SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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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): August 21, 1998
VERSATILITY INC.
(Exact name of registrant as specified in its charter)
DELAWARE 0-21793 52-1214354
(State or other (Commission File Number) (IRS Employer Id. No.)
jurisdiction of
incorporation)
11781 Lee Jackson Memorial Highway, Seventh Floor, Fairfax, Virginia 22033
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (703) 591-2900
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Item 5. Other Events.
On August 21, 1998, Versatility Inc., a Delaware corporation (the
"Company"), entered into an Agreement and Plan of Merger (the "Merger
Agreement") with Oracle Corporation, a Delaware corporation ("Parent"), and AQX
Acquisition Corporation, a Delaware corporation and a wholly owned subsidiary of
Parent (the "Purchaser"), which provides for the merger (the "Merger") of the
Purchaser with and into the Company with the Company continuing as the surviving
corporation (the "Surviving Corporation"). Pursuant to the terms of the Merger
Agreement, at the effective time of the Merger (the "Effective Time"), (i) each
share of Common Stock, par value $.01 per share, of the Company (the "Common
Stock") outstanding immediately prior to the Effective Time (other than shares
held by the Company, the Purchaser or Parent (which will be cancelled) and
shares for which appraisal rights under Delaware law are perfected) will be
converted into a right to receive a cash payment in the amount of $1.50 per
share and (ii) each share of Common Stock, par value $0.001 per share, of the
Purchaser outstanding prior to the Effective Time will be converted into the
right to receive one share of the common stock, par value $0.01 per share, of
the Surviving Corporation.
The closing of the Merger is subject to a number of conditions
precedent, including, without limitation, (i) the receipt of all required
government approvals, (ii) the approval of the Merger by the stockholders of the
Company, (iii) the retention of certain key employees of the Company, (iv) the
receipt of final court approval of the settlement of the putative securities
class actions filed in the United States District Court for the Southern
District of New York and the United States District Court for the Eastern
District of Virginia on terms consistent with the Memorandum of Understanding
Concerning Settlement Terms dated July 9, 1998 and the expiration of all rights
to appeal such settlement, and (v) the absence of any instituted and continuing
(or in the case of (c) below, threatened) action, suit or proceeding against the
Company, Parent, the Purchaser or any officer, director, employee or other
person that the Company is obligated to indemnify, by any governmental entity or
third party (a) directly relating to the Merger Agreement, the License Agreement
(defined below), or any intellectual property of the Company, (b) who is or was
a stockholder of the Company or in a derivative action on behalf of the Company,
or (c) which could reasonably be expected to have a material adverse effect on
the Company and its subsidiaries, taken as a whole.
In connection with the Merger Agreement, certain stockholders of the
Company owning in excess of 50% of the outstanding shares of Common Stock
entered into Support Agreements ("Support Agreements") with the Company and
Parent, whereby the stockholders (i) agreed to vote all shares of Common Stock
in favor of the Merger and against any action by the Company that would breach
the Merger Agreement or impair or delay the consummation of the Merger and (ii)
granted to designees of Parent an irrevocable proxy to vote such shares in favor
of the Merger and as agreed in the Support Agreements. The Support Agreements
terminate upon the earlier of the Effective Time or the termination of the
Merger Agreement.
In connection with the Merger Agreement, the Company entered into a
Technology License Agreement (the "License Agreement") with Parent whereby the
Company agreed to grant to Parent a irrevocable, non-exclusive license of the
Company's computer software and related technology (the "Technology"). Parent
will pay the Company a sublicense fee equal to 30% of the net fees Parent
receives for sublicenses of the Technology, of which $2,000,000 will be prepaid
in three equal monthly installments commencing on September 1, 1998 (the
"Prepaid License Fee"). In the event that Parent breaches the terms of the
Merger Agreement, fails to pay the sublicense fee when due, or the Merger
Agreement is terminated as a result of the Company accepting a superior offer
than that presented in the Merger Agreement, the Company may terminate the
License Agreement upon repayment of the Prepaid License Fee paid to the Company
in excess of $360,000.
As a condition precedent to the execution of the Merger Agreement,
Parent and each of Paul Zoukis, James Dellamore and Marcus Heth (the
"Executives") entered into Non-Competition Agreements which have an initial term
of two years from the Effective Time and terminate upon the termination of the
Merger Agreement. In addition, Parent delivered to each of the Executives a
letter indicating its intent to offer employment to such persons at the
Effective Time.
In connection with the Merger Agreement, the Company, Parent and
Silicon Valley Bank, a California chartered bank (the "Bank"), entered into a
Loan Modification and Extension of Forbearance Agreement (the "Loan Modification
Agreement") whereby, pursuant to the terms of the Loan Modification Agreement,
the Bank agreed to forebear from exercising remedies available to it as a result
of the Company's existing defaults under the loan agreements with the Bank until
the earlier of December 31, 1998 and the consummation of the Merger. The Bank's
continuing forbearance will terminate upon the termination of the Merger
Agreement. The Bank also agreed to allow the Company and Parent to enter into
the License Agreement, to waive the anti-dilution provisions applicable to its
warrant to purchase 100,000 shares of Common Stock during the period of
forbearance and to terminate its Warrant Agreement upon consummation of the
Merger. The Company agreed to deposit into an account at the Bank any refund
that the Company may receive from the Internal Revenue Service and/or the
Commonwealth of Virginia and agreed to withdraw such funds only pursuant to a
cash plan approved by the Bank.
On August 20, 1998, the Board of Directors of the Company approved the
Merger Agreement and the Merger and recommended that it be submitted to the
stockholders of the Company for their approval. The Company will file with the
Securities and Exchange Commission a proxy statement that will be mailed to the
stockholders in connection with a special stockholders meeting called to
consider and vote upon the Merger.
The foregoing descriptions of the Merger Agreement, the form of
Support Agreement, the License Agreement, and the Loan Modification Agreement
are qualified in their entirety by the text of the Merger Agreement, the form of
Support Agreement, the License Agreement, and the Loan Modification Agreement
which are attached hereto as Exhibits 2.1, 10.1, 10.2 and 10.3, respectively,
and are incorporated herein by reference.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(c) Exhibits.
Exhibit
Number Description
2.1 Agreement and Plan of Merger dated as of August 21, 1998, by and among
Versatility Inc., Oracle Corporation and AQX Acquisition Corporation
10.1 Form of Support Agreement
10.2 License Agreement dated as of August 21, 1998, by and between
Versatility Inc. and Oracle Corporation
10.3 Loan Modification and Extension of Forbearance Agreement dated August
20, 1998 by and among Versatility Inc., Oracle Corporation and Silicon
Valley Bank
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.
VERSATILITY INC.
Dated: August 24, 1998 By: /s/ Kenneth T. Nelson
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Kenneth T. Nelson
Chief Financial Officer
EXHIBIT INDEX
Exhibit
Number Description
2.1 Agreement and Plan of Merger dated as of August 21, 1998, by and among
Versatility Inc., Oracle Corporation and AQX Acquisition Corporation
10.1 Form of Support Agreement
10.2 License Agreement dated as of August 21, 1998, by and between
Versatility Inc. and Oracle Corporation
10.3 Loan Modification and Extension of Forbearance Agreement dated August
20, 1998 by and among Versatility Inc., Oracle Corporation and Silicon
Valley Bank