Attached files
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EX-99.1 - PRESS RELEASE - Crexendo, Inc. | cxdo_ex991.htm |
EX-10.2 - VOTING AND SUPPORT AGREEMENT - Crexendo, Inc. | cxdo_ex102.htm |
EX-10.1 - VOTING AND SUPPORT AGREEMENT - Crexendo, Inc. | cxdo_ex101.htm |
EX-2.1 - AGREEMENT AND PLAN OF MERGER AND REORGANIZATION - Crexendo, Inc. | cxdo_ex21.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): March 5,
2021
_______________
Crexendo, Inc.
(Exact Name of Registrant as Specified in Its Charter)
_______________
Nevada
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001-32277
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87-0591719
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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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1615 S. 52nd Street, Tempe, AZ
85281
(Address of Principal Executive Offices) (Zip Code)
(602) 714-8500
(Registrant’s Telephone Number, Including Area
Code)
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 (see General Instruction A.2.
below):
☐
Written
communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
☒
Soliciting material
pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
☐
Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange
Act (17 CFR 240.14d-2(b))
☐
Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange
Act (17 CFR 240.13e-4(c))
Securities
registered or to be registered pursuant to Section 12(b) of the
Act:
Title of each class
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Trading Symbol(s)
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Name of each exchange on which registered
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Common
Stock, par value $0.001 per share
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CXDO
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The
Nasdaq Capital Market
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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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☐
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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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☐
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Item 1.01 Entry Into A Material Definitive Agreement.
The Merger Agreement
On
March 5, 2021, Crexendo, Inc. (“we,” “us,”
“our” or the “Company”) entered into an
Agreement and Plan of Merger and Reorganization (the “Merger
Agreement”) with Crexendo Merger Sub, Inc., a
Delaware corporation and a direct, wholly-owned subsidiary of the
Company (“Merger Sub I”), Crexendo Merger Sub, LLC, a
Delaware limited liability company and a direct, wholly-owned
subsidiary of the Company (“Merger Sub II” and,
together with Merger Sub I, the “Merger Subs”),
NetSapiens, Inc., a Delaware corporation
(“NetSapiens”), and David Wang as the Stockholder
Representative (as defined in the Merger Agreement).
Pursuant to the
Merger Agreement, Merger Sub I will merge with and into NetSapiens,
with NetSapiens continuing as the surviving entity (the
“First Merger”), and, as a part of the same overall
transaction, the surviving entity of the First Merger will merge
with and into Merger Sub II, with Merger Sub II continuing as the
surviving entity and a wholly-owned subsidiary of the Company (the
“Second Merger,” and, together with the First Merger,
the “Mergers”). Immediately following the consummation
of the Second Merger, the name of Merger Sub II will be changed to
“NetSapiens, LLC”.
The
board of directors of the Company and NetSapiens have approved the
Merger Agreement and the transactions contemplated thereby (the
“Transactions”).
Consideration
Subject
to the terms of the Merger Agreement, the total
consideration for the Mergers, including repayment of debt and
expenses, is approximately $50 million, consisting of (1)
$10 million in cash, and (2) approximately $40 million in the
form of approximately 6,462,036 shares of the Company’s
common stock, par value $0.001 per share, and valued at $6.19 per
share for the purpose of determining the aggregate number of shares
payable to NetSapiens’ equityholders (the
“Shares”). The merger consideration is subject to
customary upward or downward adjustments for NetSapiens’s net
working capital and closing cash. At the closing, a portion of
NetSapiens’ outstanding in-the-money options will be
cancelled and exchanged for the Company’s options to be
issued under the Company’s equity incentive plan at an
exchange ratio determined pursuant to the Merger Agreement. In
addition, holders of outstanding common stock, in-the-money stock
options and in-the-money warrants of the Company will receive a
portion of the merger consideration as described above on a pro
rata basis and/or in accordance with the Merger Agreement and any
option or warrant cancellation agreements entered into by such
equityholders.
Representations, Warranties and Covenants
The
Merger Agreement contains mutual customary representations and
warranties made by each of the Company, Merger Subs and NetSapiens.
It also contains customary pre-closing covenants, including
covenants for NetSapiens, among others, (i) to operate its
businesses in the ordinary course consistent with past practice and
to refrain from taking certain actions without the Company’s
consent, (ii) not to solicit, initiate or knowingly take any
action to facilitate or encourage, and, subject to certain
exceptions, not to participate or engage in any discussions or
negotiations, or cooperate in any way with respect to, any
inquiries or the making of, any proposal of an alternative
transaction, (iii) subject to certain exceptions, not to
withdraw, qualify or modify the support of its board of directors
for the Merger Agreement and the Transactions, as applicable, and
(iv) to use its reasonable best efforts to obtain governmental
and third party approvals. In addition, the Merger Agreement
contains covenants that require each of the Company and NetSapiens
to hold a stockholder vote on the Mergers and the other
Transactions as soon as reasonably practicable after signing the
Merger Agreement and, subject to certain exceptions, require each
of the boards of directors of the Company and NetSapiens to
recommend to its stockholders to approve the
Transactions.
Conditions to the Mergers
The
completion of the Mergers is subject to the satisfaction or waiver
of certain conditions, including (i) the adoption of the
Merger Agreement by the affirmative vote of the holders of a
majority of all outstanding shares of NetSapiens entitled to vote
thereon (the “NetSapiens Stockholder Approval”);
(ii) the approval of the issuance of the Shares and the other
matters requiring stockholder approval for the consummation of the
Transactions (collectively, the “Parent Proposals”) by
the affirmative vote of the holders of a majority of all
outstanding shares of the Company entitled to vote thereon (the
“Company Stockholder Approval”); and (iii) the absence
of governmental restraints or prohibitions preventing the
consummation of the Mergers. The obligation of each of the Company
and NetSapiens to consummate the Mergers is also conditioned on,
among other things, the truth and correctness of the
representations and warranties made by the other party as of the
closing date (subject to certain “materiality” and
“material adverse effect” qualifiers), the performance
of the covenants required by the Merger Agreement in all material
respects and there being no material adverse effect with respect to
the Company or NetSapiens. In addition, the obligation of
NetSapiens to consummate the Mergers is conditioned on it
reasonably determining that the Transactions qualify as a tax-free
reorganization pursuant to Section 368(a)(1) of the Internal
Revenue Code of 1986, as
amended.
Certain Other Terms of the Merger Agreement
The
Merger Agreement contains certain termination rights for each of
the Company and NetSapiens, including in the event that
(i) the Mergers are not consummated on or before 120 days
after the signing date (the “End Date”), (ii) the
NetSapiens Stockholder Approval or the Company Stockholder Approval
is not obtained, or (iii) if any law or governmental order
having the effect of preventing the consummation of the
Transactions shall have become final and nonappealable, provided
that this right to termination shall not be available to the party
whose breach of representation, warranty or covenant resulted in
the issuance of such law or governmental order. Either of the
Company or NetSapiens may also terminate the Merger Agreement if
the other party has materially breached any representation,
warranty or covenant causing certain closing conditions to not be
satisfied, subject to a 20-day cure period, provided, that, the
terminating party is not in any material breach of its
representation, warranty or covenant.
The
Merger Agreement further provides that subject to certain
limitations, if either the Company or NetSapiens fails to obtain
its stockholder approval of the Transactions prior to the End Date,
then it will need to pay the other party the out-of-pocket expenses
incurred by the other party to effect the Mergers since entering
into the non-binding letter of intent regarding the Mergers (the
“Expenses”); provided, that, if NetSapiens fails to
obtain its stockholder approval as a result of its board of
directors changing its recommendation in favor of the Transactions
or causing NetSapiens to enter into an alternative transaction with
respect to a Superior Proposal (as defined in the Merger
Agreement), NetSapiens will be required to pay the Expenses as well
as grant a two-year license to the Company, as specified in the
Merger Agreement.
The
Agreement provides for mutual indemnification for breaches of
representations and covenants, subject to certain deductible and
cap limitations.
The
foregoing description of the Merger Agreement is not complete and
is qualified in its entirety by the text of the Merger Agreement,
which is filed as Exhibit 2.1 to this Current Report on Form 8-K
and is incorporated herein by reference. The Merger Agreement has
been attached to provide investors with information regarding its
terms. It is not intended to provide any other factual information
about the Company or NetSapiens. The Merger Agreement contains
representations, warranties and covenants that the respective
parties made to each other as of the date of the Merger Agreement
or other specific dates. The assertions embodied in those
representations, warranties and covenants were made for purposes of
the contract among the respective parties and are subject to
important qualifications and limitations agreed to by the parties
in connection with negotiating such agreement. The representations,
warranties and covenants in the Merger Agreement are also modified
in important part by the underlying disclosure schedules which are
not filed publicly and which are subject to a contractual standard
of materiality different from that generally applicable to
stockholders and were used for the purpose of allocating risk among
the parties rather than establishing matters as facts. We do not
believe that these schedules contain information that is material
to an investment decision. The representations and warranties in
the Merger Agreement should not be relied upon as characterizations
of the actual state of facts about the Company or
NetSapiens.
The Voting and Support Agreements
Concurrent
with the execution of the Merger Agreement, the Company and certain
principal stockholders of NetSapiens entered into a voting and
support agreement (the “Company Principal Stockholders Voting
and Support Agreement”), pursuant to which such stockholders
agreed to, among other things, (i) vote the shares of common stock
of NetSapiens beneficially owned by them in favor of the adoption
of the Merger Agreement and the Transactions, and (ii) against any
action, proposals, transaction or agreement that would result in a
breach of any representation, warrant, covenant, obligation or
agreement of NetSapiens contained in the Merger Agreement,
provided, that the agreement shall not limit the
stockholders’ actions in their capacity as a director or
officer of NetSapiens.
Concurrent
with the execution of the Merger Agreement, NetSapiens and the
majority stockholder of the Company also entered into a voting and
support agreement (the “Parent Majority Stockholder Voting
and Support Agreement”, collectively with the Company
Principal Stockholders Voting and Support Agreement, the
“Voting and Support Agreements”), pursuant to which the
stockholder agreed to, among other things, (i) vote the shares of
common stock of the Company beneficially owned by him in favor of
the adoption of the Parent Proposals, and (ii) against any action,
proposals, transaction or agreement that would result in a breach
of any representation, warrant, covenant, obligation or agreement
of the Company contained in the Merger Agreement, provided, that
the agreement shall not limit the stockholder’s actions in
his capacity as a director or officer of the Company.
Each
Voting and Support Agreement will terminate upon the earlier to
occur of, (x) the mutual written consent of the parties therein,
(y) the closing of the Mergers, and (z) the date of termination of
the Merger Agreement.
The
foregoing description of the Voting and Support Agreements is not
complete and is qualified in its entirety by the text of the Voting
and Support Agreements, which are filed as Exhibits 10.1 and 10.2
to this Current Report on Form 8-K and is incorporated herein by
reference.
Item
3.02 Unregistered Sales of Equity Securities.
The
disclosure set forth above in Item 1.01 of this Current Report is
incorporated by reference into this Item 3.02. The Shares of the
Company to be issued in connection with the Merger Agreement and
the Transactions contemplated thereby, will not be registered under
the Securities Act of 1933, as amended (the “Securities
Act”), in reliance on the exemption from registration
provided by Section 4(a)(2) of the Securities Act and/or Regulation
D promulgated thereunder.
Item 7.01 Regulation FD Disclosure.
On
March 8, 2021, the Company issued a press release announcing the
execution of the Merger Agreement. The press release is attached
hereto as Exhibit 99.1.
The
foregoing is being furnished pursuant to Item 7.01 and will not be
deemed to be filed for purposes of Section 18 of the Securities and
Exchange Act of 1934, as amended (the “Exchange Act”),
or otherwise be subject to the liabilities of that section, nor
will it be deemed to be incorporated by reference in any filing
under the Securities Act.
Additional Information
The
Company intends to file a proxy statement (“Proxy
Statement”) with the Securities and Exchange Commission (the
“SEC”) in connection with its annual meeting of
stockholders to approve, among other things, the Parent Proposals
as of a record date to be established (the “Meeting”).
The Company will mail the Proxy Statement and other relevant
documents to its stockholders. Investors and security holders of
the Company are advised to read, when available, the Proxy
Statement because the Proxy Statement will contain important
information about the proposed Mergers and the related transactions
and the parties to such transactions. Stockholders of the Company
will also be able to obtain copies of the Proxy Statement, without
charge, once available, at the SEC website at www.sec.gov or by
directing a request to: Crexendo, Inc., 1615 S. 52nd Street, Tempe,
AZ 85281.
Participants in the Solicitation
The
Company and its directors, executive officers, other members of
management, and employees, under SEC rules, may be deemed to be
participants in the solicitation of proxies of the Company’s
stockholders in connection with the Mergers and the related
transactions. Investors and security holders may obtain more
detailed information regarding the names and interests in the
proposed transactions of the Company’s directors and
officers, including a description of their direct interests, by
security holdings or otherwise, in the Company’s filings with
the SEC, including the Company’s prospectus filed with the
SEC on September 24, 2020, and such information will also be in the
Proxy Statement to be filed with the SEC by the Company in
connection with the Meeting to be held to approve the Parent
Proposals.
Forward Looking Statements
This Current Report on
Form 8-K includes “forward looking statements” within
the meaning of the “safe harbor” provisions of the
United States Private Securities Litigation Reform Act of 1995.
When used in this Current Report on Form 8-K, the words
“estimates,” “projected,”
“expects,” “anticipates,”
“forecasts,” “plans,”
“intends,” “believes,” “seeks,”
“may,” “will,” “should,”
“future,” “propose” and variations of these
words or similar expressions (or the negative versions of such
words or expressions) are intended to identify forward-looking
statements. These forward-looking statements are not guarantees of
future performance, conditions or results, and involve a number of
known and unknown risks, uncertainties, assumptions and other
important factors, many of which are outside the Company’s
management’s control, that could cause actual results or
outcomes to differ materially from those discussed in the
forward-looking statements. Important factors, among others, that
may affect actual results or outcomes
include: the conditions to
the completion of the Mergers, including the required approval by
the Company’s stockholders or NetSapiens’ stockholders,
may not be satisfied on the terms expected or on the anticipated
schedule; the parties’ ability to meet expectations regarding
the timing and completion of the Mergers; the occurrence of any
event, change or other circumstance that could give rise to the
termination of the Merger Agreement; the outcome of any legal
proceedings that may be instituted against the Company related to
the Mergers or the Merger Agreement; and the amount of the costs,
fees, expenses and other charges related to the
Mergers. The Company
undertakes no obligation to update or revise any forward-looking
statements, whether as a result of new information, future events
or otherwise, except as required by law.
Item
9.01. Financial Statements and Exhibits.
(d) Exhibits
Exhibit Number
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Description
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2.1*
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Agreement
and Plan of Merger and Reorganization, dated March 5, 2021, by and
among Crexendo, Inc., Crexendo Merger Sub, Inc., Crexendo Merger
Sub, LLC, NetSapiens, Inc. and David Wang as stockholder
representative.
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10.1+
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Voting
and Support Agreement, dated March 5, 2021, by and among Crexendo,
Inc., Anand Buch, David T.K. Wang and James Murphy.
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Voting
and Support Agreement, dated March 5, 2021, by and between
NetSapiens, Inc. and Steven G. Mihaylo.
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Press
Release, dated March 8, 2021.
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* The schedules and exhibits to this agreement have been
omitted in accordance with Regulation S-K Item 601(b)(2). The
Company agrees to furnish supplementally a copy of any omitted
exhibit or schedule to the SEC upon request.
+ Portions of this exhibit have been omitted in accordance
with Item 601 of Regulation S-K.
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.
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Crexendo,
Inc.
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By:
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/s/ Ronald
Vincent
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Ronald
Vincent
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Chief Financial
Officer
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Dated:
March 8, 2021