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2.1 Caldera SCO Reorganization August 2000
See original SEC file that this excerpt taken from at Form S-4 file number 333-45936 2000-09-15
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APPENDIX A
AGREEMENT AND PLAN OF REORGANIZATION
BY AND AMONG
CALDERA SYSTEMS, INC.,
A DELAWARE CORPORATION
CALDERA HOLDING, INC.,
A DELAWARE CORPORATION
AND
THE SANTA CRUZ OPERATION, INC.
A CALIFORNIA CORPORATION
AUGUST 1, 2000
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TABLE OF CONTENTS
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1. PLAN OF REORGANIZATION............................................. A-1
1.1 The Organization of Newco and Merger Sub.................... A-1
1.2 The Merger.................................................. A-2
1.3 SCO Transaction............................................. A-2
1.4 Contribution and Transfer of Contributed Stock and
Contributed Assets.......................................... A-3
1.5 Closing Matters............................................. A-6
1.6 Dissenter's Rights.......................................... A-6
1.7 Newco Plans................................................. A-6
1.8 Registration on Form S-8.................................... A-6
1.9 Effects of the Caldera Merger............................... A-6
1.10 Tax-Free Reorganization..................................... A-6
1.11 Tax-Free Section 351 Transaction............................ A-7
1.12 HSR Filings................................................. A-7
1.13 Board of Directors and Officers of Newco; Newco Certificate
of Incorporation
and Bylaws.................................................. A-7
1.14 Registration on Form S-4.................................... A-8
2. REPRESENTATIONS AND WARRANTIES OF SCO.............................. A-8
2.1 Organization; Good Standing; Qualification and Power........ A-8
2.2 Capital Structure........................................... A-8
2.3 Authority................................................... A-9
2.4 SEC Documents............................................... A-10
2.5 Disclosure; Information Supplied............................ A-11
2.6 Compliance with Applicable Laws............................. A-12
2.7 Litigation.................................................. A-12
2.8 ERISA and Other Compliance.................................. A-13
2.9 Absence of Certain Changes or Events........................ A-15
2.10 Full Force and Effect....................................... A-17
2.11 Agreements.................................................. A-17
2.12 No Defaults................................................. A-18
2.13 Certain Agreements.......................................... A-18
2.14 Taxes....................................................... A-18
2.15 Intellectual Property....................................... A-19
2.16 Fees and Expenses........................................... A-21
2.17 Insurance................................................... A-21
2.18 Ownership of Property....................................... A-21
2.19 Environmental Matters....................................... A-21
2.20 Interested Party Transactions............................... A-22
2.21 Fairness Opinion............................................ A-22
2.22 Title to and Condition and Sufficiency of Group Assets...... A-22
2.23 No Restrictive Agreements................................... A-22
2.24 Supplier and Customer Relationships......................... A-22
2.25 Product and Inventory Status................................ A-23
2.26 Affirmative Vote............................................ A-23
2.27 State Takeover Statutes..................................... A-23
2.28 Competition and Fair Trading Laws........................... A-23
2.29 Grants...................................................... A-23
3. REPRESENTATIONS AND WARRANTIES OF CALDERA AND NEWCO................ A-24
3.1 Organization; Good Standing; Qualification and Power........ A-24
3.2 Capital Structure........................................... A-24
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TABLE OF CONTENTS -- (CONTINUED)
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3.3 Authority................................................... A-25
3.4 SEC Documents............................................... A-26
3.5 Disclosure; Information Supplied............................ A-26
3.6 Vote Required............................................... A-27
3.7 Litigation.................................................. A-27
3.8 Valid Issuance.............................................. A-27
3.9 Absence of Certain Changes or Events........................ A-27
3.10 Taxes....................................................... A-29
3.11 Intellectual Property....................................... A-29
3.12 Fees and Expenses........................................... A-29
3.13 Environmental Matters....................................... A-30
3.14 Fairness Opinion............................................ A-30
3.15 Tax Representations......................................... A-30
4. SCO COVENANTS...................................................... A-30
4.1 Advice of Changes........................................... A-30
4.2 Maintenance of Business..................................... A-31
4.3 Conduct of Business......................................... A-31
4.4 SCO Corporate Approvals..................................... A-32
4.5 Letter of SCO's Accountants................................. A-32
4.6 Prospectus/Proxy Statement.................................. A-32
4.7 Regulatory Approvals........................................ A-33
4.8 Necessary Consents.......................................... A-33
4.9 Access to Information....................................... A-33
4.10 Satisfaction of Conditions Precedent........................ A-33
4.11 Voting Agreement............................................ A-33
4.12 Sales Representative and Support Agreement.................. A-34
4.13 Stockholders Agreement...................................... A-34
4.14 No Other Negotiations....................................... A-34
4.15 Books and Records........................................... A-35
4.16 [Intentionally Omitted.].................................... A-35
4.17 Modification of Joint Contributed Agreements and Shared
Contributed Assets.......................................... A-35
4.18 Key Employee Employment Agreements.......................... A-35
4.19 SCO IP Rights............................................... A-35
4.20 Directors' and Officers' Liability Insurance................ A-36
4.21 Closing Group Account....................................... A-36
4.22 SCO Retained Business....................................... A-36
4.23 Taking of Necessary Action; Further Action.................. A-36
4.24 Accounting Treatments....................................... A-36
5. CALDERA AND NEWCO COVENANTS........................................ A-36
5.1 Advice of Changes........................................... A-36
5.2 Maintenance of Business..................................... A-36
5.3 Conduct of Business......................................... A-36
5.4 Stockholder Approval........................................ A-37
5.5 Letter of Caldera's Accountants............................. A-37
5.6 Prospectus/Proxy Statement.................................. A-38
5.7 State Securities Law Compliance............................. A-38
5.8 Regulatory Approvals........................................ A-38
5.9 Necessary Consents.......................................... A-39
5.10 Access to Information....................................... A-39
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5.11 Books and Records........................................... A-39
5.12 Satisfaction of Conditions Precedent........................ A-39
5.13 Voting Agreement............................................ A-39
5.14 Sales Representative and Support Agreement.................. A-39
5.15 Stockholders Agreement...................................... A-39
5.16 Caldera Employee Plans...................................... A-39
5.17 Indemnification and Insurance -- Caldera.................... A-40
5.18 Indemnification and Insurance -- Employees.................. A-41
5.19 Distribution to SCO Shareholders............................ A-42
6. CONDITIONS PRECEDENT TO OBLIGATIONS OF SCO......................... A-43
6.1 Accuracy of Representations and Warranties.................. A-43
6.2 Covenants................................................... A-43
6.3 Compliance with Law......................................... A-43
6.4 Form S-4.................................................... A-43
6.5 Opinion of Caldera and Newco's Counsel...................... A-43
6.6 Stockholder Approval........................................ A-43
6.7 Tax Opinion................................................. A-43
6.8 Designees to the Board of Directors of Newco................ A-43
6.9 Nasdaq Listing.............................................. A-44
6.10 HSR Act..................................................... A-44
6.11 Ancillary Agreements........................................ A-44
6.12 Delivery of Newco Shares.................................... A-44
7. CONDITIONS PRECEDENT TO OBLIGATIONS OF CALDERA AND NEWCO........... A-44
7.1 Accuracy of Representations and Warranties.................. A-44
7.2 Covenants................................................... A-44
7.3 Compliance with Law......................................... A-44
7.4 Consents.................................................... A-44
7.5 Form S-4.................................................... A-44
7.6 Opinion of Counsel to SCO................................... A-44
7.7 Caldera Stockholder Approval................................ A-44
7.8 Tax Opinion................................................. A-44
7.9 HSR Act..................................................... A-45
7.10 Ancillary Agreements........................................ A-45
7.11 Key Employee Term Sheets.................................... A-45
8. TERMINATION OF AGREEMENT........................................... A-45
8.1 Termination................................................. A-45
8.2 Notice of Termination....................................... A-46
8.3 Liability................................................... A-46
8.4 Termination Fee............................................. A-47
9. SURVIVAL OF REPRESENTATIONS........................................ A-47
9.1 Survival of Representations................................. A-47
10. ESCROW AND INDEMNIFICATION........................................ A-47
10.1 Escrow Fund................................................. A-47
10.2 Indemnification by SCO...................................... A-48
10.4 Limitations on Indemnification.............................. A-48
10.5 Indemnification Procedures.................................. A-48
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TABLE OF CONTENTS -- (CONTINUED)
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11. EMPLOYEE MATTERS.................................................. A-50
11.1 Right to Offer Employment................................... A-50
11.2 Termination of Employment................................... A-51
11.3 Cooperation................................................. A-52
12. TAX MATTERS....................................................... A-52
12.1 Transaction Taxes; Representation; Transaction Tax
Indemnity................................................... A-52
12.2 Treatment of Indemnity Payments............................. A-52
12.3 Indemnity for Taxes......................................... A-52
12.4 Other Tax Matters........................................... A-54
12.5 Tax Representations......................................... A-56
13. MISCELLANEOUS..................................................... A-57
13.1 Governing Law; Venue........................................ A-57
13.2 Assignment; Binding upon Successors and Assigns............. A-57
13.3 Severability................................................ A-57
13.4 Counterparts................................................ A-57
13.5 Other Remedies.............................................. A-57
13.6 Amendment and Waivers....................................... A-57
13.7 Expenses.................................................... A-57
13.8 Attorneys' Fees............................................. A-58
13.9 Notices..................................................... A-58
Construction of Agreement...................................
13.10 A-58
No Joint Venture............................................
13.11 A-58
Further Assurances..........................................
13.12 A-59
Absence of Third Party Beneficiary Rights...................
13.13 A-59
Public Announcement.........................................
13.14 A-59
Certain Defined Terms.......................................
13.15 A-59
Entire Agreement............................................
13.16 A-68
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TABLE OF CONTENTS -- (CONTINUED)
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EXHIBITS
Exhibit A -- Certificate of Merger
Exhibit A-1 -- Certificate of Incorporation
Exhibit 1.4(b) -- Excluded Assets
Exhibit 1.4(c)(i)(B) -- Assumed Liabilities
Exhibit 1.3(b) -- Escrow Agreement
Exhibit 1.13(b) -- Officers
Exhibit 1.13(c)A -- Form of Newco Amended and Restated Certificate of
Incorporation
Exhibit 1.13(c)B -- Form of Newco Amended and Restated Bylaws
Exhibit 1.4(a)(i) -- Non US-Contributed Companies and Contributed Assets
Exhibit 4.11A -- Form of Voting Agreement
Exhibit 4.11B -- SCO Affiliates Who Executed Voting Agreements
Exhibit 4.12 -- Sales Representative and Support Agreement
Exhibit 4.13B -- Stockholder Agreement
Exhibit 4.18A -- SCO Key Employees
Exhibit 4.18B -- Form of Key Employee Term Sheet
Exhibit 5.13B -- Caldera Affiliates Who Executed Voting Agreements
Exhibit 6.5 -- Opinion of Counsel of Caldera and Newco
Exhibit 7.6 -- Opinion of Counsel of SCO and Contributing Companies
Exhibit 13.15A -- Contributed Assets
Exhibit 13.15B -- Contributed Contracts
Exhibit 13.15C -- Contributed Subsidiaries
Exhibit 13.15D -- Group Products
Exhibit 13.15E -- Permitted Encumbrances
SCHEDULES
-- Caldera Disclosure Letter
-- SCO Disclosure Letter
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AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (this "Agreement") is entered
into as of August 1, 2000, by and among Caldera Systems, Inc., a Delaware
corporation including for all purposes Caldera Surviving Corporation,
("Caldera"), Caldera Holding, Inc., a Delaware corporation ("Newco") and The
Santa Cruz Operation, Inc., a California corporation ("SCO"). The terms defined
in Section 13.15 of this Agreement shall have the meanings therein specified in
this Agreement.
RECITALS
A. The parties intend that, subject to the terms and conditions of this
Agreement, (i) a new Delaware corporation referred to herein as Newco has been
formed by Caldera solely for the purpose of the transactions contemplated
hereunder; (ii) a newly formed, wholly owned subsidiary of Newco ("Merger Sub")
will be merged with and into Caldera, with Caldera being the surviving
corporation of such merger (the "Merger"), and all outstanding Caldera
securities will be converted, on a share for share basis, into Newco securities
having identical rights, preferences and privileges, with Newco assuming any and
all outstanding options and other rights to purchase shares of capital stock of
Caldera (with all such Newco securities issued to former Caldera security
holders initially representing the Caldera Percentage Interest in Newco), all on
the terms set out in this Agreement and in the Certificate of Merger
substantially in the form of Exhibit A hereto (the "Certificate of Merger") and
the applicable provisions of Delaware Law; (iii) SCO and certain of its
subsidiaries as herein specified will contribute to Newco, all on the terms
herein specified, all of the Contributed Stock of the Contributed Companies
(with each of the Contributed Companies thereby becoming a wholly owned
subsidiary of Newco) and the Contributed Assets in consideration for the
issuance by Newco to SCO of shares of Common Stock of Newco, $0.001 par value
("Newco Common Stock"), and (iv) Newco will assume all options to acquire common
stock of SCO held by the Employees (other than David McCrabb, Jack Moyer and Jim
Wilt) hired or retained by Caldera (the "Optionees") and such options will be
converted into options to purchase Newco Common Stock ("Newco Options") as set
forth herein, which Newco Common Stock issued to SCO and Newco Options will
represent in the aggregate a fully diluted equity interest in Newco equal to the
difference between 100% and the Caldera Percentage Interest. The transactions
described in subpart (iii) and (iv) of the foregoing sentence are collectively
the "SCO Transaction."
B. The Newco Common Stock and the Newco Options issued in the Merger and in
the SCO Transaction will be registered under the Securities Act, pursuant to a
Newco registration statement on Form S-4 or Form S-8, as set forth herein.
C. For federal income tax purposes, it is intended that (i) the Merger
qualify as a reorganization under the provisions of Section 368(a) of the
Internal Revenue Code and (ii) that the Merger and the portion of the SCO
Transaction described in Recital A (iii) above qualify as an exchange under the
provisions of Section 351 of the Internal Revenue Code.
NOW, THEREFORE, the parties hereto hereby agree as follows:
1. Plan of Reorganization.
1.1 The Organization of Newco and Merger Sub. Caldera has formed Newco
under the laws of the State of Delaware for the purposes of the transactions
contemplated by the Merger and in accordance with the terms of this Agreement.
Newco currently has no outstanding securities and has conducted no business and,
prior to the Effective Time, will not issue any securities, will conduct no
business or operations, will have no assets and will enter into no agreements
nor incur any obligations or Liabilities, except as required or contemplated by
this Agreement or necessary to perform its obligations hereunder. As soon as
practicable after the date hereof, Newco shall form the Merger Sub as a wholly
owned subsidiary, which will conduct no business prior to Closing except as
expressly contemplated hereunder.
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1.2 The Merger. At the Closing, subject to the terms and conditions of
this Agreement, Caldera will execute and deliver and will file with the
Secretary of State of the State of Delaware in accordance with relevant
provisions of the Delaware Law, a Certificate of Merger providing for the Merger
of Merger Sub with and into Caldera, with Caldera being the surviving
corporation upon the effectiveness of the Merger and thereby becoming a wholly
owned subsidiary of Newco, pursuant to this Agreement, the Certificate of Merger
and in accordance with applicable provisions of the Delaware Law as follows:
(a) Conversion of Caldera Common Stock. Each share of the Common
Stock of Caldera ("Caldera Common Stock") that is issued and outstanding
immediately prior to the Effective Time will by virtue of the Merger and at
the Effective Time, and without any further action on the part of Caldera,
Newco or any holder of Caldera Common Stock, be converted into one share
(the "Caldera Ratio") of validly issued, fully paid and nonassessable Newco
Common Stock.
(b) Conversion of Caldera Options.
(i) Conversion. At the Effective Time, each of the then
outstanding options to purchase shares of Caldera Common Stock
(collectively, the "Caldera Options") (consisting of all outstanding
options granted under the stock option plans of Caldera or the Caldera
Subsidiaries, including but not limited to its 1998 Stock Option Plan
and its 1999 Omnibus Stock Incentive Plan (collectively, the "Caldera
Plans"), and any individual non-Plan options), will, by virtue of the
Merger, and without any further action on the part of any holder
thereof, be assumed by Newco and converted into an option to purchase an
equivalent number of shares of Newco Common Stock, at an exercise price
per share equal to the per share exercise price of such Caldera Option
in effect at the Effective Time. The term, exercisability, vesting
schedule, status as an "incentive stock option" under Section 422 of the
Internal Revenue Code, if applicable, and all other terms and conditions
of the Caldera Options will be unchanged and all references in any
option agreement governing such option to Caldera shall be deemed to
refer to Newco, where appropriate. Continuous service as an employee or
consultant with Caldera or any of the Caldera Subsidiaries will be
credited to an optionee of Caldera for purposes of determining the
number of shares of Newco Common Stock vested and exercisable under the
assumed Caldera Option after the Closing.
(ii) Stock Rights. At the Effective Time, Newco will assume all of
Caldera's obligations under Caldera's 2000 Employee Stock Purchase Plan
(the "Caldera Stock Purchase Plan") and each of the then outstanding
rights to purchase shares of Caldera Common Stock under such plan
(collectively, the "Caldera Stock Purchase Plan Rights"), will by virtue
of the Merger, and without any further action on the part of any holder
thereof, be assumed and converted into a right to purchase the same
number of shares of Newco Common Stock on the next "purchase date" (as
such term is defined in the Caldera Stock Purchase Plan) following the
Effective Time at a purchase price per share determined in accordance
with the Caldera Stock Purchase Plan.
(c) Cancellation of Caldera-Owned Shares. Each share of Caldera
Common Stock held in the treasury of Caldera or any of which are owned by
Newco, Caldera, or any direct or indirect wholly owned subsidiary of Newco
or Caldera immediately prior to the Effective Time shall be cancelled and
extinguished without any conversion thereof.
1.3 SCO Transaction.
(a) Issuance of Newco Common Stock. At the Effective Time and subject
to the terms and conditions of this Agreement, Newco will, in consideration
for the contribution and transfer of the Contributed Stock and Contributed
Assets to Newco as contemplated by this Agreement, perform the following:
(i) Consideration. Issue to SCO that number of issued, fully paid
and nonassessable shares of Newco Common Stock equal to The SCO
Percentage Interest, less (a) the number of shares of Newco Common Stock
issuable upon exercise of the Newco Options pursuant to
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Section 1.3(a)(iii) below and (b) the Escrow Shares issued to SCO and
placed directly into escrow by Caldera pursuant to Section 1.3(b) below,
with such number of shares to be appropriately adjusted in the event of
any Caldera stock split, stock combination, reclassification or other
similar capital change (the "First SCO Certificate") and pay SCO cash
consideration equal to seven million dollars ($7,000,000) (the "Cash
Consideration"), by wire transfer of immediately available funds or upon
the cancellation of SCO's outstanding indebtedness to Caldera.
(ii) [Intentionally Omitted.]
(iii) Assumption and Conversion of SCO Options. At the Effective
Time, each of the then outstanding options to purchase shares of SCO
Common Stock held by the Optionees (collectively, the "SCO Options")
(consisting of all outstanding options granted under the stock option
plans of SCO or the SCO Subsidiaries, and any individual non-plan
options held by the Optionees), will, by virtue of the Merger, and
without any further action on the part of any holder thereof, be assumed
by Newco and converted into an option to purchase one share of Newco
Common Stock for each two shares of SCO Common Stock subject to a SCO
Option at the Effective Time (the "SCO Ratio") at an exercise price per
share of Newco Common Stock equal to the exercise price per share of
such assumed SCO Option immediately prior to the Effective Time divided
by the SCO Ratio, rounded up to the nearest cent. Except as set forth in
the preceding sentence, the term, exercisability, vesting schedule, and
all other terms and conditions of the SCO Options will be unchanged and
all references in any option agreement governing such option to SCO
shall be deemed to refer to Newco, where appropriate; provided, however,
that the outstanding SCO Options previously designated as "incentive
stock options" under Section 422 of the Internal Revenue Code may, as a
result of the foregoing adjustments, be converted into non-statutory
stock options. Continuous service as an employee or consultant with SCO
or any of the SCO Subsidiaries will be credited to the Optionee for
purposes of determining the number of shares of Newco Common Stock
vested and exercisable under the assumed SCO Option after the Closing.
If the foregoing calculation results in a Newco Option, which is issued
for a SCO Option, being exercisable for a fraction of a share of Newco
Common Stock, then the number of shares of Newco Common Stock subject to
such option will be rounded down to the nearest whole number of shares,
with no cash being payable for such resulting fractional share.
(b) Escrow. As soon as practicable after the Effective Time, and
subject to and in accordance with the provisions of Section 10 and the
Escrow Agreement, a form of which is attached as Exhibit 1.3(b) (the
"Escrow Agreement"), Caldera shall deliver to the Escrow Agent on behalf of
SCO a certificate representing ten percent (10%) of the SCO Percentage
Interest (the "Escrow Shares"). The Escrow Shares distributed to the Escrow
Agent shall be held in escrow and shall be available to transfer to Caldera
for certain damages as provided in Section 10. To the extent not
transferred to Caldera for such damages, the Escrow Shares shall be
released to SCO, all as provided in Section 10 and the Escrow Agreement.
(c) Termination of Newco Options. All shares of Common Stock
underlying Newco Options assumed pursuant to Section 1.3(a)(iii) which
terminate without being exercised by the Optionees shall be issued by
Caldera to SCO on a quarterly basis.
1.4 Contribution and Transfer of Contributed Stock and Contributed Assets.
(a) Contribution and Transfer. Subject to the terms and conditions of
this Agreement and in consideration for the issuance by Newco of Newco
Common Stock as provided above, the Contributing Companies shall at the
Effective Time, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged on behalf of each of the
Contributing Companies, contribute and transfer and deliver to Newco or
cause to be contributed, transferred and delivered to Newco, and at the
Effective Time Newco shall accept the contribution and transfer from the
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Contributing Companies of all right, title and interest in and to the
Contributed Stock and Contributed Assets. Notwithstanding the preceding,
the Contributed Assets and Contributed Companies which are located outside
of the United States shall be purchased and sold by and among the Newco and
SCO entities located in such countries in exchange for stock or cash
consideration as the parties shall agree before the Effective Time. Such
payment shall be included within and shall not change the total amount of
The SCO Percentage Interest and the Cash Consideration. The parties shall
execute, or cause to be executed, Bills of Transfer relevant to their
particular jurisdiction reflecting the transfer of any such Contributed
Assets which shall reflect the purchase price allocation as agreed. Such
amounts shall be reported as the purchase price for all foreign Tax
reporting purposes in each relevant jurisdiction and no party shall have a
position inconsistent therewith.
(b) Excluded Assets.
(i) Excluded Assets. SCO is not selling and Caldera shall not
acquire from SCO any of the following assets or any interest therein
(collectively, the "Excluded Assets"):
(A) any assets related solely to the SCO Retained Business;
(B) any cash and cash equivalents and any accounts receivable
(the "Cash Equivalents") of the Contributing Companies and the
Contributed Companies;
(C) those assets set forth on Exhibit 1.4(b).
(ii) Net Cash Equivalents. "Net Cash Equivalent" shall mean the
net book value of any cash and cash equivalents held by any of the
Contributed Companies, including but not limited to accounts receivable,
accounts payable and third party debt obligations. To the extent the Net
Cash Equivalents of any Contributed Company are or are expected to be
positive as of the Effective Time, either SCO will withdraw that value
from the Contributed Company at or before the Effective Time or Caldera
will cause that value to be paid or credited to SCO at or promptly after
the Effective Time. To the extent the Net Cash Equivalents of any
Contributed Company are negative as of the Effective Time, SCO will pay
or credit such amount to Caldera at or promptly after the Effective
Time. The payment or credits will be treated as either a dividend by the
Contributed Company or as an adjustment to the Cash Consideration as the
parties may agree.
(c) Assumption and Exclusion of Liabilities.
(i) Assumed Liabilities. As a result of the transfer to Newco of
the Contributed Stock, Newco will as a matter of law own all of the
outstanding equity capital of the Contributed Companies, which
Contributed Companies and their respective Contributed Subsidiaries
(collectively, the "Contributed Company Group") in turn shall remain
liable for their respective Liabilities. In addition, subject to the
terms and conditions of this Agreement, Newco (or a subsidiary of Newco
designated by Newco and acceptable to SCO) shall, at the Effective Time,
assume, and thereafter pay, perform and discharge when due those (and
only those) Liabilities of the Contributing Companies and/or their
direct and indirect subsidiaries (excluding the Liabilities of the
Contributed Company Group, which are governed by the first sentence of
this Section 1.4(c)(i)) that are expressly listed in the following
subparagraphs of this Section 1.4(c)(i) (collectively, the "Assumed
Liabilities") and no other Liabilities of the Contributing Companies
whatsoever:
(A) all Liabilities of the Contributing Companies under all
Contributed Contracts;
(B) all Liabilities of the Contributing Companies that are
included in the Closing Group Account or that are listed on Exhibit
1.4(c)(i)(B) attached hereto; and
(C) those Tax liabilities for which Newco is responsible
pursuant to Section 12 below.
(ii) Excluded Liabilities Not Assumed. Except for the Liabilities
of the Contributed Company Group (which will remain the sole
responsibility of the applicable member of the
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Contributed Company Group) and except for the Assumed Liabilities
expressly described above in Section 1.4(c), Newco shall not assume,
pay, perform or discharge, or otherwise have any obligation,
responsibility or liability whatsoever for, any and all Liabilities of
SCO or its direct and indirect subsidiaries (whether now existing or
hereafter arising), and said companies shall retain, and shall be solely
responsible and liable for paying, performing and discharging when due,
all such Liabilities (collectively, the "Excluded Liabilities").
(iii) Intercompany Accounts. One or more Contributed Companies is
likely to owe intercompany debt to SCO. The amount of any such
intercompany debt remaining after payment by Newco to SCO of any Net
Cash Equivalents will be treated as an Excluded Liability and will be
cancelled by SCO.
(d) Asset Contribution. The SCO will, and will cause each of the
other Contributing Companies to, take all actions and sign and deliver any
and all instruments and documents (including Bills of Transfer for each
relevant jurisdiction) reasonably necessary or appropriate to fully effect
and perfect the transfer to Newco of any and all of the Contributed Stock
and Contributed Assets held by either of them and any Contributed Contracts
to which they are a party.
(e) Unassignable Assets. Notwithstanding any other provision of this
Agreement or any of the Ancillary Agreements, to the extent that any of the
Contributed Assets are not assignable or otherwise transferable by the
Contributing Companies to Newco without the consent, approval or waiver of
another party thereto or any third party (including any governmental
agency), or if such assignment or transfer would constitute a breach
thereof or of any other material contract binding upon the transferor or
any of its Affiliates, or a violation of any applicable law, then neither
this Agreement nor such Ancillary Agreements shall constitute an assignment
or transfer (or an attempted assignment or transfer) thereof until such
consent, approval or waiver of such party or parties has been duly
obtained.
With respect to each such Contributed Asset whose assignment or transfer to
Newco requires the consent, approval or waiver of another party thereto or any
third party, Newco and SCO shall cooperate and use their mutual reasonable,
commercial efforts to obtain such consent, approval or waiver of such other
party or parties or such third party to such assignment or transfer as promptly
as practicable prior to the Effective Time; and each agrees to supply relevant
information to such party or parties or such third party in order to facilitate
such objective. Notwithstanding the foregoing, nothing contained herein shall
obligate Newco or any Contributing Company to expend or pay any amount to third
parties to obtain any consents, approvals or waivers, or to make alternative
arrangements available; provided that where the Contributing Companies are
unable to effectively assign or otherwise transfer to Newco nor any Contributed
Asset without constituting a breach due to such lack of third party consent, the
Contributing Companies shall make available to Newco the net economic benefits
(such as inbound royalty payments, net of actual costs), if any, received by the
Contributing Companies from and after the Effective Time with respect to any
such Contributed Asset.
(f) No Fraudulent Conveyance. The Contributing Companies are not
entering into this Agreement or any Ancillary Agreement with the intent to
defraud, delay or hinder their respective creditors and the consummation of
the transactions contemplated by this Agreement, and the Ancillary
Agreements referenced in this Agreement will not have any such effect.
Except for the Assumed Liabilities, the transfer of the Contributed Stock
and Contributed Assets pursuant hereto will not give rise to any right of
any creditor of the Contributing Companies to assert any claim whatsoever
against Newco or any of the Contributed Stock and Contributed Assets in the
hands of Newco or any of Newco's respective successors and assigns
following the Effective Time which would have a Material Adverse Effect on
Newco. SCO and its consolidated subsidiaries, taken as a group are Solvent,
and will continue to be Solvent immediately following the transfer of the
Contributed Stock and Contributed Assets pursuant to this Agreement.
Neither SCO nor any of its consolidated subsidiaries nor any of the
Contributed Stock and Contributed Assets is subject to, or the subject of,
any Insolvency Proceeding or Insolvency Action. No writ of attachment,
execution or similar process
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has been ordered, executed or filed against any of the Contributed Stock
and Contributed Assets. There is not any reason to expect that any of the
aforementioned actions, or any similar action, will take place or be taken,
and there are no grounds for any of the aforementioned actions or like
action. The parties agree that the securities issued by Newco to SCO and
the Optionees and the other obligations on Newco's part to be performed
under the terms of this Agreement and the Ancillary Agreements constitute
full and fair equivalent consideration for the Contributed Stock and
Contributing Assets exchanged therefor and the covenants, agreements and
performances of the Contributing Companies under this Agreement and the
Ancillary Agreements.
1.5 Closing Matters. Unless this Agreement has been terminated as
provided in Section 8 below, the closing of the transactions contemplated by
this Agreement (the "Closing") (i) will take place at the offices of Brobeck,
Phleger & Harrison LLP at Two Embarcadero Place, 2200 Geng Road, Palo Alto,
California 94303 on a date (the "Closing Date") and at a time to be mutually
agreed upon by the parties, which date shall be as soon as practicable after the
Caldera Stockholders Meeting and SCO Stockholders Meeting and, in any event, no
later than the third business day after all conditions to Closing set forth
herein shall have been satisfied or waived, unless another place, time and date
is mutually selected by SCO and Caldera and (ii) will take place concurrently
with the Effective Time.
1.6 Dissenter's Rights. It shall be the sole responsibility of SCO to
disclose any dissenter's rights which SCO stockholders have with respect to the
SCO Transaction; these rights shall be disclosed to Caldera in writing no later
than the date of filing the Proxy/Prospectus.
1.7 Newco Plans. Newco shall assume, effective as of the Closing, the
Caldera Plans, Caldera Stock Purchase Plan and non-plan grants and awards, as
amended through the Effective Time (collectively, the "Newco Plans"). Newco
shall also reserve a sufficient number of shares of Newco Common Stock for
issuance pursuant to the SCO Options assumed by Newco pursuant to Section
1.3(a)(ii) herein.
1.8 Registration on Form S-8. Newco will cause the Newco Common Stock
issuable upon exercise of outstanding awards under the Newco Plans or upon
exercise of the SCO Options assumed by Newco (collectively, the "Stock Rights")
and the shares reserved for issuance pursuant to future awards under the Newco
Plans to be registered on Form S-8 (the "Form S-8") promulgated by the SEC prior
to, but in no event later than, 10 days after the Effective Time and Newco will
use its reasonable best efforts to maintain the effectiveness of such
registration statement or registration statements for so long as any such Stock
Rights shall remain outstanding.
1.9 Effects of the Caldera Merger. At the Effective Time: (a) the
separate existence of Merger Sub will cease and Merger Sub will be merged with
and into Caldera, with Caldera being the surviving corporation of the Merger
(the "Caldera Surviving Corporation"), pursuant to the terms of this Agreement
and the Certificate of Merger; (b) the Certificate of Incorporation of the
Caldera Surviving Corporation shall be in the form attached as Exhibit A-1 to
the Certificate of Merger; (c) the Bylaws of Caldera immediately prior to the
Effective Time will be the Bylaws of the Caldera Surviving Corporation; (d) the
directors and officers of Caldera immediately prior to the Effective Time will
be the directors and officers of the Caldera Surviving Corporation; (e) each
share of the Common Stock of Merger Sub outstanding immediately prior to the
Effective Time will be converted into one share of Common Stock of the Caldera
Surviving Corporation; (f) each share of Caldera Common Stock, each Caldera
Option, and each Caldera Stock Purchase Plan Right outstanding immediately prior
to the Effective Time will be converted, as provided above in this Section
1.2(b). The Merger will, from and after the Effective Time, have all of the
effects provided by applicable law, including, without limitation, the Delaware
Law.
1.10 Tax-Free Reorganization. The parties adopt this Agreement (to the
extent it relates to the Merger) as a plan of reorganization and intend the
Merger to be a tax-free reorganization under Section 368(a)(1)(A) of the
Internal Revenue Code by virtue of the provisions of Section 368(a)(2)(E) of the
Internal Revenue Code. The Newco Common Stock issued in the Merger will be
issued solely in exchange for the Caldera Common Stock, and no other transaction
other than the Merger represents,
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provides for or is intended to be an adjustment to the consideration paid for
the Caldera Common Stock. No consideration that could constitute "other
property" within the meaning of Section 356(b) of the Internal Revenue Code is
being transferred by Newco for the Caldera Common Stock in the Merger. The
parties shall not take a position on any tax return inconsistent with this
Section 1.10. In addition, Newco hereby represents, and will represent as of the
Effective Time, that it intends to continue Caldera's historic businesses or use
a significant portion of Caldera's business assets in a trade or business. None
of the parties shall cause a transaction, without offsetting compensation to the
other party, that would result in income to SCO under the Subpart F provisions
of the Internal Revenue Code.
1.11 Tax-Free Section 351 Transaction. The contribution and transfer of
the Contributed Stock and Contributed Assets to Newco in exchange for Newco
Common Stock, together with the Merger, are intended to constitute an exchange
within the meaning of Section 351 of the Internal Revenue Code. The Newco Common
Stock issued to SCO therein will be issued solely in exchange for the
Contributed Stock and Contributed Assets transferred in the SCO Transaction and
no consideration (other than the cash consideration) that could constitute other
property within the meaning of Internal Revenue Code Section 351(b) is being
transferred by Newco to SCO. The parties shall not take a position on any tax
return inconsistent with this Section 1.11.
1.12 HSR Filings. Caldera, SCO and Newco will as promptly as practicable
prepare and file the applicable notices and forms (if any) required to be filed
by them under the HSR Act or comparable laws of non-U.S. governmental entities,
and comply promptly with any appropriate requests from the Federal Trade
Commission, the United States Department of Justice or any other Governmental
Antitrust Authority for additional information and documentary material. The
parties hereto will not take any action that will have the effect of delaying,
impairing or impeding the termination of any waiting period or the receipt of
any required approvals of a Government Antitrust Authority. Without limiting the
generality of the parties' undertakings pursuant to this Section 1.12, the
parties shall use their reasonable best efforts to prevent the entry in a
judicial or administrative proceeding brought under any antitrust law by any
Governmental Antitrust Authority or any other party of any permanent or
preliminary injunction or other order that would make consummation of the SCO
Transaction or the Merger in accordance with the terms of this Agreement
unlawful under appropriate anti-trust laws or that would prevent or delay such
consummation as a consequence of such laws. Each party hereto shall promptly
inform the other of any material communication between such party and the
Federal Trade Commission, the Department of Justice or any other Governmental
Antitrust Authority regarding any of the transactions contemplated hereby. If
any party or any Affiliate of such party receives a request for additional
information or for documents or any material from any such Governmental
Antitrust Authority with respect to the transactions contemplated hereby, then
such party shall endeavor in good faith to make or cause to be made, as soon as
reasonably practicable and after consultation with the other parties, an
appropriate response in compliance with such request. Further, no written
materials shall be submitted by any party to the Federal Trade Commission, the
Department of Justice or any other Governmental Antitrust Authority in
connection with HSR Act compliance or the merger control regulations of any
other state or country, nor shall any oral communications be initiated with such
governmental entities by any party, without prior disclosure to and coordination
with the other parties and its counsel. Each party hereto will cooperate in
connection with reaching any understandings, undertakings or agreements (oral or
written) involving the Federal Trade Commission, the Department of Justice or
any other Governmental Antitrust Authority in connection with the transactions
contemplated hereby.
1.13 Board of Directors and Officers of Newco; Newco Certificate of
Incorporation and Bylaws.
(a) Board of Directors. At the Effective Time, Newco will have a
Board of Directors consisting of nine directors. At the Effective Time, the
directors of Newco shall consist of the current Caldera directors plus Doug
Michels and one other individual to be named by SCO, nominees of SCO. At
the Effective Time, Ralph J. Yarro shall be the Chairman of the Board of
Newco.
(b) Officers. At the Effective Time, the officers of Newco shall be
as set forth on Exhibit 1.13(b).
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(c) Certificate of Incorporation and Bylaws. Attached hereto as
Exhibits 1.13(c)A and 1.13(c)B are the respective forms of Amended and
Restated Certificate of Incorporation and Bylaws of Newco to be in effect
at the Effective Time.
1.14 Registration on Form S-4. The Newco Common Stock to be issued in the
Merger to Caldera stockholders and the Newco Common Stock to be issued in the
SCO Transaction to SCO and pursuant to the assumption of SCO Options shall be
registered under the Securities Act on Form S-4. As promptly as practicable
after the date hereof, Newco, with the cooperation of Caldera and SCO, shall
prepare and file with the SEC a Form S-4 registration statement (the "Form
S-4"), together with the prospectus/joint proxy statement to be included therein
(the "Prospectus/Proxy Statement") and any other documents required by the
Securities Act or the Exchange Act in connection with the Merger and the SCO
Transaction.
2. Representations and Warranties of SCO.
Except as set forth in the respectively referenced provisions of the SCO
Disclosure Letter delivered by SCO on behalf of itself and any other
Contributing Companies (collectively, "Representing SCO Entities") to Caldera
concurrently herewith and certified by an officer of SCO, on behalf of all of
the Representing SCO Entities, respectively, to be true, accurate and complete
to the best of his/her knowledge (the "SCO Disclosure Letter"), SCO on behalf of
each and all of the Representing SCO Entities, hereby represents and warrants to
Caldera that as of the date hereof:
2.1 Organization; Good Standing; Qualification and Power. The Contributed
Subsidiaries are all of the subsidiaries of the Contributed Companies or any of
their direct or indirect subsidiaries. Each of the Contributed Companies, and
the Contributed Subsidiaries and each of the Contributing Companies is a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its formation, has all requisite corporate power and
authority to own, lease and operate any and all of the Group Assets held by such
company and for the Conduct of the Group Business as now being conducted by such
company, and is duly qualified and in good standing to do business in each
jurisdiction in which the nature of its business or the ownership or leasing of
its properties makes such qualification necessary, other than in such
jurisdictions where the failure so to qualify would not have a Material Adverse
Effect on the Group Business. SCO has delivered to Caldera or its counsel
complete and correct copies of the charter documents of the Contributed
Companies and the Contributed Subsidiaries. Except for the Contributed
Subsidiaries, none of the Contributed Companies nor any of the Contributed
Subsidiaries owns, directly or indirectly, any capital stock or other equity
interest of any corporation or has any direct or indirect equity or ownership
interest in any other business, whether organized as a corporation, partnership,
joint venture or otherwise.
2.2 Capital Structure.
(a) Stock and Options. The authorized, issued and as of the date of
July 28, 2000, the outstanding capital stock of the Contributed Companies
and the Contributed Subsidiaries is set forth in Section 2.2(a) of the SCO
Disclosure Letter. Except as specified in Section 2.2(a) of the SCO
Disclosure Letter, no shares of the capital stock of the Contributed
Companies or of any of the Contributed Subsidiaries are held by any of them
in its treasury or reserved for issuance upon the exercise of options or
warrants. Except as specified in Section 2.2(a) of the SCO Disclosure
Letter, all outstanding shares of the capital stock of the Contributed
Companies on July 28, 2000 are set forth in Section 2.2(a) of the SCO
Disclosure Letter and are validly issued, fully paid and nonassessable and
free and clear of any Encumbrances and not subject to preemptive rights
under any statute, pursuant to the Certificate of Incorporation or Bylaws
or Memorandum and Articles of Incorporation (or similar governing documents
in each relevant jurisdiction) of the Contributed Companies, or pursuant to
any agreement or document to which any of them is a party or by which any
of them is bound. All outstanding shares of the capital stock of each of
the Contributed Subsidiaries are validly issued, fully paid and
nonassessable and are owned by a Contributed Company, or one of the
Contributed Subsidiaries, free and clear of any Encumbrances. SCO has
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provided Caldera with a correct and complete list of each of the SCO
Options as of July 28, 2000, including the name of the Optionees, the plan
pursuant to which such SCO Options were issued (if applicable), the number
of shares covered by such SCO Options, the per share exercise price of such
SCO Options, and the vesting schedule applicable to such SCO Options,
including the number of shares vested as of such date and will provide a
final list of such information on the Closing Date. All the outstanding SCO
Options have been issued in compliance with all applicable federal and
state securities laws. Doug Michels owns and has the right to vote shares
representing approximately 10% of the capital stock of SCO as of the date
of this Agreement.
(b) No Other Commitments. Except as set forth in Section 2.2(b) of
the SCO Disclosure Letter there are no options, warrants, calls, rights,
commitments, conversion rights or agreements of any character to which the
Contributed Companies is a party or by which any of them is bound
obligating them to issue, deliver or sell, or cause to be issued, delivered
or sold, any shares of its capital stock, or securities convertible into or
exchangeable for shares of its capital stock, or obligating any of them to
grant, extend or enter into any such option, warrant, call, right,
commitment, conversion right or agreement. There is no voting trust, proxy
or other agreement or understanding to which SCO or any of its respective
direct or indirect subsidiaries is a party with respect to the voting of
the capital stock of any member of the Contributed Company Group. All
shares of capital stock of any member of the Contributed Company Group are
held free and clear of any Encumbrances.
(c) Registration Rights. Neither the Contributed Companies nor the
Contributing Companies is under any obligation to register under the
Securities Act (or equivalent or similar legislation in each relevant
jurisdiction) any of the presently outstanding securities of the
Contributed Companies or any securities of the Contributed Companies that
may be subsequently issued.
(d) Caldera Ownership. Except as set forth in Section 2.2(d) of the
SCO Disclosure Letter, none of SCO or any of its direct or indirect
subsidiaries owns, or will own immediately prior to the Effective Time, any
Caldera Common Stock.
2.3 Authority.
(a) Corporate Action. Subject to approval of this Agreement and the
Ancillary Agreements by SCO's stockholders, SCO and each of the
Contributing Companies have all requisite corporate power and authority to
enter into this Agreement and the Ancillary Agreements, to perform its
obligations hereunder and thereunder, and to consummate the transactions
contemplated by this Agreement and the Ancillary Agreements. The Board of
Directors of SCO has, as of the date of this Agreement, unanimously (i)
approved and declared advisable this Agreement and the Ancillary Agreements
and has approved the SCO Transaction and the other transactions
contemplated hereby, (ii) determined that the SCO Transaction is consistent
with and in furtherance of the long-term business strategy of SCO and fair
to, and in the best interests of, SCO and its stockholders and (iii)
determined to recommend that the stockholders of SCO adopt and approve this
Agreement and approve the SCO Transaction. Prior to the Effective Time,
this Agreement and the Ancillary Agreements will be approved by the Board
of Directors of each of the other Contributing Companies. This Agreement
has been and, prior to the Effective Time, the Ancillary Agreements will
be, duly executed and delivered by the Contributing Company party to such
agreement. Subject to receiving such stockholder approval, this Agreement
is, or, in the case of each of the Ancillary Agreements will be, a valid
and binding obligation of the Contributing Company party to such agreement,
each enforceable against the Contributing Company party to such agreement
in accordance with its terms, except as enforceability may be limited by
bankruptcy and other similar laws and general principles of equity.
(b) No Conflict. Neither the execution, delivery and performance of
this Agreement and the Ancillary Agreements nor the consummation of the
transactions contemplated hereby or thereby, nor compliance with the
provisions hereof, will (i) conflict with, or result in any violations of,
or cause a default (with or without notice or lapse of time, or both)
under, or give rise to a right of termination, amendment, cancellation or
acceleration of any obligation contained in, or the loss of any material
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benefit under, or result in the creation of any Encumbrance upon any of the
Group Assets or Contributed Stock under, any term, condition or provision
of (x) the Certificate of Incorporation or Bylaws or equivalent
organizational documents of any of the Contributing Companies or the
Contributed Companies or any of the Contributed Subsidiaries or (y) any of
the Contributed Contracts or any other loan or credit agreement, note,
bond, mortgage, indenture, lease or other material agreement, judgment,
order, decree, statute, law, ordinance, rule or regulation applicable to
the Contributed Companies, the Contributed Companies' Property, the
Contributed Stock or the Contributed Assets, other than any such conflicts,
violations, defaults, rights or Encumbrances which, individually or in the
aggregate, would not have a Material Adverse Effect on the Group Business;
or (ii) require the affirmative vote of the holders of greater than a
majority of the issued and outstanding capital stock of any member of the
Contributing Companies or any member of the Contributed Company Group.
(c) Governmental Consents. Except (i) as set forth in Section 2.3(c)
of the SCO Disclosure Letter; (ii) such filings, authorizations, orders and
approvals as may be required under state takeover laws; (iii) such filings
and notifications as may be necessary under the HSR Act; (iv) the filings,
authorizations, orders, notifications, and approvals contemplated by this
Agreement or the Ancillary Agreements; and (v) such other governmental or
third party consents, filings, authorizations, orders and approvals which,
if not obtained or made, would not have a Material Adverse Effect on Newco
or have a material adverse effect on the ability of the Contributing
Companies to consummate the transactions contemplated by this Agreement or
the Ancillary Agreements, no consent, approval, order or authorization of,
or registration, declaration or filing with, any governmental entity is
required to be obtained by the Contributing Companies or any member of the
Contributed Company Group in connection with the execution and delivery of
this Agreement or the Ancillary Agreements by SCO or the performance of the
Contributing Companies and the Contributed Companies of the respective
obligations herein pertaining to such company.
2.4 SEC Documents.
(a) SEC Reports. SCO has delivered to Caldera or its counsel correct
and complete copies of the final version of each report, schedule,
registration statement and definitive proxy statement filed by SCO with the
SEC on or after July 1, 1995 with respect to the Group Business or the
Group Assets (the "SCO SEC Documents"), which are the material documents
(other than preliminary proxy material) that SCO was required to file with
the SEC on or after July 1, 1995 with respect to the Group Business or the
Group Assets. As of their respective dates or, in the case of registration
statements, their effective dates, none of the SCO SEC Documents (including
all exhibits and schedules thereto and documents incorporated by reference
therein) contained any untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances under which
they were made, not misleading as of such time of filing, and there is no
requirement under the Securities Act or the Exchange Act, as the case may
be, to have amended any such filing, except for such requirements as were
fulfilled by the filing of such SCO SEC Documents, the SCO SEC Documents
complied, when filed, in all material respects with the then applicable
requirements of the Securities Act or the Exchange Act, as the case may be,
and the rules and regulations promulgated by the SEC thereunder, and SCO
has filed in all material respects all documents and agreements that were
required to be filed as exhibits to the SCO SEC Documents.
(b) SCO Financial Statements; Absence of Undisclosed Liabilities. The
audited consolidated financial statements dated as of and for the period
ending September 30, 1999 and the unaudited consolidated financial
statements dated as of and for the period ending June 30, 2000 of SCO and
its consolidated subsidiaries (the "SCO Consolidated Financial Statements")
complied as to form in all material respects with the then applicable
accounting requirements and the published rules and regulations of the SEC
with respect thereto, were prepared in accordance with GAAP applied on a
consistent basis during the periods involved (except as may have been
indicated in the notes thereto)
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and fairly present (subject, in the case of the unaudited statements, to
normal year-end audit adjustments) the consolidated financial position of
SCO and its respective consolidated subsidiaries as at the respective dates
thereof and the consolidated results of its operations and cash flows for
the respective periods then ended. SCO has no liabilities or obligations of
any nature (matured or unmatured, fixed or contingent) which are,
individually or in the aggregate, of a nature required to be disclosed on
the face of a consolidated balance sheet for SCO and its consolidated
subsidiaries prepared in accordance with GAAP and which would have a
Material Adverse Effect on the Group Business, except for such liabilities
or obligations as (i) were accrued or provided for in the consolidated
balance sheet at June 30, 2000 included in the SCO Consolidated Financial
Statements as of the date thereof (the "SCO Consolidated Financial
Statements Balance Sheet Date") or (ii) are of a normally recurring nature
and were incurred after the SCO Consolidated Financial Statements Balance
Sheet Date in the ordinary course of business consistent with past
practice. All liabilities and valuation accounts established and reflected
in the SCO Consolidated Financial Statements are, to SCO's Knowledge,
reasonably adequate. At the SCO Consolidated Financial Statements Balance
Sheet Date, there were no material loss contingencies arising from the
conduct of the business of SCO and its consolidated subsidiaries which are
required to be provided for or disclosed, but are not provided for or
disclosed, in the SCO Consolidated Financial Statements.
(c) Group Financial Statements; Absence of Undisclosed
Liabilities. Attached as Schedule 2.4(c)(1) to the SCO Disclosure Letter
are the audited combined financial statements of the Group Business dated
as of and for the period ended June 30, 2000 including a combined balance
sheets as of June 30, 2000 (the "2000 Group Balance Sheet") and a combined
balance sheet for September 30, 1999 and 1998, together with combined
statements of operations, cash flows, and Group Business equity for the two
years and nine months in the period ended September 30, 1999 (collectively
the "Group Financial Statements"). The Group Financial Statements comply in
all material respects with the then applicable accounting requirements and
rules and regulations of the SEC with respect thereto, and present fairly,
in all material respects, the combined financial position of the Group
Business as of September 30, 1999 and June 30, 2000, and the combined
results of its operations and its cash flows for each of the two years and
nine months in the period ended September 30, 1999, in conformity with
GAAP. The Contributed Company Group and the Contributing Companies (with
respect to the Group Business) have no Liabilities of any nature (matured
or unmatured, fixed or contingent) which (i) are related to or arose in
connection with the Group Business; (ii) individually or in the aggregate,
are of a nature required to be recorded on the face of or disclosed in the
notes to the Group Financial Statements; and (iii) are material to the
Group Business taken as a whole, except for such Liabilities as (A) were
accrued, provided for or disclosed in the Group Financial Statements or (B)
are of a normally recurring nature and were incurred after June 30, 2000
(the "Group Financial Statements Balance Sheet Date"), in the ordinary
course of business consistent with past practice. All liabilities and
valuation accounts established and reflected in the Group Financial
Statements are, to SCO's Knowledge, reasonably adequate. To SCO's
Knowledge, at the Group Financial Statements Balance Sheet Date, there were
no material loss contingencies which are not properly provided for or
disclosed in the Group Financial Statements.
2.5 Disclosure; Information Supplied. No representation or warranty made
by SCO in this Agreement, nor any final financial statement, certificate or
exhibit prepared and furnished or to be prepared and furnished by it, or its
representatives pursuant hereto or in connection with the transactions
contemplated hereby, contains any untrue statement of a material fact, or omits
to state a material fact necessary to make the statements or facts contained
herein or therein, taken as a whole, not misleading in light of the
circumstances under which they were furnished. None of the information supplied
or to be supplied by SCO for inclusion or incorporation by reference in the Form
S-4 and Prospectus/Proxy Statement will, at the time the information is supplied
contain, after giving effect to any supplement or amendment thereto, 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 in light of the
circumstances under which they are made, not materially misleading.
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2.6 Compliance with Applicable Laws. Except as disclosed in the SCO SEC
Documents filed prior to the date hereof, the Group Business is not being
conducted and no Contributed Company is in violation of any law, ordinance,
regulation, rule or order of any governmental entity where such violation would
have a Material Adverse Effect on the Group Business. Except as disclosed in the
SCO SEC Documents filed prior to the date hereof, neither SCO, any Contributing
Company, nor any member of the Contributed Company Group has been notified in
writing by any governmental entity that any investigation or review with respect
to the Contributed Companies or any of the Contributed Subsidiaries, any of the
Group Assets or the Group Business is pending or threatened, nor has any
governmental entity notified any of them in writing of its intention to conduct
the same. The Group Assets include all permits, licenses and franchises from
governmental entities required for the Conduct of the Group Business, except for
those whose absence would not have a Material Adverse Effect on the Group
Business and those which would terminate as a consequence of the SCO
Transaction.
2.7 Litigation. Except as would not reasonably be expected to have a
Material Adverse Effect on the Group Business or as set forth in Section 2.7 of
the SCO Disclosure Letter or as disclosed in the SCO SEC Documents, there is no
suit, action, arbitration, demand, investigation, claim or proceeding pending
or, to SCO's Knowledge, threatened against the Contributed Company Group, any of
the Contributing Companies or the Group Assets; nor is there any judgment,
decree, injunction, ruling or order of any governmental entity, statutory body
or arbitrator or settlement or compromise agreement outstanding against the
Contributed Company Group or any of the Contributing Companies or the Group
Assets. SCO has delivered or made available to Caldera or its counsel correct
and complete copies of all material correspondence prepared by its counsel for
SCO auditors in connection with the last two completed audits of SCO's Financial
Statements and the audit of the Group Financial Statements and any such
correspondence since the date of the last such audit. No member of the
Contributed Company Group and none of the Contributin