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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
November 8, 2000
Date of earliest event reported
OZ.COM
(Exact name of Registrant as specified in its charter)
California 000-30701 95-4560875
(State of (Commission File No.) (IRS Employer
incorporation or Identification No.)
organization)
Snorrabraut 54
Reykjavik, Iceland
(Address of principal executive offices)
IS-105
(Zip code)
(011 354) 535-0000
(Registrant's telephone number, including area code)
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Item 1. Not Applicable
Item 2. Acquisition or Disposition of Assets
On November 8, 2000, the Registrant, OZ.COM, completed its acquisition
of all of the outstanding voting capital stock of MCE Holding Corporation. MCE
Holding Corporation was a strategic alliance (the "Strategic Alliance") of
Microcell Capital II, Inc. ("Microcell") and Ericsson Canada Inc. ("Ericsson
Canada") formed to hold all of the issued and outstanding capital stock of
3044016 Nova Scotia Company, a recently organized company based in Montreal,
Canada which was formed to develop mobile Internet applications for network
operators in Canada. The name of 3044016 Nova Scotia Company was changed to
OZ.COM Canada Company ("OZ Canada") following the closing of the transaction.
The transaction was closed pursuant to two Share Exchange Agreements (the
"Acquisition Agreements") dated November 8, 2000 by and between OZ.COM and each
of Microcell and Ericsson Canada as the former stockholders of MCE Holding
Corporation. The descriptions in this 8-K of the Acquisition Agreements and
other agreements entered into in connection therewith do not purport to be
complete and are qualified in their entirety by the provisions of such
agreements, which agreements were filed on November 14, 2000 as exhibits to
OZ.COM's Quarterly Report on Form 10-QSB for the period ended September 30,
2000.
The acquisition was structured as a stock-for-stock exchange in which
OZ.COM issued an aggregate of 16,475,131 shares of its common stock to Microcell
and Ericsson Canada in exchange for all of the issued and outstanding stock of
MCE Holding Corporation. Total consideration given, including direct acquisition
costs, aggregated approximately $26.4 million. OZ.COM will account for the
acquisition as a purchase with the results of OZ Canada included from the
acquisition date. There were no operations prior to the acquisition. The excess
of the purchase price over the estimated fair value of tangible net assets
acquired amounted to approximately $24.4 million, with $18.4 million
attributable to goodwill and $6 attributable to a fully paid-up iPulse(TM) 1.5
license for the benefit of Microcell and its affiliates. OZ.COM will amortize
the goodwill on a straight-line basis over an estimated useful life of 5 years
and the other intangible assets on a straight-line basis over an estimated
useful life of 3 years. The estimated fair values and useful lives are a
preliminary determination based on available information. The actual
determination may differ from these estimates once a valuation of the assets has
been completed.
The acquired assets consist of licensed technology, cash, property and
equipment, and other tangible and intangible assets that are used in the
business of developing and marketing Internet application technology for
wireless service providers. OZ.COM intends to continue these uses of the assets.
In connection with the acquisition, OZ.COM entered into a shareholder
agreement among Microcell and two of OZ.COM's directors and officers, Skuli
Mogensen and Gudjon Mar Gudjonsson. This agreement gives Microcell the right to
participate in any sales of OZ.COM shares by either Mr. Mogensen or Mr.
Gudjonsson and, with some exceptions, to purchase pro rata shares of OZ.COM
securities offered by OZ.COM. In addition, Messrs. Mogensen and Gudjonsson have
agreed to vote a sufficient number of OZ.COM shares to enable a nominee of
Microcell to sit on the board of directors of OZ.COM.
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OZ.COM also entered into a shareholder agreement with Ericsson Canada,
Skuli Mogensen and Gudjon Mar Gudjonsson. This agreement gives Ericsson Canada
the right to participate in any sales of OZ.COM's shares by either Mr. Mogensen
or Mr. Gudjonsson and, with some exceptions, to purchase pro rata shares of
OZ.COM's securities offered by OZ.COM.
The Acquisition Agreement with Microcell grants Microcell the right,
during the period from February 15, 2002 until April 15, 2002, to require OZ.COM
to repurchase the 11,405,860 shares delivered to Microcell in connection with
the acquisition at the price of $4,500,000, if prior to February 15, 2002 OZ.COM
fails to complete a firmly underwritten public offering pursuant to a
registration statement under the Securities Act of 1933, as amended ("Securities
Act"), or a public offering in which OZ.COM's shares are listed or designated
for trading on any "designated offshore securities market" as such term is
defined in Regulation S under the Securities Act, which offering, in either
case, results in a market capitalization of not less than $225 million. The
11,405,860 shares that are subject to this right have an issue value of $18.2
million which will be recorded in shareholders' equity in OZ.COM's consolidated
balance sheet less the amount related to the redemption value of $4.5 million.
The redemption value of $4.5 million will be recorded in temporary equity on the
balance sheet.
Prior to the acquisition, OZ Canada had entered into a General
Co-Operation Development Agreement ("Microcell GCDA") with Microcell Labs, Inc.
("Microcell Labs") on November 8, 2000, pursuant to which Microcell Labs agreed
to use OZ Canada as its preferred development resource for development work and
consulting services in the field of wireless Internet applications under the
terms and conditions of the Microcell GCDA. Under the terms of the Microcell
GCDA, Microcell Labs has committed to purchasing $9 million in consulting and
development services and technology licenses during the term of the Microcell
GCDA. OZ Canada will have full ownership of the products developed under the
Microcell GCDA and their related intellectual property rights. However, if the
products are unrelated to OZ Canada's product offerings or if the products are
completed by Microcell Labs as a result of OZ Canada's breach of the Microcell
GCDA, Microcell Labs will own the product and its related intellectual property
rights, with OZ Canada retaining the right to use, sell, and distribute the
product outside of Canada for three years. Microcell Labs will have a license to
use, sell and distribute for commercial use by Microcell Labs and its affiliates
all products developed under the Microcell GCDA. The license shall be royalty
free, except that Microcell Labs will pay to OZ Canada 10% of its net revenues
attributable to the sale or license of the products during the three year term
after the commercial launch of the products. OZ Canada will pay to Microcell
Labs 10% of all of its net revenues attributable to the sale or license of
products developed under the Microcell GCDA during the three year term
commencing with the commercial launch of the products. The term of the Microcell
GCDA is three years, unless earlier terminated by written notice of a party upon
a petition for bankruptcy by the other party or the occurrence of a insolvency
related event with respect to the other party.
OZ Canada also had concluded, prior to the acquisition, a Specific
Development and Consulting Agreement ("Microcell SDCA") with Microcell Labs
dated November 8, 2000 pursuant to which OZ Canada granted to Microcell Labs a
non-exclusive, non-transferable, non-revocable license to use iPulse(TM) 1.5.
Except for the revenue sharing payments under the Microcell GCDA the license is
royalty-free. Ericsson had granted to MCE Holding Corporation the right to grant
a license to iPulse(TM) 1.5 and agreed to the assignment of this right to OZ
Canada.
In addition, OZ Canada had entered into a Specific Co-Operation and
Development Agreement with Ericsson Canada Inc. on November 8, 2000 ("Ericsson
SCDA"), prior to the acquisition, pursuant to which OZ Canada will provide
consulting and development services in the areas of mobile Internet applications
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for third generation ("3G") mobile telephony platforms. The Ericsson SCDA is an
agreement under the General Co-Operation and Development Agreement entered into
on November 1, 2000 between an affiliate of Ericsson Canada, Ericsson Radio
Systems AB ("Ericsson Radio Systems"), and OZ.COM. Under the terms of the
Ericsson SCDA, Ericsson Canada will advance to OZ Canada a total of $6 million
in quarterly installments over the Ericsson SCDA's two year term, which
installments will be applied by Ericsson Canada against amounts due for
development work performed under the Ericsson SCDA. OZ Canada will have access
to Ericsson Canada's 3G laboratories and will receive up to 6,000 hours of
assistance from qualified 3G experts for testing of the 3G development work.
Ericsson Canada is a subsidiary of LM Ericsson, Sweden. Another
subsidiary of LM Ericsson, Ericsson, Inc., owns 10,052,431 shares of OZ.COM's
Series A Preferred stock, which is currently convertible into OZ.COM's common
stock on a two for one basis. Under the terms of a shareholders agreement
entered into in February 1999 among Ericsson, Inc., OZ.COM and Messrs. Skuli
Mogensen and Gudjon Mar Gudjonsson, Messrs. Skuli Mogensen and Gudjon Mar
Gudjonsson have agreed to vote a sufficient number of shares to elect a nominee
of Ericsson Inc. to OZ.COM's board of directors. Currently, an Ericsson, Inc.
nominee sits on OZ.COM's board of directors. OZ.COM and Ericsson Radio Systems
entered into a Specific Co-Operation and Development Agreement in February 1999
under which OZ.COM is performing development work for Ericsson Radio Systems
related to Ericsson's iPulse(TM) product, as well as a value added license
distribution agreement under which OZ.COM may offer the iPulse(TM) product to
its customers in exchange for royalties. In addition, OZ.COM and Ericsson Radio
Systems entered into two agency agreements which allow OZ.COM to act as a sales
agent for Ericsson's iPulse(TM) product and allow Ericsson Radio Systems to act
as a sales agent for OZ.COM's mPresence(TM) services offering, in return for
certain sales commissions and referral fees.
Item 3. Not Applicable.
Item 4. Not Applicable.
Item 5. In October 2000 OZ.COM and Ericsson Inc. entered into Amendment Number
One to Shareholder Rights Agreement ("Amendment No. One") which eliminated
Ericsson's right under the Shareholder Rights Agreement dated February 4, 1999
to require OZ.COM to repurchase the shares of Series A Preferred Stock and/or
Common Stock owned by Ericsson under certain terms and conditions. Prior to
Amendment No. One, the Series A Preferred stock held by Ericsson had been
recorded in temporary equity on OZ.COM's consolidated balance sheet. With the
elimination of Ericsson's right of redemption, this Series A Preferred stock
will be transferred to permanent shareholders' equity.
Item 6. Not Applicable.
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Item 7. Exhibits.
Pro Forma financial information required by Article 11 of Regulation
S-X and the financial statements of MCE Holding Corporation will be filed by
amendment no later than 60 days after the date of the initial report.
2.1* Share Exchange Agreement, dated as of November 8, 2000, between
the Registrant and Microcell Capital II Inc.
2.2* Share Exchange Agreement, dated as of November 8, 2000, between
the Registrant and Ericsson Canada Inc.
10.1* Shareholder Agreement, dated as of November 8, 2000, among the
Registrant, Gudjon Mar Gudjonsson, Skuli Mogensen and Microcell
Capital II Inc.
10.2* Shareholder Agreement, dated as of November 8, 2000, among the
Registrant, Gudjon Mar Gudjonsson, Skuli Mogensen and Ericsson
Canada Inc.
10.3* General Co-Operation and Development Agreement, dated as of
November 8, 2000, between Microcell Labs Inc. and OZ.COM Canada
Company (fka 3044016 Nova Scotia Company).
10.4* Specific Development and Consulting Development, dated as of
November 8, 2000, between Microcell Labs Inc. and OZ.COM Canada
Company (fka 3044016 Nova Scotia Company).
10.5* Specific Co-Operation and Development Agreement, dated as of
November 8, 2000, between OZ.COM Canada Company (fka 3044016
Nova Scotia Company) and Ericsson Canada Inc.
10.6 Amendment Number One to Shareholder Rights Agreement, dated as of
October 2000, between Ericsson Inc. and OZ.COM.
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* Filed on November 14, 2000 as an exhibit to the Registrant's Quarterly
Report on Form 10-QSB for the period ended September 30, 2000, and
incorporated by reference herein.
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SIGNATURE
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, thereto duly authorized.
OZ.COM
By: /s/ Robert G. Quinn
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Name: Robert G. Quinn
Title: Chief Financial Officer
(Principal Financial and Accounting
Officer)
Date: November 21, 2000
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EXHIBIT INDEX
2.1* Share Exchange Agreement, dated as of November 8, 2000, between
the Registrant and Microcell Capital II Inc.
2.2* Share Exchange Agreement, dated as of November 8, 2000, between
the Registrant and Ericsson Canada Inc.
10.1* Shareholder Agreement, dated as of November 8, 2000, among the
Registrant, Gudjon Mar Gudjonsson, Skuli Mogensen and Microcell
Capital II Inc.
10.2* Shareholder Agreement, dated as of November 8, 2000, among the
Registrant, Gudjon Mar Gudjonsson, Skuli Mogensen and Ericsson
Canada Inc.
10.3* General Co-Operation and Development Agreement, dated as of
November 8, 2000, between Microcell Labs Inc. and OZ.COM Canada
Company (fka 3044016 Nova Scotia Company).
10.4* Specific Development and Consulting Development, dated as of
November 8, 2000, between Microcell Labs Inc. and OZ.COM Canada
Company (fka 3044016 Nova Scotia Company).
10.5* Specific Co-Operation and Development Agreement, dated as of
November 8, 2000, between OZ.COM Canada Company (fka 3044016 Nova
Scotia Company) and Ericsson Canada Inc.
10.6 Amendment Number One to Shareholder Rights Agreement, dated as of
October 2000, between Ericsson Inc. and OZ.COM.
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* Filed on November 14, 2000 as an exhibit to the Registrant's Quarterly
Report on Form 10-QSB for the period ended September 30, 2000, and
incorporated by reference herein.
