Unassociated Document
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): November 30, 2007
 
Customer Acquisition Network Holdings, Inc.
(Exact Name of Registrant as Specified in Charter)
Delaware
  
333-141141
  
01-0692341
(State or other jurisdiction
  
(Commission File Number)
  
(IRS Employer
of incorporation)
      
Identification No.)
 
401 E. Las Olas Blvd. Suite 1560
Fort Lauderdale, Florida
  
33301
(Address of principal executive offices)
  
(Zip Code)

Registrant’s telephone number, including area code: (954) 712-0000
 
 
N/A
(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:
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
o Pre-commencement communications pursuant to Rule 13e-4 (c) under the Exchange Act (17 CFR 240.13e-4(c))
 
 
Item 1.01 Entry into a Material Definitive Agreement.
 
The information set forth in Item 2.03 of this Current Report on Form 8-K relating to the entry into material definitive agreements is incorporated by reference into this Item 1.01.
 
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.
 
On November 30, 2007, Customer Acquisition Network Holdings, Inc., a Delaware corporation (“Registrant”) completed the offering described in a Current Report on Form 8-K dated November15, 2007 and filed on November 20, 2007 (SEC Filing No. 333-141141) pursuant to a Securities Purchase Agreement, (the “Purchase Agreement’), by and among Registrant and the buyers listed therein (“Buyers”). Registrant sold senior secured promissory notes (the “Notes”) in the original aggregate principal amount of $5,000,000. Registrant received aggregate net proceeds in the amount of $4,500,000 from the sale of the Notes.

The Notes will mature on May 30, 2008 (the “Maturity Date”) and will accrue interest at the rate of 8% per annum, payable quarterly in cash. Registrant, in the absence of an event of default and the satisfaction of certain conditions set forth in the Notes, shall be able to extend the Maturity Date from the original six months to nine months (the “Extended Maturity Date”) by delivering a written notice to the holders of the Notes within at least ten (10) but not more than twenty (20) business days prior to the Maturity Date. Registrant, as one of the conditions to such extension, is obligated to issue an aggregate of 40,000 shares of its common stock (the “Shares”), to be allocated among the Buyers on the Maturity Date. In accordance with the terms and conditions of the Purchase Agreement, Registrant will grant to the Buyers, in connection with the issuance of the Shares, “piggyback” registration rights with respect to the Shares in the event that Registrant registers any shares of common stock held by other stockholders of Registrant. Additionally, as one of the conditions to such extension, the interest rate will increase from 8% per annum to 12% per annum.

The Registrant may redeem the Notes, in whole or in part, at any time without premium or penalty on three (3) business days’ prior notice. If accrued interest is not paid within three (3) business days from the due date, the percent per annum of the interest rate of the Notes will be increased by an additional 5% per annum until paid in full.

The Notes contain certain customary default provisions, including, without limitation, (i) any default in payment of principal on any of the Notes, (ii) any default in payment of any interest or other amount (other than principal) that is not cured within three (3) business days from the date such interest or other amount was due, (iii) any failure by Registrant for ten (10) days, to comply with any other provision of the Notes in all material respects, (iv) any default in payment of certain indebtedness to third parties, (v) the bankruptcy or insolvency of Registrant, (vi) the breach by Registrant or any subsidiary thereof of any covenant or other term or condition of the Purchase Agreement or the Transaction Documents (as defined in the Purchase Agreement), Security Documents (as defined in the Notes) and any applicable subordination agreement (after giving effect to any applicable grace period relating to any such breach), (vii) certain unsatisfied judgments or orders exceeding $250,000, (viii) a change of control of Registrant, (ix) failure of a representation or statement in the Purchase Agreement and Security Documents to be correct in any material respect when made, (x) failure of a Lien (as defined in the Purchase Agreement) to constitute a valid first priority perfected Lien on all the collateral, and (xi) failure to timely file periodic and certain current reports under the Exchange Act.
 

The Notes are secured by a first security interest on all of Registrant’s and its subsidiaries’ assets pursuant to a security agreement as previously filed. The Purchase Agreement also provides for the pledge by the Registrant and each of its subsidiaries of all of the capital stock or other equity interests held by them as collateral for the Notes, pursuant to a pledge agreement. In addition, each of the Registrant’s subsidiaries has entered into a guaranty, guarantying Registrant’s performance under the Purchase Agreement, Notes and related transaction documents.

The Purchase Agreement contains certain customary affirmative covenants, including, without limitation, (i) the timely filing of a Form D, to the extent required, (ii) the timely filing of all reports required to be filed with the Securities Exchange Commission pursuant to the Securities Exchange Act of 1934, as amended (the "Exchange Act"), (iii) the use of the proceeds from the sale of the Notes first, to pay expenses and commissions related to the sale of the Notes and second, for the general working capital needs and acquisitions of companies or businesses reasonably related to internet marketing and advertising, (iv) the maintenance of certain internal accounting controls, (v) compliance with laws and maintenance of permits, (vi) inspection and audit rights, and (vii) preservation of collateral, maintenance of insurance, and payment of taxes. In addition, the Purchase Agreement contains certain customary negative covenants, including, without limitation, certain restrictions (subject to limited exceptions) on (i) the issuance of variable priced securities, (ii) purchases and payments, (iii) limitations on prepayments, (iv) incurrence of indebtedness, (v) sale of collateral, (vi) affiliate transactions and (vii) the ability to make loans and investments.

The foregoing is not a complete summary of the terms of the Note described in this Item 2.03 and reference is made to the complete text of the Purchase Agreement, Amendment to the Purchase Agreement, Form of Note, Security Agreement, Pledge Agreement, Guaranty and Form of Deposit Account Control Agreement attached hereto as Exhibits 10.1, 10.2, 10.3, 10.4, 10.5,10.6, and 10.7, respectively

Item 9.01 Financial Statements and Exhibits.
 
(d) Exhibits.
 
The exhibits listed in the following Exhibit Index are filed as part of this Current Report on Form 8-K.
 
Exhibit No.
Description
*10.1
Securities Purchase Agreement, dated as of November 15, 2007, among the Registrant and the investors listed therein
  10.2
First Amendment to the Securities Purchase Agreement, dated as of November 15, 2007, among the Registrant and the investors listed therein
*10.3
Form of 8% Senior Note
*10.4
Form of Security Agreement, among the Company, the debtors listed therein and Viking Asset Management, LLC (“Viking”), as collateral agent
*10.5
Form of Pledge Agreement between the Registrant and Viking
*10.6
Form of Guaranty, made by Customer Acquisition Network, Inc. and Desktop Acquisition Sub, Inc. in favor of Viking
*10.7
Form of Deposit Account Control Agreement

*Previously filed as an Exhibit to our Form 8-K which was filed on November 20, 2007

 
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 thereunto duly authorized.
 
Date: December 6, 2007
     
  Customer Acquisition Network Holdings, Inc.
 
 		  
 		  
 
  By:   /s/ Bruce Kreindel
 
Bruce Kreindel
  Chief Financial Officer
 
 
 
 
 
 
EXHIBIT INDEX
 
Exhibit No.
Description
*10.1
Securities Purchase Agreement, dated as of November 15, 2007, among the Registrant and the investors listed therein
  10.2
First Amendment to the Securities Purchase Agreement, dated as of November 15, 2007, among the Registrant and the investors listed therein
*10.3
Form of 8% Senior Note
*10.4
Form of Security Agreement, among the Company, the debtors listed therein and Viking Asset Management, LLC (“Viking”), as collateral agent
*10.5
Form of Pledge Agreement between the Registrant and Viking
*10.6
Form of Guaranty, made by Customer Acquisition Network, Inc. and Desktop Acquisition Sub, Inc. in favor of Viking
*10.7
Form of Deposit Account Control Agreement
   
*Previously filed as an Exhibit to our Form 8-K which was filed on November 20, 2007