book value as of November 1, 1995. Such right of first refusal shall be exercisable until (1) February 29, 1996 as to the financial accounting server(s) and (2) January 31, 1996 as to all other items.
1.2. Payments.
(a)
Consideration for Assets: Stock. On the terms and subject to
the conditions set forth in this Agreement, as full payment for
the transfer of the Assets by Seller to Buyer, at the Closing
Buyer shall assume the Assumed Liabilities and issue to Seller
6,127,500 shares of fully paid and nonassessable shares of Common
Stock of Buyer (the "Shares" or the "Purchase Price").
(b)
Royalties. Except as otherwise provided in paragraph (e) of this Section 1.2, Buyer agrees to collect and pass through to Seller
one hundred percent (100%) of the SVRX Royalties as defined and
described in Section 4.16 hereof. Seller agrees to pay Buyer an
administrative fee of five percent (5%) of the SVRX Royalties.
Seller and Buyer further acknowledge and agree that Seller is
retaining all rights to the SVRX Royalties notwithstanding the
transfer of the SVRX Licenses to Buyer pursuant hereto, and that
Buyer only has legal title and not an equitable interest in such
royalties within the meaning of Section 541(d) of the Bankruptcy
Code. For purposes of administering the collection of SVRX
Royalties, the Parties acknowledge that the royalties shall
continue to be recognized as royalties by Seller on an
ongoing basis and the parties shall take such commercially
reasonable steps as may be necessary to effectuate the foregoing
for financial accounting and tax purposes. In addition, Buyer
agrees to make payment to Seller of additional royalties retained
by Seller in respect of the transfer of UnixWare and on account
of Buyer's future sale of UnixWare products. The amounts [...]
of additional royalties to be paid in connection
with Buyer's sale of the UnixWare products are identified in
detail on Schedule 1.2(b) hereto. Seller shall be entitled to
conduct periodic audits of Buyer concerning all royalties and
payments due to Seller hereunder or under the SVRX Licenses,
provided that Seller shall conduct such audits after reasonable
notice to Buyer and during normal business hours and shall not be
entitle to more than two (2) such audits per year. The cost of
any such audio shall be borne by Seller, unless such audit
reveals a payment shortfall in excess of 5% of amounts
due hereunder in which case the cost of such audio shall be borne
by Buyer.
(c) Allocation of Purchase Price. Within 45 days
following the Closing Buyer shall prepare and deliver to Seller,
subject to Seller's approval, an allocation of the Purchase Price
plus any other consideration properly allocable among the Assets
(the "Allocation"). The parties agree that all tax returns and
reports (including Internal Revenue Service ("IRS") Form 8594)
and all financial statements shall be prepared in a manner
consistent with (and the parties shall not otherwise take a
position inconsistent with) the Allocation unless required by the
IRS or state taxing authority. The Allocation shall be prepared
in a manner consistent with Section 1060 of the internal Revenue
Code of 1986, as amended (the "Code"), and the income
tax regulations promulgated thereunder.
(d)
[...]
Asset Transfer and Transfer Taxes. Notwithstanding any other provision of this Agreement, the Assets shall remain the property of Seller until expeditiously delivered to Buyer in the manner and at the locations prescribed as follows in this Section 1.2(d), or as subsequently agreed in writing.
Seller shall deliver and Buyer shall accept source code, object code, related documentation and other software assets described in Schedule 1.1(a) (collectively referred to as "Software Assets") only at Seller's facility in Florham Park, New Jersey.
In the event that Seller subsequently discovers Software Assets outside of New Jersey contemplated by this Agreement which have not heretofore been delivered to Buyer in New Jersey, Seller shall consult with Buyer to determine if Seller may destroy such assets in place without delivery to Buyer, or transport them to New Jersey or another location specified by Buyer for delivery to Buyer.
Seller represents that to its knowledge software documentation previously delivered to Buyer for the purpose of due diligence is the property of Seller, and Buyer agrees that it will destroy or return possession to Seller in New Jersey before title passes to Buyer.
Seller and Buyer agree that the license that Seller is entitled to exercise after Closing pursuant to Section 1.6 hereof is a right not sold to Buyer and as such is a right retained by Seller.
Buyer shall pay and promptly discharge when due the entire amount of any and all sales and use taxes ("Sales Taxes") imposed or levied by reason of the sale of the Assets to Buyer. The parties shall cooperate with each other to the extent reasonably requested and legally permitted to minimize any such Sales Taxes. If Seller is obligated to pay any of such Sales Taxes, Buyer shall reimburse Seller on demand for the amount of such payment.
(e) Revenues to be Retained by Buyer. Subject to the last sentence of paragraph (a) of Section 4.16 hereof, Buyer shall be entitled to retain 100% of the following categories of SVRX Royalties collected by Buyer:
- fees attributable to stand-alone contracts for maintenance and support of SVRX products listed under Item VI of Schedule 1.1(a) hereof;
- source code right to use fees under existing SVRX Licenses from the licensing of additional CPU's and from the distribution by Buyer of additional source code copies;
- source code right to use fees attributable to new SVRX licenses approved by Seller pursuant to Section 4.16(b) hereof; and
- royalties attributable to the distribution by Buyer and its distributors of binary copes of SVRX products, to the extent such copies are made by or for Buyer pursuant to Buyer's own licenses from Seller acquired before the Closing Date through Software Agreement No. SOFT-000302 and Sublicensing Agreement No. SUB-000302A.
(f) Monthly Reports. Within one (1) calendar month following each calendar month in which SVRX Royalties [and royalties from Royalty-Bearing Products as contemplated in Schedule1.2(b) hereof] are received by Buyer, Buyer shall provide to Seller, in electronic file format, a report detailing all such royalties. Such monthly reports shall be separately broken down by revenue type (i.e. source code right to use fees, gross and net binary per copy fees, and support fees), by product, by customer, by quarterly period by which distribution occurs, and by country (if provided by customer) of distribution. Each such report shall also detail, with respect to the revenues reported, any third party payments attributable to such revenues, broken down by the identity of such third parties and the applicable payments to each. Buyer shall provide Seller with a single point of contact to discuss specific additional revenue and unit information (by customer) which, in Seller's judgment, are appropriate to supplement such monthly reports. Buyer shall also provide to Seller, on a monthly basis, a report that reconciles monthly revenues reported (and accounts receivable) to cash remittances actually made to Seller by Buyer.
1.3. Transfer of Customers.
(a) Transfer
of Customers. (i) Intent. It is the intent of parties hereto that
all of the Business and all of Seller's backlog, if any relating
to the Business be transferred to Buyer. Accordingly, all parties
agree to facilitate the transfer of customers of the
Business from Seller to Buyer following the Closing.
(ii)
Purchase Order Data. Seller shall make available to Buyer,
upon request (A) a list of all outstanding written customer
orders, purchase orders and other customer commitments from the
current customers of the Business (the "Current Customers"), (B)
the names of all current Customers, and (C) data regarding
Seller's standard cost of sales for the items covered by such
orders, and shall provide upon request such other information as
it (AA) relevant to profitability of such items, (BB) available
to Seller without incurring undue effort or expense and (CC)
requested by Buyer.
(iii) Transfer of Orders: Assignments.
Prior to the Closing, Seller and Buyer agree to cooperate with
each other in conducting joint contracts with the Current
Customers (as appropriate) for the purpose of attempting to
obtain such customers' consent to transfer orders from Seller to
Buyer (or to issue new orders to Buyer for the same or
similar items) and to assign Seller's rights and benefits under
the contracts included in the Assets to Buyer as of the
Closing.
(iv) Assumption of Obligation. Tot he extent that an
order is transferred or assigned to Buyer or that Buyer accepts a
new purchase order from a Current Customer, Buyer agrees to
assume and perform all obligations thereunder.
1.4.
Non-Assignment of Certain Items.
Notwithstanding anything to
the contrary in this Agreement, to the extent that the assignment
or license hereunder of any of the Assets shall require the
consent of any other party (or in the event that any of the
Assets shall be nonassignable), neither this Agreement nor any
action taken pursuant to its provisions shall constitute an
assignment or license or an agreement to assign or license such
Assets if the requisite consents are not obtained and
such assignment or license or attempted assignment or license
would constitute a material breach or result in the loss or
diminution thereof: provided, however, that Seller shall, as soon as practicable after the Closing Date and at its
own expense, use reasonable commercial efforts to obtain all
third party consents necessary to assign or license the Assets to
Buyer, and Seller hereby consents to Buyer using such efforts as
it deems necessary or appropriate to effect the same. In the
event that notwithstanding the efforts of Selle and Buyer all
assignments or licenses needed to assign or license the Assets to
Buyer cannot be provided to Buyer, Seller shall negotiate an
alternative assignment or license as to such Assets so as to
afford Buyer, to the extent practicable, the same or similar
benefits and rights as if such assignment or license had
occurred.
1.5. Transitional Contracts.
The parties
acknowledge that it may not be practical or advisable to assign
or terminate certain contracts (such as Seller's Master License
Agreements ("MLA's")) pursuant to which Seller has granted third
parties rights to sell, distribute, obtain support and/or
maintain Seller's UnixWare products (such contracts to
be referred to hereinafter collectively as the "Transitional
Contracts"). In such cases, Seller and Buyer will use diligent
efforts to transition such business (concerning the Business
only) and the customer relationship relating to such business to
Buyer such that any new agreements concerning the Business will
be entered into by, and support and maintenance will be provided
by, Buyer, except where Buyer is unable to do so. In any event,
Buyer shall be entitled to the revenue and benefits received by
Seller reasonably attributable to support or maintenance of the
products pursuant to the Transitional Contracts (even if prepaid
before Closing) net of Seller's identifiable direct expenses of
support and maintenance related specifically thereto and
documented to Buyer. Seller may retain such units of inventory of
products as it seems reasonable necessary solely to satisfy
customers under Transitional Contracts in accordance with this
paragraph if Buyer is unable to do so. Following the Closing,
Seller shall not enter it any new Transitional Contracts nor
extend the term of any existing contract. Except for revenue from
MLAs, Buyer and Seller shall negotiate a mutually acceptable
arrangement to afford Buyer the benefits of ongoing licenses
which are intended to be assigned hereunder as part of the Assets
but which cannot be assigned due to third party
objections.
1.6 [...]Seller's Licenses to Assets.
Concurrent with the
Closing, Buyer and Seller shall
[...]enter into a license agreement
[...]providing Seller with
a royalty-free, perpetual, worldwide
license to (i) all of the technology included in the Assets and
(ii) all derivatives of the technology included in the Assets,
including the "Eiger" product release (such licensed back
technology to be referred to collectively as
"Licensed Technology"). Seller agrees that it shall use the
Licensed Technology only (i) for internal purposes without
restriction or (ii) for resale in bundled or integrated products
sold by Seller which are not directly competitive with the core
products of Buyer and in which the Licensed Technology does not
constitute a primary portion of the value of the total bundled or
integrated product. The license agreement shall
include reasonable provisions concerning Buyer's obligation to
provide documentation and support for the Licensed Technology.
The license agreement shall also provide Seller with an unlimited
royalty-free, perpetual, worldwide license to the Licensed
Technology upon the occurrence of a Change of Control of Buyer
described in Section 6.3(c) hereof. In the event of a Change of
Control of Seller (as defined in Section 6.6 hereof, the license
granted pursuant to the license agreement shall be limited to
Seller's products either developed or substantially developed as
of the time of the Change of Control.
1.7. Closing.
(a)
Closing. Unless this Agreement is earlier terminated pursuant to
Article VII, the closing of the transactions contemplated by this
Agreement (the "Closing") shall be held at the offices of
Wilson, Sonsini, Goodrich & Rosati, 650 Page Mill Road, Palo
Alto, California 94304, at 10:00 a.m. on the date which is two
business days following satisfaction or waiver of the last of the
conditions to Closing as set forth in the Article IV hereof, or
on such other time and/or date as the parties agree (the actual
date on which the Closing occurs is referred to herein as the
"Closing Date").
(b) Delivery. At the Closing:
(i)
Buyer shall deliver to Seller an instrument of assumption
of liabilities by which Buyer shall assume the Assumed
Liabilities as of the Closing;
(ii) Buyer shall deliver to
Seller a certificate or certificates representing the
Shares;
(iii) Seller shall deliver to Buyer all bills of
sale, endorsements, assignments, consents to assignments to the
extent obtained and other instruments and documents as Buyer may
reasonably request to sell, convey, assign, transfer and deliver
to Buyer Seller's title to all the Assets; and
(iv) Seller
and Buyer shall deliver or cause to be delivered to one another
such other instruments and documents necessary or appropriate
to evidence the due execution, delivery and performance of this
Agreement.
(c) Taking of Necessary Action: Further Action.
If, at any time after the Closing Date, any further action is
necessary or desirable to carry out the purposes of this
Agreement the parties agree to take, and will take, all such
lawful and necessary and/or desirable action.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SELLER
Except as
described with reasonable particularity in the Seller Disclosure
Schedule (which shall cross-reference to the particular section
below to which such description applies) delivered by Seller
to Buyer simultaneously with the execution of this Agreement, as
such Seller Disclosure Schedule may be updated and/or amended
pursuant to Section 4.11 hereof (the "Seller Disclosure
Schedule"), Seller represents and warrants to buyer
that:
2.1. Organization, Standing and Power.
Seller is a
corporation duly organized, validly existing and in good standing
under the laws of its state of incorporation, and has all
requisite corporate power and authority to own, operate and lease
its properties and to carry on its business as now being
conducted. Seller is duly qualified as a foreign corporation and
is in good standing in each jurisdiction in which the failure to
so qualify reasonably would be expected to have a
material adverse effect on the Business Condition of the
Business. As used in this agreement, "Business Condition" with
respect to any corporate entity, group of corporate entities or
the Business shall mean the business, financial condition,
results of operations and assets of such corporate entity, group
of corporate entities or the Business, as the case may be.)
Seller has made available to Buyer complete and correct copies of
the Certificate of Incorporation and Bylaws of Seller, as amended
to the date hereof.
2.2. Authority.
Seller has all requisite
corporate power and authority to enter into this Agreement and to
consummate the transactions contemplated hereby. The execution
and delivery of this Agreement, the performance by Seller of its
obligations hereunder and the consummation of the transactions
contemplated hereby have been duly and validly authorized by all
necessary corporate action on the part of Seller, and have been
approved by the Board of Directors of Seller. No other corporate
proceeding on the part of either Seller is necessary to authorize
the execution and delivery of this Agreement by Seller or
the performance of Seller's obligations hereunder or the
consummation of the transactions contemplated hereby. This
Agreement has been duly executed and delivered by Seller and
constitutes a legal, valid and binding obligation of Seller
enforceable against Seller in accordance with its terms, except
as enforcement may be limited by bankruptcy, insolvency, or other
similar laws affecting the enforcement of creditors'
rights generally and except that the availability of equitable
remedies is subject to the discretion of the court before which
any proceeding therefor may be brought. Subject to satisfaction
or waiver of the conditions set forth in Article V the execution
of this Agreement does not, and the consummation of the
transactions contemplated hereby will not, conflict with or
resulting any violation of any statute, law, rule, regulation,
judgment, order, decree, or ordinance applicable to Seller, or
its properties or assets that, individually or in the
aggregate, reasonably would be expected to have a material
adverse effect on the Business Condition of the Business, or
conflict with any provision of the Certificate of Incorporation
or Bylaws of Seller or result in any breach or default (with or
without notice or laps of time, or both) under, or give rise to a
right of termination, cancellation or acceleration of any
obligation or to loss of a material benefit under, or result in
the creation of a lien or encumbrance on any of the properties or
assets of Seller pursuant to any agreement, contract, note,
mortgage, indenture, lease, instrument, permit,
concession, franchise or license to which Seller is a party or by
which Seller or its properties or assets may be bound that would
reasonably be expected, either individually or in the aggregate,
to have a material adverse effect on the Business Condition of
the Business). No consent, approval, order or authorization of,
or registration, declaration or filing with any court,
administrative agency, commission, regulatory authority or other
governmental authority or instrumentality, domestic or foreign
(a "Governmental Entity"), is required by or with respect to
Seller in connection with the execution and delivery of this
Agreement or the consummation by Seller of the transactions
contemplated hereby, except for (i) the filing of a pre-merger
notification report under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the "HSR Act"), (ii) those
required to be made or obtained by Buyer or any of its
affiliates, (iii) such consents, approvals,
orders, authorizations, registrations, declarations and filings
as would not have a material adverse effect on the ability of
Seller to transfer the Assets to Buyer at the
Closing.
2.3. Financial Statements.
Seller has furnished
Buyer with unaudited financial information concerning the
Business as of July 31, 1995 (the foregoing financial information
is referred to collectively as the "Business Financial
Information"). The Business Financial Information has been
prepared in accordance with generally accepted
accounting principles consistently applied (except as may be
indicated in the notes thereto) and fairly present, in all
material aspects, the financial position of the Business as of
the dates thereof and the results of operations for the periods
then ended. There has been no material change in Seller's
accounting policies during such periods relating to
the Business.
2.4. Compliance with Law.
Seller has
conducted the Business so as to comply in all material respects
with all laws, rules, and regulations, judgments, decrees or
orders of any governmental Entity applicable to its operations
except where the failure so to comply reasonably would not be
expected to have a material adverse effect on the
Business Condition of the Business. As of the date hereof, there
are no judgments or orders, injunctions, decrees, stipulations or
awards (whether rendered by a court or administrative agency or
by arbitration) against Seller with any continuing effect that
reasonably would be expected to have a material adverse affect on
the Business Condition of the Business. To the knowledge of
Seller, there is no investigation by any Governmental Entity with
respect to Seller pending against Seller which is reasonably
likely to have a material adverse effect on the
Business Condition of the Business.
2.5. No Defaults.
To
the knowledge of Seller, Seller is not, nor has it received
written notice that it would be with the passage of time, (i) in
violation of any provision of its Certificate of Incorporation
or Bylaws or (ii) in default or violation of any term, condition
or provision of (A) any judgment, decree, order, injunction or
stipulation applicable to the Business or (B) any agreement,
note, mortgage, indenture, contract, lease or instrument, permit,
concession, franchise or license to which Seller is a party (with
respect to the Business) or by which the Business may be bound,
in any such case in a manner that reasonably would be expected to
have a material adverse effect on the Business Condition of the
Business.
2.6. Litigation.
There is no action, suit,
proceeding, claim or governmental investigation pending or, to
the knowledge of Seller, threatened, against Seller that
reasonably would be expected to have a material adverse effect on
the Business Condition of the Business. There is no action, suit,
proceeding, claim or governmental investigation pending against
Seller as of the date hereof that in any manner challenges or
seeks to prevent, enjoin, alter or materially delay any of the
transactions contemplated hereby.
2.7. Absence of Certain
Changes.
Since July 31, 1995, Seller has conducted the Business
in the ordinary course and, except for the execution, delivery
and performance of this Agreement or as required hereby, there
has not occurred: (a) any material adverse change in the Business
Condition of the Business; (b) any entry into any
material commitment or transaction by Seller relating to the
Business, other than in the ordinary course of business; (c) any
damage, destruction or loss, whether covered by insurance or not,
materially and adversely affecting the Business Condition of the
Business; (d) any acquisition or disposition of a material amount
of property or assets of Seller relating to the Business outside
of the ordinary course of business; (e) any transfer or grant by
Seller of a right under any Seller Intellectual Property Rights
(as defined in Section 2.10 hereof), other than those transferred
or granted in the ordinary course of business.
2.8.
Agreements.
With respect to the Business, Seller is not a party
to, and the Business is not subject to:
(a) Any union
contract or any employment contract or arrangement providing for
future compensation, written or oral, with any
officer, consultant, director or employee which is not cancelable
by Seller on 30 days' notice or less without penalty or
obligation to make payments related to such termination, other
than (A) (in the case of employees other than executive officers
of Seller) such agreements as are not materially different from
standard arrangements offered to employees generally in the
ordinary course of business consistent with Seller's past
practices and (B) such agreements as may be imposed or implied
by law;
(b) Any plan, contract, or arrangement, the
obligations under which exceed $100,000, written or oral,
providing for bonuses, pensions, deferred compensation, severance
pay or benefits, retirement payments, profit-sharing, or the
like;
(c) As of the date hereof, any existing OEM agreement,
distribution agreement, volume purchase agreement, or other
similar agreement in which the annual amount paid or received by
Seller during t he twelve-month period ended July 31, 1995
exceeded 31,500,000 or pursuant to which Seller has granted most
favored nation pricing provisions or exclusive marketing rights
related to any product, group of products or territory to any
person;
(d) Any lease or month-to-month tenancy for real or
personal property in which the amount of payments which Seller is
required to make on an annual basis exceeds $100,000;
(e)
Any contract containing covenants purporting to limit
Seller's freedom to compete in any line of business in any
geographic area; or
(f) Any license to a third party
involving Seller Intellectual Property Rights (as such term is
defined in Section 2.10 hereof) source or binary code which
includes a right to sublicense such source or binary code without
additional payment.
Each agreement, contract, mortgage,
indenture, plan, lease, instrument, permit, concession,
franchise, arrangement, license, and commitment listed in the
Seller Disclosure Schedule pursuant to this Section is valid and
binding on Seller, and is in full force and effect, and
Seller has not breached any provision of, nor is it in default
under the terms of, any such agreement, contract, mortgage,
indenture, plan, lease, instrument, permit, concession,
franchise, arrangement, license or commitment except for such
failures to be valid and binding or in full force and effect and
such breaches or defaults as reasonably would not be expected to
have a material adverse effect on the Business Condition of the
Business.
2.9. Tax Returns and Reports.
(a) Definition
of Taxes. For the purposes of this Agreement, "Tax" or "Taxes"
refers to any and all federal, state, local and foreign
taxes, assessments and other governmental charges, duties,
impositions and liabilities relating to taxes, including taxes
based upon or measured by gross receipts, income, profits, sales,
use and occupation, and value added, ad valorem transfer,
franchise, withholding, payroll, recapture, employment, excise
and property taxes, together with all interest, penalties and
additions imposed with respect to such amounts and
any obligations under any agreements or arrangements with any
other person with respect to such amounts and including any
liability for taxes of a predecessor entity.
(b) Tax
Returns and Audits. Except as reasonably would not be expected to
have a material adverse effect on the Business Condition of
the Business:
(i) Seller has timely filed all federal,
state, local and foreign returns, estimates, information
statements and reports ("Returns") relating to Taxes required to
be filed by it, except such Returns which are not material to the
Business, and has paid all Taxes shown to be due on such Returns
or is contesting them in good faith.
(ii) Seller has withheld
with respect to its employees all federal and state income taxes,
FICA, FUTA and other Taxes required to be withheld.
(iii)
Seller has not been delinquent in the payment of any Tax nor
is there any Tax deficiency outstanding, proposed or assessed
against Seller, nor has Seller executed any waiver of any statute
of limitations on or extending the period for the assessment or
collection of any Tax.
(iv) No audio or other examination of
any Return of Seller is presently in progress, nor has Seller
been notified of any request for such an audit or other
examination.
(v) None of the Assets are treated as
"tax-exempt use property" within the meaning of Section 168(h) of
the Code.
(vi) Seller is not, and has not been at any time, a
"United States real property holding corporation" within the
meaning of Section 897(c)(2) of the Code.
2.10.
Technology.
To the knowledge of Seller, as of the date
hereof, Seller owns, co-owns or is licensed or otherwise entitled
to use rights to all patents, trademarks, trade names, service
marks, copyrights, mask work rights, trade secret rights, and
other intellectual property rights and any applications therefor,
and all maskworks, net lists, schematics, technology, source
code, know-how, computer software programs and all other tangible
information or material, that are used in the Business
as currently conducted (the "Seller Intellectual Property
Rights").
The Seller Disclosure Schedule lists, as of the
date hereof, (i) all patents, registered copyrights, trademarks,
service marks, mask work rights, and any applications therefor,
included in the Seller Intellectual Property Rights; (ii) the
jurisdictions in which each such Seller Intellectual Property
Right has been issued or registered or in which an application
for such issuance and registration has been filed, including the
respective registration or application numbers; and (iii) which,
if any, of such products have been registered for
copyright protection with the United States Copyright Office and
any foreign offices. The Seller Disclosure Schedule also sets
forth a list of license agreements which, to Seller's knowledge,
constitutes all license agreements under which Seller licenses as
licensee the intellectual property rights of third parties
relating to technology or software which is incorporated in
existing products of the Business for which products Seller has
received revenues in excess of $2,000,000 in the twelve-month
period ended July 31, 1995. To Seller's knowledge, Seller is not
in material violation of any such license agreement.
With
respect to the Business, Seller is not a party to nor is
the Business subject to (i) any joint venture contract or
arrangement or any other agreement that involves a sharing of
profits with other persons other than the payment or receipt of
royalties by Seller; (ii) any agreement pursuant to which Seller
was obligated to make payment of royalties in the twelve-month
period ended July 31, 1995 of $1,000,000 or more; or (iii) any
agreement pursuant to which Seller utilizes the intellectual
property rights of others in any products currently marketed by
seller and which is either non-perpetual or terminable by the
licensor thereunder in the event of the Acquisition and which,
if terminated, reasonably would be expected to have a material
adverse effect on the Business Condition of the
Business.
No claims with respect to the Seller Intellectual
Property Rights have been communicated in writing to Seller (i)
to the effect that the manufacture, sale or use of any product of
the Business as now used or offered by Seller infringes on any
copyright, patent, trade secret or other intellectual property
right of a third party or (ii) challenging the ownership or
validity of any of the Seller Intellectual Property Rights, any
or all of which claims reasonably would be expected to have a
material adverse effect on the Business Condition of the Business.
To the knowledge of Seller, as of the date hereof, all patents
and registered trademarks, service marks and registered
copyrights held by Seller in connection with the Business are
valid and subsisting except for failures to be valid and
subsisting that reasonably would not be expected to have a
material adverse effect on the Business Condition of the
Business. Seller does not know of any unauthorized use,
infringement or misappropriation of any of the Seller
Intellectual Property Rights by any third party that reasonably
would be expected to have a material adverse effect on the
Business Condition of the Business.
2.11. Title to
Properties: Absence of Liens and Encumbrances.
(a) The Seller
Disclosure Schedule sets forth a list of all real property owned
or, as of the date hereof, leased by Seller for use in connection
with the Business and the aggregate annual rental or
mortgage payment or other fees payable under any such lease or
loan.
(b) Seller has good and valid title to, or, in the case
of leased properties and assets, valid leasehold interests in,
all of the tangible properties and assets, real, personal, and
mixed, which are material to the conduct of the Business, free
and clear of any liens, charges, pledges, security interests or
other encumbrances, except for such of the foregoing as (A) are
reflected in the Seller Financial Statements, or (B) arise out of
taxes or general or special assessments not in default and
payable without penalty or interest or the validity of which is
being contested in good faith by appropriate proceedings, or (C)
such imperfections of title and encumbrances, if any, which are
not substantial in character, amount or extent, and which do not
materially detract from the value, or interfere with the present
use, of the property subject thereto or affected
thereby.
2.12 Governmental Authorizations and Licenses.
Seller is the holder of all licenses, authorizations, permits,
concessions, certificates and other franchises of any
Governmental Entity required to operate the Business, the failure
to hold which reasonably would be expected to have a material
adverse effect on the Business Condition of the
Business (collectively, the "Licenses"). The Licenses are in full
force and effect. There is not now pending, or to the knowledge
of Seller is there threatened, any action, suit, investigation or
proceeding against Seller before any Governmental Entity with
respect to the Licenses, nor is there any issued or outstanding
notice, order or complaint with respect to the violation by
Seller of the terms of any License or any rule or regulation
applicable thereto, except in any such case as reasonably would
not be expected to have a material adverse effect on the
Business Condition of the Business.
2.13 Environmental
Matters.
To Seller's knowledge, Seller has at all relevant times
with respect to the Business been in material compliance with all
environmental laws, and has received no potentially
responsible party ("PRP") notices or functionally equivalent
notices from any governmental agencies or private parties
concerning releases or threatened releases of any "hazardous
substance" as that term is defined under 42 U.S.C.
960{1}(14).
2.14 Customers.
The Seller Disclosure Schedule
sets forth each customer of the Business that paid Seller
royalties and licensee fees in an aggregate amount in excess of
$1,000,000 during the twelve-month period ended July 31,
1995.
2.15 Proprietary Information and Inventions and
confidentiality Agreements.
To the knowledge of the Seller, each
employee, consultant, and officer of Seller (exclusively with
respect to the Business) has executed a proprietary information
and inventions and confidentiality agreement, copies of which
have been made available to counsel to Buyer, and it is Seller's
policy that such agreements be executed by each new employee,
consultant, officer and director of Seller in the ordinary course
of Seller's business.
2.16 Inventory.
The Seller Disclosure
Schedule sets forth the estimated amount of UnixWare inventory
(as defined thereon), including pre-paid royalties, that was held
by Seller's resellers as of the date of
this Agreement.
2.17 Investment Intent.
The purchase of
the Shares pursuant to this Agreement is for the account of
Seller for the purpose of investment and not with a view to or
for sale in connection with any distribution thereof within the
meaning of the Securities Act of 1933, as amended (the
"Securities Act") and the rules and regulations
promulgated thereunder, and that Seller has no present intention
of selling, granting any participation in, or otherwise
distributing the same. By executing this Agreement, Seller
further represents that it does not have any contract,
undertaking, agreement or arrangement with any person to sell,
transfer or grant participations to such person or to any
third person, with respect to any of the Shares.
2.18
Reliance Upon Seller's Representations.
Seller understands that
the Shares are not registered under the Securities Act on the
ground that the sale provided for in this Agreement and the
issuance of the Shares hereunder is exempt from registration
under the Securities Act pursuant to section 4(2) thereof, and
that Buyer's reliance on such exemption is predicated on Seller's
representations set forth herein. Seller realizes that the basis
for the exemption may not be present if, notwithstanding such
representations, Seller has in mind merely acquiring the Shares
for a fixed or determinable period in the future, or for a market
rise, or for sale if the market does not rise. Seller presently
does not have any such intention.
2.19 Receipt of
Information.
Seller believes it has received all the information
it considers necessary or appropriate for deciding whether to
purchase the Shares. Seller further represents that it has had
an opportunity to ask questions and receive answers from Buyer
regarding the terms and conditions of the offering of the Shares
and the business, properties, prospects and financial condition
of Buyer and to obtain additional information (to the extent
Buyer possessed such information or could acquire it without
unreasonable effort or expense) necessary to verify the accuracy
of any information furnished to it or to which it had access. The
foregoing, however, does not limit or modify the representations
and warranties of the Buyer in Article III of this Agreement or
the right of the Seller to rely thereon.
2.20 Accredited
Investor.
Seller is an "accredited investor" within the meaning
of Securities and Exchange Commission ("SEC") Rule 501
of Regulation D, as presently in effect.
2.21 Restricted
Securities.
Seller understands that the Shares may not be sold,
transfered, or otherwise disposed of without registration
under the Securities Act or an exception therefrom, and that in
the absence of an effective registration statement covering the
Shares or an available exemption from registration under the
Securities Act, the Shares must be held indefinitely. In
particular, Seller is aware that the Shares may not be sold
pursuant to Rule 144 promulgated under the Securities Act unless
all of the conditions of that rule are met.
2.22 Legends.
To
the extent applicable each certificate or other document
evidencing any of the Shares shall be endorsed with the
legends set forth below, and Seller covenants that, except to the
extent such restrictions are waived by Buyer, Seller shall not
transfer the shares represented by any such certificate without
complying with the restrictions on transfer described in the
legends endorsed on such certificate:
(a) The Following
Legend under the Securities Act
"THE SHARES REPRESENTED
HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES
SECURITIES ACT OF 1993, AS AMENDED, AND MAY NOT BE
SOLD, TRANSFERRED, ASSIGNED, PLEDGED, OR HYPOTHECATED ABSENT AN
EFFECTIVE REGISTRATION THEREOF UNDER SUCH ACT OR COMPLIANCE WITH
RULE 144 PROMULGATED UNDER SUCH ACT, OR UNLESS THE COMPANY HAS
RECEIVED AN OPINION OF COUNSEL, SATISFACTORY TO THE COMPANY AND
ITS COUNSEL THAT SUCH REGISTRATION IS NOT REQUIRED."
2.23
Non Implied Representations.
It is the explicit intent of
each party hereto that Seller is not making any representations
and warranties of Seller contained in this Agreement or in the
Seller Disclosure Schedule.
ARTICLE
III
REPRESENTATIONS AND WARRANTIES OF BUYER
Except as
described with reasonable particularity in the Buyer Disclosure
Schedule (which shall cross reference to the particular section
below to which such description applies) delivered by Buyer
to Seller simultaneously with the exception of this Agreement as
such Buyer Disclosure Schedule may be updated and/or amended
pursuant to Section 4.11, hereof (the "Buyer Disclosure
Schedule"), and except as disclose in Buyer's SEC Documents (as
defined in Section 3.4), Buyer represents and warrants to Seller
that
3.1 Organization, Standing and Power
Buyer is a
corporation duly organized, validly existing and in good standing
under the laws of its state of incorporation, and has
all requisite corporate power and authority to own, operate and
lease its properties and to carry on its business as now being
conducted. Buyer is duly qualified as a foreign corporation and
is in good standing in each jurisdiction in which the failure to
so qualify would reasonably be expected to have a material
adverse effect on the Business Condition of Buyer. Buyer has made
available to Seller complete and correct copies of the
Certificate of incorporation and Bylaws of Buyer, as amended to
the date hereof.
3.2 Authority.
Buyer has all requisite
corporate power and authority to enter into this Agreement and,
to consummate the transactions contemplated hereby. The execution
and delivery of this Agreement, the performance by Buyer of its
obligations hereunder and the consummation of the transactions
contemplated hereby have been duly and validly authorized by all
necessary corporate action on the part of Buyer, and have been
approved by the Board of Directors of Buyer. No other corporate
proceeding on the part of either Buyer is necessary to authorize
the execution and deliver of the Agreement by Buyer or
the performance of Buyer's obligations hereunder or the
consummation of the transactions contemplated hereby. This
Agreement has been duly executed and delivered by Buyer and
constitutes a legal, valid and binding obligation of Buyer
enforceable against Buyer in accordance with its terms, except as
enforcement may be limited by bankruptcy, insolvency, or other
similar laws affecting the enforcement of creditor's
rights generally and except that the availability of equitable
remedies is subject to the discretion of the court before which
any preceding therefore may be brought. Subject to satisfaction
or waiver of the condition set forth in Article V, the execution
and delivery of this Agreement does not, and the consummation of
the transactions contemplated hereby will not conflict with or
result in any violation of any statute, law, rule, regulation,
judgment, order, decree, or ordinance applicable to Buyer or its
properties or assets that individually or in the aggregate,
reasonably would be expected to have a material adverse effect on
the Business Condition of Buyer, or conflict with any provision
of the Certificate of Incorporation or Bylaws of Buyer or result
in any breach or default (with or without notice or lapse of
time, or both) under, or give rise to a right of
termination, cancellation, or acceleration of any obligation or
to loss of a material benefit under, or result in the creation of
a lien or encumbrance on any of the properties or assets of Buyer
pursuant to any agreement, contract, note, mortgage, indenture,
lease, instrument, permit, concession, franchise or license to
which Buyer is a party or by which Buyer or its properties or
assets may be bound that would reasonably be expected to have a
material adverse effect on the Business Condition of Buyer. No
consent, approval, order or authorization of, or
registration, declaration or filing with any Governmental Entity
is required by or with respect to Buyer in connection with the
execution and delivery of this Agreement or the consummation by
Buyer of the transactions contemplated hereby, except for (i) the
filing of a pre-merger notification report under the HSR Act,
(ii) those required to be made or obtained by Seller or any of
its affiliates, (iii) filings following the Closing under federal
and state securities laws relating to issuance of the Shares; and
(iv) such concerns, approvals, adverse effect on the ability of
Buyer to issue the Shares to Seller and assume the
Assumed Liabilities at the Closing.
3.3 Capitalization.
The authorized capital stock of Buyer consists of 100,000,000
shares of Common Stock, no par value, and 20,000,000 shares of
Preferred Stock, no par value, of which there were issued
and outstanding as of the close of business on September 18,
1995, 30,791,674 shares of Common Stock and no shares of
Preferred Stock. There are no other outstanding shares of capital
stock or voting securities of Buyer other than shares of Buyer
Common Stock issued after September 18, 1995 upon the exercise of
options issued under the Buyer's Amended and Restated 1987 Stock
Option Plan (the "Buyer Stock Option Plan"). All outstanding
shares of the Common Stock of Buyer have been duly authorized,
validly issued, fully paid and are nonassessable and free of any
liens or encumbrances other than any liens or
encumbrances created by or imposed upon the holders thereof. As
of the close of business on September 18, 1995, Buyer has
reserved 9,663,565 shares of Common Stock for issuance to
employees, directors and independent contractors pursuant to the
Buyer Stock Option Plan and the Buyer Employee Stock Purchase
Plan, of which 5,256,108 shares are subject to outstanding,
unexercised options. Other than this Agreement, there are no
other options, warrants, calls, rights, commitments or agreements
of any character to which Buyer is a party or by which it is
bound obligating Buyer to issue, deliver, sell, repurchase or
redeem, or cause to be issued, delivered, sold, repurchased or
redeemed, any shares of the capital stock of Buyer, or obligating
Buyer to grant, extend or enter into any such option, warrant,
call, right, commitment or agreement. The shares of Buyer Common
Stock to be issued pursuant to this Agreement will be duly
authorized, validly issued, fully paid
and non-assessable.
3.4 SEC Documents: Buyer Financial
Statements.
Buyer has made available to Seller a true and
complete copy of each statement, annual, quarterly and other
report, and definitive proxy statement filed by Buyer with
the Securities and Exchange Commission ("SEC") since September
30, 1993 (the "Buyer SEC Documents"), which are all the documents
(other than preliminary material) that Buyer was required to file
with the SEC since such date. As of their respective filing
dates, the Buyer SEC Documents complied in all material respects
with the requirements of the Securities Exchange Act of 1934 (the
"Exchange Act") or the Securities Act of 1933 (the "Securities
Act"), as the case may be, and none of the Buyer SEC Documents
contained any untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary
to make the statements made therein, in light of
the circumstances in which they were made, not misleading. The
financial statements of Buyer included in the Buyer SEC Documents
(the "Buyer Financial Statements") comply as to form in all
material respects with applicable accounting requirements and
with the published rules and regulations of the SEC with respect
thereto, have been prepared in accordance with generally accepted
accounting principles (except as may be indicated in the notes
therein or, in the case of unaudited statements, as permitted by
Form 10-Q of the SEC) and fairly present the consolidated
financial position of Buyer and its consolidated subsidiaries at
the dates thereof and the consolidated results of
their operations and cash flows for the periods then ended
(subject, in the case of unaudited statements, to normal,
recurring audit adjustments). Since September 30, 1994, there has
been no material change in Buyer's accounting policies except as
described in the notes to Buyer's Financial
Statements.
3.5 Compliance with Law.
Buyer has conducted its
business so as to comply in all material respects with all laws,
rules, and regulations, judgments, decrees or orders of any
governmental Entity applicable to its operations except where the
failure so to comply reasonably would not be expected to have a
material adverse effect on the Business Condition of Buyer. As of
the date hereof, there are no judgments or orders, injunctions,
decrees, stipulations or awards (whether rendered by a court or
administrative agency or by arbitration) against Buyer with any
continuing effect that reasonably would be expected to have
a material adverse affect on the Business Condition of the Buyer.
To the knowledge of the Buyer, there is no investigation by any
Governmental Entity with respect to Buyer pending against Buyer
which is reasonably likely to have a material adverse effect on
the Business Condition of Buyer.
3.6 No Defaults.
To the
knowledge of the Buyer, Buyer is not nor has received written
notice that it would be with the passage of time, (i) in
violation of any provision of its Certificate of Incorporation
or Bylaws or (ii) in default or violation of any term, condition
or provision of (A) any judgment, decree, order, injunction or
stipulation applicable to Buyer or (B) any agreement, note,
mortgage, indenture, contract, lease or instrument, permit,
concession, franchise or license to which Buyer is a party or by
which Buyer may be bound, in any such case in a manner that
reasonably would be expected to have a material adverse effect on
the Business Condition of Buyer.
3.7 Litigation.
There is no
action, suit, proceeding, claim or governmental investigation
pending or, to the knowledge of the Buyer, threatened, against
Buyer which reasonably would be expected to have, a material
adverse effect on the Business Condition of Buyer. There is
no action, suit, proceeding, claim or governmental investigation
pending against Buyer as of the date hereof which in any manner
challenges or seeks to prevent, enjoin, alter or materially delay
any of the transactions contemplated hereby.
3.8 Absence
of Certain Changes.
Since June 30, 1995, Buyer has conducted its
business in the ordinary course and, except for the
execution, delivery and performance of this Agreement or as
required hereby, there has not occurred; (a) any material adverse
change in the Business Condition of Buyer; (b) any entry into any
material commitment or transaction by Buyer, other than in the
ordinary course of business; (c) any damage, destruction or loss,
whether covered by insurance or not, materially and adversely
affecting the Business Condition of Buyer; or (d) any acquisition
or disposition of a material amount of property or assets of
Buyer outside of the ordinary course of business.
3.9
Agreements.
Each agreement, contract, mortgage, indenture,
plan, lease, instrument, permit, concession, franchise,
arrangement, license and commitment that is an Exhibit to Buyer's
most recent Form 10-Q is valid and binding on Buyer, and is in
full force and effect, and Buyer has not breached any provision
of, nor is it in default under the terms of, any such agreement,
contract, mortgage, indenture, plan, lease, instrument, permit,
concession, franchise, arrangement, license or commitment except
for such failures to be valid and binding or in full force and
effect and such breaches or defaults as reasonably would not be
expected to have a material adverse effect on the Business
Condition of Buyer.
3.10 Tax Returns and Reports.
Except
as reasonably would not be expected to have a material adverse
effect on the Business Condition of Buyer:
(i) Buyer has
timely filed all federal, state, local and foreign returns,
estimates, information statements and reports (Returns) relating
to Taxes required to be filed by it, except such Returns
which are not material to Buyer, and has paid all Taxes shown to
be due on such Returns or is contesting them in good
faith.
(ii) Buyer has withheld with respect to its employees
all federal and state income taxes, FICA, FUTA and other Taxes
required to be withheld.
(iii) Buyer has not been delinquent
in the payment of any Tax nor is there any Tax deficiency
outstanding, proposed or assessed against Buyer, nor has Buyer
executed any waiver of any statute of limitations on or extending
the period for the assessment or collection of any Tax.
(iv)
No audit or other examination of any Return of Buyer is
presently in progress, nor has Buyer been notified of any request
for such an audit or other examination.
(v) None of Buyers
assets are treated as "tax-exempt use property" within the
meaning of Section 168(h) of the Code.
(vi) Buyer is not, and
has not been at any time, a "United States real property holding
corporation" within the meaning of Section 897(c)(2) of the
Code.
3.11 Technology.
To the knowledge of the Buyer, as the
date hereof, Buyer owns, co-owns or is licensed or otherwise
entitled to use rights to all patents, trademarks, trade names,
service marks, copyrights, mask work rights, trade secret rights,
and other intellectual property rights and any applications
therefor, and all maskworks, net lists, schematics, technology,
source code, know-how, computer software programs and all other
tangible information or material, that are used in its business
as currently conducted (the "Buyer Intellectual Property
Rights").
3.12 Government Authorizations and Licenses.
Buyer
is the holder of all licenses, authorizations, permits,
concessions, certificates and other franchises of any
Governmental Entity required to operate its business, the failure
to hold which reasonably would be expected to have a material
adverse effect on the Business Condition of Buyer (collectively,
the "Buyer License"). The Buyer Licenses are in full force and
effect. There is not now pending, or to the knowledge of Buyer is
there threatened, any action, suit, investigation,or
proceeding against Buyer before any Governmental Entity with
respect to the Buyer Licenses, nor is there any issued or
outstanding notice, order or complaint with respect to the
violation by Buyer of the terms of any Buyer License or any rule
or regulation applicable thereto, except in any such case as
reasonably would not be expected to have a material adverse
effect on the Business Condition of Buyer.
3.13 Environmental
Matters.
To the Buyer's knowledge, Buyer has at all relevant
times been in material compliance with all environmental
laws, and has received no PRP notices or functionally equivalent
notices from any governmental agencies or private parties
concerning releases or threatened releases of any "hazardous
substance" as that term is defined under 42 U.S.C.
9601(14).
3.14 Proprietary Information and Inventions and
Confidentiality Agreements.
To the knowledge of the Buyer,
each employee, consultant, and officer of Buyer has executed a
proprietary information and inventions and confidentiality
agreement, copies of which as been made available to counsel to
Seller, and it is Buyer's policy that such agreements be executed
by each new employee, consultant, officer and director of
Buyer in the ordinary course of Buyer's business.
3.15
Status of Shares.
When issued to Seller at the Closing, the
Shares will be duly authorized, validly issued, fully paid and
nonassessable, free and clear of any and all liens and
encumbrances of any kind, except as may be imposed by
Seller.
3.16 No Implied Representations.
It is the explicit
intent of each party hereto that Buyer is not making any
representation or warranty whatsoever, express or implied, except
those representations and warranties of Buyer contained in this
Agreement or in the Buyer Disclosure Schedule.
ARTICLE
IV
CERTAIN COVENANTS
4.1 Conduct of Business of
Seller.
During the period from the date of the is agreement and
continuing until the earlier of the termination of this Agreement
and the Closing Date, Seller agrees (except to the extent that
Buyer shall otherwise consent in writing), to carry on the
Business in the usual, regular and ordinary course in
substantially the same manner as heretofore conducted, including
sales of products in a manner and on terms consistent with past
practices, to pay or perform other obligations when due and use
all reasonable efforts consistent with past practice and policies
to preserve intact the Business, keep available the services of
its present officers and key employees and preserve their
relationships with customers, suppliers, distributors,
licensors, licensees, and others having business dealings with
it, all with the goal of preserving unimpaired the Business at
the Closing Date. Except as contemplated by this Agreement,
Seller shall not, with respect to the Business, without the prior
written consent of Buyer (which shall be given, or reasonably
withheld, within one business day after receipt of written
request therefore) (a) enter into any commitment or
transaction not in the ordinary course of business, or (b) enter
into any strategic alliance or joint marketing arrangement or
agreement.
4.2 Conduct of Business of Buyer.
During the
period from the date of this agreement and continuing until the
earlier of the termination of this Agreement and the Closing
Date, Buyer agrees (except to the extent that Seller shall
otherwise consent in writing) to carry on its business in the
usual, regular and ordinary course in substantially the
same manner as heretofore conducted to pay or perform other
obligation when due, and use all reasonable efforts consistent
with past practice and policies to preserve intact its business,
keep available the services of its present officers and key
employees and preserve their relationships with consumers,
suppliers, distributors, licensors, licensees, and others having
business dealings with it, all with the goal of
preserving unimpaired its business at the Closing Date. Except as
contemplated by this Agreement, Buyer shall not, without the
prior written consent of Seller (which shall be given, or
reasonably withheld within on business day after receipt of
written request therefore) (a) enter into any commitment or
transaction not in the ordinary course of business; (b) enter
into any strategic alliance or joint marketing arrangement
or agreement; (c) declare or pay any dividends on or make any
other distributions (whether in cash, stock or property) in
respect of any of its capital stock, or split, combine or
reclassify any of its capital stock or issue or authorize the
issuance of any securities in respect of, in lieu of or in
substitution for shares of capital stock of Buyer, or repurchase,
redeem or otherwise acquire, directly or indirectly, any shares
of its capital stock (or options, warrants, or other
rights exercisable therefore); (d) except for the issuance of
shares of capital stock of Buyer upon exercise of conversion of
options granted to employees, issue, deliver or sell or authorize
or propose the issuance, delivery or sale of, or purchase or
propose the purchase of, any shares of its capital stock or
securities convertible into, or subscriptions, rights, warrants
or options to acquire, or other agreements or commitments of any
character obligating it to issue any such shares or other
convertible securities; or (c) cause or permit any amendments
to its Certificate of Incorporation or Bylaws.
4.3 No
Solicitation.
Until the earlier to occur of (i) the Closing Date
and (ii) the date of termination of the Agreement pursuant to
its terms, as the case may be, Seller will not (nor will Seller
permit any of Seller's officers, directors, agents,
representatives or affiliates to) directly or indirectly, take
any of the following actions with any party other than the Buyer
and its designees: solicit, encourage, initiate or articipate in
any negotiations or discussions with respect to, any offer or
proposal to acquire all or any portion of the Business. Until
the earlier to occur of (i) the Closing Date and (ii) the date
of termination of the Agreement pursuant to its term, as the case
may be, and except to the extent of the Board of Directors of
Buyer believes (after consultation with outside legal counsel) it
necessary to comply with its fiduciary duties, Buyer will not
(nor will Buyer permit any of Buyer's officers, directors,
agents, representatives or affiliates to) directly or indirectly,
take any of the following actions with any party other than the
Seller and its designees:
solicit, encourage, initiate or
participate in any negotiations or discussions with respect to,
any offer or proposal to acquire all or any portion of the
business of Buyer.
4.4 Access to Information.
Seller and
Buyer shall each afford the other and its accountants, counsel
and other representatives, reasonable access during normal
business hours during the period prior to the Closing Date to (a)
all of its properties, books, contracts, commitments and records,
and (b) all other information concerning the business, properties
and personnel (subject to restrictions imposed by applicable law)
of it as the other may reasonably request (it being understood
that access to informationconcerning Seller shall pertain only to
the Business).
4.5 Confidentiality.
Each of the parties
hereto hereby agrees to keep such information or knowledge
obtained in any investigation pursuant to Section 4.4
confidential; provided, however, that the forgoing shall
not apply to information or knowledge which (a) a party can
demonstrate was already lawfully in its possession prior to the
disclosure thereof by the other party, (b) is generally known to
the public and did not become so known through any violation of
law or this Agreement, (c) became known to the public through no
fault of such party, (d) is later lawfully acquired by such part
from other sources, (e) is required to be disclosed by order of
court or government agency with subpoena powers or (f) which is
disclosed in the course of any litigations between any of the
parties hereto.
4.6 Expenses.
Whether or not the Acquisition
is consummated, all fees and expenses incurred in connection with
the Acquisition including without limitation, all legal,
accounting, financial advisory, consulting and all other fees and
expenses of third parties ("Third Party Expenses") incurred by a
party in connection with the negotiation and effectuation of the
terms and conditions of this Agreement and the transactions
contemplated thereby, shall be the obligation of the respective
party incurring such fees and expenses.
4.7 Public
Disclosure.
Buyer and Seller shall issue a joint press release
with respect to the subject matter of this Agreement.
4.8
Consents.
Seller shall use commercially reasonable efforts to
obtain all necessary consents, waivers, and approvals under any
of the contracts of the Business as may be required in connection
with the Acquisition so as to transfer to Buyer all rights of
Seller thereunder as of the Closing.
4.9 Commercially
Reasonable Efforts.
Subject to the terms and conditions provided
in this agreement, each of the parties hereto shall use
its commercially reasonable efforts ti take promptly, or cause to
be taken, all actions, and to do promptly, or cause to be done,
all things necessary, proper or advisable under applicable laws
and regulations, to consummate and make effective the
transactions contemplated hereby, to obtain all necessary
registrations and filings, and to remove any injunctions or other
impediments or delays, legal or otherwise, in order to consummate
and make effective the transactions contemplated by
this Agreement.
4.10 Notification of Certain matters.
Seller shall give prompt notice to Buyer, and Buyer shall give
notice to Seller, of(i) the occurrence or non-occurrence of any
event, the occurrence or non-occurrence of which is likely to
cause any representation or warranty of Seller or
Buyer, respectively, contained in this Agreement to be untrue or
inaccurate on or prior to the Closing Date and (ii) any failure
of Seller or Buyer, as the case may be, to comply with or satisfy
any covenant, condition or agreement to be complied with or
satisfied by it hereunder; provided however that subject to
Section 4.11, the delivery of any notice pursuant to this Section
shall not limit or otherwise affect any remedies available to the
party receiving such notice.
4.11 Delivery of Schedules.
It
it understood that the Seller Disclosure Schedule and Buyer
Disclosure Schedule may not be complete as of the date hereof.
Because of this, the parties agree that until 5:00 California
time on October [15], 1995, Seller and Buyer shall each
be permitted to amend its respective Disclosure Schedule so as to
qualify the representations and warranties of each party
contained in this Agreement (as each may be so amended, the
"Subsequent Seller Disclosure Schedule" and the "Subsequent Buyer
Disclosure Schedule", respectively). it is further understood
that, to the extent that this Agreement is not terminated
pursuant to Section 7.1(d) or 7.1(e) after delivery of any such
Subsequent Disclosure Schedule, then representations and
warranties in this Agreement of the party delivering such
Subsequent Disclosure Schedule shall be qualified in their
entirety by the modified or supplemented disclosures contained
therein.
4.12 Additional Documents and Further Assurances.
Each party hereto, at the request of another party hereto, shall
execute and deliver such other instruments and do and perform
such other acts and things as may be necessary or desirable for
effecting completely the consummation of this Agreement and the
transactions contemplated hereby.
4.13 Treatment of Employees
of the Business.
Following the execution and delivery of this
Agreement and prior to Closing, the person(s) responsible for the
hiring of Buyer's personnel and the person(s) responsible for the
hiring of Seller's personnel shall agree upon an employee benefit
package (the "Benefits Package") which
[...]
is comparable to that offered by Seller.
The Benefits Package shall credit Seller's employees who
become employees of Buyer with all years of service accrued by
such employee with Seller or any predecessor of Seller or the
Business. Buyer shall offer employment consistent with the terms
of the Benefits Package to any of the employees of the Business
it shall so choose. Seller will use reasonable commercial efforts
to assist Buyer to encourage such employees to become employees
of Buyer and to support an orderly and successful
transition. Except as may be agreed between Buyer and Seller in
accordance with the preparation of the Benefits Package. Buyer
shall not be required to assume any obligations of Seller with
respect to liabilities relating to such employees, including
without limitation, obligations for accrued vacation time,
severance arrangements, workers' compensation or any liability
for any insurance, medical or other welfare benefits, other than
under Buyer's plans. In addition, all welfare or benefit
claims relating to the period prior to midnight on the Closing
Date shall be the responsibility of Seller. Buyer agrees to have
completed all hiring of employees pursuant to this section 4.13
prior to February 29, 1996.
Seller's employees shall continue
to be employees of Seller through the Closing and through the
Closing Seller shall continue in force all employee benefits and
salaries in place as of the date of this Agreement, subject to
such changes as may occur in the ordinary course of Seller's
business.
Seller agrees to use its reasonable commercial
efforts to support the transition of the Business to Buyer,
including without limitation, cooperation between Seller's sales
and field service personnel to help assure an orderly transition
of customer accounts.
For purposes of this Section 4.13, the term "Type 1 employee" means a person who (1) as of the effective date of this Agreement was employed by Seller in any technical, business or financial (but not sales) capacity in Seller's Operating System Division in Florham Park, New Jersey, Provo, Utah or San Jose, California or otherwise in connection with the Business and/or the Assets and (2) whose employment with Seller thereafter terminates under circumstances under which such employee is given severance benefits from Seller including payment ("Severance Payment") calculated for a prescribed interval ("Severance Period").
Buyer agrees that it will not knowingly offer employment to, or offer to hire as a contractor, any Type 1 employee until the Severance Period for such employee is completed.
In the event that for any reason Buyer offers employment to, or offers to hire as a contractor, any such employee before the end of the period contemplated in the preceding sentence, Buyer shall remit to Seller a prorated portion of such Severance Payment applicable to the period between February 1, 1996 and the date of such offer. Such remittance shall be made to Seller within ten (10) days after such employee commences work on behalf of Buyer.
Seller agrees that prior to February 1, 1996, it will provide to Buyer a list of persons who are Type 1 employees.
Notwithstanding the above and except for normal attribution of previously hired employees, Buyer agrees not to hire any Type 1 employees for a period of 150 days from February 1, 1996. If Buyer does then Buyer will remit to Seller the full Severance Payment made to such Type 1 employees.
4.14 Tax Returns
Seller shall be
responsible for and pay when due (i) all of Seller's Taxes
attributable to or levied or imposed upon the Assets relating or
pertaining to the period (or that portion of any period) ending
on or prior to the Closing Date, except for Sales Taxes, if any,
which are the responsibility of Buyer pursuant to Section
1.2(d) hereof, and (ii) all Taxes attributable to, levied or
imposed upon, or incurred in connection with the Seller's
business operations, other than the Business, following the
Closing Date.
4.15 Bulk Sales.
Buyer hereby agrees to waive
the requirement, if any, that Seller comply with any bulk
transfer law which may be applicable to the transactions
contemplated by this Agreement; provided, that Seller agrees to
indemnify and hold harmless Buyer with respect to
any noncompliance with such laws and Buyer's waiver with respect
thereto.
4.16 SVRX Licenses.
(a) Following the
Closing, Buyer shall administer the collection of all royalties,
fees and other amounts due under all SVRX Licenses (as listed in
detail under item VI of Schedule 1.1(a) hereof and referred to
herein as "SVRX Royalties").
[...]
Within one (1) calendar month following each calendar month in which SVRX royalties (and royalties from Royalty-Bearing Products) are received by Buyer [except for those SVRX Royalties to be retained in their entirety by Buyer pursuant to paragraph (e) of Section 1.2 hereof] Buyer shall remit 100% of all such royalties to Seller or Seller's assignee. Buyer shall also provide to Seller, within six (6) days following the calendar month in which such royalties are received, and estimate of the total amount of such royalties.
Buyer shall diligently seek to
collect all such royalties, funds and other amounts when due (and
shall investigate and perform appropriate auditing and
enforcement under such licenses at Buyer's cost including
auditing two (2) SVRX licensees identified by Seller during each
quarter in which SVRX Royalties are collected). In consideration
of such activities described in the preceding sentence, Seller
shall pay to Buyer within 5 days of receipt of SVRX Royalties
from Buyer as set forth in the preceding sentence, an
administrative fee equal to 5% of such SVRX Royalties
together with a remittance sufficient to cover applicable third party payments, (if any) which are attributable to distributions giving rise to such SVRX Royalties (and royalties from Royalty-Bearing Products) and for which Buyer has assumed Seller's obligation of payment to such third party.
(b)
Buyer shall not, and shall not have the authority to, amend,
modify or waive any right under or assign any SVRX License
without the prior written consent of Seller. In addition, at
Seller's sole discretion and direction, Buyer shall amend,
supplement, modify or waive any rights under, or shall assign any
rights to, any SVRX License to the extent so directed in any
manner or respect by Seller. In the event that Buyer shall fail
to take any such action concerning the SVRX Licenses as required
herein, Seller shall be authorized, and hereby is granted,
the rights to take any action on Buyer's own behalf.
[...]
Notwithstanding the foregoing, Buyer shall have the right to enter into amendments of the SVRX Licenses (i) as may be incidentally involved through its rights to sell and license UnixWare software or the Merged Product [as such latter term is defined in a separate Operating Agreement between the parties to be effective as of the Closing Date, a copy of which is attached hereto as Exhibit 5.1(c)], or future versions of the Merged Product, or (ii) to allow a licensee under a particular SVRX License to use the source code of the relevant SVRX product(s) on additional CPU's or to receive an additional distribution, from Buyer, of such source code. In addition, Buyer shall not, and shall have no right to, enter into new SVRX Licenses except in the situation specified in (i) of the preceding sentence or as otherwise approved in writing in advance by Seller on a case by case basis.
(c) Seller further covenants
that immediately following the Closing Date neither it, nor any
of its officers, directors or employees shall (i) take any
material action designed to promote the sale of SVRX products or
(ii) provide material compensation to any employee designed
and intended to incentivize such employee to promote the sale of
SVRX products, except for actions incidental to unrelated
business activities of Seller.
4.17 Audited Financials.
The parties shall work diligently together to prepare audited
financial statements relating to the Business as may be required
for Buyer's financial reporting requirements under the
federal securities laws. The costs associated with preparation of
any required audited financial statements shall be shared equally
between Seller and Buyer.
4.18 Development of Merged
Product.
Following the Closing, Buyer shall diligently and
vigorously market, sell and promote the Business. In addition,
Buyer shall use its commercially reasonable efforts to complete
the Merged Product (as such term is defined in the
proposed Operating Agreement) by a date not later than December
31, 1997 to be agreed upon by Buyer and Seller. Buyer shall be
entitled to modify the specifications of the Merged Product
provided that any modification is previously reviewed by the
Architecture Board described in Section 3(a) of the proposed
Operating Agreement, and (i) does not impact upon the anticipated
migration of Seller's Product to the White Box Product (as such
term is defined in the proposed Operating
Agreement). Notwithstanding the foregoing without the prior
written approval of the Architecture Board, Buyer shall not
change the specifications of the Merged Product such that the
Merged Product will not include the "NetWare Services"
specification set forth on Exhibit A of the proposed Operating
Agreement.
4.19 License of Networking Services.
Seller and
Buyer acknowledge that Eiger contains, and future releases of
UnixWare and/or Eiger will continue to contain substantial
networking services which form a part of and are currently sold
in conjunction with Seller's product known as NetWare (the
NetWare portion of such products to be referred to hereinafter as
the "NetWare Portion"). Prior to the Closing Date, Seller and
Buyer shall enter into a license agreement with respect to
the NetWare Portion, such agreement to be on customary terms to
be negotiated in good faith by Seller and Buyer.
ARTICLE
V
CONDITIONS TO THE ACQUISITION
5.1 Conditions to
Obligations of Each Party to Effect the Acquisition.
The
respective obligations of each party to this Agreement to effect
the Acquisition shall be subject to the satisfaction at or prior
to the Closing Date of the following conditions:
(a) No
Injunctions or Restraints Illegally. No temporary
restraining order, preliminary or permanent injunction or other
order issued by any court of competent jurisdiction or other
legal restraint or prohibition preventing the consummation of the
Acquisition shall be in effect, nor shall any proceeding brought
by an administrative agency or commission or other governmental
authority or instrumentality, domestic or foreign, seeking any of
the foregoing be pending, nor shall there be any action taken, or
any statue, rule, regulation or order enacted, entered, enforced
or deemed applicable to the Acquisition, which makes
the consummation of the Acquisition illegal.
(b) The
waiting period under the Hart-Scott-Rodino Antitrust
Improvement Act shall have expired.
(c) The parties shall
have entered into a mutually satisfactory Operating Agreement.
Because certain terms contained herein are defined in the
proposed Operating Agreement, a non-binding form of the
proposed Operating Agreement is attached hereto as of the date
hereof for definitional purposes only; notwithstanding the
foregoing, Seller and Buyer have agreed upon the terms of Exhibit
A and Exhibit B of the proposed Operating Agreement and the terms
set for in Exhibit 5.1(c) regarding Eiger development, and will
accordingly be bound thereby.
5.2 Additional Conditions to
Obligations of Seller.
The obligations of Seller to consummate
and effect this Agreement and the transactions contemplated
hereby shall be subject to the satisfaction at or prior to the
Closing Date of each of the following conditions, any of which
may be waived, in writing, exclusively by Seller.
(a)
Representations, Warranties and Covenants. The
representations andwarranties of Buyer in this Agreement (as may
be modified by the Subsequent Buyer Disclosure Schedule) shall be
true and correct in all material respects on and as of the
Closing Date as though such representations and warranties were
made on and as such time and Buyer shall have performed and
complied with all covenants, obligations and conditions of this
Agreement required to be preformed and complied with by it in all
material respects as of the Closing Date.
(b) Certificate of
Buyer. Seller shall have been provided with a certificate duly
executed on behalf of Buyer to the effect that, as of the Closing
Date.
(i) all representations and warranties made by the
Buyer in the is Agreement are true and complete in all material
respects;
(ii) all covenants, obligations and conditions of
this Agreement to be performed by Buyer on or before such date
have been so performed in all material respects and (iii) there
are no pending negotiations with respect to any offer to acquire
all or any portion of the business of Buyer.
(c) Legal
Opinion. Seller shall have received a legal opinion
from legalcounsel to Buyer, in form and substance reasonably
satisfactory to Seller, relating to due authority, execution,
validity and similar matters.
(d) No Material Adverse
Change. There shall not have occurred any material adverse change
in the Business Condition of Buyer between then date of this
Agreement and the Closing Date.
5.3 Additional Conditions to
the Obligations of Buyer.
The obligations of Buyer to consummate
and effect this Agreement and the transactions contemplated
hereby shall be subject to the satisfaction on or prior to the
Closing Date of each of the following conditions, any one of
which may be waived, in writing, exclusively by Buyer:
(a)
Representations, Warranties and Covenants. The representations
and warranties of Seller in this Agreement (as may be modified by
the Subsequent Seller Disclosure Schedule) shall be true and
correct in all material respects on or as of such time Seller
shall have performed and complied with all covenants, obligations
and conditions of this Agreement required to be performed and
complied with by it as of the Closing Date in all material
respects.
(b) Certificate of Seller. Buyer shall have been
provided with a certificate executed on behalf of Seller by its
Chief Executive Officer to the effect that, as of the Closing
Date:
(i) all representations and warranties made by Seller
in this Agreement are true and complete in all material respects,
and
(ii) all covenants, obligations and conditions of this
Agreement to be performed by Seller on or before such date have
been performed in all material respects.
(c) Legal
Opinion. Buyer shall have received a legal opinion from
legal counsel to Seller, in form and substance resonable
satisfactory to Buyer, relating to due authority, execution,
validity, and similar matters.
(d) No Material Adverse
Changes. There shall not have occured any material adverse
changes in the Business Condition of the Business between the
date of this Agreement and the Closing Date.
ARTICLE
VI
CERTAIN CORPORATE GOVERNANCE MATTERS
6.1 Nomination
of Director to Buyers Board of Directors.
As of the Closing and
Thereafter until such time as Seller together with its affiliates
shall cease to own more than 5% of the outstanding shares
of Common Stock of Buyer (the "Threshold Date") and except as set
forth further below, Buyer shall cause one individual designated
by Seller (the "Seller Designee") to be nominated for election to
the Board of Directors of Buyer, which Seller Designee shall be a
Senior Executive Officer or outside board member of Seller and
reasonably acceptable to Buyer. In the event that the Seller
Designee shall be elected as director of Buyer, but shall cease
to serve as a director of Buyer prior to the Threshold Date,
Seller shall have the right to designate another individual to
fill the vacancy created by such cessation in order to serve as a
member of the Board of Directors of Buyer. The right to
nomination for election to Buyer's Board of Directors as set forth
in this Section 6.1 shall terminate in the event that Seller's
core products become directly competitive with buyer.
6.2
Right to Maintain.
(a) Until the earlier to occur of (i)
Threshold Date; (ii) Seller's core products becoming competitive
with Buyer's core products or (iii) the expiration of three years
from the date of this Agreement in the event (including a public
offering), Buyer desires to sell and issue shares of its capital
stock or rights, options or other securities exercisable for or
convertible into shares of its capital stocks (directly
or indirectly) and whether or not such right or option is
immediately exercisable or convertible, then Buyer shall first
notify Seller of the material terms of the proposed sale and
shall permit Seller to acquire, at the time of consummation such
proposed issuance and sale and on such terms as are specified in
the Buyer's notice to Seller, such number of the shares of
capital stock or other securities of Buyer proposed to be issued
as would be required to enable Seller to maintain its voting
and ownership rights in Buyer following such issuance on a
percentage basis at a level maintained by it immediately prior to
such proposed issuance. Seller shall have ten (10 days after the
date of any such notice to elect by notice to Buyer to purchase
such shares or securities on such terms and at the time the
proposed sale is consummated.
(b) The rights set forth in
Section 6.2(a) shall not apply to (i) the issuance of shares or
grant of options to purchase shares of Common Stock under Buyer's
employee stock purchase and stock option plans, net of
repurchases or cancellations and (ii) bona fide
business acquisitions.
6.3 Right of First Refusal on
Change of Control
(a) First Refusal Right
(i) Until
the earlier of (i) Threshold Date and (ii) three (3) years from
the Closing Date, in the event Buyer's Board of Directors
has approved an intention to merge with, sell shares representing
50% or more of the voting power of Buyer to, or sell all
substantially all of Buyer's assets to any of the six (6) parties
identified by Seller in Schedule 6.3(a) hereof. Buyer shall
deliver a notice (an "Acquisition Notice") to Seller, which
Acquisition Notice shall be kept confidential by Seller, setting
forth the proposed material terms of the merger, sale or
acquisition, including the structure and price terms of the
merger, sale or acquisition, the name and address of the party
proposed to acquire or merge with Buyer and the date on or about
which such sale or merger is proposed to be made (the date of
such an Acquisition Notice being an "Acquisition Notice Date").
Seller shall have the right of first refusal to acquire or merge
with Buyer on the terms set forth in the Acquisition Notice
(subject to the valuation provisions of Section 6.3(b) below), as
provided in this Section. If the terms in the Acquisition Notice
contemplate a tax-free reorganization then Seller's right of
first refusal may only be exercised if Seller proposes a tax-free
reorganization.
(ii) Seller shall have until ten (10) days
after the later of (i) receipt of an Acquisition Notice and (ii)
the date Seller receives notice of the completion of the
appraisal of any items included as part of the proposed
consideration specified in the Acquisition Notice that are
subject to valuation pursuant to Section 6.3(b), to elect by
notice to Buyer to acquire or merge with Buyer on the terms set
forth in the Acquisition Notice. If Seller notifies the Buyer
within such time period of its election to so acquire or merge
with Buyer, a closing with respect to such acquisition or merger
shall be held at the principal office of Buyer (or such other
place as may be agreed upon by Buyer and Seller) on a date and at
a time which are mutually agreeable to Buyer and Seller, but in
no event later than the later to occur of (i) forty-five (45)
days after the receipt by Buyer of such notice of Seller's
election and (ii) five (5) days after the receipt of
any governmental consent or approval necessary for the
consummation of such transaction, including, but not limited in,
any such approval or consent required under the HSR
Act.
(iii) In the event Seller elects not to exercise the
foregoing right of first refusal, Buyer shall have six (6) months
to sell Buyer on the same material terms as are set forth in the
Acquisition Notice. If Buyer proposes to sell to or merge with
one of the identified parties on terms more favorable to such
party than those set forth in the notice, or proposes to sell to
or merge with one of the identified parties after the six (6)
month period, it shall first notify Seller and Seller shall have
another opportunity to exercise its right of first
refusal.
(b) Appraisal Procedure.
(i) Whenever the
terms of a proposed sale or merger include forms of consideration
other than cash or securities which are traded on a National
Exchange (as defined below). Seller shall have the option
to exercise its first refusal right under this section by paying
the "Appraised Value" in cash of such proposed non-cash
consideration. "Appraised Value" shall mean the fair saleable
value of such non-cash consideration as of the Acquisition Notice
Date, and shall be determined in the manner set forth in clause
(ii) below. If an item of consideration constitutes securities
which are traded on a National Exchange (as defined below), the
value of such items shall be the average of the closing prices of
such securities on such exchange during (with reference to the
principal trading market if such securities are traded on more
than one National Exchange) each day within fifteen (15) trading
days [on] such National Exchange prior to the
applicable Acquisition Notice Date. If the terms of the proposed
sale or merger include securities which are traded on a National
Exchange in a tax free reorganization, then Seller's rights
granted under Section 6.[5] may only be exercised by Seller
paying in its own securities where the value is determined on the
same basis as set forth in this Section 6.3(b)(ii). If the
transaction specified in he Acquisition Notice is a
taxable transaction and the form of consideration is in
securities traded on a National Exchange, then Seller shall have
the option of paying in cash in[*] its own securities where the
value is determined on the same basis as set forth in this
Section 6.3(b)(ii).
For purposes of this provision, "National
Exchange" means the New Your Stock Exchange, the American Stock
Exchange, or the National Market System of the National
Association of Security Dealers, Inc.
(ii) The determination
of 'Appraised Value' shall be made by an investment banking firm
or other qualified consultant of nationally recognized standing,
in accordance with this provision. Buyer and Seller shall
endeavor to mutually agree upon the investment banking firm
or other qualified consultant to undertake such determination. In
the event Buyer and Seller fail to agree within five (5) business
days after the Acquisition Notice Date, within two (2) business
days after such failure each of Buyer and Seller shall choose one
such investment banking firm or other qualified consultant and
within five (5) business days after such failure, the respective
chosen firms shall be required to choose a third such investment
banking firm or other qualified consultant to make such
determination of the Acquired Value; and the determination of
such third investment banking firm or other qualified consultant
of the Appraised Value shall be binding. The investment banking
firm or other qualified consultant selected pursuant hereto to
make the determination of the Appraised Value shall be required
to make such determination within twenty (2) business days after
its selection. Buyer shall pay all costs and fees of up to the
three such investment banking firms or qualified consultants, and
shall cooperate fully with the investment banking firm or other
qualified consultant selected to make such determination by
promptly providing such information as is requested by such
firm.
(c) Expansion of Seller's Rights Relating to the
Licensed Technology upon a Change of Control. Until two (2) years
from the Closing Date, in then event Buyer has merged with, sold
shares representing 50% or more of the voting power of Buyer to,
sold all or substantially all of Buyer's assets to, or engaged
voluntarily in any other change of control transaction with any
party identified by Seller on schedule 6.3(a) hereof, or in the
event any party identified by Seller on Schedule 6.3(a) hereof,
shall acquire shares representing 50% or more of the voting power
of Buyer.
6.4 Registration Rights.
(a) Seller
Demand Rights.
(i) Request for Registration. In case at any
time from and after the Closing Buyer shall receive from Seller a
written request that Buyer effect any registration with respect
to all or part of the Shares (or any securities issued or
issuable in respect of the Shares; collectively, the "Registrable
Securities"), provided that the number of Shares (or other
securities) designated by Seller to be included in
such registration would result in an anticipated aggregate
offering price of at least $5,000,000, Buyer will as soon as
practicable, use its reasonable commercial efforts to effect such
registration (including, without limitation, the execution of an
undertaking to file pre-effective and post-effective amendments
and supplements, appropriate qualification under the applicable
blue sky or other state securities laws and appropriate
compliance with exemptive regulations issued under the Securities
Act and any other governmental requirements or regulations) as
may be so requested and as would permit or facilitate the sale
and distribution of all or such portion of Registrable Securities
as are specified in such request; provided that Buyer shall not
be obligated to take any action to effect any such
registration after Buyer has effected two registrations pursuant
to a request by Seller hereunder. A registration proceeding
pursuant to this section which is subsequently withdrawn prior to
effectiveness of a registration, qualification or compliance for
purposes of the two demand registration to which Seller is
entitled.
Subject to the foregoing, Buyer shall file a
registration statement covering the Registrable Securities so
requested or otherwise elected to be registered as soon as
practicable, but in any event within sixty (60) days, after
receipt of the request of Seller, provided that Buyer shall have
the right to defer such registration for a period of up to
ninety (90) days following the receipt of such a request if in
the opinion of the Board of Directors of Buyer, it would be
seriously detrimental to Buyer for a registration statement to be
filed.
(ii) Underwriting. If Seller intends to distribute the
Registrable Securities covered by its request by means of an
underwriting, it shall so advise Buyer as a part of its request
made pursuant to Section 6.4(a)(i). Buyer shall enter into an
underwriting agreement in customary form with the underwriter or
underwriters selected for such underwriting by Seller, which
underwriter or underwriters shall be reasonably acceptable to
buyer.
(b) Company Registration
(i) Notice of
Registration If at any time or from time to time after
the Closing Buyer shall determine to register any of its
securities for its own account (other than a registration
relating solely to employee stock option or purchase plans or
relating solely to a Rule 145 transaction), Buyer
will:
(A) promptly give to Seller written notice thereof
(which shall include a list of the jurisdictions in which Buyer
intends to attempt to qualify such securities under the
applicable blue sky or other state securities laws);
and
(B) include such registration (and any related
qualification under blue sky laws or other compliance), and in
any underwriting involved therein, all the Registrable Securities
specified in a written request or requests, made within thirty
(30) days after the date of such written notice from Buyer to
Seller, except as set forth in Section 6.4(b)(ii).
(ii)
Underwriting If the registrars of which Buyer gives notice is for
a registered public offering involving underwriting, Buyer shall
so advise Seller as a part of the written notice given pursuant
to Section 6.4(b)(i)(A). In such event the right of Seller to
registration pursuant to Section 6.4(b) shall be conditioned upon
Seller's participation in such underwriting and the inclusion of
Seller's Registrable Securities in the underwriting to the extent
provided herein. If Seller proposes to distribute its securities
through such underwriting it shall (together with Buyer and other
holders, distributing their securities through such underwriting)
enter into an underwriting agreement in customary form with the
under underwriter or underwriters selected for such underwriting
by Buyer. Notwithstanding any other provision of this Section, if
the managing underwriter determines that marketing
factors require a limitation of the number of shares to be
underwritten, the underwriter may limit the number of Registrable
Securities to be included in the registration and underwriting
but in no event shall (i) the amount of Registrable Securities of
Seller included in the offering be reduced below twenty-five
percent (25%) of the total amount of securities included in such
such offering or (ii) notwithstanding (i) above, any shares being
sold by a shareholder exercising a demand registration right
similar to that granted in Section 6.4(a) and granted by Buyer
prior to the date of this Agreement be excluded from
such offering, and in such situation Seller's shares may be
completely excluded from registration. Buyer shall advise Seller
of any such limitations, and the number of Registrable Securities
that may be included in the registration. If Seller disapproves
of the terms of any such underwriting, it may elect to withdraw
therefrom by written notice to Buyer and the underwriter. Any
Registrable Securities excluded or withdrawn from such
underwriting shall not be included in
such registration.
(iii) Notwithstanding anything to the
contrary in this Section 6.4(b), Buyer shall not be obligated to
effect any registration of securities under this Section 6.4(b)
pursuant to a registration statement covering any of its
securities to be issued in connectino with mergers, acquisitions,
exchange offers, dividend reinvestment plans or stock option or
other employee benefits plans.
(c) Expenses of
Registration.
(i) Subject to Sections 6.4(c)(ii) and
6.4(c)(iii), all expenses incurred in connection with any
registration pursuant to Section 6.4(a) or 6.4(b), including,
without limitation, all registration, filing and qualification
fees, printing expenses, fees and disbursements of counsel for
Buyer, expenses of complying with state securities or Blue Sky
laws (including fees of counsel for Buyer and counsel for the
underwriters), accountants' fees and expenses incident to or
required by any such registration, expenses incident to the
listing of securities or any exchange in which the Registrable
Securities are to be listed, expenses of any special
auditsincidental to or required by such registration.
(ii)
Buyer shall not be required to pay for expenses of any
registration proceeding began pursuant to Section 6.4(a), the
request of which has been subsequently withdrawn by Seller, in
which case, such expenses shall be borne by Seller, provided that
Seller shall not be required to pay (a) for the cost of normal
|?????| of Buyer that would have been performed in any event, and
(b) for the time of any executives or other personnel of Buyer
involved in the preparation of the registration statement and
provided further, however, that if at the time of
such withdrawal, Seller shall have learned of a material adverse
change in the Business Condition of Buyer from that known to
Seller at the time of its request, then Seller shall not be
required to pay an of such expenses.
(iii) Notwithstanding
anything to the contrary elsewhere in this section 6.4(c), all
underwriters' discounts, commissions, or applicable
stock transfer and documentary stamp taxes (if any) relating to
the sale of Registrable Securities shall be borne by the seller
of the Registrable Securities in all cases.
(d)
Registration Procedures
(i) In the case of each registration
effected by Buyer pursuant to Section 6.4, Buyer will keep Seller
advised in writing as to the initiation of each registration and
as to the completion thereof. At its expense (except as otherwise
provided in Section 6.4(c) above) Buyer will: (A) keep such
registration effective for a period of six months or until Seller
has completed the distribution described in the registration
statement relating thereto, whichever first occurs.
(B)
furnish such number of prospectuses and other documents
incident thereto as Seller from time to time may reasonably
request; and
(C) notify Seller, (1) when a prospectus or any
prospectus supplement or post-effective amendment has been filed,
and, with respect to the registration statement or any
post-effective amendment, when the same has become effective; (2)
{illegeble} request by the SEC or any other federal or state
governmental authority during the period of effectiveness of the
registration statement for amendments or supplements to the
registration statement or related prospectus or for additional
information relating to the registration statement, (3) of the
issuance by the SEC or any other federal or state
governmental authority of any stop order suspending the
effectiveness of the registration statement or the initiation of
any proceeding from that purpose, (4) of the receipt by Buyer of
any notification with respect to the suspension of the
qualification or exemption from qualification of any of the
Registrable Securities for sale in any jurisdiction or
the initiation of any proceeding for such purpose; or (5) of the
happening of any event which makes any statement made in the
registration statement or related prospectus or any document
incorporated or deemed to be incorporated therein by reference
untrue in any material respect or which requires the making of
changes in the registration statement or prospectus so that, in
the case of the registration statement, it will not contain any
untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make
the statements therein not misleading, and that in the case of
the prospectus it will not contain any untrue statement of a
material fact or omit to state any material fact or omit to state
any material fact required to be stated therein or necessary to
make the statements therein, in the light of the circumstances
under which they were made not misleading.
(e) Buyer may,
upon the happening of any event (x) of the kind described in
clauses (2), (3), (4), or (5) of Section 6.4(d)(i)(C) or (y) that,
in the judgment of Buyer's Board of Directors, renders it
advisable to suspend use of the prospectus due to pending
corporate developments, public filings with the SEC or similar
events, suspend use of the prospectus on written notice to the
Seller, in which case Seller shall discontinue disposition of
Registrable Securities covered by the registration or prospectus
until copies of a supplemented or amended prospectus are
distributed to Seller or until Seller is advised in writing by
Buyer that the use of the applicable prospectus may be resumed.
Buyer shall use its reasonable efforts to ensure that the use of
the prospectus may be resumed as soon as practicable. Buyer shall
use every reasonable effort to obtain the withdrawal of any order
suspending the effectiveness of the registration statement, or
the lifting of any suspension of the qualification (or exemption
from qualification) of any of the securities for sale in any
jurisdiction, at the earliest practicable moment. Buyer shall
prepare as soon as practicable a supplement or post-effective
amendment to the registration statement or a supplement to the
released prospectus or any document incorporated therein by
reference or file any other required document so that,
as thereafter delivered to the purchasers of the Registrable
Securities being sold thereunder, such prospectus will not
contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which
they were made not misleading.
(f) Indemnification
(i)
Buyer will indemnify and hold harmless Seller, each of its
officers and directors, and each person controlling Seller, with
respect to which a registration has been effected pursuant to
this Section 6.4 and each underwriter, if any, and each person
who controls any underwriter of the Registrable Securities held
by or issuable to Seller, against all claims, losses, damages,
costs, expenses and liabilities whatsoever (or actions in respect
thereof) arising out of or based on any untrue statement (or
alleged untrue statement) of a material fact contained in any
registration statement, preliminary or final prospectus
contained therein or any amendment or supplement thereto, or
based on any omission (or alleged omission) to state therein a
material fact required to be stated therein or necessary to make
the statements therein not misleading, or any violation by Buyer
of the Securities Act or any state securities law or of any rule
or regulation promulgated under the Securities Act or any state
securities law applicable to Buyer and relating to action or
inaction required of Buyer in connection with any such
registration, and will reimburse Seller, each of its officers
and directors, and each person controlling Seller, each such
underwriter and each person who controls any such underwriter,
for any legal and any other expenses as reasonably incurred in
connection with investigating or defending any such claim, loss,
damage, cost, expense, liability or action, provided that Buyer
will not be liable in any such case to the extent that any such
claim, loss, damage, cost, expense, or liability arises out of or
is based on any untrue statement or omission based upon written
information furnished to Buyer by an instrument duly executed
by Seller or any underwriter and stated to be specifically for
use therein.
(ii) Seller will, if Registrable Securities held
by or issuable to Seller are included in the securities as to
which such registration is being effected, indemnify and hold
harmless Buyer, each of its directors and officers who sign such
registration statement, each underwriter, if any, of Buyer's
securities covered by such registration statement, each person
who controls Buyer within the meaning of the Securities
Act against all claims, losses, damages, costs, expenses and
liabilities whatsoever (or actions in respect thereof) arising
out of or based on any untrue statement of a material fact
contained in any such registration statement, preliminary or
final prospectus contained therein or any amendment or supplement
thereto, incident to any such registration, or based on any
omission (or alleged omission) to state therein a material fact
required to be stated therein or necessary to make the statements
therein not misleading, or any violation by Seller of the
Securities Act or of state securities laws or any rule
or regulation promulgated under the Securities Act or any state
securities law applicable to Seller and relating to action or
inaction required of Seller in connection with any such
registration and will reimburse Buyer, such directors, officers,
persons or underwriters for any legal or any other expenses as
reasonably incurred in connection with investigating or defending
any such claim, loss, damage, cost, expense, liability or
actions, in each case to the extent, but only to the extent, that
such untrue statement or omission is made in such registration
statement,prospectus, in reliance upon and in conformity with
written information furnished to Buyer by an instrument
duly executed by Seller and stated to be specifically for use
therein; provided, however, that the foregoing indemnity
agreement is subject to the condition that, insofar as it relates
to any such untrue statement or omission made in the preliminary
prospectus but eliminated or remedied in the amended prospectus
on file with the SEC at the time the registration statement
becomes effective or the amended prospectus filed with the SEC
pursuant to Rule 424(b) (the "Final Prospectus"), such indemnity
agreement shall not inure to the benefit of Buyer,
any underwriter or Holder, if there is no underwriter, if a copy
of the Final Prospectus was not furnished to the person or entity
asserting the loss, liability, claim or damage at or prior to the
time such action is required by the Securities Act.
(iii)
Each party entitled to indemnification under this Section
6.4.(e) (the "Indemnified Party") shall give notice to the party
required to provide indemnification (the "Indemnifying Party")
promptly after such Indemnified Party has actual knowledge of any
claim as to which indemnity may be sought, and shall permit the
Indemnifying Party to assume the defense of any such claim or any
litigation resulting therefrom, provided that counsel for the
Indemnifying Party, who shall conduct the defense of such claim
or litigation, shall be approved by the Indemnified Party (whose
approval shall not unreasonably be withheld), and the Indemnified
Party may participate in such defense at such party's expense. No
Indemnifying Party, in the defense of any such claim or
litigation, shall, except with the consent of each
Indemnified Party, consent to entry of any judgment or enter into
any settlement which does not include as an unconditional term
thereof the giving by the claimant or plaintiff to such
Indemnified Party of a release from all liability in respect to
such claim or litigation. If any such Indemnified Party shall
have been advised by counsel chosen by it that there may be one
or more legal defenses available to such Indemnified Party which
are different from or additional to those available to
the Indemnifying Party, the Indemnifying Party shall not have the
right to assume the defense of such action on behalf of such
Indemnified Party and will promptly reimburse such Indemnified
Party and any person controlling such Indemnified Party for the
reasonable fees and expenses of any counsel retained by the
Indemnified Party, it being understood that the Indemnifying
Party shall not, in connection with any one action or separate
but similar or related actions in the same jurisdiction arising
out of the same general allegations or circumstances, be
liable for the reasonable fees and expenses of more than one
separate firm of attorneys for such Indemnified Party or
controlling person, which firm shall be designated in writing by
the Indemnified Party to the Indemnifying Party.
(g)
Contribution. If the indemnification provided for in Section
6.4(e) is unavailable or insufficient to hold harmless an
Indemnified Party thereunder, then each Indemnifying Party
thereunder shall contribute to the account paid or payable by
such Indemnified Party as a result of the losses, claims,
damages, costs, expenses, liabilities or actions referred to in
Section 6.4(e)(i) or (ii), as the case may be in such proportion
as is appropriate to reflect the relative fault of
the Indemnifying Party on the one hand and the Indemnified Party
on the other in connection with statements or omissions which
resulted in such losses, claims, damages or liabilities, as well
as any other relevant equitable considerations. The relative
fault shall be determined by reference in, among other things,
whether the untrue or alleged untrue statement of a material fact
relates to information supplied by the Indemnifying Party or the
Indemnified Party and the Parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such
untrue statements or omission. The Parties hereto agree that it
would not be just and equitable if contributions pursuant to this
Section 6.4(f) were to be determined by pro rata or per
capita allocation or by any other method of allocation which does
not take account of the equitable considerations referred to in
the first sentence of this Section 6.4(f). The amount paid by an
Indemnified Party as a result of the losses, claims, damages or
liabilities referred to in the first sentence of this Section
6.4(f) shall be deemed to include any legal or other expenses
reasonably incurred by such Indemnified Party in connection with
investigating or defending any action or claim which is the
subject of this Section 6.4(f). Promptly after receipt by
an Indemnified Party of notice of the commencement of any action
against such party in respect of which a claim for contribution
may be made against an Indemnifying Party under this Section
6.4(f), such Indemnified Party shall notify the Indemnifying
Party in writing of the commencement thereof if the notice
specified in Section 6.4(e)(iii) has not been given with respect
to such action; provided that the omission so to notify the
Indemnifying Party shall not relieve the Indemnifying Party from
any liability which it may have to any Indemnified
Party otherwise under this Section 6.4(f), except to the extent
that the Indemnifying Party is actually prejudiced by such
failure to give notice. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f).1 of the
Securities Act) shall be entitled to contribution from any person
who was not guilty of such
fraudulent misrepresentation.
(h) Information by Holder.
Seller shall furnish to Buyer such information regarding Seller
and the distribution proposed by Seller as Buyer may reasonably
request in writing and as shall be required in connection with
any registration referred to in this Section 6.4.
(i) Rule
144 Reporting. With a view to making available to Seller
the benefits of certain rules and regulations of SEC which may
permit the sale of Registrable Securities to the public without
registration, Buyer agrees to:
(i) make and keep public
information available, as those terms are understood and defined
in Rule 144 under the Securities Act, at all times after ninety
(90) days after the effective date of the first registration
filed by Buyer which involves a sale of securities of Buyer to
the general public:
(ii) file with the SEC in a timely manner
all reports and other documents required of Buyer under the
Securities Act and the Exchange Act; and
(iii) furnish to
Seller so long as it owns any Registrable Securities forthwith
upon request a written statement by Buyer that it has
complied with the reporting requirements of said Rule 144 (at any
time after ninety (90) days after the effective date of said
first registration statement filed by Buyer), and of the
Securities Act and the Exchange Act (at any time after it has
become subject to such reporting requirements), a copy of the
most recent annual or quarterly report of Buyer, and such other
reports and documents so filed by Buyer as may be reasonably
requested in availing Seller of any rule or regulation of the SEC
permitting the selling of any such securities without
registration.
(j) Transfer of Registration Rights. Any
registration rights granted by Buyer under this Section 6.4 may
be assigned by Seller in connection with the sale by Seller of
any Registrable Securities, to a transferee or assignee, who,
after such assignment or transfer, holds at least 500,000 shares
or all remaining shares of Buyer held prior thereto by Seller,
and following such assignment, the assignee shall be entitled
to all rights of Seller under this Section 6.4, provided that
such assignee agrees in writing to be bound to the obligations of
Seller under this Section 6.4.
(k) Termination of
Registration Rights. All registration rights provided hereunder
shall terminate upon the earlier to occur of (a) the
tenth anniversary of the Closing and (b) such time as Seller is
able to sell all of its Registrable Securities under Rule 144
during any two successive, three-month periods.
(l) Future
Grants of Registration Rights. Buyer agrees for the benefit of
Seller that it will not grant registration rights with respect to
any of its securities upon terms more favorable to the holders of
such securities than those contained herein.
6.5
Standstill Agreement
(a) Standstill. Notwithstanding any
other provision of this agreement, subject to the exceptions set
forth in Section 6.5(b), without the approval of the Board of
Directors of Buyer (whether by written consent of the directors
or pursuant to a resolution duly adopted by the directors at a
meeting of the Board of Directors), Seller (which shall include
any affiliate of Seller for purposes of this Section 6.5)
shall not, after the Closing Date, acquire "beneficial ownership"
(which, for purposes of this Section 6.5, shall have the meaning
set forth in Rule 13d-3 of the Exchange Act) of any securities of
Buyer entitled to vote with respect to the election of any
directors of Buyer ("Voting Securities"), any security
convertible into, exchangeable for, or exercisable for, or that
may become any Voting Securities or any other right to acquire
Voting Securities (such Voting Securities and rights to acquire
Voting Securities are collectively referred to herein
as "Securities").
(b) Exceptions to Standstill
Provision.
(i) Seller may acquire Securities without regard
to the limitations set forth in Section 6.5(a) in accordance with
the provisions of Section 6.2 or Section 6.3 hereof;
and
(ii) Seller may, after written notice to Buyer, acquire
Securities without regard to the limitations set forth in this
Section 6.5 if a bona fide tender or exchange offer is made by
any person or 13D Group to acquire Securities that, if added to
the Securities (if any) already owned by such person or 13D
Group, would represent ownership of Securities greater than fifty
percent (50%) of Buyer's then outstanding Securities; provided,
however, that Seller shall only be permitted to take such actions
and make such offers as may be considered to be of the same
nature and type of action or offer and directed to the same
person or persons and within the same time period and for the
same resulting amount of Securities as that which is being taken
by such person or 13D Group; and provided further, that Seller
may only acquire that amount of Securities that, when added to
the amount of Securities already owned by Seller, shall not
exceed the amount of Securities acquired or to be acquired
(assuming any offers to purchase have been consummated) by
such person or 13D Group. In proceeding with any action or offer
permitted under this subsection 6.5(b)(ii), Seller shall be
permitted to offer more favorable terms than those terms offered
by such person or 13D Group, so long as such terms are
substantially consistent with an offer of the same nature and
type of consideration as that which is being proposed by such
person or 13D Group.
(c) Notice of Securities Purchases and
Sales. Seller shall advise Buyer as to its plans to acquire or
dispose of beneficial ownership of Securities, or rights thereto,
reasonably in advance of any such action.
(d) Acts in Concert
with Others. Seller shall not join a partnership, limited
partnership, syndicate or other group, or otherwise act
in concert with any third person, for the purpose of acquiring,
holding, voting or disposing of Securities or rights
thereto.
(e) Restrictions on Transfer of Securities. Seller
shall not dispose of beneficial ownership or voting control of
Securities or any right thereto, except (i) in accordance with
the provisions of Section 6.7 hereof; (ii) to Buyer or any person
or group approved by Buyer; (iii) pursuant to a bona fide public
offering registered under the Securities Act (in which Seller
does not have ability to select the purchases), including any
offering pursuant to the registration rights granted in Section
6.4 hereof; (iv) pursuant to Rule 144 under the Securities
Act; (v) in transactions not described in (i), (ii), (iii) or
(iv) hereof so long as such transactions do not, directly or
indirectly, result in any person or group owning or having the
right to acquire beneficial ownership of Securities with
aggregate voting power or five percent (5%) or more of the
aggregate voting power of all outstanding Securities (assuming
the conversion, exchange and/or exercise of all
convertible, exchangeable and exercisable securities); or (v) in
response to an offer to purchase or exchange for cash or other
consideration any Securities that (a) is made by or on behalf of
Buyer or (b) is made by another person or group to all holders of
Securities and is not opposed by the Board of Directors of Buyer
within the time such Board is required, pursuant to regulations
under the Exchange Act, to advise Company shareholders of such
Board's position on such offer.
6.6 Buyers Right of First
Refusal
(a) First Refusal Right
(i) In the event
Seller proposes to sell any Securities, other than a transaction
described in Section 6.5(c)(ii)-(v), Seller shall deliver
a written notice to Buyer setting forth the terms of the proposed
sale, including the name of the proposed purchaser and the date
on or about which such sale is proposed to be completed. Buyer
shall have the right of first refusal to acquire such Securities
on the terms set forth in such notice (subject to the valuation
provisions of Section 6.7(b) below), as provided in this
Section.
(ii) Buyer shall have until twenty (20) days after
the receipt of such a notice to elect by notice to Seller to
acquire all or any portion of such Securities proposed to be sold
by Seller on the terms set forth in such notice. If Buyer
notifies Seller within such time period of its election to
acquire any of such Securities, a closing with respect to such
acquisition shall be held at the principal office of Buyer (or
at such other place as may be agreed upon by Buyer or Seller) on
a date and at a time which are naturally agreeable to Buyer and
Seller, but in no event later than ten (10) days after receipt by
Seller of such notice of Buyer's election.
(iii) In the
event Buyer elects not to exercise the foregoing right of first
refusal, Seller shall have ninety (90) days to sell
such Securities on terms different than those set forth in the
notice, or proposes to sell such Securities after the ninety (90)
day period, Seller shall first notify Buyer of such proposed
sale, and Seller shall have another opportunity to exercise it's
right of first refusal under this Section.
(b) Appraisal
Procedure
(i) Whenever the terms of a proposed sale of
Securities include forms of consideration other than cash or
securities which are traded on a National Exchange (as defined
below), Seller shall have the option to exercise its first
refusal right under this section by paying the "Appraised Value"
in each of such proposed non-cash consideration. "Appraised
Value" shall mean the fair saleable value of such
non-cash considerations as of the date of the notice delivered
pursuant to Section 6.7(a)(i) (the "First Offer Notice Date"),
and shall be determined in the manner set forth in Section
6.7(b)(ii) below. If an item of consideration constitutes
securities which are traded on a National Exchange (as defined
below), the value of such items shall be the average of the
clearing price of such securities on such exchange during (with
reference to the principal trading market if such securities are
traded on more than one National Exchange) each day within the
fifteen (15) trading days on such National Exchange prior to the
First Offer Notice Date.
For the purposes of this provision
"National Exchange" means the New York Stock Exchange, the
American Stock Exchange, the Midwest Stock Exchange, the Pacific
Stock Exchange or the National Market System of the National
Association of Securities Dealers, Inc.
(ii) The
determination of 'Appraised Value shall be made by an investment
banking firm or other qualified consultant of
nationally recognized standing in accordance with this provision.
Buyer and Seller shall endeavor in naturally agree upon the
investment banking firm or other qualified consultant to moderate
such determination. In the event Buyer and Seller fail to so
agree within five (5) business days after the First Offer Notice
Date, within two (2) business days after such failure each of
Buyer and Seller shall choose a third such investment banking
firm or other qualified consultant to make such determination
of the Appraised Value, and the determination of such third
investment banking firm or other qualified consultant of the
Appraised Value shall be binding. The investment banking firm or
other qualified consultant selected pursuant hereto to make the
determination of the Appraised Value shall be required to make
such determination within twenty (20) business days after its
selection. Buyer shall pay all costs and fees of up to the three
such investment banking firms or other qualified consultants, and
shall cooperate fully with the investment banking firms or other
qualified consultant selected to make such determination
by promptly providing such information as is requested by such
firm.
(c) Change of Control. For purposes of this Agreement a
"Change of Control" with respect to one party shall be deemed to
have occurred whenever (1) there shall be consummated (1) any
consolidation or merger of such party in which such party is not
the continuing or surviving corporation, or pursuant to which
shares of such party's common stock immediately prior to the
merger have substantially the same proportionate ownership of
common stock of the surviving corporation immediately after the
merger or (2) any sale, lease, exchange or transfer (in one
transaction or a series of related transactions) of all or
substantially all the assets of such party, or (ii) the
stockholders of such party shall approve any plan or proposal for
the liquidation or dissolution of such party, or (iii) any party,
other than such party or a subsidiary thereof or any employee
benefit plan sponsored by such party or a subsidiary thereof or a
corporation owned, directly or indirectly, by the stockholders of
such party in substantially the same proportions as their
ownership of stock of such party, shall become the beneficial
owner of securities of such party representing greater than fifty
percent (50%) of the combined voting power of then
outstanding securities ordinarily (and apart from rights accruing
in special circumstances) having the right to vote in the
election of directors, as a result of a tender or exchange offer,
open market purchases, privately negotiated purchases or
otherwise. or (iv) at any time after the date of this Agreement,
individuals who at the date hereof constituted the Board of
Directors of such party shall cease for any reason to constitute
at least a majority thereof, unless the election or nomination
for election by such party's stockholders of each new director
was approved by a vote of at least two-thirds of the directors
then still in office who were directors at the date hereof, or
(v) any other event shall occur with respect to such party that
would be required to be reported in response to Item 6(e) (or any
successor provision) of Schedule 14A or Regulation 14A
promulgated under the Exchange Act.
Article
VII
TERMINATION, AMENDMENT AND WAIVER
7.1 Termination.
Except as provided by Section 7.2 below, this Agreement may be
terminated and the Acquisition abandoned at any time prior to
the Closing Date:
(a) by mutual consent of Seller and
Buyer;
(b) by Buyer or Seller if (i) the Closing has not
occurred by February 29, 1996; (ii) there shall be a final
nonappealable order by a federal or state court in effect
preventing consummation of the Acquisition; or (iii) there shall
be any statute, rule, regulation or order enacted, promulgated or
issued or decreed applicable to the Acquisition by
any Governmental Entity that would make consummation of the
Acquisition illegal;
(c) by Buyer if it is not in material
breach of this Agreement and there has been a material breach of
any representation, warranty, covenant or agreement contained in
this Agreement on the part of Seller and such breach has not been
cured within five (5) business days after written notice to
Seller (provided that, no cure period shall be required for
a breach which by its nature cannot be cured);
(d) by
Buyer at any time prior to November 1, 1995, if as a result
of its due diligence review of the Business subsequent to the
date of this Agreement it discovers a fact or condition existing
on the date of this Agreement and not disclosed to Buyer prior to
or on the date of this Agreement that Buyer reasonably determines
has a material adverse effect on the Business Condition of
Seller;
(e) by Seller at any time prior to November 1, 1995
if as a result of its due diligence review of Buyer subsequent to
the date of this Agreement it discovers a fact or condition
existing on the date of this Agreement not disclosed to the
Seller prior to or on the date of this Agreement that Seller
reasonably determines has a material adverse effect on the
Business Condition of Buyer;
(f) by Seller if it is not in
material breach of this Agreement and therehas been a material
breach of any representation, warrant, covenant or agreement
contained in this Agreement on the part of Buyer and such breach
has not been cured within five (5) business days after
written notice to Buyer (provided that, no cure period shall be
required for a breach which by its nature cannot be
cured).
7.2 Effect of Termination.
In the event of
termination of this Agreement as provided in Section 7.1, this
Agreement shall forthwith become void and there shall be no
liability or obligation on the part of Buyer or Seller, or their
respective officers, directory or shareholders, provided that
each party shall remain liable for any breaches of this Agreement
prior to its termination.
7.3 Amendment.
This Agreement may
be amended by the parties herein at any time by execution of an
instrument in writing signed on behalf of each of the parties
herwto[sic].
7.4 Extension: Waiver.
At any time prior to the
Closing Date, Buyer on the one hand, and Seller, on the other,
may, to the extent legally allowed, (i) extend the time for the
performance of any of the obligations of the other party herein,
(ii) waive any inaccuracies in the representations and warranties
made to such party contained herein or in any document delivered
pursuant hereto, and (iii) waive compliance with any of the
agreements or conditions for the benefit of such party contained
herein. Any agreement on the part of a party hereto to any such
extension or waiver shall be valid only if sat forth in
an instrument in writing signed on behalf of such
party.
ARTICLE VIII
INDEMNIFICATION
8.1
Survival of Representations, Warranties and
Agreements.
Notwithstanding any investigation conducted at any
time with regard thereto by or on behalf of either party, no
representation or warranty by Seller shall survive the closing of
this Agreement and no claim may be brought by any party with
respect thereto other than the representation made by Seller in
Section 2.10, including any schedules thereto, which shall
survive the execution, delivery and performance of this
Agreement, and be subject to the provisions of Section 8.2
below, until the first anniversary of the Closing
Date.
8.2 Indemnification.
Seller hereby agrees to indemnify
and hold harmless Buyer against any and all losses, liabilities,
damages, demands, claims, suits, actions, judgments or causes of
action, assessments, costs and expenses, including, without
limitation, interest, penalties, attorneys' fees, any and all
out-of-pocket expenses incurred in investigating, preparing or
defending against any litigation, or any claim whatsoever, and
any and all amounts paid in settlement of any claim or
litigation, but only to the extent that the aggregate of the
foregoing exceeds $250,000, (collectively "Damages") asserted
against, resulting to, imposed upon, or incurred or suffered by
Buyer, directly or indirectly, as a result of or arising from any
inaccuracy in or breach of the representation and warrant made by
Seller in Section 2.10, including schedules thereto
("Identifiable Claims"). Seller's indemnity obligation pursuant
to the Article VIII shall in no event exceed, either individually
or in the aggregate, $5,000,000.
8.3 Procedure for
Indemnification with Respect to Third-Party Claims
(a) If
Buyer determines to seek indemnification under this Article
VIII with respect to Identifiable Claims (the party seeking
such indemnification hereinafter referred to as the "Indemnified
Party" and the party against whom such indemnification is sought
is hereinafter referred to as the "Indemnifying Party") resulting
from the assertion of liability by third parties, the Indemnified
Party shall give notice to the Indemnifying Party within thirty
(30) days of the Indemnified Party becoming aware of any such
Identifiable Claim or of facts upon which any such Identifiable
Claim will be based; the notice shall set forth such material
information with respect thereto as is then reasonably available
to the Indemnified Party. In case any such liability is asserted
against the Indemnified Party, and the Indemnified Party notifies
the Indemnifying Party thereof, the Indemnifying Party will
be entitled, if it so elects by written notice delivered to the
Indemnified Party within twenty (20) days after receiving the
Indemnified Party's notice, to assume the defense thereof with
counsel reasonably satisfactory to the Indemnified Party.
Notwithstanding the foregoing, (i) the Indemnified Party shall
also have the right to employ its own counsel in any such case,
but the fees and expenses of such counsel shall be at the sole,
unreimbursable expense of the Indemnified Party unless the
Indemnified Party does not assume control or the
Indemnified party shall reasonably determine that there is a
conflict of interest between Buyer and Seller with respect to
such Identifiable Claim, in which case the fees and expenses of
such counsel will be borne by the Indemnifying Party, (ii) the
Indemnified party shall not have any obligation to give any
notice of any assertion of liability by a third party unless such
assertion is in writing, and (iii) the rights of the Indemnified
Party to be indemnified hereunder in respect of
Identifiable Claims resulting from the assertion of liability by
third parties shall not be adversely affected by its failure to
give notice pursuant to the foregoing unless, and, if so, only to
the extent that, the Indemnifying Party is prejudiced thereby.
With respect to any assertion of liability by a third party that
results in an Identifiable Claim, the parties hereto shall make
available to each other all relevant information in their
possession material to any such assertion.
(b) In the event
that the Indemnifying Party, within thirty (30) days after
receipt ot the aforesaid notice of an Identifiable Claim, fails
to assume the defense of the Indemnified Party against such
Identifiable Claim, the Indemnified Party shall have the right to
undertake the defense, compromise or settlement of such action on
behalf of and for the account and risk of the Indemnifying
Party.
(c) Notwithstanding anything in this Section to the
contrary, (i) if there is a reasonable probability that an
Identifiable Claim may materially and adversely affect the
Indemnified Party, other than as a result of money damages or
other money payments, the Indemnified party shall have the right
to participate in such defense, compromise or settlement and the
Indemnifying Party shall not, without the Indemnified Party's
written consent (which consent shall not be
unreasonably withheld), settle or compromise any Identifiable
Claim or consent to entry of any judgment in respect thereof
unless such settlement, compromise or consent includes as an
unconditional term thereof the giving by the claimant or the
plaintiff to the Indemnified Party a release from all liability
in respect of such Identifiable Claim.
ARTICLE
IX
GENERAL PROVISIONS
9.1 Notices.
All notices and
communications hereunder shall be in writing and shall be deemed
given if delivered personally or yby commercial delivery service,
or mailed by registered or certified mail (return receipt
requested) or sent via telecopy (with acknowledgment of complete
transmission) to the parties at the following addresses (or
at such other address for a party as shall be specified by the
like notice):
(a) if to Buyer, to:
The Santa Cruz
Operation, Inc. 400 Encinal Street P.O. Box 1900 Santa Cruz, CA
95061-1900 Attention: Legal Department Telecopy No.:
(408) 427-5474
with a copy to:
Brobeck, Phleger
& Harrison Two Embarcadero Place 2200 Geng Road Palo Alto, CA
94303 Attention: Edward M. Leonard Telecopy No.: (415)
496-2921
(b) if to Seller, to: Novell Inc. 122 East/1700
South Provo, Utah 84606 Attention: David R. Bradford, Esq.
Telecopy No.: (801) 228-7077
with a copy to:
Wilson
Sonsini Goodrich & Rosati 650 Page Mill Road Palo
Alto, California 94304 AttentionL Larry W. Scmini Telecopy No.:
(415) 496-4084
9.2 Survival.
The representations and
warranties contained in Section 2 and Section 3 hereof except for
the representation of the Seller set forth in Section 2.10 shall
not survive the closing of the sale of assets and issuance of
stock contemplated by this Agreement; provided, however, that the
foregoing provision shall not eliminate the rights and rememdies
of the parties hereto in the case of a willful fraud by the other
party provided that the agreed party shall establish all
elements of the existance of such fraud by clear and convincing
evidences.
9.3 Interpretation.
When a reference is made in
this Agreement to Schedules or Exhibits, such reference shall be
to a Schedule or Exhibit to this Agreement unless otherwise
indicated. The words "include", "includes" and "including" when
used herein shall be deemed in each case to be followed by the
words "without limitation." The table of contents and headings
contained in the Agreement are for reference purposes only and
shall not affect in any way the meaning or interpretation of
this Agreement.
9.4 Counterparts.
This Agreement may be
executed in one or more counterparts, all of which shall be
considered one and the same agreement and shall become effective
when one or more counterparts have been signed by each of the
parties and delivered to the other party, it being understood
that all parties need not sign the same counterpart.
9.5
Entire Agreement.
This Agreement, and the Schedules and
Exhibits hereto: (a) constitute the entire agreement among the
parties with respect to the subject matter hereof and supersede
all prior agreements and understandings, both written and oral,
among the parties with respect to the subject matter hereof; (b)
are not intended to confer upon any other person any rights or
remedies hereunder, unless expressly provided otherwise; and (c)
shall not be assigned by operation of law or otherwise except as
otherwise specifically provided.
9.6 Severability.
In the
event that any provision of this Agreement or the application
thereof, becomes or is declared by a court of
competent jurisdiction to be illegal, void or unenforceable, the
remainder of this Agreement will continue in full force and
effect and the application of such provision to other persons or
circumstances will be interpreted so as reasonably to effect the
intent of the parties hereto. The parties further agree to
replace such void or unenforceable provision of this Agreement
with a valid and enforceable provision that will achieve, to the
extent possible, the economic, business and other purposes of
such void or unenforceable provision.
9.7 Other Remedies.
Except as otherwise provided herein, any and all remedies herein
expressly conferred upon a party will be deemed cummative with
and not exclusive of any other remedy conferred hereby, or by law
or equity upon such party, and the exercise by a party of any one
remedy will not preclude the exercise of any other
remedy.
9.8 Governing Law.
This Agreement shall be governed
by and construed in accordances with the laws of the State of
California regardless of the laws that might otherwise govern
under applicable principles of conflicts of laws
thereof.
9.9 Rules of Construction.
The parties hereto agree
that they have been represented by counsel during the negotiation
and execution of this Agreement and, therefore, waive the
application of any law, regulation, holding or rule of
construction providing that ambiguities in an agreement or other
document will be construed against the party drafting such
agreement or document.
Amendment 2
- B.
- Except
as provided in Section C below, and notwithstanding the provisions of Article 4.16, Sections (b) and (c) of the Agreement, any potential transaction
with an SVRX licensee which concerns a buy-out of any such licensee's royalty obligations shall be managed as follows:
- 1.
- Should
either party become aware of any such potential transaction, it will immediately notify the other in writing.
- 2.
- Any
meetings and/or negotiations with the licensee will be attended by both parties, unless agreed otherwise. Novell's participation will be by personnel who are engaged in corporate
business development.
- 3.
- Any
written proposal to be presented to the licensee, including drafts and final versions of any proposed amendments to the SVRX licenses, will be consented to by both parties prior to
its delivery to the licensee, unless agreed otherwise.
- 4.
- Prior
to either parties' unilateral determination as to the suitability of any potential buy-out transaction, the parties will meet face to face and analyze the potential
merits and disadvantages of the transaction. No such transaction will be concluded unless the execution copy of the amendment is consented to in writing by both parties, and either party will have the
unilateral right to withhold its consent should it judge, for any reason whatsoever, the transaction to be contrary to its economic interests and/or its business plans and strategy.
- 5.
- This
Amendment does not give Novell the right to increase any SVRX licensee's rights to SVRX source code, nor does it give Novell the right to grant new SVRX source code licenses. In
addition, Novell may not prevent SCO from exercising its rights with respect to SVRX source code in accordance with the Agreement.
- 6.
- The
parties agree that no member of Novell's sales force will receive a bonus, commission, quota attainment credit, or other type of sales incentive as a result of the
buy-out of an SVRX license.
- C.
- Novell
may execute a buy-out with a licensee without any approval or involvement of SCO, and will no longer be bound by any of the requirements stated in Section B.
above, if: (i) SCO ceases to actively and aggressively market SCO's UNIX platforms; or (ii) upon a change of control of SCO as stated in schedule 6.3(g) of the Agreement.
- D.
- Novell
and SCO agree to indemnify and hold harmless the other from and against any and all losses, liabilities, judgments, and costs incurred ("Liability") if either causes the other
to incur Liability under Section 10 of Amendment No. X to Software Agreement SOFT-00015 as amended, Sublicensing Agreement SUB-00015A as amended, Software
Agreement SOFT-00015 Supplement No. 170 as amended, and Substitution Agreement XPER-00015B ("Amendment No. X").
In Witness Whereof, Buyer and Seller
have excuted this Agreement to be signed by their duly authorized
respective officers, all as of the date from written
above.
The Santa Cruz Operation, INC. By: [signature]
Name: Alok Mohan Title: Chief Executive Officer
Novell
Inc. By: [signature] Name: Robert J. Frankenberg Title:
Chairman of the Board President and Chief Executive
Officer
Schedule 1.1(a) Assets (Page 1 of 4)
1. All
rights and ownership of UNIX and UnixWare and Auxiliary Products, including but
not limited to all versions of UNIX and UnixWare and Auxiliary Products and all copies
of UNIX and UnixWare and Auxiliary Products (including revisions and updates in
process), and all appropriate technical, design, development, installation,
operation and maintenance information concerning UNIX and
UnixWare and Auxiliary Products, including source code, source documentation, source
listings and annotation, [...] engineering, notebooks, test
data and test results, as well as all reference manuals and
support materials normally distributed by Seller to end-users
and potential end-users in connection with the distribution of
UNIX and UnixWare and Auxiliary Products, such assets to include without limitation the
following:
UNIX and UnixWare Source Code Products
A. UnixWare 2.0
as described in the UnixWare 2.0 Licensing Schedule and those
products listed as "prior" products on such schedule
(includes source code updates where appropriate - i.e. UnixWare
product family).
B. UNIX SVR4.1 ES as described in the UNIX
SVR4.1 ES Licensing Schedule and those products listed as "prior"
products on such schedule.
C. UNIX SVR4.0 MP as described in
the UNIX SVR4.0 MP Licensing Schedule and those products listed
as "prior" products on such schedule.
D. [...]The following foreign versions of UnixWare software:
UnixWare 1.0 French
UnixWare 1.0 German
UnixWare 1.0 Italian
UnixWare 1.0 Spanish
UnixWare 1.1 French
UnixWare 1.1 German
UnixWare 1.1 Italian
UnixWare 1.1 Spanish
UnixWare 1.1 Japanese
UnixWare 1.1 Chinese
UnixWare 2.01 French
UnixWare 2.01 German
UnixWare 2.01 Italian
UnixWare 2.01 Spanish
UnixWare 2.01 Japanese
Binary Product Releases
A.
UnixWare 2.01 Product Family described by the Novell UnixWare
2.01 Part/Price List
B. UnixWare 2.0.x update
releases
C. UnixWare 1.1 Product Family as described by the
Novell UnixWare 1.1
Part/Price List
D. UnixWare 1.1.x
- update releases
Products Under Development
A.
UnixWare 2.1 (Eiger) - contains NetWare UNIX Client and
Server capabilities
B. UnixWare 2.1 Oracle Parallel Server
(OPS)
C. UnixWare 2.03 - maintenance update under
development
D. UnixWare 2.0.x/7.1 Enhanced Mode
Merge
E. UnixWare 2 Internet Server
F. Amadeus Software
Schedule 1.1(a) Assets (Page 2 of 4)
Auxiliary Products
[as listed in Attachment 1 to this Schedule I.1(a)]
Other Technology
A. UnixWare
system/HBA/etc. Test/Cerification Suites used by
Novell Labs
B. UnixWare "OS Branding" Test
Suites
C. UnixWare "OS Compatible" [Requirements?]
D.
Oracle Performance Test Suite
E. ARTUS, Bart, Buster Internal
UNIX Test suites and test harnesses.
F. UnixWare
Training/Education Courseware
G. Requirements, Design, and
Test Specifications for UnixWare 2
H. Technical Support
Update Manager
I. Marketing collateral/information in
electronic form
J. ODI Transmogrification
software
II. All of Seller's claims arising after the
Closing Date against any parties relating to any right, property
or asset included in the Business.
III All of Seller's
rights pertaining to UNIX and UnixWare under any software
development contracts, licenses and any other contracts to which
Seller is a party or by which it is bound and which pertain to
the Business (to the extent that such contracts are assignable),
including without limitation:
A. Joint Development
with third parties:
1. In-process development
agreements
2. Past development agreements with on-going
pricing discounts
3. Past development agreements without
ongoing pricing discounts
4. Joint development agreements in
which Seller didn't get full rights to the code
developed.
B. Third Party Software license agreements --
Those agreements in which Seller pays per copy fees for
technology/products which are shipped with or to be used with
UNIX System and/or UnixWare.
C. Joint marketing
agreements -- Marketing programs with customers.
D. End user
MLA agreements -- Agreements to allow end users to copy binary
products for internal use only. Associated with these
agreements are support requirements.
E. UNIX-only VAR
agreements -- UNIX Master VARs
Schedule 1.1(a) Assets
(Page 3 of 4)
F. Support agreements - End user support
agreements (i.e. TMAC, NALCOMIS)
G. Microsoft agreement
(Xenix Agreement) - Xenix compatibility and per copy fee
agreement. Seller will agree to discuss with SCO
Seller's interpretation of this agreement.
H. Microsoft
Agreement (Extra-Ordinary Discount) - Microsoft's additional
discount beyond 50%
I. Strategic Relationship Agreements
(i.e. MTA, ECPA, MBA, etc.)
J. Out-sourced development (i.e.
India) - Development agreements with third parties Wipro and HCL)
and Infix Development Center. IDC is a Seller
subsidiary.
K. Out-sourced Support Agreements
L.
Software and Sublicensing Agreements - This includes the source
codes and sublicensing agreements that Seller has with its OEM,
End User and Educational customers. The total number of these
agreements is approximately 30,000.
M. OEM Binary
Licensing Agreements - OEM distribution of UnixWare with Seller's
agreement to include some OEM added value into future releases of
UnixWare.
N. Agreements for development and licensing of Amadeus Software.
IV. [...]
All master copies of UNIX, UnixWare and Auxiliary Software owned by Seller, except as retained by Seller in connection with seller's licenses specified in Section 1.6 hereof.
V. Intellectual property -
Trademarks UNIX and UnixWare as and to the extent held by Seller
(excluding any compensation Seller receives with respect of the
license granted to X/Open regarding the UNIX trademark).
VI.
All contracts relating to the SVRX Licenses and Auxiliary Product Licenses (collectively "SVRX Licenses")listed below:
-
UNIX System V Release 4.2 MP Intel386 Implementation
- #UNIX
System V Release 4.2 MP International Edition,
Intel386 Implementation
- UNIX System V Release 4.2
Intel386 Implementation
- #UNIX System V Release 4.2
International Edition, Intel386 Implementation
- UNIX
System V Release 4.1 ES Intel386 Implementation
- #UNIX
System V Release 4.1 ES International Edition
Intel386 Implementation
Schedule 1.1(a) Assets (Page 4
of 4)
- UNIX System V Release 4.0 MP Intel386
Implementation
- #UNIX System V Release 4.0 MP International
Edition Intel386 Implementation
- UNIX System V Release
4.0 MP Intel386 Version 4 Implementation
- #UNIX System V
Release 4.0 International Edition Intel386 Version
4 Implementation
- UNIX System V Release 4.0 Intel386
Version 3 Implementation
- #UNIX System V Release 4.0
International Edition Intel386 Version 3 Implementation
-
UNIX System V Release 4.0 Intel386 Version 2 Implementation
-
#UNIX System V Release 4.0 International Edition Intel386 Version
2 Implementation
- UNIX System V Release 4.0 Intel386
Version 1 Implementation
- #UNIX System V Release 4.0
International Edition Intel386 Version 1 Implementation
-
UNIX System V/386 Release 3.2 and #UNIX System V/386 Release
3.2 International Edition
- UNIX System V Release 3.2 and
#UNIX System V Release 3.2 International Edition
- UNIX
System V Release 3.1 and #UNIX System V Release 3.1
International Edition
- UNIX System V Release 3.0 and
#UNIX System V Release 3.0 International Edition
- All
prior releases and versions of UNIX System V Release 2.1
-
#All prior releases and versions of UNIX System V Release
2.1 International Edition
- All prior releases and
versions of UNIX System V Release 2.0
- #All prior releases
and versions of UNIX System V Release 2.0 International
Edition
- All prior UNIX System releases and versions
preceding UNIX System V Release 2.0
- #All prior UNIX
System releases and versions preceding UNIX System V Release
2.0
International Editions
- Auxiliary Products
VII. Such office
furniture and personal computers or work stations as may be
currently used by the employees of Seller hired by Buyer
pursuant to Section 4.13 hereof.
Schedule 1.1(b) Excluded
Assets (Page 1 of 2)
I. Any asset not listed in Schedule
1.1(a) including without limitation any asset which pertains to
NetWare which is not listed on Schedule 1.1(a)
II. Netware
Operating System and Services
III. TUCEDO Transaction
Processing
IV. Licensed technology, including:
A.
NetWare and other Novell code contained in UnixWare 2.01 and
Eigar
1. ODI software contained in NetWare and UnixWare LAN
drive Test Kit
2. Nprinter (for printing from NetWare to
UnixWare Server)
3. NUC (NetWare UNIX Client - for print, inc
from UnixWare to NetWare Server)
4. TNVT, Host Presenter
(Terminal Emulator to Log into UnixWare Server from Netware
Client)
5. MHS Gateway (Mail Gateway)
6. IPX/SPX
(Re-Write of native 4.1)
7. ODI (Networking driver protocol,
version 3.3 of assembly Spec and 1.0 of C Spec)
8.
Kconsole (Log-in to NetWare console)
9. UnixWare TSA (SMS is
back-up and restore, TSA is the "agent" needed to do
this)
10. Some NetWare Client APIs
11.
DR-DOS
12. Host Presenter (Binary Only)
13. TNVT
(Binary Only)
14. criptor(??? unreadable from PDF ???)
(Binary Only)
15. NetWare NLM (Binary Only)
B. NetWare
code contained in Eiger Only
1. NDS APIs
2. NWS (inc
NetWare File Print and Directory Services)
C. NetWare 4.1 for
UnixWare
Schedule 1.1(b) Excluded Assets (Page 2 of
2)
V. Intellectual Property:
A. All copyrights and
trademarks, except for the
[...]
copyrights and trademarks owned by Novell as of the date of the Agreement required for SCO to exercise its rights with respect to the acquisition of UNIX and UnixWare technologies. However, in no event shall Novell be liable to SCO for any claim brought by any third party pertaining to said copyrights and trademarks.
B. All Patents
VI. Existing Master
License Agreements with end users which include, in addition to
other products of Seller, integrated delivery of
UnixWare.
VII. All accounts receivable or rights to payment
concerning the Asset arising prior to the Closing
Date
, subject to appropriate payments to Buyer in several situations involving (a) prepayments received by Seller prior to the Closing Date under its customer agreements which cover orders for licenses to and/or support for UnixWare products that remain unfulfilled as of the Closing Date, or (b) any other rights to payments which accrued to Seller prior to the Closing Date under such agreements for such unfulfilled orders for UnixWare Products. Such situations are describe in Attachment 1 to this Schedule I.1(b). The parties agree to adapt more detailed procedures, where appropriate, to deal with such payments in each of such situations within ninety (90) days after the Closing Date.
VIII. All rights, title and interest to the SVR's
Royalties less than 5% fee for adminstrating the collecting
thereof pursuant to Section 4.16 hereof. |