Attached files
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| EX-10.2 - STOCKHOLDER AGREEMENT - AutoWeb, Inc. | ex10-2.htm |
| EX-10.1 - MASTER LICENSE AND SERVICES AGREEMENT - AutoWeb, Inc. | ex10-1.htm |
UNITED STATES
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) October 5,
2017
AutoWeb, Inc.
(Exact name of registrant as specified in its charter)
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Delaware
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1-34761
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33-0711569
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(State or other jurisdiction of incorporation)
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(Commission File Number)
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(IRS Employer Identification No.)
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18872 MacArthur Boulevard, Suite 200,
Irvine, California
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92612-1400
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(Address of principal executive offices)
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(Zip
Code)
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Registrant’s telephone number, including area code (949)
225-4500
Not Applicable
(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 registrant
under any of the following provisions:
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Written
communications pursuant to Rule 425 under the Securities Act (17
CFR 230.425)
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Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
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Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17
CFR 240.14d-2(b))
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Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17
CFR 240.13e-4(c))
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Indicate by check mark whether the registrant is an emerging growth
company as defined in Rule 405 of the Securities Act of 1933
(§230.405 of this chapter) or Rule 12b-2 of the Securities
Exchange Act of 1934 (§240.12b-2 of this
chapter).
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Emerging growth company
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If an emerging growth company, indicate by check mark if the
registrant has elected not to use the extended transition period
for complying with any new or revised financial accounting
standards provided pursuant to Section 13(a) of the Exchange
Act.
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Item 1.01
Entry
into a Material Definitive Agreement.
Master
License and Services Agreement
On
October 5, 2017, AutoWeb, Inc., a Delaware corporation
(“AutoWeb” or
“Company”), and
DealerX Partners, LLC, a Florida limited liability company
(“DealerX”),
entered into a Master License and Services Agreement
(“License
Agreement”). Pursuant to the terms of the License
Agreement, AutoWeb will receive a perpetual license to access and
use DealerX’s proprietary platform and technology for
targeted, online marketing (“Platform License”). DealerX will
operate the platform for AutoWeb and provide enhancements to and
support for the DealerX platform (these operation, enhancement, and
support obligations are collectively referred to herein as the
“Platform Support
Obligations”) for an initial five year period
(“Initial Platform Support
Period”), which may be extended in perpetuity as
described below.
The
transaction consideration consists of: (i) $8.0 million in cash
paid to DealerX upon the execution of the License Agreement and
(ii) the right to have issued to DealerX 710,856 shares of
AutoWeb’s
common stock, par value $0.001 per share (“Common
Stock”) (subject to proportional
adjustment for subdivision or combination of the Common Stock as
set forth in the License Agreement), representing approximately
five percent of the Company’s outstanding Common Stock as of
the date the parties entered into the License Agreement
(“Market Capitalization
Shares”) if on or before October 5, 2022: (i)
AutoWeb’s market capitalization averages at least $225
million over a consecutive 90 day period or (ii) there is a change
in control of AutoWeb that reflects a market capitalization of at
least $225 million. In the event that the Market Capitalization
Shares are issued to DealerX, DealerX’s Platform Support
Obligations will continue in perpetuity. Alternatively, upon the
occurrence of certain events prior to the issuance of the Market
Capitalization Shares, AutoWeb may elect to make an additional
lump-sum payment of $12.5 million (“Alternative Cash Payment”) in
order to extend DealerX’s Platform Support Obligations in
perpetuity. If the Alternative Cash Payment is made,
DealerX’s contingent right to receive the Market
Capitalization Shares will be terminated. The events that give rise
to AutoWeb’s election to pay the Alternative Cash Payment
are: (i) a change in control of AutoWeb that reflects a market
capitalization of less than $225 million; (ii) the expiration of
the Initial Platform Support Period; (iii) a change in control of
DealerX; (iv) an AutoWeb bankruptcy or other insolvency event; and
(v) any transfer or
assignment of the License Agreement by AutoWeb where the Platform
Support Obligations have not previously become
perpetual.
In the
event that the Platform Support Obligations expire at the end of
the Initial Platform Support Period without becoming perpetual or
the Platform Support Obligations are otherwise terminated in
accordance with the License Agreement, the Platform License will
continue in effect and the Company will continue to be able to use
and operate the Platform as it exists at the time the Platform
Support Obligations expire or terminate, without further benefit of
the Platform Support Obligations.
The
License Agreement contains representations, warranties, and
covenants that AutoWeb believes are customary for a licensing
transaction of this size and nature.
The
foregoing description of the License Agreement is not complete and
is qualified in its entirety by reference to the Master License and
Services Agreement, a copy of which is filed herewith as Exhibit
10.1 to this Current Report on Form 8-K.
Stockholder
Agreement
Concurrently with
the execution and delivery of the License Agreement, AutoWeb,
DealerX, and Jeffrey Tognetti (DealerX’s Manager and
President), a Designated Restricted Stockholder Affiliate, entered
into a Stockholder Agreement (“Stockholder
Agreement”).
In the
event that the Market Capitalization Shares are issued, the
Stockholder Agreement contains various restrictions and limitations
on transfers of the Market Capitalization Shares. AutoWeb is
granted a right of first refusal on any shares proposed to be
transferred by DealerX and a right to repurchase the Market
Capitalization Shares from DealerX in the event of a change in
control of DealerX. Upon issuance of the Market Capitalization
Shares, DealerX will grant AutoWeb an irrevocable proxy to vote the
Market Capitalization Shares. DealerX also agreed to certain
standstill provisions restricting the acquisition of additional
shares of Common Stock and prohibiting DealerX from engaging in
other actions relating to control of the Company. Certain
restrictions and other provisions of the Stockholder Agreement
terminate after five years. However, the proxy and standstill
provisions will only terminate at such time as DealerX and its
affiliates own less than 4.9% of the outstanding shares of the
Common Stock. The Stockholder Agreement also grants DealerX certain
demand and “piggy back” registration rights with
respect to the Market Capitalization Shares.
The
foregoing description of the Stockholder Agreement does not purport
to be complete and is qualified in its entirety by reference to the
Stockholder Agreement which is filed herewith as Exhibit 10.2 to
this Current Report on Form 8-K and which is incorporated herein by
reference.
The
assertions embodied in the representations, warranties and
covenants included in the License Agreement and Stockholder
Agreement were made solely for purposes of the licensing
transaction and may be subject to important qualifications and
limitations. Moreover, some of those representations, warranties
and covenants may not be accurate or complete as of any specified
date, may be subject to contractual materiality standards or may
have been included for the purposes of allocating risk between the
parties rather than establishing matters as facts. In addition,
certain of the representations and warranties are subject to
knowledge qualifications, which means that they would not be deemed
untrue, inaccurate or incorrect as a result of matters of which the
party making the representation did not have knowledge. For these
reasons, investors should not rely on these representations,
warranties and covenants as statements of factual
information.
Exemption
Under NOL Plan
In
connection with the possible issuance of the Market Capitalization
Shares pursuant to the License Agreement, the Board of Directors of
AutoWeb (“Board”) considered exercising its
discretionary authority under the Company’s Tax Benefit
Preservation Plan (“NOL
Plan”) to deem DealerX not to be an
“Acquiring
Person” (as defined in the NOL Plan) and to grant an
exemption under the NOL Plan to allow DealerX with respect to
DealerX’s beneficial ownership of the Market Capitalization
Shares.
The NOL Plan was
adopted to protect stockholder value by preserving the
Company’s substantial net operating loss carry-forwards and
other tax attributes for United States federal income tax purposes
(“Tax
Benefits”) that can
generally be used to offset future taxable income and therefore
reduce federal income tax obligations. However, the Company’s
ability to use the Tax Benefits will be adversely affected if there
is an “ownership change” of the Company as defined
under Section 382 of the Internal Revenue Code
(“Section
382”). In
general, an ownership change will occur if the Company’s
“5%
shareholders” (as defined
under Section 382) collectively increase their ownership in
the Company by more than 50% over a rolling three-year
period. The NOL Plan was adopted to reduce the likelihood
that the Company’s use of its Tax Benefits could be
substantially limited under Section 382. The NOL Plan is
intended to deter any “Person” (as defined in the NOL
Plan) from becoming an Acquiring Person and thereby jeopardizing
the Company’s Tax Benefits. In general, an Acquiring Person
is any Person, itself or together with all “Affiliates” (as defined in the NOL
Plan) of such Person, that becomes the “Beneficial Owner” (as defined in
the NOL Plan) of 4.90% (“Plan
Limit”) or more of the Company’s outstanding
“Common Stock”
(as defined in the NOL Plan). Under the NOL Plan, the Board may, in
its sole discretion, exempt any person from being deemed an
Acquiring Person for purposes of the NOL Plan if the Board
determines that such person’s ownership of Common Stock will
not be likely to directly or indirectly limit the availability of
the Company’s Tax Benefits or is otherwise in the best
interests of the Company (“Plan Exemption”).
The
Board considered and granted DealerX and its Affiliates a Plan
Exemption with respect to the Market Capitalization Shares, subject
to and in reliance upon DealerX entering into and remaining in
compliance with the terms and conditions set forth in the
Stockholder Agreement.
The
foregoing description of the NOL Plan does not purport to be
complete and is qualified in its entirety by reference to the Tax
Benefit Preservation Plan dated as of
May 26, 2010 between the Company and Computershare Trust Company,
N.A., as rights agent, together with the following exhibits
thereto: Exhibit A – Form of Right Certificate; and Exhibit B
– Summary of Rights to Purchase Shares of Preferred Stock of
the Company, which is incorporated herein by reference to Exhibit
4.1 to the Current Report on Form 8-K filed with the SEC on June 2,
2010 (SEC File No. 000-22239), as amended by Amendment No. 1 to Tax
Benefit Preservation Plan dated as of April 14, 2014, between the
Company and Computershare Trust Company, N.A., as rights agent,
which is incorporated herein by reference to Exhibit 4.1 to the
Current Report on Form 8-K filed with the SEC on April 16, 2014
(SEC File No. 001-34761), and as amended by Amendment No. 2 to Tax
Benefit Preservation Plan dated as of April 13, 2017 between the
Company and Computershare Trust Company, N.A., as rights agent,
which is incorporated herein by reference to Exhibit 4.1 to the
Current Report on Form 8-K filed with the SEC on April 14, 2017
(SEC File No. 001-34761), together with the Certificate of
Adjustment Under Section 11(m) of the Tax Benefit Preservation
Plan, which is incorporated herein by reference to Exhibit 4.3 to
the Quarterly Report on Form 10-Q for the quarterly period ended
September 30, 2012 filed with the SEC on November 8, 2012 (SEC File
No. 001-34761).
Item 3.02
Unregistered
Sales of Equity Securities.
The
information set forth in Item 1.01 above is hereby incorporated by
reference into this Item 3.02 insofar as such information relates
to the right to receive the Market Capitalization Shares. The right
to receive the Market Capitalization Shares is issued in reliance
on Section 4(a)(2) of the Securities Act of 1933, as amended, which
exempts from registration transactions by an issuer not involving
any public offering. The right to receive the Market Capitalization
Shares is nontransferable or assignable except to an acquirer of
DealerX in connection with a change in control of DealerX (as set
forth in the License Agreement); provided that the License
Agreement is also concurrently transferred to and fully assumed by
the acquirer. In addition, the Market Capitalization Shares, if
issued, will be subject to the Stockholder Agreement providing for,
among other things, restrictions on transfer.
Item 9.01
Financial Statements and Exhibits.
(d)
Exhibits
10.1‡
Master License and
Services Agreement dated as of October 5, 2017 by and between
AutoWeb, Inc. (formerly Autobytel Inc.) and DealerX Partners,
LLC.
10.2‡
Stockholder
Agreement dated as of October 5, 2017 by and between AutoWeb, Inc.
(formerly Autobytel Inc.), DealerX Partners, LLC, and Jeffrey
Tognetti.
‡
Certain
schedules in these Exhibits have been omitted in accordance with
Item 601(b)(2) of Regulation S-K. AutoWeb will furnish
supplementally a copy of any omitted schedule or exhibit to the
Securities and Exchange Commission upon request; provided, however,
that AutoWeb may request confidential treatment pursuant to Rule
24b-2 of the Securities Exchange Act of 1934, as amended, for any
schedule or exhibit so furnished.
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.
Date:
October 11, 2017
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AUTOWEB, INC.
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By:
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/s/ Glenn E.
Fuller
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Glenn
E. Fuller, Executive Vice
President,
Chief Legal and
Administrative
Officer and Secretary
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