SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 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) NOVEMBER 23, 1999
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EMARKETPLACE, INC.
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(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 0-14731 33-0558415
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(STATE OR OTHER (COMMISSION (IRS EMPLOYER
JURISDICTION OF FILE NUMBER) IDENTIFICATION NO.)
FORMATION)
255 WEST JULIAN STREET, SUITE 100, SAN JOSE, CA 95110
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(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE (408) 295-6500
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(FORMER NAME OR FORMER ADDRESS, IF CHANGES SINCE LAST REPORT)
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ITEM 2 ACQUISITION OR DISPOSITION OF ASSETS.
On November 23, 1999, eMarketplace, Inc. (the "Company") and its wholly
owned subsidiary, TopTeam, Inc. ("TopTeam"), closed on the acquisition of six
Internet consulting companies (the "Interactive Architects"). In connection with
the acquisition of the Interactive Architects, the Company issued a total of
911,957 shares of its common stock in exchange for shares of common stock of
each of the Interactive Architects. Concurrently therewith, (i) the Company
contributed its newly purchased shares of the Interactive Architects to TopTeam
in exchange for TopTeam's issuance of 3,200,000 shares of its common stock, and
(ii) the stockholders of the Interactive Architects contributed all of the
remaining outstanding shares of the Interactive Architects (the shares not
purchased by the Company) to TopTeam in exchange for the issuance of 3,384,073
shares of TopTeam common stock.
In connection with the acquisition of the Interactive Architects, the
Company loaned TopTeam $1 million in exchange for which TopTeam issued to the
Company a promissory note in the aggregate principal amount of $1 million. The
note bears interest at a rate of seven percent (7%) per annum (the "Note").
Interest payments are due and payable monthly and the principal amount
outstanding is due and payable on November 22, 2001. TopTeam is required to
prepay the Note in full in the event that TopTeam consummates an initial public
offering of its common stock which generates gross proceeds of not less than $25
million. As consideration for the issuance of the Note, the Company received
250,000 shares of TopTeam Common Stock. In addition, the Company purchased
250,000 shares of TopTeam Series A Convertible Preferred Stock for the total
amount of $1 million.
As a result of these transactions, (a) the Company presently owns (i)
3,450,100 shares of TopTeam common stock (50.5% of the total number of shares of
TopTeam common stock outstanding), (ii) 250,000 shares TopTeam Series A
Convertible Preferred Stock, and (iii) rights to purchase 3,200,000 shares of
TopTeam common stock at a purchase price of $7.50 per share, and (b) TopTeam
owns all of the outstanding shares of capital stock of each of the Interactive
Architects.
THE SERIES A CONVERTIBLE PREFERRED STOCK
DESIGNATION AND AMOUNT; RANK. The shares of such series are designated as Series
A Convertible Preferred Stock (the "Series A Preferred Stock") and the number of
shares constituting such series is 250,000, all of which have been issued to the
Company. The Series A Preferred Stock has a par value of $0.001 per share and
ranks senior to TopTeam's common stock.
DIVIDENDS. Holders of Series A Preferred Stock are entitled to receive cash
dividends of $0.24 per share per annum payable on each February 1, May 1, August
1 and November 1, beginning February 1, 2000; provided however, that the
dividends on the Series A Preferred Stock may not be less than the amount paid
on any outstanding shares of common stock.
LIQUIDATION PREFERENCE. In the event of any liquidation, dissolution or winding
up of the affairs of TopTeam, each share of Series A Preferred Stock shall have
a liquidation preference of $4.00 per share plus unpaid dividends that have
accrued to the date of payment, if any. REDEMPTION. Commencing on December 31,
2000, the holders of a majority of the shares of Series A Preferred Stock
outstanding may require that TopTeam redeem the shares of Series A Preferred
Stock held by them at a price equal to $4.00 per share plus accrued and unpaid
dividends.
CONVERSION. Each share of Series A Preferred Stock may be converted by a holder
into one share of TopTeam common stock at any time on or prior to December 25,
2000, subject to certain anit-dilution adjustments. Each share of Series A
Preferred Stock will be automatically converted into shares of common stock upon
the earlier of (i) TopTeam's sale of common stock generating gross proceeds of
not less than $25 million, (ii) the sale of all of substantially all of the
assets or capital stock of TopTeam for aggregate consideration of at least $25
million, or (iii) the date specified by written consent or agreement of the
holders of a majority of the then outstanding shares of Series A Preferred
Stock.
VOTING RIGHTS. Each holder of Series A Preferred Stock shall be entitled to vote
for each share of common stock into which the Series A Stock could be converted.
So long as not less than 20 percent of the Series A Preferred Stock originally
issued is still outstanding, TopTeam may not without first obtaining the
approval (by vote or written consent, as provided by law) of the holders of at
least a majority of the then outstanding shares of Series A Preferred Stock:
(a) alter or change the rights, preferences or privileges of the shares
of Series A Preferred Stock so as to affect adversely the shares of Series A
Preferred Stock;
(b) increase or decrease (other than by redemption or conversion) the
total number of authorized shares of Series A Preferred Stock;
(c) authorize or issue, or obligate itself to issue, any other equity
security, including any other security convertible into or exercisable for any
equity security having a preference over, or being on a parity with, the Series
A Preferred Stock with respect to voting, dividends or upon liquidation; or
(d) amend the TopTeam's Certificate of Incorporation, bylaws or
Certificate of Designation with respect to the Series A Preferred Stock.
The following is a brief description of the acquisition transactions
involving each of the Interactive Architects.
ACQUISITION OF FULL MOON INTERACTIVE GROUP, INC.
As of November 5,1999, a Stock Purchase and Contribution Agreement was
executed among the Company , TopTeam, Full Moon Interactive Group, Inc. ("Full
Moon") and the Sellers identified therein, pursuant to which on November 23,
1999 (i) the Company acquired 520,740 shares of common stock of Full Moon (the "
Full Moon Shares") in exchange for its issuance of 333,274 shares of the
Company's common stock, (ii) TopTeam acquired 520,740 shares of common stock of
Full Moon in exchange for its issuance of 1,099,803 shares of TopTeam, and (iii)
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the Company contributed the Full Moon Shares to TopTeam in exchange for
1,099,803 shares of Common Stock of TopTeam. As a result, Full Moon became a
wholly owned subsidiary of TopTeam; provided however, that certain employees of
Full Moon hold options exercisable for Full Moon common stock. The Company and
TopTeam anticipate exchanging in the near future 98,726 shares of Company common
stock and 300,197 shares of TopTeam common stock for the shares of Full Moon
common stock issuable upon the exercise of such options.
ACQUISITION OF ORRELL COMMUNICATIONS, INC.
As of November 10,1999, a Stock Purchase and Contribution Agreement was
executed among the Company , TopTeam, Orrell Communications, Inc. ("Orrell
Communications ") and the Sellers identified therein, pursuant to which on
November 23, 1999 (i) the Company acquired 50,000 shares of common stock of
Orrell Communications (the " Orrell Shares") in exchange for its issuance of
75,000 shares of the Company's common stock, (ii) TopTeam acquired 50,000 shares
of common stock of Orrell Communications in exchange for its issuance of 300,000
shares of TopTeam, and (iii) the Company contributed the Orrell Shares to
TopTeam in exchange for 300,000 shares of Common Stock of TopTeam. As a result,
Orrell Communications became a wholly owned subsidiary of TopTeam.
ACQUISITION OF DEVRIES DATA SYSTEMS, INC.
As of November 10,1999, a Stock Purchase and Contribution Agreement was
executed among the Company , TopTeam, DeVries Data Systems, Inc. ("DeVries ")
and the Sellers identified therein, pursuant to which on November 23, 1999 (i)
the Company acquired 2,700,000 shares of common stock of DeVries (the " DeVries
Shares") in exchange for its issuance of 265,683 shares of the Company's common
stock, (ii) TopTeam acquired 330,000 shares of common stock of DeVries in
exchange for its issuance of 974,170 shares of TopTeam, and (iii) the Company
contributed the DeVries Shares to TopTeam in exchange for 774,170 shares of
Common Stock of TopTeam. As a result, DeVries became a wholly owned subsidiary
of TopTeam; provided however, that certain employees of DeVries hold options
exercisable for DeVries common stock. The Company and TopTeam anticipate
exchanging in the near future 34,317 shares of Company common stock and 125,830
shares of TopTeam common stock for the shares of DeVries common stock issuable
upon the exercise of such options.
ACQUISITION OF MUCCINO DESIGN GROUP, INC.
As of November 10,1999, a Stock Purchase and Contribution Agreement was
executed among the Company , TopTeam, Muccino Design Group, Inc. ("Muccino ")
and the Sellers identified therein, pursuant to which on November 23, 1999 (i)
the Company acquired 3,613 shares of common stock of Muccino (the " Muccino
Shares") in exchange for its issuance of 100,000 shares of the Company's common
stock, (ii) TopTeam acquired 5,419 shares of common stock of Muccino in exchange
for its issuance of 480,000 shares of TopTeam, and (iii) the Company contributed
the Muccino Shares to TopTeam in exchange for 320,000 shares of Common Stock of
TopTeam. As a result, Muccino became a wholly owned subsidiary of TopTeam.
ACQUISITION OF IMAGE NETWORK, INC.
As of November 9,1999, a Stock Purchase and Contribution Agreement was
executed among the Company , TopTeam, Image Network, Inc.("Image Network") and
the Sellers identified therein, pursuant to which on November 23, 1999 (i) the
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Company acquired 40 shares of common stock of Image Network (the " Image Network
Shares") in exchange for its issuance of 100,000 shares of the Company's common
stock, (ii) TopTeam acquired 60 shares of common stock of Image Network in
exchange for its issuance of 420,000 shares of common stock of TopTeam, and
(iii) the Company contributed the Image Network Shares to TopTeam in exchange
for 280,000 shares of Common Stock of TopTeam. As a result, Image Network became
a wholly owned subsidiary of TopTeam.
ACQUISITION OF ONCOURSE NETWORK, INC.
As of November 19,1999, a Stock Purchase and Contribution Agreement was
executed among the Company , TopTeam, OnCourse Network, Inc. ("OnCourse ") and
the Sellers identified therein, pursuant to which on November 23, 1999 (i) the
Company acquired 238,000 shares of common stock of OnCourse (the " OnCourse
Shares") in exchange for its issuance of 38,000 shares of the Company's common
stock, (ii) TopTeam acquired 238,000 shares of common stock of OnCourse in
exchange for its issuance of 110,000 shares of TopTeam, and (iii) the Company
contributed the OnCourse Shares to TopTeam in exchange for 110,000 shares of
Common Stock of TopTeam. As a result, OnCourse became a wholly owned subsidiary
of TopTeam.
ITEM 5. OTHER EVENTS.
As of November 23, 1999, TopTeam entered into an employment agreement
with Fred H. Walti, pursuant to which Mr. Walti has agreed to serve as TopTeam's
President and Chief Executive Officer for a period of five (5) years. Mr.
Walti's base salary will be at a rate of $170,000 per annum and he is entitled
to receive an annual cash bonus of up to 50% of his then current base salary
upon the achievement of certain performance targets established by TopTeam's
Board of Directors. Mr. Walti has also received options to purchase a total of
250,000 shares of TopTeam common stock at an exercise price of $7.50 per share,
50,000 shares of which vest immediately and the remainder of which vest in four
equal amounts on November 23, 2000, 2001, 2002 and 2003. The employment
agreement with Mr. Wilson contains other customary provisions including
severance arrangements and confidentiality provisions.
As of November 23, 1999, TopTeam entered into an employment agreement
with Robert Wilson, pursuant to which Mr. Wilson has agreed to serve as
TopTeam's Chief Financial Officer for a period of five (5) years. Mr. Wilson's
base salary will be at a rate of $125,000 per annum and he is entitled to
receive an annual cash bonus of up to 25% of his then current base salary upon
the achievement of certain performance targets established by TopTeam's Board of
Directors. Mr. Wilson has also received options to purchase a total of 125,000
shares of TopTeam common stock at an exercise price of $7.50 per share, 25,000
shares of which vest immediately and the remainder of which vest in four equal
amounts on November 23, 2000, 2001, 2002 and 2003. The employment agreement with
Mr. Wilson contains other customary provisions including severance arrangements
and confidentiality provisions.
On November 30, 1999, the Company closed its private offering of common
stock which had commenced in July 1999. Pursuant to the offering, the Company
issued a total of 826,225 shares of common stock raising gross proceeds of
approximately $3,200,000.
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) FINANCIAL STATEMENTS OF BUSINESS ACQUIRED.
The Registrant intends to file required financial statement disclosure
within 60 days following the date on which this Report on Form 8-K is required
to be filed.
(c) EXHIBITS.
(i) Stock Purchase and Contribution Agreement dated as of November 5, 1999, by
and among the Company, TopTeam, Full Moon Interactive Group, Inc. and the
Sellers identified therein.
(ii) Stock Purchase and Contribution Agreement dated as of November 10, 1999, by
and among the Company, TopTeam, Orrell Communications, Inc. and the Sellers
identified therein.
(iii) Stock Purchase and Contribution Agreement dated as of November 10, 1999,
by and among the Company, TopTeam, DeVries Data Systems, Inc. and the Sellers
identified therein.
(iv) Stock Purchase and Contribution Agreement dated as of November 10, 1999, by
and among the Company, TopTeam, Muccino Design Group, Inc. and the Sellers
identified therein.
(v) Stock Purchase and Contribution Agreement dated as of November 9, 1999, by
and among the Company, TopTeam, Image Network, Inc. and the Sellers identified
therein.
(vi) Stock Purchase and Contribution Agreement dated as of November 19, 1999, by
and among the Company, TopTeam, OnCourse Network, Inc. and Kent Rhodes.
(vii) Certificate of Designation with respect to the Series A Convertible
Preferred Stock of TopTeam.
(viii) Promissory Note issued by the Company dated November 23, 1999 in the
principal amount of $1,000,000.
(ix) Employment Agreement between TopTeam and Fred H. Walti, II, dated as of
November 23, 1999.
(x) Employment Agreement between TopTeam and Robert Wilson, dated as of November
23, 1999.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly authorized and caused the undersigned to sign this
Report on the Registrant's behalf.
EMARKETPLACE, INC.
By: /s/ L. WAYNE KILEY
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Name: L. Wayne Kiley
Title: Chief Executive Officer and President
Dated: December 8, 1999
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