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PUBLIC VERSION FILED ON: FEBRUARY 27, 2020 IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE IN RE MINDBODY, INC., CONSOLIDATED STOCKHOLDER LITIGATION C.A. No. 2019-0442-KSJM FIRST AMENDED VERIFIED CONSOLIDATED CLASS ACTION COMPLAINT Lead Plaintiffs Luxor Capital Partners, LP, Luxor Capital Partners Offshore Master Fund, LP, Luxor Wavefront, LP, and Lugard Road Capital Master Fund, LP (collectively, “Lead Plaintiffs” or “Luxor”), by and through their attorneys, bring this verified consolidated class action complaint (the “Consolidated Complaint”) on behalf of themselves and all other similarly situated former stockholders of MINDBODY, Inc. (“Mindbody” or the “Company”) against the defendants named herein, in connection with the sale of Mindbody for $36.50 per share to Vista Equity Partners (“Vista”), pursuant to a merger agreement dated December 23, 2018 (the “Merger Agreement”). Except for allegations specifically pertaining to Lead Plaintiffs and Lead Plaintiffs’ own acts, the allegations in the Consolidated Complaint are based upon information and belief, which includes but is not limited to: (i) Lead Plaintiffs’ analysis of, and communications with, Mindbody management and its Board; (ii) Mindbody’s public filings with the United States Securities and Exchange Commission (the “SEC”); (iii) other publicly available data, including information provided by third party sources; (iv) documents that {FG-W0461423.} Lead Plaintiffs obtained pursuant to Section 220 of the Delaware General Corporation Law; and (v) limited and incomplete document productions in the above-captioned consolidated action. NATURE OF THE CASE 1. This action is brought by Luxor, which owned 18.9% of Mindbody’s outstanding common stock prior to the challenged buyout of Mindbody by Vista (the “Merger”). That transaction was corrupted by (i) Mindbody founder, Chairman, and CEO Richard Stollmeyer, (ii) Mindbody CFO Brett White, and (iii) Eric Liaw, the constituency director for venture capital firm IVP, each of whom was motivated to sell Mindbody at an artificially depressed price. 2. Mindbody was a rapidly growing software company that dominates the market for booking fitness classes and spa appointments. Stollmeyer co-founded Mindbody in 2001. He took it public in 2015. 3. Mindbody suffered from a severe separation of ownership and control. Stollmeyer and IVP held Class A and super-voting Class B shares representing approximately 32.1% of the Company’s voting power, even though their combined economic interest was just 6.6%. The supervoting shares were time-limited. IVP’s internal documents reflect that it wanted to exit its investment in 2018. 2 {FG-W0461423.} 4. Stollmeyer knew that a sale to Vista would provide him with 5. In a post-Merger interview for a podcast, Stollmeyer expressed his exasperation with how, prior to the Merger, when “98% of his net worth” was tied up in “extremely volatile” Mindbody stock, he took flak for selling “tiny bits” of his stake in the public market, which he described as “kind of like sucking through a very small straw”: Stollmeyer: …. [F]or the entrepreneur or particularly for the CEO, [an IPO] is not a liquidity event. Your capital is locked inside the business, and you can sell tiny bits of it, called the 10b5-1 plan where you decide essentially a year in advance, a couple of quarters in advance, you come up with a plan that says sell off a little bit on these predefined dates. It doesn’t matter if the stock got hammered, it doesn’t matter if the stock’s high. So, it’s kind of like sucking through a very small straw. For me, I had been at it for a long time. Q: How many years? Stollmeyer: We were public in 2015, so I’d been at it for 15 years. We would have public investors. I would have them challenge me that I was selling my own stock, and he was like, “Don’t you believe in your own company, Rick?” 98% of my net worth is in the stock of my company, which is 3 {FG-W0461423.} extremely volatile. I’m in my 50s now, and I’ve got kids in college. What kind of question is that?1 6. In early 2018, 7. One year later, due to the close of the Merger, Stollmeyer’s The Merger allowed His net worth was no longer tied up in a single illiquid, highly volatile stock. 8. Stollmeyer sought out a sale of Mindbody. On August 7, 2018, Stollmeyer met with an investment banker. The banker reconnected him to Vista 1 Alejandro Cremades, Rick Stollmeyer On Selling For $1.9 Billion The Company That He Created Out Of His Own Garage, https://alejandrocremades.com/rick- stollmeyer-on-selling-for-1-9-billion-the-company-that-he-created-out-of-his-own- garage/. 4 {FG-W0461423.} principal Monti Saroya, who had previously talked to Stollmeyer about buying Mindbody. 9. On October 8-9, 2018, Stollmeyer attended a two-day Vista retreat. He met with Saroya and Vista founders Robert Smith and Brian Sheth. Stollmeyer found these meetings “mind blowing” and “inspiring.” And for good reason. Vista’s founders made presentations with slides labeled Stollmeyer met Vista portfolio CEOs. Within three months, Stollmeyer had agreed to sell Mindbody to Vista. Before the stockholder vote, Stollmeyer was already celebrating with Vista’s Saroya and Vista portfolio company CEO Reggie Aggarwal in Vista’s Super Bowl suite: 5 {FG-W0461423.} (Stollmeyer is center; Aggarwal is to Stollmeyer’s left; Saroya is to his right.) 10. Stollmeyer wanted to operate Mindbody “freed from the shackles of public market investors.” He planned to work for at least another three to five years. Stollmeyer wrote that he would “not support the sale of MB at this time” unless he was assured that the acquirer would retain management post-buyout. Vista assured Stollmeyer he would remain CEO post-buyout. As Stollmeyer said the day the deal was announced, “Vista loves me and wants to step on the gas. No retirement in my headlights!” 6 {FG-W0461423.} 11. Stollmeyer also knew that he would receive new stock options in the post-merger company. 12. The entire senior management team was incentivized to sell Mindbody to Vista. Stollmeyer learned that management would receive new options for of the post-closing company – management’s pre-closing equity stake in Mindbody. 13. To summarize, Vista’s purchase of Mindbody was a life-transforming, personally enriching event for Stollmeyer for reasons not shared by the public stockholders. Stollmeyer expected to: • • 7 {FG-W0461423.} 14. Stollmeyer and his colleagues manipulated the sale process to obtain massive personal benefits. 15. On October 16, Vista’s Saroya informed Stollmeyer that Vista was interested in acquiring Mindbody at “a substantial premium to [MINDBODY’s] recent trading range.” Mindbody’s 30-day VWAP prior to Vista’s October 16 indication of interest was $38.46, and Mindbody’s stock traded as high as $41.25 per share in October. Stollmeyer delayed informing his board of directors of Vista’s interest, and never disclosed to Mindbody’s board or its public stockholders Vista’s willingness to pay in excess of $41.25 per share. 16. After receiving Vista’s indication of interest, Stollmeyer and White drove down Mindbody’s stock price. After delaying the Company’s Q3 earnings call, Stollmeyer and White decided to inform Mindbody’s stockholders of a “substantial guide down for the quarter” and “a significant reset of our Q4 growth expectations.” On November 6, 2018, Stollmeyer and White threw a recent acquisition “under the bus,” stating that “we’ve been humbled by the last couple of quarters in dealing with the magnitude of integrating these [newly acquired] businesses and ramping up growth at the same time.” Mindbody’s stock price plummeted by approximately 25% on the news. 8 {FG-W0461423.} 17. Stollmeyer knew that his “guide down” and “reset” would cause Mindbody’s stock price to drop significantly. Stollmeyer and White also knew that this price drop was not justified by the Company’s actual performance and growth expectations. The Company’s internal projections for Q4 remained unchanged. As Stollmeyer explained internally to management, “we are resetting street expectations to position ourselves up for future beat and raises.” 18. Meanwhile, Stollmeyer continued his private conversations with Vista’s Saroya, steered the Company to Vista, and foreclosed price competition. Stollmeyer vetoed outreach to certain potential alternative bidders, and manipulated the data room to provide substantially more diligence to Vista than any other prospective acquirer. Vista used its first-mover advantage to make a preemptive bid at $35 per share on December 18, 2018 – a mere 3 days after Mindbody opened the data room for the other potential bidders. Stollmeyer then accelerated the bid process to prevent other prospective acquirers from bidding. 19. The Board set up an ineffective special committee (the “Transaction Committee”) that had limited power. IVP’s constituency director, Eric Liaw, was allowed to head the committee, despite IVP’s undisclosed desire to sell the Company in 2018. 9 {FG-W0461423.} 20. On December 24, 2018, Mindbody announced that it had agreed to sell itself to Vista for $36.50 per share, an 18.2% discount to Mindbody’s 52-week high ($44.60 per share), 16.8% discount to Mindbody’s stock price in late September ($43.85 per share) and far below the price Vista had been willing to pay only two months earlier. Stollmeyer and IVP entered into a voting agreement requiring them to vote their 32.1% voting power (approximately 46.2% when taking into account Mindbody options and RSUs) in favor of the transaction. 21. The Merger Agreement included an illusory go-shop that Stollmeyer exhibited no interest in pursuing. The go-shop was scheduled over the year-end holidays and it required any prospective bidder to enter into a definitive alternative agreement within 30 days to qualify for the reduced go-shop termination fee.

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