EXHIBIT 10.1
The Santa ▇▇▇▇ Operation, Inc.
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COMMON STOCK AND WARRANT PURCHASE AGREEMENT
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COMMON STOCK AND WARRANT PURCHASE AGREEMENT
THIS COMMON STOCK AND WARRANT PURCHASE AGREEMENT (the "Agreement") is made
as of September 11, 2000 by and among The Santa ▇▇▇▇ Operation, Inc., a
California corporation (the "Company"), and the investor identified on the
Investor Schedule which is attached hereto as Exhibit A (each an "Investor,"
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collectively the "Investors").
R E C I T A L S:
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A. The Company desires to sell shares of its common stock, as well as
warrants to purchase additional shares of its common stock, and/or the common
stock of Caldera, Inc. held by Company, (hereinafter "Shares and Warrants") to
the Investors and the Investors desire to purchase such Shares and Warrants on
the terms and subject to the conditions set forth in this Agreement and the
Stock Purchase Warrant, the form of which is attached hereto as Exhibit B.
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THE PARTIES AGREE AS FOLLOWS:
1. Purchase and Sale of Common Stock and Warrants.
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1.1 Sale and Issuance of Common Stock and Warrants. The Company shall
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sell to each Investor and each such Investor shall purchase from the Company the
number of Shares and Warrants as set forth opposite the name of such Investor in
column two (2) of Exhibit A in exchange for the total purchase price set forth
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in column three (3) of Exhibit A.
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1.2 Escrow. Company shall deliver to the escrow agent, ▇▇▇▇▇ Fargo Bank,
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National Association, Corporate Trust Services, (hereinafter "Escrow Agent") (i)
certificates representing the Shares, and (ii) executed Stock Purchase Warrants
representing the Warrants to be purchased by the Investors as set forth in
Exhibit A. Investors shall deposit the purchase price, via check or wire
transfer to the Escrow Agent, as set forth in Exhibit A. The Closing shall be
subject to receipt of the foregoing by the Escrow Agent. The Escrow Agent shall
hold the share certificates, Warrants and purchase price in an escrow account
until the parties have executed the Agreement, the Registration Rights
Agreement, and the Escrow Agent has received an authorization from the Company
instructing the Escrow Agent to release the purchase price to the Company, and
the certificates and warrants to the Investors.
The parties hereby acknowledge that Escrow Agent is acting only as an
escrow agent in connection with this Agreement, and has not endorsed,
recommended or guaranteed the value of the stock and warrants purchased in
connection with this Agreement.
1.3 Registration Rights. At the Closing, the parties will enter into a
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Registration Rights Agreement, the form of which is attached hereto as Exhibit
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C.
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1.4 Closing. The purchase and sale of the Shares and Warrants shall take
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place upon the execution and delivery of this Agreement, the Registration Rights
Agreement, and the authorization
by Company authorizing the escrow agent to release the purchase price to the
Company and the shares and Warrants to the Investors. (the "Closing"). It is
anticipated that the Closing shall occur on or about September 8, 2000, with a
termination date of September 15, 2000. In the event the Investors have not
placed in escrow an aggregate sum of not less than $10,000,000, on or before
September 15, 2000, the Company and Security Research Associates, Inc. (the
"Placement Agent"), may, in their discretion, terminate this transaction and
cause the Escrow Agent to return any funds received to the applicable Investors.
Consequently, there is no minimum amount to be raised in the offering.
2. Representations and Warranties of the Company to the Investors. Except
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as set forth on the Schedule of Exceptions attached hereto as Exhibit D, the
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Company hereby represents and warrants to the Investor that:
2.1 Organization; Good Standing; Qualification and Power. The Company
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is a corporation duly organized, validly existing and in good standing under the
laws of the State of California, has all requisite corporate power and authority
to execute this Agreement and the Stock Purchase Warrant (collectively, the
"Agreements"), and to carry out the transactions contemplated hereby and
thereby, to own, lease and operate any and all of its properties, and to carry
on its business as now being conducted.
2.2 Capital Structure. The number of shares authorized and outstanding
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as of the date of July 28, 2000, is set forth in the Schedule of Exceptions. No
shares of the capital stock of the Company are held by the Company in its
treasury. Except as specified in the Schedule of Exceptions, all outstanding
shares of the capital stock of the Company on July 28, 2000 are set forth in the
Schedule of Exceptions 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 pursuant
to any agreement or document.
2.3 Other. Except as set forth in the Schedule of Exceptions and as
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contemplated by the Agreements, there are no outstanding warrants, conversion
privileges, preemptive rights, or other rights or agreements to purchase or
otherwise acquire or issue any equity securities of the Company.
2.4 Authorization. All corporate action on the part of the Company, its
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officers, directors and stockholders necessary for the authorization, execution
and delivery of, and performance of all obligations under the Agreements, and
for the issuance and delivery of the Shares, has been taken. The Agreements
constitute legally binding valid obligations of the Company enforceable against
the Company in accordance with their terms, except (i) as limited by applicable
bankruptcy, insolvency, reorganization, moratorium, and other laws of general
application affecting enforcement of creditors' rights generally, and (ii) as
limited by laws relating to the availability of specific performance, injunctive
relief, or other equitable remedies.
2.5 Validity of Shares. The Shares, when issued, sold and delivered in
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accordance with the terms and for the consideration expressed in this Agreement,
shall be duly and validly issued (including, without limitation, issued in
compliance with applicable federal and state securities laws), fully-paid and
non-assessable, and free from any liens or encumbrances other than those
accepted or imposed by the holders thereof, and the applicable state and federal
securities laws restrictions on transfer to which such Shares are subject.
2.6 No Conflict with Other Instruments; Compliance with Laws. The
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execution, delivery and performance of the Agreements will not result in any
violation of, be in conflict with, or constitute a default under, with or
without the passage of time or the giving of notice: (i) any provision of the
Company's Certificate of Incorporation or Bylaws; (ii) any provision of any
judgment, decree or order to which the Company is a party or by which it is
bound; (iii) any material contract, obligation or commitment to which the
Company is a party or by which it is bound; or (iv) to the best of Company's
knowledge, any statute, rule or governmental regulation applicable to the
Company. To the best of Company's knowledge, the Company is conducting its
business in compliance with all statutes, rules, and governmental regulations
applicable to the Company where the failure to do so would constitute a material
adverse event.
2.7 Agreements; Actions.
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(a) Except as set forth in the Company's SEC filings, there are no
agreements, understandings or proposed transactions between the Company and any
of its officers, directors, affiliates or any affiliate thereof.
(b) Except as set forth in the Schedule of Exceptions, the Company has not
(i) declared or paid any dividends, or authorized or made any distribution upon
or with respect to any class or series of its capital stock, (ii) incurred any
indebtedness for money borrowed, (iii) incurred any other liabilities other than
in the ordinary course of business, (iv) sold, exchanged or otherwise disposed
of any of its material assets or rights or (v) agreed to any of the foregoing.
(c) Except as set forth in the Schedule of Exceptions, the Company is not
a party to and is not bound by any contract, agreement or instrument, or subject
to any restriction under its Certificate or Bylaws, which to the knowledge of
the Company adversely affects in any material respect its business as now
conducted or as proposed to be conducted, its properties or its financial
condition.
2.8 Litigation. Except as set forth in the Schedule of Exceptions,
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there is no legal action, proceeding or investigation pending or to the best of
the Company's knowledge, threatened, that questions the validity of the
Agreements, or the right of the Company to enter into the Agreements or to
consummate the transactions contemplated hereby and thereby, or that would
result, either individually or in the aggregate, in any material adverse event
or any change in the current equity ownership of the Company, nor is the Company
aware that there is any basis for the foregoing. To the best of the Company's
knowledge, there is no judgment, decree or order of any court in effect against
the Company and the Company is not in default with respect to any order of any
governmental authority to which the Company is a party or by which it is bound.
The Company has no present intention to commence litigation against any other
party.
2.9 Title to Property and Assets; Leases. Except (a) for liens for
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current taxes not delinquent, (b) for liens imposed by law and incurred in the
ordinary course of business for obligations not past due to carriers,
warehousemen, laborers, material, men and the like, (c) for minor defects in
title, none of which, individually or in the aggregate, materially interferes
with the
use of such property, or (d) the proposed liens pursuant to the proposed
agreements with the Canopy Group, and Caldera Systems, Inc., the Company owns
its property and assets free and clear of all mortgages, liens, claims and
encumbrances. With respect to the property and assets it leases, the Company is
in compliance with such leases and, to the best of its knowledge, holds a valid
leasehold interest free of any liens, claims, or encumbrances, subject to
clauses (a)-(c) above.
2.10 Patents and Other Proprietary Rights. To the best of the Company's
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knowledge, the Company has sufficient title and ownership or license to use all
material patents, trademarks, service marks, trade names, copyrights, trade
secrets, information, proprietary rights and processes necessary for its
business as now conducted, and as proposed to be conducted, without conflict
with or infringement of the rights of others. Except as set forth in the
Schedule of Exceptions, the Company has not received any communications
alleging, nor is the Company aware of any basis for such allegation, that the
Company has violated or, by conducting its business as proposed, would violate
any of the patents, trademarks, service marks, trade names, copyrights or trade
secrets or other proprietary rights of any other person or entity. The Company
is not aware that any of its employees is obligated under any contract
(including licenses, covenants or commitments of any nature) or other agreement,
or subject to any judgment, decree or order of any court or administrative
agency, that would interfere with the use of such employee's best efforts to
promote the interests of the Company or that would conflict with the Company's
business as proposed to be conducted. Neither the execution nor delivery of this
Agreement, nor the carrying on of the Company's business by the employees of the
Company, nor the conduct of the Company's business as now conducted and as
proposed to be conducted, will, to the best of the Company's knowledge, conflict
with or result in a breach of the terms, conditions or provisions of, or
constitute a default under, any contract, covenant or instrument under which any
of such employees is now obligated. The Company does not believe it is or will
be necessary to use any inventions of any of its employees (or persons it
currently intends to hire) made prior to their employment by the Company.
2.11 Proprietary Information and Invention Assignments. Each employee of
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and consultant to the Company has executed and delivered to the Company a
Proprietary Information Agreement, that includes an invention assignment
provision. The Company is not aware that any of its employees or consultants are
in violation thereof, and the Company will use its best efforts to prevent any
such violation.
2.12 No Defaults; Violations or Conflicts. The Company is not in violation
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of any term or provision of its Certificate of Incorporation, Bylaws, or any
term or provision of any indebtedness, mortgage, indenture, contract, agreement,
or judgment which would constitute a material adverse event.
2.13 Governmental Consents. No consent, approval, order or authorization
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of, or registration, qualification, designation, declaration or filing with, any
federal, state, local or provincial governmental authority on the part of the
Company is required in connection with the consummation of the transactions
contemplated by this Agreement.
2.14 Disclosure. The Company has provided the Investors with all the
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information that the Investors have requested for deciding whether to acquire
the Shares and Warrants, including information regarding the agreement Company
entered into with Caldera Systems, Inc. on August 1,
2000, regarding the sale of Company's Server Software and Professional Services
Divisions to Caldera Systems, Inc. To the best of the Company's knowledge, no
representation or warranty of the Company contained in this Agreement and the
exhibits attached hereto, any certificate furnished or to be furnished to
Investors at the Closing or the Stock Purchase Warrant (when read together)
contains any untrue statement of a material fact or omits to state a material
fact necessary in order to make the statements contained herein or therein not
misleading in light of the circumstances under which they were made.
2.15 No Conflict of Interest. Except as set forth in Company's SEC filings,
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the Company is not indebted, directly or indirectly, to any of its officers or
directors or to their respective spouses or children, in any amount whatsoever
other than in connection with expenses or advances of expenses incurred in the
ordinary course of business or relocation expenses of employees. To the
Company's knowledge, and except as set forth in Company's SEC filings, none of
the Company's officers or directors, or any members of their immediate families,
are, directly or indirectly, indebted to the Company (other than in connection
with purchases of the Company's stock) or have any direct or indirect ownership
interest in any firm or corporation with which the Company in affiliated or with
which the Company has a business relationship, or any firm or corporation which
competes with the Company except that officers, directors and/or stockholders of
the Company may own stock in (but not exceeding two percent of the outstanding
capital stock of) any publicly traded company that may compete with the Company.
Except as set forth in Company's SEC filings, to the Company's knowledge, none
of the Company's officers or directors or any members of their immediate
families are, directly or indirectly, interested in any material contract with
the Company.
3. Representations and Warranties of the Investors to the Company. Each
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Investor represents and warrants to the Company as follows:
3.1 Authorization. When executed and delivered by such Investor, and
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assuming execution and delivery by the Company, the Agreements will constitute
valid obligations of such Investor, enforceable in accordance with their terms,
except (i) as limited by applicable bankruptcy, insolvency, reorganization,
moratorium, and other laws of general application affecting enforcement of
creditors' rights generally, and (ii) as limited by laws relating to the
availability of specific performance, injunctive relief, or other equitable
remedies.
3.2 Each Investor represents and warrants that such Investor has reviewed
the Company's 10Q and 8-K SEC filings related to the agreement Company entered
into with Caldera Systems, Inc., on August 1, 2000, regarding the sale of the
Company's Server Software and Professional Services Divisions to Caldera
Systems, Inc., and acknowledges the risks involved with such agreement,
including but not limited to (i) the risk that the transaction may not close;
(ii) the risk that the transaction may disrupt or is disrupting the efficient
functioning of the Company; and (iii) the risk that the Company's cash flow
requirements exceed its ability to generate cash in the near term.
4. Securities Laws.
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4.1 Securities Laws Representations and Covenants of Investor. Each
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Investor represents and warrants to the Company as follows:
(a) This Agreement is made with such Investor in reliance upon such
Investor's representation to the Company, which by such Investor's execution of
this Agreement such Investor hereby confirms, that the Shares and the Warrants
purchased hereto and to be received by such Investor will be acquired for
investment for such Investor's own account, not as a nominee or agent, and not
with a view to the sale or distribution of any part thereof, and that such
Investor has no present intention of selling, granting any participation in, or
otherwise distributing the same. By executing this Agreement, such Investor
further represents that such Investor has no 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 Securities.
(b) Each such Investor understands and acknowledges that the offering of
the Securities pursuant to this Agreement will not be registered under the
Securities Act on the grounds that the offering and sale of securities
contemplated by this Agreement are exempt from registration pursuant to Section
4(2) of the Securities Act, and that the Company's reliance upon such exemption
is predicated upon such Investor's representations set forth in this Agreement.
(c) Each such Investor represents that it is an Accredited Investor, as
defined under Rule 501(a) of the Securities Exchange Commission Act of 1933, or
that it is an Institutional Investor. In addition, each Investor represents
that: (i) such Investor has such knowledge and experience in financial and
business matters as to be capable of evaluating the merits and risks of such
Investor's prospective investment in the Securities; (ii) such Investor has
received all the information it has requested from the Company and considers
necessary or appropriate for deciding whether to purchase the Securities; (iii)
such Investor has the ability to bear the economic risks of such Investor's
prospective investment.
4.2 Legends. All certificates for the Shares and Warrants shall bear the
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following legend:
"THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED ("ACT"). SUCH SECURITIES MAY NOT BE TRANSFERRED UNLESS A
REGISTRATION STATEMENT UNDER THE ACT IS IN EFFECT AS TO SUCH TRANSFER OR SUCH
TRANSFER MAY BE MADE PURSUANT TO RULE 144 OR IN THE OPINION OF COUNSEL FOR THE
COMPANY, REGISTRATION UNDER THE ACT IS UNNECESSARY IN ORDER FOR SUCH TRANSFER TO
COMPLY WITH THE ACT."
5. Miscellaneous.
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5.1 Entire Agreement; Successors and Assigns. The Agreements constitute
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the entire agreement between the Company and the Investors relative to the
subject matter hereof. Any previous agreement between the Company and the
Investors is superseded by this Agreement. Subject to the exceptions
specifically set forth in this Agreement, the terms and conditions of this
Agreement shall inure to the benefit of and be binding upon the respective
executors, administrators, heirs, successors and assigns of the parties.
5.2 Governing Law. This Agreement shall be governed by and construed in
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accordance with the laws of the State of California.
5.3 Counterparts. This Agreement may be executed in two (2) or more
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counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
5.4 Headings. The headings of the sections of this Agreement are for
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convenience and shall not by themselves determine the interpretation of this
Agreement.
5.5 Notices. Any notice required or permitted hereunder shall be given in
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writing and shall be conclusively deemed effectively given (i) five (5) days
after sending by first class U.S. mail postage prepaid, (ii) upon personal
delivery, or (iii) two (2) days after the date of sending if sent by commercial
overnight courier addressed to the Company as set forth below the Company's name
on the signature page of this Agreement, and to an Investor, at such Investor's
address as set forth on Exhibit A or at such other address as the Company or
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such Investor may designate.
5.6 Survival of Warranties. The warranties, representations and covenants
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of the parties contained in or made pursuant to this Agreement shall survive the
Closing, and such warranties, representations and covenants of the Company shall
in no way be affected by any investigation of the subject matter thereof made by
or on behalf of the Investors; provided, however, that such representations and
warranties need only be accurate as of the Closing.
5.7 Finders Fees. Each of the Company and the Investors will be
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responsible for its own costs and expenses related to investment banking or
finders fees in connection with the transactions contemplated by this Agreement,
including those fees Company shall pay to Securities Research Associates, Inc.,
in connection with this transaction.
5.8 Severability. If any provision of this Agreement is held to be
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unenforceable for any reason, it shall be adjusted rather than voided, if
possible, in order to achieve the intent of the parties to the extent possible.
In any event, all other provisions of this Agreement shall be deemed valid and
enforceable to the full extent possible.
5.9 Delays or Omissions. No delay or omission to exercise any right, power
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or remedy accruing to any party under this Agreement, upon any breach or default
of any other party under this Agreement, shall impair any such right, power or
remedy of such non-breaching or non-defaulting party nor shall it be construed
to be a waiver of any such breach or default, or an acquiescence therein, or of
or in any similar breach or default thereafter occurring; nor shall any waiver
of any single breach or default be deemed a waiver of any other breach or
default theretofore or thereafter occurring. Any waiver, permit, consent or
approval of any kind or character on the part of any party of any breach or
default under this Agreement, or any waiver on the part of any party of any
provisions or conditions of this Agreement, must be in writing and shall be
effective only to the extent specifically set forth in such writing. All
remedies, either under this Agreement or by law or otherwise afforded to any
party, shall be cumulative and not alternative.
5.10 Exculpation Among Investors. Each Investor acknowledges that it is not
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relying upon any person, firm or corporation, other than the Company and its
officers and directors, in making its investment or decision to invest in the
Company. Each Investor agrees that no Investor nor the respective controlling
persons, officers, directors, partners, agents, or employees of any Investor
shall be liable to any other Investor for any action heretofore or hereafter
taken or omitted to be taken by any of them in connection with the purchase of
the Shares and Warrants.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
THE COMPANY: The Santa ▇▇▇▇ Operation, Inc.
a California corporation
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
By:________________________________
Name:______________________________
Title:_____________________________
THE INVESTOR:
By:________________________________
Name:______________________________
Title:_____________________________
EXHIBIT A
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INVESTOR SCHEDULE
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Price per Unit is $32.00.
Unit is defined as follows:
Upon close of the Agreement and Plan of Reorganization by and among Caldera
Systems, Inc., Caldera Holding, Inc., and Company, (hereinafter "Merger
Agreement") a Unit will consist of eight (8) shares of Company's common stock
and warrants to purchase either (a) one (1) share of Caldera, Inc. common stock
held by Company at $8.00 per share, or (b) two (2) shares of Company's common
stock at $4.00 per share.
If the Merger Agreement does not close, for any reason, or is terminated by the
parties thereto, a Unit will consist of eight (8) shares of Company's common
stock and warrants to purchase two (2) shares of Company's common stock at the
lesser of $4.00 per share, or 90% of the closing price of the Company's Common
Stock on the first trading day following the announcement that the Merger
Agreement shall not be consummated.
Notwithstanding the foregoing, in the event that within 90 days from the Closing
of the Merger Agreement, the Caldera shares held by Company purchasable under
the Warrant have not been registered, then Investor's exercise price shall
decrease by 1/8/th of a point (12.5 cents) each month until either the
registration of the shares becomes effective, or twelve months elapse.
Further, in the event that within 90 days from the Closing of this Common Stock
and Warrant Purchase Agreement, the Company shares purchasable under the Warrant
have not been registered, then Investor's exercise price shall decrease by
1/16/th (6.25 cents) each month until the either the registration of the shares
becomes effective, or twelve months elapse.
The purchase price must be deposited via check or wire transfer to:
If by Wire:
▇▇▇▇▇ Fargo Bank, N.A.
ABA #▇▇▇▇▇▇▇▇▇
Trust Clearing Account #▇▇▇▇▇▇▇
For Credit to SCO/SRA Escrow Account #▇▇▇▇▇▇▇▇
If by Check:
Checks should be payable to SCO, Inc./SRA, Inc. Escrow - Ref: SEI A/C
#10215800
Checks should be forwarded to:
▇▇▇▇▇ Fargo Bank, Minnesota, N.A.
IPS-MTU Check Processing
MAC N9303-122
▇▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇-▇▇▇-▇▇▇▇
Investor Name, Address, and Number of Units Aggregate Purchase Price
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Taxpayer ID Number
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Name:
Address:
Social Security or Taxpayer ID:
EXHIBIT B
STOCK PURCHASE WARRANT
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STOCK PURCHASE WARRANT
To Purchase Shares of Common Stock of
The Santa ▇▇▇▇ Operation, Inc. and/or Caldera, Inc.
THIS CERTIFIES that, for value received, ___________________________, The
Holder, or Holder's transferee (the "Holder"), is entitled, upon the terms and
subject to the conditions set forth herein, at any time on or after the date of
this Warrant and on or before, but in no case after, two (2) years from the date
of this Warrant (and subject to early termination as provided in Section 9
herein), to subscribe for and purchase, from The Santa ▇▇▇▇ Operation, Inc., a
California corporation (the "Company"), shares of the Company's Common Stock,
and/or shares of Caldera, Inc.'s Common Stock held by the Company.
This Warrant is issued pursuant to a certain Common Stock and Warrant
Purchase Agreement (the "Agreement"), attached hereto as Exhibit A and
incorporated herein by this reference, dated as of September 11, 2000, by and
between the Company and the Investor set forth in Exhibit "A" of the Agreement.
1. Number of Warrant Shares.
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(a) If the Agreement and Plan of Reorganization between the Company and
Caldera Systems, Inc. (the "Merger Agreement") closes, this Warrant entitles the
Holder, at Holder's option, to purchase up to [_____] shares of the Common Stock
of Company, or up to [_____] shares of the Common Stock of Caldera, Inc. (held
by Company), or some combination thereof.
For every purchase of two (2) shares of Common Stock of Company, the number
of shares of Common Stock of Caldera, Inc. that Holder may purchase under this
Warrant shall be reduced by one (1).
For every purchase of one (1) share of Common Stock of Caldera, Inc., the
number of shares of Common Stock of Company that Holder may purchase under this
Warrant shall be reduced by two (2).
(b) If the Merger Agreement does not close, this Warrant entitles the
Holder to purchase up to [_____] shares of the Common Stock of Company.
2. Exercise Price.
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(a) The purchase price is as follows:
(i) If the Merger Agreement closes, then;
(A) Company's Common Stock. The Exercise Price under
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this Warrant shall be $4.00 per share.
(B) Caldera, Inc.'s Common Stock (held by Company).
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The Exercise Price under this Warrant shall be
$8.00 per share.
(ii) If the Merger Agreement does not close, for any reason, or is
terminated by the parties thereto, then the exercise price for Company's Common
Stock shall be the lesser of $4.00 per share, or 90% of the closing price of the
Company's Common Stock on the first trading day following the announcement that
the Merger Agreement shall not be consummated.
(iii) Notwithstanding the foregoing, in the event that within 90 days
from the Closing of the Merger Agreement, the Caldera shares held by Company
purchasable under this Warrant have not been registered with the SEC for sale in
a public offering, then Holder's exercise price shall decrease by 1/8th of a
point (12.5 cents) each month until either the registration of the shares
becomes effective, or twelve months elapse. Further, in the event that within 90
days from the Closing of the Common Stock and Warrant Purchase Agreement, the
Company shares purchasable under this Warrant have not been registered with the
SEC for sale in a public offering, then Holder's exercise price shall decrease
by 1/16th of a point (6.25 cents) each month until either the registration of
the shares becomes effective, or twelve months elapse.
3. Exercise of Warrant. The purchase rights represented by this Warrant
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are exercisable by the Holder, in whole or in part, at any time on or after the
date of this Warrant and on or before two (2) years from the date of this
Warrant (and subject to early termination as provided in Section 9 herein), by
the surrender of this Warrant, a Notice of Exercise in the form attached as
Exhibit B, and, if no registration statement is then in effect, the Investment
Representation Certificate in the form attached as Exhibit D duly executed at
the office of the Company in Santa Cruz, California (or such other office or
agency of the Company as it may designate by notice in writing to the Holder at
the address of such Holder appearing on the books of the Company), and upon
payment of the purchase price of the shares thereby purchased (by cash or by
check or bank draft payable to the order of the Company or by cancellation of
indebtedness of the Company to the Holder, if any, at the time of exercise in an
amount equal to the purchase price of the shares thereby purchased); whereupon
the Holder shall be entitled to receive a certificate for the number of shares
of Common Stock so purchased.
4. Conversion of Warrant (Cashless Exercise). In lieu of exercising
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this Warrant as described in Section 3, the registered holder hereof shall have
the right to convert this warrant, in whole or in part, by surrender of this
Warrant and a Notice of Conversion in the form attached as Exhibit E duly
executed at the office of the Company, into shares of Common Stock of the
Company, or shares of Common Stock of Caldera held by the Company, as provided
in this Section 4. Upon exercise of this conversion right, the holder hereof
shall be entitled to receive that number of shares of Common Stock of the
Company, or shares of Common Stock of Caldera held by the Company, equal to the
quotient obtained by dividing [(A - B)(X)] by (A), where:
A = the Fair Market Value (as defined below) of one share of Common
Stock on the date of conversion of this Warrant.
B = the purchase price for one share of Common Stock under this
Warrant.
X = the number of shares of Common Stock as to which this Warrant is
being converted.
If the above calculation results in a negative number, then no shares of
Common Stock shall be issued or issuable upon conversion of this Warrant.
"Fair Market Value" of a share of Common Stock shall be the average closing
price of such stock on the ten (10) trading days immediately preceding the date
as of which such value is to be determined.
5. Restrictions on Transfer.
------------------------
(a) Permitted Transfers. This Warrant shall be freely transferable in
-------------------
whole or in part, subject to the limitations specified in this Section 5.
(b) Investment Representation. The Holder agrees that the
-------------------------
Holder will not offer, sell or otherwise dispose of this Warrant or any
securities issued on exercise of this Warrant except under circumstances which
will not result in a violation of the Securities Act. Unless a registration
statement is in effect, then upon exercise of this Warrant, the Holder shall
confirm in writing, by executing the form attached as Exhibit D hereto, that the
securities purchased thereby are being acquired for investment solely for the
Holder's own account and not as a nominee for any other Person, and not with a
view toward distribution or resale.
(c) Disposition of Warrant or Shares. With respect to any
--------------------------------
offer, sale or other disposition of this Warrant or any securities issued upon
exercise of this Warrant, the Holder agrees to give written notice to the
Company prior thereto, describing briefly the manner thereof, together with a
written opinion of the Holder's counsel, if reasonably requested by the Company,
to the effect that such offer, sale or other disposition may be effected without
registration under the Securities Act or qualification under any applicable
state securities laws of this Warrant or such shares, as the case may be, and
indicating whether or not under the Securities Act certificates for this Warrant
or such shares, as the case may be, to be sold or otherwise disposed of require
any restrictive legend as to applicable restrictions on transferability in order
to insure compliance with the Securities Act. Each certificate representing this
Warrant or the securities thus transferred (except a transfer pursuant to Rule
144) shall bear a legend as to the applicable restrictions on transferability in
order to insure compliance with the Securities Act, unless in the aforesaid
reasonably satisfactory opinion of counsel for the Holder or the security
holder, as the case may be, such legend is not necessary in order to insure
compliance with the Securities Act. The Company may issue stop transfer
instructions to its transfer agent in connection with such restrictions.
In the event Holder seeks an opinion from Holder's counsel as to transfer
without registration, the Company shall provide such factual information to
Holder's counsel as Holder's counsel may reasonably request for the purpose of
rendering such opinion and such counsel may rely on the accuracy and
completeness of such information in rendering such opinion.
(d) Procedure. Subject to the limitations set forth in this
---------
Section 5, Holder may transfer the Warrant on the books of the Company by
surrendering to the Company: (i) this Warrant; (ii) a written Assignment, in the
form attached as Exhibit C, naming the assignee and duly executed by Holder; and
(iii) funds sufficient to pay any stock transfer taxes payable upon the making
of such transfer.
The Company shall thereupon execute and deliver a new Warrant in the name
of the assignee specified in such instrument of assignment, and if the Warrant
is transferred in part, the Company shall also execute and deliver in the name
of the Holder a new Warrant covering the untransferred portion of the Warrant.
Upon issuance of the new Warrant or Warrants, the Warrant surrendered for
transfer shall be canceled by the Company.
(e) Expenses. The Company shall pay all expenses, and other
--------
charges payable in connection with the preparation, issue, and delivery of any
new Warrant under this Section 5.
6. No Rights as Shareholder. This Warrant does not entitle the Holder to
------------------------
any voting rights or other rights as a shareholder of the Company prior to
exercise.
7. Loss, Theft, Destruction or Mutilation of Warrant. Upon receipt by
-------------------------------------------------
the Company of evidence reasonably satisfactory to it of the loss, theft,
destruction or mutilation of this Warrant, and in case of loss, theft or
destruction, of indemnity or security reasonably satisfactory to it, and upon
reimbursement to the Company of all reasonable expenses incidental thereto, and
upon surrender and cancellation of this Warrant, if mutilated, the Company will
make and deliver a new Warrant of like tenor and dated as of such cancellation,
in lieu of this Warrant.
8. Saturdays, Sundays, Holidays, etc. If the last or appointed day for
---------------------------------
the taking of any action or the expiration of any right required or granted
herein shall be a Saturday or a Sunday or shall be a legal holiday, then such
action may be taken or such right may be exercised on the next succeeding day
not a legal holiday.
9. Early Termination. This Warrant shall terminate earlier than two (2)
-----------------
years from the date of this Warrant if the Agreement is earlier terminated or
fails to close.
10. Miscellaneous. This Warrant may be amended and any term of this
-------------
Warrant may be waived only by a written instrument signed by the Company and the
Holder. This Warrant shall be binding upon any successors or assigns of the
Company. This Warrant shall constitute a contract under the laws of the State of
California and for all purposes shall be construed in accordance with and
governed by the laws of said state applied without reference to conflict of laws
principles.
Dated: September 11, 2000
COMPANY
___________________________
EXHIBIT A
COMMON STOCK AND WARRANT PURCHASE AGREEMENT
(See Exhibit 10.1)
EXHIBIT B
NOTICE OF EXERCISE
------------------
TO: The Santa ▇▇▇▇ Operation, Inc.
The undersigned hereby elects to purchase [_______] shares of Common Stock
of The Santa ▇▇▇▇ Operation, Inc., and or [________] shares of Common Stock of
Caldera, Inc. held by the Santa ▇▇▇▇ Operation, Inc., pursuant to the terms of
the attached Warrant, and tenders herewith payment of the purchase price in
full, together with all applicable transfer taxes, if any.
(1) Please issue a certificate or certificates representing
said shares of Common Stock in the name of the undersigned.
(2) The undersigned represents that the aforesaid shares of
Common Stock are being acquired for the account of the undersigned for
investment.
_____________________________ ________________________________
(Date) (Signature)
EXHIBIT C
ASSIGNMENT
----------
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto __________ [Name and Address]_______ the rights represented by the
foregoing Common Stock Warrant issued by The Santa ▇▇▇▇ Operation, Inc., on
[__date__], and appoints ________________ its attorney to transfer said rights
on the books of said corporation, with full power of substitution in the
premises.
_______________________________
Signature guaranteed:
Dated: _________________
EXHIBIT D
INVESTMENT REPRESENTATION CERTIFICATE
-------------------------------------
HOLDER:
COMPANY:
SECURITY: COMMON STOCK
AMOUNT:
DATE:
In connection with the purchase of the above-listed Securities, the
undersigned Holder represents to the Company the following:
(a) Holder is aware of the Company's business affairs and financial
condition and has acquired sufficient information about the Company to reach an
informed and knowledgeable decision to acquire the Securities. Holder is
acquiring these Securities for investment for Holder's own account only and not
with a view to, or for resale in connection with, any "distribution" thereof
within the meaning of the Securities Act of 1933, as amended (the "Securities
Act"). Holder represents that such Holder has no contract, undertaking,
agreement or arrangement with any person to sell, transfer or grant
participations to any such person or any third person with respect to any of the
Securities.
(b) Holder acknowledges and understands that the Securities
constitute "restricted securities" under the Securities Act and have not been
registered under the Securities Act in reliance upon a specific exemption
therefrom, which exemption depends upon, among other things, the bona fide
nature of Holder's investment intent as expressed herein. In this connection,
Holder understands that, in the view of the Securities and Exchange Commission,
the statutory basis for such exemption may be unavailable if Holder's
representation was predicated solely upon a present intention to hold these
Securities for the minimum capital gains period specified under tax statutes,
for a deferred sale, for or until an increase or decrease in the market price of
the Securities, or for a period of one year or any other fixed period in the
future. Holder further understands that the Securities must be held indefinitely
unless they are subsequently registered under the Securities Act or an exemption
from such registration is available. Holder understands that the certificate
evidencing the Securities will be imprinted with a legend which prohibits the
transfer of the Securities unless they are registered or such registration is
not required in the opinion of counsel satisfactory to the Company.
(c) Holder is familiar with the provisions of Rule 144, promulgated
under the Securities Act, which, in substance, permit limited public resale of
"restricted securities" acquired, directly or indirectly from the issuer
thereof, in a non-public offering subject to the satisfaction of certain
conditions.
The Securities may be resold in certain limited circumstances subject
to the provisions of Rule 144, which requires the resale to occur not less than
one year after the later of the date the Securities were sold by the Company or
the date the Securities were sold by an affiliate of the Company, within the
meaning of Rule 144; and, in the case of acquisition of the Securities by an
affiliate, or by a non-affiliate who subsequently holds the Securities less than
two years, the satisfaction of certain conditions of Section 13 or 15(d) of the
Securities Exchange Act of 1934, ninety (90) days thereafter (or such longer
period as any market stand-off agreement may require) the Securities may be
resold, subject to the satisfaction of certain of the conditions specified by
Rule 144, including: (1) the resale being made through a broker in an
unsolicited "broker's transaction" or in transactions directly with a market
maker (as said term is defined under the Securities Exchange Act of 1934); and,
in the case of an affiliate, (2) the availability of certain public information
about the Company, (3) the amount of Securities being sold during any three
month period not exceeding the limitations specified in Rule 144, and (4) the
timely filing of a Form 144, if applicable.
(d) Holder further understands that in the event all of the
applicable requirements of or 144 are not satisfied, registration under the
Securities Act, compliance with Regulation A, or some other registration
exemption will be required; and that, notwithstanding the fact that Rule 144 is
not exclusive, the Staff of the Securities and Exchange Commission has expressed
its opinion that persons proposing to sell private placement securities other
than in a registered offering and otherwise than pursuant to Rule 144 will have
a substantial burden of proof in establishing that an exemption from
registration is available for such offers or sales, and that such persons and
their respective brokers who participate in such transactions do so at their own
risk. Holder understands that no assurances can be given that any such other
registration exemption will be available in such event.
Signature of Holder:
________________________________
Date:___________________________
EXHIBIT E
NOTICE OF CONVERSION
--------------------
To: The Santa ▇▇▇▇ Operation, Inc.
(1) The undersigned hereby elects to convert that portion of the attached
Warrant representing the right to purchase [_______] shares of Common Stock of
the Company and/or [_______] shares of Common Stock of Caldera held by the
Company into such number of shares of Common Stock of the Company or of Caldera
(held by the Company) as is determined pursuant to Section 4 of such Warrant,
which conversion shall be effected pursuant to the terms of the attached
Warrant.
(2) Please issue a certificate or certificates representing said shares in
the name of the undersigned or in such other name as is specified below:
(Name): _______________________________________
(Address): _______________________________________
(3) The undersigned represents that the aforesaid shares of Common Stock of
the Company and/or the Common Stock of Caldera held by the Company are being
acquired for the account of the undersigned for investment and not with a view
to, or for resale in connection with, the distribution thereof and that the
undersigned has no present intention of distributing or reselling such shares.
_________________________________ _____________________________________
(Date) (Signature)
EXHIBIT C
REGISTRATION RIGHTS AGREEMENT
-----------------------------
(See Exhibit 10.2)
EXHIBIT D
---------
SCHEDULE OF EXCEPTIONS
----------------------
2.2 Capital Structure.
-----------------
As of July 28, 2000, 35,914,424 shares of SCO's Common Stock were issued and
outstanding
2.3 Other.
-----
As of August 1, 2000, there were 12,302,271 employee and director options
outstanding.
The Company is in the process of preparing a Form S-8 Registration Statement
registering additional shares to be reserved for issuance under the Company's
1994 Incentive Stock Option Plan, 1993 Director Option Plan and 1993 Employee
Stock Purchase Plan.
2.7 Agreements; Actions.
-------------------
(b) On August 1, 2000, the Company entered into a transaction with Caldera
Systems, Inc., under which Caldera intends to purchase Company's Server Software
Division and Professional Services Division, both such divisions being
approximately 90% of the assets of the Company.
In addition, the Company is currently in negotiations with the Canopy Group, and
with Caldera to borrow $18,000,000 and $7,000,000 respectively, using its assets
as security for the loans.
(c) On August 1, 2000, the Company entered into a transaction with Caldera
Systems, Inc., under which Caldera intends to purchase Company's Server Software
Division and Professional Services Division, both such divisions being
approximately 90% of the assets of the Company.
