Item 1.01 Entry into a Material Definitive Agreement.
Agreement and Plan of Merger
On September 28, 2022, BTRS Holdings Inc., a Delaware
corporation (“Billtrust” or the “Company”), entered into an Agreement and Plan of Merger (the “Merger
Agreement”) by and among the Company, Bullseye FinCo, Inc., a Delaware corporation (“Parent”) and Bullseye
Merger Sub, Inc., a Delaware corporation and a direct, wholly owned subsidiary of Parent (“Merger Sub”), pursuant to
which Merger Sub will merge (the “Merger”) with and into the Company, with the Company surviving as a wholly owned
subsidiary of Parent.
Subject to the terms and conditions set forth
in the Merger Agreement, at the effective time of the Merger (the “Effective Time”), each share of Class 1 common stock
of the Company, $0.0001 par value, and Class 2 common stock of the Company, $0.0001 par value (collectively, “Company Common
Stock”) (other than the Rollover Shares (as defined below), and shares of Company Common Stock held by the Company as treasury
stock), issued and outstanding immediately prior to the Effective Time (other than dissenting shares) will be converted into the right
to receive $9.50 in cash, without interest (the “Merger Consideration”).
Pursuant to the Merger Agreement, at the Effective
Time:
| · | Each stock option to purchase Company Common Stock (whether or not vested) pursuant to a Company equity plan that is outstanding immediately
prior to the Effective Time (each, a “Company Stock Option”) will automatically vest and be cancelled and converted
into the right to receive an amount in cash, without interest, equal to (i) the excess, if any, of the Merger Consideration over the applicable
exercise price of such canceled Company Stock Option multiplied by (ii) the number of shares of Company Common Stock subject to such Company
Stock Option immediately prior to the Effective Time (and, for the avoidance of doubt, if the exercise price per share for any Company
Stock Option is equal to or greater than the Merger Consideration, such Company Stock Option will be forfeited and cancelled without consideration);
and |
| · | Each restricted stock unit granted pursuant to a Company equity plan (each, a “Company RSU”), other than an Interim
RSU (defined below) that is outstanding immediately prior to the Effective Time will automatically vest and be cancelled and converted
into the right to receive an amount in cash, without interest, equal to the product of (i) the Merger Consideration multiplied by (ii)
the number of shares of Company Common Stock underlying such Company RSU. Certain Company RSUs that are permitted to be granted between
the date of the Merger Agreement and the Effective Time (the “Interim RSUs”) will not be accelerated and instead will
be converted into a cash award equal to the Merger Consideration multiplied by the number of shares of Company Common Stock underlying
the Interim RSUs, which cash award will vest and be paid over an agreed schedule after the Effective Time. |
If the Merger is consummated, the Company’s
securities will be de-listed from the Nasdaq Global Select Market and de-registered under the Securities Exchange Act of 1934 as soon
as practicable following the Effective Time.
The consummation of the Merger (the “Closing”)
is subject to certain customary mutual conditions, including (i) the approval of the Company’s stockholders holding a majority of
the outstanding shares of Company Common Stock, (ii) the expiration or termination of any waiting period applicable to the consummation
of the Merger under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the “HSR Act”), and the expiration of
applicable waiting periods or clearances of the Merger, as applicable, under the antitrust and foreign investment laws of certain other
jurisdictions and (iii) the absence of any order or law that prohibits or renders illegal the consummation of the Merger. The obligation
of each party to consummate the Merger is also conditioned upon (a) the accuracy of the representations and warranties of the other party
as of the Closing (subject to customary materiality qualifiers), (b) compliance by the other party in all material respects with its pre-Closing
obligations under the Merger Agreement and (c) in Parent’s and Merger Sub’s case, the absence of a material adverse effect
with respect to the Company.
The Company and Parent have each made customary
representations, warranties and covenants in the Merger Agreement. Subject to certain exceptions, the Company has agreed, among other
things, to covenants relating to the conduct of its business during the interim period between the execution of the Merger Agreement and
the consummation of the Merger. In addition, subject to certain exceptions, the Company has agreed to covenants
relating to (i) the submission of the Merger Agreement to the Company’s
stockholders at a special meeting thereof for approval, (ii) the recommendation by the board of directors of the Company in favor of the
adoption by the Company’s stockholders of the Merger Agreement and (iii) non-solicitation obligations of the Company relating to
alternative acquisition proposals.
Either the Company or Parent may terminate the
Merger Agreement if (i) Parent, Merger Sub and the Company agree by mutual written consent to do so, (ii) the Merger has not been consummated
on or before March 28, 2023 (the “End Date”) (provided, however, that if antitrust approvals have not been obtained
by such time related to any acquisition by Parent or its affiliates (or entry by Parent or its affiliates into a definitive agreement
with respect to any such acquisition) and all other conditions have been satisfied, then the End Date may be extended by either party
to September 28, 2023), (iii) any governmental authority has issued an order permanently enjoining, making illegal or otherwise prohibiting
the Merger and such order is, or has become, final and non-appealable, (iv) the approval of the Company’s stockholders is not obtained
at a meeting of the Company’s stockholders (including an adjournment or postponement thereof) called for the purpose of adopting
the Merger Agreement or (v) the other party breaches any representation, warranty or covenant that results in the failure of the related
closing condition to be satisfied, subject to a cure period in certain circumstances. In addition, the Company may, under certain circumstances,
terminate the Merger Agreement in order for the Company to enter concurrently or immediately thereafter into a binding definitive written
agreement with respect to an unsolicited superior acquisition proposal, subject to the Company having first complied with certain matching
rights and other obligations set forth in the Merger Agreement, including payment of a termination fee by the Company equal to $50,245,503.85.
Additionally, Parent may, under certain circumstances, terminate the Merger Agreement if the board of directors of the Company qualifies,
withdraws or adversely modifies its recommendation that the Company’s stockholders vote in favor of adopting the Merger Agreement
or approves a competing acquisition proposal.
If the Merger Agreement is terminated (i) by the
Company in order for the Company to enter into a definitive written agreement with respect to an unsolicited superior acquisition proposal,
(ii) by Parent because the board of directors of the Company qualifies, withdraws or adversely modifies its recommendation that the Company’s
stockholders vote in favor of adopting the Merger Agreement or approves a competing acquisition proposal or (iii) by (a) either party
because approval of the Company’s stockholders was not obtained, (b) the Effective Time has not occurred prior to the End Date (as
may be extended) or (c) Parent in connection with the Company intentionally breaching its non-solicitation obligations under the Merger
Agreement, but only if, in the case of this clause (iii), an alternative acquisition proposal was publicly announced (or became publicly
known) and not publicly withdrawn prior to such termination (or prior to the Company meeting in the case of the stockholder approval not
being obtained) and, within 12 months after termination of the Merger Agreement, an acquisition transaction is entered into and, whether
during such 12-month period or thereafter, consummated, then, in each case, the Company will be obligated to pay to Parent a one-time
fee equal to $50,245,503.85 in cash. In addition, the Company will be required to reimburse Parent for up to $5 million of its costs and
expenses incurred by Parent in connection with an action or proceeding (or settlement) that results in a judgment that the Company must
pay the termination fee.
If the Merger Agreement is terminated (i) by the
Company (a) if all of the closing conditions have been satisfied (other than those conditions that by their terms are to be satisfied
at the closing) and the Company is prepared to consummate the Merger but Parent and Merger Sub fail to consummate the Merger in accordance
with the Merger Agreement or (b) in connection with Parent or Merger Sub breaching its representations, warranties or covenants in a manner
that would cause the related closing conditions to not be satisfied (subject to a cure period in certain circumstances) or (ii) if either
party terminates because the Merger has not been consummated by the End Date, and at the time of such termination, the Company was otherwise
entitled to terminate the Merger Agreement for either of the foregoing reasons, then, in each case, Parent will be obligated to pay to
the Company a one-time fee equal to $100,491,007.71 in cash. In addition, Parent will be required to reimburse the Company for (i) up
to $5 million of its costs and expenses incurred by the Company in connection with an action or proceeding (or settlement) that results
in a judgment that Parent must pay the termination fee and (ii) up to $1 million of the costs and expenses incurred by the Company or
any of its subsidiaries in connection with the financing.
Parent has obtained equity and debt financing
commitments for the transactions contemplated by the Merger Agreement. Sixth Street Partners, LLC, Owl Rock Capital Advisors LLC and Monroe
Capital Management Advisors, LLC have agreed to provide debt financing for the transactions, subject to the terms and conditions set forth
in a debt commitment letter delivered to Parent. In addition, certain funds managed by affiliates of Parent (the “Investors”)
have delivered an equity commitment letter to Parent, pursuant to which, upon the terms and subject to
the conditions set forth therein, such funds have committed to purchase
from Parent equity interests of Parent as may be required by Parent or Merger Sub to make payments due by Parent and Merger Sub under
the Merger Agreement. In addition, Parent has entered into a Termination Equity Commitment Letter (the “Termination Equity Commitment
Letter”) with certain funds managed by affiliates of Parent pursuant to which such affiliates commit to provide funds to Parent
for the purpose of paying the reverse termination fee and certain of Parent’s and Merger Sub’s other obligations under the
Merger Agreement. The transaction is not subject to a financing condition.
Each of Flint A. Lane, FL 2009 GRAT FBO APL, FL 2009
GRAT FBO KML, FL 2009 GRAT FBO TKL and certain entities affiliated with Bain Capital Venture Investors, LLC (collectively, the “Rollover
Holders”) entered into a Rollover and Contribution Agreement with Parent pursuant to which, among other things, (i) Flint A.
Lane agrees to contribute 4,619,080 shares of Company Common Stock, (ii) each of FL 2009 GRAT FBO APL, FL 2009 GRAT FBO KML and FL 2009
GRAT FBO TKL agrees to contribute 653,289 shares of Company Common Stock, and (iii) certain entities affiliated with Bain Capital Venture
Investors, LLC agree to contribute 6,578,947 shares of Company Common Stock (collectively, the “Rollover Shares”),
in each case to Bullseye Holdings, LP (to be contributed to Parent thereafter) in exchange for equity interests in Bullseye Holdings,
LP, pursuant to the terms set forth in the applicable Rollover and Contribution Agreement.
In addition,
each Rollover Holder entered into a Voting and Support Agreement pursuant to which such Rollover Holder agrees, among other things,
to vote in favor of the Merger and the adoption of the Merger and for the approval and adoption of the Merger Agreement.
Each Rollover
Holder has also entered into a Restrictive Covenant Agreement, pursuant to which such Rollover Holder agrees, among other things,
to be bound by certain restrictions on hiring and soliciting senior-level employees, certain confidentiality and non-disparagement obligations
and, in the case of certain Rollover Holders, certain non-competition obligations.
The Merger Agreement and the above descriptions
have been included to provide investors with information regarding its terms. It is not intended to provide any other factual information
about the Company, Parent or any of their respective subsidiaries or affiliates or to modify or supplement any factual disclosures about
the Company or Parent included in their public reports filed with the SEC. The representations, warranties and covenants contained in
the Merger Agreement were made only for purposes of the Merger Agreement and, as of specific dates, were solely for the benefit of the
parties to the Merger Agreement, may be subject to limitations agreed upon by the contracting parties, including being qualified by confidential
disclosures made for the purposes of allocating contractual risk between the parties to the Merger Agreement, instead of establishing
these matters as facts, and may be subject to standards of materiality that differ from those applicable to investors. Investors should
not rely on the representations, warranties and covenants or any descriptions thereof as characterizations of the actual state of facts
or condition of the Company, Parent or any of their respective subsidiaries or affiliates.
The foregoing description of the Merger
Agreement, the Rollover and Contribution Agreements, the Voting and Support Agreements and the Restrictive Covenant Agreements, and
the transactions contemplated thereby, including the Merger, does not purport to be complete and is qualified in its entirety by
reference to the actual Merger Agreement, Rollover and Contribution Agreements, Voting and Support Agreements and
Restrictive Covenant Agreements. A copy of the Merger Agreement is filed as Exhibit 2.1 to this Current Report on Form 8-K and
incorporated herein by reference. Copies of the Rollover and Contribution Agreements, the Voting and Support Agreements and the
Restrictive Covenant Agreements are filed as Exhibits 10.1, 10.2, 10.3, 10.4, 10.5 and 10.6 to this Current Report on Form 8-K and
incorporated herein by reference.
