Filed Pursuant to Rule 424(b)(3)
Registration No. 333-47070
WORLDWIDE XCEED GROUP, INC.
PROSPECTUS
[LOGO]
32,400,213 Shares of Common Stock
This prospectus relates to up to 32,400,213 shares of Common Stock of
Worldwide Xceed Group, Inc. which may be offered from time to time by certain of
our existing shareholders. We will not receive any of the proceeds from the sale
of the Common Stock. We will bear the costs relating to the registration of the
Common Stock which are estimated to be approximately $27,571.
The Common Stock is being registered in connection with our issuance to
Peconic Fund, Ltd., Leonardo, L.P. and HFTP Investment, L.L.C. of:
- an aggregate of 30,000 shares of our Series A Cumulative Convertible
Preferred Stock, par value $0.05 per share, issued on January 13, 2000
(including shares of Common Stock paid as dividends on the Series A
Preferred Stock through December 31, 2000), of which Series A Preferred
Stock, 3,212 shares have been converted into 4,426,148 shares of our
Common Stock as of November 17, 2000;
- Warrants to purchase an aggregate of 183,273 shares of our Common Stock,
$0.01 par value per share, issued on January 13, 2000; and
- Warrants to purchase an aggregate of 1,350,000 shares of our Common
Stock issued on April 4, 2000.
We agreed to register for resale all of the shares of our Common Stock issuable
to the above entities on conversion of the shares of Series A Preferred Stock
and the Warrants issued to each of them. This prospectus also covers such
additional shares of Common Stock as may be issuable to the selling shareholders
in the event of a stock dividend, stock split, recapitalization or other similar
change in the Common Stock.
The selling shareholders may sell the shares from time to time at fixed
prices, market prices, prices computed with formulas based on market prices or
at negotiated prices and may engage a broker or dealer to sell the shares. For
additional information on the selling shareholders' possible methods of sale,
you should refer to the section of this prospectus entitled "Plan of
Distribution" on page 12.
Our Common Stock is traded on the Nasdaq National Market under the symbol
"XCED". On November 17, 2000, the last reported sale price for our Common Stock
on the Nasdaq National Market was $0.9375 per share.
Any investment in the shares of Common Stock included herein involves risk.
See "Risk Factors" beginning on page 3 to read about certain risks you should
consider before buying shares of our Common Stock.
Neither the Securities and Exchange Commission nor any other regulatory
body has approved or disapproved these securities or passed upon the accuracy or
adequacy of this prospectus. Any representation to the contrary is a criminal
offense.
The date of this prospectus is November 29, 2000
Table of Contents
Worldwide Xceed Group, Inc........................................................... 1
Risk Factors......................................................................... 3
Forward-Looking Statements........................................................... 6
Description of Series A Cumulative Convertible Preferred Stock and Related Warrants.. 7
Selling Shareholders................................................................. 10
Plan of Distribution................................................................. 12
Use of Proceeds...................................................................... 13
Legal Matters........................................................................ 13
Experts.............................................................................. 13
Where You Can Find More Information.................................................. 13
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WORLDWIDE XCEED GROUP, INC.
Our Business
We are Interactive Architects who provide Internet professional services
that seek to transform the way companies conduct eBusiness. Through our multi-
disciplined methodology, we offer a full range of services that allow us to
deliver end-to-end solutions enabling companies to capitalize on the reach and
efficiency of the Internet. Our key competencies include:
- strategy, research and consulting--creating specialized business plans
and models to enable our clients to operate and improve their
eBusinesses;
- creative design--developing robust visual and interactive web site
content and graphics;
- technology integration--combining third-party products with our
customized technology applications and components to create a
specialized, technical infrastructure for our clients; and
- marketing and branding--promoting our clients' eBusinesses, services and
brands to their existing and target customers and industry segment.
Our multi-disciplined methodology enables us to provide our clients with
solutions to:
- strengthen relationships with customers and business partners in both
business-to-business and business-to-consumer environments;
- create new revenue and distribution opportunities; and
- reduce costs and improve operating efficiencies, productivity and
internal communications.
Our strategic, technical and creative personnel collaborate to address the
full range of end-to-end solutions required to meet the increasingly large and
complex needs of an expanding, sophisticated client base. The industry in which
we operate is time-to-market sensitive, and we believe that we provide faster
project delivery than many of our competitors due to our ability to use
previously developed technology applications for multiple client engagements.
Our proven methodology provides a framework to assess and execute each stage of
a client engagement. By delivering our services in a seamless and integrated
fashion, we guide our clients from concept to launch and deployment of their
eBusinesses.
Our Market Opportunity
The emergence and acceptance of the Internet as a new global medium has
fundamentally changed the way that consumers and businesses communicate, obtain
information, purchase goods and services and transact business. eBusiness, which
is business that combines the reach and efficiency of the Internet with both
emerging and existing technologies, is significant for many companies,
regardless of industry or location. With the expanding creative and technical
demands of supporting eBusiness, companies are increasingly outsourcing their
eBusiness functions to capitalize on the competencies of Internet professional
services companies.
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Recent Developments
We were founded in 1979 and primarily manufactured and marketed first aid
burn products and provided business travel services to corporations until 1998.
During recent years, we decided to pursue a number of strategic acquisitions
designed to shift our corporate focus to the provision of Internet professional
services. As part of this decision, we changed our name from Water-Jel
Technologies, Inc. to Xceed Inc. in March 1998. In November 2000 we changed our
name again from Xceed Inc. to Worldwide Xceed Group, Inc.
Since August 1998, we have acquired 12 companies engaged in operations such
as Internet consulting, interactive marketing and e-commerce development
strategies, custom software design, systems administration and strategic
consulting for mergers and acquisitions, process management and large systems
implementation. These acquisitions have allowed us to expand our existing
Internet professional services operations, as well as develop a more expansive
geographic presence. Through these acquisitions, personnel with expertise in
systems solutions, consulting, eBusiness and e-commerce joined our company. We
have grown from 237 employees as of August 31, 1999 to 470 employees as of
November 16, 2000.
Until recently, we operated three businesses that were not aligned with our
current corporate focus. These three businesses were:
- Water-Jel Technologies, our first aid burn product business, which we
sold in January 2000;
- Journeycorp, our travel business, which we sold in July 2000; and
- Our Performance Enhancement business, which we sold in November 2000.
Our Offices
Our principal executive offices are located at 233 Broadway, New York, New
York 10279. Our telephone number at that location is (212) 553-3112. We also
have offices in Atlanta, Chicago, Colorado Springs, Dallas, Los Angeles,
Chandler (Arizona), Sausalito, Amsterdam and London. Our Internet address is
www.xceed.com. The information contained on our web site is not incorporated by
reference in this prospectus and shall not be considered a part of this
prospectus.
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RISK FACTORS
You should carefully consider the risks and uncertainties described below,
as well as the discussion of risks in our annual report on Form 10-K for the
fiscal year ended August 31, 2000, and other information contained or
incorporated by reference in this prospectus before deciding whether to invest
in our Common Stock. Additional risks and uncertainties not presently known to
us or that we currently deem immaterial may also impair our business operations.
If any of the following risks actually occur, our business, financial
condition or operating results could be materially adversely affected. In such
case, the trading price of our Common Stock could decline and you may lose part
or all of your investment.
RISKS RELATED TO OUR
SERIES A CUMULATIVE CONVERTIBLE PREFERRED STOCK
THE CONVERSION OF OUR SERIES A PREFERRED STOCK AND THE EXERCISE OF THE RELATED
WARRANTS COULD RESULT IN SUBSTANTIAL NUMBERS OF ADDITIONAL SHARES BEING ISSUED
IF OUR MARKET PRICE DECLINES.
On January 13, 2000, we issued 30,000 shares of our Series A Preferred
Stock, $1,000 stated value per share, and warrants to purchase an aggregate of
183,273 shares of our Common Stock at an exercise price of $50.10 per share,
subject to adjustment. In addition, on April 4, 2000, we issued Warrants to
purchase an aggregate of 1,350,000 shares of our Common Stock at an exercise
price of $15.75 per share, subject to adjustment. As of November 17, 2000, the
selling shareholders have converted 3,212 shares of Series A Preferred Stock
into 4,426,148 shares of our Common Stock. The shares of Series A Preferred
Stock are currently convertible at a floating rate based on the market price of
our Common Stock, provided the conversion price may not exceed $36.00 per share,
subject to adjustment. As a result, the lower the price of our Common Stock at
the time of conversion, the greater the number of shares the holder will
receive. For additional information regarding the number of additional shares
that may be issued at various assumed conversion prices, see the table on page 9
under "Description of Series A Cumulative Convertible Preferred Stock and
Related Warrants - Series A Cumulative Convertible Preferred Stock."
To the extent the Series A Preferred Stock is converted or dividends on the
Series A Preferred Stock are paid in shares of Common Stock rather than cash, a
significant number of shares of Common Stock may be sold into the market, which
could decrease the price of our Common Stock and encourage short sales. Short
sales could place further downward pressure on the price of our Common Stock. In
that case, we could be required to issue an increasingly greater number of
shares of our Common Stock upon future conversions of the Series A Preferred
Stock, sales of which could further depress the price of our Common Stock.
The conversion of and payment of dividends in shares of Common Stock in
lieu of cash on the Series A Preferred Stock may result in substantial dilution
to the interests of other holders of our Common Stock. Although no selling
shareholder may convert its Series A Preferred Stock if upon such conversion the
selling shareholder together with its affiliates would have acquired a number of
shares of Common Stock which, when added to the number of shares of Common Stock
held would exceed 4.99% of our then outstanding Common Stock, excluding for
purposes of such determination shares of Common Stock issuable upon conversion
of shares of Series A Preferred Stock which have not been converted, this
restriction does not prevent a selling shareholder from selling a substantial
number of shares in the market. By periodically selling shares into the market,
an individual selling shareholder could eventually sell more than 4.99% of our
outstanding Common Stock while never holding more than 4.99% at any specific
time.
WE MAY ISSUE ADDITIONAL SHARES AND DILUTE YOUR OWNERSHIP PERCENTAGE.
Some events over which you have no control could result in the issuance of
additional shares of our Common Stock, which would dilute your ownership
percentage in Xceed. We may issue additional shares of Common Stock or preferred
stock:
- to raise additional capital or finance acquisitions;
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- upon the exercise or conversion of outstanding options, warrants and
shares of convertible preferred stock; and/or
- in lieu of cash payment of dividends.
As of November 17, 2000, other than the Warrants issued to the holders of
the Series A Preferred Stock on January 13, 2000 and April 4, 2000, there were
outstanding warrants to acquire an aggregate of 4,726,562 shares of Common
Stock, and there were outstanding options to acquire an aggregate of 10,218,564
shares of Common Stock. If converted or exercised, these securities will dilute
your percentage ownership of Common Stock. These securities, unlike the Common
Stock, provide for anti-dilution protection upon the occurrence of stock splits,
redemptions, mergers, reclassifications, reorganizations and other similar
corporate transactions, and, in some cases, major corporate announcements. If
one or more of these events occurs, the number of shares of Common Stock that
may be acquired upon conversion or exercise would increase. In addition, as
disclosed in the preceding risk factor, the number of shares that may be issued
upon conversion of or payment of dividends in lieu of cash on the Series A
Preferred Stock could increase substantially if the market price of our Common
Stock decreases during the period the Series A Preferred Stock are outstanding.
For example, the number of shares of Common Stock that we would be required
to issue upon conversion of all 26,788 shares of Series A Preferred Stock
outstanding as of November 17, 2000, excluding shares issued as accrued
dividends, would increase from approximately 28.9 million shares, based on the
applicable conversion price of $0.9276 per share as of November 17, 2000, to
approximately:
- 38.5 million shares if the applicable conversion price decreased 25%;
- 57.8 million shares if the applicable conversion price decreased 50%;
or
- 115.5 million shares if the applicable conversion price decreased 75%.
SUBSTANTIAL SALES OF OUR COMMON STOCK COULD CAUSE OUR STOCK PRICE TO FALL.
If our shareholders sell substantial amounts of our Common Stock, including
shares issued upon the exercise of outstanding options and upon conversion of
the Series A Preferred Stock and exercise of the related Warrants, the market
price of our Common Stock could fall. Such sales also might make it more
difficult for us to sell equity or equity-related securities in the future at a
time and price that we deem appropriate. As of November 17, 2000, we had
outstanding 28,574,138 shares of Common Stock and options to acquire an
aggregate of 10,218,564 shares of Common Stock, of which 3,781,645 options were
vested and exercisable. As of November 17, 2000, of the shares that are
currently outstanding, 20,933,525 are freely tradeable in the public market and
2,678,880 are tradeable in the public market subject to the restrictions, if
any, applicable under Rule 144 and Rule 145 of the Securities Act of 1933, as
amended.
In general, under Rule 144 as currently in effect, a person who has
beneficially owned restricted securities for at least one year would be entitled
to sell within any three-month period a number of shares that does not exceed
the greater of: (a) one percent of the number of shares of Common Stock then
outstanding (which for Xceed was 285,742 shares as of November 17, 2000); or (b)
the average weekly trading volume of the Common Stock during the four calendar
weeks preceding the sale. Sales under Rule 144 are also subject to requirements
with respect to manner of sale, notice, and the availability of current public
information about us. Under Rule 144(k), a person who is not deemed to have been
our affiliate at any time during the three months preceding a sale, and who has
beneficially owned the shares proposed to be sold for at least two years, is
entitled to sell such shares without complying with the manner of sale, public
information, volume limitation or notice provisions of Rule 144. Sales by
shareholders of a substantial amount of our Common Stock could adversely affect
the market price of our Common Stock.
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WE MAY BE REQUIRED TO PAY SUBSTANTIAL PENALTIES TO THE HOLDERS OF THE SERIES A
PREFERRED STOCK IF SPECIFIC EVENTS OCCUR.
In accordance with the terms of the documents relating to the issuance of
the Series A Preferred Stock, we are required to pay substantial penalties to a
holder of the Series A Preferred Stock under specified circumstances, including,
among others,
. the delisting or suspension from trading of our Common Stock from
Nasdaq for a period of five consecutive trading days;
. notice by Xceed or our transfer agent to any holder of Series A
Preferred Stock of our intention not to comply with a request for
conversion of any shares of Series A Preferred Stock;
. our failure to deliver shares of our Common Stock upon conversion of the
Series A Preferred Stock or upon exercise of the related Warrants after
a proper request; or
. our breach of any provisions of the Certificate of Designation,
Preferences and Rights of Series A Cumulative Convertible Preferred
Stock, the related Warrants, and the subscription agreement and
registration rights agreement both dated January 13, 2000.
IF OUR COMMON STOCK IS REMOVED FROM NASDAQ, THE MARKETABILITY OF OUR COMMON
STOCK WILL BE DECREASED SUBSTANTIALLY.
Our Common Stock is currently traded on the Nasdaq National Market. There
can be no assurance that our Common Stock will maintain the minimum bid price
and continue to be listed on Nasdaq. The requirements for continued listing on
such Nasdaq include, among other things, a requirement that our Common Stock
maintain a minimum bid price of $1.00 per share. Our Common Stock has traded at
prices below $1.00 per share in the recent past. In addition, in order to
maintain our Nasdaq listing, we are required to comply with the guidance of the
National Association of Securities Dealers, Inc. regarding "future priced
securities." We believe that the Series A Preferred Stock and the related
Warrants of the selling shareholders complies with the guidance and criteria set
forth by the NASD with regard to such future priced securities. Any removal from
Nasdaq would have a material adverse effect on both the price and the liquidity
of our Common Stock.
THE MARKET PRICE OF OUR COMMON STOCK MAY BE VOLATILE, WHICH COULD RESULT IN
SUBSTANTIAL LOSSES FOR INDIVIDUAL SHAREHOLDERS.
The market price for our Common Stock has been and is likely to continue to
be highly volatile and subject to wide fluctuations in response to factors
including the following, some of which are beyond our control:
. actual or anticipated variations in our quarterly operating results;
. announcements of technological innovations, increased cost of
operations or new products or services by us or our competitors;
. changes in financial estimates by securities analysts;
. conditions or trends in the Internet and/or interactive architect
industries;
. changes in the economic performance and/or market valuations of other
interactive architects or digital strategy companies;
. volatility in the stock markets, particularly with respect to Internet
stocks, and decreases in the availability of capital for Internet-
related businesses;
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. announcements by us or our competitors of significant acquisitions,
strategic partnerships, joint ventures or capital commitments;
. additions or departures of key personnel;
. transfer restrictions on our outstanding shares of Common Stock or
sales of additional shares of Common Stock; and
. pending or potential litigation.
From November 18, 1999, through November 17, 2000, the high and low sales
prices for our Common Stock fluctuated between $48 and $0.6875. On November 17,
2000, the closing price of our Common Stock was $0.9375. In the past, following
periods of volatility in the market price of their securities, many companies
have been the subject of securities class action litigation. If we were sued in
a securities class action, it could result in substantial costs and a diversion
of management's attention and resources and would cause the price of our Common
Stock to fall.
FORWARD-LOOKING STATEMENTS
The statements contained in this prospectus or incorporated by reference in
this prospectus that are not historical facts are "forward-looking statements,"
as defined in Section 27A of the Securities Act and Section 21E of the
Securities Exchange Act of 1934, which can be identified by the use of forward-
looking terminology such as "estimates," "projects," "anticipates," "expects,"
"intends," "believes," or the negative thereof or other variations thereon or
comparable terminology, or by discussions of strategy that involve risks and
uncertainties. Examples of these forward-looking statements include, but are not
limited to:
. expectations of anticipated benefits of our acquisitions;
. estimates of future operating results;
. expectations of generating a significant portion of our revenues from a
limited number of large clients;
. plans to further develop and commercialize value-added services;
. expectations regarding our relationships with clients and other third
parties;
. expectations of pricing for our services in the future;
. our anticipated capital expenditures; and
. other statements contained in this prospectus or incorporated by
reference in this prospectus regarding matters that are not historical
facts.
These statements are only estimates or predictions and cannot be relied
upon. We can give you no assurance that future results will be achieved. Actual
events or results may differ materially as a result of risks facing us or actual
results differing from the assumptions underlying such statements. These risks
and assumptions could cause actual results to vary materially from the future
results indicated, expressed or implied in the forward-looking statements
included in this prospectus.
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All forward-looking statements made in this prospectus that are
attributable to us or persons acting on our behalf are expressly qualified in
their entirety by the factors listed above in the section captioned "Risk
Factors" and other cautionary statements included in this prospectus. We
disclaim any obligation to update information contained in any forward-looking
statement.
DESCRIPTION OF
SERIES A CUMULATIVE CONVERTIBLE PREFERRED STOCK AND RELATED WARRANTS
General
On January 13, 2000, we closed a private offering of our securities
pursuant to the terms of a subscription agreement with the three selling
shareholders. Pursuant to the terms of the subscription agreement, we issued to
the selling shareholders:
. 30,000 shares of Series A Preferred Stock having a par value of $.05 per
share and a stated value of $1,000 per share; and
. Warrants to purchase 183,273 shares of our Common Stock at an exercise
price of $50.10 per share, subject to adjustment.
In exchange for the issuance of the Series A Preferred Stock and the Warrants,
the selling shareholders paid us an aggregate of $30,000,000 to be used by us
for working capital and general corporate purposes, including strategic
acquisitions and investments, hiring of additional personnel and technical
upgrades of systems. As of November 17, 2000, the selling shareholders have
converted 3,212 shares of Series A Preferred Stock into 4,426,148 shares of our
Common Stock. Pursuant to a covenant in the subscription agreement, we obtained
shareholder approval of the issuance on January 13, 2000, of the Series A
Preferred Stock and Warrants at a special meeting of shareholders held on
October 5, 2000.
On April 4, 2000, we issued to the selling shareholders additional Warrants
to purchase an aggregate of 1,350,000 shares of our Common Stock at an exercise
price of $15.75 per share, subject to adjustment. In exchange for the issuance
of these additional Warrants, the selling shareholders agreed to the amendment
of certain of the terms of:
. the Certificate of Designation, Preferences, and Rights of Series A
Cumulative Convertible Preferred Stock;
. the subscription agreement dated January 13, 2000 between Xceed and the
selling shareholders; and
. the registration rights agreement dated January 13, 2000 between Xceed
and the selling shareholders.
The following table illustrates the amount of each security issued to each
selling shareholder pursuant to the subscription agreement dated January 13,
2000 and the agreement dated April 4, 2000.
Series A Warrants Issued on Warrants Issued on
Selling Shareholder Preferred Stock January 13, 2000 April 4, 2000
- ----------------------------------- ---------------------- ---------------------- ----------------------
Leonardo, L.P...................... 10,000 61,091 450,000
Peconic Fund, Ltd.................. 10,000 61,091 300,000
HFTP Investment, L.L.C............. 10,000 61,091 600,000
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Series A Cumulative Convertible Preferred Stock
The Series A Preferred Stock pays a 4% quarterly dividend and has no voting
rights. The dividend accumulates daily on each share of Series A Preferred
Stock whether or not earned or declared, until such share has been converted or
redeemed. If we do not pay a dividend for a particular quarter, the dividends
accumulate and compound quarterly until paid. We have the option to pay a
dividend by increasing the aggregate value of the Series A Preferred Stock by
the amount of the unpaid dividend; provided that we give timely notice of our
election to do so in advance of a dividend payment date. The aggregate value
for each share of Series A Preferred Stock is the sum of the stated value of
each such share, plus accumulated but unpaid dividends thereon.
The Series A Preferred Stock ranks senior to our Common Stock with respect
to dividend rights and preferences as to distributions and payments, and to
date, we have not issued any security that ranks on parity with the Series A
Preferred Stock. The holders of at least two-thirds of the Series A Preferred
Stock must consent in writing before we may: (i) issue any additional shares of
Series A Preferred Stock; (ii) issue any stock that ranks senior to, or on
parity with, the Series A Preferred Stock; or (iii) amend our Certificate of
Incorporation or Bylaws or file any resolution of our Board of Directors that
would adversely affect or impair the rights of the holders of the Series A
Preferred Stock.
Upon the occurrence of an Extraordinary Transaction, as defined in the
Certificate of Designation, Preferences and Rights of Series A Cumulative
Convertible Preferred Stock, each holder of Series A Preferred Stock has the
right to cause us to redeem any of our shares of Series A Preferred Stock at a
redemption price per share equal to 120% of the aggregate value of such
preferred stock. In the event of a Triggering Event, as defined in the
Certificate of Designation, each selling shareholder has the right to cause us
to redeem any of our shares of Series A Preferred Stock at a redemption price
per share equal to 125% of the aggregate value of such preferred stock.
Extraordinary Transactions include, without limitation, such events as our
merger, consolidation or other business combination with or into another
corporation, and the transfer of all or substantially all of our assets to
another entity. Triggering Events include, without limitation, such events as
the delisting of our Common Stock from the Nasdaq National Market or our
failure to deliver shares of our Common Stock upon conversion of the Series A
Preferred Stock after a proper request.
In addition to the foregoing, we have the right to redeem all of the
outstanding shares of Series A Preferred Stock at any time at a redemption price
per share equal to 110% of the aggregate value of such preferred stock plus: (i)
1% of such aggregate value per share for each month since January 13, 2000, up
to a maximum redemption price equal to 140% of the aggregate value; and (ii)
accumulated but unpaid dividends that have not been previously added to the
aggregate value.
Each selling shareholder may convert any portion of its shares of Series A
Preferred Stock into Common Stock at any time. Subject to certain restrictions,
conditions and limitations as set forth in the Certificate of Designation, we
could have chosen to convert any portion of the Series A Preferred Stock into
Common Stock at any time prior to October 13, 2000. The number of shares of
Common Stock issuable upon conversion by either the selling shareholders or us
is determined by dividing the aggregate value of the Series A Preferred Stock
plus unpaid dividends by the applicable conversion price. The conversion price
applicable to a specific conversion shall be the lowest of the daily weighted
average trading prices on the Nasdaq National Market as reported by Bloomberg,
L.P. during the ten trading days immediately preceding and including the date of
conversion. Notwithstanding the foregoing, we have a mandatory conversion right
to convert the Series A Preferred Stock into Common Stock provided the closing
price of our Common Stock exceeds $54 for 30 consecutive trading days. On
January 13, 2005 or such later date agreed to by us and the selling
shareholders, we must convert all of the outstanding shares of Series A
Preferred Stock into Common Stock in accordance with the terms of the
Certificate of Designation.
The following table sets forth the number of shares of Common Stock we
would be required to issue upon conversion of the 26,788 shares of Series A
Preferred Stock outstanding as of November 17, 2000, at an assumed conversion
price of $0.9276 per share of Common Stock as of November 17, 2000, and the
resulting percentage of our total shares of Common Stock outstanding after such
a conversion. The table also sets forth the number of shares of Common Stock we
would be required to issue assuming: (1) increases of 25%, 50% and 75% in the
assumed conversion price; and (2) decreases of 25%, 50% and 75% in the assumed
conversion price.
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Assumed Conversion Price Per Share Approximate Number of Shares of Common Percentage of Common Stock After
of Common Stock Stock Issuable Upon Conversion (1) Conversion (2)
- ----------------------------------- --------------------------------------- -------------------------------------
$1.6233 (+75%) 16.5 million 36.6%
$1.3914 (+50%) 19.3 million 40.3%
$1.1595 (+25%) 23.1 million 44.7%
$0.9276 28.9 million 50.3%
$0.6957 (-25%) 38.5 million 57.4%
$0.4638 (-50%) 57.8 million 66.9%
$0.2319 (-75%) 115.5 million 80.2%
(1) The number of shares of Common Stock issuable upon conversion and the
percentage of outstanding Common Stock after such conversion set forth
above do not take into account any shares of Common Stock that may be
issuable as dividends on the Series A Preferred Stock or upon exercise of
the Warrants issued in connection with the sale of the Series A Preferred
Stock.
(2) Calculated based on 28,574,138 shares of Common Stock issued and
outstanding as of November 17, 2000.
In the event of any voluntary or involuntary liquidation, dissolution or
winding up of Xceed, the selling shareholders are entitled to receive, before
any amount is paid to the holders of any subordinate securities, cash in an
amount per share of Series A Preferred Stock equal to the aggregate value of
such preferred stock.
Warrants
The Warrants issued on January 13, 2000 to purchase 183,273 shares of our
Common Stock at an exercise price of $50.10 per share, subject to adjustment,
are exercisable for a term of five years ending on January 13, 2005. The
Warrants issued on April 4, 2000 to purchase 1,350,000 shares of our Common
Stock at an exercise price of $15.75 per share, subject to adjustment, are
exercisable for a term of five years ending on April 4, 2005.
The respective terms of the Warrants issued to the selling shareholders on
January 13, 2000 and April 4, 2000, are virtually identical. Upon the
occurrence of certain events as summarized below and more fully set forth in the
Warrants, the number and kinds of securities purchasable upon exercise of the
Warrants and the exercise price are subject to adjustment.
. In the case of a "triggering event," as defined in the Warrants to
include, among other things, our merger or consolidation where we are
not the surviving entity, or the transfer of all or substantially all
our assets to another entity, the selling shareholders will be entitled
to receive at the then-current exercise price of the Warrants, including
any adjustments, cash and property to which the selling shareholders
would have been entitled had they exercised the Warrants immediately
prior to such triggering event.
. In the event we effect: (i) a stock-split or subdivision of our Common
Stock, the Warrant exercise price will be proportionately reduced to
reflect the increase in the total number of shares of Common Stock
outstanding as a result of such subdivision; or (ii) a reverse stock-
split or combination of the Common Stock, the Warrant exercise price
will be proportionately increased to reflect the reduction in the total
number of shares of Common Stock outstanding as a result of such
combination.
. In the event we pay a stock dividend, or make any other distribution
of the Common Stock to our shareholders, the Warrant exercise price will
be adjusted, as at the record date set for such stock dividend or
distribution, to the price determined by multiplying the Warrant
exercise price in effect prior to such record date by the fraction in
which: (i) the numerator equals the total shares of Common Stock
outstanding immediately prior to such stock dividend or distribution;
and (ii) the denominator equals the total shares of Common Stock
outstanding immediately after such stock dividend or distribution.
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. In the event we pay a dividend, make any distribution (other than as
described above) of our assets with respect to our Common Stock, or
offer options or rights to subscribe for shares of Common Stock, then
each selling shareholder holding a Warrant will receive what each would
have received had it exercised its Warrant in full prior to the record
date of such dividend or distribution.
. In the event we issue "additional shares of Common Stock," as defined
in the Warrants, without consideration or at a price per share less than
the lower of the Warrant exercise price or the closing price of our
Common Stock on the date preceding such issuance, then the Warrant
exercise price will be adjusted to the price determined by multiplying
the Warrant exercise price by the fraction in which: (i) the numerator
equals the total shares of Common Stock outstanding immediately prior to
such issuance, plus the number of shares of Common Stock equal in value
to the aggregate consideration for the issued "additional shares of
Common Stock," based on a price equal to the greater of the Warrant
exercise price or the closing price of our Common Stock on the date
preceding such issuance; and (ii) the denominator equals the total shares
of Common Stock outstanding immediately after such issuance.
. In the event we issue "common stock equivalents," as defined in the
Warrants, at a price per share less than the lower of the Warrant
exercise price or the closing price of our Common Stock on the date
preceding such issuance, then the Warrant exercise price will be
adjusted to the price determined by multiplying the Warrant exercise
price by the fraction in which: (i) the numerator equals the total
shares of Common Stock outstanding immediately prior to such issuance,
plus the number of shares of Common Stock equal in value to the
aggregate consideration for the issued "common stock equivalents," based
on a price equal to the greater of the Warrant exercise price or the
closing price of our Common Stock on the date preceding such issuance;
and (ii) the denominator equals the total shares of Common Stock
outstanding immediately after such issuance.
. In the event we purchase, redeem or otherwise acquire any shares of our
Common Stock at a price per share greater than the closing price of our
Common Stock on the date preceding such event then the Warrant exercise
price will be adjusted to the price determined by multiplying the
Warrant exercise price by the fraction in which: (i) the numerator
equals the total shares of Common Stock outstanding immediately prior to
such event, minus the number of shares of Common Stock equal in value to
the aggregate consideration for the total number of shares of Common
Stock purchased, redeemed or otherwise acquired at the applicable
closing price; and (ii) the denominator equals the total shares of
Common Stock outstanding immediately after such event.
. Upon the adjustment of the Warrant exercise price as a result of any
of the events set forth above, the number of shares of Common Stock
underlying the Warrants will be adjusted to the amount obtained by
multiplying the number of shares of Common Stock underlying the Warrants
immediately prior to such Warrant exercise price adjustment by the
fraction in which: (i) the numerator equals the Warrant exercise price
prior to such adjustment; and (ii) the denominator equals the adjusted
Warrant exercise price.
SELLING SHAREHOLDERS
The shares of Common Stock being offered by the selling shareholders are
issuable (1) upon conversion of, or issuance of Common Stock dividends on the
Series A Preferred Stock or (2) upon exercise of the related Warrants. For
additional information regarding the Series A Preferred Stock, see "Description
of Series A Cumulative Convertible Preferred Stock and Related Warrants --
Series A Cumulative Convertible Preferred Stock." We are registering the shares
in order to permit the selling shareholders to offer the shares of Common Stock
for resale from time to time. Except for the ownership of the Series A Preferred
Stock and the related Warrants, the selling shareholders have not had any
material relationship with us within the past three years.
The table below lists the selling shareholders and other information
regarding the beneficial ownership of the Common Stock by each of the selling
shareholders. The second column lists, for each selling shareholder, the number
of shares of Common Stock, based on its ownership of Series A Preferred Stock
and related Warrants, that would have been issuable to the selling shareholders
on November 17, 2000 assuming conversion of all Series A Preferred Stock,
accrued dividends and the exercise of all Warrants held by such selling
shareholders on that date, without regard to any limitations on conversions or
exercise. Because conversion of the Series A Preferred Stock is based on a
formula that depends on the market price of our Common Stock, the numbers listed
in the second column may fluctuate from time to time. The third column lists
each selling shareholder's pro rata portion, based on its ownership of Series A
Preferred Stock, of the 32,400,213 shares of Common Stock being offered by this
prospectus, which includes shares of Common Stock paid as dividends on the
Series A Preferred Stock through December 31, 2000.
We determined the number of shares of Common Stock to be offered for resale
by this prospectus in order to adequately cover a reasonable increase in the
number of shares of Common Stock required. Our calculation of the number of
shares to be offered for resale assumes a conversion price of $1.00. In
accordance with the terms of the registration rights agreement with the holders
of the Series A Preferred Stock, this prospectus covers the resale of the number
of shares of Common Stock issuable upon conversion of the Series A Preferred
Stock to the extent such number of shares of Common Stock exceeds the number of
shares of Common Stock included in the amended registration statement we filed
with the SEC on April 11, 2000, excluding the shares of Common Stock issuable
upon exercise of the related Warrants. Because the conversion of the Series A
Preferred Stock into Common Stock is based on a formula that depends upon the
market price of our Common Stock, the number of shares that will actually be
issued upon conversion may be more than the 32,400,213 shares being offered by
this prospectus. The fourth column assumes the sale of all of the shares offered
by each selling shareholder.
Under the Certificate of Designation, Preferences and Rights of Series A
Cumulative Convertible Preferred Stock and under the terms of the Warrants, no
selling shareholder may convert shares of Series A Preferred Stock or exercise
the Warrants, respectively, to the extent such conversion or exercise would
cause such selling shareholder's beneficial ownership of our Common Stock (other
than deemed beneficially owned through ownership of unconverted shares of the
Series A Preferred Stock and exercise of the related Warrants) to exceed 4.99%
of the outstanding shares of our Common Stock. The number of shares in the
second column does not reflect this limitation. The selling shareholders may
sell all, some or none of their shares in this offering. See "Plan of
Distribution."
10
Securities Securities Which Securities
Beneficially Owned Prior to May be Sold in the To Be Owned
Name of Shareholder Offering Offering After Offering (1)
Leonardo, L.P.(2) 11,167,524 10,800,071 0
Peconic Fund, Ltd.(3) 11,057,381 10,650,071 0
HFTP Investment, L.L.C.(4) 11,019,207 10,950,071 0
(1) Assumes all shares of Common Stock underlying the Series A Preferred Stock
and related Warrants will be sold by the selling shareholders.
(2) Angelo, Gordon & Co., L.P. ("Angelo Gordon") is a general partner of
Leonardo, L.P. and consequently has voting control and investment
discretion over securities held by Leonardo, L.P. Angelo Gordon disclaims
beneficial ownership of the shares held by Leonardo, L.P. Mr. John M.
Angelo, the Chief Executive Officer of Angelo Gordon, and Mr. Michael L.
Gordon, the Chief Operating Officer of Angelo Gordon, are the sole general
partners of AG Partners, L.P., the sole general partner of Angelo Gordon.
As a result, Mr. Angelo and Mr. Gordon may be considered beneficial owners
of any shares deemed to be beneficially owned by Angelo Gordon.
(3) Ramius Capital Group, LLC ("Ramius Capital") is the investment adviser of
Peconic Fund, Ltd. ("Peconic") and consequently has voting control and
investment discretion over securities held by Peconic. Ramius Capital
disclaims beneficial ownership of the shares held by Peconic. Mr. Peter A.
Cohen, Mr. Morgan B. Stark and Mr. Thomas W. Strauss are the sole managing
members of C4S& Co., LLC, the sole managing member of Ramius Capital. As a
result, Messrs. Cohen, Stark and Strauss may be considered beneficial
owners of any shares deemed to be beneficially owned by Ramius Capital.
(4) Promethean Asset Management, LLC, a New York limited liability company
("Promethean"), serves as investment manager to HFTP Investment, L.L.C.
("HFTP") and may be deemed to share beneficial ownership of the shares
beneficially owned by HFTP by reason of shared power to vote and to dispose
of the shares beneficially owned by HFTP. Promethean disclaims beneficial
ownership of the shares beneficially owned by HFTP. Mr. James F. O'Brien,
Jr. indirectly controls Promethean. Mr. O'Brien disclaims beneficial
ownership of the shares beneficially owned by Promethean and HFTP.
PLAN OF DISTRIBUTION
We have filed a registration statement relating to the shares of Common
Stock being offered hereunder in connection with the Registration Rights
Agreement, dated January 13, 2000, by and among Xceed, Leonardo, L.P., Peconic
Fund, Ltd. and HFTP Investment, L.L.C. and the Agreement, dated April 4, 2000,
by and among Xceed, Leonardo, L.P. Peconic Fund, Ltd. and HFTP Investment,
L.L.C.
The selling shareholders (and their respective pledgees, transferees,
donees or other successors in interest) may offer and sell the shares of Common
Stock covered by this prospectus from time to time as follows:
. in the open market
. on the Nasdaq National Market;
. in privately negotiated transactions;
11
. in an underwritten offering; or
. a combination of such methods or any other legally available means.
Such sales may be made at varying prices determined by reference to, among
other things:
. market value prevailing at the time of the sale;
. prices related to the then-prevailing market price; or
. negotiated prices.
Negotiated transactions may include:
. purchases by a broker-dealer as principal and resale by such broker-
dealer for its account pursuant to this prospectus;
. ordinary brokerage transactions and transactions in which a broker
solicits purchasers; or
. block trades in which a broker-dealer so engaged will attempt to sell
the shares as agent but may take a position and resell a portion of the
block as principal to facilitate the transaction.
In connection with distributions of our Common Stock, any selling
shareholder may:
. enter into hedging transactions with broker-dealers and the broker-
dealers may engage in short sales of our Common Stock in the course of
hedging the positions they assume with the selling shareholders;
. sell our Common Stock short and deliver the Common Stock to close out
such short positions;
. enter into option or other transactions with broker-dealers that involve
the delivery of our Common Stock to the broker-dealers, which may then
resell or otherwise transfer such Common Stock; and
. loan or pledge our Common Stock to a broker-dealer which may then sell
our Common Stock so loaned or upon a default may sell or otherwise
transfer the pledged Common Stock.
Broker dealers may receive commissions or discounts from the selling
shareholders in amounts to be negotiated immediately prior to the sale. The
selling shareholders and any broker executing selling orders on behalf of the
selling shareholders may be deemed to be an "underwriter" within the meaning of
the Securities Act. Commissions received by any such broker may be deemed to be
underwriting commissions under the Securities Act.
USE OF PROCEEDS
The shares of Common Stock covered by this prospectus will be offered for
the account of the selling shareholders. Accordingly, we will not receive any
proceeds from the sale of the shares of Common Stock. The principal reason for
this offering is to enable the selling shareholders to resell the Common Stock
they acquire on the conversion of the Series A Preferred Stock and the exercise
of the Warrants.
LEGAL MATTERS
The validity of the shares of Common Stock offered hereby will be passed upon
for us by Akin, Gump, Strauss, Hauer & Feld, L.L.P.
12
EXPERTS
The consolidated financial statements for the year ended August 31, 2000
and 1999, incorporated in this prospectus by reference from the company's annual
report on Form 10-K for the year ended August 31, 2000, have been audited by
Deloitte & Touche LLP, independent auditors, as stated in their report, which is
incorporated herein by reference, and have been so incorporated in reliance upon
the report of such firm given upon their authority as experts in accounting and
auditing.
Our consolidated financial statements for the fiscal year ended August 31,
1998 incorporated in this prospectus by reference to our annual report on Form
10-K for the fiscal year ended August 31, 2000, has been audited by Holtz
Rubenstein & Co., LLP, independent auditors, as stated in their report, which is
incorporated in reliance upon the report of such firm given upon their authority
as experts in accounting and auditing.
WHERE YOU CAN FIND MORE INFORMATION
We have filed with the Securities and Exchange Commission a registration
statement on Form S-3, of which this prospectus is a part, under the Securities
Act with respect to the shares of Common Stock offered hereby. This prospectus
does not contain all of the information included in the registration statement.
Statements contained in this prospectus concerning the provisions of any
document are not necessarily complete. You should refer to the copy of these
documents filed as an exhibit to the registration statement or otherwise filed
by us with the SEC for a more complete understanding of the matter involved.
Each statement concerning these documents is qualified in its entirety by such
reference.
We are also subject to the informational requirements of the Securities
Exchange Act of 1934. In accordance with the Exchange Act, we file reports,
proxy statements and other information with the SEC. The registration statement,
including the attached exhibits and schedules, may be inspected and copied at
the public reference facilities maintained by the SEC, Room 1024, Judiciary
Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549 and at the regional
offices of the Commission located at Seven World Trade Center, New York, New
York 10048, and 500 West Madison Street, Chicago, Illinois 60661. Please call
the SEC at 1-800-SEC-0330 for further information about the public reference
rooms. The SEC maintains a Web site that contains reports, proxy and information
statements and other information regarding registrants that file electronically
with the SEC. Copies of the registration statement and the reports, proxy and
information statements and other information that we file with the SEC may be
obtained from the SEC's Internet address at http://www.sec.gov.
The SEC allows us to "incorporate by reference" into the prospectus the
information we have filed with them. The information incorporated by reference
is an important part of this prospectus and the information that we file
subsequently with the SEC will automatically update this prospectus. The
information incorporated by reference is considered to be part of this
prospectus. We incorporate by reference the documents listed below and any
filings we make with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the
Securities Exchange Act of 1934, as amended, after the initial filing of this
registration statement that contains this prospectus and prior to the time that
we sell all the securities offered by this prospectus:
. Our Definitive Proxy Statement on Form 14A for the special meeting of
shareholders held on October 5, 2000, filed with the SEC on September 8,
2000;
. Our Annual Report on Form 10-K for the year ended August 31, 2000, filed
with the SEC on November 16, 2000;
13
. Our Current Report on Form 8-K filed with the SEC on September 22, 2000;
and
. Our Current Report on Form 8-K filed with the SEC on November 6, 2000.
You may request a copy of these documents, which will be provided to you at
no cost, by contacting: Worldwide Xceed Group Inc., 233 Broadway, New York, New
York, 10279, Attention: Investor Relations, (212) 553-2427.
14
You should rely only on the information
contained or incorporated by reference in this 32,400,213 Shares
prospectus. We have not authorized anyone to
provide you with different or additional [WORLDWIDE XCEED GROUP LOGO]
information. This prospectus is not an offer
to sell nor is it seeking an offer to buy Common Stock
shares of our Common Stock in any jurisdiction
where the offer or sale is not permitted. The PROSPECTUS
information contained or incorporated by ----------
reference in this prospectus is correct as of
the date of this prospectus, regardless of the
time of the delivery of this prospectus or any
sale of our Common Stock.
TABLE OF CONTENTS
-----------------
Page
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Worldwide Xceed Group, Inc.............................. 1
Risk Factors............................................ 3
Forward-Looking Statements.............................. 6
Description of Series A Cumulative Convertible
Preferred Stock and Related Warrants................... 7
Selling Shareholders.................................... 10
Plan of Distribution.................................... 12
Use of Proceeds......................................... 13
Legal Matters........................................... 13
Experts................................................. 13
Where You Can Find More Information..................... 13
November 29, 2000