Item 1.01 Entry into a Material Definitive Agreement.
On March 12, 2018, MINDBODY, Inc. (the
Company
) and Harley Merger Sub, Inc., a Delaware corporation and a wholly owned
subsidiary of the Company (the
Merger
Sub
), entered into an Agreement and Plan of Merger (the
Merger
Agreement
) with Booker Software, Inc. (
Booker
) and Shareholder Representative
Services LLC, as stockholder representative thereunder, pursuant to which Merger Sub will merge with and into Booker, with Booker continuing as the surviving corporation and becoming a wholly-owned subsidiary of the Company (the
Merger
).
The Boards of Directors of the Company and Booker have unanimously approved the Merger Agreement.
Pursuant to the Merger Agreement, and subject to the terms and conditions set forth therein, at the closing of the Merger, the Company will
acquire Booker for approximately $150.0 million in cash and the assumption of unvested option awards. The assumed unvested option awards will be converted into options to purchase a number of shares of Class A common stock of the Company,
subject to an exchange ratio as described in the Merger Agreement. At the closing of the Merger, the purchase price will be adjusted based on the amount of indebtedness, cash, unpaid transaction expenses and net working capital of Booker.
In addition, the Company is expected to grant approximately $15.0 million in new, retention-based equity compensation to certain
employees of Booker who accept employment transition offers with the Company following the closing of the Merger.
The Merger Agreement
contains customary representations and warranties made by each of Booker, the Company and Merger Sub. The representations and warranties of each party set forth in the Merger Agreement have been made solely for the benefit of the other parties to
the Merger Agreement, and such representations and warranties should not be relied on by any other person. In addition, such representations and warranties (i) have been qualified by disclosure schedules that the parties have exchanged in
connection with the execution of the Merger Agreement, (ii) are subject to the materiality standards set forth in the Merger Agreement, which may differ from what may be viewed as material by investors, (iii) in certain cases, were made as
of a specific date, and (iv) may have been used for purposes of allocating risk between the respective parties rather than establishing matters of fact. Accordingly, no person should rely on the representations and warranties as
characterizations of the actual state of facts. Moreover, information concerning the subject matter of the representations and warranties may change after the date of the execution of the Merger Agreement.
The Merger Agreement contains customary covenants of the Company and Booker, including, among other things, a covenant by Booker (i) to
operate in the ordinary course of business, (ii) not to take certain actions prior to the closing of the Merger without the prior consent of the Company and (iii) not to solicit alternative transactions.
The Merger Agreement also contains customary indemnification provisions whereby certain equityholders of Booker have agreed to indemnify,
subject to certain caps and thresholds, the Company and its affiliated parties for any losses arising out of any inaccuracy in, or breaches of, the representations, warranties and covenants of Booker in the Merger Agreement, certain tax
liabilities of Booker, any appraisal claims of Booker stockholders and certain other matters. The Merger Agreement provides that $7.5 million of the purchase price otherwise payable in the Merger to certain Booker equityholders will be placed
in a third party escrow fund for one year as partial security for the indemnification obligations of these Booker equityholders, in addition to $1.0 million of the purchase price that will also be placed in the escrow fund as partial security
for certain specified indemnity matters. The Company also secured representation and warranty insurance as additional recourse for certain losses arising out of any inaccuracy in, or breaches of, the representations and warranties of Booker.
The Merger Agreement contains customary closing conditions, including, among other things, (i) the absence of any law or order
prohibiting the closing, (ii) the absence of a material adverse effect with respect to Booker, (iii) the accuracy of the representations and warranties of the Company and Booker and (iv) compliance by the parties with the covenants
described above.
The foregoing is a summary of the terms of the Merger Agreement and does not purport to summarize or include all terms
relating to the transactions contemplated by the Merger Agreement. The foregoing summary is qualified in its entirety by reference to the Merger Agreement, which is filed as Exhibit 2.1 to this Current Report on Form
8-K
and is incorporated herein by reference.