SCO has filed an 8K regarding the appointment of a Chapter 11 trustee, and it answers one of our questions:
Pursuant to the Bankruptcy Code, and subject to the supervision and approval of the Bankruptcy Court, the Chapter 11 Trustee will have, upon appointment, authority over the Debtors’ assets and affairs and the future course of the Debtors’ litigation against Novell, IBM, et al. So there you have it. That's what it means.
But the 8K also includes a pleasant benefit for Ken Nielsen, who just testified on July 27th on SCO's behalf in the bankruptcy hearing.
What he testified to was that SCO had filed incorrect financial information with the court, actually, I find from reading the transcript. So that may explain why we could never make the MORs add up.
On August 3rd, SCO entered into a change of control agreement, whereby Nielsen agrees not to leave in the event of a threatened change in control, only if it actually happens, and SCO promises that if he's still there at such an event, any stock, stock options or restricted stock that would have vested if he continued with the company will vest immediately even on a change of control.
My cynical brain, remembering all the raises and appointments to higher office that Sandy Gupta and Jean Acheson enjoyed, has decided that a sure way to get a benefit from SCO is to be needed to testify on SCO's behalf.
The 8K says this change of control agreement is similar to one they did with their other executives, and in fact in 2004, here it is. The beneficiaries were Darl McBride, Bert Young, but he's left, Christopher Sontag, who also left, Jeff Hunsaker, and Ryan Tibbitts.
Here's the text of the new 8K:
Item 1.03 Bankruptcy or Receivership.
On September 14, 2007, The SCO Group, Inc. and its wholly owned subsidiary, SCO Operations, Inc. (collectively, the “Debtors”), filed voluntary petitions for relief under Chapter 11 of the United States Bankruptcy Code in the Bankruptcy Court for the District of Delaware (the “Bankruptcy Court”). The Debtors’ Chapter 11 cases are being jointly administered under Case No. 07-11337(KG).
On July 27, 2009, the Bankruptcy Court held a hearing and took evidence on cross-motions consisting of (a) the Debtor’s Motion for the Sale of Property Outside the Ordinary Course of Business Free and Clear of Interest and for Approval of Assumption and Assignment of Executory Contracts and Unexpired Leases in Conjunction with Sale (the “Sale Motion”), and (b) the Motions of Novell, IBM and the Office of the United States Trustee for conversion of Debtors’ reorganization under Chapter 11 to a liquidation proceeding under Chapter 7 of the Bankruptcy Code (collectively, the “Conversion Motions”).
On August 5, 2009, the Bankruptcy Court issued its Memorandum Opinion, and denied all of the Conversion Motions and the Sale Motion. Instead, the Bankruptcy Court opted to appoint a Chapter 11 Trustee, and entered an Order directing the Office of the United States Trustee to do so. Pursuant to this Order, the Office of the United States Trustee will select, and the Bankruptcy Court shall thereafter consider and approve, a Chapter 11 Trustee. Pursuant to the Bankruptcy Code, and subject to the supervision and approval of the Bankruptcy Court, the Chapter 11 Trustee will have, upon appointment, authority over the Debtors’ assets and affairs and the future course of the Debtors’ litigation against Novell, IBM, et al.
A copy of the Memorandum Opinion is attached hereto as Exhibit 99.1
Item 5.02 Departure of Directors or Certain Offficers; Election of Directors; Appointment of Certain Officers, Compensatory Arrangements of Certain Officers.
On August 3, 2009, The SCO Group, Inc. (the “Company”) entered into a Change in Control Agreement (the “Agreement”) with Kenneth R. Nielsen, Chief Financial Officer of the Company. Other than the name of Mr. Nielsen and the address of Mr. Nielsen, the Agreement is substantially identical to the Change in Control Agreements entered into with other executive officers of the Company.
Pursuant to the terms of the Agreement, Mr. Nielsen agrees that he will not voluntarily leave the employ of the Company in the event any individual, corporation, partnership, company or other entity takes certain steps to effect a Change in Control (as defined in the Agreement) of the Company, until the attempt to effect a Change in Control has terminated, or until a Change in Control occurs.
If Mr. Nielsen is still employed by the Company when a Change in Control occurs, any stock, stock option or restricted stock granted to Mr. Nielsen by the Company that would have become vested upon continued employment by Mr. Nielsen shall immediately vest in full and become exercisable notwithstanding any provision to the contrary of such grant and shall remain exercisable until it expires or terminates in accordance with its terms.
Mr. Nielsen shall be solely responsible for any taxes that arise or become due pursuant to the acceleration of vesting that occurs pursuant to the Agreement.
The Company’s form of Change in Control Agreement is attached to the Current Report on Form 8-K as Exhibit 99.1, which was filed on December 16, 2004.
ITEM 9.01 Financial Statements and Exhibits.
Exhibit 99.1 Memorandum Opinion of the United States Bankruptcy Court for the District of Delaware Dated August 5, 2009.
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: August 6, 2009
THE SCO GROUP, INC.
Name: /s/ Kenneth R. Nielsen
Kenneth R. Nielsen
Title: Chief Financial Officer