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EX-2.1 - EX-2.1 - LOCAL Corp | a59879exv2w1.htm |
EX-99.1 - EX-99.1 - LOCAL Corp | a59879exv99w1.htm |
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 of 15(d) of the Securities Exchange Act of 1934
Pursuant to Section 13 of 15(d) of the Securities Exchange Act of 1934
July 8, 2011
Date of Report (Date of earliest event reported)
Date of Report (Date of earliest event reported)
LOCAL.COM CORPORATION
(Exact name of registrant as specified in its charter)
Delaware (State or other jurisdiction of incorporation) |
001-34197 (Commission File Number) |
33-0849123 (IRS Employer Identification No.) |
7555 Irvine Center Drive
Irvine, California 92618
(Address of principal executive offices, zip code)
Irvine, California 92618
(Address of principal executive offices, zip code)
(949) 784-0800
(Registrants telephone number, including area code)
(Registrants telephone number, including area code)
N/A
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the
filing obligation of the issuer under any of the following provisions:
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
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Item 1.02 Termination of a Material Definitive Agreement.
On July 13, 2011, Local.com Corporation (the Registrant) terminated that certain Yahoo! Publisher
Network Agreement dated August 25, 2010, as subsequently amended (the Yahoo Agreement), by and
between the Registrant and Yahoo! Inc. (Yahoo) effective July 31, 2011. The terminated Yahoo
Agreement provides for the distribution of Yahoos paid search results by Registrant for which the
Registrant is compensated. The Registrant continues to source a material portion of its paid
traffic from Yahoo. The Registrant terminated the Yahoo Agreement because it no longer generated as
much revenue for the Registrant as it had previously generated and the Registrant has entered into
other agreements with third parties.
Item 2.01 Acquisition or Disposition of Assets.
On July 11, 2011, Local.com Corporation (the Registrant) issued a press release announcing it had
acquired Screamin Media Group, Inc., a Delaware corporation (SMG). The acquisition became
effective on July 9, 2011, following the execution by the Registrant on July 8, 2011 of an
Agreement and Plan of Merger (the Agreement) by and among the Registrant, Screamin Media Group,
Inc., a Delaware corporation (SMG), Agile Acquisition Corporation, a Delaware corporation and
wholly-owned subsidiary of the Registrant (Subcorp), and Dan Griffith, as Stockholders Agent
(the Stockholders Agent) pursuant to which Subcorp was merged with and into SMG and SMG became a
wholly-owned subsidiary of the Registrant (the Merger). As consideration for the Merger, the
Registrant paid upfront consideration of $5,000,000 in cash, up to 727,378 shares of Local.com
common stock, $0.00001 par value (the Shares), and $5,000,000 in secured promissory notes (the
Notes), subject to adjustment as described below (collectively, the Merger Consideration). The
cash portion of the Merger Consideration payable to the SMG Stockholders will be reduced by
$862,500 to repay certain debt obligations of SMG immediately following the closing. The Shares
actually issued will be reduced to whole share amounts and any fractional shares converted to cash
at approximately $3.437 per share, which is the twenty (20) day trailing average close price of the
Shares prior to July 7, 2011. The aggregate amount of Notes issued will be reduced by up to
$2,378,000, including $500,000 to repay a promissory note held by the Registrant and up to
$1,878,000 to establish an escrow fund for indemnification claims asserted by the Registrant
against SMG consistent with the terms of the Agreement (the Escrow Fund). The cash portion of the
Merger Consideration was funded from the Registrants cash on hand. Allocation of the purchase
price will be determined based on fair market valuation of the net assets acquired.
Subject to meeting certain additional financial performance milestones throughout the two (2) year
period beginning July 1, 2011, as more particularly described in the Agreement, the SMG
Stockholders will be eligible to receive an aggregate of up to an additional $20,000,000 (the
Earn-out). The Earn-Out may be paid in a combination of cash and Local.com common stock, provided
that any such payments are comprised of at least twenty five percent (25%) cash and the Registrant
will not issue twenty percent (20%) or more of its common stock outstanding immediately prior to
the closing date of the Merger in connection with this transaction. The Registrant intends to file
a registration statement on Form S-3 within twenty (20) days of the date of the Agreement in order
to cover the resale of the Shares issued in connection with the Merger, including any subsequently
issued shares of Local.com common stock that may be issued in connection with the Earn-out.
The Agreement contains representations and warranties of the parties that are customary for a
transaction of this type, which generally survive for a period after the closing date. The
representations and warranties made with respect to SMG are qualified by information contained in
confidential disclosure schedules provided to the Registrant in connection with the execution of
the Agreement. Although certain of the information contained in the disclosure schedules may be
non-public, the Registrant does not believe that this information is required to be publicly
disclosed under the Federal securities laws. Moreover, certain of these representations and
warranties may not be accurate or complete as of a specific date because they are subject to a
contractual standard of materiality that may be different from the standard generally applied under
the Federal securities laws or were used for the purpose of allocating risk between the Registrant
and the SMG Stockholders, rather than establishing matters as facts. Accordingly, you should not
rely on these representations and warranties as statements of fact.
Additionally, Earn-Out milestones set forth in the Agreement are not
projections and should not be relied upon in any way. Such Earn-Out
milestones constitute forward-looking statements within the meaning
of the Private Securities Litigation Reform Act of 1995.
The SMG Stockholders agreed to defend, indemnify and hold harmless the Registrant from and against
losses arising out of or resulting from (i) any breach of any representation or warranty made by
SMG and the SMG
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Stockholders in the Agreement, the disclosure letter, or certain of the closing documents, (ii) any
breach of any covenant or obligation of SMG in the Agreement or certain of the closing documents,
(iii) any act of fraud or intentional misrepresentation of SMG and the SMG Stockholders related to
the Agreement, and (iv) certain other matters. The indemnification obligations of the SMG
Stockholders are subject to certain caps and survival periods, each as more particularly described
in the Agreement.
The Registrant and SMG also agreed to establish an escrow fund in an amount to be determined
between $1,250,000 and $1,878,000 (the Escrow Fund) from the Merger Consideration to secure the
Registrants rights to seek indemnification under the Agreement, as well as any adjustment to the
Merger Consideration that might be required. The Escrow Fund will terminate thirty seven (37)
months from the date of the Agreement, subject to extension for disputed claim amounts. The
Registrant, SMG, and the SMG Stockholders Agent and Computershare Trust Company, N.A. (as escrow
agent) entered into a separate agreement with respect to the Escrow Fund. The escrow agreement does
not contain any obligations, rights or other provisions that are material to the Registrant.
The foregoing description of the Agreement is qualified in its entirety by reference to the
Agreement, which is attached hereto as Exhibit 2.1 and is incorporated herein by reference.
On July 11, 2011, the Registrant issued a press release announcing the execution of the Agreement.
The press release is attached as Exhibit 99.1 and is incorporate herein by reference.
Item 3.02 Unregistered Sales of Equity Securities.
The information contained in Item 2.01 of this Current Report on Form 8-K is incorporated herein by
reference.
Item 9.01 Financial Statements and Exhibits.
a) | Financial statements of businesses acquired. | |
The financial statements required by this item will be filed within 71 days of the date of this initial report on Form 8-K. | ||
b) | Pro forma financial information. | |
The financial statements required by this item will be filed within 71 days of the date of this initial report on Form 8-K. | ||
d) | Exhibits |
2.1 | Agreement and Plan of Merger by and among Local.com Corporation, Agile Acquisition Corporation, Screamin Media Group, Inc. and Dan Griffith, as stockholders agent dated July 8, 2011. | ||
99.1 | Press Release of Local.com Corporation dated July 11, 2011. |
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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.
LOCAL.COM CORPORATION |
||||
Date: July 14, 2011 | By: | /s/ Kenneth S. Cragun | ||
Kenneth S. Cragun | ||||
Chief Financial Officer |
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