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): June 6, 1996
------------
Atria Software, Inc.
-----------------------------------------------
(Exact name of Registrant as specified in its charter)
Massachusetts 0-23720 04-3072943
- - ------------------------------- ------- ----------
(State or Other Jurisdiction of (Commission (I.R.S. Employer
Incorporation or Organization) File Number) Identification No.)
20 Maguire Road,
Lexington, Massachusetts 02173
- - ---------------------------------------- -----
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (617) 676-2400
----------------
Total number of sequentially numbered pages in this filing, including exhibits
thereto: __
Exhibit Index Located on Page __
ITEM 5. OTHER EVENTS
On June 6, 1996, Atria Software, Inc. ("Atria") entered into an
Agreement and Plan of Merger (the "Merger Agreement") with CST Acquisition
Corporation, a Delaware corporation and wholly-owned subsidiary of Pure
Software, Inc. ("Merger Sub"), and Pure Software, Inc., a California corporation
("Pure"). The Merger Agreement is filed as Exhibit 2.1 and is
-----------
incorporated herein by this reference. The information contained in the joint
press release of Atria Software and Pure Software, dated June 6, 1996, attached
as Exhibit 99.1 is also incorporated herein by this reference.
------------
Pursuant to the Merger Agreement, and subject to the conditions set
forth therein (including approval by stockholders of Pure and Atria),
Merger Sub will be merged with and into Atria (the "Merger"). At the effective
time of the Merger (the "Effective Time"), the separate existence of Merger Sub
will cease to exist and Atria will continue as the surviving corporation and as
a wholly-owned subsidiary of Pure (the "Surviving Corporation"). Holders of
outstanding shares of Common Stock, $.01 par value, of Atria (the "Atria Common
Stock") will receive, in exchange for each share of Atria Common Stock held by
them, 1.544615 shares of Pure Common Stock, $.0001 par value, of Pure (the "Pure
Common Stock"). In addition, Pure will assume the Atria 1990 Stock Option Plan,
1994 Stock Plan, 1994 Non-Employee Directors Stock Option Plan, and will assume
all purchase rights outstanding under the Atria 1994 Employee Stock Purchase
Plan. If the Merger is consummated, the Atria Common Stock will be deregistered
under the Securities Exchange Act of 1934, as amended and delisted from the
Nasdaq National Market.
The Merger Agreement contains customary representations and warranties on the
part of Atria and Pure, and the consummation of the Merger is subject to
customary closing conditions, including, without limitation, approval by the
stockholders of Atria and Pure, and no event with a material adverse
effect with respect to a party or a material shortfall in earnings of a party
for the fiscal quarter ending June 30, 1996.
The Merger Agreement also contains covenants regarding the activities of the
parties pending consummation of the Merger. Generally, each of the parties must
conduct its business in the ordinary course consistent with past practice.
Upon the occurrence of (i) the acceptance of a Superior Proposal (as defined
below) by Pure or the recommendation of such a Superior Proposal by the Board
of Directors of Pure to its stockholders, or (ii) the failure to obtain the
required vote by the stockholders of Pure at a meeting of such stockholders
(a "Pure Negative Vote") if prior to such Pure Negative Vote there shall
have occurred an Acquisition Proposal (as defined below) with respect to Pure
that has been publicly disclosed and not withdrawn, then the Merger Agreement
provides for the payment of a break-up fee of $25 million by Pure to Atria. If,
however, prior to a Pure Negative Vote the Board of Directors of Pure
withholds, withdraws or modifies in a manner adverse to Atria its recommendation
in
1
favor of the Merger but the events specified in clauses (i) or (ii) in the
previous sentence shall not have occurred then the Merger Agreement provides for
the payment of a break-up fee of $15 million by Pure to Atria. A break-up fee of
only $5 million must be paid to Atria in the event of a Pure Negative Vote if
Pure is not required to make payment of the break-up fees specified in the first
two sentences of this paragraph.
Upon the occurrence of (i) the acceptance of a Superior Proposal (as defined
below) by Atria or the recommendation of such a Superior Proposal by the Board
of Directors of Atria to its stockholders, or (ii) the failure to obtain the
required vote by the stockholders of Atria at a meeting of such stockholders (an
"Atria Negative Vote") if prior to such Atria Negative Vote there shall have
occurred an Acquisition Proposal (as defined below) with respect to Atria that
has been publicly disclosed and not withdrawn, then the Merger Agreement
provides for the payment of a break-up fee of $25 million by Atria to Pure. If,
however, prior to an Atria Negative Vote the Board of Directors of Atria
withholds, withdraws or modifies in a manner adverse to Pure its
recommendation in favor of the Merger, but the events specified in clauses (i)
or (ii) in the previous sentence shall not have occurred, then the Merger
Agreement provides for the payment of a break-up fee of $15 million by Atria to
Pure. A break-up fee of only $5 million must be paid to Pure in the event of an
Atria Negative Vote if Atria is not required to make payment of the break-up
fees specified in the first two sentences of this paragraph.
As an inducement to Atria to enter into the Merger Agreement, Atria and
Pure entered into a Stock Option Agreement. The stock option (the "Stock
Option") entitles Atria to purchase up to 2,646,096 shares (the "Option Shares")
of Pure Common Stock under the circumstances specified in the Stock Option
Agreement dated June 6, 1996 between Pure and Atria (the "Stock Option
Agreement") by exchanging therefor shares of Atria Common Stock at the rate of
.64741 of a share of Atria Common Stock for each Option Share and/or, at Atria's
election, by paying cash of $40.625 per share (the "Exercise Price"). In the
event that Atria elects to pay any portion of the Exercise Price in cash, Atria
will determine the source of the necessary funds. The Stock Option Agreement is
attached hereto as Exhibit 99.5 and is incorporated herein in its entirety by
------------
this reference. Subject to certain conditions, the Stock Option may be
exercised in whole or in part by Atria (i) upon the commencement of a tender or
exchange offer for 25% or more of any class of Pure's capital stock, (ii) in
the event Pure shall have accepted a Superior Proposal (as such term is
defined below) or if Pure's Board of Directors recommends a Superior
Proposal to the stockholders of Pure or (iii) in the event a Pure Negative
Vote if prior to such Pure Negative Vote there shall have occurred an
Acquisition Proposal (as such term is defined below) with respect to Pure
which shall have been publicly disclosed and not withdrawn (any of the events
specified in clauses (i), (ii) or (iii) of this sentence are referred to herein
as an "Exercise Event"). The Stock Option Agreement terminates upon the earlier
of (i) at the Effective Time, (ii) 180 days following termination of the Merger
Agreement if an Exercise Event shall have occurred on or prior to the date of
such termination, and (iii) the date on which the Merger Agreement is terminated
if an Exercise Event shall not have occurred on or prior to such date; provided,
--------
however, with respect to clause (ii) of this sentence, if the Stock
- - -------
2
Option Agreement cannot be exercised by reason of any applicable government
order shall not have expired or been terminated, then the Stock Option shall not
be terminated until the tenth business day after such impediment to exercise
shall have been removed or shall have become final and not subject to appeal.
Notwithstanding the foregoing, the Stock Option may not be exercised if Atria is
in breach in any material respect of any of its covenants or agreements
contained in the Merger Agreement.
As an inducement to Pure to enter into the Merger Agreement, Pure and
Atria have also entered into a Stock Option Agreement, which entitles Pure
to purchase up to 2,149,038 shares of Atria Common Stock under the circumstances
specified in the Stock Option Agreement between Atria and Pure by
exchanging therefor shares of Pure Common Stock at the rate of 1.544615 shares
of Pure Common Stock for each share of Atria Common Stock subject to such option
and/or, at Pure's election, by paying cash of $62.75 per share. The foregoing
summary of this Stock Option Agreement is qualified in its entirety by reference
to the copy of the Stock Option Agreement included as Exhibit 99.4 and is
------------
incorporated herein in its entirety by this reference.
The term "Acquisition Proposal" means any proposal or offer relating to (i)
any merger, consolidation, sale of substantial assets or similar transactions
involving an entity or any subsidiary of the entity (other than sales of assets
or inventory in the ordinary course of business or permitted under the terms of
the Merger Agreement), (ii) the sale of 10% or more of the outstanding shares of
capital stock of the entity (including without limitation by way of a tender
offer or an exchange offer), (iii) the acquisition by any person of beneficial
ownership or a right to acquire beneficial ownership of, or the formation of any
"group" (as defined under Section 13(d) of the Act and the rules and regulations
thereunder) which beneficially owns, or has the right to acquire beneficial
ownership of, 10% or more of the then outstanding shares of capital stock of the
entity (except for acquisitions for passive investment purposes only in
circumstances where the person or group qualifies for and files a Schedule 13G
with respect thereto) or (iv) any public announcement of a proposal, plan or
intention to do any of the foregoing or any agreement to engage in any of the
foregoing.
The term "Superior Proposal" means an unsolicited bona fide Acquisition
Proposal which the Board of Directors of an entity in its good faith reasonable
judgment determines, after consultation with its independent financial advisors,
would result in a transaction more favorable to the stockholders of the entity
from a financial point of view than the Merger and for which financing, to the
extent required, is then committed or which, in the good faith reasonable
judgment of the Board of Directors of the entity (based upon the advice of
independent financial advisors), is reasonably capable of being financed by such
person, entity or group, and which is likely to be consummated.
In addition, at any time during which the Stock Option is exercisable Atria
shall have the right to sell to Pure and Pure shall be obligated to purchase
from Atria (i) the Stock Option to the extent not previously exercised by Atria
(the "Option Agreement
3
Put") and (ii) the shares of Pure Common Stock, if any, acquired by Atria
pursuant to the Option Agreement (the "Option Share Put"). The price that Pure
shall be required to pay in connection with the Option Agreement Put shall be
equal to the difference between the Market Price (as such term is defined below)
for shares of Pure Common Stock as of the date Atria gives notice of its intent
to exercise the Option Agreement Put and the Exercise Price, multiplied by the
number of shares of Pure Common Stock purchasable pursuant to the Option
Agreement, but only if the Market Price is greater than the Exercise Price. The
price that Pure shall be required to pay in connection with the Option Share Put
shall be the Exercise Price paid by Atria for shares of Pure Common Stock
acquired pursuant to the Option Agreement plus the difference between the Market
Price and such Exercise Price (but only if the Market Price is greater than the
Exercise Price) multiplied by the number of shares of Pure Common Stock so
purchased. Notwithstanding the foregoing, in connection with the Option
Agreement Put and the Option Share Put, Pure shall not be required to pay Atria
an aggregate amount in excess of the sum of (i) $40,000,000 plus (ii) the
aggregate Exercise Price paid by Atria for such shares, minus (iii) any break-up
fee paid by Pure to Atria. The term "Market Price" means the highest closing
sale price of shares of Pure Common Stock on the Nasdaq National Market during
the five (5) trading days ending on the trading day immediately preceding the
date Atria gives notice of its intent to exercise the Option Agreement Put or
the Option Share Put. Pure has also granted Atria certain registration rights
that become effective in the event the Stock Option is exercised. The foregoing
summary of the Stock Option Agreement is qualified in its entirety by reference
to the copy of the Stock Option Agreement included as Exhibit 99.5 and is
------------
incorporated herein in its entirety by this reference.
Also as an inducement to Atria to enter into the Merger Agreement, certain
stockholders of Pure (collectively, the "Voting Agreement Stockholders")
have entered into a Participation Agreement dated June 6, 1996 (the "Voting
Agreement") with Atria. Pursuant to each Voting Agreement, the Voting Agreement
Stockholders have agreed to vote the shares of Pure Common Stock owned by them
(i) in favor of approval and adoption of the Merger Agreement and the Merger and
any matter that could reasonably be expected to facilitate the Merger and (ii)
against approval of any proposal made in opposition to or competition with
consummation of the Merger. The Voting Agreement Stockholders have also agreed
if requested by Atria to execute and deliver to Atria an irrevocable proxy
granting Atria the authority to vote the shares of Pure Common Stock owned by
the Voting Agreement Stockholders in the manner described in the previous
sentence. The Voting Agreement terminates upon the earlier to occur of the
Effective Time or the termination of the Merger Agreement. Atria did not pay
any additional consideration to any Voting Agreement Stockholder in connection
with the execution and delivery of the Voting Agreement. The foregoing
summary of the Voting Agreement is qualified in its entirety by reference to the
copy of the Voting Agreement included as Exhibit 99.3 and is incorporated herein
------------
in its entirety by reference.
As an inducement to Pure to enter into the Merger Agreement, certain
stockholders of Atria have entered into a Participation Agreement dated June 6,
1996 with Pure, the substance of which is substantially similar to the substance
of the Voting Agreement. A copy of this Participation Agreement is included as
Exhibit 99.2 and is incorporated herein in its entirety by reference.
- - ------------
4
As a result of the Voting Agreement, Atria has shared power to vote an
aggregate of 4,368,326 shares of Pure Common Stock for the limited purposes
described above, and such shares constitute approximately 24.8% of the issued
and outstanding shares of Pure Common Stock as of June 1, 1996. To the extent
that Atria, as permitted by the Voting Agreement, requests proxies to vote all
of the shares of Pure Common Stock subject to the Voting Agreement and such
proxies are so granted, Atria will have the sole voting power with respect to
such shares.
Also in connection with the Merger Agreement, the Voting Agreement
Stockholders and the stockholders of Atria who have executed a Voting
Agreement in favor of Pure (each an "Affiliate") have each entered into an
Affiliate Agreement with Pure (collectively, the "Affiliate Agreements")
pursuant to which each Affiliate has agreed not to sell, exchange, transfer,
pledge, dispose or otherwise reduce its risk relative to any shares of Pure
Common Stock or other equity securities of Pure (and Atria Common Stock with
respect to its Affiliates) owned by it during the period commencing on June 6,
1996 and ending at such time as financial results covering at least 30 days of
combined operations of Pure and Atria have been published by Pure,
in the form of a quarterly earnings report, an effective registration statement
filed with the Securities and Exchange Commission ("Commission"), a report to
the Commission on Form 10-K, 10-Q or 8-K, or any other public filing or
announcement which includes the combined results of operations, so as to
interfere with Pure accounting for the Merger as a pooling of interests.
The foregoing summary of the Affiliate Agreements is qualified in its entirety
by reference to the forms of the Affiliate Agreements included as Exhibits 99.6
-------------
and 99.7 and are incorporated herein in their entirety by reference.
- - --------
Atria and Pure have also entered into a License and Marketing Agreement
(the "License and Marketing Agreement") in connection with the proposed merger
between the two companies. The agreement would become effective only in the
event that the Merger Agreement is terminated under certain circumstances,
including in the event of a regulatory prohibition, the failure of Pure's
shareholders to approve the merger, a breach of the merger agreement by
Pure, or the acceptance by Pure of an alternative transaction. The
agreement would, if effective, permit Atria to market, distribute, support and
maintain Pure's DDTS defect tracking system product, and modify and create
derivative works of the product. Atria would pay Pure a royalty of 30% of
the net revenue Atria recognizes from the licensing of the product, or from
support services provided by Atria for the product, and a royalty of 50% of the
net revenue Atria recognizes from support services sold by Atria but provided by
Pure. The initial term of the agreement is five years, with an automatic
right to renew that Atria may exercise for an additional two year period unless
sooner terminated by either party in accordance with the agreement. The
agreement contains customary warranty, indemnity and confidentiality provisions.
The foregoing summary of the License and Marketing Agreement is qualified in its
entirety by reference to the copy of the License and Marketing Agreement
included as Exhibit 99.8 and is incorporated herein in its entirety by
------------
reference.
5
Upon consummation of the Merger, Pure will initially have a mutually
agreed upon board of directors consisting of six directors, with three directors
designated by Pure and three directors designated by Atria. At the
Effective Time, Reed Hastings will become the Chief Executive Officer and
President of Pure, Chuck Bay will become the Chief Financial Officer of
Pure and Paul H. Levine will become the Chairman of the Board of Pure.
Upon consummation of the Merger, the Certificate of Incorporation of Pure,
as in effect immediately prior to the Merger, shall be the Certificate of
Incorporation of Pure until thereafter amended; provided, however,
-------- -------
that, if approved as a separate proposal by stockholders of Pure, Article 1 of
the Certificate of Incorporation of Pure shall be amended to read as
follows: "The name of the corporation is Pure Atria Corporation".
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(c) Exhibits.
----------------------------------------
Exhibit No. Description
- - ----------- ----------------------------------------
2.1 Agreement and Plan of Reorganization
dated June 6, 1996, by and among Pure
Software Inc. a Delaware corporation,
CST Acquisition Corporation, a
Massachusetts corporation and
wholly-owned subsidiary of Pure
Software Inc. and Atria Software
99.1 Joint Press Release of Atria Software
and Pure Software, dated June 6, 1996
99.2 Participation Agreement dated June 6,
1996, by and among Pure Software Inc.,
a Delaware corporation, CST Acquisition
Corporation, a Massachusetts
corporation, and certain stockholders
of Atria Software, Inc., a
Massachusetts corporation
99.3 Participation Agreement dated June 6,
1996, by and among Atria Software Inc.,
a Massachusetts corporation and certain
stockholders of Pure Software Inc., a
Delaware corporation
99.4 Stock Option Agreement dated June 6,
1996, by and between Atria Software,
Inc., a Massachusetts corporation, and
Pure Software Inc., a Delaware
corporation
99.5 Stock Option Agreement dated June 6,
1996, by and between Pure Software
Inc., a Delaware corporation, and Atria
Software, Inc., a Massachusetts
corporation
99.6 Form of Affiliate Agreement dated June
6, 1996, by and between Pure Software
Inc., a Delaware corporation and
certain stockholders of Pure
99.7 Form of Affiliate Agreement dated June
6, 1996, by and between Atria
6
Software, Inc., a Massachusetts corporation
and certain stockholders of Atria
99.8 License and Marketing Agreement dated
June 6, 1996 between Pure Software
Inc., a Delaware corporation, and Atria
Software, Inc., a Massachusetts
corporation
7
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.
Atria Software, Inc.
--------------------
(Registrant)
Date: June 17, 1996 By: /s/ Paul H. Levine
------------------
Paul H. Levine,
President, Chief Executive
Officer and Director
8
EXHIBIT INDEX
-------------
Page Number in
Sequentially
Exhibit No. Description Numbered Copy
- - ----------- --------------------------- --------------
2.1 Agreement and Plan of
Reorganization dated June
6, 1996, by and among Pure
Software Inc., a Delaware
corporation, CST
Acquisition Corporation, a
Massachusetts corporation
and wholly-owned
subsidiary of Pure
Software Inc. and Atria
Software
99.1 Joint Press Release of
Atria Software and Pure
Software, dated June 6,
1996.
99.2 Participation Agreement
dated June 6, 1996, by and
among Pure Software Inc.,
a Delaware corporation,
CST Acquisition
Corporation, a
Massachusetts corporation,
and certain stockholders
of Atria Software, Inc., a
Massachusetts corporation
99.3 Participation Agreement
dated June 6, 1996, by and
among Atria Software, Inc.,
a Massachusetts
corporation and certain
stockholders of Pure
Software Inc., a Delaware
corporation
99.4 Stock Option Agreement
dated June 6, 1996, by and
between Atria Software,
Inc., a Massachusetts
corporation, and Pure
Software Inc., a Delaware
corporation
99.5 Stock Option Agreement
dated June 6, 1996, by and
between Pure Software
Inc., a Delaware
corporation, and Atria
Software, Inc., a
Massachusetts corporation
99.6 Form of Affiliate
Agreement dated June 6,
1996, by and between Pure
Software Inc., a Delaware
corporation and certain
stockholders of Pure
99.7 Form of Affiliate
Agreement dated June 6,
1996, by and between Atria
Software, Inc., a
Massachusetts corporation
and certain stockholders
of Atria
99.8 License and Marketing
Agreement dated June 6,
1996, between Pure Software
Inc., a Delaware
corporation, and Atria
Software, Inc., a
Massachusetts corporation
1