Novell-SCO Asset Purchase Agreement
by Pamela Jones
Groklaw
November 16 2003
Here is the Asset Purchase Agreement between SCO and Novell. It has particular
importance now that SCO is claiming a non-compete clause it says it will enforce
if Novell tries to release a Linux distribution. They appear to be referring to
clause 1.6. However, as you will see, the interpretation they are giving that clause
appears to be dependent on Linux actually containing SCO's code, something that
is yet to be proven and which many feel is unlikely ever to be proven.
Here is the language I think they are referring to:
"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."
Obviously, this is talking about Unix code, the code they were licensing, not Linux.
You have to stretch quite a bit to even get what McBride might be thinking to imagine
this as being applicable to Linux, because SCO wasn't licensing Linux and the wording
is talking about the code they were licensing. If they mean the Unix code they claim
is inside Linux, the next question (after they actually prove that claim, which
they haven't yet) would be: how much do the four chunks SCO is claiming, SMP, RCU
etc., constitute in the whole picture? To qualify for the non-compete clause to
kick in, it would have to "constitute a primary portion of the value of the total
bundled or integrated product", which arguably it would not, especially when you
consider that not a lot of us actually use that code in the first place, let alone
it being only a portion of the whole.
This was done as a group project, with lots of volunteers working on one section
and then putting it all together, and it was hard work, because the original was
so unclear that a lot of the times, it was a matter of typing from scratch. You
can get the original as a pdf at http://www.groklaw.net/pdf/SCONovellAssetAg.pdf
Praise and thanks to all. I especially want to thank Edward Macnaghten for pulling
all the pieces together into one document. Also to the team: in the order I heard
from them, with more to go -- Steve Martin, beast, Philip Stephens, Chris Brewer,
Rand McNatt, Bill Sharrock, and Thomas Le Page, and some others too modest to be
mentioned but who also made a contribution.
ASSET PURCHASE AGREEMENT
BY AND BETWEEN
THE SANTA CRUZ OPERATION, INC.
AND
NOVELL, INC.
Dated as of September 19, 1995
TABLE OF CONTENTS
ARTICLE 1
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
Standstill 38
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
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
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 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 Schedule 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.
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. 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 and timing 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 audit 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 audit 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) Transfer Taxes. Buyer shall pay and promptly discharge when due the
entire amount of any and all sales and use tax ("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 reasonable requested and
legally permitted to minimize any such Sales Taxes.
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, 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 License Back of Assets. Concurrent with the Closing, Buyer shall
execute a license agreement under which it shall grant to Seller 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 in their mutual
opinion shall be sufficiently enticing to attract and retain a number of
existing employees of the Business as new employees of the Buyer. 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.
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 45 days of the end of each fiscal quarter
of Buyer, Buyer shall deliver to Seller or Seller's assignee 100% of any
SVRX Royalties collected in the immediately preceding quarter. 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.
(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. Buyer shall not, and
shall have no right to, enter into future licenses or amendments of the
SVRX Licenses, except as may be incidentally involved through its rights
to sell and license the Assets or the Merged Product (as such term is
defined in the proposed Operating Agreement, attached hereto as Exhibit
5.1(c)) or future versions thereof of the Merged Product.
(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, Seller shall automatically have unlimited, royalty-free,
perpetual rights to the
Licensed Technology.
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.
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, including but not
limited to all versions of UNIX and UnixWare and all copies of UNIX and
UnixWare (including revisions and updates in process), and all
technical, design, development, installation, operation and maintenance
information concerning UNIX and UnixWare, including source code, source
documentation, source listings and annotation, appropriate 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, such assets to include without limitation the following:
UNIX 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. Ancillary SVRx Products (a final list of which shall be developed by
the partied prior to the Closing)
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
Schedule 1.1(g)
Assets
(Page 2 of 4)
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.
IV. All copies of Unix and UnixWare, wherever located, owned by Seller.
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 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
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 trademarks UNIX and
UnixWare.
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.
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.
01:10 AM EST
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