1
EXHIBIT 99.1
[E-SYNC LOGO]
E-Sync Networks Signs Letter Of Intent For Merger With SpaceLogix
[E-SYNC LOGO]
FINANCIAL ANALYSTS/INVESTORS: Juan Dominguez/Dian Griesel Ph.D.
The Investor Relations Group, New York, NY
212-825-3210
MEDIA: Deirdre Fletcher
203-601-3275
E-Sync Networks Signs Letter Of Intent For Merger With SpaceLogix
- --------------------------------------------------------------------------------
TRUMBULL, CT, MAY 7, 2001 - E-Sync Networks, Inc. (NASDAQ: ESNI;
www.esyncnetworks.com), a leading provider of e-business infrastructure products
and services, has signed a non-binding letter of intent to merge with
SpaceLogix, Inc., a privately-held company formed to exploit the market
opportunity for co-location and network managed services in third party data
centers.
According to the terms of the letter of intent, E-Sync and SpaceLogix will
immediately commence negotiating a definitive merger agreement. As one of the
conditions for execution of the definitive merger agreement, SpaceLogix will
provide one or more bridge loans to E-Sync of at least $1,050,000, which would
be converted into common stock upon consummation of the merger. Additionally,
SpaceLogix would agree in the definitive merger agreement to cause its
investment banker, Trautman Wasserman & Company, Inc to undertake an additional
best efforts equity capital raise of $2,000,000 to $3,500,000 for the merged
entity.
Upon the consummation of the merger, (i) SpaceLogix would merge into a
subsidiary of E-Sync, (ii) E- Sync stockholders would retain their currently
outstanding securities in E-Sync, and (iii) SpaceLogix' stockholders would
receive the following consideration:
- First, that number of shares of E-Sync common stock equal to
the sum of (x) 6,000,000 plus (y) that number of shares equal
to the quotient of the amounts bridge loaned by SpaceLogix to
E- Sync divided by 80% of the average share price at the time
of the loan(s);
- Second, 1,200,000 shares of E-Sync's new series C preferred
stock, which (x) if, within 120 days of the consummation of
the merger, the combined company is able to complete a private
placement of a minimum of $2 million of new equity capital
(the "Private Placement"), in addition to the amount
previously bridge loaned, would convert into an aggregate
amount of 12,000,000 shares of E-Sync's common stock, and (y)
if the Private Placement is not consummated within 120 days of
the merger, would instead be thereafter redeemed for an
aggregate cash consideration of $600,000; and
- Third, warrants to acquire 5,500,000 shares of E-Sync common
stock, with an exercise price equal to 85% of the average
closing price of E-Sync's common stock over the five trading
days prior to the date the definitive merger agreement is
executed, the exercisability of which would be subject to the
merged entity meeting the following performance criteria:
- (i) 1,833,000 shall be exercisable at such time as
E-Sync has increased monthly gross margin on sales
above the level recorded at April 30, 2001 by
$100,000 for three consecutive months, (ii) 1,833,000
shall be exercisable at such time as E-Sync has net
after tax income (but excluding any goodwill
amortization charges arising by virtue of the merger)
for a period of three consecutive months and (iii)
1,834,000 shall be
1/3
2
[E-SYNC LOGO]
E-Sync Networks Signs Letter Of Intent For Merger With SpaceLogix
- --------------------------------------------------------------------------------
exercisable at such time as the balance sheet current
ratio will exceed 1:1 for a period of three
consecutive months commencing not earlier than
November, 2001.
- The offer and sale of E-Sync securities in connection
with the proposed merger and capital raising would
not be registered and would therefore be made
pursuant to an exemption from registration under the
Securities Act of 1933, as amended. E-Sync will agree
to use its best efforts to file and have declared
effective a shelf registration statement covering the
resale of (i) all of the securities to be issued upon
conversion of the notes issued in connection with the
bridge loans, (ii) all of the securities to be issued
in connection with the capital raising following
consummation of the merger and (iii) 500,000 shares
of E-Sync common stock issued to SpaceLogix
stockholders as part of the merger consideration.
Upon execution of the definitive merger agreement, SpaceLogix would be entitled
to name up to two members of E-Sync's board of directors, currently fixed at a
total of seven members; upon successful completion of the Private Placement,
SpaceLogix would be entitled to name an additional two members of E-Sync's
board, thus giving it control thereof. The merged entity will continue under the
"E-Sync Networks, Inc." name.
In connection with the letter of intent, E-Sync announced that it had entered
into agreements with SpaceLogix and Trautman Wasserman for the provision of
certain management consulting services. While the letter of intent is
non-binding, the aforesaid consulting agreements would require E-Sync to pay
SpaceLogix and Trautman Wasserman an aggregate of $150,000 in the event that the
merger does not occur, except to the extent that SpaceLogix or Trautman
Wasserman causes the merger not to occur. In addition, if the merger does not
occur and E-Sync borrows money from SpaceLogix pursuant to the aforesaid bridge
loan, then the bridge note would have to be repaid, with interest, plus an extra
25% or 35% of principal, depending upon whether the repayment is within 270 days
of today or later.
"We believe this merger can help us accelerate the achievement of our business
objectives," said Michael A. Clark, President and COO of E-Sync. "SpaceLogix
brings not only a compatible vision of the market opportunity for networked
managed services, but also a seasoned management team."
According to Douglas C. Greenwood, acting Chairman of SpaceLogix and Managing
Director of Trautman Wasserman, "The timing on this could not have been better.
We have been aggressively studying the co-location and managed services space
over the past year, developed a compelling business strategy and service
offerings and assembled our senior management team. We believe that the merger
with E-Sync will save us both significant time and money entering this exciting
marketplace."
CONFERENCE CALL SCHEDULED
The company has scheduled a conference call for stockholders on Monday, May 14,
2001 at 3:00 pm ET. The management team will address year-end and fourth quarter
2000 results as well as the pending merger transaction with SpaceLogix. The
domestic dial-in number is 800-927-7269, the international number is
847-413-3749. A replay will be available until June 14, 2001 by calling
domestically 888-843- 8996, or internationally by calling 630-652-3044 and
entering the passcode 4015400.
ABOUT E-SYNC NETWORKS, INC.
Headquartered in Trumbull, CT with offices in New York and the U.K., E-Sync
Networks, Inc. (NASDAQ: ESNI) provides an array of e-business infrastructure
products and services, including: B2B integration solutions; IT infrastructure
and network design and implementation; reliable, high-quality messaging; and,
secure, high-performance hosting. E-Sync Networks has an extensive corporate
client base, including Briggs & Stratton, Discover Financial Services, Ford(TM),
IVANS, Johnson & Johnson,
2/3
3
[E-SYNC LOGO]
E-Sync Networks Signs Letter Of Intent For Merger With SpaceLogix
- --------------------------------------------------------------------------------
Pepsi(TM), Perkin Elmer, Purdue Pharma, Ralston Purina and Travelers Insurance.
The company's largest stockholder is New York-based venture fund Commercial
Electronics Capital Partnership, LP (CECAP). CECAP (www.cellc.com) is a partner
of TRW, Inc. (NYSE: TRW) established solely to create independent businesses
founded on TRW technologies in markets outside of TRW's strategic interests.
More information can be found on the Internet at www.esyncnetworks.com.
ABOUT SPACELOGIX, INC.
SpaceLogix, a privately-held, development-stage company incorporated in
Delaware, plans to offer telco-grade, carrier-neutral co-location and managed
network services aimed at the fast-growing web hosting market. By capitalizing
on its strong relationships with landlords, major telcos, and other third-party
data center owners, the company intends to be a leading facilities-based managed
services provider. For more information, contact Trautman Wasserman & Company,
Inc. at (212) 575-5500.
ABOUT TRAUTMAN WASSERMAN
Trautman Wasserman builds companies and manages wealth. Its seasoned operating
and financial professionals provide guidance to portfolio companies in the
information and biotechnology sectors; select high-quality investments are
presented to accredited investors. Based in New York, the firm as financed over
40 technology-based firms over the last eight years. Member NASD and SIPC. For
more information, see www.trautmanwasserman.net or call the New York
headquarters at (212) 575-5500.
# # #
Certain of the above statements contained in this press release contain
forward-looking statements within the meaning of Section 27A of the Securities
Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934,
as amended (the "Exchange Act"). Actual results, events, and circumstances
(including future performance, results, and trends) could differ materially from
those set forth in such statements due to various factors, risks, and
uncertainties, including, but not limited to, risks associated with the
Company's future growth and operating results, the uncertainty of market
acceptance of the Company's products, technological change, competitive factors,
and general economic conditions. Except as otherwise required to be disclosed in
periodic reports required to be filed by companies registered under the Exchange
Act by rules of the Securities and Exchange Commission, the Company has no duty
and undertakes no obligation to update such statements.
3/3