Attached files
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): June 1, 2021
_______________
Crexendo, Inc.
(Exact Name of Registrant as Specified in Its Charter)
_______________
Nevada
|
001-32277
|
87-0591719
|
(State or Other Jurisdictionof Incorporation)
|
(CommissionFile Number)
|
(IRS EmployerIdentification No.)
|
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
|
Trading Symbol(s)
|
Name of each exchange on which registered
|
Common
Stock, par value $0.001 per share
|
CXDO
|
The
Nasdaq Capital Market
|
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).
|
Emerging growth company
|
|
☐
|
|
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.
|
|
☐
|
Item 1.01 Entry Into A Material Definitive Agreement.
Voting Agreement
In connection with the closing of the mergers (the
“Mergers”) pursuant to that certain Agreement
and Plan of Merger and Reorganization dated March 5, 2021 (the
“Merger Agreement”), by and among Crexendo, Inc. (the
“Company”), 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) and as a
condition for the closing, on June 1,
2021 (the “Closing Date”), the Company, the pre-Mergers
majority stockholder of the Company (the “Principal
Stockholder”) and David Wang as the Stockholder
Representative entered into that certain Voting Agreement, dated as
of the Closing Date (the “Voting
Agreement”).
Pursuant to the Merger Agreement, the Company had
agreed to (i) include the NetSapiens Board Designee (as defined in
the Merger Agreement) as a nominee to the board of directors of the
Company (the “Board”) on each slate of nominees for
election to the Board proposed by the management of the Company,
(ii) recommend the election of the NetSapiens Board Designee to the
stockholders of the Company, and (iii) otherwise use its reasonable
best efforts to cause the NetSapiens Board
Designee to be elected to the Board. Pursuant to the Voting
Agreement, the Principal Stockholder agreed to, among other things,
vote the shares of common stock of the Company beneficially owned
by him in favor of the election of the NetSapiens Board
Designee at any
annual or special meeting of the Company or on any action or
approval by written consent of the Company stockholders with
respect to the election and removal of directors of the Company.
The Voting Agreement will terminate upon the earlier of (a) that
date on which the NetSapiens equityholders that received shares of
the Company’s common stock at the closing of the Mergers fail
to collectively beneficially own at least 5% of the Company’s
total issued and outstanding shares of common stock; and (b) the
termination of the Voting Agreement by mutual written
consent.
The
description of the Voting Agreement is qualified in its entirety by
reference to the complete text of the agreement, which has been
filed with this Current Report on Form 8-K as Exhibit 10.1, and is
incorporated herein by reference.
Item 2.01 Completion of Acquisition or Disposition of
Assets.
On the Closing Date, the Company consummated the
previously announced Mergers. NetSapiens provides an award-winning, patented
cloud-native communications platform delivered via a high
availability, multi-tenant solution that can be consumed however
the service providers prefer, in their cloud or the NetSapiens
cloud, on a subscription or a purchase model.
As
contemplated by the Merger Agreement and as described in the
Company’s definitive proxy statement filed with the United
States Securities and Exchange Commission (the “SEC”)
on April 26, 2021 (the “Proxy Statement”), on the
Closing Date, Merger Sub I merged 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 merged 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”). Immediately following the consummation of the
Second Merger, the name of Merger Sub II changed to
“NetSapiens, LLC”.
As contemplated by the Merger Agreement and as
described in the Proxy Statement, the total base 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 shares of the
Company’s common stock or Company options valued at $6.19 per
share for the purpose of determining the aggregate number of shares
payable to NetSapiens’ equityholders. The merger
consideration is subject to customary upward or downward
adjustments for NetSapiens’ net working capital and closing
cash. In connection with the closing of the Mergers, the Company
issued (i) 3,097,309 shares of the Company’s common stock
valued at $6.19 per share for common stock consideration of
approximately $19.2 million (the “Shares”) and (ii)
4,482,328 options under the Crexendo, Inc. 2021 Equity Incentive
Plan with an aggregate value of $22.1 million, net of the aggregate
exercise price of $5.6 million. Holders of outstanding common
stock, in-the-money stock options and in-the-money warrants of
NetSapiens 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.
Immediately
following the Mergers, NetSapiens’ equityholders acquired
approximately 14.4% of the issued and outstanding shares of common
stock of the Company.
The
foregoing description of the Merger Agreement and the transactions
contemplated thereby is not complete and is qualified in its
entirety by reference to the complete text of Merger Agreement,
which is filed as Exhibit 2.1 hereto and is incorporated herein by
reference.
Item 3.02 Unregistered Sales of Equity Securities.
The
disclosure set forth above in Item 2.01 of this Current Report is
incorporated by reference into this Item 3.02. The Shares issued in
connection with the closing of the Mergers were not 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 5.02 Departure of Directors or Certain Officers; Election of
Directors; Appointment of Certain Officers; Compensatory
Arrangements of Certain Officers.
On
the Closing Date, the Board elected Anand Buch, the initial
NetSapiens Board Designee, as a member of the Board. Mr. Buch will
commence his service on the Board effective as of the Closing Date
and shall continue to serve in such capacity until the
Company’s next annual meeting of stockholders, or until his
successor has been duly elected and qualified.
There
are no arrangements or understandings between Mr. Buch and any
other person pursuant to which Mr. Buch was selected as a director
of the Company other than as set forth in the Merger Agreement and
the Voting Agreement described in Item 1.01 of this Current Report,
which information is incorporated herein by reference. There is no
family relationship between Mr. Buch and any of the Company’s
other directors or executive officers. There are also no related
party transactions that are required to be reported pursuant to
Item 404(a) of Regulation S-K.
Mr.
Buch as an employee of the Company will not receive additional
compensation for his service as a director.
Item 7.01 Regulation FD Disclosure.
On
the Closing Date, the Company issued a press release announcing the
closing of the Mergers and related matters. 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.
Item 8.01. Other Events.
Employment Agreements
In connection with the closing of the Mergers and
as a condition for the closing, the Company entered into employment
agreements with NetSapiens’ current Chief Executive Officer,
Anand Buch, Chief Technology Officer, David Wang and Executive Vice
President, James Murphy. On the Closing Date, Mr. Buch was
appointed to serve as Chief Strategy Officer, Mr. Wang was
appointed to serve as Chief Technology Officer and Mr. Murphy was
appointed to serve as an Executive Vice President of the Company.
The employment agreements provide that the term of employment
of each of Messrs. Buch, Wang and Murphy will be two years from the
Closing Date, subject to automatic one-year extensions provided
that neither party provides written notice of non-extension at
least 60 days prior to the expiration of the then-current
term.
Pursuant to their
employment agreements, Messrs. Buch, Wang and Murphy will each be
entitled to initial base salary of $323,950. In addition, Messrs.
Buch, Wang and Murphy will be eligible to receive annual bonuses
beginning from 2022, the amount and terms of which shall be set by
the Compensation Committee of the Board. Messrs. Buch, Wang and
Murphy will also be eligible to receive (i) equity awards under the Company’s
equity incentive plan(s) beginning from 2022, (ii) fringe benefits
and perquisites similar to those provided to executives by
NetSapiens previously until December 31, 2021 and similar to those
provided to other executives of the Company after December 31, 2021
(iii) other standard employee benefits including PTO and (iv)
reimbursement of reasonable business expenses.
In
the event that the Company terminates Mr. Buch, Mr. Wang or Mr.
Murphy’s employment (a) for “Cause” (as defined
in their employment agreements) or due to their death or
disability, or (b) if Mr. Buch, Mr. Wang or Mr. Murphy terminates
his employment without Good Reason (as defined in their employment
agreements), then the employee shall be entitled to receive: (i)
any accrued but unpaid base salary and accrued but unused PTO, (ii)
reimbursement for unreimbursed business expenses and (iii) benefits
under the Company’s employee benefits plans (collectively,
the “Accrued Amounts”).
In the event that the Company terminates Mr. Buch,
Mr. Wang or Mr. Murphy’s employment (a) without
“Cause” or (b) if Mr. Buch, Mr. Wang or Mr. Murphy
terminates his employment for Good Reason, the employee shall be
entitled to receive the Accrued Amounts, and subject to entering
into a release of claims in favor of the Company, the employee will
also be entitled to receive (i) a lump sum payment equal to 1/12 of
the employee’s base salary for every year the employee has
been employed (including the employee’s employment period
with NetSapiens prior to the closing of the Mergers) up to a
maximum of one year of the employee’s base salary and
(ii) reimbursement for
payments such employee makes for COBRA coverage
for one year following
termination. In addition any outstanding equity awards shall be
determined according to the applicable equity incentive plan(s) and
award agreements.
The description of the employment agreements
with Messrs. Buch, Wang and
Murphy are qualified in their
entirety by reference to the complete text of the agreements, which
have been filed with this Current Report on Form 8-K as Exhibit
10.2, Exhibit 10.3 and Exhibit 10.4, respectively, and are
incorporated herein by reference.
Item 9.01. Financial Statements and Exhibits.
(a)
Financial statements of businesses acquired
The
audited consolidated financial statements of NetSapiens for the
years ended December 31, 2020 and 2019 and the notes related
thereto were included as part of the Definitive Proxy Statement
filed on April 26, 2021, and are incorporated herein by
reference.
(b)
Pro Forma Financial Information
The
pro forma financial information required by this Item was included
as part of the Definitive Proxy Statement filed on April 26, 2021,
and is incorporated herein by reference.
(d) Exhibits
Exhibit
Number
|
|
Description
|
|
2.1*
|
|
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 (incorporated by reference to Exhibit 2.1 to the
Company’s Current Report on Form 8-K filed with the SEC on
March 8, 2021).
|
|
|
Voting
Agreement, dated June 1, 2021, by and among Crexendo, Inc., Steven
G. Mihaylo and David Wang as stockholder
representative.
|
||
|
Executive
Employment Agreement, dated June 1, 2021, by and between Crexendo,
Inc. and Anand Buch.
|
||
|
Executive
Employment Agreement, dated June 1, 2021, by and between Crexendo,
Inc. and David Wang.
|
||
|
Executive
Employment Agreement, dated June 1, 2021, by and between Crexendo,
Inc. and James Murphy.
|
||
|
Press
Release, dated June 1, 2021.
|
* 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.
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.
|
Crexendo,
Inc.
|
|
|
|
|
|
|
Date: June 1,
2021
|
By:
|
/s/ Ronald Vincent
|
|
|
|
Ronald
Vincent
|
|
|
|
Chief Financial
Officer
|
|
EXHIBIT INDEX
Exhibit
Number
|
|
Description
|
|
2.1*
|
|
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 (incorporated by reference to Exhibit 2.1 to the
Company’s Current Report on Form 8-K filed with the SEC on
March 8, 2021).
|
|
|
Voting
Agreement, dated June 1, 2021, by and among Crexendo, Inc., Steven
G. Mihaylo and David Wang as stockholder
representative.
|
||
|
Executive
Employment Agreement, dated June 1, 2021, by and between Crexendo,
Inc. and Anand Buch.
|
||
|
Executive
Employment Agreement, dated June 1, 2021, by and between Crexendo,
Inc. and David Wang.
|
||
|
Executive
Employment Agreement, dated June 1, 2021, by and between Crexendo,
Inc. and James Murphy.
|
||
|
Press
Release, dated June 1, 2021.
|
* 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.