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ASSET PURCHASE AGREEMENT

This ASSET PURCHASE AGREEMENT (the "Agreement") is made and entered into as of September 19, 1995 by and between The Santa Cruz Operation, Inc., a California corporation ("Buyer") and Novell, Inc., a Delaware corporation ("Seller").

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RECITALS

A. Seller [Novell] is engaged in the business of
1. developing a line of software products currently known as Unix and UnixWare,
2. the sale of binary and source code licenses to various versions of Unix and UnixWare,
3. the support of such products and
4. the sale of other products which are directly related to Unix and UnixWare
(collectively, the "Business").

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ARTICLE I

THE ACQUISITION

Start - APA - 1.1 Purchase of Assets. - a limited subset

(a) Purchase and Sale of Assets. On the terms and subject to the conditions set forth in this Agreement, Seller [Novell] will sell, convey, transfer, assign and deliver to Buyer [Old Santa Cruz Operation] and Buyer [Old Santa Cruz Operation] will purchase and acquire from Seller [Novell] on the Closing Date (as defined in Section 1.7), all of Seller's [Novell's] right, title and interest in and to the assets and properties of Seller [Novell] relating to the Business (collectively the "Assets") identified on Schedule 1.1 (a) hereto. Notwithstanding the foregoing, the Assets to be so purchased shall not include those assets (the "Excluded Assets") set forth on Schedule 1.1 (b):

So the Old Santa Cruz Operation gets what's the "Business", which is itemized in Schedule 1.1 (a) "Assets", and doesn't get what's in Schedule 1.1 (b) "Excluded Assets". Pretty straightforward.

Schedule 1.1(a) Assets (Page 1 of 4) OK: first off, let's look for the word "copyright". And, if you don't mind, let me help you. You won't find the word "copyright" anywhere in Schedule 1.1 (a) Assets. (But, at the risk of spoiling a good story, you will find "copyright" in Schedule 1.1 (b) Excluded Assets. And, it's an interesting section). I. All rights and ownership of UNIX and UnixWare, including but not limited to all versions of UNIX and UnixWare and all copies of UNIX and UnixWare (including revisions and updates in process), and all technical, design, development, installation, operation and maintenance information concerning UNIX and UnixWare, including source code, source documentation, source listings and annotation, appropriate engineering, notebooks, test data and test results, as well as all reference manuals and support materials normally distributed by Seller [Novell] to end-users and potential end-users in connection with the distribution of UNIX and UnixWare, such assets to include without limitation the following: So Old SCO gets: All rights and ownership of UNIX and UnixWare, including but not limited to First of all, it's interesting to note that around May, 1994, Novell had transfered its rights to the "UNIX®" trademark and the Single UNIX Specification to X/Open. all versions of UNIX and UnixWare and all copies of UNIX and UnixWare (including revisions and updates in process), and all technical, design, development, installation, operation and maintenance information concerning UNIX and UnixWare, including source code, source documentation, source listings and annotation, appropriate engineering, notebooks, test data and test results, as well as all reveference manuals and support materials normally distribute by Seller [Novell] to end-users and potential end-users in connection with the distribution of UNIX and UnixWare, such assets to include without limitation the following: So it sounds to me like the Old SCO gets a lot of tapes and manuals and stacks and stacks of green-bar printouts. And, they're all itemized, below: UNIX Source Code Products A. UnixWare 2.0 as described in the UnixWare 2.0 Licensing Schedule and those products listed as "prior" products on such schedule (includes source code updates where appropriate - i.e. UnixWare product family). B. UNIX SVR4.1 ES as described in the UNIX SVR4.1 ES Licensing Schedule and those products listed as "prior" products on such schedule. C. UNIX SVR4.0 MP as described in the UNIX SVR4.0 MP Licensing Schedule and those products listed as "prior" products on such schedule. D. Ancillary SVRx Products (a final list of which shall be developed by the partied prior to the Closing) Binary Product Releases A. UnixWare 2.01 Product Family described by the Novell UnixWare 2.01 Part/Price List B. UnixWare 2.0.x update releases C. UnixWare 1.1 Product Family as described by the Novell UnixWare 1.1 Part/Price List D. UnixWare 1.1.x - update releases Products Under Development A. UnixWare 2.1 (Eiger) - contains NetWare UNIX Client and Server capabilities B. UnixWare 2.1 Oracle Parallel Server (OPS) C. UnixWare 2.03 - maintenance update under development D. UnixWare 2.0.x/7.1 Enhanced Mode Merge E. UnixWare 2 Internet Server Schedule 1.1(g) [sic] Assets (Page 2 of 4) Other Technology [this heading seems to be missing from previous Groklaw references] A. UnixWare system/HBA/etc. Test/Cerification Suites used by Novell Labs B. UnixWare "OS Branding" Test Suites C. UnixWare "OS Compatible" [Requirements?] D. Oracle Performance Test Suite E. ARTUS, Bart, Buster Internal UNIX Test suites and test harnesses. F. UnixWare Training/Education Courseware G. Requirements, Design, and Test Specifications for UnixWare 2 H. Technical Support Update Manager I. Marketing collateral/information in electronic form J. ODI Transmogrification software II. All of Seller's [Novell's]claims arising after the Closing Date against any parties relating to any right, property or asset included in the Business. III. All of Seller's [Novell's] rights pertaining to UNIX and UnixWare under any software development contracts, licenses and any other contracts to which Seller [Novell] is a party or by which it is bound and which pertain to the Business (to the extent that such contracts are assignable), including without limitation: Let's look at this. Old SCO gets "All of Seller's [Novell's] rights pertaining to UNIX and UnixWare under any software development contracts, licenses and any other contracts to which Seller [Novell] is a party or by which it is bound and which pertain to the Business.." So, rights under contracts, licenses, and more contracts. What kind of "licenses"? Any kind, or licenses related to software development, or licenses that Novell itself owns? Remember, from the Recitals that one part of the "Business" is: "the sale of binary and source code licenses to various versions of Unix and UnixWare," but the rest of Section III here is talking about Joint Development with third parties Third Party Software license agreements Joint marketing agreements End user MLA agreements, and UNIX-only VAR agreements         Out-sourced development (i.e. India) so this doesn't really seem like it means "binary and source code licenses to various versions of Unix and UnixWare" but rather something to do with what the Recitals call: "the support of such products and" "the sale of other products which are directly related to Unix and UnixWare" Or it could mean simply licenses that Novell itself holds from other vendors. A. Joint Development with third parties: 1. In-process development agreements 2. Past development agreements with on-going pricing discounts 3. Past development agreements without ongoing pricing discounts 4. Joint development agreements in which Seller [Novell] didn't get full rights to the code developed. B. Third Party Software license agreements -- Those agreements in which Seller [Novell] pays per copy fees for technology/products which are shipped with or to be used with UNIX System and/or UnixWare. C. Joint marketing agreements -- Marketing programs with customers. D. End user MLA agreements -- Agreements to allow end users to copy binary products for internal use only. Associated with these agreements are support requirements. E. UNIX-only VAR agreements -- UNIX Master VARs Schedule 1.1(a) Assets (Page 3 of 4) F. Support agreements - End user support agreements (i.e. TMAC, NALCOMIS) G. Microsoft agreement (Xenix Agreement) - Xenix compatibility and per copy fee agreement. Seller [Novell] will agree to discuss with SCO Seller's [Novell's] interpretation of this agreement. H. Microsoft Agreement (Extra-Ordinary Discount) - Microsoft's additional discount beyond 50% I. Strategic Relationship Agreements (i.e. MTA, ECPA, MBA, etc.) J. Out-sourced development (i.e. India) - Development agreements with third parties Wipro and HCL) and Infix Development Center. IDC is a Seller [Novell] subsidiary. K. Out-sourced Support Agreements L. Software and Sublicensing Agreements - This includes the source codes and sublicensing agreements that Seller [Novell] has with its OEM, End User and Educational customers. The total number of these agreements is approximately 30,000. M. OEM Binary Licensing Agreements - OEM distribution of UnixWare with Seller [Novell]'s agreement to include some OEM added value into future releases of UnixWare. IV. All copies of Unix and UnixWare, wherever located, owned by Seller [Novell]. "...owned by Seller [Novell]." So, Novell's own software. V. Intellectual property - Trademarks UNIX and UnixWare as and to the extent held by Seller [Novell] (excluding any compensation Seller [Novell] receives with respect of the license granted to X/Open regarding the UNIX trademark). "Intellectual property - Trademarks..." You'll see "Intellectual property" again, but in the Schedule 1.1 (b) "Excluded Assets", which is where you'll also see the first mention of the word "copyright". So this is "trademarks". Perhaps a relevant note or two about trademarks is in order. "...as and to the extent held by Seller [Novell]..." What's that all about? First of all, around May 10, 1994, Novell had transfered its rights to the "UNIX®" trademark and the Single UNIX Specification to X/Open. Then, X/Open became the Open Group, in 1996. So here's what the Open Group has to say now about SCO, UNIX, and the UNIX trademark: Status "Regarding SCO's positioning on UNIX, The Open Group would like to make it clear that SCO holds the rights ONLY to the operating system source code (originally licensed by AT&T) and related intellectual property and DOES NOT OWN the UNIX trademark itself or the definition (the Single UNIX Specification) of what the UNIX system is. Reference to the SCO web site shows that they own certain intellectual property and that they correctly attribute the trademark to The Open Group. SCO has never owned "UNIX". SCO is licensed to use the registered trademark UNIX "on and in connection" with their products that have been certified by The Open Group, as are all other licensees. These are the ONLY circumstances in which a licensee may use the trademark UNIX on and in connection with it's products. Statements that SCO "owns the UNIX operating system", has "licensed UNIX to XYZ" are clearly inaccurate and misleading." VI. All contracts relating to the SVRX Licenses listed below: OK: here's the "the sale of binary and source code licenses to various versions of Unix and UnixWare" kind of licenses, but note that it's not talking about the licenses only, but rather a modified "contracts relating to the...licenses" that we're talking about. And, we'll see licenses come up again, but then we'll be talking about royalties and buyouts. - UNIX System V Release 4.2 MP Intel386 Implementation - #UNIX System V Release 4.2 MP International Edition, Intel386 Implementation - UNIX System V Release 4.2 Intel386 Implementation - #UNIX System V Release 4.2 International Edition, Intel386 Implementation - UNIX System V Release 4.1 ES Intel386 Implementation - #UNIX System V Release 4.1 ES International Edition Intel386 Implementation Schedule 1.1(a) Assets (Page 4 of 4) - UNIX System V Release 4.0 MP Intel386 Implementation - #UNIX System V Release 4.0 MP International Edition Intel386 Implementation - UNIX System V Release 4.0 MP Intel386 Version 4 Implementation - #UNIX System V Release 4.0 International Edition Intel386 Version 4 Implementation - UNIX System V Release 4.0 Intel386 Version 3 Implementation - #UNIX System V Release 4.0 International Edition Intel386 Version 3 Implementation - UNIX System V Release 4.0 Intel386 Version 2 Implementation - #UNIX System V Release 4.0 International Edition Intel386 Version 2 Implementation - UNIX System V Release 4.0 Intel386 Version 1 Implementation - #UNIX System V Release 4.0 International Edition Intel386 Version 1 Implementation - UNIX System V/386 Release 3.2 and #UNIX System V/386 Release 3.2 International Edition - UNIX System V Release 3.2 and #UNIX System V Release 3.2 International Edition - UNIX System V Release 3.1 and #UNIX System V Release 3.1 International Edition - UNIX System V Release 3.0 and #UNIX System V Release 3.0 International Edition - All prior releases and versions of UNIX System V Release 2.1 - #All prior releases and versions of UNIX System V Release 2.1 International Edition - All prior releases and versions of UNIX System V Release 2.0 - #All prior releases and versions of UNIX System V Release 2.0 International Edition - All prior UNIX System releases and versions preceding UNIX System V Release 2.0 - #All prior UNIX System releases and versions preceding UNIX System V Release 2.0 International Editions "All prior UNIX System releases and versions preceding UNIX System V Release 2.0" Well, UNIX SysVR2 was long about April of 1984, so that's a *long* time ago... And, "preceeding"? Well, that would be at least UNIX System V (01/83), System IV (1982), and System III (11/81). So we're talking about a *long* time ago. Interesting... And remember, we're only talking contracts as related to licenses here. VII. Such office furniture and personal computers or work stations as may be currently used by the employees of Seller [Novell] hired by Buyer [Old Santa Cruz Operation] pursuant to Section 4.13 hereof. End - Schedule 1.1(a) Assets

Again, the Old Santa Cruz Operation gets what's in Schedule 1.1 (a) "Assets", above, and doesn't get what's in Schedule 1.1 (b) "Excluded Assets", below.

Schedule 1.1(b) Excluded Assets (Page 1 of 2) I. Any asset not listed in Schedule 1.1(a) including without limitation any asset which pertains to NetWare which is not listed on Schedule 1.1(a) OK: that seems pretty straight forward. If it's not listed above, the Old SCO doesn't get it. Any questions? II. Netware Operating System and Services III. TUXEDO Transaction Processing IV. Licensed technology, including: A. NetWare and other Novell code contained in UnixWare 2.01 and Eiger 1. ODI software contained in NetWare and UnixWare LAN drive Test Kit 2. Nprinter (for printing from NetWare to UnixWare Server) 3. NUC (NetWare UNIX Client - for print, inc from UnixWare to NetWare Server) 4. TNVT, Host Presenter (Terminal Emulator to Log into UnixWare Server from Netware Client) 5. MHS Gateway (Mail Gateway) 6. IPX/SPX (Re-Write of native 4.1) 7. ODI (Networking driver protocol, version 3.3 of assembly Spec and 1.0 of C Spec) 8. Kconsole (Log-in to NetWare console) 9. UnixWare TSA (SMS is back-up and restore, TSA is the "agent" needed to do this) 10. Some NetWare Client APIs 11. DR-DOS 12. Host Presenter (Binary Only) 13. TNVT (Binary Only) 14. criptor(??? unreadable from PDF ???) (Binary Only) 15. NetWare NLM (Binary Only) B. NetWare code contained in Eiger Only 1. NDS APIs 2. NWS (inc NetWare File Print and Directory Services) C. NetWare 4.1 for UnixWare Schedule 1.1(b) Excluded Assets (Page 2 of 2) V. Intellectual Property: A. All copyrights and trademarks, except for the trademarks UNIX and UnixWare. B. All Patents Whoops. The Old SCO gets no copyrights. Period. (OK: We're going to modify this with Amendment No. 2, but bear with me). trademarks except for the trademark "UNIX®" and the trademark "UnixWare®" (See: note about "trademarks", above) and no patents whatsoever Any questions? VI. Existing Master License Agreements with end users which include, in addition to other products of Seller [Novell], integrated delivery of UnixWare. VII. All accounts receivable or rights to payment concerning the Asset arising prior to the Closing Date. VIII. All rights, title and interest to the SVR's Royalties less than 5% fee for adminstrating the collecting thereof pursuant to Section 4.16 hereof. Again, these are exclusions, so the Old SCO gets no SysVRx royalties directly. The Old SCO will get a 5% handling fee, we'll see that in "Section 4.16" later. End - Schedule 1.1(b) Excluded Assets (Page 2 of 2)

Continue - APA - 1.1 Purchase of Assets. - a limited subset

(b) Assumption of Liabilities. At the Closing, Buyer [Old Santa Cruz Operation] shall assume those obligations and liabilities of Seller [Novell] [Novell] set forth on Schedule 1.1(c) hereto (collectively, the "Assumed Liabilities").

(c) Liabilities Not Assumed. Other than the Assumed Liabilities, Buyer [Old Santa Cruz Operation] shall not assume, nor shall Buyer [Old Santa Cruz Operation] or any affiliate of Buyer [Old Santa Cruz Operation] be deemed to have assumed or guaranteed, any other liability or obligation of any nature of Seller [Novell], or claims of such liability or obligation, whether accrued, matured or unmatured, liquidated or unliquidated, fixed or contingent, known or unknown arising out of

• (i) acts or occurrences related to any of the Assets, prior to the Closing Date, or
• (ii) any other liability or obligation of Seller [Novell] which is not an Assumed Liability (collectively, the "Unassumed Liabilities"). Seller [Novell] will remain responsible for all Unassumed Liabilities.

End - APA - 1.1 Purchase of Assets. - a limited subset

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Start - APA - 1.2. Payments. - a limited subset

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• (b) Royalties.
  • Buyer [Old Santa Cruz Operation] agrees to collect and pass through to Seller [Novell] one hundred percent (100%) of the SVRX Royalties as defined and described in Section 4.16 hereof.

    We'll see "4.16 SVRX Licenses." later...

  • Seller [Novell] agrees to pay Buyer [Old Santa Cruz Operation] an administrative fee of five percent (5%) of the SVRX Royalties.
  • Seller [Novell] and Buyer [Old Santa Cruz Operation] further acknowledge and agree that Seller [Novell] is retaining all rights to the SVRX Royalties notwithstanding the transfer of the SVRX Licenses to Buyer [Old Santa Cruz Operation] pursuant hereto, and that Buyer [Old Santa Cruz Operation] only has legal title and not an equitable interest in such royalties within the meaning of Section 541(d) of the Bankruptcy Code.

    Here's the first mention as to the Old SCO actually *getting* the licenses, as opposed to contracts *about* the licenses, or handling royalties *from* the licenses..

  • For purposes of administering the collection of SVRX Royalties, the Parties acknowledge that the royalties shall continue to be recognized as royalties by Seller [Novell] on an ongoing basis and the parties shall take such commercially reasonable steps as may be necessary to effectuate the foregoing for financial accounting and tax purposes.
  • In addition, Buyer [Old Santa Cruz Operation] agrees to make payment to Seller [Novell] of additional royalties retained by Seller [Novell] in respect of the transfer of UnixWare and on account of Buyer [Old Santa Cruz Operation]'s future sale of UnixWare products. The amounts and timing of additional royalties to be paid in connection with Buyer [Old Santa Cruz Operation]'s sale of the UnixWare products are identified in detail on Schedule 1.2(b) hereto.
  • Seller [Novell] shall be entitled to conduct periodic audits of Buyer [Old Santa Cruz Operation] concerning all royalties and payments due to Seller [Novell] hereunder or under the SVRX Licenses, provided that Seller [Novell] shall conduct such audits after reasonable notice to Buyer [Old Santa Cruz Operation] and during normal business hours and shall not be entitle to more than two (2) such audits per year. The cost of any such audit shall be borne by Seller [Novell], unless such audit reveals a payment shortfall in excess of 5% of amounts due hereunder in which case the cost of such audit shall be borne by Buyer [Old Santa Cruz Operation].

End - APA - 1.2. Payments. - a limited subset

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Start - APA - 1.7. Closing. - a limited subset

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• 1.7. Closing.
  • (a) Closing. Unless this Agreement is earlier terminated pursuant to Article VII, the closing of the transactions contemplated by this Agreement (the "Closing") shall be held at the offices of Wilson, Sonsini, Goodrich & Rosati, 650 Page Mill Road, Palo Alto, California 94304, at 10:00 a.m. on the date which is two business days following satisfaction or waiver of the last of the conditions to Closing as set forth in the Article IV hereof, or on such other time and/or date as the parties agree (the actual date on which the Closing occurs is referred to herein as the "Closing Date").
  • (b) Delivery. At the Closing:
    • (i) Buyer [old Santa Cruz Operation] shall deliver to Seller [Novell] an instrument of assumption of liabilities by which Buyer [old Santa Cruz Operation] shall assume the Assumed Liabilities as of the Closing;
    • (ii) Buyer [old Santa Cruz Operation] shall deliver to Seller [Novell] a certificate or certificates representing the Shares;
    • (iii) Seller [Novell] shall deliver to Buyer [old Santa Cruz Operation] all bills of sale, endorsements, assignments, consents to assignments to the extent obtained and other instruments and documents as Buyer [old Santa Cruz Operation] may reasonably request to sell, convey, assign, transfer and deliver to Buyer [old Santa Cruz Operation] Seller [Novell]'s title to all the Assets; and

      OK: here it certainly sounds like the Old SCO is getting *only* what is itemized as the "Assets", as modified by the "Excluded Assets".

    • (iv) Seller [Novell] and Buyer [old Santa Cruz Operation] shall deliver or cause to be delivered to one another such other instruments and documents necessary or appropriate to evidence the due execution, delivery and performance of this Agreement.
  • (c) Taking of Necessary Action: Further Action. If, at any time after the Closing Date, any further action is necessary or desirable to carry out the purposes of this Agreement the parties agree to take, and will take, all such lawful and necessary and/or desirable action.

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Start - APA - ARTICLE II - a limited subset

ARTICLE II

REPRESENTATIONS AND WARRANTIES OF SELLER

OK: right off the bat, we have an exception to keep track of, so let's take a look at this "Seller [Novell] Disclosure Schedule". /* snip */ Article IV CERTAIN COVENANTS /* snip */ 4.11 Delivery of Schedules. It it understood that the Seller [Novell] Disclosure Schedule and Buyer [old Santa Cruz Operation] Disclosure Schedule may not be complete as of the date hereof. Why does this not sound good :-/ Because of this, the parties agree that until 5:00 California time on October [15], 1995, Seller [Novell] and Buyer [old Santa Cruz Operation] shall each be permitted to amend its respective Disclosure Schedule so as to qualify the representations and warranties of each party contained in this Agreement (as each may be so amended, the "Subsequent Seller [Novell] Disclosure Schedule" and the "Subsequent Buyer [old Santa Cruz Operation] Disclosure Schedule", respectively). it [sic] is further understood that, to the extent that this Agreement is not terminated pursuant to Section 7.1(d) or 7.1(e) after delivery of any such Subsequent Disclosure Schedule, then representations and warranties in this Agreement of the party delivering such Subsequent Disclosure Schedule shall be qualified in their entirety by the modified or supplemented disclosures contained therein. And this is effectively the last mention of the "Seller [Novell] Disclosure Schedule", except where it reappears briefly, down at "5.3 Additional Conditions to the Obligations of Buyer [old Santa Cruz Operation]." in the entire APA. Remember that we were interested in reading this because "The Seller [Novell] Disclosure Schedule lists, as of the date hereof, (i) all patents, registered copyrights, trademarks, service marks, mask work rights, and any applications therefor, included in the Seller [Novell] Intellectual Property Rights;" Hopefully it does, at least. OK: but the "Seller [Novell] Disclosure Schedule" is not listed in either the "Index of Exhibits" or the "Index of Schedules" :-( Off to google; search "seller disclosure schedule novell" and the second hit (right now, anyway) is http://sco.tuxrocks.com/Docs/APA_Missing_Schedules.txt, and there in this text file is the "Seller [Novell] Disclosure Schedule". Or, there *something* is: the APA_Missing_Schedules.txt is a text file compilation of what appears, in the pdf, to be miscellaneous pages from many documents -- the "Missing Schedules". So what you really have to do is to look closely at the pdf, and note that somewhere on almost every scanned page is some sort of identifier that lets you form a reasonable idea of which pages go with which... Anyway... SELLER DISCLOSURE SCHEDULE - aka page 7, APA_Missing_Schedules.pdf For convenience, section numbers refer to the Asset Purchase Agreement dated as of September 19, 1995 between the Seller [Novell] and the Santa Cruz Operation, Inc. However, the disclosure herein of any information which is relevant in connection with more than one section of such agreement shall be deemed adequate in all respects notwithstanding the fact that such informations is disclosed herein only with reference to one section. /* snip */ OK: so, at this point, we'll return to the APA and insert the relevant portions of the Seller [Novell] Disclosure Schedule inline, as needed...

OK: so is anything of interest being "Represented and Warranted"?

Start - APA - ARTICLE II - a limited subset

ARTICLE II

REPRESENTATIONS AND WARRANTIES OF SELLER

• 2.1. Organization, Standing and Power.
  • Seller [Novell] is a corporation duly organized, validly existing and in good standing under the laws of its state of incorporation, and has all requisite corporate power and authority to own, operate and lease its properties and to carry on its business as now being conducted...blah blah blah...Seller [Novell] has made available to Buyer [old Santa Cruz Operation] complete and correct copies of the Certificate of Incorporation and Bylaws of Seller [Novell], as amended to the date hereof.

/* snip */

• 2.8. Agreements. With respect to the Business, Seller [Novell] is not a party to, and the Business is not subject to:
  1. (a) Any union contract or any employment contract or arrangement providing for future compensation, written or oral, with any officer, consultant, director or employee which is not cancelable by Seller [Novell] on 30 days' notice or less without penalty or obligation to make payments related to such termination, other than (A) (in the case of employees other than executive officers of Seller [Novell]) such agreements as are not materially different from standard arrangements offered to employees generally in the ordinary course of business consistent with Seller [Novell]'s past practices and (B) such agreements as may be imposed or implied by law;
  2. (b) Any plan, contract, or arrangement, the obligations under which exceed $100,000, written or oral, providing for bonuses, pensions, deferred compensation, severance pay or benefits, retirement payments, profit-sharing, or the like;
  3. (c) As of the date hereof, any existing OEM agreement, distribution agreement, volume purchase agreement, or other similar agreement in which the annual amount paid or received by Seller [Novell] during t he twelve-month period ended July 31, 1995 exceeded 31,500,000 or pursuant to which Seller [Novell] has granted most favored nation pricing provisions or exclusive marketing rights related to any product, group of products or territory to any person;
  4. (d) Any lease or month-to-month tenancy for real or personal property in which the amount of payments which Seller [Novell] is required to make on an annual basis exceeds $100,000;
  5. (e) Any contract containing covenants purporting to limit Seller [Novell]'s freedom to compete in any line of business in any geographic area; or
  6. (f) Any license to a third party involving Seller [Novell] Intellectual Property Rights (as such term is defined in Section 2.10 hereof) source or binary code which includes a right to sublicense such source or binary code without additional payment.
  Each agreement, contract, mortgage, indenture, plan, lease, instrument, permit, concession, franchise, arrangement, license, and commitment listed in the Seller [Novell] Disclosure Schedule pursuant to this Section is valid and binding on Seller [Novell], and is in full force and effect, and Seller [Novell] has not breached any provision of, nor is it in default under the terms of, any such agreement, contract, mortgage, indenture, plan, lease, instrument, permit, concession, franchise, arrangement, license or commitment except for such failures to be valid and binding or in full force and effect and such breaches or defaults as reasonably would not be expected to have a material adverse effect on the Business Condition of the Business.

  Remebering that we come into this with the construction: "Except as described with reasonable particularity in the Seller [Novell] Disclosure Schedule" - so here we're noting exceptions. Seller [Novell] Disclosure Schedule - Section 2.8(c) - Agreements. (i) Contracts under which Seller [Novell] paid $1,500,000 or more in Business related royalties, additional license fees and revenue sharing during the period 8/1/94 - 7/31/95: (1) February 7, 1987 Development and License Agreement now in effect between Seller [Novell] and Microsoft Corporation (2) March 8, 1993 International OEM Distribution Agreement now in effect between Seller [Novell] and Locus Computing Corporation. (ii) Customers from whom Seller [Novell] received $1,500,000 or more in Business related royalties, additional license fees and revenue sharing during the period 8/1/94 - 7/31/95:* See Attachment A (iii) Contracts now in existence in which Seller [Novell] granted most favored nation pricing or exclusive marketing rights to any Business related product, group of products, or territory: See Attachment B *Pursuant to various Software Agreements and Sublicensing Agreements administered by Seller [Novell]'s Licensing Organization. So, with the phrasing created by the exception at the start of Article II, all these are prefaced with "Seller [Novell] is a party to, and the Business is subject to..." (And recall that Novell acquired Unix Systems Laboratories in June, 1993) SDS - Attachment B Agreements* with Most Favored Customer Pricing or Exclusive Marketing Rights for Business Products or Territories February 21, 1986 Territorial Software Distribution Agreement between AT&T Information Systems, Inc. and AT&T UNIX Pacific Co., Ltd. Joint Venture Contract between Shenzhen Comtec Software, Ltd., China National Computer Software & Technology Service Corporation, China Great Wall Computer Group Co., Langchao Electronic Information Industrial Group Corporation, Changjiang Computer Union Corporation (Group), Beijing Modern Information Development Center, Dascom (Holdings) Ltd., and UNIX System Technologies China Company Ltd. for the Establishment of UNIX System Technologies Company, Ltd. Sales Agency Agreement between AUDILOG (France) and UNIX System Laboratories, Inc. Publication Agreement between UNIX System Laboratories, Inc. and Addison-Wesley Publishing Company, Inc. January 1, 1994 Software License and Distribution Agreement between Seller [Novell] and Sun Microsystems, Inc. May 10, 1994 Trademark Relicensing Agreement between Seller [Novell] and X/Open Company, Ltd. Publication Agreement dated December 17, 1986 between AT&T Information Systems Inc. and Prentice-Hall, Inc. *Agreements originally entered into by one of Seller [Novell]'s predecessors in title are so identified. Now, I'm betting that the bolded line refers to the agreement whereupon Novell licensed the "Unix®" trademark to X/Open aka the Open Group. And here's a post by DrStupid at Groklaw that expands on this thought: The Novell/XOpen deal Authored by: DrStupid on Friday, July 30 2004 @ 11:34 AM EDT http://groups.google.com/groups?selm=29k4tiINN89u%40rodan.UU.NET&output=gplain Date: 14 Oct 1993 11:14:10 -0700 "This status report should clarify some of the questions. At 4:30 BST October 11, X/Open and Novell formally announced the transfer of the UNIX trademark to X/Open. In return for the transfer of the trademark, Novell will be able to use the UNIX trademark free of royalty for three years and may also, subject to normal board approval, become an X/Open shareholder, with fees waived for three years. " http://groups.google.com/groups?selm=Co5BpG.1pt%40epimbe.com&output=gplain Date: Tue, 12 Apr 1994 12:22:28 GMT "> Nope. The UNIX trademark was *given* to X/Open by Novell last year. Actually, the deal is still in progress. Various minor issues (such as what obligations Novell assumed by acquiring USL) still have to be ironed out, and the process is expected to be completed this month." As you noticed, the final agreement was dated May 10, 1994. http://groups.google.com/groups?selm=Cuwx9w.31C%40epimbe.com&output=gplain Date: Mon, 22 Aug 1994 01:25:07 GMT "As you may know, Novell acquired Unix Systems Laboratories from AT&T in 1993; along with USL came the UNIX trademark. Soon after finalizing the acquisition, Novell announced its intention to deed the UNIX trademark to X/Open, a transaction which was completed earlier this year. X/Open is now the owner of the UNIX trademark, and one must deal with them in order to legally use it." The final wording becomes: "Seller [Novell] is a party to, and the Business is subject to [the] May 10, 1994 Trademark Relicensing Agreement between Seller [Novell] and X/Open Company, Ltd." And, for completeness, here is the record at the USPTO: Trademark Assignment Abstract of Title #73537419 for the mark "UNIX" - Filing Dt: 05/13/1985 - Date matches at Page 9 of 9 - "Attachment C" - "SELLER DISCLOSURE SCHEDULE" for mark "Unix" and country "United States" Trademark Assignment Abstract of Title #73544900 for the mark "UNIX" - Filing Dt: 06/24/1985 - Date matches at Page 9 of 9 - "Attachment C" - "SELLER DISCLOSURE SCHEDULE" - for mark "Unix" and country "United States"

/* snip */

• 2.10. Technology.
  1. To the knowledge of Seller [Novell], as of the date hereof, Seller [Novell] owns, co-owns or is licensed or otherwise entitled to use rights to all
     • patents,
     • trademarks,
     • trade names,
     • service marks,
     • copyrights,
     • mask work rights,
     • trade secret rights,
     • and other intellectual property rights and any applications therefor,
     • and all mask works, net lists, schematics, technology, source code, know-how, computer software programs and all other tangible information or material,
     that are used in the Business as currently conducted (the "Seller [Novell] Intellectual Property Rights").
  2. The Seller [Novell] Disclosure Schedule lists, as of the date hereof,
     • (i) all patents, registered copyrights, trademarks, service marks, mask work rights, and any applications therefor, included in the Seller [Novell] Intellectual Property Rights;
     • (ii) the jurisdictions in which each such Seller [Novell] Intellectual Property Right has been issued or registered or in which an application for such issuance and registration has been filed, including the respective registration or application numbers; and
     • (iii) which, if any, of such products have been registered for copyright protection with the United States Copyright Office and any foreign offices.

     The Seller [Novell] Disclosure Schedule also sets forth a list of license agreements which, to Seller [Novell]'s knowledge, constitutes all license agreements under which Seller [Novell] licenses as licensee the intellectual property rights of third parties relating to technology or software which is incorporated in existing products of the Business for which products Seller [Novell] has received revenues in excess of $2,000,000 in the twelve-month period ended July 31, 1995. To Seller [Novell]'s knowledge, Seller [Novell] is not in material violation of any such license agreement.

  3. With respect to the Business, Seller [Novell] is not a party to nor is the Business subject to
     • (i) any joint venture contract or arrangement or any other agreement that involves a sharing of profits with other persons other than the payment or receipt of royalties by Seller [Novell];
     • (ii) any agreement pursuant to which Seller [Novell] was obligated to make payment of royalties in the twelve-month period ended July 31, 1995 of $1,000,000 or more; or
     • (iii) any agreement pursuant to which Seller [Novell] utilizes the intellectual property rights of others in any products currently marketed by seller and which is either non-perpetual or terminable by the licensor thereunder in the event of the Acquisition and which, if terminated, reasonably would be expected to have a material adverse effect on the Business Condition of the Business.
  4. No claims with respect to the Seller [Novell] Intellectual Property Rights have been communicated in writing to Seller [Novell]
     • (i) to the effect that the manufacture, sale or use of any product of the Business as now used or offered by Seller [Novell] infringes on any copyright, patent, trade secret or other intellectual property right of a third party or
     • (ii) challenging the ownership or validity of any of the Seller [Novell] Intellectual Property Rights, any or all of which claims reasonably would be expected to have a material adverse effect on the Business Condition of the Business.
     To the knowledge of Seller [Novell], as of the date hereof, all patents and registered trademarks, service marks and registered copyrights held by Seller [Novell] in connection with the Business are valid and subsisting except for failures to be valid and subsisting that reasonably would not be expected to have a material adverse effect on the Business Condition of the Business. Seller [Novell] does not know of any unauthorized use, infringement or misappropriation of any of the Seller [Novell] Intellectual Property Rights by any third party that reasonably would be expected to have a material adverse effect on the Business Condition of the Business.

• 2.11. Title to Properties: Absence of Liens and Encumbrances.
  • (a) The Seller [Novell] Disclosure Schedule sets forth a list of all real property owned or, as of the date hereof, leased by Seller [Novell] for use in connection with the Business and the aggregate annual rental or mortgage payment or other fees payable under any such lease or loan.

    SDS - Section 2.11(a) - Real property and leases: The Business (excluding outside sales and support activities conducted in the ordinary course) is primarily concentrated in a facility leased from Exxon Corporation in Fiorham Park, New Jersey. A copy of the current lease covering such facility is appended hereto as Attachment H. Other facilities in which relatively minor portions of the Business are conducted are located in San Jose, California, Orem, Utah and Provo, Utah.

  • (b) Seller [Novell] has good and valid title to, or, in the case of leased properties and assets, valid leasehold interests in, all of the tangible properties and assets, real, personal, and mixed, which are material to the conduct of the Business, free and clear of any liens, charges, pledges, security interests or other encumbrances, blah blah blah...
• 2.12 Governmental Authorizations and Licenses. blah blah blah...
• 2.13 Environmental Matters. To Seller [Novell]'s knowledge, Seller [Novell] has at all relevant times with respect to the Business been in material compliance with all environmental laws, blah blah blah...
• 2.14 Customers. The Seller [Novell] Disclosure Schedule sets forth each customer of the Business that paid Seller [Novell] royalties and licensee fees in an aggregate amount in excess of $1,000,000 during the twelve-month period ended July 31, 1995.

  Is that this, again? SDS - ATTACHMENT A Largest Volume OEM Customers of Seller Sales Over $2 Million Sales Over $1.5 Million Sales Over $1 Million Microsoft Microsoft Microsoft AT&T AT&T AT&T Hewlett-Packard Hewlett-Packard Hewlett-Packard Fujitsu Fujitsu Fujitsu NEC NEC NEC Siemens-Nixdorf Siemens-Nixdorf Siemens-Nixdorf ICL ICL ICL Digital Equipment Digital Equipment Digital Equipment IBM IBM IBM Silicon Graphics Silicon Graphics Silicon Graphics Hitachi Hitachi Motorola Motorola Cray Stratus Tandem Mitsubishi

• 2.15 Proprietary Information and Inventions and confidentiality Agreements. To the knowledge of the Seller [Novell], each employee, consultant, and officer of Seller [Novell] (exclusively with respect to the Business) has executed a proprietary information and inventions and confidentiality agreement, copies of which have been made available to counsel to Buyer [old Santa Cruz Operation], and it is Seller [Novell]'s policy that such agreements be executed by each new employee, consultant, officer and director of Seller [Novell] in the ordinary course of Seller [Novell]'s business.
• 2.16 Inventory. The Seller [Novell] Disclosure Schedule sets forth the estimated amount of UnixWare inventory (as defined thereon), including pre-paid royalties, that was held by Seller [Novell]'s resellers as of the date of this Agreement.

  SDS - Section 2.16 Estimated level of UnixWare software inventory as of October 11, 1995: U.S./Canada $1,516,860 International 750,700 Total $2,267,560

• 2.17 Investment Intent. The purchase of the Shares pursuant to this Agreement is for the account of Seller [Novell] for the purpose of investment blah blah blah..
• 2.18 Reliance Upon Seller [Novell]'s Representations. Seller [Novell] understands that the Shares are not registered under the Securities Act on the ground that blah blah blah..
• 2.19 Receipt of Information. Seller [Novell] believes it has received all the information it considers necessary or appropriate for deciding whether to purchase the Shares blah blah blah..
• 2.20 Accredited Investor. Seller [Novell] is an "accredited investor" within the meaning of Securities and Exchange Commission ("SEC") Rule 501 blah blah blah..
• 2.21 Restricted Securities. Seller [Novell] understands that the Shares may not be sold, transfered, or otherwise disposed of blah blah blah..
• 2.22 Legends. To the extent applicable each certificate or other document evidencing any of the Shares shall be endorsed blah blah blah.. certificate:
• 2.23 Non Implied Representations. It is the explicit intent of each party hereto that Seller [Novell] is not making any representations and warranties of Seller [Novell] contained in this Agreement or in the Seller [Novell] Disclosure Schedule.

AMENDMENT No. 2 TO THE ASSET PURCHASE AGREEMENT

As of the 16 th day of October, 1996, the September 19, 1995 Asset Purchase Agreement (the "Agreement") between Novell [Seller], Inc. ("Novell") and The Santa Cruz Operation [Buyer], Inc. ("SCO") is amended in the following respects.

1. A. With respect to Schedule 1.1(b) of the Agreement, titled "Excluded Assets", Section V, Subsection A shall be revised to read:
   All copyrights and trademarks, except for the copyrights and trademarks owned by Novell [Seller] as of the date of the Agreement required for SCO [Buyer] to exercise its rights with respect to the acquisition of UNIX and UnixWare technologies. However, in no event shall Novell [Seller] be liable to SCO [Buyer] for any claim brought by any third party pertaining to said copyrights and trademarks.

2. B. Except as provided in Section C below, and notwithstanding the provisions of Article 4.16, Sections (b) and (c) of the Agreement, any potential transaction with an SVRX licensee which concerns a buy-out of any such licensee's royalty obligations shall be managed as follows:
   • 1. Should either party become aware of any such potential transaction, it will immediately notify the other in writing.
   • 2. Any meetings and/or negotiations with the licensee will be attended by both parties, unless agreed otherwise. Novell's [Seller's] participation will be by personnel who are engaged in corporate business development.
   • 3. Any written proposal to be presented to the licensee, including drafts and final versions of any proposed amendments to the SVRX licenses, will be consented to by both parties prior to its delivery to the licensee, unless agreed otherwise.
   • 4. Prior to either parties' unilateral determination as to the suitability of any potential buy-out transaction, the parties will meet face to face and analyze the potential merits and disadvantages of the transaction. No such transaction will be concluded unless the execution copy of the amendment is consented to in writing by both parties, and either party will have the unilateral right to withhold its consent should it judge, for any reason whatsoever, the transaction to be contrary to its economic interests and/or its business plans and strategy.
   • 5. This Amendment does not give Novell [Seller] the right to increase any SVRX licensee's rights to SVRX source code, nor does it give Novell [Seller] the right to grant new SVRX source code licenses. In addition, Novell [Seller] may not prevent SCO [Buyer] from exercising its rights with respect to SVRX source code in accordance with the Agreement.
   • 6. The parties agree that no member of Novell's [Seller's] sales force will receive a bonus, commission, quota attainment credit, or other type of sales incentive as a result of the buy-out of an SVRX license.
   
   
3. C. Novell [Seller] may execute a buy-out with a licensee without any approval or involvement of SCO [Buyer], and will no longer be bound by any of the requirements stated in Section B. above, if: (i) SCO [Buyer] ceases to actively and aggressively market SCO's [Buyer's] UNIX platforms; or (ii) upon a change of control of SCO [Buyer] as stated in schedule 6.3(g) of the Agreement.
   
   
4. D. Novell [Seller] and SCO [Buyer] agree to indemnify and hold harmless the other from and against any and all losses, liabilities, judgments, and costs incurred ("Liability") if either causes the other to incur Liability under Section 10 of Amendment No. X to Software Agreement SOFT-00015 as amended, Sublicensing Agreement SUB-00015A as amended, Software Agreement SOFT-00015 Supplement No. 170 as amended, and Substitution Agreement XPER-00015B ("Amendment No. X"). [emphasis added]

In witness whereof, the parties have executed this Amendment No. 2 to be signed by their duly authorized representatives as of the date first written above.

THE SANTA CRUZ OPERATION, INC. 

By: 

/s/ STEVEN M. SABBATH 
Name: Steven M. Sabbath 
Title: 
Vice President Law & Corporate Affairs 

 NOVELL, INC. 

By: 

/s/ JAMES R. TOLONEN
Name: 
James R. Tolonen 
Title: 
EVP & CFO 

APA Schedule 1.1(b) V. A. - Excluded Assets - as modified by Amendment No. 2

So,

A. All copyrights and trademarks, except for the trademarks UNIX and UnixWare.

becomes

A. All copyrights and trademarks,
• except for the copyrights and trademarks owned by Novell [Seller] as of the date of the Agreement required for SCO [Buyer] to exercise its rights with respect to the acquisition of UNIX and UnixWare technologies.
However, in no event shall Novell [Seller] be liable to SCO [Buyer] for any claim brought by any third party pertaining to said copyrights and trademarks.

OK: What's happened here? Remember that we are excepting an exclusion, as it were. Still excluded are: "All copyrights and trademarks, except for the copyrights and trademarks owned by Novell [Seller] as of the date of the Agreement required for SCO [Buyer] to exercise its rights with respect to the acquisition of UNIX and UnixWare technologies." So, the Old SCO gets no copyrights or trademarks except for the copyrights and trademarks owned by Novell [Seller] as of the date of the Agreement So if Novell didn't own it, the Old SCO doesn't get it. Fine. required for SCO [Buyer] to exercise its rights with respect to the acquisition of UNIX and UnixWare technologies Whoa. What does that mean? That seems to be a rather specific wording, no? Let's break it down: the Old SCO gets the copyrights and trademarks required for the Old SCO to exercise its rights with respect to the [its] acquisition of UNIX and UnixWare technologies First off, this clause certainly seems to relate to something about the process of acquistion of technologies only, for that's the wording used. And it's pretty specific wording, really, although that doesn't necessarily mean *we'll* be able to figure out what it means. But clearly, it meant something to the Old SCO and Novell, at one point in time. And it clearly seems *not* to mean all copyrights and all trademarks by any stretch. hmm.. Remember the "Business"? RECITALS A. Seller [Novell] is engaged in the business of developing a line of software products currently known as Unix and UnixWare, the sale of binary and source code licenses to various versions of Unix and UnixWare, the support of such products and the sale of other products which are directly related to Unix and UnixWare (collectively, the "Business"). In the "Business" as defined in the APA, there is no mention of the "acquisition of technologies". And in Amendment No. 2, V. A., there is no mention of developing anything, or selling binary or source code licenses, or supporting anything, or selling anything related to UNIX or Unixware. Later in the Amendment we will see "licensees" discussed a lot, but not a mention of acquiring anything. So Novell and the Old SCO felt compeled to address something outside of the "Business", or something that arose after the initial contract, apparently: we're talking only about rights related to the acquiring of technologies, going to the Old SCO, from Novell. I just don't see any other way to read this, which is not to say that I can explain what it means. What's the historical context, here? 1992: USL (Unix Systems Laboratories - an AT&T spinoff) releases UNIX System V Release 4.2. December 22nd, Novell announces intent to acquire USL. Solaris 2.0 ships. 1993: 4.4BSD the final release from Berkeley. June 16, Novell acquires USL. Late 1993: Novell transfers rights to the "UNIX" trademark and the Single UNIX Specification to X/Open. In December Novell ships SVR4.2MP, the final USL OEM release of System V 1994: BSD 4.4-Lite eliminated all code claimed to infringe on USL/Novell. As the new owner of the UNIX trademark, X/Open introduces the Single UNIX Specification (formerly Spec 1170), separating the UNIX trademark from any actual code stream. 1995: X/Open introduces the UNIX 95 branding programme for implementations of the Single UNIX Specification. Novell sells UnixWare business line to SCO. Digital UNIX introduced. UnixWare 2.0 ships. OpenServer 5.0 debuts. 1996: The Open Group forms as a merger of OSF and X/Open. So in barely two years, Novell bought the Unix business from AT&T, transfered the "UNIX®" trademark to X/Open, wanted out of the Unix business, and sold it to SCO. And in that same period, Solaris shipped, 4.4BSD was released, BSD 4.4-Lite (without any infringing USL/Novell/AT&T code) shipped, the Single UNIX specification was honed, Digital UNIX came out, UnixWare and OpenServer were released - representing the SCO/Xenix (OpenServer) and Novell/SVR4 (UnixWare) UNIX family trees, to be combined by 1995 within the Old Santa Cruz Operation. And by 1996, when Amendment No. 2 was penned, the Linux kernel was at 2.0.21, and had just forked into the 2.1 tree. Windows NT 3.51 was released in 1995; Windows NT 4.0 was released in 1996. So after Novell thought it had sold the UNIX business and UnixWare to the Old SCO, and the Old SCO thought it had bought the UNIX business and UnixWare from Novell, one of them, or the other, or both of them felt compelled to execute an amendment, clearly dealing with some issue that involved helping "...SCO [Buyer] to exercise its rights with respect to the acquisition of UNIX and UnixWare technologies..." At this point, let's visit the rest of Amendment No. 2 to see if we can gain any insight into *why* Novell and the Old SCO went to this trouble, why it is they both felt compelled to execute Amendment No. 2. Yes. There's more. What does it talk about? First, it's interesting to note the remainder of the amendment to V. Intellectual Property, paragraph A: ...However, in no event shall Novell [Seller] be liable to SCO [Buyer] for any claim brought by any third party pertaining to said copyrights and trademarks. huh.. "Claims brought by any third party" pertaining to the copyrights and trademarks related to helping "...SCO [Buyer] to exercise its rights with respect to the acquisition of UNIX and UnixWare technologies..." Interesting. Was there a thought in someone's mind (Novell's?) that there was a cloud over these copyrights and trademarks? OK. What about the rest of the Amendment No. 2? B. Except as provided in Section C below, and notwithstanding the provisions of Article 4.16, Sections (b) and (c) of the Agreement, any potential transaction with an SVRX licensee which concerns a buy-out of any such licensee's royalty obligations shall be managed as follows: 1. Should either party become aware of any such potential transaction, it will immediately notify the other in writing. 2. Any meetings and/or negotiations with the licensee will be attended by both parties, unless agreed otherwise. Novell's [Seller's] participation will be by personnel who are engaged in corporate business development. 3. Any written proposal to be presented to the licensee, including drafts and final versions of any proposed amendments to the SVRX licenses, will be consented to by both parties prior to its delivery to the licensee, unless agreed otherwise. 4. Prior to either parties' unilateral determination as to the suitability of any potential buy-out transaction, the parties will meet face to face and analyze the potential merits and disadvantages of the transaction. No such transaction will be concluded unless the execution copy of the amendment is consented to in writing by both parties, and either party will have the unilateral right to withhold its consent should it judge, for any reason whatsoever, the transaction to be contrary to its economic interests and/or its business plans and strategy. 5. This Amendment does not give Novell [Seller] the right to increase any SVRX licensee's rights to SVRX source code, nor does it give Novell [Seller] the right to grant new SVRX source code licenses. In addition, Novell [Seller] may not prevent SCO [Buyer] from exercising its rights with respect to SVRX source code in accordance with the Agreement. 6. The parties agree that no member of Novell's [Seller's] sales force will receive a bonus, commission, quota attainment credit, or other type of sales incentive as a result of the buy-out of an SVRX license. OK: certainly, "licensee" here is refering to previous UNIX licensees of Novell's, for which there was a continuing revenue stream. (Remember, UNIX SysVRx is the parent of the Novell UnixWare family, UnixWare 1 being released in November, 1992). And the entire clause B. starts by talking about "a buy-out of any such licensee's royalty obligations". And the remainder basically says that: either party has to tell the other, and work out with the other, what happens (if anything) if a licensee's royalty obligations are bought out; and that Novell can't convey any *more* rights to SVRx source code than a licensee already has; and that Novell can't sell any *new* SVRx licenses; and that Novell may not prevent SCO "from exercising its rights with respect to SVRX source code in accordance with the Agreement". So, clearly the Old SCO and Novell were concerned about licensee issues, pretty heavily. Remember, there was quite a revenue stream there. And the next section is interesting: C. Novell [Seller] may execute a buy-out with a licensee without any approval or involvement of SCO [Buyer], and will no longer be bound by any of the requirements stated in Section B. above, if: (i) SCO [Buyer] ceases to actively and aggressively market SCO's [Buyer's] UNIX platforms; or (ii) upon a change of control of SCO [Buyer] as stated in schedule 6.3(g) of the Agreement. D. Novell [Seller] and SCO [Buyer] agree to indemnify and hold harmless the other from and against any and all losses, liabilities, judgments, and costs incurred ("Liability") if either causes the other to incur Liability under Section 10 of Amendment No. X to Software Agreement SOFT-00015 as amended, Sublicensing Agreement SUB-00015A as amended, Software Agreement SOFT-00015 Supplement No. 170 as amended, and Substitution Agreement XPER-00015B ("Amendment No. X"). [emphasis added] So, if the Old SCO is to stop promoting UNIX, or "upon a change of control", all of Section B. goes away, and Novell can pretty much do what it wants in regards to licenses and licensees. At this point, let's backtrack and fill in some blanks opened up by Amendment No. 2 B. Except as provided in Section C below, and notwithstanding the provisions of Article 4.16, Sections (b) and (c) of the Agreement, any potential transaction with an SVRX licensee which concerns a buy-out of any such licensee's royalty obligations shall be managed as follows: OK. Just what is in "Article 4.16, Sections (b) and (c) of the Agreement", the APA? And for completeness, let's start with "Article 4.16, Section (a)". 4.16 SVRX Licenses. (a) Following the Closing, Buyer [Old Santa Cruz Operation] shall administer the collection of all royalties, fees and other amounts due under all SVRX Licenses (as listed in detail under item VI of Schedule 1.1(a) hereof and referred to herein as "SVRX Royalties"). So first, we go back to the APA: Schedule 1.1(a), Assets VI. All contracts relating to the SVRX Licenses listed below: - UNIX System V Release 4.2 MP Intel386 Implementation - #UNIX System V Release 4.2 MP International Edition, Intel386 Implementation - UNIX System V Release 4.2 Intel386 Implementation - #UNIX System V Release 4.2 International Edition, Intel386 Implementation - UNIX System V Release 4.1 ES Intel386 Implementation - #UNIX System V Release 4.1 ES International Edition Intel386 Implementation - UNIX System V Release 4.0 MP Intel386 Implementation - #UNIX System V Release 4.0 MP International Edition Intel386 Implementation - UNIX System V Release 4.0 MP Intel386 Version 4 Implementation - #UNIX System V Release 4.0 International Edition Intel386 Version 4 Implementation - UNIX System V Release 4.0 Intel386 Version 3 Implementation - #UNIX System V Release 4.0 International Edition Intel386 Version 3 Implementation - UNIX System V Release 4.0 Intel386 Version 2 Implementation - #UNIX System V Release 4.0 International Edition Intel386 Version 2 Implementation - UNIX System V Release 4.0 Intel386 Version 1 Implementation - #UNIX System V Release 4.0 International Edition Intel386 Version 1 Implementation - UNIX System V/386 Release 3.2 and #UNIX System V/386 Release 3.2 International Edition - UNIX System V Release 3.2 and #UNIX System V Release 3.2 International Edition - UNIX System V Release 3.1 and #UNIX System V Release 3.1 International Edition - UNIX System V Release 3.0 and #UNIX System V Release 3.0 International Edition - All prior releases and versions of UNIX System V Release 2.1 - #All prior releases and versions of UNIX System V Release 2.1 International Edition - All prior releases and versions of UNIX System V Release 2.0 - #All prior releases and versions of UNIX System V Release 2.0 International Edition - All prior UNIX System releases and versions preceding UNIX System V Release 2.0 - #All prior UNIX System releases and versions preceding UNIX System V Release 2.0 International Editions Within 45 days of the end of each fiscal quarter of Buyer [Old Santa Cruz Operation], Buyer [Old Santa Cruz Operation] shall deliver to Seller [Novell] or Seller's [Novell's] assignee 100% of any SVRX Royalties collected in the immediately preceding quarter. Buyer [Old Santa Cruz Operation] shall diligently seek to collect all such royalties, funds and other amounts when due (and shall investigate and perform appropriate auditing and enforcement under such licenses at Buyer [Old Santa Cruz Operation]'s cost including auditing two (2) SVRX licensees identified by Seller [Novell] during each quarter in which SVRX Royalties are collected). In consideration of such activities described in the preceding sentence, Seller [Novell] shall pay to Buyer [Old Santa Cruz Operation] within 5 days of receipt of SVRX Royalties from Buyer [Old Santa Cruz Operation] as set forth in the preceding sentence, an administrative fee equal to 5% of such SVRX Royalties. So, here's where the Old SCO pays *all* of the SysVRx license royalties to Novell, and Novell pays them back 5% of the dollar amount, for their trouble. Gee.. Doesn't it seem like TSCOG has described that a little differently, somewhere recently? But, I digress... (b) Buyer [Old Santa Cruz Operation] shall not, and shall not have the authority to, amend, modify or waive any right under or assign any SVRX License without the prior written consent of Seller [Novell]. In addition, at Seller [Novell]'s sole discretion and direction, Buyer [Old Santa Cruz Operation] shall amend, supplement, modify or waive any rights under, or shall assign any rights to, any SVRX License to the extent so directed in any manner or respect by Seller [Novell]. In the event that Buyer [Old Santa Cruz Operation] shall fail to take any such action concerning the SVRX Licenses as required herein, Seller [Novell] shall be authorized, and hereby is granted, the rights to take any action on Buyer [Old Santa Cruz Operation]'s own behalf. Buyer [Old Santa Cruz Operation] shall not, and shall have no right to, enter into future licenses or amendments of the SVRX Licenses, except as may be incidentally involved through its rights to sell and license the Assets or the Merged Product (as such term is defined in the proposed Operating Agreement, attached hereto as Exhibit 5.1(c)) or future versions thereof of the Merged Product. (c) Seller [Novell] further covenants that immediately following the Closing Date neither it, nor any of its officers, directors or employees shall (i) take any material action designed to promote the sale of SVRX products or (ii) provide material compensation to any employee designed and intended to incentivize such employee to promote the sale of SVRX products, except for actions incidental to unrelated business activities of Seller [Novell]. So, let's review: The Old SCO shall administer the royalties, fees, and other amounts due from existing SysVRx licenses The Old SCO shall pay 100% of those royalties, fees etc directly to Novell Novell then pays back to the Old SCO 5% of the dollar amount of the royalties, fees etc etc The Old SCO shall not amend, modify or waive any right under, nor even assign any right under, any existing SysVRx license unless Novell says its OK The Old SCO shall not, and shall have no right to, enter into future licenses or amendments of the SVRX Licenses except as may be incidentally involved through its rights to sell and license the Assets or the Merged Product or future versions thereof of the Merged Product (...whatever the "Merged Product" is, because we can't find the entire text of "Exhibit 5.1(c)"). So, after all of this, can we pull any thoughts together? After just over two years in the UNIX business, Novell wanted out, selling off what it had purchased from Unix Systems Labs i.e. UNIX SVR4.2MP, the final USL OEM release of System V Novell wanted to sell: source code products; binary code products; products under development; a list of other technology; various claims arising that were related to the "Business"; various rights relating to software development, licenses that Novell held, and other contracts; all of the actual UNIX and UnixWare software itself that Novell held; the specific trademarks "UNIX®" and "UnixWare" (remember that Novell had transfered rights to the "UNIX®" trademark and the Single UNIX Specification to X/Open in late 1993, so here Novell must have been transfering to the Old SCO whatever rights it retained for its specific use of the "UNIX®" trademark, eh?); all contracts relating to a whole bunch of existing SysVRx licenses; and a bunch of office furniture... And (and after the Amendment No. 2 almost a year later) Novell did *not* want to sell: anything that hadn't been explicitly listed as an "Asset" in the first place; some Netware stuff TUXEDO Transaction Processing a bunch more Netware stuff all copyrights and all trademarks, except "...for the copyrights and trademarks owned by Novell [Seller] as of the date of the Agreement required for SCO [Buyer] to exercise its rights with respect to the acquisition of UNIX and UnixWare technologies. However, in no event shall Novell [Seller] be liable to SCO [Buyer] for any claim brought by any third party pertaining to said copyrights and trademarks." And, after the Amendment No. 2 of 1996, Novell added a whole *bunch* of clauses and stuff relating to the handling of royalties from then-current SysVRx licenses, and relating to the buying-out of such licenses. So almost a year after Novell sold out its UNIX business, it felt compelled to nail down issues regarding royalties that hadn't been covered in the original APA, or that had later arisen. And as a quid-pro-quo (or perhaps simply because Novell didn't place much importance on the language), Novell agreed to insert language that granted the Old SCO "... the copyrights and trademarks owned by Novell [Seller] as of the date of the Agreement required for SCO [Buyer] to exercise its rights with respect to the acquisition of UNIX and UnixWare technologies." What does it all mean? What does it all mean? I don't know! What do you think?

End: APA Schedule 1.1(b) V. A. - Excluded Assets - as modified by Amendment No. 2