SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report Pursuant to Section 13 or 15(d) of
The Securities Act of 1934
Date of Report (Date of earliest event reported): October 6, 2000
VSOURCE, INC.
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(Exact name of registrant as specified in its charter)
Nevada 000-30326 95-3538903
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(State of incorporation) (Commission (I.R.S. Employer
File Number) Identification Number)
5740 Ralston Street, Suite 110, Ventura, California 93003
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(Address of principal executive offices)
Registrant's telephone number, including area code: (805) 677-6720
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Item 5. OTHER EVENTS
Pursuant to a document dated as of October 4, 2000, Vsource, Inc., a Nevada
corporation ("Registrant" or the "Company"), reached a non-binding preliminary
agreement with Online Transaction Technologies, Inc., a privately owned
California corporation ("OTT"), to merge OTT with a subsidiary of the Company to
be formed. The proposed merger is to be a tax-free reorganization under Section
368(a) of the Internal Revenue Code.
The aggregate purchase price payable at closing of the proposed transaction
(the "Closing") is to be $7,000,000, payable solely in an amount of Company
common stock to be determined by the average closing price of a share of Company
common stock for the 30 calendar days immediately prior to closing (the
"Acquisition Price"). It is to be a condition of Closing that such average
price shall not exceed $19.469 or 175% of the closing price as of October 3,
2000. Such aggregate price shall be subject to adjustment based on, among other
factors, reductions or increases in certain assets and liabilities of OTT, and
other factors to be agreed upon.
As a condition to Closing, two key employees of OTT must enter into
mutually agreeable employment contracts with the Company providing for, inter
alia, salaries of $125,000 and options to purchase 100,000 shares of Vsource
common stock which vest over 24 months and have an exercise price of $6.41 per
share.
Twenty-five percent of the equity securities comprising the aggregate
purchase price will be held for six months in an escrow (the "Escrow
Securities"). The Escrow Securities and Company shares issued to OTT management
shareholders will be the sole recourse for the Company for indemnification
against claims and losses arising from breaches by OTT of representations and
warranties or covenants made pursuant to the definitive agreements. Such
representations and warranties shall terminate after one year. The Escrow
Securities will be valued for purposes of any such indemnification at the
Acquisition Price. OTT shareholders may at their option pay any such indemnity
in cash in lieu of Escrow Securities.
The Company and the shareholders of OTT will each pay their own expenses in
connection with the proposed transaction, provided however that if the
transaction is completed, the Company will pay up to $50,000 of OTT's expenses.
The transaction is contingent upon a number of conditions, including,
without limitation, completion of due diligence without discovering any material
negative information regarding OTT, mutually acceptable definitive agreements,
approval of OTT shareholders, approval of Company board of directors, and
execution of Company employment agreements with certain OTT officers.
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Item 7. FINANCIAL STATEMENTS AND EXHIBITS
The following financial statements and exhibits are filed as part
of this report:
(c) Exhibits in accordance with Item 601 of Regulation S-K:
Exhibit No. Description
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99.1 Press release issued October 5, 2000.
99.2 Term Sheet dated as of October 4, 2000.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, Registrant
has duly caused this report to be signed on its behalf by the undersigned
hereunto duly authorized.
VSOURCE, INC.
Date: October 23, 2000 By: /s/ Robert C. McShirley
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Robert C. McShirley
President, Chief Executive Officer
and Chairman of the Board
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EXHIBIT INDEX
Exhibit No. Description Page No.
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99.1 Press release issued October 5, 2000.
99.2 Term Sheet dated as of October 4, 2000.
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