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): May 2, 1999
ENTERPRISE SOFTWARE, INC.
(Exact name of Registrant as specified in its charter)
Delaware 0-18034 68-0158367
(State or Other (Commission File No.) (IRS Employer
Jurisdiction of Identification No.)
Incorporation)
8415 Explorer Drive, Colorado Springs, Colorado 80920
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (719) 548-1800
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
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ITEM 5. Other Events.
On May 2, 1999, Enterprise Software, Inc. ("Enterprise") signed a
non-binding letter of intent with LiveWire Ventures, LLC ("LiveWire") regarding
a proposed transaction whereby LiveWire, through a subsidiary, would acquire up
to one hundred percent (100%) of the outstanding common stock of Enterprise. A
copy of the letter intent is attached as an exhibit to this Form 8-K.
ITEM 7. Financial Statements, Pro Forma Financial Information And Exhibits.
(c) Exhibits.
Item 601
Regulation S-K
Exhibit Reference
Number Exhibit Description
----------------- -------------------
99 Letter of Intent, dated May 2, 1999, between
Enterprise Software, Inc. and LiveWire
Ventures, LLC.
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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.
Enterprise Software, Inc.
By: /s/ Richard Schleufer
---------------------
Richard Schleufer
Chief Executive Officer
May 14, 1999
S-1
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EXHIBIT INDEX
Exhibit Reference
Number Exhibit Description
----------------- -------------------
99 Letter of Intent, dated May 2, 1999, between
Enterprise Software, Inc. and LiveWire
Ventures, LLC.
E-1
May 2, 1999
Board of Directors
Enterprise Software, Inc.
c/o Schroder & Co., Inc.
The Equitable Center
787 Seventh Avenue
New York, NY 10019
Dear Sirs:
Thank you very much for affording us the opportunity to review certain
basic information regarding Enterprise Software, Inc. ("Enterprise" or the
"Company"). After reviewing those materials LiveWire Ventures, LLC ("LiveWire")
is very interested in pursuing an acquisition of Enterprise.
LiveWire is a recently formed entity that intends to become a major
player in the media and telecommunications billing, customer care, consulting
and related businesses. We believe that business process outsourcing, centered
around "mission critical" systems, will be an area of exciting growth
particularly among media and telecommunications companies. LiveWire recently
purchased H.O. Systems, Inc., a Savannah, Georgia based provider of billing and
customer care solutions for telecommunications companies.
The senior management of LiveWire has significant experience in the
telecommunications arena, having run PriCellular Corporation, formerly an
American Stock Exchange listed cellular company with over five million POPs
which was sold in June of 1998. PriCellular's corporate management team remained
together and we reconstituted ourselves as LiveWire. During our tenure at
PriCellular we employed a very decentralized approach. Our corporate team was
based in White Plains, New York and focused on mergers and acquisitions,
financing and overall strategy while senior managers in the field had complete
day-to-day operating responsibility. Given that, we would hope that Enterprise
management will want to play an integral role in the future strategy, direction
and operations of the business. LiveWire believes that employees should be
rewarded with substantial economic rewards for superior performance and plans to
implement compensation and stock plans for Enterprise's management and other
employees, which are consistent with this policy.
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Enterprise Software, Inc. Page 2
May 2, 1999
LiveWire has assembled one of the most impressive groups of private
equity sponsors and we believe that their commitment, resources and prestige
will create significant opportunities as we move forward with the growth of our
business. Our investors have committed (and reserved from their funds) $200
million to purchase equity securities upon LiveWire's request at a to-be-agreed
upon valuation, in addition to amounts previously invested.
1. Terms.
Subject to the conditions set forth below, LiveWire, through a
subsidiary, proposes to acquire up to 100% of the outstanding common stock and
in-the-money stock options of the Company at $10 per share in cash. This
proposal is based on our understanding of Enterprise's pro forma balance sheet
as of March 31, 1999 including (i) shares outstanding of 5,406,496, (ii)
in-the-money stock options of up to 549,932, (iii) there are no other common
share equivalents including SARs, etc., (iv) positive working capital (defined
for this purpose as cash plus accounts receivables minus accounts payable and
accrued expenses) of at least $2.7 million, (v) long-term debt/notes payable of
no more than $21.3 million, (vi) prepayment penalty obligations of no more than
$3.5 million as of August 1, 1999; (vii) notes receivable of at least $4.3
million; and (viii) bonuses, fees and expenses not to exceed $3.0 million
(excluding the fees and expenses referred to in Section 7 below).
The form of the acquisition would be to acquire up to 100% of the
common stock of the Company. We would prefer to structure the transaction as a
recapitalization and therefore reserve the right to offer to the Company's
shareholder's shares of the purchasing subsidiary for up to 7% of the Company's
common stock (the "Subsidiary Stock"). The Subsidiary Stock, if offered
generally to the Company's shareholders, would be registered under the
Securities Act of 1933. It is understood that the directors of the Company shall
have no obligation to recommend the acquisition of the Subsidiary Stock to the
Company's shareholders and shall not be required to estimate its value in any
communication with its shareholders. The majority of our purchase price would be
financed from equity contributions by LiveWire and its affiliates. The remainder
will be in the form of bank debt, led by our current lead bank, Chase Manhattan.
Our current view is that we would repay all existing indebtedness and provide
appropriate treatment for all existing employment arrangements and employment
benefits.
2. Definitive Documentation.
LiveWire and the Company shall endeavor to simultaneously complete due
diligence and negotiate in good faith and sign a definitive mutually
satisfactory stock purchase agreement embodying the terms set forth herein (the
"Stock Purchase Agreement") within 30 days after the execution and delivery of
this letter of intent and to consummate the proposed transaction within 90 days
after the execution and delivery of the Stock Purchase Agreement. The Stock
Purchase Agreement shall contain representations, warranties and covenants on
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Enterprise Software, Inc. Page 2
May 2, 1999
the part of the Company and Buyer customary for transactions of this type, none
of which shall survive the closing of the proposed transaction.
3. Conditions to Closing.
The closing under the Stock Purchase Agreement is subject to, among other
things, the following conditions:
(i) execution of employment agreements with no more than seven key
individuals;
(ii) certification by an independent third party that each item of
hardware, software or firmware held or used in connection with
the Business is year 2000 compliant, at LiveWire's expense;
(iii)
(iv) receipt of fiscal 1999 audited financial statements, with
results therein not materially different than those
preliminary fiscal 1999 financial statements previously
provided;
(v) absence of any material adverse change in the business,
condition (financial or otherwise), results of operations,
prospects, assets or liabilities of the Company and its
subsidiaries taken as a whole; and
(vi) receipt of required governmental approvals (if any) and third
party consents, which if not received would reasonably be
expected to result in a material adverse change in the
business, condition (financial or otherwise), results of
operations, prospects, assets or liabilities of the Company
and its subsidiaries taken as a whole.
4. Access.
Subject at all times to the provisions of the Confidentiality
Agreement, dated April 15, 1999, between the Company and LiveWire (the
"Confidentiality Agreement"), from the date of execution of this letter of
intent by the Company (the "Signing Date") until the date on which either party
provides the other with written notice that negotiations regarding the proposed
transaction are terminated (the "Termination Date"), LiveWire and its
representatives will have full access during normal business hours to the
Company and its officers, counsel, auditors, and books and records.
5. Confidentiality.
LiveWire acknowledges and agrees that the Confidentiality Agreement
shall remain in effect after the Signing Date and continue in effectiveness
through the Closing, with the terms of such Confidentiality Agreement
incorporated into this letter of intent by reference.
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Enterprise Software, Inc. Page 4
May 2, 1999
6. Publicity.
None of the Company, LiveWire or their respective representatives will
publicly disclose the existence of this letter of intent or make known any facts
related to the proposed transaction without the prior consent of the other
parties, except to its advisors, counsel and lenders, or except as required by
law, legal process or the rules and regulations of any United States securities
exchange or the NASDAQ Stock Market.
7. Additional Limitation.
In consideration of LiveWire's execution of the letter of intent and
its good faith performance of the due diligence undertakings provided in
paragraph 2 above, if at any time within six months following the date hereof
the Company or any of its subsidiaries shall enter into a binding agreement or
letter of intent with any other party with respect to a merger, consolidation or
other business combination, the sale of a significant equity interest in the
Company or any subsidiary, or the sale of all or any substantial portion of the
assets of the Company and its subsidiaries, taken as a whole, the Company shall
pay to LiveWire a break-up fee in the amount of $1.25 million plus up to
$500,000 of reasonably documented out-of-pocket expenses incurred from and after
the date hereof by LiveWire in connection with its investigation, evaluation and
negotiation of a possible acquisition of the Company by LiveWire. Such amounts
shall be payable by wire transfer in immediately available funds to an account
designated by LiveWire. If the parties enter into a definitive agreement with
respect to the acquisition by LiveWire of the Company, such agreement shall
provide for payment of a breakup fee and expense reimbursement on customary
terms in lieu of the foregoing. The definitive agreement with respect to the
acquisition transaction shall also provide for the payment by LiveWire to the
Company of liquidated damages in an amount equivalent to the break-up fee and
expenses in the event of Buyer's unexcused failure to close.
8. Fees, Costs and Expenses.
Each party hereto shall bear its respective costs related to the
proposed transaction, including, without limitation, the fees and expenses of
its respective lawyers, accountants and financial advisors.
9. Effect.
If the foregoing accurately summarizes our understanding with respect
to the proposed transaction, please date and execute the duplicate original of
this letter of intent that is enclosed and return same to the undersigned within
48 hours. Until this letter of intent has been executed by the Company, LiveWire
reserves the right to amend, modify or revoke this letter. This letter of intent
sets forth the parties' proposals with respect to the subject matter hereof, and
except for Sections 5, 6, 7 and 8 hereof, which shall be binding upon the
parties (the "Binding Provisions"), this letter of intent shall not constitute a
binding agreement.
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Enterprise Software, Inc. Page 5
May 2, 1999
10. Other.
Our proposal is subject to: (a) negotiation of a satisfactory purchase
and sale agreement and other related agreements; (b) required regulatory
approvals such as Hart Scott Rodino clearance; (c) completion of due diligence
within 30 days of the date hereof, including visits to Company locations,
meetings with management, review of Enterprise's customer contracts, discussions
with key Company customers and legal and accounting due diligence; (d)
financing; and (e) approval of our Board of Directors (the majority of whom have
been briefed and support this letter of intent).
11. Counterparts.
This letter of intent may be signed in two counterparts, each of which
shall be an original, with the same effect as if the signatures thereto and
hereto were upon the same instrument.
12. Governing Law.
The provisions of this letter of intent shall be governed by and
construed in accordance with the laws of the State of New York, without regard
to its conflict of laws rules.
13. No Liability.
Except for the Binding Provisions, the paragraphs and provisions of
this letter of intent do not constitute and will not give rise to any legally
binding obligation on the part of any of the parties. Unless a definitive
agreement is executed, regardless of the reason such agreement was not executed,
neither Enterprise nor LiveWire shall be under any obligation to the other for
damages, expenses or otherwise, irrespective of any negotiations, agreements or
understandings heretofore and hereafter existing between the parties, and
irrespective of any implied course of conduct between the parties excluding the
Binding Provisions. Moreover, except as expressly provided in the Binding
Provisions (or as expressly provided in any binding written agreement that the
parties may enter into in the future), no past or future action, course of
conduct, or failure to act relating to the proposed transaction, or related to
the negotiation of the terms of the proposed transaction or any purchase
agreement, will give rise to or serve as a basis for any obligation or other
liability on the part of the parties.
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Enterprise Software, Inc. Page 6
May 2, 1999
Very truly yours,
LIVEWIRE VENTURES, LLC
By: /s/ Steven Price
-----------------------------------
Name: Steven Price
Title: President and CEO
Accepted and agreed: May 2, 1999
ENTERPRISE SOFTWARE, INC.
By: /s/ Rick Schleufer
----------------------------
Name: Richard Schleufer
Title: C.E.O.
