Asure Software,Inc. (NASDAQ:ASUR) Files An 8-K Entry into a Material Definitive Agreement
Item 1.01 Entry into a Material Definitive Agreement
Equity Purchase Agreement
On May25, 2017, we entered into an equity purchase agreement (the
Equity Purchase Agreement) with iSystems Holdings, LLC, a
Delaware limited liability company (Seller), and iSystems
Intermediate Holdco,Inc., a Delaware corporation (iSystems), to
which we acquired 50% of the outstanding equity interests of
iSystems for an aggregate purchase price of $55,000,000, subject
to adjustment as provided in the Equity Purchase Agreement. The
aggregate purchase price consists of (i)$32,000,000 in cash,
subject to adjustment, (ii)a secured subordinated promissory note
(iSystems Note) in the principal amount of $5,000,000, subject to
adjustment, and (iii) 1,526,332 shares of unregistered common
stock valued at $18,000,000 based on a volume-weighted average of
the closing prices of our common stock during a 90-day period.
The iSystems Note bears interest at an annual rate of 3.5% and
matures on May25, 2019. The unpaid principal and all accrued
interest under the promissory note is payable in two installments
of $2.5 million on May25, 2018 and May25, 2019, subject to
adjustment. The Equity Purchase Agreement contains certain
customary representations, warranties, indemnities and covenants.
To finance the iSystems acquisition, we amended and restated our
existing credit agreement with Wells Fargo Bank, National
Association, as administrative agent (the Restated Credit
Agreement) to add an additional term loan in the amount of
approximately $40,000,000, of which we borrowed approximately
$32,000,000 to complete the iSystems acquisition.
In connection with the iSystems acquisition, we also entered into
an investor rights agreement (the Investor Rights Agreement) with
the Seller. to the terms of the Investor Rights Agreement, until
May2018, the holders of the registrable securities received in
connection with the acquisition have agreed not to directly or
indirectly transfer, sell, make any short sale or otherwise
dispose of any of our equity securities and not to vote any of
our equity securities or solicit proxies other than in favor of
each director that our board recommends for election, against any
director that our board has not nominated for election, and in
accordance with the recommendation of our board on any other
matters, subject to certain exceptions. In addition, under the
Investor Rights Agreement, holders of the registrable securities
have demand registration rights which allow a registration
statement to be filed on or about March 31, 2018 and piggyback
registration rights which become effective in May 2018. In
addition, under the terms of the Investor Rights Agreement, such
holders have the right to nominate one director to our board of
directors until the first date that the holders of the
registrable securities no longer hold more than the lesser of
(x)5% of our outstanding common stock (as equitably adjusted for
any stock splits, stock combinations, reorganizations, exchanges,
merger, recapitalizations or similar transaction after the date
hereof) and (y)90% of the shares of our common stock held by such
holders as of May25, 2017. The director nominee initially
appointed by the holders will be Daniel Gill and our board will
appoint him to serve as a director on June6, 2017. Mr. Gill is a
founder and a co-managing partner of Silver Oak Services
Partners, a private equity firm focused exclusively on business,
healthcare and consumer services companies in the middle market.
In 2014 Silver Oak acquired iSystems, LLC (currently, a wholly
owned subsidiary of iSystems) and Mr.Gill served on the board of
directors of iSystems, LLC.
The foregoing description of the Equity Purchase Agreement, the
Investor Rights Agreement and iSystems Note does not purport to
be complete and is qualified in its entirety by reference to the
full text of the Equity Purchase Agreement, the Investor Rights
Agreement and iSystems Note, copies of which are filed as
Exhibits10.1, 10.2 and 4.1, respectively, hereto and incorporated
herein by reference.
Amended and Restated Credit Agreement
On May25, 2017, we entered into an amended and restated credit
agreement (the Restated Credit Agreement) with Wells Fargo Bank,
National Association, as administrative agent, and the lenders
that are parties thereto, amending and restating the terms of the
Credit Agreement dated as of March20, 2014, as amended.
The Restated Credit Agreement provides for an increase in the
aggregate principal amount of total commitments from
approximately $32,714,000 to $75,000,000. This increase includes
an additional term loan commitment of approximately $40,286,000
and an additional revolver commitment of $2,000,000.
The Restated Credit Agreement amends the applicable margin rates
for determining the interest rate payable on outstanding loans as
follows:
|
LeverageRatio |
|
FirstOutBase RateMargin |
|
FirstOutLIBOR RateMargin |
|
LastOutBase RateMargin |
|
LastOutLIBOR RateMargin |
|
3.25:1 |
2.00 Percentage Points |
3.00 Percentage Points |
7.00 Percentage Points |
8.00 Percentage Points |
||||
|
3.25:1 |
2.50 Percentage Points |
3.50 Percentage Points |
7.50 Percentage Points |
8.50 Percentage Points |
The outstanding principal amount of the term loan is payable in
equal installments of $875,000 beginning on September30, 2017
and the last day of each fiscal quarter thereafter. The
outstanding principal balance and all accrued and unpaid
interest on the term loan is due on May 25, 2022.
The Restated Credit Agreement also:
amends our leverage ratio covenant to increase the maximum
ratio to5.75:1 at June 30, 2017, stepping down to 3.25:1 at
June 30, 2020 and each quarter-end thereafter;
amends our fixed charge coverage ratio to be not less than
1.35:1 at June 30, 2017 and September 30, 2017, not less than
1.45:1 at December 31, 2017, and not less than 1.50:1 beginning
with the quarter ending March 31, 2018 and each quarter-end
thereafter; and
adds a TTM recurring revenue covenant, requiring
software-as-a-service, hardware-as-a-service and cloud
subscription and maintenance support revenues to be at least
$41,000,000 at June 30, 2017 and stepping up to $60,500,000 at
June 30, 2022 and each quarter-end thereafter.
The foregoing description of the Restated Credit Agreement does
not summarize or include all terms relating to the Restated
Credit Agreement, and is qualified in its entirety by reference
to the full text of the Restated Credit Agreement, which is
filed as Exhibit10.3 hereto and is incorporated herein by
reference.
Item 2.01 Completion of Acquisition or Disposition of
Assets
The information set forth under Equity Purchase Agreement in
Item 1.01 is incorporated herein by reference in its entirety.
Item 2.03 Creation of a Direct Financial Obligation or
an Obligation under an Off-Balance Sheet Arrangement of a
Registrant
The information set forth under Amended and Restated Credit
Agreement in Item 1.01 is incorporated herein by reference in
its entirety.
Item 3.02. Unregistered Sales of Equity
Securities.
The information set forth under Equity Purchase Agreement in
Item 1.01 is incorporated herein by reference in its entirety.
The issuance and sale of the shares of our common stock in
connection with the iSystems acquisition are exempt from the
registration requirements of the Securities Act of 1933 to
Section4(a)(2)thereof and Rule506(b)of Regulation D thereunder.
Item 8.01.Other Events.
On May25, 2017 we entered into a stock purchase agreement (the
Stock Purchase Agreement) with Compass HRM,Inc. (Compass) and
the sellers and seller representative named therein, to which
the sellers sold 50% of the outstanding shares of capital stock
of Compass to us for an aggregate purchase price of $6,000,000,
subject to adjustment as provided in the Stock Purchase
Agreement. The aggregate purchase price consists of $4,500,000
in cash and a subordinated promissory note (Compass Note) in
the principal amount of $1,500,000, subject to adjustment. The
Compass Note bears interest at an annual rate of 2.0% and
matures on May25, 2022. The Compass Note is payable in five
annual installments of $300,000 on the anniversary of the
closing date, subject to adjustment. Compass is headquartered
in Tampa, Florida, and provides cloud-based human resource
management software, including payroll, benefits, time and
attendance, and performance management.
To finance the Compass acquisition, we incurred approximately
$4,500,000 of additional indebtedness to an additional term
loan under our Restated Credit Agreement.
The foregoing description of the Stock Purchase Agreement and
Compass Note does not purport to be complete and is qualified
in its entirety by reference to the full text of the Stock
Purchase Agreement and Compass Note, copies of which are filed
as Exhibits 99.5 and 4.2, respectively, hereto and incorporated
herein by reference.
On May25, 2017, we issued a press release announcing the
iSystems and Compass acquisitions, the Restated Credit
Agreement and the commencement of a registered public offering
of our common stock. A copy of the press release is filed as
Exhibit 99.1 hereto.
Item 9.01.Financial Statements and Exhibits.
(a) Financial Statements of Business Acquired.
The audited consolidated financial statements of iSystems
Holdings, LLC and Subsidiaries as of December31, 2016 and 2015
and for the years then ended and the unaudited consolidated
financial statements of iSystems Holdings, LLC and Subsidiaries
as of March31, 2017 and 2016 and for each of the three months
then ended are filed as Exhibits 99.2 and 99.3, respectively,
hereto and incorporated herein by reference.
(b)Pro Forma Financial Information.
Our unaudited pro forma condensed combined financial
information of Asure Software, Inc., after giving effect to the
iSystems acquisition and the borrowings under the Restated
Credit Agreement, is filed as Exhibit99.4 hereto and is
incorporated herein by reference.
(d)Exhibits
|
Exhibit No. |
|
Description |
|
4.1 |
Secured Subordinated Promissory Note in the principal |
|
|
4.2 |
Subordinated Promissory Note in the principal amount of |
|
|
10.1 |
Equity Purchase Agreement, dated as of May 25, 2017, |
|
|
10.2 |
Investor Rights Agreement dated as of May 25, 2017 by and |
|
|
10.3 |
Amended and Restated Credit Agreement,dated as of May 25, |
|
|
23.1 |
Consent of RSM US LLP. |
|
|
99.1 |
Press Release dated May 25, 2017. |
|
|
99.2 |
Audited consolidated financial statements of iSystems |
|
|
99.3 |
Unaudited consolidated financial statements of iSystems |
|
|
99.4 |
Unaudited pro forma condensed combined financial |
|
|
99.5 |
Stock Purchase Agreement, dated as of May 25, 2017 among |
Cautionary Statement Regarding Forward-Looking
Statements
This Report contains forward-looking statements that involve
risks and uncertainties. These statements relate to future
periods, future events or our future operating or financial
performance. All statements other than statements of historical
fact, including statements identified by words such as may,
will, could, expect, anticipate, continue, plan, intend,
estimate, project, believe and similar expressions or
variations, are forward-looking statements. Forward-looking
statements include but are not limited to statements regarding
our strategy, future operations, financial condition, results
of operations, projected costs, and plans and objectives of
management. Actual results may differ materially from those
contemplated by the forward-looking statements due to, among
others, the risks and uncertainties described in our reports
and filings with the Securities and Exchange Commission. We
undertake no obligation to update any forward-looking statement
or statements to reflect events or circumstances that occur
after the date on which the statement is made or to reflect the
occurrence of unanticipated events.
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 hereunto duly authorized.
|
ASURE SOFTWARE,INC. |
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|
Dated: May26, 2017 |
By: |
/s/ Brad Wolfe |
|
Brad Wolfe |
||
|
Chief Financial Officer |
EXHIBITINDEX
|
Exhibit No. |
|
Description |
|
4.1 |
Secured Subordinated Promissory Note in the principal |
|
|
4.2 |
Subordinated Promissory Note in the principal amount of |
|
|
10.1 |
Equity Purchase Agreement, dated as of May 25, 2017, |
|
|
10.2 |
Investor Rights Agreement dated as of May 25, 2017 by and |
|
|
10.3 |
Amended and Restated Credit Agreement,dated as of May 25, |
About Asure Software, Inc. (NASDAQ:ASUR)
Asure Software, Inc. is a global provider of cloud-based software-as-a-service (SaaS) solutions that help companies to bring people, time, space and assets together. The Company serves approximately 6,000 clients in over 80 countries. The Company offers a range of solutions to help its clients optimize and manage mobile workforces and global workspaces. Its SaaS-based offerings include asset management, mobile room scheduling, mobile time tracking, scheduling software, space utilization solutions, tablet-based time clocks, time clocks, touch panels for room scheduling and workplace business intelligence (BI) analytics. It offers approximately two product lines, including AsureSpace and AsureForce. Its AsureSpace provides workplace management solutions that enable organizations to manage their office environments and manage real estate utilization. Its AsureForce time and labor management solutions help organizations to manage labor and labor administration costs and activities. Asure Software, Inc. (NASDAQ:ASUR) Recent Trading Information
Asure Software, Inc. (NASDAQ:ASUR) closed its last trading session down -0.15 at 14.63 with 58,166 shares trading hands.
