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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
________________
SCHEDULE TO
TENDER OFFER STATEMENT
UNDER
SECTION 14(D)(1) OR 13(E)(1) OF THE
SECURITIES EXCHANGE ACT OF 1934
________________
EVOLVE SOFTWARE, INC.
(NAME OF SUBJECT COMPANY (ISSUER) AND FILING PERSON (OFFEROR))
OPTIONS TO PURCHASE COMMON STOCK, PAR VALUE $0.001 PER SHARE
(TITLE OF CLASS OF SECURITIES)
N/A*
(CUSIP NUMBER OF CLASS OF SECURITIES)
KENNETH J. BOZZINI
CHIEF FINANCIAL OFFICER
EVOLVE SOFTWARE, INC.
1400 65TH STREET, SUITE 100
EMERYVILLE, CA 94608
(510) 428-6000
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED TO RECEIVE NOTICES AND
COMMUNICATIONS ON BEHALF OF FILING PERSON)
COPIES TO:
LARRY W. SONSINI, ESQ.
RAMSEY HANNA, ESQ.
WILSON SONSINI GOODRICH & ROSATI,
PROFESSIONAL CORPORATION
650 PAGE MILL ROAD
PALO ALTO, CALIFORNIA 94304-1050
(650) 493-9300
CALCULATION OF FILING FEE
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TRANSACTION VALUATION+ AMOUNT OF FILING FEE
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$ 333,304 . . . . . . . . . . . . . . . . . . . . . . $ 66.66
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+ Calculated solely for purposes of determining the filing fee. This amount
assumes that options to purchase 1,822,690 shares of common stock of Evolve
Software, Inc. having an aggregate value of $333,304 as of December 4, 2001
will be exchanged and/or cancelled pursuant to this offer. The aggregate
value of such options was calculated based on the Black-Scholes option
pricing model. The amount of the filing fee, calculated in accordance with
Rule 0-11(b) of the Securities Exchange Act of 1934, as amended, equals
1/50th of one percent of the value of the transaction.
[ ] Check the box if any part of the fee is offset as provided by Rule
0-11(a)(2) and identify the filing with which the offsetting fee was
previously paid. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
AMOUNT PREVIOUSLY PAID: NOT APPLICABLE.
FORM OR REGISTRATION NO.: NOT APPLICABLE.
FILING PARTY: NOT APPLICABLE.
DATE FILED: NOT APPLICABLE.
[ ] Check the box if the filing relates solely to preliminary communications
made before the commencement of a tender offer.
Check the appropriate boxes below to designate any transactions to which the
statement relates:
[ ] third party tender offer subject to Rule 14d-1.
[X] issuer tender offer subject to Rule 13e-4.
[ ] going-private transaction subject to Rule 13e-3.
[ ] amendment to Schedule 13D under Rule 13d-2.
Check the following box if the filing is a final amendment reporting the results
of the tender offer: [ ]
* There is no trading market or CUSIP Number for the options. The CUSIP
Number for the underlying common stock is 30049P104.
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ITEM 1. SUMMARY TERM SHEET.
The information set forth under "Offer Summary" in the Offer to Exchange
all Outstanding Options for New Options dated December 5, 2001 ("Offer to
Exchange"), a copy of which is attached hereto as Exhibit (a)(1), is
incorporated herein by reference.
ITEM 2. SUBJECT COMPANY INFORMATION.
(a) The name of the issuer is Evolve Software Inc., a Delaware
corporation ("Evolve" or the "Company"). The address of its principal executive
offices is 1400 65th Street, Suite 100, Emeryville, California 94608. The
telephone number at that address is (510) 428-6000.
(b) This Tender Offer Statement on Schedule TO relates to an offer by
the Company to exchange options outstanding under the Company's 1995 Stock
Option Plan and the Company's 2000 Stock Plan (collectively, the "Plans") to
purchase approximately 1,822,690 shares of the Company's Common Stock, par value
$0.001 per share ("Option Shares"), for new options that will be granted under
the Evolve Software, Inc. 2000 Stock Plan (the "New Options"), upon the terms
and subject to the conditions set forth under "The Offer" in the Offer to
Exchange. Persons who are not employees of Evolve or one of its subsidiaries or
who do not live and work in the United States are not eligible to accept the
Offer. Persons who are Section 16 officers of Evolve are also not be eligible to
accept the Offer. The information set forth under "The Offer" in the Offer to
Exchange is incorporated herein by reference.
(c) The information set forth in the Offer to Exchange under Section 8
("Price range of shares underlying the options") is incorporated herein by
reference.
ITEM 3. IDENTITY AND BACKGROUND OF FILING PERSON.
(a) The filing person is the issuer. The information set forth under
Item 2(a) above is incorporated herein by reference.
ITEM 4. TERMS OF THE TRANSACTION.
(a) The information set forth in the Offer to Exchange under "Offer
Summary," Section 2 ("Number of options; expiration date"), Section 4
("Procedures for tendering options"), Section 5 ("Withdrawal rights and change
of election"), Section 6 ("Acceptance of options for exchange and issuance of
new options"), Section 7 ("Conditions of the offer"), Section 9 ("Source and
amount of consideration; terms of new options"), Section 12 ("Status of options
acquired by us in the offer; accounting consequences of the offer"), Section 13
("Legal matters; regulatory approvals"), Section 14 ("Material U.S. federal
income tax consequences"), and Section 15 ("Extension of offer; termination;
amendment") are incorporated herein by reference.
(b) The information set forth in the Offer to Exchange under Section 11
("Interests of directors and officers; transactions and arrangements concerning
the options") is incorporated herein by reference.
ITEM 5. PAST CONTACTS, TRANSACTIONS, NEGOTIATIONS AND ARRANGEMENTS.
(e) (i) Evolve currently has reserved 4,117,971 shares subject to
options granted pursuant to the Company's 2000 Stock Plan and 1995 Stock Option
Plan, in the aggregate.
(ii) Evolve completed a sale of Series A Preferred Stock (the
"Series A Preferred Financing") on October 9, 2001. As a result of the Series A
Preferred Financing the Company currently has outstanding the following
securities and rights held by the investors participating therein:
- an aggregate of 1.3 million shares of the Company's Series A Preferred
Stock at a price of $10 per share
- warrants to purchase up to an aggregate of 1.3 million additional shares of
Series A Preferred Stock at a price of $10 per share (the "Preferred Stock
Warrants")
- warrants to purchase up to 6.5 million shares of Common Stock at a price of
$1.00 per share (the "Common Stock Warrants")
- the right to receive additional Common Stock Warrants to purchase a number
of shares of Common Stock equal to 25% of the number of shares of Common
Stock into which the shares of Series A Preferred Stock issued upon
exercise of the Preferred Stock Warrants are convertible, at the time such
Preferred Stock Warrants are exercised.
Conversion Rights / Anti-Dilution Adjustment. Each share of Series A
Preferred Stock is convertible into Common Stock at an initial conversion price
of $0.50, or at an initial conversion rate of 20 shares of Common Stock for each
share of Series A Preferred Stock. The conversion rate accretes at a rate of
8.00% per annum. The conversion rate is also subject to certain adjustments as
set forth in the Certificate of Designation of Series A Preferred Stock of the
Company (attached hereto as Exhibit (d)(1)), in the event of dilutive stock
issuances by the Company and in the event the Company incurs litigation or
tax-related expenses in excess of certain limitations. The Series A Preferred
Stock may be converted at any time at the election of each holder. The Company
may cause all of the shares of Series A Preferred Stock to be automatically
converted into Common Stock at any time after the fifth anniversary of the date
of initial issuance of these shares, provided that the Common Stock has been
trading at a value of at least $5.00 for a specified period.
Liquidation Preference. In the event of a transaction involving a
dissolution of the Company, the holders of Series A Preferred Stock will be
entitled to payment of a liquidation preference equal to the initial purchase
price of their shares of Series A Preferred Stock, plus an 8.00% annual rate of
return, prior to any payment to holders of Common Stock and other junior
securities. In the event of certain transactions involving a change of control
of the Company, a liquidation preference equal to the initial purchase price of
the Series A Preferred shares held plus an 8.00% rate of return computed over a
five-year period is payable to the holders of Series A Preferred Stock,
irrespective of when such a transaction occurs.
Voting Rights. Holders of Series A Preferred Stock are generally entitled
to one vote for each share of Common Stock into which their Series A Preferred
Stock is convertible, subject to certain protective provisions.
Board Representation. The holders of the Series A Preferred Stock, voting
as a separate class, are entitled to elect three members to the Company's Board
of Directors, subject to reduction upon certain events.
Preferred Stock Warrants. The Preferred Stock Warrants are exercisable to
purchase up to an aggregate of 1.3 million shares of Series A Preferred stock at
a Common Stock-equivalent price of $.50 per share, payable in cash. Fifty
percent of the Preferred Stock Warrants expire if not exercised within 30 days
after the Company's appointment of a new permanent Chief Executive Officer. If
these first warrants are exercised in full, then the balance of the Preferred
Stock Warrants may be exercised for up to one year after issuance. Forms of such
warrants are attached hereto as Exhibit (d)(2).
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Common Stock Warrants. The Common Stock Warrants issued to the investors
are exercisable for up to 6.5 million shares of Common Stock, and the Company
will issue warrants to purchase up to an additional 6.5 million shares of Common
Stock if the Preferred Stock Warrants are exercised in full. The Common Stock
Warrants have an exercise price of $1.00 per share, which is subject to
adjustment if the Company issues securities at less than fair market value and
under certain other circumstances. The Common Stock Warrants may be exercised
for cash, or on a cashless basis by converting the Common Stock Warrants into a
number of shares with a value equal to the spread between the market value of
the shares subject to the Common Stock Warrants and the exercise price. In
addition, in the event of certain transactions involving a change of control of
the Company, holders of Common Stock Warrants will have the right to deliver
these Warrants to the Company in exchange for payments equal to the market value
of such warrants at the time of the change of control transaction, payable in
cash or, subject to certain conditions, shares of Common Stock of the Company.
The Common Stock Warrants have a term of seven years. A form of such warrants is
attached hereto as Exhibit (d)(3).
Preemptive Rights. The Company has granted to the holders of the Series A
Preferred Stock rights to maintain their percentage ownership in the Company by
purchasing additional shares in connection with future equity issuances by the
Company.
Registration Rights. The Company has agreed to prepare and file with the
Securities and Exchange Commission, upon request of the holders of Series A
Preferred Stock after June 1, 2002, registration statements to enable the resale
of the shares of Common Stock issued or issuable upon conversion of the Series A
Preferred Stock and the Warrants.
ITEM 6. PURPOSES OF THE TRANSACTION AND PLANS OR PROPOSALS.
(a) The information set forth in the Offer to Exchange under Section 3
("Purpose of the offer") is incorporated herein by reference.
(b) The information set forth in the Offer to Exchange under Section 12
("Status of options acquired by us in the offer; accounting consequences of the
offer") is incorporated herein by reference.
(c) The information set forth in the Offer to Exchange under Section 3
("Purpose of the offer") is incorporated herein by reference.
ITEM 7. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
(a) The information set forth in the Offer to Exchange under Section 9
("Source and amount of consideration; terms of new options") and Section 16
("Fees and expenses") is incorporated herein by reference.
(b) Not applicable.
(d) Not applicable.
ITEM 8. INTEREST IN SECURITIES OF THE SUBJECT COMPANY.
(a) Not applicable.
(b) The information set forth in the Offer to Exchange under Section 11
("Interests of directors and officers; transactions and arrangements concerning
the options") is incorporated herein by reference.
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ITEM 9. PERSON/ASSETS, RETAINED, EMPLOYED, COMPENSATED OR USED.
(a) Not applicable.
ITEM 10. FINANCIAL STATEMENTS.
(a) The information set forth on pages F-1 through F-26 of Evolve's
Annual Report on Form 10-K for its fiscal year ended June 30, 2001, which
contains Evolve's financial statements for such fiscal year, is incorporated
herein by reference. The information set forth on pages 2 through 11 of
Evolve's Quarterly Report on Form 10-Q for its first fiscal quarter ended
September 30, 2001, which contains Evolve's financial statements for such fiscal
quarter, is incorporated herein by reference.
(b) Not applicable.
ITEM 11. ADDITIONAL INFORMATION.
(a) The information set forth in the Offer to Exchange under Section 13
("Legal matters; regulatory approvals") is incorporated herein by reference.
(b) Not applicable.
ITEM 12. EXHIBITS.
(a) (1) (i) Offer to Exchange Certain Outstanding Options for New
Options, dated December 5, 2001.
(ii) Election Form.
(iii) Letter from Chairman to Employees, dated December 5,
2001.
(iv) Form of Notice to Withdraw from the Offer.
(v) Form of Promise to Grant Stock Option(s).
(5) (i) Evolve Software, Inc. Amended and Restated 2000 Stock
Plan.
(ii) Form of agreement under Evolve Software, Inc. Amended
and Restated 2000 Stock Plan.
(iii) Evolve Software, Inc. 2000 Stock Plan Prospectus.
(b) Not applicable.
(d) (1) Certificate of Designation of Evolve Software, Inc. Series A
Preferred Stock, filed as Exhibit 10.4 to the Company's Current
Report on Form 8-K/A filed on October 3, 2001, and incorporated
herein by reference.
(2) Form of Form A Subscription Warrant and Form of Form B
Subscription Warrant, filed as Exhibit 10.2 to the Company's Current
Report on Form 8-K/A filed on October 3, 2001, and incorporated
herein by reference.
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(3) Form of Warrant to Purchase Shares of Common Stock, filed as
Exhibit 10.3 to the Company's Current Report on Form 8-K/A filed on
October 3, 2001, and incorporated herein by reference.
(g) Not applicable.
(h) Not applicable.
ITEM 13. INFORMATION REQUIRED BY SCHEDULE 13E-3.
(a) Not applicable.
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SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this Schedule TO is true, complete and
correct.
EVOLVE SOFTWARE, INC.
By: /s/ Kenneth J. Bozzini
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Kenneth J. Bozzini
Chief Financial Officer and Vice President,
Finance
Date: December 5, 2001
INDEX TO EXHIBITS
EXHIBIT
NUMBER DESCRIPTION
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(a)(1)(i) Offer to Exchange Certain Outstanding Options for New Options, dated December 5, 2001.
(a)(1)(ii) Election Form.
(a)(1)(iii) Letter from Chairman to Employees, dated December 5, 2001.
(a)(1)(iv) Form of Notice to Withdraw from the Offer.
(a)(1)(v) Form of Promise to Grant Stock Option(s).
(a)(5)(i) Evolve Software, Inc. Amended and Restated 2000 Stock Plan.
(a)(5)(ii) Form of agreement under Evolve Software, Inc. Amended and Restated 2000 Stock Plan.
(a)(5)(iii) Evolve Software, Inc. 2000 Stock Plan Prospectus.
(d)(1) Certificate of Designation of Evolve Software, Inc. Series A Preferred Stock, filed as Exhibit 10.4
to the Company's Current Report on Form 8-K/A filed on October 3, 2001, and incorporated herein by
reference.
(d)(2) Form of Form A Subscription Warrant and Form of Form B Subscription Warrant, filed as Exhibit 10.2
to the Company's Current Report on Form 8-K/A filed on October 3, 2001, and incorporated herein by
reference.
(d)(3) Form of Warrant to Purchase Shares of Common Stock, filed as Exhibit 10.3 to the Company's Current
Report on Form 8-K/A filed on October 3, 2001, and incorporated herein by reference.