Accelerize Inc. on May 15 agreed to sell all the assets associated with its CAKE and Journey by CAKE business to Constellation Software Inc. under an asset purchase agreement with Constellation unit CAKE Software Inc.
The company is selling the assets for a base price of $19.4 million plus or minus an estimated closing date adjustment based on the net tangible assets of CAKE and Journey by CAKE business at the closing, a holdback of $500,000 adjusted under the asset purchase agreement and payable on the first anniversary of the closing date, and a three-year earnout equal to 30% of the amount that the annual net revenue of the business exceeds $13.8 million and payable within 120 days on each of the first, second and third end of month anniversaries of the closing date.
Constellation will assume the company's post-closing obligations under certain vendor, customer and other commercial contracts related to the CAKE and Journey by CAKE business, including Accelerize's lease for its headquarters in Newport Beach, Calif., and its subsidiary's office in the U.K., according to a May 20 SEC filing.
The closing of the sale is subject to satisfaction or waiver of certain closing conditions, including the approval by Accelerize's stockholders and the release of their security interest in the assets related to the business.
Accelerize and its Chairman, CEO, President and Treasurer Brian Ross have agreed not to compete with the CAKE and Journey by CAKE business for a five years from the closing date and not to solicit from the business employees, customers, vendors and others with a business relationship with the CAKE and Journey by CAKE business for a period of two years.
If the agreement is terminated because of a superior offer, or the breach of certain closing conditions, the party responsible for the termination will be required to pay damages of $1 million to the other. However, if the deal is terminated because of a failure of the company's stockholders to approve the sale, Accelerize will pay Constellation damages of $194,000.
Accelerize intends to use the proceeds from the sale to pay the outstanding principal amount of debt due to Beedie and SaaS Capital, to repay the outstanding principal amount of debt due to certain of the 2018 lenders and August 2018 lenders, to pay transaction expenses and for general corporate purposes.
In other news, Accelerize struck a deal to buy certain assets from Emerging Growth LLC related to its sponsored content and marketing business for $420,000 in cash, 30 million shares of the company's common stock and preferred stock of a class to be created, with an aggregate stated value of $3 million.
Accelerize provides software services for businesses to enhance their digital advertising spend in the U.S.