Attached files
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
________________
Form 8-K
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
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
Date of report (date of earliest event
reported):
June 25, 2010
June 25, 2010
Unify Corporation
(Exact name of registrant as specified in its charter)
(Exact name of registrant as specified in its charter)
| Delaware | 001-11807 | 94-2710559 |
| (State or other jurisdiction of incorporation) | (Commission File No.) | (I.R.S. Employer Identification No.) |
1420 Rocky Ridge Drive, Suite
380
Roseville, California 95661
Roseville, California 95661
(Address of principal executive
offices)
Registrant’s telephone number, including area
code:
(916) 218-4700
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 (see
General Instruction A.2. below):
| Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | ||
| o | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |
| o |
Pre-commencement communications pursuant to Rule
14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
|
|
| o |
Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
|
Item 1.01 Entry into a Material Definitive
Agreement.
AGREEMENT AND PLAN OF
MERGER
On
June 29, 2010, Unify Corporation, a Delaware corporation (“Unify” or the
“Company”), entered into an Agreement and Plan of Merger (the “Merger
Agreement”), by and among the Company, Unify Acquisition Corp., a California
corporation and wholly-owned subsidiary of the Company, and Software Office
Solutions, Inc., d/b/a Daegis (“Daegis”), and all of the shareholders of Daegis.
Pursuant to the terms of the Merger Agreement, all of the issued and outstanding
shares of common stock of Daegis have been converted into a right to receive a
pro rata share of the aggregate merger consideration, which is made up of $24
million in cash, $6.2 million in convertible subordinated notes, and 2,085,714
shares of Unify common stock (the “Merger Consideration”). $1.2 million of the
convertible subordinated notes are subject to set-off for indemnity claims the
Company may have under the Merger Agreement post transaction for a period of 18
months after the effective time of the merger.
The convertible subordinated notes are
sixty-three month term notes, bearing 8% interest unless an event of default
occurs, in which case the interest rate will increase to 13% during the
continuance of the event of default, provided that the subordinated indemnity
note bears interest at 3% until the eighteen month anniversary of its issuance,
at which point the interest rate will increase to 8%. Subject to certain
conditions, the convertible subordinated notes are convertible into
approximately 1,771,428 shares of Unify common stock. The parties also entered
into a Registration Rights Agreement (the “Registration Agreement”) pursuant to
which the Company has agreed to register for resale the shares of its common
stock issued pursuant to the Merger Agreement and issuable upon conversion of
the subordinated notes.
The foregoing is a summary
description of certain terms of the Merger Agreement and the Convertible Notes
and it is qualified in its entirety by reference to the full text of the Merger
Agreement and the form of Convertible Note, each of which are attached as
Exhibit 10.1 and Exhibit 10.6, respectively, to this Current Report on Form
8-K.
The Merger Agreement has been filed to provide investors and security holders with information regarding its terms. It is not intended to provide any other factual, business or operational information about the parties thereto. The representations, warranties and covenants contained in the Merger Agreement were made only for purposes of such Merger Agreement and as of specific dates, were solely for the benefit of the parties to such agreement, and may be subject to limitations agreed upon by the contracting parties, including being qualified by disclosures: (i) exchanged between the parties in connection with the execution of the Merger Agreement and (ii) contained in the disclosure schedules to the Merger Agreement. The representations and warranties may have been made for the purpose of allocating contractual risk among the parties to the Merger Agreement instead of establishing matters as facts, and may be subject to standards of materiality applicable to the contracting parties that differ from those applicable to investors. Accordingly, investors and security holders should not rely on such representations and warranties as characterizations of the actual state of facts or circumstances. Moreover, information concerning the subject matter of such representations and warranties may change after the date of the Merger Agreement, which subsequent information may or may not be fully reflected in the Company’s public disclosures.
The foregoing is intended only to be a summary
of the Merger Agreement and is qualified in its entirety by reference to the
Merger Agreement which is attached as Exhibit 10.1 hereto.
FINANCING AGREEMENT
To finance the cash portion of the acquisition
of Daegis, the Company entered into a Loan and Security Agreement (the “Loan
Agreement”) with Hercules Technology II, L.P. on June 29, 2010. Pursuant to the
Loan Agreement, the Company was provided with debt financing consisting of a
term loan in the aggregate principal amount of $24.0 million and a revolving
credit facility of up to $6.0 million. The term loan bears an interest rate of
the greater of (i) 10.25% and (ii) the LIBOR rate plus 8.25%, plus PIK interest
of 2%, and has a term of 60 months. The revolving credit facility has an
interest rate of the greater of (i) 9.25% and (ii) the LIBOR rate plus 7.25% and
has a maturity date of June 29, 2015. As part of the financing, the lenders were
issued a warrant to acquire 718,860 shares of Unify common stock at an exercise
price of $3.30 per share, subject to certain adjustments contained in the terms
of the warrant. The Company has agreed to register the shares issuable upon
exercise of the warrant under the Registration Agreement. In order to secure its
obligations under the Loan Agreement, the Company has granted the lender a first
priority security interest in substantially all of its assets.
The Loan Agreement requires ongoing compliance
with certain affirmative and negative covenants. The affirmative covenants
include, but are not limited to: (i) maintenance of existence and conduct of
business; (ii) compliance with laws; (iii) use of proceeds; and (iv) books and
records and inspection. The negative covenants set forth in the Loan Agreement
include, but are not limited to, restrictions on the ability of the Company (and
the Company’s subsidiaries): (i) with certain limited exceptions, to create,
incur, assume or allow to exist indebtedness; (ii) with certain limited
exceptions, to create, incur, assume or allow to exist liens on properties;
(iii) with certain limited exceptions, to make certain payments, transfers of property, or investments; or (iv) with
certain limited exceptions, to make additional acquisitions.
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In addition, the Company is obligated to
maintain certain minimum consolidated adjusted EBITDA levels, certain total
leverage ratios, and certain fixed charge coverage ratios, all as calculated in
accordance with the terms and definitions determining such ratios contained in
the Loan Agreement. The Loan Agreement also contains various information and
reporting requirements.
The Loan Agreement also contains customary
events of default, including without limitation events of default based on
payment obligations, repudiation of guaranty obligations, material inaccuracies
of representations and warranties, covenant defaults, insolvency proceedings,
monetary judgments in excess of certain amounts, change in control, certain
ERISA events, and defaults under certain other obligations.
The foregoing is intended only to be a summary
of the Loan Agreement and is qualified in its entirety by reference to the Loan
Agreement which is filed as Exhibit 10.2 hereto.
JENSEN EMPLOYMENT
AGREEMENT
Following its acquisition of Daegis, the
Company entered into an Employment Agreement with Kurt A. Jensen on June 30,
2010 (the “Employment Agreement”). Pursuant to the Employment Agreement, Mr.
Jensen will join the Company as its executive vice president and chief operating
officer in order to assist with the integration of Daegis and to continue to
manage the legacy Daegis business and employees. The Employment Agreement has a
three-year term, which may be extended year to year upon expiration. Under the
Employment Agreement, Mr. Jensen is entitled to a base salary of $325,000 with a
performance bonus up to 55% of base salary, subject to the discretion of the
Compensation Committee of the Company, and guaranteed additional payments
of $175,000 and $87,500 for the first and second years, respectively, of his
employment with the Company. Mr. Jensen will also be eligible to participate in
the Company’s employee benefit programs, including the Company’s stock option
plans. If the Company terminates Mr. Jensen’s employment for any reason, other
than cause, or if Mr. Jensen terminates his employment for good reason, Mr.
Jensen shall receive his base salary, bonus, and benefits for the twelve months
following termination. If Mr. Jensen terminates his employment for any reason,
other than death, disability, or good reason, prior to the first anniversary of
Mr. Jensen’s employment, Mr. Jensen shall pay the Company a buy-out and release
fee of $500,000.
The foregoing is intended only to be a summary
of the Employment Agreement and is qualified in its entirety by reference to the
Employment Agreement which is filed as Exhibit 10.7 hereto.
A copy of the following documents with regard
to the transactions described above are attached hereto as Exhibits and
incorporated herein by reference.
| 1. | Agreement and Plan of Merger, dated June 29, 2010, by and among the Company, Unify Acquisition Corp., Daegis, and the shareholders of Daegis (without Schedules and Exhibits). | ||
| 2. |
Loan and
Security Agreement, dated June 29, 2010, by an among the Company, the
Guarantors thereto, and Hercules Technology II, L.P. (including Form of
Revolving Promissory Note and Form of Term Promissory
Note).
|
||
| 3. | Registration Rights Agreement dated June 29, 2010. | ||
| 4. | Form of Warrant. | ||
| 5. | Form of Subordinated Indemnity Note. | ||
| 6. | Form of Subordinated Purchase Note. | ||
| 7. | Employment Agreement, dated June 30, 2010, by and between the Company and Kurt A. Jensen. | ||
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Item 2.01 Completion of Acquisition or
Disposition of Assets.
Effective June 29, 2010, the merger
(the “Merger”) contemplated by the Merger Agreement described in Item 1.01
above, was consummated. Pursuant to the Merger Agreement, the Company acquired
(via merger with a wholly-owned subsidiary of the Company) all of the
outstanding stock of Daegis from the Daegis shareholders in exchange for the
Merger Consideration described above.
Item 2.03 Creation of Direct Financial Obligation or an Obligation under an
Off-Balance Sheet Arrangement of a Registrant.
As discussed under Item 1.01 above, on June
29, 2010 the Company entered into the Loan Agreement. The information set forth
above in Item 1.01 under the caption “Jensen Employment
Agreement” is incorporated herein by reference.
Item 3.02 Unregistered Sale of Equity Securities.
Pursuant to the Merger Agreement
described in Item 1.01 above, on June 29, 2010 the Company issued 2,085,714
shares of Unify common stock, and $6.2 million in subordinated notes convertible
into shares of Unify common stock as a portion of the Merger Consideration paid
in exchange for all of the outstanding shares of Daegis. Pursuant to the Loan
Agreement described in Item 1.01 above, on June 29, 2010 the Company issued a
warrant to acquire 718,860 shares of Unify common stock as a portion of the
consideration given to the lender as an inducement to enter into the Loan
Agreement.
Subject to certain conditions, the
subordinated notes are convertible, at the election of the Company or the holder
at any time following the twenty-first day after the Company has sent to its
stockholders an Information Statement on Schedule 14C of the Exchange Act with
respect to the action by written consent of the stockholders on June 25, 2010
authorizing the issuance of Unify common stock issuable upon conversion of the
subordinated notes. The initial conversion price of the subordinated notes is
$3.50 per share and adjusts to the twenty day volume weighted average trading
price of Unify common stock for the twenty trading days ending two trading days
prior to the date of the notice of conversion if conversion is elected after the
first anniversary of the date of issuance.
The warrants are exercisable at the
election of the holder at any time following the twenty-first day after the
Company has sent to its stockholders an Information Statement on Schedule 14C of
the Exchange Act with respect to the action by written consent of the
stockholders on June 25, 2010 authorizing the issuance of Unify common stock
issuable upon exercise of the warrant. The initial exercise price of the warrant
is $3.30 per share and is subject to certain anti-dilution
adjustments.
The subordinated notes, warrant and
the shares underlying these instruments are exempt from registration under
Section 4(2) of the Securities Act of 1933 and/or Rule 506 of Regulation D
promulgated thereunder as neither security was offered or sold to more than 35
purchasers and no form of general solicitation was used in either
offer.
The foregoing is intended only to be a summary
of the subordinated notes and warrant and is qualified in its entirety by
reference to those documents which are attached hereto as Exhibits 10.4, 10.5,
and 10.6.
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| Item 5.02. | Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers. |
On June 29, 2010, the Company
announced the appointment of Kurt A. Jensen as the Company’s executive vice
president and chief operating officer. Mr. Jensen was selected to be an officer
of the Company in connection with the consummation of the Merger to assist with
the integration of Daegis and to continue to manage the legacy Daegis business
and employees.
Mr. Jensen, age 44, is the founder,
president, and chief-executive officer of Daegis, which he founded in 1999. In
his new role with the Company, Mr. Jensen will continue to head Daegis, which is
now a wholly-owned subsidiary of the Company, and will continue to have
responsibility for its operations, sales, marketing, business development, and
administration.
In connection with the consummation
of the Merger, on June 29, 2010, Mr. Jensen was issued a convertible
subordinated note as partial consideration for his Daegis shares. The principal
amount of the subordinated note is $2,588,192 and is convertible as described in Item 3.02. In addition,
upon the expiration of the 18 month indemnity set-off period, Mr. Jensen may be
entitled to up to an additional $621,166 in cash or Unify common stock currently
held in the subordinated indemnity note.
The information set forth above in
Item 1.01 under the caption “Jensen Employment
Agreement” is incorporated herein by reference.
Mr. Jensen and the Company have
entered into an employment agreement described above in Item 1.01 and attached
hereto as Exhibit 10.7.
Item 5.03. Amendments to Articles of
Incorporation or Bylaws; Change in Fiscal Year.
On June 25, 2010, the Company’s
Board of Directors amended the Company’s Bylaws to allow the Company’s
stockholders to act by written consent, which was previously prohibited by the
Bylaws.
Item 5.07. Submission of Matters to a Vote of
Security Holders.
On June 25, 2010, stockholders
holding a majority (5,844,473) of the outstanding common stock of the
Company acted by written consent to approve the issuance of the shares of Unify
Common Stock issuable upon conversion of the subordinated notes and the exercise
of the warrant described in this Current Report on Form 8-K.
Item 9.01. Financial Statements and
Exhibits.
(a) Financial Statements of Business Acquired
The financial statements required by this item
will be filed by amendment to this Current Report on Form 8-K as soon as
practicable, but not later than seventy-one (71) calendar days after the date
this Current Report on Form 8-K is required to be filed.
(b) Pro Forma Financial Information
The pro forma financial statements required by
this item will be filed by amendment to this Current Report on Form 8-K as soon
as practicable, but not later than seventy-one (71) calendar days after the date
this Current Report on Form 8-K is required to be filed.
(c) Not applicable
(10) Exhibits
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| Exhibit | ||
| Number | Description | |
| 3.1 | Amendment to Bylaws adopted June 25, 2010. | |
| 10.1 | Agreement and Plan of Merger, dated June 29, 2010, by and among the Company, Unify Acquisition Corp., Daegis, and the shareholders of Daegis (without Schedules and Exhibits). | |
| 10.2 | Loan and Security Agreement, dated June 29, 2010, by an among the Company, the Guarantors thereto, and Hercules Technology II, L.P. (including Form of Revolving Promissory Note and Form of Term Promissory Note). | |
| 10.3 | Registration Rights Agreement dated June 29, 2010. | |
| 10.4 | Form of Warrant (without Schedules or Exhibits). | |
| 10.5 | Form of Subordinated Indemnity Note. | |
| 10.6 | Form of Subordinated Purchase Note. | |
| 10.7* | Employment Agreement, dated June 30, 2010, by and between the Company and Kurt A. Jensen. | |
* Management compensatory agreement
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SIGNATURE
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: July 1, 2010
| Unify Corporation | ||
| By: | /s/ Steven D. Bonham | |
| Steven D. Bonham | ||
| Vice President and Chief Financial Officer | ||
| (Principal Financial and Accounting Officer) | ||
| Exhibit | ||
| Number | Description | |
| 3.1 | Amendment to Bylaws adopted June 25, 2010. | |
| 10.1 | Agreement and Plan of Merger, dated June 29, 2010, by and among the Company, Unify Acquisition Corp., Daegis, and the shareholders of Daegis (without Schedules and Exhibits). | |
| 10.2 | Loan and Security Agreement, dated June 29, 2010, by an among the Company, the Guarantors thereto, and Hercules Technology II, L.P. (including Form of Revolving Promissory Note and Form of Term Promissory Note). | |
| 10.3 | Registration Rights Agreement dated June 29, 2010. | |
| 10.4 | Form of Warrant (without Schedules or Exhibits). | |
| 10.5 | Form of Subordinated Indemnity Note. | |
| 10.6 | Form of Subordinated Purchase Note. | |
| 10.7* | Employment Agreement, dated June 30, 2010, by and between the Company and Kurt A. Jensen. | |
* Management compensatory agreement
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