UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) July 22, 2005 (July 18, 2005)
Conversion Services International, Inc.
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(Exact name of registrant as specified in its charter)
Delaware 0-30420 20-1010495
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
100 Eagle Rock Avenue, East Hanover,
New Jersey 07936
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (973) 560-9400
Not Applicable
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(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation to the registrant under any of the
following provisions:
|_| Written communications pursuant to Rule 425 under the Securities Act (17
CFR 230.425)
|_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
|_| Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
|_| Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
Item 1.01. Entry into Material Definitive Agreement.
Item 2.01. Completion of Acquisition or Disposition of Assets.
On July 18, 2005, Conversion Services International, Inc. (the "Company")
entered into (and simultaneously consummated) an asset purchase agreement (the
"Agreement") with Similarity Vector Technologies (Sivtech) Limited, a company
organized under the laws of Ireland (d/b/a Similarity Systems) ("SVT"),
Similarity Systems, Inc., a Delaware corporation ("Similarity"), and the
Company's subsidiary, Evoke Software Corporation, a Delaware corporation
("Evoke"). Pursuant to the Agreement, the Company sold substantially all of the
assets of Evoke to SVT and Similarity for aggregate consideration consisting of:
(i) the assumption of substantially all of the liabilities of Evoke (the
"Assumed Liabilities"), (ii) $645,000 in cash, (iii) shares of SVT, subject to
certain conditions described below (the "Holdback Shares"), and a potential
earnout, as described below (the "Earnout").
The following describes certain of the material terms of the transaction. The
description below is not a complete description of the material terms of the
transaction and is qualified in its entirety by reference to the agreements
entered into in connection with the transaction which are included as exhibits
to this Current Report on Form 8-K:
General
On July 18, 2005 (the "Closing Date"), the Company completed the sale of
substantially all of the assets of Evoke and received aggregate consideration of
$645,000 cash, the assumption by Similarity and SVT of the Assumed Liabilities,
the Holdback Shares and the Earnout.
The Holdback Shares
If within sixty (60) days following the Closing Date, certain contingencies have
been satisfied (the "Trigger"), SVT shall deliver to the Company 567,075 shares
of SVT common stock. In addition to the foregoing, if the Trigger has been met,
and consents from entities who are parties to contracts with Evoke have been
delivered by the Company to SVT or Similarity, SVT shall deliver to the Company
up to 253,978 additional shares of SVT common stock 190 days following the
Closing Date.
The Earnout
SVT will pay additional consideration to the Company (the "Earnout
Consideration") in an amount equal to thirteen percent (13%) of the Qualified
Revenue for successive fiscal quarters following the Closing Date. "Qualified
Revenue" means the cash receipts of SVT and its Subsidiaries in respect of the
sale of product license and maintenance and support services of (i) SVT's
Athanor product and (ii) the products of the Evoke business, in each case, as
sold, invoiced and shipped or provided following the Closing Date and less any
sales, use, excise value-added or similar taxes, commissions, rebates, and
refunds. The maximum amount of Earnout Consideration to which the Company is
entitled in any twelve (12) month period is $466,667 and the aggregate maximum
amount of Earnout Consideration to which the Company is entitled pursuant to
this Agreement is $1,400,000.
The Lockup
The Company has agreed not to, without the prior written consent of SVT, sell,
assign, transfer, pledge, hypothecate, mortgage or dispose of, by gift or
otherwise, or in any way encumber, shares of SVT stock received by the Company
pursuant to the Agreement for a period of 2 years from the Closing Date;
provided, however, that such restrictions on transferability of the SVT stock
shall terminate upon the consummation of SVT's first firm commitment
underwritten public offering of SVT's ordinary shares where the shares are
subsequently traded primarily on the Nasdaq Stock Market's National Market or
Small-Cap Market, the New York Stock Exchange, the London Stock Exchange or the
American Stock Exchange (an "Initial Offering") or upon such earlier date as may
be agreed between the Company and SVT. In addition, the Company has agreed that
it will not, without the prior written consent of SVT, sell publicly any shares
of SVT's stock for a period of 180 days (or such longer period as may be agreed
between the Company and SVT) following the effective date of the Initial
Offering; provided that the foregoing shall only be applicable to the Company if
all officers, directors and holders of two percent (2%) or more of the stock of
SVT enter into similar agreements.
Other Material Terms
As set forth more fully in the Agreement, the Assumed Liabilities include, but
are not limited to, a lease with respect to a facility located in Austin, Texas
and a number of leases in Boulder, Colorado.
As set forth more fully in the Agreement, the purchase price is subject to
potential adjustment (increase or decrease) based upon Evoke's net assets and
working capital immediately prior to the Closing Date and the amount, if any,
that such net assets and working capital exceed or fall below certain
threshholds.
Item 7.01. Regulation FD Disclosure.
On July 18, 2005, the Company issued a press release announcing completion of
the Transaction described above. The press release is attached hereto as Exhibit
99. 1 and is incorporated herein by this reference. The press release and the
information in Item 7.01 of this Form 8-K shall not be deemed "filed" for
purposes of Section 18 of the Securities Exchange Act of 1934, nor shall they be
deemed incorporated by reference in any filing under the Securities Act, except
as shall be expressly set forth by specific reference in such filing.
Item 9.01. Financial Statements and Exhibits.
(c) Exhibits.
2.1 Asset Purchase Agreement dated July 18, 2005 between Similarity
Technologies (SIVTECH) Limited, Similarity Systems Inc., Conversion
Services International Inc. and Evoke Software Corporation. . 2.2
Bill of Sale, Assignment and Assumption Agreement dated July 18,
2005 between Evoke Software Corporation and Similarity Vector
Technologies (SIVTECH) Limited.
2.3 Bill of Sale, Assignment and Assumption Agreement dated July 18,
2005 between Evoke Software Corporation and Similarity Systems Inc.
2.4 Intellectual Property and Domain Name Assignment dated July 18, 2005
between Evoke Software Corporation and Similarity Vector
Technologies (SIVTECH) Limited.
99.1 Press Release of the Company, dated July 18, 2005.
This Current Report on Form 8-K may contain, among other things, certain
forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995, including, without limitation, (i) statements
with respect to the Company's plans, objectives, expectations and intentions;
and (ii) other statements identified by words such as "may", "could", "would",
"should", "believes", "expects", "anticipates", "estimates", "intends", "plans"
or similar expressions. These statements are based upon the current beliefs and
expectations of the Company's management and are subject to significant risks
and uncertainties. Actual results may differ from those set forth in the
forward-looking statements. These forward-looking statements involve certain
risks and uncertainties that are subject to change based on various factors
(many of which are beyond the Company's control).
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has caused this report to be signed on its behalf by the undersigned
hereunto duly authorized.
July 22, 2005 CONVERSION SERVICES INTERNATIONAL, INC.
By: /s/ Scott Newman
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Name: Scott Newman
Title: President and Chief Executive Officer