Attached files
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| EX-10.1 - SCO GROUP INC | v177731_ex10-1.htm |
| EX-99.1 - SCO GROUP INC | v177731_ex99-1.htm |
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of
Report (Date of earliest event reported): March 5, 2010
The SCO Group, Inc.
(Exact
name of registrant as specified in its charter)
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Delaware
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0-29911
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87-0662823
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(State
or other jurisdiction of
incorporation)
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(Commission
File
Number)
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(IRS
Employer
Identification
No.)
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333
South 520 West
Lindon,
Utah 84042
(Address
of principal executive offices, including Zip Code)
Registrant’s
telephone number, including area code: (801) 765-4999
355
South 520 West
Lindon,
Utah 84042
(Former name or former
address, if changed since last report)
Check the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions:
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o
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Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
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o
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Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
|
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o
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Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
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o
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Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
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Item
1.01
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Entry
into a Material Definitive
Agreement
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As of March 5, 2010, The SCO Group,
Inc., (the “Company”) obtained funding for $2.0 million in postpetition
financing (the “Loan”) in the form of a secured super-priority credit agreement
(the “Secured Credit Agreement”), from a group of private lenders including
Seung Ni Capital Partners, LLC, Jan Loeb, Leap Tide Capital Management, Inc.,
Steven Shin, Henry C. Beinstein, Stanley A. Beinstein, Neil J. Gagnon, Robert
Dyson, WBS LLC, Ne Obliviscaris, Ltd., Darcy Mott, Clemons F. Walker and Herbert
W. Jackson (collectively, the “Lenders”). Other than WBS LLC and
Robert Dyson, all of the other Lenders listed above are direct or indirect
shareholders of the Company. Proceeds from the financing will be used
to fund the Company’s operating and administrative expenses, as well as
litigation-related expenses. In order to document this financing
arrangement, the Company entered into a separate Secured Credit Agreement, Stock
Pledge Agreement and Security and Pledge Agreement in favor of each
Lender. The Secured Credit Agreement and related documents, described
below, which were entered into by the Company in connection with the $2.0
million financing were approved by order of the U.S. Bankruptcy Court on March
5, 2010 (the “Bankruptcy Court”).
The Secured Credit Agreement provides
for a $2.0 million loan which bears interest at a rate of 14% per annum
compounded quarterly, and has a loan fee (the “Loan Fee”) equal to 6.6 percent
of any Litigation Proceeds, as defined in the Secured Credit
Agreement. Litigation Proceeds means the amount of any final
non-appealable verdict or other award received by the Company in connection with
the two pending litigation matters of the Company or other litigation matters
between the Company and such parties, including, settlements, interest and
attorney fees paid by the other parties to such litigation, as well as proceeds
from the sale of Company assets occurring in connection with the settlement of
such litigation (“Litigation Proceeds”). The Loan has a maturity date
of the earliest to occur of (a) October 31, 2011, (b) acceleration provisions
under the agreement, (c) conversion of the Company’s bankruptcy case to a case
under Chapter 7 of the Bankruptcy Code, (d) dismissal of the Company’s
bankruptcy case, and (e) the confirmation of a plan of
reorganization. The Loan Fee is due and payable to the Lenders 10
calendar days following the date that the Litigation Proceeds become available
to the Company.
The Loan is secured by a lien on
substantially all of the assets of the Company. Pursuant to
applicable bankruptcy law and the Bankruptcy Court Order approving the Secured
Credit Agreement, the Lenders’ lien is senior in priority to all other liens and
claims and administrative expenses of the Company.
So long
as the Loan is outstanding, upon an event of default, as such term is defined in
the Secured Credit Agreement (“Event of Default”) and during the continuance of
any Event of Default, the Lenders: (a) may by notice to the Company declare that
all the Lenders’ loan commitment be terminated, whereupon any and all
obligations of the Lenders to make a portion of the Loan shall immediately
terminate; and (b) may by notice to the Company, declare the Loan, including all
interest owed thereon and all other amounts and obligations payable under the
Secured Credit Agreement due and payable. The Company shall have a
period of five (5) business days in which to either cure the default or obtain a
scheduled court hearing with regard to the default. In the event the
Company fails to either cure the default or obtain a scheduled court hearing
with regard to the default, the automatic stay provided in the Bankruptcy Code
Section 362 shall be deemed automatically vacated without further action or
order by the Bankruptcy Court, and the Lenders shall be entitled to exercise all
of the respective rights and remedies under the Secured Credit Agreement and
related documents, including all rights and remedies with respect to the
collateral as provided in such agreements. In the event of default
under the Secured Credit Agreement that continues after notice, upon demand of
the Lenders, the Company shall pay a late fee equal to 5% of any past due
amount, and the interest rate applicable shall be increased by 6% per annum
until the default is cured.
In
addition, the Lenders have agreed that the Company may sell core assets, as
defined in the Secured Credit Agreement, provided the Company utilizes 50% of
proceeds from such core asset sales to pay the amounts due to the
Lenders. Sales of non-core assets are not subject to such
restriction. The Secured Credit Agreement contains representations,
warranties and financial covenants which are typical for agreements of this type
entered into by companies in bankruptcy, including a prohibition on the
incurrence of additional indebtedness and incurring additional liens on the
collateral securing the Loan.
In connection with entering into the
Secured Credit Agreement, the Company also entered into a Stock Pledge Agreement
with the Lenders pursuant to which the Company and its subsidiaries pledged
shares of stock owned by them in their subsidiary companies (the “Shares”) as
security for the Loan. Except as otherwise provided in the Stock
Pledge Agreement, and subject to the rights of the Lenders in the event of a
default, the Company retains voting rights over the Shares, as well as the right
to receive dividends or distributions with respect to such Shares. In
the event of default under the Secured Credit Agreement, the Lenders are
entitled to exercise all rights under the Secured Credit Agreement and may sell
the Shares pledged as collateral as described in the Share Pledge
Agreement.
The
Company and the Lenders also entered into a Security and Pledge Agreement and a
Collateral Agent Agreement which provides a lien and security interest in favor
of the Lenders in substantially all of the assets and properties owned or
acquired by the Company or its subsidiaries as security for the Loan and related
obligations. The Security and Pledge Agreement contains
representations, warranties, covenants and remedies provisions which are typical
for agreements of this type entered into by a company in
bankruptcy.
In
connection with entering into the Secured Credit Agreement, the Company also
entered into the Collateral Agent Agreement pursuant to which Seung Ni Capital
Partners, L.L.C. agreed to act as collateral agent for the Lender.
The foregoing description of the
Secured Credit Agreement and related documents does not purport to be complete
and is qualified in its entirety by reference to the text of the agreements
which are attached hereto as exhibits to this Form 8-K and are incorporated by
reference herein.
This
financing is intended to allow for the preservation of the value of the
Company’s business while enabling the Company to proceed with asset sales,
continue supporting SCO’s loyal UNIX customer base and to pursue litigation
against, among others, IBM and Novell. The Secured Credit Agreement
provides that up to 50% of the Loan proceeds may be used to pay litigation trial
costs and related expenses, including compensating employees assisting with the
litigation and the remaining 50% of the Loan proceeds may be used for the
payment of administrative expenses, in the Trustee’s discretion.
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Item
2.03
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Creation
of a Direct Financial Obligation or an Obligation under an Off-Balance
Sheet Arrangement of a Registrant
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The information set forth in Item 1.01
is incorporated herein by reference.
Forward
Looking Statements
The
statements contained in this Form 8-K regarding (1) the Company’s plan of
reorganization and (2) the Company’s financing efforts are forward-looking
statements and are made under the safe harbor provisions of the Private
Securities Litigation Reform Act of 1995. These statements are based
on management’s current expectations and are subject to risks and uncertainties.
We wish to advise readers that a number of important factors could cause actual
results to differ materially from historical results or those anticipated in
such forward-looking statements. These factors include, but are not limited to,
outcomes and developments of our restructuring plan, outcomes and developments
of our Chapter 11 case, court rulings in our bankruptcy proceedings, the impact
of the bankruptcy proceedings on our other pending litigation, and our cash
balances and available cash. These and other factors that could cause actual
results to differ materially from those anticipated are discussed in more detail
in the Company’s periodic and current filings with the Securities and Exchange
Commission, including the Company’s Form 10-K for the fiscal year ended October
31, 2008, as amended, and future filings with the SEC. These forward-looking
statements speak only as of the date on which such statements are made, and the
Company undertakes no obligation to update such statements to reflect events or
circumstances arising after such date.
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Item
9.01
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Financial
Statements and Exhibits.
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(d)
Exhibits
10.1 Form
of Secured Super-Priority Credit Agreement dated as of March 5, 2010 among the
Bankrupt Estates of The SCO Group, Inc., a Delaware corporation, and SCO
Operations, Inc., a Delaware corporation, by and through Edward N. Cahn, solely
in his capacity as Chapter 11 Trustee, as Borrower, and each of the Lenders
listed in this Form 8-K.
10.2 Form
of Stock Pledge Agreement dated as of March 5, 2010 by and among the Bankrupt
Estates of The SCO Group, Inc., a Delaware corporation, and SCO Operations,
Inc., a Delaware Corporation, by and through Edward N. Cahn, solely in his
capacity as Chapter 11 Trustee, as Borrower, and each of the Lenders listed in
this Form 8-K (included as Exhibit E to the Secured Credit Agreement, attached
as Exhibit 10.1 hereto).
10.3 Form
of Security and Pledge Agreement dated as of March 5, 2010 by and the Bankrupt
Estates of The SCO Group, Inc., a Delaware corporation, and SCO Operations,
Inc., a Delaware Corporation, by and through Edward N. Cahn, solely in his
capacity as Chapter 11 Trustee, as Borrower, and each of the Lenders listed in
this Form 8-K (included as Exhibit E to the Secured Credit Agreement, attached
as Exhibit 10.1 hereto).
10.4 Collateral
Agreement dated March 5, 2010 by and among Seung Ni Capital Partners, L.L.C., a
Utah limited liability company, as collateral agent, and the Bankrupt Estates of
The SCO Group, Inc., a Delaware corporation, and SCO Operations, Inc., a
Delaware Corporation, by and through Edward N. Cahn, solely in his capacity as
Chapter 11 Trustee, as Borrower, and each of the Lenders listed in this Form 8-K
(included as Exhibit A to the Secured Credit Agreement attached as Exhibit 10.1
hereto).
99.1 Press
release issued by The SCO Group, Inc., dated March 15, 2010.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
Dated: March 18, 2010
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THE SCO GROUP,
INC.
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By:
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/s/ Kenneth R. Nielsen
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Name:
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Kenneth R. Nielsen
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Title:
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Chief
Financial Officer
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EXHIBIT
LIST
10.1 Form
of Secured Super-Priority Credit Agreement dated as of March 5, 2010 among the
Bankrupt Estates of The SCO Group, Inc., a Delaware corporation, and SCO
Operations, Inc., a Delaware corporation, by and through Edward N. Cahn, solely
in his capacity as Chapter 11 Trustee, as Borrower, and each of the Lenders
listed in this Form 8-K.
10.2 Form
of Stock Pledge Agreement dated as of March 5, 2010 by and among the Bankrupt
Estates of The SCO Group, Inc., a Delaware corporation, and SCO Operations,
Inc., a Delaware Corporation, by and through Edward N. Cahn, solely in his
capacity as Chapter 11 Trustee, as Borrower, and each of the Lenders listed in
this Form 8-K (included as Exhibit E to the Secured Credit Agreement, attached
as Exhibit 10.1 hereto).
10.3 Form
of Security and Pledge Agreement dated as of March 5, 2010 by and the Bankrupt
Estates of The SCO Group, Inc., a Delaware corporation, and SCO Operations,
Inc., a Delaware Corporation, by and through Edward N. Cahn, solely in his
capacity as Chapter 11 Trustee, as Borrower, and each of the Lenders listed in
this Form 8-K(included as Exhibit E to the Secured Credit Agreement, attached as
Exhibit 10.1 hereto).
10.4 Collateral
Agreement dated March 5, 2010 by and among Seung Ni Capital Partners, L.L.C., a
Utah limited liability company, as collateral agent, and the Bankrupt Estates of
The SCO Group, Inc., a Delaware corporation, and SCO Operations, Inc., a
Delaware Corporation, by and through Edward N. Cahn, solely in his capacity as
Chapter 11 Trustee, as Borrower, and each of the Lenders listed in this Form 8-K
(included as Exhibit A to the Secured Credit Agreement attached as Exhibit 10.1
hereto).
99.1 Press
release issued by The SCO Group, Inc., dated March 15, 2010.