Social Reality Inc. entered into an asset purchase agreement with Halyard MD Opco LLC, an affiliate of private equity firm Halyard Capital Management LLC, to sell Social Reality's assets related to its SRAXmd product line for up to $52.5 million.
The amount consists of $33.5 million in cash, $10 million worth of equity in Halyard MD Opco's parent company, Halyard MD LLC, and an earnout of up to $9 million, when Halyard MD Opco achieves certain gross profit thresholds.
Social Reality will retain ownership of all of its other assets unrelated to the SRAXmd product line, upon asset sale completion, expected to be on or about Aug. 7, subject to customary closing conditions.
In addition, Halyard MD Opco will choose which SRAXmd product line employees to offer employment contracts upon closing of the deal. Social Reality and Halyard MD Opco will agree not to hire, approach or contact each other's employees for a determined period after the closing date; Social Reality will not compete directly with Halyard MD Opco concerning the SRAXmd product line for three years from the closing date.
Both parties will enter into a transition services agreement, under which Social Reality will provide Halyard MD Opco with additional direct services or access to its third-party services, and a master services agreement where Social Reality will give Halyard MD Opco access to some of its employees and consultants at varying fees that will be determined on a per employee/consultant basis.
Social Reality will be subject to pay Halyard MD Opco a termination fee of approximately $2 million if they breach the purchase agreement under certain circumstances.
Social Reality must pay up to approximately $4.6 million in stay bonuses, assuming full earnout, repurchase 514,557 class A common stock shares of one of its prior employees at a price per share of $5.80, or an aggregate of about $3 million and repurchase 160,000 class A common stock purchase options at a price of $1.83 per option or an aggregate of about $293,000.