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EXHIBIT 99.3
STOCKHOLDER AGREEMENT
This Stockholder Agreement (the "Agreement") is entered into as of
_______________, 2000, (the "Effective Date") by and among Caldera Systems,
Inc., a Delaware corporation ("Caldera"), Caldera Holding, Inc., a Delaware
corporation ("Newco"), The Santa Cruz Operation, Inc., a California corporation
(together with its subsidiaries, "SCO"), The Canopy Group, Inc. ("Canopy") and
MTI Technology Corporation ("MTI").
RECITALS
A. The parties have entered into an Agreement and Plan of Reorganization
(the "Plan") whereby (i) a newly formed, wholly owned subsidiary of Newco
("Newco Caldera Merger Sub") will be merged with and into Caldera, with Caldera
being the surviving corporation of such merger (the "Caldera Merger"); (ii) all
Caldera securities will be converted, on a share-for-share basis, into Newco
securities with identical rights, preferences and privileges (and Newco will
assume all outstanding options, warrants, convertible debentures and other
rights to purchase shares of capital stock of Caldera); and (iii) SCO will
transfer to Newco all assets used in connection with the business previously
carried on by SCO's Server Division and Professional Services Division (the
"Server Division"), in consideration for which Newco will issue Newco securities
to SCO and assume the options held by former Server Division employees who
become employees of Newco, which Newco securities in the aggregate will
represent 28% of the fully diluted equity securities of Newco (collectively, the
"Reorganization").
B. As an inducement for Newco to enter into the Plan, the parties desire
to enter into this Agreement, which shall become effective on the Effective Time
of the Reorganization and, among other things, grants SCO certain rights and
places certain restrictions on SCO and on the Newco securities that SCO now
holds or hereafter acquires.
NOW, THEREFORE, in consideration of the above recitals and the mutual covenants
hereinafter set forth, the parties hereby agree as follows:
1. Board Of Directors.
1.1 Appointments. Upon the closing of the Reorganization, Newco shall
increase the size of its Board of Directors (the "Newco Board") to nine persons
and appoint two designees of SCO, Doug Michels, and ________________, as members
of the Newco Board. Newco agrees that for so long as SCO owns at least 10% of
the outstanding Common Stock of Newco, the number of directors comprising the
Newco Board shall not be increased to a number greater than nine (9), except
upon written consent of SCO.
1.2 SCO Designees. (a) For so long as SCO owns at least 20% of the
outstanding Common Stock of Newco, Newco and its Board of Directors shall
nominate, in connection with
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each stockholder solicitation relating to the election of Newco directors, two
candidates designated by SCO who are reasonably acceptable to Newco.
(b) For so long as SCO owns at least 10% and not more than 19.9% of
the outstanding Common Stock of Newco, Newco and the Newco Board shall nominate,
in connection with each stockholder solicitation relating to the election of
Newco directors, one candidate designated by SCO who is reasonably acceptable to
Newco.
1.3 Affiliates. For purposes of this Agreement, all shares held by an
entity or person controlling, controlled by or under common control with SCO
will be deemed to be owned by SCO.
1.4 Voting Of Management Shares. Newco shall use its best efforts (i) to
cause the Newco Board to unanimously recommend to its stockholders that such
stockholders vote in favor of the designee(s) of SCO under Section 1.2 of this
Agreement (the "SCO Designee(s)"); and (ii) to cause the shares for which
Newco's management holds proxies to be voted in favor of the election of such
SCO Designee(s) nominated pursuant to this Agreement.
1.5 Vacancies. In the event that any SCO Designee shall cease to serve
as a member of the Board of Directors of Newco for any reason, the vacancy
resulting therefrom shall be filled by another SCO Designee.
1.6 Equal Treatment. Newco shall provide to the SCO Designee(s) that are
not employees of Newco the same compensation, rights and benefits and
indemnities as are provided to other non-employee members of the Newco Board.
1.7 Termination. All rights and obligations under this Section 1 shall
terminate and have no further force or effect immediately upon SCO ceasing to
hold at least 10% of the outstanding Common Stock of Newco.
1.8 Voting Of SCO Shares. SCO agrees to vote all of the shares of Newco
held by it in favor of the Newco nominees for election to the Newco Board.
1.9 Voting of Certain Caldera Stockholders. Canopy and MTI agree to vote
all of the shares of Newco held by them in favor of the SCO Designee(s)
nominated by the Newco Board pursuant to Section 1.2.
2. Restrictions Upon Transfer Of Shares.
2.1 Permitted Sales Of Newco Stock. For so long as SCO owns (of record
or beneficially) at least 5% of the outstanding Common Stock of Newco, SCO
agrees that (i) it will only sell, transfer, assign, pledge, hypothecate or
otherwise dispose of ("Transfer") any Newco securities, directly or indirectly,
pursuant to the applicable restrictions, if any, of Rule 144 under the
Securities Act of 1933, as amended (the "Securities Act") and (ii) that it will
not Transfer, directly or indirectly, any Newco securities constituting 5% or
more of the outstanding securities
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of Newco, to any person or "group" in one or a series of transactions, without
the prior written consent of Newco.
2.2 Private Sales. SCO agrees to notify and collaborate with Newco
before consummating any sales of Newco Common Stock in private transactions.
Newco agrees to cooperate with and provide reasonable assistance to SCO in
consummating any such sales.
3. Voting Provisions.
3.1 Directed Voting. For so long as SCO owns (of record or beneficially)
at least 10% of the outstanding Common Stock of Newco, in connection with all
matters to be voted on by the stockholders of Newco, SCO shall vote all shares
of Newco Common Stock then owned, directly or indirectly, by it in every case in
accordance with the recommendation of the board of directors of Newco, except
that SCO may vote its shares as it determines in its sole discretion as to the
following specific matters: (i) a change in the Fundamental Rights (as defined
below) of Newco Common Stock; (ii) a Corporate Event; (iii) a recapitalization
in which Newco Common Stock is converted or exchanged for a security having
substantially different Fundamental Rights than Newco Common Stock; (iv) any
transaction or matter involving or relating to a conflict of interest between
any member of the Board of Directors and Newco; (v) any business properly
brought before any meeting of the stockholders by a stockholder in accordance
with Section 12 of Newco's bylaws; and (vi) any amendment to the bylaws of
Newco.
A "Corporate Event" shall include any merger, acquisition, consolidation
or reorganization, any transaction of a type contemplated by Section 351 of the
Internal Revenue Code of 1986, as amended (the "Code") or any other similar
transaction whereby (a) Newco is acquired by a third party, (b) where there has
been a "change of control" such that the stockholders of Newco prior to a
transaction own, in the aggregate, less than a majority of the outstanding stock
of Newco or the acquiring entity after the transaction, (c) Newco acquires
another entity, or (d) Newco acquires all or substantially all of the assets of
another entity.
"Fundamental Rights" shall mean the right to vote Newco's shares and to
participate pro rata with other holders of Newco Common Stock in any
distribution to the holders of Newco Common Stock.
3.2 No Dissent. For so long as SCO owns (of record or beneficially) at
least 5% of the outstanding Newco Common Stock, SCO agrees that it will not
exercise dissenter's or appraisal rights or otherwise dissent or seek appraisal
rights with respect to any Corporate Event involving Newco that has been
approved by the Newco Board.
4. Standstill Provisions.
4.1 Standstill. SCO hereby agrees that, until the fifth anniversary of
the Effective Date, SCO will not, without Newco's prior written consent:
(i) acquire, or enter into discussions, negotiations,
arrangements or understandings with any third party to acquire,
beneficial ownership (as defined in Rule
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13d-3 promulgated under the Securities Exchange Act of 1934, as amended
(the "Exchange Act") of any Newco securities entitled to vote with
respect to the election of any directors of Newco ("Voting Stock"), any
securities convertible into, exchangeable for or exercisable for, or
that may otherwise become, Voting Stock, or any other right to acquire
Voting Stock, if the effect of such acquisition would be that SCO would
then beneficially own and/or have the right to acquire more than
twenty-eight percent (28%) of the Voting Stock (the "Standstill
Percentage");
(ii) make, or in any way participate in, any "solicitation" of
"proxies" (as such terms are defined or used in Regulation 14A under the
Exchange Act, as such Regulation is currently in effect) with respect to
the voting of any Voting Stock if Newco is at the time of such
solicitation publicly-traded and subject to the proxy rules promulgated
under the Exchange Act;
(iii) otherwise seek, either alone or in concert with others, to
control the Newco Board; or
(iv) disclose any intention, plan or arrangement inconsistent
with the foregoing.
For purposes of this Section 4.1, any shares of Newco Common Stock or
options or rights to acquire such Newco Common Stock acquired by SCO Affiliates
who are also employees or directors of Newco pursuant to Newco's option and
employee stock purchase plans (including any options to purchase Newco
securities issued to such persons under the terms of the Plan) shall be excluded
from the calculation of the number of shares of Voting Stock held by SCO.
4.2 Exceptions To Standstill. Notwithstanding the restrictions set forth
in Section 4.1 above:
(a) Acquisitions. SCO may acquire Voting Stock, and the
limitations of Section 4.1 shall be suspended, upon the earlier of: (i)
the date that a third party not affiliated with SCO commences a tender
or exchange offer that is made and is not withdrawn or terminated to
purchase, or to exchange for cash or other consideration, Voting Stock
that, if accepted or if otherwise successful, would result in such
person or group beneficially owning or having the right to acquire
shares of Voting Stock (not counting any shares of Voting Stock
originally acquired by such third party from SCO or any SCO Affiliate)
with aggregate Voting Power (as defined below) representing more than
50% of the Total Voting Power (as defined below) of Newco then in effect
provided, however, that the foregoing standstill limitation will be
reinstated if any such tender or exchange offer is withdrawn or
terminated, (ii) the public announcement by Newco that it has entered
into any agreement with respect to a merger, consolidation,
reorganization or similar transaction involving Newco in which all the
stockholders of Newco before such transaction collectively will own less
than 50% of the outstanding voting stock of the surviving or acquiring
entity immediately after such transaction provided, however; that the
foregoing standstill limitation will be reinstated if such transaction
is terminated prior
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to consummation thereof, or (iii) the sale or disposition of all or
substantially all of Newco's assets.
(b) No Obligation To Dispose. SCO will not be obliged to dispose
of any Voting Stock to the extent that the aggregate percentage of the
Total Voting Power represented by shares of Voting Stock beneficially
owned by SCO or which SCO has a right to acquire is increased beyond the
Standstill Percentage: (i) as a result of a recapitalization of Newco or
a repurchase or exchange of securities by Newco or any other action
taken by Newco or its affiliates; (ii) as the result of any acquisition
of Voting Stock made during the period when SCO's "standstill"
obligations are suspended pursuant to Section 4.2(a); (iii) by way of
stock dividend or other distribution or rights or offerings made
available to holders of shares of Voting Stock generally; or (iv) with
the consent of a simple majority of the members of Newco's Board of
Directors that have not been designated by SCO.
(c) Voting Power. As used in this Section 4, (i) the term
"Voting Power" means the number of votes such Voting Stock is entitled
to cast with respect to the election of directors of Newco at any
meeting of stockholders of Newco; and (ii) the term "Total Voting Power"
means the total number of votes which may be cast in the election of
directors of Newco at any meeting of stockholders of Newco if all Voting
Stock was represented and voted to the fullest extent possible at such
meeting, other than votes that may be cast only upon the happening of a
contingency that has not occurred.
For purposes of this Section 4, "SCO" shall mean not only SCO, as
defined in the preamble of this Agreement, but also any entity or person
controlling, controlled by or under common control with SCO (except as set forth
in the last paragraph of Section 4.1).
5. General Provisions.
5.1 Notices. All notices and other communications pursuant to this
Agreement shall be in writing and deemed to be sufficient if contained in a
written instrument and shall be deemed given if delivered personally,
telecopied, sent by nationally-recognized overnight courier or mailed by
registered or certified mail (return receipt requested), postage prepaid, to the
parties at the following address (or at such other address for a party as shall
be specified by like notice):
If to SCO to: The Santa Cruz Operation, Inc.
425 Encinal Street
Santa Cruz, California 95061
Attention: Chief Executive Officer and Law and Corporate Affairs
Telecopier: (831) 427-5454
With a copy to: Wilson, Sonsini, Goodrich & Rosati
650 Page Mill Road
Palo Alto, California 94304
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Attention: Michael Danaher
Telecopier: (650) 493-6811
And if to Caldera or
Newco to: Caldera Systems, Inc.
240 West Center Street
Orem, Utah 84057
Attention: Chief Executive Officer
Telecopier: (801) 765-1313
With a copy to: Brobeck, Phleger & Harrison LLP
370 Interlocken Boulevard, Suite 500
Broomfield, Colorado 80209
Attention: John E. Hayes, III
Telecopier: (303) 410-2199
All such notices and other communications shall be deemed to have been
received (a) in the case of personal delivery, on the date of such delivery, (b)
in the case of a telecopy, when the party receiving such copy shall have
confirmed receipt of the communication, (c) in the case of delivery by
nationally-recognized overnight courier, on the business day following dispatch,
and (d) in the case of mailing, on the third business day following such
mailing.
5.2 Entire Agreement. This Agreement constitutes and contains the entire
agreement and understanding of the parties with respect to the subject matter
hereof and supersedes any and all prior negotiations, correspondence,
agreements, understandings, duties or obligations between the parties respecting
the subject matter hereof.
5.3 Amendment And Waivers. Any term or provision of this Agreement may
be amended by the parties hereto at anytime by execution of an instrument in
writing signed on behalf of each of SCO and Caldera. The waiver by a party of
any breach hereof or default in the performance hereof will not be deemed to
constitute a waiver of any other default or any succeeding breach or default.
Delay in exercising any right under this Agreement shall not constitute a waiver
of such right.
5.4 Governing Law; Venue.
(i) Governing Law. The internal laws of the State of Delaware
(irrespective of its choice of law principles) will govern the validity
of this Agreement, the construction of its terms and the interpretation
and enforcement of the rights and duties of the parties hereto, except
that the fiduciary duties of the directors and managers of parties
hereto and its Affiliates shall be governed by the law of the
jurisdiction of such company's formation.
(ii) Venue. The parties agree that any dispute regarding the
interpretation or validity of, or otherwise arising out of this
Agreement, shall be subject to the exclusive jurisdiction of the
California State Courts in and for Santa Clara County, California or, in
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the event of federal jurisdiction, the United States District Court for
the Northern District of California sitting in Santa Clara County,
California, and each party hereby agrees to submit to the personal and
exclusive jurisdiction and venue of such courts and not to seek the
transfer of any case or proceeding out of such courts.
5.5 Severability. If any provision of this Agreement, or the application
thereof, will for any reason and to any extent be invalid or unenforceable, the
remainder of this Agreement and application of such provision to other persons
or circumstances will be interpreted so as reasonably to effect the intent of
the parties hereto. The parties further agree to replace such void or
unenforceable provision of this Agreement with a valid and enforceable provision
that will achieve, to the greatest extent possible, the economic, business and
other purposes of the void or unenforceable provision.
5.6 Assignment; Binding Upon Successors And Assigns. SCO may not assign
any of its rights or obligations hereunder without the prior written consent of
the other parties hereto. Subject to the preceding sentence, this Agreement will
be binding upon and inure to the benefit of the parties hereto and its
respective successors and permitted assigns.
5.7 Counterparts. This Agreement may be executed in any number of
counterparts, each of which will be an original as regards any party whose
signature appears thereon and all of which together will constitute one and the
same instrument. This Agreement will become binding when one or more
counterparts hereof, individually or taken together, will bear the signatures of
all the parties reflected hereon as signatories.
5.8 Attorneys' Fees. Should suit be brought to enforce or interpret any
part of this Agreement, the prevailing party will be entitled to recover, as an
element of the costs of suit and not as damages, reasonable attorneys' fees to
be fixed by the court (including, without limitation, costs, expenses and fees
on any appeal). The prevailing party will be entitled to recover its costs of
suit, regardless of whether such suit proceeds to final judgment.
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IN WITNESS WHEREOF, the parties hereto have executed this Stockholder
Agreement as of the date and year first above written.
CALDERA SYSTEMS, INC.
By:
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Ransom Love
President & CEO
CALDERA HOLDING, INC.
By:
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Ransom Love
President & CEO
THE SANTA CRUZ OPERATION, INC.
By:
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Douglas Michels
President & CEO
MTI TECHNOLOGY CORPORATION
By:
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THE CANOPY GROUP, INC.
By:
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[SIGNATURE PAGE TO STOCKHOLDER AGREEMENT]
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