U.S. AUTO PARTS NETWORK,INC. (NASDAQ:PRTS) Files An 8-K Entry into a Material Definitive Agreement
Item 1.01Entry into a Material Definitive Agreement.
Board Candidate Agreement with Kanen
On January18, 2019, U.S. Auto Parts Network,Inc. (the “Company”) entered into a Board Candidate Agreement (the “Agreement”) with David Kanen (“Mr.Kanen”), Kanen Wealth Management LLC, and Philotimo Fund, LP (collectively with its affiliates, “Kanen”).
Under the Agreement, the Company has appointed Mr.Kanen to the Company’s Board of Directors (the “Board”) as a ClassII Director, effective January18, 2019. If at any point in time Kanen fails to beneficially own more than 5% of the Company’s outstanding voting capital stock or Kanenbreaches any provision of the Agreement (each, a “Termination Event”), Mr.Kanen shall promptly resign from the Board upon request. In addition, in the event Mr.Kanen resigns or otherwise ceases to serve as a director, other than due to a Termination Event, prior to the expiration of the Voting Period (as defined below), the Company and Mr.Kanen agree to work collaboratively to appoint a mutually agreeable replacement candidate (a “Replacement Candidate”).
Additionally, at each annual or special meeting of the Company’s stockholders, Kanen has agreed to vote all shares of the Company’s capital stock beneficially owned by Kanen(the “Kanen Shares”) on each director nominee or other matter presented for a vote which has been recommended by the Board except any matter that would result in a change in control transaction (the “Voting Obligation”). Kanenhas also agreed not to provide assistance with any vote to be taken by the Company’s stockholders that has not been formally recommended by the Board provided Kanen is not restricted from taking any action in connection with a publicly announced change of control transaction that is not supported by Mr.Kanen (the “Standstill Obligation” and together with the Voting Obligation, the “Obligations”). to the Agreement, the Obligations begin on the date of the Agreement and shall end on the earliest to occur of (i)the date that the Company notifies Mr.Kanen in writing that it does not intend to re-nominate Mr.Kanen as a director at its 2020 Annual Meeting of Stockholders or such subsequent annual meeting at which Mr.Kanen would be up for re-election; (ii)the date that is fifteen (15) businessdays prior to the deadline for the submission of stockholder nominations for the Company’s 2021 Annual Stockholder Meeting (but only in the event that the Mr.Kanen has tendered his resignation on or before such date), or (iii)the date of the Company’s 2021 Annual Stockholder Meeting (such period, the “Voting Period”). In connection with the Obligations, Kanen has also granted the Company an irrevocable proxy with respect to the Kanen Shares during the Voting Period. The terms of the Voting Agreement also contain a mutual nondisparagement provision.
The foregoing description of the Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Agreement attached hereto as Exhibit10.1.
Amendment to Board Candidate Agreement with Nia
On January17, 2019, the Company entered into an Amendment to the Board Candidate Agreement (the “Amendment”) with Mehran Nia (“Mr.Nia”) and the Nia Living Trust Established September2, 2004 (the “Nia Trust” and together with Mr.Nia, “Nia”). Under the Amendment, Nia has agreed to defer his right to appoint a second director the Board, provided that the Company agrees to use commercially reasonable efforts to appoint the second director to the Board at a later date through one of the following methods at the Company’s sole discretion: (i)the Board nominates the second director to serve as a ClassI director at the Company’s 2019 Annual Stockholder Meeting; (ii)the Company seeks stockholder approval at the Company’s 2019 Annual Stockholder Meeting to amend its Second Amended and Restated Certificate of Incorporation to expand the size of the Board to ten (10)directors and at a mutually agreeable time thereafter appoints the second director to serve on the Board as a ClassII director; or (iii)to the extent there is an open vacancy on the Board at or prior to the Company’s 2019 Annual Stockholder Meeting, the Board shall appoint the second director to serve on the Board and fill such vacancy.
The foregoing description of the Amendment does not purport to be complete and is qualified in its entirety by reference to the full text of the Amendment attached hereto as Exhibit10.2.
Item 1.01.Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
(b)OnJanuary18, 2019 (the “Separation Date”), Roger Hoffmann, the Company’s Chief Technology Officer, resigned from the Company. In connection with his resignation, Mr.Hoffmann entered into separation agreements with the Company and its wholly owned subsidiary, U.S. Auto Parts (Philippines) Corp. (the “Separation Agreements”).
to the terms of the Separation Agreements, Mr.Hoffmann has executed a general release of all claims against the Company and U.S. Auto Parts (Philippines) Corp. and will be entitled to receive the following benefits: (i)continuation of his base salary for a period of four (4)months following the Separation Date, payable in accordance with the Company’s payroll practices for its employees; (ii)accelerated vesting of 24,127 restricted stock unit awards and 44,094 performance-based restricted stock unit awards to be automatically accelerated on the Separation Date; (iii)the right to stay in his Company provided housingthrough the expiration of the current term of the pre-paid lease; and (iv)reimbursement of up to $5,000 of relocation expenses if Mr.Hoffmann moves back to the United States on or prior to the expiration of the Company provided lease, provided Mr.Hoffmann provides the Company with substantiated documentation of such relocation expenses.
The Separation Agreements also provide, among other things, that Mr.Hoffmann will abide by confidentiality, non-solicitation and non-disparagement covenants entered into with the Company, and that he will continue to cooperate with the Company in any transition matters.
The foregoing description of the Separation Agreements are qualified in their entirety by reference to the separation agreements which are filed as Exhibits10.3 and 10.4 to this Form8‑K.
(d)On January18, 2019, the Board appointed David Kanen to serve as a ClassII director of the Company, effective immediately. The appointment of Mr.Kanen brings the Company’s total number of directors to nine and fills an open vacancy on the Board. The nomination and subsequent appointment of Mr.Kanen as a director was made to the terms of the Board Candidate Agreement described above.
Mr.Kanen, age 53, has served as the Managing Member of Kanen Wealth Management, LLC, a registered investment advisor, since 2016 and as President and Portfolio Manager of Philotimo Fund, LP, a hedge fund focused on small-cap value and activism, since December2016. From 2012 to 2016, Mr.Kanen was an independent advisor at Aegis Capital,Inc. Prior to that he worked as a retail and institutional financial advisor for various investment firms, including A.G. Edwards& Sons,Inc. from 1992 to 2004. Mr.Kanen holds a Bachelor of Science in Marketing from Jacksonville University. Mr.Kanen also serves on the Board of Directors of Famous Dave’s of America,Inc. (NASDAQ:DAVE), which develops, owns, operates and franchises barbeque restaurants.
Mr.Kanen will enter into the Company’s standard form of indemnification agreement. The Company is not aware of any transaction involving Mr.Kanen requiring disclosure under Item404(a)of Regulation S-K.
Item 1.01. Regulation FD Disclosure
On January23, 2019, the Company issued a press release announcing Mr.Kanen’s appointment to the Board of Directors. A copy of the press release is attached to this Current Report on Form8‑K as Exhibit99.1 and is incorporated herein by reference.
The information furnished to this Itemshall not be deemed “filed” for purposes of Section18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act.
Item 1.01Financial Statements and Exhibits.
(d)Exhibits
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Exhibit No. |
Description |
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10.1 |
Board Candidate Agreement dated January18, 2019 by and among U.S. Auto Parts Network,Inc., David Kanen, Kanen Wealth Management LLC, and Philotimo Fund,LP. |
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10.2 |
Amendment to Board Candidate Agreement dated January17, 2019 by and among U.S. Auto Parts Network,Inc., Mehran Nia, and the Nia Living Trust Established September2, 2004. |
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10.3 |
Separation Agreement and Release of Claims, dated January23, 2019, by and between U.S. Auto Parts Network,Inc. and Roger Hoffmann. |
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10.4 |
Separation Agreement dated January23, 2019, by and between U.S. Auto Parts Network (Philippines) Corp. and Roger Hoffmann. |
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99.1 |
Press Release, dated January23, 2019. |
U.S. Auto Parts Network, Inc. Exhibit
EX-10.1 2 ex-10d1.htm EX-10 prts_Ex10_1 Exhibit 10.1 U.S. AUTO PARTS NETWORK,…
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About U.S. AUTO PARTS NETWORK,INC. (NASDAQ:PRTS)
U.S. Auto Parts Network, Inc. is an online source for automotive aftermarket parts and repair information. The Company is an online provider of aftermarket auto parts, including collision parts, engine parts, and performance parts and accessories. Its Websites provide a range of stock keeping units (SKUs) with detailed product descriptions and photographs. The Company operates through two segments: Base USAP, which is the core auto parts business, and AutoMD, an online automotive repair source. The Company offers a range of aftermarket auto parts. The Company classifies its products into three categories: collision parts serving the collision repair segment, engine parts to serve the replacement/wear parts market, and performance parts and accessories. The Company sells its products through its network of Websites and online marketplaces, including www.autopartswarehouse.com, www.carparts.com, www.jcwhitney.com and www.AutoMD.com.
