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):
September 17, 1998 (September 9, 1998)
X-ceed, Inc.
(Exact name of registrant as specified in its charter)
Delaware
(State or Other Jurisdiction of Incorporation)
0-13049 13-3006788
(Commission File Number) (I.R.S. Employer Identification No.)
488 Madison Avenue, New York, New York 10022
(Address and zip code of principal executive offices)
212-753-5511
(Registrant's telephone Number)
Item 2. ACQUISITION OR DISPOSITION OF ASSETS
On September 9, 1998, X-ceed, Inc. (the "Company" or "X-ceed")
finalized a Plan of Merger with Mercury Seven, Inc. ("Mercury"), a privately
held Delaware corporation specializing in development of Internet based
businesses.
Under the Plan of Merger, Mercury was merged into a newly
created Delaware subsidiary of the Company, X-ceed Merger Inc. Upon completion
of the merger, X-ceed Merger Inc.'s name was changed to Mercury Seven, Inc., and
as such, Mercury Seven, Inc. will operate as a wholly owned subsidiary of the
Company. The Plan of Merger was structured as a reorganization under the
provisions of Section 368 of the Internal Revenue Code of 1986, as Amended.
As consideration for the transaction, the principal
shareholders of Mercury received in exchange for their stock ownership of
Mercury in the aggregate 1,073,333 shares of restricted common stock of X-ceed
having a market value of approximately $8,050,000, together with cash
consideration of $1,500,000. Pursuant to employment agreements with the Company,
the principal shareholders of Mercury will continue to direct the daily affairs
of Mercury.
Mercury is engaged in the business of Internet consulting,
marketing and development in creating Internet-based businesses. Among its
clients are Madison Square Garden, the New York Rangers, Arthur Anderson & Co.,
Radio City Music Hall and the Hearst Corporation. Through its ChannelSeven
division, it offers cross-marketing navigational technologies and centralized
media advertising management to connect Internet professional with valuable
resources and services. Its clients include Netscape, Doubleclick, GTE Superpage
and the @Home Network.
On September 14, 1998, the Company completed a Plan of Merger
with Zabit and Associates, Inc. ("Zabit"), a privately owned California
corporation engaged in corporate communications. It is intended that the Merger
qualify as a tax-free reorganization with the meaning of Section 368(a) of the
Internal Revenue Code of 1986, as amended (the "Code").
The Company paid a total consideration in exchange for all of
the issued and outstanding Zabit common stock consisting of 2,258,724 shares of
restricted common stock of X-ceed and the issuance of notes to the two principal
shareholders of Zabit: (i) two notes totaling $4.8 million due March 15, 1999
together with interest at the Prime Rate per annum and (ii) two notes totaling
$1,930,208 due on or before September 14, 2002 together with interest at 7% per
annum. In a separate transaction, the Company purchased all of the issued and
outstanding common stock of Water Street Design Group, Inc., a company engaged
in design and production and affiliated with Zabit, for $2 million in cash. The
Company purchased in a separate transaction the trade names and trademark of
Zabit for $3.2 million in cash. The total consideration paid in connection with
all of the foregoing transactions amounted to approximately $29.5 million.
Zabit was founded by William N. Zabit and Joyce Wesolowski in
1993. Since that time, Zabit has been engaged in providing creative solutions to
corporate communications, both internally and externally. Zabit, which is
headquartered in Sausalito, California, presently employs
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approximately 70 employees and maintains regional centers in Sausalito, Chicago
and New York. Zabit will operate as a separate division of X-ceed.
Zabit's present clients include Aetna Life Insurance Company,
Advanced Micro Devices, Inc., Cirrus Logic Inc., Dell Computer Inc., Electronic
Data Systems, Inc., Fidelity Investments Institutional Services Company, Inc.,
Fireman's Fund Insurance Company and numerous other major corporate clients.
As part of the transaction, William N. Zabit entered into a
four-year employment agreement with X-ceed. Under the agreement, Mr. Zabit, who
will receive a base salary of $400,000 annually, has now been named president
and chief operating officer of X-ceed and has been appointed a director of the
Company until the Company's next annual meeting. Mr. Bradley K. Nelson has also
entered into a four-year employment agreement with X-ceed. Mr. Nelson will
receive a base salary of $300,000 per year and has been named president of the
Zabit division.
As a condition to closing both the Mercury Seven and Zabit
mergers, the Board of Directors obtained from an independent advisory firm
fairness opinions concluding that both transactions were fair from a financial
point of view to the stockholders of X-ceed and X-ceed.
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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.
X-ceed, Inc.
(Registrant)
By: /s/ Werner Haase
Werner Haase, President
DATED: September 17, 1998
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EXHIBITS
2(e) Agreement and Plan of Merger by and among X-ceed, Inc., X-ceed Merger
Inc., Mercury Seven, Inc., and the Shareholders of Mercury Seven, Inc.
2(f) Certificate of Merger of Mercury Seven, Inc. into X-ceed Merger Inc.
2(g) Agreement and Plan of Merger among X-ceed, Inc. Zabit & Associates,
Inc. and the Shareholders Named Therein
2(h) Certificate of Merger of Zabit and Associates, Inc. into X-ceed, Inc.
10(j) Stock Purchase Agreement among X-ceed, Inc., William N. Zabit and Joyce
M. Wesolowski
10(k) Purchase Agreement by and among X-ceed, Inc., William N. Zabit and
Joyce M. Wesolowski
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