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Subsequent Events
12 Months Ended
Dec. 31, 2019
Subsequent Events [Abstract]  
Subsequent Events

New Credit Facility

 

On March 26, 2020, the Company entered into a Loan, Security and Guarantee Agreement (“CNC Credit Agreement”) by and among CIT Northbridge Credit LLC, as Agent (“Lender”), the Company, as Borrower, and the Company’s U.S. subsidiaries Car.com, Inc., Autobytel, Inc., and AW GUA USA, Inc., as Guarantors (“Company Subsidiaries”).

The CNC Credit Agreement provides for a $20,000,000 revolving credit facility (“Credit Facility”) with borrowings subject to availability based primarily on limits of 85% of eligible billed accounts receivable and 75% against eligible unbilled accounts receivable. The obligations under the CNC Credit Agreement are guaranteed by the Company Subsidiaries and secured by a first priority lien on all of the Company’s and the Company Subsidiaries’ tangible and intangible assets. The CNC Credit Agreement has a minimum borrowing usage requirement of $8,000,000, which will increase to $10,000,000 on June 30, 2020, and the Company is required to maintain a minimum of $3,000,000 of availability under the CNC Credit Agreement.

The interest rate per annum applicable to borrowings under the CNC Credit Agreement will be the LIBO Rate plus 5.5%. The LIBO Rate will be equal to the greater of (i) 1.75% and (ii) the rate determined by the Lender to be equal to the quotient obtained by dividing (1) the LIBO Base Rate (i.e., the rate per annum determined by Lender to be the offered rate that appears on the applicable Bloomberg page) for the applicable LIBOR Loan for the applicable interest period by (2) one minus the Eurodollar Reserve Percentage (i.e., the reserve percentage in effect under regulations issued from time to time by the Board of Governors of the Federal Reserve System for determining the maximum reserve requirement with respect to Eurocurrency funding for the applicable LIBOR Loan for the applicable interest period). In the event LIBOR-based rates or loans are no longer available or quoted, then Lender and the Company may replace LIBOR with an alternate benchmark rate (any such proposed rate, a “LIBOR Successor Rate”); provided that if no LIBOR Successor Rate has been determined or agreed upon, (i) the obligation of lenders to make or maintain LIBOR loans shall be suspended, and (ii) the LIBO Base Rate component shall no longer be utilized in determining the Base Rate.  In such an event, the Company may revoke any pending request for a borrowing based on LIBOR loans or, failing that, will be deemed to have converted the borrowing request into a request for a borrowing bearing interest at the Base Rate (i.e., for any day a fluctuating rate per annum equal to the highest of (i) the Federal Funds Rate plus 1/2 of 1%; (ii) the rate of interest in effect for such day as publicly announced from time to time by JPMorgan Chase Bank, N.A. as its “prime rate” in effect for such day; and (iii) the most recently available LIBO Base Rate (as adjusted by any minimum LIBO Rate floor) plus 1%) plus 5.5%. Upon commencement, the interest rate will be 7.25%.

There is a one-time origination fee of $300,000. In addition, the Company will pay annual fees of (i) 0.5% on any unused portion of the Credit Facility and (ii) 0.15% of the aggregate revolver amount as an administration fee.

Subject to customary provisions regarding earlier termination, the CNC Credit Agreement expires on March 26, 2023.

The CNC Credit Agreement contains customary representations and warranties and certain covenants that limit the ability of the Company and the Company Subsidiaries to, among other things: (i) incur or guarantee additional indebtedness; (ii) create or suffer to exist any liens on Company assets; (iii) make investments or acquisitions; (iv) dissolve, liquidate, consolidate, merge or wind-up its affairs; (v) sell or otherwise transfer or dispose of assets; (vi) engage in transactions with affiliates; (vii) make loans; or (viii) declare or make distributions on its equity interest.

The CNC Credit Agreement also contains customary events of default including, without limitation: a breach of the representations and warranties made in the loan documents entered into in connection with the CNC Credit Agreement; failure to make required payments; failure to comply with certain agreements or covenants; cross-defaults to certain other indebtedness in excess of specified amounts; certain events of bankruptcy and insolvency; failure to pay certain judgments; a change in control; or any event that or conditions exists that has a material adverse effect on the Company or impairs the ability of the Company to perform its obligations under the CNC Credit Agreement or the ability of the Lender or lenders to enforce their rights under the CNC Credit Agreement. If such an event of default occurs, the Lender would be entitled to take various actions set forth in the CNC Credit Agreement, including the acceleration of amounts due thereunder and all actions permitted to be taken by a creditor.

Concurrently with entering into the CNC Credit Agreement, the Company terminated its Revolving Credit and Security Agreement dated April 30, 2019 by and among PNC Bank, National Association, as Agent, the Company and the Company Subsidiaries.

Network Security Incident

 

On January 9, 2020, the Company discovered that its network was impacted by malware that encrypted servers on most systems and disrupted consumer and customer access to many of our services. In connection with this incident, third-party consultants and forensic experts have been engaged to assist with the restoration and remediation of systems and to investigate the incident. All impacted systems are now operational, and the Company has not discovered evidence that causes the Company to conclude that there was any unauthorized access to or acquisition of any consumer personal information or customer confidential information.

 

Coronavirus

 

In early 2020 and continuing as of the date of this Annual Report on Form 10-K, the outbreak of a novel coronavirus (COVID-19) has led to quarantines and stay-at-home/work-from-home orders in a number of countries, states, cities and regions and the closure or limited access to public and private offices and facilities, worldwide, causing widespread disruptions to travel, economic activity and financial markets. The outbreak has led the Company’s Manufacturer and Dealer customers to experience disruptions in the (i) supply of vehicle and parts inventories, (ii) ability and willingness of consumers to visit automotive dealerships to purchase or lease vehicles and (iii) overall health and availability of their labor force. Recent volatility in the financial markets, concerns about exposure to the virus and governmental quarantines and stay-at-home/work-from-home orders have also impacted consumer confidence and willingness to visit dealerships and to purchase or lease vehicles. These disruptions have impacted the willingness or desire of the Company’s customers to acquire vehicle Leads or other digital marketing services from the Company. The Company is also experiencing direct disruptions in its operations due to the overall health of, and concerns for, our labor force and as a result of governmental “social distancing” programs, quarantines, travel restrictions and stay-at-home/work-from-home orders, leading to office closures, operating from employee homes and restrictions on our employees traveling to our various offices. At this time, the eventual extent and magnitude of the disruptions caused by the outbreak on the automotive industry in general and on the Company specifically are not known, but vehicle sales have declined significantly in recent weeks, and the Company is experiencing cancellations or suspensions of purchases of Leads and other digital marketing services by its customers, which could materially and adversely affect the Company’s business, results of operations, financial condition, earnings per share, cash flow or the trading price of the Company’s stock.