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): May 5, 2006
Marchex, Inc.
(Exact name of Registrant as Specified in its Charter)
| Delaware | 000-50658 | 35-2194038 | ||
| (State or other jurisdiction of incorporation) |
(Commission File Number) | (I.R.S. Employer Identification No.) |
413 Pine Street
Suite 500
Seattle, Washington 98101
(Address of Principal Executive Offices)
(206) 331-3300
(Registrant’s telephone number, including area code)
Check the appropriate box if the Form 8-K filing is intended to simultaneously satisfy the reporting obligation of the registrant under any of the following provisions:
| ¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ¨ | Soliciting material pursuant to Rule 14a-12 of the Exchange Act (17 CFR 240.14a-12) |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) Exchange Act (17 CFR 240.14d-2(b)) |
| ¨ | Pre-commencement communications pursuant to Rule 13e-4(c) Exchange Act (17 CFR 240.13e-4(c)) |
| Item 1.01 | Entry into a Material Definitive Agreement. |
On May 1, 2006, Marchex, Inc., a Delaware corporation (the “Registrant”) and MDNH, Inc., a Delaware corporation and a wholly-owned subsidiary of Registrant, entered into a definitive asset purchase agreement (the “Asset Purchase Agreement”) with AreaConnect LLC, a Delaware limited liability company (“AreaConnect”), and the holder of all of the issued and outstanding ownership interests of AreaConnect (the “Sole Member”) to acquire certain assets of AreaConnect, a provider of local online traffic to Yellow and White Pages providers for local merchants and simultaneously completed such acquisition. The aggregate consideration pursuant to the Asset Purchase Agreement is an amount of cash equal to $12,000,000, 183,832 shares of the Registrant’s Class B common stock which was obtained by dividing $4,000,000 (the “Equity Consideration”) by the average of the last quoted sale price for shares of the Registrant’s Class B common stock on the Nasdaq National Market for the ten trading days immediately prior to the closing) (the “Closing Market Price”) and 78,129 shares of the Registrant’s Class B common stock which was obtained by dividing $1,700,000 by the Closing Market Price (the “Restricted Equity Consideration”). The Restricted Equity Consideration is subject to vesting over the three year period from the closing date and forfeiture upon the occurrence of certain events.
The Asset Purchase Agreement contains customary representations and warranties and requires AreaConnect and the Sole Member to indemnify the Registrant for certain liabilities arising under the Asset Purchase Agreement, subject to certain limitations and conditions. At closing, the Registrant deposited into escrow for a period of twelve months from the closing $1,200,000 in cash, 55,609 shares of the Registrant’s Class B common stock issued as the Equity Consideration and 11,719 shares of the Registrant’s Class B common stock issued as the Restricted Equity Consideration for the benefit of AreaConnect and the Sole Member to secure their respective indemnification and other obligations under the Asset Purchase Agreement.
The Registrant has also agreed to use reasonable best efforts to file a registration statement to register the shares of Class B common stock issued as the Equity Consideration and Restricted Equity Consideration thereunder for resale with the SEC no later than forty-five (45) days following the closing.
The foregoing description of the Asset Purchase Agreement is qualified in its entirety by reference to the full text of the Asset Purchase Agreement filed as Exhibit 2.1 to this Current Report, which is incorporated herein by reference.
A press release announcing the acquisition was filed as Exhibit 99.1 to the Current Report on Form 8-K that the Registrant furnished to the Securities and Exchange Commission on May 2, 2006.
| Item 2.01 | Completion of Acquisition or Disposition of Assets. |
The information required by this item is contained in Item 1.01 above and is incorporated herein by reference.
| Item 3.02 | Unregistered Sale of Equity Securities. |
The information contained in Item 1.01 above is incorporated herein by reference.
The issuance of the shares of Class B common stock to the Sole Member at closing on behalf of AreaConnect in connection with the Asset Purchase Agreement was made in reliance upon an exemption from the registration provisions of the Securities Act of 1933, as amended, as set forth in Section 4(2) thereof on the basis that the offer and sale of the shares does not involve a public offering. No underwriters were involved in this transaction.
| Item 9.01 | Financial Statements and Exhibits. |
(a) Financial Statements of Businesses Acquired.
As permitted by Item 9.01(a)(4) of Form 8-K, Registrant will, if required, file the financial statements required by Item 9.01(a)(1) of Form 8-K pursuant to an amendment to this Current Report not later than 71 calendar days after the date this Current Report must be filed.
(b) Pro Forma Financial Information.
As permitted by Item 9.01(b)(2) of Form 8-K, Registrant will, if required, file the pro forma financial information required by Item 9.01(b)(1) of Form 8-K pursuant to an amendment to this Current Report not later than 71 calendar days after the date this Current Report must be filed.
(d) Exhibits.
| Exhibit No. | Description | |
| 2.1 | Asset Purchase Agreement, dated as of May 1, 2006, by and among Marchex, Inc., MDNH, Inc., AreaConnect LLC and the holder of all of the issued and outstanding ownership interests of AreaConnect LLC. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Current Report to be signed on its behalf by the undersigned hereunto duly authorized.
| Date: May 5, 2006 |
MARCHEX, INC. | |||||||
| By: |
/s/ Russell C. Horowitz | |||||||
| Name: |
Russell C. Horowitz | |||||||
| Title: |
Chairman and Chief Executive Officer | |||||||
EXHIBIT INDEX
| Exhibit No. | Description | |
| 2.1 | Asset Purchase Agreement, dated as of May 1, 2006, by and among Marchex, Inc., MDNH, Inc., AreaConnect LLC and the holder of all of the issued and outstanding ownership interests of AreaConnect LLC. |