Filed by MuleSoft, Inc.
Pursuant to Rule 425
under the Securities Act of 1933 and
deemed filed pursuant to Rule14d-9
under the Securities Exchange Act of 1934
Subject Company: MuleSoft, Inc.
(Commission FileNo. 001-38031)
The following communications are being filed in connection with the acquisition of MuleSoft, Inc. by salesforce.com, inc.
UPDATED Employee FAQ
These FAQs are being provided to you for information purposes only and shall not serve as an amendment or modification of any of your equity awards. Any information contained in these FAQs is qualified in its entirety by the terms of the merger agreement between MuleSoft and salesforce dated March 20, 2018 and the terms of your equity awards. These FAQs are not intended to provide tax advice and you should consult with your individual tax advisor regarding the tax treatment of your stock and equity compensation in connection with the exchange offer and merger.
Contents:
The shares you already own - NEW INFO
Vested and exercisable stock options - NEW INFO
Future Trading Windows - NEW INFO
| I. | Terms of the acquisition |
MuleSoft stock (MULE) will be acquired by salesforce (CRM) for a mix of cash and CRM shares. Subject to the terms of the offer, Salesforce will be paying $36 in cash and 0.0711 shares of CRM in exchange for each share of MULE tendered in the exchange offer. The mix of cash and shares has been set in the terms of the merger agreement and cannot be changed per individual preference. We anticipate thetransaction to close in the middle of Q2.
| II. | The shares you own |
Q:What happens to the shares of MULE I already own?
A: CRM launched an exchange offer to purchase MULE stock on April 2, 2018. The offer will expire on May 1, 2018 at 11:59PM, New York time, unless extended or terminated in accordance with the merger agreement, the SEC rules or applicable law.
All current shareholders who participate in the exchange offer will receive the merger consideration for their participating MULE shares. Subject to the terms of the offer, the per share merger consideration consists of the following:
$36/share in cash
0.0711 CRM shares
Fractional shares will be paid out in cash
This consideration will be delivered promptly following the expiration date of the offer either through your broker (for most of you this will be Schwab) or through Computershare if you still holdpre-IPO Class B shares.
Q:Why is salesforce issuing this exchange offer?
A: The purpose of the offer is for salesforce to acquire control of, and ultimately the entire equity interest in, MuleSoft. The offer is the first step in Salesforce’s plan to acquire all of the outstanding MuleSoft shares, and the merger is the second step in such plan. MuleSoft shares that are not tendered in the exchange offer will automatically receive the per share merger consideration at closing.
Q:Who is the Malbec Acquisition Corp.?
A: They are a wholly owned subsidiary of Salesforce.com, Inc. which is being used by salesforce as the Offeror of the exchange.
Q:How long do I have to decide whether to tender myMuleSoft shares in the offer?
A: The offer is scheduled to expire on May 1, 2018 at 11:59pm, New York time, unless extended or terminated in accordance with the merger agreement, the SEC rules or applicable law. Your broker, in most cases Schwab, will have a deadline to participate prior to the expiration of the offer. Schwab lists their participation deadline as April 27, 2018. If you hold shares at a different broker contact them directly for their deadline.
Q:Who can participate in the offer?
A: All MuleSoft shareholders, including employees, can participate in the offer.
Q:How do I participate in the offer to sell my shares?
A: You will receive a “letter of transmittal” or email from the broker, in most cases Schwab, at which your shares are held. This letter of transmittal will contain instructions on how to participate in the exchange offer. For more details on how this process will work at Schwab clickhere.
If you hold Class B shares from apre-IPO stock option exercise, Computershare will mail instructions for participation in the exchange offer and a letter of transmittal to you directly.
Contact your broker directly to ensure they have your current email and mailing address on file.
Q:Which shares are eligible for the exchange?
A: All of the MuleSoft stock that you own is eligible for the offer. This includes shares acquired from stock option exercises, ESPP purchases, and RSU vestings.
Q:How will I be taxed as a result of the exchange offer?
A: Selling shares in the offer is a taxable event. The total value of the transaction consideration less the price you paid for your MuleSoft shares (ie your strike price and/or ESPP purchase price) is reportable for tax purposes. Note that the full value of the merger consideration is taxable, not just the cash portion ($36 for each MULE share). You will also owe tax on the value you receive in CRM shares (.0711 for each MULE share).
In the US, the amount of tax you owe will be determined based on how long you have held your shares (long or short term capital gains). Generally, taxes will be due whenfiling your 2018 tax return with the IRS. Taxes arenot due at the time of the transaction, however, the amount of income you receive from this transaction may result in you needing to make estimated quarterly payments to the IRS. It is important that you speak to a tax advisor about this.
Outside of the US, you will likely owe capital gains tax depending on the tax rules in your country. For general tax information by country see theRSU andESPP tax supplements posted on MuleyLife. The relevant section is labeled ‘Sale of Shares’ in each document.
Here is anexample of how taxes would work if we assume transaction consideration of $45:
You own 1,000 shares from an option exercise with a strike price of $7.
$45 - $7 = $38 gain per share
$38 * 1,000 shares = $38,000 reported for tax purposes
Everyone’s tax situation is unique and it is strongly encouraged to consult a tax adviser.
Please note that the value of the transaction consideration is unknown at this time and could be greater or less than the amount used in the example above.
| III. | Vested and Exercisable Stock Options |
Q:Can I exercise my vested stock options now?
A: Yes. Subject to any MuleSoft policies that apply to you, including ourInsider Trading Policy, you may continue to exercise your vested stock options through Schwab. If you need assistance with exercising your stock options see the FAQ on MuleyLife or contactSchwab directly.
Remember, our trading window is currently closed. You may not sell your shares at this time.
Q:Do we anticipate a freeze on the ability to exercise stock options in the future?
A: Yes.Your final day to exercise vested stock options prior to the expected closing is Friday, April 20, 2018. We don’t have a date for resuming exercise activity after the acquisition closes, but will communicate it to you as soon as we know.
You do not have to exercise your stock options now. It is entirely up to you. At the closing, for then-current employees, all outstanding stock options (vested or unvested) will be assumed by salesforce and converted into CRM options based on a conversion ratio to be calculated shortly before closing.
Q:If I exercise my vested stock options now may I sell my purchased shares in the exchange offer?
A: Yes. Salesforce will pay the merger consideration for any shares you own and subsequently sell in the exchange offer. Subject to the terms of the offer, the per share merger consideration will consist of the following:
$36/share in cash
0.0711 CRM shares
Fractional shares will be paid out in cash
Q:What happens to my vested stock options if I don’t exercise them before closing?
A: At the closing, for then-current employees, all outstanding stock options (vested or unvested) will be assumed by salesforce and converted into CRM options based on a conversion ratio to be calculated shortly before closing. The terms of your assumed options, including the vesting schedule and the type of stock option you have (ISO or NQ), will remain the same. Your vested and unvested stock options will move out theMuleSoft Schwab Equity Awards Center and into eTrade, which is salesforce’s equity platform, post closing. We anticipate this to occur approximately 30 days following the close date, but it could potentially take longer. The stock team will keep you updated on timing.
The number of CRM stock options you will receive will be determined by multiplying the number of MULE stock options you have at closing by the conversion ratioand rounding down to the nearest whole share. Fractional shares will not be issued.
The exercise price of your assumed options will be calculated by dividing the exercise price of your MULE stock options by the conversion ratio, and rounding up to the nearest whole cent.
Here’s anexample of how the conversion will work if we assume the conversion ratio is .3587:
You have 1,000 vested MULE stock options with a $7 exercise price
1,000 MULE x .3587 = 358 CRM stock options
$7 exercise price/.3587 = $19.52 exercise price
You will end up with 358 vested stock options to purchase CRM stock with a $19.52 exercise price.
Please note that the conversion ratio is unknown at this time and could be greater or less than the conversion ratio used in the example above.
Q:What happens to my vested stock options if my employment terminates before closing?
A: Upon a termination of employment, your vested MULE stock options remain exercisable for the post termination exercise period provided in your option agreement. At closing, if you have terminated employment and your vested stock options have not been exercised and remain outstanding, they will be cancelled and you will receive a cash payment for each share. The cash payment is calculated based on a formula in the merger agreement, which is tied to CRM’s stock price at closing. As a result, it cannot be calculated at this time. However, the cash payment will equal the approximate cash value of the per share merger consideration, less the per share exercise price, and less applicable taxes as required.
| IV. | Unvested Stock Options |
Q:What happens to my unvested MULE stock options at close?
A: At the closing, for then-current employees, all outstanding stock options (vested or unvested) will be assumed by salesforce and converted into options to purchase CRM common stock based on a conversion ratio to be calculated shortly before closing. The terms of your assumed options, including the vesting schedule and the type of stock option you have (ISO or NQ), will remain the same. Your vested and unvested stock options will move out theMuleSoft Schwab Equity Awards Center and into eTrade, which is salesforce’s equity platform post closing. We anticipate this to occur approximately 30 days following the close date, but it could potentially take longer. The stock team will keep you updated on timing.
The number of CRM stock options you will receive will be determined by multiplying the number of MULE stock options you have at closing by the conversion ratio and rounding down to the nearest whole share. Fractional shares will not be issued.
The exercise price of your assumed options will be calculated by dividing the exercise price of your MULE stock options by the conversion ratio, and rounding up to the nearest whole cent.
Here’s anexample of how the conversion will work if we assume the conversion ratio is .3587:
You have 1,000 unvested MULE stock options with a $7 exercise price
1,000 MULE x .3587 = 358 CRM stock options
$7 exercise price/.3587 = $19.52 exercise price
You will end up with 358 unvested stock options to purchase CRM stock (currently valued at ~$116) with a $19.52 exercise price.
Please note that the conversion ratio is unknown at this time and could be greater or less than the conversion ratio used in the example above.
Q: What happens to my unvested stock options if my employment terminates before closing?
A: Your unvested stock options will be cancelled upon your termination of employment. Please see above for a description of the treatment of the vested portion of your stock options.
| V. | Unvested RSUs |
Q:What happens to my unvested RSUs at close?
A: At the closing, for then-current employees, all unvested MULE RSUs will be assumed by salesforce and converted into CRM RSUs based on the same conversion ratio that applies to stock options. The terms of your RSUs, including the vesting schedule, will remain the same.
The number of CRM RSUs you will receive will be determined by multiplying the number of MULE RSUs you have at closing by the conversion ratio and rounding up to the nearest whole share. Fractional shares will not be issued.
Here’s anexample of how the conversion will work if we assume the conversion ratio is .3587:
You have 1,000 unvested MULE RSUs
1,000 MULE x .3587 = 359 CRM RSUs
You will end up with 359 unvested CRM RSUs, which will continue vesting on the same schedule you already have.
Please note that the conversion ratio is unknown at this time and could be greater or less than the conversion ratio used in the example above.
| VI. | ESPP |
Q:I am a current participant in the ESPP.What happens now?
A: The next purchase period will continue as scheduled unless the closing occurs on or before May 10, 2018. If the closing occurs on or before May 10, the purchase period may be shortened to a date shortly before closing. We will use all funds accumulated through payroll to purchase shares at the discounted rate on the purchase date.
If closing occurs after May 10th, we anticipate that a new purchase period will begin as scheduled. Any purchase periods in effect as of the closing will be shortened to a date prior to closing. We will provide additional information on the ESPP and any new purchase dates.
The ESPP will terminate in connection with the closing of the acquisition. Details regarding salesforce’s ESPP and your eligibility to participate will be shared at a later date.
Q:I have not enrolled in the ESPP yet.Will I be able to?
A: You will not be able to enroll in MuleSoft’s ESPP. Per the terms of the merger agreement, we will not start a new offering period for our ESPP and open enrollment will not occur in April. Details regarding salesforce’s ESPP and your eligibility to participate will be shared at a later date.
| VII. | New Grants |
Q:I’m a new hire.Will I still get my grant?
A: Prior to close, our intent is to follow our current practice regarding new hire grants which are currently made on a monthly basis, subject to approval by our compensation committee or equity grant committee. The dollar amount in your offer letter will be converted to a number of RSU shares based on MULE’s stock price. After the closing date, any new hire grants will be made by salesforce in accordance with their grant approval process.
Q:I was recently promoted and told I will receive a grant with my promotion.How will this work?
A: Prior to close, our intent is to follow our current practice regarding promotion grants which are currently made on a monthly basis, subject to approval by our compensation committee or equity grant committee. The dollar amount for your promotion grant will be converted to a number of RSU shares based MULE’s stock price. After the closing date, any promotion grants will be made by salesforce in accordance with their grant approval process.
| VIII. | Future Trading Windows |
Q:When will the MuleSoft trading window open?
A: Given the expiration of the exchange offer, which is currently set for May 1, 2018, we will not open the trading window after our next earnings release on April 26, 2018. Following the closing of the acquisition, all MuleSoft employees will be subject to salesforce’s Insider Trading
Policy and their corresponding trading windows. Salesforce has informed us that they expect the trading window to open in early June and remain open until June 29, 2018 unless otherwise communicated by Salesforce to its employees.
| IX. | Schwab Accounts |
Q:What will happen to my Schwab account after closing?
A: Your Schwab brokerage account will remain open and there is no fee for holding this account. In fact, if you participate in the exchange offer, the MuleSoft Schwab account is where your cash and CRM shares will be deposited after closing. Your vested and unvested equity will move out of theMuleSoft Schwab Equity Awards Center and into eTrade, which is salesforce’s equity platform. We suggest downloading all relevant documents from your Equity Awards Center account now - grant agreements, tax documents, statements, etc. If you need assistance with this please contact Schwab directly.
Q:How do I participate in the offer to sell my shares through Schwab?
A: You will receive an email from Schwab with instructions on how to participate in the exchange offer. For more details on how this process will work, clickhere.
In addition, for further details on the exchange offer, please review salesforce’sSchedule TO andS-4 filings and MuleSoft’s Schedule14D-9 filing.
Schwab Contact Information
M-F, 24 hrs a day
US: 800.654.2593
Non-US: SeeInternational Dialing Instructions and select the country you’re calling from
These examples are provided for illustrative purposes only. The estimated conversion ratio and assumed parent trading price used in these examples may be less than or greater than the amounts used in these examples. These examples also do not reflect any applicable taxes payable on the amounts you receive in connection with the merger.
Conversion Ratio
The conversion ratio that will be applied to vested and unvested stock options and RSU grants follows the following formula:
($36 + (.0711*Average CRM Price))/Average CRM Price
The result of this formula will be rounded to the nearest fourth decimal place.
The average CRM price is determined using the volume weighted average trading price of a share of CRM stock for 10 trading days prior to the closing. We will not have this figure available until closing. The conversion ratio is unknown at this time and could be greater or less than the conversion ratio used in the scenarios below or the examples we shared above.
Scenario #1
Today, Max the Mule has a grant of 1,000 stock options at $7 exercise price.
Max exercises 300 shares on March 30, 2018.
Estimated Conversion Ratio at Closing: .3587
Max participates in the tender off and tenders 300 owned shares.
Merger Consideration for Owned Shares (subject to the terms of the offer): $36 in cash, .0711 in CRM Stock
Assumed Average CRM Price for purposes of cashing out fractional shares: $125.44
| Vested & Exercisable Options | MULE Shares Owned | Unvested Options | Merger Consideration Payable for MULE Shares Owned | |||||
Today | 500 | 0 | 500 | N/A | ||||
March 30, 2018 | 200 | 300 | 500 | N/A | ||||
At Closing | 71 with $19.52 exercise price | 0 | 179 with $19.52 exercise price | $10,841.40 + 21 CRM shares |
Scenario #2
Maxine the Mule has 350 shares she purchased through the ESPP program in November 2017.
Maxine also has 50 shares that she received when her RSU vested in February 2018.
Altogether, she owns 400 shares of MULE stock.
Maxine participates in the tender off and tenders 400 owned shares.
Merger Consideration for Owned Shares (subject to the terms of the offer): $36 in cash, .0711 in CRM Stock
Assumed Average CRM Price for purposes of cashing out fractional shares: $125.44
| MULE Shares Owned | Merger Consideration Payable for MULE Shares Owned | |||
Today | 400 | N/A | ||
At Closing | 0 | $14,455.19 + 28 CRM shares |
Scenario #3
Max the Mule has 1,000 unvested RSUs
Estimated Conversion Ratio at Closing: .3587, Rounded up to the nearest whole share
| Unvested RSUs | ||
Today | 1000 | |
At Closing | 359 |
Important Information around ISO Shares
If you joined MuleSoft prior to our IPO and are based in the US, you likely received a grant of Incentive Stock Options (ISOs) during your employment. ISOs carry preferred tax treatment if you hold shares for certain periods of time. More information on how ISOs work can be found here on MuleyLife.
This FAQ is intended to address what happens with ISO shares you have exercised and are still holding, assuming you participate in the exchange offer. These FAQs only discuss the federal tax treatment of your shares and do not discuss any state or local taxes that may apply. This is not an analysis of your individual tax position and it is not tax advice. Please consult a tax advisor to understand your individual tax position, which may vary based on your individual facts and circumstances.
Q:I exercised my ISO shares over 1 year ago. What happens at closing?
A: If you have been holding your shares for more than 1 year at the time of closing and more than 2 years from the date of grant you can expect the following to occur:
| • | Subject to the terms of the offer, the merger consideration will be paid out as follows: |
$36/share in cash
0.0711 CRM shares
Fractional shares will be paid out in cash
| • | Receiving the merger consideration is a considered a qualified disposition. |
| • | When you file your 2018 taxes you will owe long term capital gains tax on the difference between the merger consideration and what you paid for the shares at exercise. |
| • | If you paid AMT for the year in which you exercised, you may have a credit toward the long term capital gains owed. Consult your tax advisor. |
| • | NOTE: Retain all records of your ISO grant agreements and exercise transactions for tax filing |
Q:I exercised my ISO shares less than 1 year ago. What happens at closing?
A: If you have not held your shares for more than 1 year at the time of closing you can expect the following to occur:
| • | Subject to the terms of the offer, the merger consideration will be paid out as follows: |
$36/share in cash
0.0711 CRM shares
Fractional shares will be paid out in cash
| • | Receiving the merger consideration is considered a disqualified disposition. |
| • | The difference between the value of the shares on the exercise date and the exercise price will be ordinary income to you. |
| • | When you file your 2018 taxes you will owe short term capital gains tax on the difference between the merger consideration and what you paid for the shares at exercise. |
| • | If you paid AMT for the year in which you exercised, you may have a credit toward the short term capital gains owed. Consult your tax advisor. |
| • | NOTE: Retain all records of your ISO grant agreements and exercise transactions for tax filing |
Additional Information and Where to Find It
In connection with the proposed acquisition, salesforce.com, inc. (“salesforce”) commenced an exchange offer for the outstanding shares of MuleSoft, Inc. (“MuleSoft”) on April 2, 2018. This communication is for informational purposes only and is neither an offer to purchase nor a solicitation of an offer to sell shares of MuleSoft, nor is it a substitute for any offer materials that salesforce and MuleSoft filed with the Securities and Exchange Commission (the “SEC”) upon commencement of the exchange offer. Salesforce filed exchange offer materials on Schedule TO with the SEC, and MuleSoft filed a Solicitation/Recommendation Statement on Schedule14D-9 with the SEC with respect to the offer. In addition, salesforce filed a registration statement on FormS-4 related to the transaction with the SEC in connection with the proposed transaction. THE EXCHANGE OFFER MATERIALS (INCLUDING AN OFFER TO EXCHANGE, A RELATED LETTER OF TRANSMITTAL AND CERTAIN OTHER EXCHANGE OFFER DOCUMENTS) AND THE SOLICITATION/RECOMMENDATION STATEMENT WILL CONTAIN IMPORTANT INFORMATION. MuleSoft STOCKHOLDERS ARE URGED TO READ THESE DOCUMENTS CAREFULLY WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION THAT HOLDERS OF MuleSoft SECURITIES SHOULD CONSIDER BEFORE MAKING ANY DECISION REGARDING EXCHANGING THEIR SECURITIES. The Solicitation/Recommendation Statement, the Offer to Exchange, the related Letter of Transmittal and certain other exchange offer documents are available to all MuleSoft stockholders at no expense to them. The exchange offer materials and the Solicitation/Recommendation Statement are available for free on the SEC’s website atwww.sec.gov. Copies of the documents filed with the SEC by salesforce are available free of charge under the Financials heading of the Investor Relations section of salesforce’s website atwww.salesforce.com/investor. Copies of the documents filed with the SEC by MuleSoft are available free of charge under the SEC filings heading of the Investors section of MuleSoft’s website athttps://investors.mulesoft.com/.
Forward-Looking Statements
This communication contains forward-looking information related to MuleSoft, Inc. (“MuleSoft”) and the acquisition of MuleSoft by salesforce.com, inc. (“salesforce”) that involves substantial risks, uncertainties and assumptions that could cause actual results to differ materially from those expressed or implied by such statements. Forward-looking statements in this release include, among other things, statements about the potential benefits of the proposed transaction, MuleSoft’s plans, objectives, expectations and intentions, the financial condition, results of operations and business of MuleSoft, and the anticipated timing of closing of the proposed transaction. Risks and uncertainties include, among other things, risks related to the ability of MuleSoft to consummate the proposed transaction on a timely basis or at all, including due to complexities resulting from the adoption of new accounting pronouncements and associated system implementations; MuleSoft’s ability to successfully integrate MuleSoft’s operations; MuleSoft’s ability to implement its plan, forecasts and other expectations with respect to MuleSoft’s business after the completion of the transaction and realize expected synergies; the satisfaction of the conditions precedent to consummation of the proposed transaction, including having a sufficient number of MuleSoft’s shares being validly tendered into the exchange offer to meet the minimum condition; MuleSoft’s ability to secure regulatory approvals on the terms expected in a timely manner or at all; the ability to realize the anticipated benefits of the proposed transaction, including the possibility that the expected benefits from the proposed transaction will not be realized or will not be realized within the expected time period; disruption from the transaction making it more difficult to maintain business and operational relationships; the negative side effects of the announcement or the consummation of the proposed transaction on the market price of MuleSoft’s common stock or on MuleSoft’s operating results; significant transaction costs; unknown liabilities; the risk of litigation and/or regulatory actions related to the proposed transaction; the pace of
change and innovation in enterprise cloud computing services; the competitive nature of the market in which MuleSoft participates; MuleSoft’s service performance and security, including the resources and costs required to prevent, detect and remediate potential security breaches; the expenses associated with new data centers and third-party infrastructure providers; additional data center capacity; MuleSoft’s ability to protect its intellectual property rights and develop its brand; dependency on the development and maintenance of the infrastructure of the Internet; the ability to develop new services and product features; other business effects, including the effects of industry, market, economic, political or regulatory conditions; future exchange and interest rates; changes in tax and other laws, regulations, rates and policies, including those related to the provision of services on the Internet, those related to accessing the Internet and those addressing data privacy and import and export controls; future business combinations or disposals; the uncertainties inherent in research and development; competitive developments and climate change.
Further information on these and other risk and uncertainties relating to MuleSoft can be found in its reports on Forms10-K,10-Q and8-K and in other filings MuleSoft makes with the SEC from time to time and available atwww.sec.gov. These documents are available under the SEC filings heading of the Investors section of MuleSoft’s website athttps://investors.mulesoft.com/.
The forward-looking statements included in this communication are made only as of the date hereof. MuleSoft assumes no obligation and does not intend to update these forward-looking statements, except as required by law.
