ITEM 1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT.
Equity Purchase Agreement
On September 13, 2021, Intuit Inc., a Delaware corporation (“Purchaser”), entered into an Equity Purchase Agreement (the “Equity Purchase Agreement”) by and among Purchaser, The Rocket Science Group LLC (d/b/a Mailchimp), a Georgia limited liability company (the “Company”), VERP Holdings I, LLC, a Georgia limited liability company (“VERP I”), VERP Holdings II, LLC, a Georgia limited liability company (“VERP II”), DMK RSG, LLC, a Delaware limited liability company (“DMK RSG”), DMK Life LLC, a Delaware limited liability company (“DMK Life”), DMK 10 LLC, a Delaware limited liability company (“DMK 10”), DMK 20 LLC, a Delaware limited liability company (“DMK 20”), DMK RSG Holdco LLC, a Delaware limited liability company (“DMK RSG Holdco” and, together with VERP I, VERP II, DMK RSG, DMK Life, DMK 10 and DMK 20, the “Sellers”), and Benjamin Chestnut, an individual resident of the State of Georgia, as the Sellers’ representative (the “Sellers’ Representative”). Pursuant to the Equity Purchase Agreement, among other matters, and subject to the satisfaction or waiver of the conditions set forth therein, the Sellers will sell to Purchaser, and Purchaser will purchase from the Sellers, all of the Sellers’ right, title and interest in and to the outstanding equity securities of the Company (the “Equity Purchase”).
Pursuant to the terms of, and subject to the conditions specified in, the Equity Purchase Agreement, which has been approved by the board of directors of Purchaser and the board of managers of the Company, upon consummation of the Equity Purchase, Purchaser will pay total consideration of $12.0 billion, subject to certain adjustments set forth in the Equity Purchase Agreement (the “Purchase Price”). The Purchase Price includes approximately $300 million of assumed Company employee transaction bonuses that will be issued in the form of Purchaser restricted stock units. The remainder of the Purchase Price payable to the Sellers will be paid approximately 50% in cash and approximately 50% in shares of Purchaser common stock, par value $0.01 (the “Purchaser Common Stock”) (at a fixed value of $562.6085 per share (the “Purchaser Stock Price”), which is the average of the daily volume-weighted average sales price per share of the Purchaser Common Stock on the Nasdaq Global Select Market, as such daily volume-weighted average sales price per share is reported by Bloomberg L.P., calculated to four decimal places and determined without regard to after-hours trading or any other trading outside the regular trading session trading hours, for each of the five consecutive trading days ending on and including the third trading day immediately preceding the date of the Equity Purchase Agreement). Purchaser intends to issue the shares of Purchaser Common Stock described herein in reliance upon the exemptions from registration afforded by Section 4(a)(2) and Rule 506 of Regulation D promulgated under the Securities Act of 1933, as amended. Purchaser also has agreed to file a supplement to the prospectus included in Purchaser’s existing Registration Statement filed on Form S-3 on June 23, 2020, covering the resale of the shares of Purchaser Common Stock to be issued in the Equity Purchase (the “Prospectus Supplement”). In addition, concurrent with the parties’ entry into the Equity Purchase Agreement, Purchaser and each Seller entered into an agreement to facilitate an orderly process with respect to certain sales of Purchaser Common Stock by the Sellers following the closing of the Equity Purchase (the “Closing”). In connection with the Equity Purchase, Purchaser has agreed to establish a retention pool consisting of $200 million in Purchaser restricted stock units to be issued to certain employees of the Company following the Closing.
The consummation of the Equity Purchase is subject to certain customary conditions to Closing, including, among others, (i) the absence of any law or order that is in effect and restrains, enjoins or otherwise prohibits or makes illegal the consummation of the transactions contemplated by the Equity Purchase Agreement (a “Closing Legal Impediment”), (ii) the absence of any pending legal proceeding by a governmental authority that seeks to restrain, enjoin, prohibit, prevent or otherwise make illegal the transactions contemplated by the Equity Purchase Agreement, (iii) the receipt of specified regulatory approvals and the expiration or termination of applicable waiting periods, including the expiration or termination of the applicable waiting period under the Hart-Scott Rodino Antitrust Improvements Act of 1976, as amended (the “HSR Act”), and the absence of any pending or proposed legal proceeding by any governmental authority that could result in the issuance of an order that would cause the failure of such condition to be satisfied, (iv) the effectiveness of the Prospectus Supplement, (v) the shares of Purchaser Common Stock to be issued in connection with the Equity Purchase being approved for listing on the Nasdaq Global Select Market, (vi) subject to certain materiality exceptions, the accuracy of certain representations and warranties of each of the Company, the Sellers and Purchaser contained in the Equity Purchase Agreement and the compliance in all material respects by each party with the covenants contained in the Equity Purchase Agreement, and (vii) the absence of a material adverse effect with respect to each of the Company and Purchaser. The consummation of the Equity Purchase is not subject to a financing condition.
