As filed with the Securities and Exchange Commission on April 16, 2021.
Registration No. 333-
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
SQUARESPACE, INC.
(Exact name of registrant as specified in its charter)
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Delaware
(State or other jurisdiction of
incorporation or organization)
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7372
(Primary Standard Industrial
Classification Code Number)
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20-0375811
(I.R.S. Employer
Identification Number)
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225 Varick Street, 12th Floor
New York, New York 10014
(646) 580-3456
(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)
Anthony Casalena
Chief Executive Officer
Squarespace, Inc.
225 Varick Street, 12th Floor
New York, New York 10014
(646) 580-3456
(Name, address, including zip code, and telephone number, including area code, of agent for service)
Copies to:
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Ryan J. Dzierniejko
David J. Goldschmidt
Skadden, Arps, Slate, Meagher & Flom LLP
One Manhattan West
New York, NY 10001
(212) 735-3000
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Courtenay O’Connor
Jessica Krasner
Squarespace, Inc.
225 Varick Street, 12th Floor
New York, New York 10014
(646) 580-3456
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Marc D. Jaffe
Gregory P. Rodgers
Benjamin J. Cohen
Latham & Watkins LLP
885 Third Avenue
New York, NY 10022
(212) 906-1200
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Approximate date of commencement of proposed sale to public: As soon as practicable after this registration statement is declared effective.
If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. ☒
If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
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Large accelerated filer
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Accelerated filer
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☐
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Non-accelerated filer
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☒
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Smaller reporting company
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☐
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Emerging growth company
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided to Section 7(a)(2)(B) of the Securities Act. ☐
CALCULATION OF REGISTRATION FEE
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Title of Each Class of
Securities to be Registered
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Amount to be
Registered
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Proposed
Maximum
Offering Price
Per Share
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Proposed
Maximum
Aggregate
Offering Price(1)
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Amount of
Registration Fee
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Class A common stock, $0.0001 par value per share
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Not Applicable
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$
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100,000,000
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$
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10,910
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(1)
Estimated solely for the purpose of calculating the registration fee in accordance with Rule 457(a) under the Securities Act of 1933, as amended. Given that there is no proposed maximum offering price per share of Class A common stock, the Registrant calculates the proposed maximum aggregate offering price, by analogy to Rule 457(f)(2), based on one-third of the par value per share of the Registrant’s Class A common stock because the Registrant has an accumulated capital deficit based on the Registrant’s unaudited pro forma balance sheet as of December 31, 2020. Given that the Registrant’s shares of Class A common stock are not traded on an exchange or over-the-counter, the Registrant did not use the market prices of its Class A common stock in accordance with Rule 457(c).
The Registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, or until the registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.
TABLE OF CONTENTS
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F-1
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Neither we nor any of the Registered Stockholders have authorized anyone to provide any information or to make any representations other than those contained in this prospectus or in any free writing prospectus we have prepared or that have been prepared on our behalf or to which we have referred you. Neither we nor any of the Registered Stockholders take responsibility for, and can provide no assurance as to the reliability of, any other information that others may give you. The Registered Stockholders are offering to sell and seeking offers to buy shares of their Class A common stock but only under circumstances and in jurisdictions where it is lawful to do so. The information contained in this prospectus is current only as of its date, regardless of the time of delivery of this prospectus or of any sale of our Class A common stock. Our business, financial condition and results of operations may have changed since such date.
For investors outside the United States: Neither we nor any of the Registered Stockholders have done anything that would permit the use or possession or distribution of this prospectus or any related free writing prospectus in any jurisdiction where action for that purpose is required, other than in the United States. Persons outside the United States who come into possession of this prospectus must inform themselves about, and observe any restrictions relating to, the offering of the shares of our Class A common stock by the Registered Stockholders and the distribution of this prospectus outside the United States.
ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement on Form S-1 that we filed with the SEC using a “shelf” registration or continuous offering process. Under this process, the Registered Stockholders may, from time to time, sell the Class A common stock covered by this prospectus in the manner described in the section titled “Plan of Distribution.” Additionally, we may provide a prospectus supplement to add information to, or update or change information contained in, this prospectus, including the section titled “Plan of Distribution.” You may obtain this information without charge by following the instructions under the section titled “Where You Can Find Additional Information” appearing elsewhere in this prospectus. You should read this prospectus and any prospectus supplement before deciding to invest in our Class A common stock.
Except as otherwise indicated, all information in this prospectus assumes:
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the conversion of (i) all our outstanding Class C common stock, (ii) certain of our Series A-1 redeemable convertible preferred stock, (iii) all our outstanding Series A-2 redeemable convertible preferred stock and (iv) all our outstanding Series B redeemable convertible preferred stock into an aggregate of 62,064,788 shares of Class A common stock and the remainder of our outstanding Series A-1 redeemable convertible preferred stock into an aggregate of 49,583,897 shares of Class B common stock (the “Capital Stock Conversions”);
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the exclusion of (i) shares of Class B common stock issuable upon exercise of stock options outstanding as of , 2021 at a weighted average exercise price of $ per share; (ii) shares of Class A common stock issuable upon settlement of restricted stock units outstanding as of , 2021 for which the time-based vesting condition had not been satisfied as of such date; and (iii) shares of Class A common stock reserved for issuance under our equity incentive plan;
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no forfeiture of the 4,460,858 restricted shares of Class B common stock held by Mr. Casalena pursuant to the equity award described in “Executive Compensation — Outstanding Equity Awards at Fiscal Year End for 2020”; and
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the filing and effectiveness of our amended and restated certificate of incorporation and the adoption and effectiveness of our amended and restated bylaws, each of which will occur in connection with the effectiveness of the registration statement of which this prospectus forms a part.
After giving effect to the Capital Stock Conversions, as of March 31, 2021, we had a total of 73,754,765 shares of Class A common stock, 64,880,264 shares of Class B common stock and no shares of Class C common stock outstanding.
Approximately of these shares may be immediately sold either by the Registered Stockholders pursuant to this prospectus or by our other existing stockholders under Rule 144 under the Securities Act since such shares held by such other stockholders will have been beneficially owned by non-affiliates for at least one year. See also “Shares Eligible For Future Sale.”
Certain amounts, percentages and other figures presented in this prospectus have been subject to rounding adjustments. Accordingly, figures shown as totals, dollars or percentage amounts of changes may not represent the arithmetic summation or calculation of the figures that precede them.
PROSPECTUS SUMMARY
This summary highlights select information contained elsewhere in this prospectus and does not contain all the information you should consider before making an investment decision. You should read the entire prospectus carefully, including the sections entitled “Risk Factors,” “Cautionary Note Regarding Forward-Looking Statements,” “Selected Consolidated Financial and Operating Information,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and the accompanying notes included elsewhere in this prospectus before making an investment decision. Unless otherwise indicated or the context otherwise requires, all references in this prospectus to “we,” “us,” “our,” the “Company,” “Squarespace” and similar terms refer to Squarespace, Inc. and its consolidated subsidiaries.
Our Mission
Squarespace exists to help people with creative ideas stand out and succeed. We enable millions to build a brand and transact with their customers in an impactful and beautiful online presence.
Overview
Squarespace is a leading all-in-one platform for businesses and independent creators to build a beautiful online presence, grow their brands and manage their businesses across the internet. We offer websites, domains, e-commerce, tools for managing a social media presence, marketing tools and scheduling capabilities. Our easy-to-customize and design-first platform empowers millions of customers in approximately 180 countries. From individual entrepreneurs just starting out to the world’s most iconic businesses, Squarespace helps transform our customers’ visions into reality by creating an impactful, stylish and professional online presence.
Consumer behavior continues to rapidly evolve in conjunction with changes in the internet and technology, and the amount of time and money consumers spend online is accelerating. As consumers increasingly engage with companies online to learn about and transact with new brands, the marketplace for consumer attention is intensely competitive. It is mission-critical for brands to differentiate themselves with a beautiful and effective online presence. Businesses and independent creators need a way to develop an impactful, professional-quality presence quickly and cost-effectively that also enables them to transact directly with their customer base.
The Squarespace platform empowers our customers to build, manage and grow compelling brands online. We bring together three primary pillars of functionality to create a unified, all-in-one platform to help our customers grow:
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Presence: Our intuitive design tools make it possible to quickly and easily create a professional-quality, mobile and desktop friendly website, acquire a domain and have a differentiated social media presence. Since our founding, we have aggressively invested in our design and creative teams in an effort to create innovative, forward-thinking website designs that ensure our customers’ websites are seen as among the most sophisticated on the web.
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Commerce: Through our comprehensive commerce solutions, we provide our customers everything they need to sell physical products, subscriptions, content or services online. Our commerce functionality is fully integrated with our presence products, eliminating the need for third-party tools.
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Marketing: We provide brands with powerful, integrated marketing solutions, such as Email Campaigns, customer relationship management functionality, search engine optimization (“SEO”) and analytics tools to help them better understand and target their audiences while driving traffic, sales and conversion.
Squarespace is an engineering and design-led company and our platform features a modern architecture, scalable delivery platform and secure solutions that provide support for our global customer base. The Squarespace platform works for customers that are just getting started, as well as large brands that need scale, flexibility and reliability.
In addition to servicing customers from inception to at-scale, our customers span a wide variety of industries and use cases, from small businesses and independent creators, such as restaurants, photographers, wedding planners, artists, musicians and bloggers, to iconic brands. As of December 31, 2020, we had 3.66 million unique subscriptions to our platform.
We believe we have a significant existing and growing market opportunity with over 800 million small businesses and self-employed ventures globally. In addition, according to the Kauffman Index, nearly 540,000 new businesses are created each month in the United States. According to Clutch, approximately 46% of small and medium-sized businesses (“SMBs”) are not online today and we believe there is significant headroom for growth with increasing online penetration alone. We believe we have created a highly-efficient and multi-pronged go-to-market model that enables us to capitalize on our market opportunity and acquire customers in a cost effective manner. We believe we have a stable and predictable business model driven by efficient customer acquisition and the adoption by our customers over time of higher value offerings and add-on subscriptions. We generated in 2019 and 2020, respectively:
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revenue of $484.8 million and $621.1 million;
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net income of $58.2 million and $30.6 million;
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adjusted EBITDA of $97.6 million and $116.7 million;
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cash flow from operating activities of $102.3 million and $150.0 million; and
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unlevered free cash flow of $94.6 million and $152.4 million.
For additional information about our non-GAAP financial measures, including reconciliations of the non-GAAP financial measures to the most directly comparable financial measures stated in accordance with GAAP, see “Selected Consolidated Financial and Operating Information — Key Performance Indicators and Non-GAAP Financial Measures.”
Our Industry
Some of the key trends impacting our industry include:
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The Criticality of Online Presence: The rise in global internet usage has resulted in a dynamic and competitive online environment where consumers are provided with more options and more ways to engage than ever before. Many customers’ first interaction with a new brand will be digital. In response, businesses and independent creators have rapidly transitioned online (a shift further accelerated by the recent pandemic).
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The Rise in Online Commerce: In addition to engaging with brands online from a discovery standpoint, consumers expect to transact with them across digital channels, purchasing both goods and services.
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The Rise of Direct to Consumer Relationships: As brands move online and gain more control over their technology stack, there is a trend towards brands being able to directly own the relationship with their customers. This allows businesses and independent creators to directly access their customer data, which is not possible when relying on social networks and other distribution channels that otherwise might control access to it.
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The Preference for DIY and DIFM Solutions: “Do-it-yourself” (“DIY”) website creation tools have democratized the web, rapidly displacing expensive agencies and making equivalent design quality out-of-the-box, accessible and easy-to-use for all. Affordable “do-it-for-me” (“DIFM”) services leverage powerful DIY development tools due to the speed, scalability and maintenance advantages of these platforms.
The Challenges of Creating and Growing an Online Brand
Businesses and independent creators face several key challenges as they build and market their brands online, including:
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Growing Competition for Consumer Attention: As consumers increasingly engage online, the marketplace for consumer attention is intensely competitive, making it mission-critical for brands to
differentiate themselves with an online presence that stands out. Based on a study by the Association for Computing Study and a study in Taylor & Francis’ Behavior and Information Technology Journal, 94% of first impressions are design-related, and it takes less than 0.05 seconds for someone to form an opinion about whether they like a website or not.
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Limited Ability to Transact with Consumers: Consumers are increasingly purchasing goods and services online. Many traditional commerce offerings are primarily designed to sell physical products. We believe in order for businesses and independent creators to succeed, they require comprehensive solutions that enable them to transact with their consumers across the full range of commerce models, including sale of physical goods, subscriptions and content, as well as capabilities such as scheduling appointments.
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Accessibility of Solutions: SMBs often lack the tools to develop a comprehensive and effective online presence quickly and affordably. Developing and maintaining a beautiful, fully functional website that addresses various use cases often requires extensive coding skills or the engagement of professional designers, agencies or developers. Meanwhile, traditional DIY solutions often lack the complex functionality required to create and maintain high-quality, expressive content.
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Lack of Integrated Solutions: Historically, brands have leveraged multiple separate solutions due to the lack of a comprehensive, integrated platform. As businesses continue to evolve and add new offerings, the integration of their solutions becomes crucial to maintain a cohesive brand expression across all touchpoints, to analyze data to grow their businesses and to provide an efficient and seamless customer experience across channels and devices.
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Inability to Adapt Quickly to Rapidly Changing Consumer Behavior: Traditional solutions often lack the flexibility customers require to keep up with constantly changing consumer behavior. From new products and services to new digital channels, businesses and independent creators need flexible and dynamic solutions with broad functionality.
The Key Benefits of our Platform
Our comprehensive, integrated platform provides a unified experience for our customers.
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Beautiful Design, Consistent Everywhere: We believe design is not a luxury. Our beautifully-designed, award-winning templates enable our customers to look professional from the start, while also providing deep levels of customization so that no two websites look alike. This empowers our customers to stand out and express their story and brand in a beautiful, engaging and consistent way across digital channels, including websites, social media and Email Campaigns, among others.
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Sell Anything: Our commerce solution supports a diverse set of business models, allowing our customers to sell physical products, subscriptions, content and services within the same platform. For example, a fitness instructor can market their brand professionally online and their clients can book personal training sessions through their website, attend virtual classes and buy custom apparel, all powered on the Squarespace platform.
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Power with Simplicity: Our platform balances ease-of-use with a deep level of functionality required to run more complex businesses. Our platform is also accessible from anywhere — customers can update their website or manage their business on-the-go using our web application or our iPhone and Android applications.
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All-in-One Platform: Our all-in-one platform offers businesses and independent creators everything they need to build and manage their online presence and commerce across devices and social media. Our fully-integrated SaaS-based content management solution combines a website builder, a commerce solution, social presence and blogging infrastructure, a hosting service, a domain name registrar, marketing tools and differentiated analytics across digital channels. This comprehensive approach enables customers to aggregate and analyze data across solutions to help our customers better understand their audience and drive higher traffic, sales and conversion through a single interface.
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Built for Modern Use Cases: Our platform is both accessible and editable from all types of devices. Built on modern technology, we can adapt quickly to emerging channels and technology. For
example, our Unfold product provides easy-to-use tools that empower storytellers to differentiate their content and brand on social media. With elevated design collections and intuitive photo and video editing, Unfold helps our customers look great beyond their websites. We aim to establish a foothold with the next generation of independent creators, because we understand that not all journeys may begin with a website.
Our Market Opportunity
Based on data from Intuit, as of 2019, there are an estimated 800 million SMBs and self-employed ventures worldwide. We believe that our near and medium-term addressable market is in excess of $150 billion, based on the number of global SMBs and self-employed ventures and our average revenue per unique subscription (“ARPUS”) as of December 31, 2020.
Global spending on e-commerce is set to accelerate. In response to this accelerating growth, we continue to innovate and add new services and features that create incremental opportunities to further penetrate as well as expand our core addressable market through new use cases and entry points. In addition, the growth of SMBs and proliferation of commerce, both domestically and internationally, will continue to drive our market opportunity and unlock new monetization opportunities for our platform.
Our Growth Strategies
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Expand Our New Customer Base, Especially Internationally: We aim to continue to deploy offerings across the globe, both in English and non-English speaking regions, in order to continue to diversify and accelerate our growth.
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Expand and Deepen our Commerce Offerings: We will continue to expand and invest in our commerce capabilities through the development of solutions that enable new ways for our customers to transact online.
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Continued Investment in our Design Platform: We will continue to invest in our core design platform and technology to ensure that we maintain our position at the forefront of leading design on the web.
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Deepen Relationships with Existing Customers: We plan to further invest in offerings that will enable our existing customers to grow their businesses by using more of our products and features, including online scheduling, exclusive Member Areas and Email Campaigns.
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Promote and Develop our Enterprise Capabilities: We will continue to develop our Enterprise offering, which includes both larger businesses and volume customers, to ensure they are able to fully leverage our all-in-one platform.
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Expand our Experts Community: We will continue to support our Experts community with the knowledge and tools they need to find clients and grow their businesses, as we believe it provides us with a unique marketing channel to address the steadily growing DIFM website development industry.
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Opportunistically Pursue Strategic Acquisitions: We believe that future strategic acquisitions will enable us to accelerate key platform, product and marketing initiatives and augment our organic growth strategy.
Recent Developments
In March 2021, we issued on a private placement basis an aggregate of 4,452,023 shares of our Class C common stock to certain accredited investors at a purchase price of approximately $68.42 per share for aggregate proceeds of approximately $300 million (the “Private Placement”). The shares acquired by such investors will be registered for resale in connection with the registration statement of which this prospectus forms a part. See the section titled “Principal and Registered Stockholders.”
In March 2021, we acquired all of the outstanding equity of Tock, Inc. (“Tock”) for aggregate consideration of $415 million, consisting of $226.8 million of cash and 2,750,330 shares of our Class C common stock, subject to customary post-closing adjustments, based on, among other things, working capital, indebtedness and cash (the “Acquisition”). Tock was founded to solve booking problems of restaurants
and to enable a direct connection between the hospitality industry’s business owners and its consumers. Tock provides a hospitality platform and application system for restaurants and other businesses that facilitates reservation, guest and table management, takeout, pickup and delivery and event management ticketing systems and related services. The Acquisition closed on March 31, 2021. The shares issued to Tock stockholders in the Acquisition will be registered for resale in connection with the registration statement of which this prospectus forms a part. See the section titled “Principal and Registered Stockholders.”
Summary Risk Factors
Our business is subject to a number of risks and uncertainties, as more fully described under “Risk Factors” in this prospectus. These risks could materially and adversely impact our business, financial condition and results of operations, which could cause the trading price of our Class A common stock to decline and could result in a loss of all or part of your investment. Some of these risks include:
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Our business, financial condition and results of operations will be harmed if we are unable to attract and retain customers and expand their use of our platform.
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If we fail to improve and enhance the functionality, performance, reliability, design, security and scalability of our solutions in a manner that responds to our customers’ evolving needs, our business, financial condition and results of operations may be adversely affected.
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Our industry is highly competitive and we may not be able to compete successfully against current and future competitors.
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The COVID-19 pandemic, the measures attempting to contain and mitigate the effects of the COVID-19 pandemic (including stay-at-home, business closure and other restrictive orders) and the resulting changes in consumer behaviors have disrupted and may continue to disrupt our normal operations.
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The Squarespace brand is integral to our success. If we fail to protect or promote our brand, our business, financial condition and results of operations may be harmed.
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Our business, financial condition and results of operations would be adversely affected if our marketing and selling activities fail to generate new customers at the levels that we anticipate or fail to generate new customers on a cost-effective basis.
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We depend on highly skilled personnel, and if we are unable to hire, integrate and retain our personnel, we may not be able to address competitive challenges.
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We rely heavily on the reliability, security and performance of our software. If our software contains serious errors or defects, or we have difficulty maintaining the software, we may lose revenue and market acceptance and may incur costs to defend or settle claims with our customers.
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Our business, financial condition and results of operations would be harmed if changes to technologies used in our platform or new versions or upgrades of operating systems and internet browsers adversely impact the process by which customers interface with our platform and users interface with our customers’ sites.
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We are subject to privacy and data protection laws and regulations as well as contractual privacy and data protection obligations. Our failure to comply with these or any future laws, regulations or obligations could subject us to sanctions and damages and could harm our reputation, business, financial condition and results of operations.
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Our business is susceptible to risks associated with international sales and the use of our platform in various countries as well as our ability to localize our platform in such countries.
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Our listing differs significantly from a traditional underwritten public offering.
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The public trading price of our Class A common stock may be volatile, and could, upon listing on the NYSE, decline significantly and rapidly.
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The multi-class structure of our common stock will have the effect of concentrating voting control with those stockholders who hold our Class B common stock, including our Founder and Chief
Executive Officer. This will limit or preclude your ability to influence corporate matters, including the election of directors, amendments to our organizational documents and any merger, consolidation, sale of all or substantially all of our assets or other major corporate transactions requiring stockholder approval. Further, the issuance of shares of Class C common stock, whether to our Founder and Chief Executive Officer or to other stockholders, could prolong the duration of control of holders of Class B common stock.
Channels for Disclosure of Information
Following the effectiveness of the registration statement of which this prospectus forms a part, we intend to announce material information to the public through filings with the SEC, the investor relations page on our website (www.squarespace.com), press releases, public conference calls and public webcasts.
Any updates to the list of disclosure channels through which we will announce information will be posted on the investor relations page on our website.
Implications of Being an Emerging Growth Company
As a company with less than $1.07 billion in revenue during our last fiscal year, we qualify as an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). An emerging growth company may take advantage of specified reduced reporting and other requirements that are otherwise applicable generally to public companies. These provisions include that:
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we are only required to include two years of audited consolidated financial statements in this prospectus in addition to any required interim financial statements, and correspondingly only required to provide reduced disclosure in “Management’s Discussion and Analysis of Financial Condition and Results of Operations”;
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we are not required to engage an auditor to report on our internal controls over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act of 2002, as amended (the “Sarbanes-Oxley Act”);
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we are not required to submit certain executive compensation matters to stockholder advisory votes, such as “say-on-pay,” “say-on-frequency” and “say-on-golden parachutes”; and
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we are not required to disclose certain executive compensation related items such as the correlation between executive compensation and performance and comparisons of the chief executive officer’s compensation to our median employee compensation.
We may take advantage of these provisions until the last day of the fiscal year during which the fifth anniversary of this listing occurs or such earlier time that we are no longer an emerging growth company. We will remain an emerging growth company until the earliest of: (i) the last day of the first fiscal year in which our annual gross revenue is $1.07 billion or more; (ii) the last day of the fiscal year during which the fifth anniversary of this listing occurs; (iii) the date on which we have issued more than $1.0 billion in nonconvertible debt during the previous three years; or (iv) the date on which we are deemed to be a large accelerated filer under the rules of the SEC.
Under the JOBS Act, emerging growth companies also can delay adopting new or revised accounting standards until such time as those standards would otherwise apply to private companies. We currently intend to take advantage of this exemption.
For risks related to our status as an emerging growth company, see “Risk Factors — Risks Related to Being a Public Company — We are an “emerging growth company” and we cannot be certain if the reduced disclosure requirements applicable to emerging growth companies will make our Class A common stock less attractive to investors.”
Our Principal Stockholder and our Status as a Controlled Company
As a result of his share ownership, Mr. Casalena, our Founder and Chief Executive Officer, will be able to exercise voting control with respect to an aggregate of shares of our Class B common stock,
representing approximately % of the total voting power of our outstanding capital stock as of , 2021 (after giving effect to the Capital Stock Conversions). Accordingly, Mr. Casalena will have the ability to control the outcome of matters submitted to our stockholders for approval, including the election of our directors. As a founder-led company, we believe that this voting structure aligns our interests in creating stockholder value.
Because Mr. Casalena will control a majority of our outstanding voting power, we will be a “controlled company” under the corporate governance rules for NYSE-listed companies. We have currently elected not to avail ourselves of any “controlled company” exemptions.
Corporate Information
We were incorporated in the State of Delaware in October 2007. Our principal executive offices are located at 225 Varick Street, 12th Floor, New York, New York 10014. Our telephone number is (646) 580-3456 and our website address is www.squarespace.com. The information contained on, or that can be accessed through, our website is deemed not to be incorporated in this prospectus or to be part of this prospectus. You should not consider information contained on, or hyperlinked through, our website to be part of this prospectus in deciding whether to purchase shares of our Class A common stock.
SUMMARY HISTORICAL AND UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL AND OPERATING INFORMATION
The following tables summarize our consolidated financial and operating information. We have derived our summary consolidated statements of operations information and consolidated statements of cash flows information for the years ended December 31, 2019 and 2020 and the summary consolidated balance sheet information as of December 31, 2020 from our audited consolidated financial statements included elsewhere in this prospectus. Our historical results are not necessarily indicative of the results that may be expected in the future. Except as otherwise indicated, the following unaudited pro forma condensed combined financial and operating information presents Squarespace’s summary consolidated statements of operations information and balance sheet information after giving effect to (i) the Private Placement, (ii) the Acquisition and (iii) the Listing (as defined under “Unaudited Pro Forma Condensed Combined Financial Information”). The unaudited pro forma condensed combined statement of operations information for the year ended December 31, 2020 gives pro forma effect to such transactions as if they had occurred on January 1, 2020. The unaudited pro forma condensed combined balance sheet information as of December 31, 2020 gives effect to such transactions as if they had occurred on December 31, 2020. You should read the following financial information together with the information under the sections titled “Capitalization,” “Selected Consolidated Financial and Operating Information,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Unaudited Pro Forma Condensed Combined Financial Information” and our consolidated financial statements and related notes included elsewhere in this prospectus.
|
|
|
|
Year Ended
December 31,
|
|
|
Pro Forma
Year ended
December 31,
|
|
|
($ in thousands, except share and per share data)
|
|
|
2019
|
|
|
2020
|
|
|
2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(unaudited)
|
|
|
Consolidated Statements of Operations Information:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
|
|
$
|
484,751
|
|
|
|
|
$
|
621,149
|
|
|
|
|
$
|
644,177
|
|
|
|
Cost of revenue(1)
|
|
|
|
|
81,910
|
|
|
|
|
|
98,337
|
|
|
|
|
|
113,662
|
|
|
|
Gross profit
|
|
|
|
|
402,841
|
|
|
|
|
|
522,812
|
|
|
|
|
|
530,515
|
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and product development(1)
|
|
|
|
|
107,645
|
|
|
|
|
|
167,906
|
|
|
|
|
|
180,084
|
|
|
|
Marketing and sales(1)
|
|
|
|
|
184,278
|
|
|
|
|
|
260,039
|
|
|
|
|
|
272,652
|
|
|
|
General and administrative(1)
|
|
|
|
|
49,578
|
|
|
|
|
|
54,647
|
|
|
|
|
|
324,136
|
|
|
|
Total operating expenses
|
|
|
|
|
341,501
|
|
|
|
|
|
482,592
|
|
|
|
|
|
776,872
|
|
|
|
Operating income
|
|
|
|
|
61,340
|
|
|
|
|
|
40,220
|
|
|
|
|
|
(246,357)
|
|
|
|
Interest expense
|
|
|
|
|
(1,080)
|
|
|
|
|
|
(10,043)
|
|
|
|
|
|
(10,043)
|
|
|
|
Other income/(loss), net
|
|
|
|
|
3,815
|
|
|
|
|
|
(7,678)
|
|
|
|
|
|
(7,667)
|
|
|
|
Income before (provision for)/benefit from income taxes
|
|
|
|
|
64,075
|
|
|
|
|
|
22,499
|
|
|
|
|
|
(264,067)
|
|
|
|
(Provision for)/benefit from income taxes
|
|
|
|
|
(5,923)
|
|
|
|
|
|
8,089
|
|
|
|
|
|
(3,586)
|
|
|
|
Net income/loss
|
|
|
|
$
|
58,152
|
|
|
|
|
$
|
30,588
|
|
|
|
|
$
|
(267,653)
|
|
|
|
Net loss per share attributable to Class A and Class B common stockholders, basic and diluted(2)
|
|
|
|
$
|
(14.91)
|
|
|
|
|
$
|
(14.10)
|
|
|
|
|
|
|
|
|
|
Weighted-average shares used in computing net income/(loss)
per share attributable to Class A and Class B common
stockholders, basic and diluted(2)
|
|
|
|
|
17,354,458
|
|
|
|
|
|
17,917,236
|
|
|
|
|
|
|
|
|
|
Pro forma net income/(loss) per share attributable to Class A and Class B common stockholders, basic and diluted (unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
(4.11)
|
|
|
|
Pro forma weighted-average shares used in computing net
income/(loss) per share attributable to Class A and Class B
common stockholders, basic and diluted (unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
134,172,935
|
|
|
|
($ in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated Statements of Cash Flows Information:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by operating activities
|
|
|
|
$
|
102,333
|
|
|
|
|
$
|
150,030
|
|
|
|
|
|
|
|
|
|
Net cash (used in) provided by investing activities
|
|
|
|
|
(75,323)
|
|
|
|
|
|
34,262
|
|
|
|
|
|
|
|
|
|
Net cash used in financing activities
|
|
|
|
|
(45,827)
|
|
|
|
|
|
(170,709)
|
|
|
|
|
|
|
|
|
|
|
|
|
As of December 31, 2020
|
|
|
|
|
|
Actual
|
|
|
Pro Forma
|
|
|
(in thousands)
|
|
|
|
|
|
|
|
|
(Unaudited)
|
|
|
Consolidated Balance Sheet Information:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
|
$
|
57,891
|
|
|
|
|
$
|
139,803
|
|
|
|
Restricted cash
|
|
|
|
|
—
|
|
|
|
|
|
12,334
|
|
|
|
Investment in marketable securities
|
|
|
|
|
37,462
|
|
|
|
|
|
37,462
|
|
|
|
Total assets
|
|
|
|
|
306,766
|
|
|
|
|
|
831,622
|
|
|
|
Total liabilities
|
|
|
|
|
839,582
|
|
|
|
|
|
900,240
|
|
|
|
Redeemable convertible preferred stock
|
|
|
|
|
131,390
|
|
|
|
|
|
—
|
|
|
|
Total stockholders’ equity/(deficit)
|
|
|
|
|
(664,206)
|
|
|
|
|
|
(68,618)
|
|
|
(1)
Includes stock-based compensation as follows:
|
|
|
|
Year Ended December 31,
|
|
|
($ in thousands)
|
|
|
2019
|
|
|
2020
|
|
|
Cost of revenue
|
|
|
|
$
|
532
|
|
|
|
|
$
|
780
|
|
|
|
Research and product development
|
|
|
|
|
12,087
|
|
|
|
|
|
21,619
|
|
|
|
Marketing and sales
|
|
|
|
|
1,737
|
|
|
|
|
|
3,144
|
|
|
|
General and administrative
|
|
|
|
|
3,619
|
|
|
|
|
|
5,711
|
|
|
|
Total stock-based compensation
|
|
|
|
$
|
17,975
|
|
|
|
|
$
|
31,254
|
|
|
(2)
See Note 2 of the notes to our audited consolidated financial statements included elsewhere in this prospectus for an explanation of the calculations of our net income/(loss) per share, basic and diluted.
Key Performance Indicators and Non-GAAP Financial Measures
We review the following key performance indicators and non-GAAP financial measures to evaluate our business, measure our performance, identify trends affecting our business, formulate financial projections and make strategic decisions. Increases or decreases in our key performance indicators and non-GAAP financial measures may not correspond with increases or decreases in our revenue and our key performance indicators and non-GAAP financial measures may be calculated in a manner different than similar key performance indicators and non-GAAP financial measures, respectively, used by other companies.
|
|
|
|
Year Ended
December 31,
|
|
|
|
|
|
2019
|
|
|
2020
|
|
|
Unique subscriptions (in thousands)(1)
|
|
|
|
|
2,984
|
|
|
|
|
|
3,656
|
|
|
|
Total bookings (in thousands)(2)
|
|
|
|
$
|
514,428
|
|
|
|
|
$
|
664,739
|
|
|
|
Annual run rate revenue (ARRR) (in thousands)(3)
|
|
|
|
$
|
549,156
|
|
|
|
|
$
|
705,546
|
|
|
|
Average revenue per unique subscription (ARPUS)(4)
|
|
|
|
$
|
182
|
|
|
|
|
$
|
187
|
|
|
|
Adjusted EBITDA (in thousands)(5)
|
|
|
|
$
|
97,624
|
|
|
|
|
$
|
116,666
|
|
|
|
Unlevered free cash flow (in thousands)(6)
|
|
|
|
$
|
94,571
|
|
|
|
|
$
|
152,439
|
|
|
(1)
Unique subscriptions represent the number of unique sites, standalone scheduling subscriptions and Unfold (social) subscriptions, as of the end of a period. A unique site represents a single subscription and/or group of related subscriptions, including a website subscription and/or a domain subscription, and other subscriptions related to a single website or domain. Every unique site contains at least one domain subscription or one website subscription.
(2)
Total bookings represents cash receipts for all subscriptions purchased, as well as payments due under the terms of contractual agreements for obligations to be fulfilled.
(3)
ARRR is calculated as the monthly revenue from subscription fees and revenue generated in conjunction with associated fees (fees taken or assessed in conjunction with commerce transactions) in the last month of the period multiplied by 12.
(4)
ARPUS is calculated as the total revenue during the preceding 12-month period divided by the average of the number of total unique subscriptions at the beginning and end of the period.
(5)
Adjusted EBITDA is calculated as net income excluding interest expense, other income/(loss), net, provision for/(benefit from) income taxes, depreciation and amortization, stock-based compensation expense and other items that we do not consider indicative of our ongoing operating performance, which includes expenses associated with a special bonus in 2020.
(6)
Unlevered free cash flow is defined as cash flow from operating activities less cash paid for capital expenditures increased by cash paid for interest expense net of the associated tax benefit.
For additional information about our key performance indicators and non-GAAP financial measures, including reconciliations of the non-GAAP financial measures to the most directly comparable financial measures stated in accordance with GAAP, see “Selected Consolidated Financial and Operating Information — Key Performance Indicators and Non-GAAP Financial Measures” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Key Performance Indicators and Non-GAAP Financial Measures.”
RISK FACTORS
An investment in our Class A common stock involves a high degree of risk. You should consider carefully the following risks, together with the financial and other information contained in this prospectus, before you decide to purchase shares of our Class A common stock. If any of the following risks or uncertainties actually occurs, our business, financial condition and results of operations could be materially and adversely affected. In that case, the market price of our Class A common stock could decline and you may lose all or a part of your investment. The risks discussed below are not the only risks we face. Additional risks or uncertainties not currently known to us, or that we currently deem immaterial, may also have a material adverse effect on our business, financial condition and results of operations. We cannot assure you that any of the events discussed in the risk factors below will not occur.
Risks Related to our Business and Industry
Our business, financial condition and results of operations will be harmed if we are unable to attract and retain customers and expand their use of our platform.
We have experienced growth in recent years, due in large part to sustained subscription growth and retention, including customers who expand their use of our platform over time. We offer two payment options for each of our subscription plans: monthly and annual. Customers’ subscriptions currently renew automatically at the end of each monthly or annual period, as applicable, but the customer is free to disable automatic renewal or cancel the subscription at any time. As a result, even though the number of unique subscriptions to our platform has grown in recent years, there can be no assurance that we will be able to retain unique subscriptions beyond the existing monthly or annual subscription periods. In addition, any limitation or restriction imposed on our ability to bill our customers on a recurring basis, whether due to new regulations or otherwise, may significantly lower our unique subscription retention rate.
A number of factors could impact our ability to attract and retain customers and expand our customers’ use of our platform, including:
•
the quality and design of our solutions compared to other similar solutions;
•
our ability to develop new technologies or offer new or enhanced solutions;
•
the pricing of our solutions compared to our competitors;
•
the reliability and availability of our customer support;
•
our ability to provide value-added third-party applications, solutions and services that integrate into our platform;
•
any perceived or actual security, reliability, quality or compatibility problems with our solutions, including those related to system outages, unscheduled downtime and the impact of cyber-attacks on customers’ data;
•
our ability to expand into new geographic regions; and
•
the cost and effectiveness of our marketing campaigns.
We have historically experienced customer turnover as a result of general economic conditions and other risks affecting our customers’ businesses or needs. Many of these customers are in the entrepreneurial stage of their development and there is no guarantee that their businesses will succeed. Other customers may be looking for a shorter-term solution for a specific event. Our costs associated with renewals are substantially lower than costs associated with generating new unique subscriptions. Therefore, a reduction in retention of our unique subscriptions, even if offset by an increase in new unique subscriptions, could adversely impact our business, financial condition and results of operations. Moreover, any volatile or uncertain economic conditions due to the COVID-19 pandemic or otherwise and any resulting decrease in business formation or failures of SMBs could affect our ability to generate new unique subscriptions or retain existing unique subscriptions.
Additionally, our growth rate may decline over time even though the number of unique subscriptions on our platform increases. As our growth rate declines, investors’ perception of our business, financial
condition and results of operations may be adversely affected. To the extent our growth rate slows, our business performance will become increasingly dependent on our ability to retain revenue from existing unique subscriptions and increase sales to existing customers.
If we fail to improve and enhance the functionality, performance, reliability, design, security and scalability of our solutions in a manner that responds to our customers’ evolving needs, our business, financial condition and results of operations may be adversely affected.
The markets in which we compete are characterized by constant change and innovation, and we expect them to continue to evolve rapidly. The success of our business will depend, in part, on our ability to adapt and respond effectively to changing market dynamics on a timely basis while continuing to improve and enhance the functionality, performance, reliability, design, security and scalability of our solutions. For example, as commerce transacted over mobile devices continues to grow more rapidly than desktop transactions, continued effective mobile functionality becomes increasingly integral to our long-term development and growth strategy. If we are unable to develop new and upgraded solutions that satisfy our customers and that keep pace with rapid technological and industry change, our business, financial condition and results of operations could be adversely affected.
The process of developing new technology is complex and uncertain. If we fail to accurately predict customers’ changing needs or emerging technological trends, or we otherwise fail to achieve the benefits expected from our investments in technology, our business, financial condition and results of operations could be harmed. The development of new and upgraded solutions involves a significant amount of time and effort from our research and development team, as it can take months to update, code and test new and upgraded solutions and integrate them into our existing solutions. Further, our design team spends a significant amount of time and resources in order to incorporate various design elements and other features into any new and upgraded solutions. The introduction of these new and upgraded design and functional features often involves a significant amount of marketing spend. We must also manage our existing solutions as we continue to introduce new solutions. Given this complexity, we occasionally have experienced, and could experience in the future, delays in completing the development and introduction of new and upgraded solutions.
Our industry is highly competitive and we may not be able to compete successfully against current and future competitors.
The market for providing SaaS-based website design and management software is evolving and highly fragmented and we face competition in various aspects of our business, which we expect to intensify in the future as existing and new competitors introduce new solutions or enhance existing solutions. We also compete with specific providers offering services or products that overlap with parts of our solutions, including online presence solutions, e-commerce solutions, domain registration and website hosting services, email marking solutions and scheduling solutions. Some of our competitors have longer operating histories, larger customer bases, greater brand recognition, more extensive commercial relationships and greater financial and other resources than we do.
New or existing competitors may be able to develop solutions better received by customers or may be able to respond more quickly and effectively than we can to new or changing opportunities, technologies, regulations or requirements of our customers and their users. In addition, some larger competitors may be able to leverage a larger installed customer base and distribution network to adopt more aggressive pricing policies and offer more attractive sales terms, which could cause us to lose potential sales or reduce prices to remain competitive.
Competition may also intensify as our competitors enter into business combinations or alliances or raise additional capital, or as established companies in other market segments or geographic regions expand into our market segments or geographic regions. For instance, certain competitors could use strong or dominant positions in one or more markets to gain a competitive advantage by integrating competing platforms or features into solutions they control such as search engines, web browsers, mobile device operating systems or social networks or by making access to our platform more difficult. We also expect new entrants to offer competitive solutions. If we cannot compete successfully against current and future competitors, our business, financial condition and results of operations could be negatively impacted.
The COVID-19 pandemic, the measures attempting to contain and mitigate the effects of the COVID-19 pandemic (including stay-at-home, business closure and other restrictive orders), and the resulting changes in consumer behaviors have disrupted and may continue to disrupt our normal operations.
In response to the COVID-19 pandemic, we have taken a number of actions that have impacted and continue to impact our business, financial condition and results of operations, including transitioning employees across all our offices (including our corporate headquarters) to remote work-from-home arrangements and recommending travel and related restrictions. While we believe these actions were reasonable and necessary as a result of the COVID-19 pandemic, they were disruptive to our business. Given the continued spread of COVID-19, we may have to take additional actions in the future that could further disrupt our business. If we are required to maintain work-from-home arrangements for a significant period of time as a result of the ongoing COVID-19 pandemic or other future adverse public health developments, it may impact our ability to preserve our corporate culture. Any failure to preserve our culture could negatively affect our future success, including our ability to retain and recruit personnel and to effectively focus on and pursue our corporate objectives. In addition, the COVID-19 pandemic could disrupt or delay the ability of our employees to work because they become sick or are required to care for those who become sick or for dependents for whom external care is not available. The COVID-19 pandemic could also cause delays or disruptions in services provided by key service providers, increase our and service providers’ vulnerability to security breaches, distributed denial of service (“DDoS”) attacks or other hacking or phishing attacks or cause other unpredictable effects. Our management team has spent, and will likely continue to spend, significant time, attention and resources monitoring the COVID-19 pandemic and associated global economic uncertainty and seeking to manage its effects on our business and workforce.
If economic conditions further deteriorate, uncertainty from the pandemic may cause prospective or existing customers to cancel their subscriptions for our solutions and users may not have the financial means to make purchases from our customers or may delay or reduce discretionary purchases, negatively impacting our e-commerce customers and our associated results of operations. Our entrepreneurial and small business customers may be more susceptible to general economic conditions than larger businesses with greater liquidity and access to capital.
The degree to which COVID-19 and any associated volatile or uncertain economic conditions will affect our business, financial condition and results of operations will depend on future developments that are highly uncertain and cannot currently be predicted. The risks described herein and throughout this “Risk Factors” section could be further exacerbated by a prolonged existence of the COVID-19 pandemic or other future adverse public health developments.
Our business, financial condition and results of operations could be harmed if we fail to manage our growth effectively.
The growth that we have experienced places significant demands on our operational infrastructure. The scalability and flexibility of our platform depends on the functionality of our technology and network infrastructure and our ability to handle increased traffic and demand for bandwidth. The growth in the number of unique subscriptions on our platform and the number of orders processed through our platform has increased the amount of data and requests processed. Any problems with the transmission of increased data and requests could result in harm to our brand or reputation. Moreover, as our business grows, we will need to devote additional resources to improving our operational infrastructure and continuing to enhance our scalability in order to maintain the performance of our platform.
Our growth has also placed, and will likely continue to place, a significant strain on our managerial, administrative, operational, financial and other resources. We intend to further expand the business, including into new geographic regions, with no assurance that our revenue will continue to grow. We are likely to recognize the costs associated with these investments earlier than some of the anticipated benefits, and the return on these investments may be lower or may develop more slowly than we expect. Unless our growth results in an increase in our revenues that is proportionate to, or greater than, the increase in our costs associated with this growth, our profitability may be adversely affected. As we grow, we will be required to continue to improve our operational and financial controls, management information systems and reporting procedures and we may not be able to do so effectively.
The Squarespace brand is integral to our success. If we fail to protect or promote our brand, our business, financial condition and results of operations may be harmed.
We believe that protecting, maintaining and enhancing the Squarespace brand is integral to our success, particularly as we seek to attract new customers. Protecting, maintaining and enhancing our brand will depend largely on our ability to continue to provide design-focused and differentiated solutions, which we may not do successfully. The value of our brand may decline if we are unable to maintain the image of the Squarespace brand as design-focused. Successfully maintaining our brand will depend largely on the effectiveness of our marketing efforts, our ability to provide a reliable and useful platform to meet the needs of our customers, our ability to maintain our customers’ trust and our ability to continue to develop and successfully differentiate our solutions. Errors, defects, disruptions or other performance problems with our solutions, including with third-party services accessed through our platform, may harm our reputation and brand. Unfavorable media coverage, negative publicity or negative public perception about us or our marketing efforts, our industry, the quality and reliability of our platform or our privacy and security practices may also harm our reputation and our brand. If events occur that damage our reputation and brand, our ability to expand our subscription base may be impaired, and our business, financial condition and results of operations may be harmed.
We also believe that the importance of brand recognition will increase as competition in our market increases and the promotion of our brand may require substantial expenditures. We have invested, and expect to continue to invest, substantial resources to increase our brand awareness, both generally and in specific geographies and to specific customer groups. There can be no assurance that our brand development strategies and investment of resources will enhance recognition of the Squarespace brand or lead to an increased customer base. Furthermore, our international branding efforts may prove unsuccessful due to language barriers and cultural differences. If our efforts to protect and promote our brand are not successful, our business, financial condition and results of operations may be adversely affected. In addition, even if brand recognition and loyalty increases, revenue may not increase at a level commensurate with our marketing spend.
Our business, financial condition and results of operations would be adversely affected if our marketing and selling activities fail to generate new customers at the levels that we anticipate or fail to generate new customers on a cost-effective basis.
We use a variety of marketing channels to promote our brand, including online keyword search, sponsorships and celebrity endorsements, television, podcasts, print and online advertising, email and social media marketing. If we lose access to one or more of these channels because the costs of advertising become prohibitively expensive or for other reasons, we may not be able to promote our brand effectively, which could limit our ability to grow our business. In addition, in order to maintain our current revenues and grow our business, we need to continuously optimize our marketing campaigns aimed at acquiring new customers. However, we may fail to accurately predict customer interest and, as a result, fail to generate the expected return on marketing spend. An unexpected increase in the marginal acquisition cost of new customers may have an adverse effect on our ability to grow our subscription base. We have and may in the future invest a significant portion of our marketing expenses in more traditional advertising and promotion of our brand, including through print and television commercials, the effectiveness of which is more difficult to track than online marketing. If these marketing activities fail to generate traffic to our website, attract potential customers and lead to new and renewed subscriptions at the levels we anticipate, our business, financial condition and results of operations would be adversely affected.
If demand for our solutions does not meet expectations, our ability to generate revenue could be adversely affected.
Although we expect continued demand from individuals and businesses for our solutions, it is possible the rate of growth may not meet our expectations, or the market may not grow, including as a result of the global economic slowdown resulting from the COVID-19 pandemic or future adverse public health developments. Our expectations for future revenue growth are based in part on assumptions reflecting our industry knowledge and experience serving individuals and businesses, as well as our assumptions regarding demographic shifts, growth in the availability and capacity of internet infrastructure internationally and the general economic climate. If any of these assumptions proves to be inaccurate, including as a result of the extent of current global economic uncertainty, our growth could be significantly lower than expected.
Our ability to compete successfully depends on our ability to offer an integrated and comprehensive platform enabling a diverse base of customers to start, grow and run their businesses or promote their brand. The success of our solutions is predicated on the assumption that an online presence is, and will continue to be, an important factor in our customers’ abilities to establish, expand and manage their online presence quickly, easily and affordably. If we are incorrect in this assumption, for example due to the introduction of a new technology or industry standard superseding the importance of an online presence or rendering our existing or future solutions obsolete, then our ability to retain existing customers and attract new customers could be adversely affected, which could harm our business, financial condition and results of operations.
If we fail to maintain a consistently high level of customer support, our brand, business, financial condition and results of operations may be harmed.
We believe our focus on customer support is critical to acquiring new customers, retaining existing customers and growing our business. As a result, we have invested heavily in the quality and training of our Customer Operations team along with the tools they use to provide this service. If we are unable to maintain a consistently high level of customer support, we may lose existing customers. In addition, our ability to attract new customers and increase unique subscriptions depends, in part, on the support we provide to customers as well as positive recommendations from our existing customers. Any failure to maintain a consistently high level of customer support, or a market perception that we do not maintain high-quality customer support, could adversely affect our brand, business, financial condition and results of operations.
Our pricing decisions may adversely affect our ability to attract and retain customers.
We have from time to time changed our overall pricing model or the various price points of our subscription plans and add-on services and expect to do so in the future. However, no assurance can be given that any new pricing model or price points will be optimal and not result in loss of customers or profits. In addition, as competitors introduce new solutions, we may be unable to attract new customers at the price or based on the pricing models we currently use and we may be required to reduce prices. Individuals and small businesses, which comprise the majority of customers on our platform, could be sensitive to price increases or swayed by more attractive prices offered by competitors. We also must determine the appropriate price to enable us to compete effectively internationally. Any of these developments could negatively impact our business, financial condition and results of operations.
We may acquire or invest in companies, which may divert our management’s attention and result in additional dilution to our stockholders. We may be unable to integrate acquired businesses and technologies successfully or achieve the expected benefits of such acquisitions.
From time to time, we evaluate potential strategic acquisition or investment opportunities and we have completed various strategic acquisitions in recent periods, including the Acquisition. Any future transactions that we enter into could be material to our business, financial condition and results of operations. The process of acquiring and integrating another company or technology could create unforeseen operating difficulties and expenditures. Acquisitions and investments involve a number of risks, such as:
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diversion of management time and focus from operating our business;
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use of resources that are needed in other areas of our business;
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retention and integration of employees from an acquired company, including potential risks or challenges to our corporate culture;
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implementation or remediation of controls, procedures and policies of an acquired company;
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difficulty integrating the accounting systems and operations of an acquired company;
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coordination of product, engineering and selling and marketing functions, including difficulties and additional expenses associated with incorporating the acquired company’s solutions and infrastructure with our existing solutions and infrastructure and difficulties converting the customers of the acquired company onto our platform;
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unforeseen costs or liabilities;
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adverse effects to our existing business relationships as a result of the acquisition or investment;
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the possibility of adverse tax consequences;
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litigation or other claims arising in connection with the acquired company or investment; and
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in the case of foreign acquisitions, the need to integrate operations and workforces across different cultures and languages and to address the particular economic, currency, political and regulatory risks associated with specific countries.
In addition, a significant portion of the purchase price of companies we acquire may be allocated to acquired goodwill and other intangible assets, which must be assessed for impairment at least annually. If our acquisitions, including the Acquisition, do not yield expected returns, we may be required to take charges to our operating results based on this impairment assessment process, which could adversely affect our business, financial condition and results of operations.
Future acquisitions and investments may also result in dilutive issuances of equity securities, which could adversely affect the trading price of our Class A common stock, result in issuances of securities with superior rights and preferences to our Class A common stock or result in the incurrence of debt with restrictive covenants that limit our operating flexibility.
We may not be able to identify future acquisition or investment opportunities that meet our strategic objectives, or to the extent such opportunities are identified, we may not be able to negotiate terms with respect to the acquisition or investment that are acceptable to us. If we do complete acquisitions, we may not ultimately strengthen our competitive position or achieve our strategic objectives, and any acquisitions we complete could be viewed negatively by investors. To pay for any such acquisition, we may have to use cash or incur debt, both of which may affect our financial condition or the trading price of our Class A common stock. At this time we have made no commitments or agreements with respect to any such material transactions.
We depend on highly skilled personnel, and if we are unable to hire, integrate and retain our personnel, we may not be able to address competitive challenges.
Our future success will depend upon our continued ability to hire, integrate and retain highly skilled personnel, including senior management, engineers, designers, product managers, finance and legal personnel and customer support. Competition for highly skilled personnel is intense. We compete with many other companies for engineers, designers and product managers with meaningful experience in designing, developing and managing software, as well as for skilled marketing, operations and customer support professionals, and we may not be successful in attracting and retaining the professionals we need. We may need to invest significant amounts of cash and equity to attract and retain new and highly skilled employees, and may never realize returns on these investments. Extended stay-at-home, business closure and other restrictive orders may impact our ability to identify, hire and train new personnel. In addition, we are limited in our ability to recruit global talent for our U.S. offices by U.S. immigration laws, including those related to H1-B visas. If we are not able to effectively hire, train and retain employees, our ability to achieve our strategic objectives will be adversely impacted and our business, financial condition and results of operations will be harmed.
In addition to hiring and integrating new employees, we must continue to focus on retaining our key employees who foster and promote our innovative corporate culture. Our future performance depends on the continued services and contributions of our Founder and Chief Executive Officer, Mr. Casalena, who is critical to the development of our business and growth strategy, in addition to other key employees to execute on our business plan and to identify and pursue new opportunities and solutions. The failure to properly develop or manage succession plans or develop leadership talent or the loss of services of key employees could significantly delay or prevent the achievement of our strategic objectives. From time to time, there may be changes in our senior management team resulting from the hiring or departure of executives, which could disrupt our business. We do not have employment agreements with our executive officers or other key personnel that require them to continue to work for us for any specified period; therefore, they could terminate their employment with us at any time. The loss of one or more of our key employees (including any limitation on the performance of their duties or short term or long term absences as a result of illness, such as COVID-19) could adversely affect our business, financial condition and results of operations.
We primarily rely on a single supplier to process payments from our customers and we integrate with a limited number of suppliers to process transactions from users.
The success of our platform depends, in part, on our ability to integrate and offer third-party services to our customers. In particular, we use Stripe Inc. (“Stripe”) to process our transactions with our customers and we offer payment processing integrations for our customers to charge their users through Stripe, PayPal Holdings, Inc. (“PayPal”) and Square, Inc. (“Square”). While we offer our customers access to three payment processing integrations through which to charge their users, disruptions or problems with the relevant services provided by any of these companies could have an adverse effect on our reputation, business, financial condition and results of operations. If Stripe, PayPal or Square were to terminate its relationship with us or become unable to continue processing payments on our behalf, we could incur substantial delays and expense in finding and integrating an alternative payment service provider to process payments from our customers and their users, and the quality and reliability of any such alternative payment service provider may not be comparable.
If we cannot maintain the compatibility of our platform and solutions with third-party applications or content or if the third-party applications that we offer fail to keep pace with competitors’ offerings, demand for our platform and solutions could decline.
In addition to offering our customers access to Stripe and other payment solutions, we offer our customers access to third-party applications for order fulfillment, accounting and other business services as well as third-party content. Third-party application providers may change the features of their applications and third-party content providers and application providers may change how others can access the application or content or alter the terms governing use of their applications or content in an adverse manner. Such changes could limit, restrict or terminate our access to their applications and content, which could negatively impact our solutions and harm our business, financial condition and results of operations. In addition, competitors may offer better functionality than the third-party applications integrated into our platform. If we fail to integrate new third-party applications and content that our customers need for their online presence or develop them directly, we may not be able to offer the functionality that our customers expect, which would negatively impact our solutions and, as a result, harm our business, financial condition and results of operations.
We rely heavily on the reliability, security and performance of our software. If our software contains serious errors or defects, or we have difficulty maintaining the software, we may lose revenue and market acceptance and may incur costs to defend or settle claims with our customers.
The reliability and continuous availability of our platform is critical to our success. However, software such as ours often contains errors, defects, security vulnerabilities or software bugs that are difficult to detect and correct, particularly when first introduced or when new versions or enhancements are released. Any third-party software we incorporate into our platform may have similar deficiencies. Despite internal testing, our platform may contain serious errors or defects, security vulnerabilities or software bugs that we may be unable to successfully correct in a timely manner or at all, and any ensuing disruptions could result in lost revenue, significant expenditures of capital, a delay or loss in market acceptance and damage to our reputation and brand, any of which could have an adverse effect on our business, financial condition and results of operations. Furthermore, our platform is cloud-based, which allows us to deploy new versions and enhancements to all of our customers simultaneously. To the extent we deploy new versions or enhancements that contain errors, defects, security vulnerabilities or software bugs to all of our customers simultaneously, the consequences would be more severe than if such versions or enhancements were only deployed to a smaller number of customers. In addition, to the extent that we do not effectively address capacity constraints, upgrade our systems as needed and continually develop our technology and network architecture to accommodate actual and anticipated changes in technology, our business, financial condition and results of operations, as well as our reputation, may be adversely affected.
Since customers may use our solutions for processes that are critical to their businesses, errors, defects, security vulnerabilities, service interruptions or software bugs in our platform could result in losses to our customers. Customers may seek significant compensation from us for any losses they suffer or they may cease conducting business with us altogether. Further, a customer could share information about bad experiences
on social media, which could result in damage to our reputation. There can be no assurance that provisions typically included in agreements with our customers that attempt to limit exposure to claims would be enforceable or adequate or would otherwise protect us from liabilities or damages with respect to any particular claim. Even if not successful, a claim brought against us by any of our customers would likely be time-consuming, divert management’s attention and be costly to defend and could seriously damage our reputation and brand, making it harder to sell our solutions.
We rely on search engines, social networking sites and online streaming services to attract a meaningful portion of our customers, and if those search engines, social networking sites and online streaming services change their listings or policies regarding advertising, or increase their pricing or suffer problems, it may limit our ability to attract new customers.
Many customers locate our platform through internet search engines, such as Google, and advertisements on social networking sites and online streaming services, such as Facebook and YouTube. If we are listed less prominently or fail to appear in search results for any reason, visits to our website could decline significantly, and we may not be able to replace this traffic. Search engines revise their algorithms from time to time in an attempt to optimize their search results. If the search engines on which we rely for algorithmic listings modify their algorithms, we may appear less prominently or not at all in search results, which could result in reduced traffic to our website that we may not be able to replace. Additionally, if the costs of search engine marketing services, such as Google AdWords, increase, we may incur additional marketing expenses, we may be required to allocate a larger portion of our marketing spend to this channel or we may be forced to attempt to replace it with another channel (which may not be available at reasonable prices, if at all), and our business, financial condition and results of operations could be adversely affected.
Furthermore, competitors may in the future bid on our brand names and other search terms that we use to drive traffic to our website. Such actions could increase our marketing costs and result in decreased traffic to our website. In addition, search engines, social networking sites and video streaming services may change their advertising policies from time to time. If any change to these policies delays or prevents us from advertising through these channels, it could result in reduced traffic to our website and sales of our solutions. Additionally, new search engines, social networking sites, video streaming services and other popular digital engagement platforms may develop in specific jurisdictions or more broadly that reduce traffic on existing search engines, social networking sites and video streaming services. Moreover, the use of voice recognition technology such as Alexa, Google Assistant, Cortana or Siri may drive traffic away from search engines, potentially resulting in reduced traffic to our website. If we are not able to achieve awareness through advertising or otherwise, we may not achieve significant traffic to our website.
Our business, financial condition and results of operations would be harmed if changes to technologies used in our platform or new versions or upgrades of operating systems and internet browsers adversely impact the process by which customers interface with our platform and users interface with our customers’ sites.
We believe that our integrated web and mobile platform has helped us to grow our customer base. In addition to offering customers mobile-optimized websites created on our platform, we offer mobile apps that enable customers to monitor analytics, fulfill orders and create, edit and manage content from their mobile devices. In the future, mobile and desktop operating system providers, such as Microsoft, Google, Apple or any other provider of internet browsers, could introduce new features that would make it difficult for customers to use our platform, change existing browser specifications such that they would be incompatible with our platform, prevent users from accessing customers’ sites or limit or preclude our marketing efforts. In addition, we are subject to the standard policies and terms of service of these providers, which may change in the future. We may incur additional costs in order to adapt our platform to other operating systems and may face technical challenges adapting our solutions to different versions of already-supported operating systems, such as Android variants offered by different mobile phone manufacturers, and we may face technical challenges adapting to new hardware and software on the Android and iOS platforms. Any changes to technologies used in our platform, to existing features that we rely on or to operating systems or internet browsers that make it difficult for customers to access our platform or visitors to access our customers’ sites, may make it more difficult for us to maintain or increase our revenue and could adversely impact our business, financial condition and results of operations. Moreover, as customers increasingly expect to be able to purchase and use our solutions on their mobile device or via our mobile apps, our future
prospects could be harmed or we could face increased costs to build out and maintain this functionality. The use of our apps is also subject to applicable terms of use of third-party app stores. If we are unable to maintain availability on these third-party app stores or update our applications on these stores, our business, financial condition and results of operations may be harmed.
We use a limited number of cloud service providers, infrastructure providers and data centers to deliver our solutions. Any disruption of service by these providers or at these facilities could harm our business, financial condition and results of operations.
We currently rely on a limited number of cloud service providers and third-party data center facilities. While we engineer and architect the systems upon which our platform runs, and own the hardware installed at the data centers on which we rely, we do not control the operation of these facilities. We also obtain cloud storage and computing from Amazon and Google. We have experienced, and may in the future experience, failures at the third-party data centers where our hardware is deployed. Data centers are vulnerable to damage or interruption from human error, cyber-crimes, computer viruses and other intentional bad acts, earthquakes, hurricanes, floods, fires, war, terrorist attacks, power losses, hardware failures, systems failures, telecommunications failures and similar events. Changes in law or regulations applicable to data centers in various jurisdictions could also cause a disruption in service. Similarly, if we are unable to utilize cloud services from Amazon and Google, we could experience delays or disruptions. The occurrence of any of these events or other unanticipated problems with these providers or at these facilities could result in loss of data (including personal information), lengthy interruptions in the availability of our solutions and harm to our reputation and brand.
While our third-party data center and cloud provider agreements include automatic renewal provisions, these service providers have no obligation to renew the agreements on commercially reasonable terms or at all. In addition, a timely notice of intent not to renew under one or more of these agreements may not provide us with adequate time to transfer operations and may cause disruptions to our platform. Similarly, service providers of other aspects of our critical infrastructure, such as private network connectivity, content delivery, DDoS mitigation, domain registration and domain name servers, among others, are under no obligation to continue to provide these services after the expiration of the respective service agreements, nor are they obligated to renew the terms of those agreements. If we were required to move our equipment to a new facility, move cloud platforms or migrate to a new critical infrastructure vendor without adequate time to plan and prepare for such a migration, we would face significant challenges due to the technical complexity, risk and high costs of the relocation or migration. If we are unable to renew these agreements on commercially reasonable terms, or if the service providers close such facilities or cease providing such services, we may be required to transfer to new service providers and may incur costs and possible service interruption in connection with doing so.
Our business depends on our customers’ continued and unimpeded access to the internet and the development and maintenance of the internet infrastructure. Internet service providers may be able to block, degrade or charge for access to certain of our solutions, which could lead to additional expenses and the loss of customers.
Our success depends upon the general public’s ability to access the internet and continued willingness to use the internet as a means to pay for purchases, communicate, access social media and research and conduct commercial transactions, including through mobile devices. If consumers or sellers become unable, unwilling or less willing to use the internet for commerce for any reason, including lack of access to high-speed communications equipment, internet outages or delays, disruptions or other damage to sellers’ and consumers’ computers, increases in the cost of accessing the internet and security and privacy risks or the perception of such risks, our business, financial condition and results of operations could be adversely affected.
Currently, internet access is provided by companies that have significant market power in the broadband and internet access marketplace, including incumbent telephone companies, cable companies, mobile communications companies and government-owned service providers. Laws or regulations that adversely affect the growth, popularity or use of the internet, including changes to laws or regulations impacting internet neutrality, could decrease the demand for our solutions, increase our operating costs, require us to alter the manner in which we conduct our business or otherwise adversely affect our business, financial condition and results of operations. We could experience discriminatory or anti-competitive practices that
could impede our growth, cause us to incur additional expense or otherwise negatively affect our business, financial condition and results of operations. For example, paid prioritization could enable internet service providers to impose higher fees. Public opinion towards internet infrastructure, mobile connected devices and other similar technological advancements is rapidly evolving and such industries have faced criticism in the past. We cannot be certain that the public will continue to support existing or new technologies on which we, our service providers, our customers and their users rely or may come to rely. If our industry loses public interest and support, it could have a material adverse effect on our business, financial condition and results of operations.
We may be unable to obtain, maintain and protect our intellectual property rights and proprietary information or prevent third parties from making unauthorized use of our technology.
Intellectual property rights are important to our business. We rely on a combination of trade secret, copyright, patent and trademark laws as well as contractual provisions, such as confidentiality clauses, to protect our proprietary technology, know-how, brand and other intellectual property, all of which offer only limited protection. While it is our policy to protect and defend our intellectual property, the steps we take may be inadequate to prevent infringement, misappropriation, dilution or other potential violations of our intellectual property rights or to provide us with any competitive advantage. Further, the laws of foreign countries may not provide as much protection to intellectual property as exists in the United States. For example, some license provisions protecting against unauthorized use, copying, transfer and disclosure of our solutions may be unenforceable under the laws of certain jurisdictions and foreign countries. Moreover, policing unauthorized use of our intellectual property is difficult, expensive and time-consuming, particularly in foreign countries where the laws may not be as protective of intellectual property rights as those in the United States and where mechanisms for enforcement of intellectual property rights may be weak. To the extent we expand our international activities, our exposure to unauthorized copying and use of our intellectual property and proprietary information may increase. We will not be able to protect our intellectual property if we are unable to enforce our rights or if we do not detect unauthorized use of our intellectual property. Despite the precautions taken by us, it may be possible for unauthorized third parties to copy or reverse engineer our solutions and use information that we regard as proprietary to create solutions that compete with those offered by us.
We enter into confidentiality and invention assignment agreements with our employees and consultants and enter into confidentiality agreements with the parties with whom we have strategic relationships and business alliances. No assurance can be given that these agreements will be effective in controlling access to, or ownership of, our proprietary information and technology or providing adequate remedies for unauthorized use or disclosure of such information or technology. Further, these agreements do not prevent competitors from independently developing technologies that are substantially equivalent or superior to our solutions. Additionally, from time to time we may be subject to opposition or similar proceedings with respect to applications for registrations of our intellectual property, including but not limited to trademark applications. While we aim to acquire adequate protection of our brand through trademark registrations in key markets, occasionally third parties may have already registered or otherwise acquired rights to identical or similar marks for solutions that also address the software market. Any of the pending or future trademark applications and any future patent applications, whether or not challenged, may not be issued with the scope of the claims we seek, if at all. There can be no guarantee that additional trademarks will issue from pending or future applications, that patents will issue from future applications, if any, or that any issued patents or trademarks will not be challenged, invalidated, circumvented or declared invalid or unenforceable, or that the rights granted under the patents will provide us with meaningful protection or any commercial advantage. We rely on our brand and trademarks to identify our solutions to our customers and to differentiate our solutions from those of our competitors. If we are unable to adequately protect our trademarks, third parties may use brand names or trademarks similar to ours in a manner that may cause confusion or dilute our brand names or trademarks, which could decrease the value of our brand.
From time to time, we may discover that third parties are infringing, misappropriating or otherwise violating our intellectual property rights. However, policing unauthorized use of our intellectual property and misappropriation of our technology is difficult and we may therefore not always be aware of such unauthorized use or misappropriation. In addition, litigation brought to protect and enforce our intellectual property rights can be costly, time-consuming and distracting to management and could result in the
impairment or loss of portions of our intellectual property. As a result, we may be aware of infringement by competitors but may choose not to bring litigation to enforce our intellectual property rights due to the cost, time and distraction of bringing such litigation. Furthermore, even if we decide to bring litigation, our efforts to enforce our intellectual property rights may be met with defenses, counterclaims and countersuits challenging or opposing our right to use and otherwise exploit particular intellectual property, services and technology or the enforceability of our intellectual property rights. As a result, despite efforts by us to protect our intellectual property rights, unauthorized third parties may attempt to use, copy or otherwise obtain and market or distribute our intellectual property or technology or otherwise develop solutions with the same or similar functionality as our solutions. If competitors infringe, misappropriate or otherwise violate our intellectual property rights and we are not adequately protected or elect not to litigate, or if competitors are able to develop solutions with the same or similar functionality without infringing our intellectual property, our competitive position, business, financial condition and results of operations could be harmed.
Claims by third parties of intellectual property infringement, regardless of merit, could result in litigation and materially adversely affect our business, financial condition and results of operations.
The software industry is characterized by the existence of a large number of patents and frequent claims and related litigation regarding patents and other intellectual property rights. Third parties have asserted, and may in the future assert, that our platform, solutions, technology, methods or practices infringe, misappropriate or otherwise violate their intellectual property or other proprietary rights. Such claims may be made by competitors seeking to obtain a competitive advantage or by other parties. Our competitors and others may now and in the future have significantly larger and more mature patent portfolios than we have.
Additionally, in recent years, non-practicing entities have begun purchasing intellectual property assets for the purpose of making claims of infringement and attempting to extract settlements from companies like us, and such entities may not be deterred by a patent portfolio of any size because their sole or primary business is the assertion of patent claims. The risk of claims may increase as the number of solutions we offer and the number of competitors increases and overlaps occur. In addition, to the extent we gain greater visibility and market exposure, we face a higher risk of being the subject of intellectual property infringement claims. If it appears necessary or desirable, we may seek to license intellectual property that our solutions are alleged to infringe. If required licenses cannot be obtained, litigation could result.
Regardless of merit, litigation is inherently uncertain and defending intellectual property claims is costly, can impose a significant burden on management and employees, disrupt the conduct of our business and have an adverse effect on our brand, business, financial condition and results of operations. The terms of any settlement or any adverse judgment may require us to pay substantial damages, develop non-infringing technology, enter into royalty-bearing licensing agreements, stop selling or marketing some or all of our solutions, indemnify our customers or partners, refund fees or re-brand our solutions, any of which could be costly and could materially and adversely affect our business, financial condition and results of operations.
Our platform contains open-source software, which could negatively affect our ability to sell our solutions, pose particular risks to our proprietary software and subject us to possible litigation.
We use open-source software that is subject to one or more open-source licenses in connection with our software development and we may incorporate additional open-source software into our software, or otherwise link our software to open-source software. Open-source software is typically freely accessible, usable and modifiable, subject to compliance with the applicable licenses. Certain open-source software licenses require an entity who distributes or otherwise makes available the open-source software in connection with the entity’s software to disclose publicly part or all of the source code to the entity’s software or to make any derivative works of the open-source code or even the entity’s software available to others on potentially unfavorable terms or at no cost.
However, the terms of many open-source licenses have not been interpreted by United States or foreign courts and there is little or no legal precedent governing the interpretation of many of the terms of certain of these licenses. As a result, the potential impact of these terms on our business is uncertain and may result in unanticipated obligations or restrictions relating to the use of our platform. In that event, we could be required to seek licenses from third parties in order to continue offering our solutions, to re-develop our
solutions, to discontinue sales of our solutions or to release our proprietary source code under the terms of an open-source license, any of which could harm our business, financial condition and results of operations. From time to time, companies that use open-source software have faced claims challenging the use of open-source software and/or compliance with open-source license terms, and we may be subject to such claims in the future.
While we monitor our use of open-source software and try to ensure that none is used in a manner that would require disclosure of proprietary source code that would preclude us from charging fees for the use of our software or that would otherwise breach the terms of an open-source agreement, we cannot guarantee that our monitoring efforts will be fully successful. While it is our view that the majority of our solutions are not considered distributed software since no installation of the applicable software is necessary, this position could be challenged. In addition, parts of our platform, such as our mobile applications, for example, may be considered to be distributed. Finally, certain open-source licenses require disclosure of proprietary code under certain circumstances, even in the absence of distribution. In those instances, if a specific open-source license requires it, we might be obligated to disclose part of our proprietary code or otherwise be subject to undesirable open-source license terms. Any termination of an open-source license, requirement to disclose proprietary source code or distribute proprietary software on open-source license terms or pay damages for breach of contract could be harmful to our business, financial condition and results of operations, and could help our competitors develop solutions that are similar to or better than ours.
In addition to risks related to license requirements, usage of open-source software can lead to greater risks than the use of third-party commercial software, as open-source licensors generally do not provide warranties, controls on the origin or development of the software or remedies against the licensors. Further, given the nature of open-source software, it may be more likely that third parties might assert copyright and other intellectual property infringement claims against us based on our use of open-source software. Finally, use of open-source software may introduce vulnerabilities into our solutions. Many of the risks associated with usage of open-source software cannot be eliminated and could adversely affect our business, financial condition and results of operations.
We are exposed to risks, including security and regulatory risks, associated with credit card and debit card payment processing.
We accept payments through credit and debit cards and are therefore subject to a number of risks related to credit and debit card payments, including:
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payment of fees, which may increase over time and may require us to either increase the prices we charge for our solutions or experience an increase in operating expenses;
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if our billing systems fail to work properly and, as a result, we do not automatically charge customers’ credit cards on a timely basis or at all, we could lose revenue;
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if we are unable to maintain our chargeback rate at acceptable levels, our credit card fees for chargeback transactions, or for other credit and debit card transactions, may increase or issuers may terminate their relationship with us;
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if we are unable to maintain payment card industry data security standards (“PCI-DSS”) compliance, we may breach our contractual obligations, be subject to fines, penalties, damages, higher transaction fees and civil liability, be prevented from processing or accepting payment cards or lose payment processing partners;
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we rely on third-party payment service providers to securely store customer payment card information and maintain PCI-DSS compliance; and
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we rely on third-party payment service providers to process payments from our customers and their users and the providers may face downtime and thus affect our cash flow and our customers’ cash flow.
There can also be no assurance that the billing system data security standards of our third-party payment service provider will adequately comply with the billing standards of any future jurisdiction in which we seek to market our solutions.
In addition, certain of our subsidiaries perform services that relate to the processing of payments or similar activities. The U.S. Department of Treasury’s Financial Crimes Enforcement Network and various state banking departments regulate entities engaged in money transmission and require registration, at the federal level, and licensure, at the state level, of entities engaged in regulated activity. We have relied on various exemptions from such registration and licensing requirements to date and believe, based on our business model, that such exemptions are valid. Any determination that we are not exempt may require expenditures of time and money to remediate and could adversely affect our business, financial condition and results of operations.
If the security of personal information, payment card information or other confidential information of customers and their users stored in our systems is breached or otherwise subjected to unauthorized access, our reputation may be harmed and we may be exposed to liability.
Our business involves the storage and transmission of personal information, payment card information and other confidential information. In addition, the amount of potentially sensitive or confidential data we store for customers on our servers has been increasing. If third parties succeed in penetrating our security measures or those of our service providers, or in otherwise accessing or obtaining without authorization the sensitive or confidential information we or our service providers maintain, we could be subject to liability, loss of business, litigation, government investigations or other losses. Hackers or individuals who attempt to breach the security measures put in place by us or our service providers could, if successful, cause the unauthorized disclosure, misuse or loss of personal information, payment card information or other confidential information, suspend web-hosting operations or cause malfunctions or interruptions in our platform.
If we or our customers experience any breaches of security measures or sabotage or otherwise suffer unauthorized use or disclosure of, or access to, personal information, payment card information or other confidential information, we might be required to expend significant capital and resources to address these problems. We may not be able to remedy any problems caused by hackers or other similar actors in a timely manner, or at all. Because techniques used to obtain unauthorized access or to sabotage systems change frequently and generally are not recognized until after they are launched against a target, we and our service providers may be unable to anticipate these techniques or to implement adequate preventative measures. Advances in computer capabilities, discoveries of new weaknesses and other developments with software generally used by the internet community also increase the risk we, or customers using our servers, will suffer a security breach. We, our service providers or our customers may also suffer security breaches or unauthorized access to personal information, payment card information and other confidential information due to employee error, rogue employee activity, unauthorized access by third parties acting with malicious intent or who commit an inadvertent mistake or social engineering. If a breach of security or other data security incident occurs or is perceived to have occurred, the perception of the effectiveness of our security measures and reputation could be harmed and we could lose current and potential customers, even if the security breach were to also affect one or more of our competitors. Further, concerns about practices with regard to the collection, use, disclosure or security of personal information, payment card information or other confidential information, even if unfounded, could damage our reputation and adversely affect our business, financial condition and results of operations.
Any actual or alleged security breaches or other unauthorized access to personal information, payment card information and other confidential information or alleged violation of federal, state or foreign laws or regulations relating to privacy and data security could result in:
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mandated customer notifications, litigation, government investigations, significant fines and expenditures;
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claims against us for misuse of personal information, payment card information and other confidential information;
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diversion of management’s attention;
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damage to our brand and reputation;
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our operations being suspended for some length of time; and
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an adverse effect on our business, financial condition and results of operations.
In addition, we could be required to devote significant resources to investigate and address a security breach. Defending against claims or litigation based on any security breach or incident, regardless of its merit, will be costly and may cause reputation harm. Further, under certain regulatory schemes, such as the California Consumer Privacy Act (the “CCPA”), we may be liable for statutory damages on a per breached record basis, irrespective of any actual damages or harm to the individual. The successful assertion of one or more large claims against us that exceed available insurance coverage, denial of coverage as to any specific claim or any change or cessation in our insurance policies and coverages, including premium increases or the imposition of large deductible requirements, could adversely affect our business, financial condition and results of operations. We expect to continue to expend significant resources to protect against security breaches and other data security incidents. The risk that these types of events could seriously harm our business is likely to increase as we expand our solutions and operate in more geographic regions.
We are subject to privacy and data protection laws and regulations as well as contractual privacy and data protection obligations. Our failure to comply with these or any future laws, regulations or obligations could subject us to sanctions and damages and could harm our reputation, business, financial condition and results of operations.
We are subject to a variety of laws and regulations, including regulation by various federal government agencies, including the Federal Trade Commission (“FTC”), the Federal Communications Commission and state and local agencies, as well as data privacy and security laws in jurisdictions outside of the United States. We collect personal information, payment card information and other confidential information from our employees, our current and prospective customers and their users. The U.S. federal and various state and foreign governments have adopted or proposed limitations on, or requirements regarding, the collection, distribution, use, security and storage of personal information, payment card information or other confidential information of individuals and the FTC and many state attorneys general are applying federal and state consumer protection laws to impose standards on the online collection, use and dissemination of data. Self-regulatory obligations, other industry standards, policies and other legal obligations may apply to our collection, distribution, use, security or storage of personal information, payment card information or other confidential information relating to individuals. These obligations may be interpreted and applied inconsistently from one jurisdiction to another and may conflict with one another, other regulatory requirements or our internal practices. Any failure or perceived failure by us to comply with United States, European Union or other foreign privacy or security laws, policies, industry standards or legal obligations or any security incident resulting in the unauthorized access to, or acquisition, release or transfer of, personal information, payment card information or other confidential information relating to our customers, employees and others may result in governmental enforcement actions, litigation, fines and penalties or adverse publicity and could cause our customers to lose trust in us, which could have an adverse effect on our reputation, business, financial condition and results of operations.
We expect there will continue to be newly enacted and proposed laws and regulations as well as emerging industry standards concerning privacy, data protection and information security in the United States, the European Union and other jurisdictions, and we cannot yet determine the impact such future laws, regulations and standards may have on our business. Such laws, regulations, standards and other obligations could impair our ability to, or the manner in which we, collect or use information to target advertising to our customers, thereby having a negative impact on our ability to maintain and grow our customer base and increase revenue. For example, California recently enacted the CCPA that, among other things, requires covered companies such as ours to provide new disclosures to California consumers and affords such consumers new rights, including the right to access and delete their information and to opt-out of certain sharing and sales of personal information or opt into certain financial incentive programs. The law also prohibits covered businesses from discriminating against consumers (e.g., charging more for services) for exercising any of their CCPA rights. The CCPA took effect on January 1, 2020 and enforcement of the CCPA by the California Attorney General began on July 1, 2020. The CCPA imposes a severe statutory damages framework as well as a private right of action for certain data breaches that result in the loss of personal information. This private right of action is expected to increase the likelihood of, and risks associated with, data breach litigation. It remains unclear how various provisions of the CCPA will be interpreted
and enforced. The CCPA has been amended on multiple occasions and is the subject of regulations of the California Attorney General finalized on August 14, 2020. Additionally, the California Secretary of State recently certified a new privacy law, the California Privacy Rights Act (the “CPRA”), which California voters approved on November 4, 2020. This initiative significantly modifies the CCPA, potentially resulting in further uncertainty and requiring us to incur additional costs and expenses in an effort to comply. The CCPA and CPRA may lead other states to pass comparable legislation, with potentially greater penalties and more rigorous compliance requirements relevant to our business. The effects of the CCPA, and other similar state or federal laws, are potentially significant and may require us to modify our data processing practices and policies and to incur substantial costs and potential liability in an effort to comply with such legislation. Future restrictions on the collection, use, sharing or disclosure of our customers’ data or additional requirements for express or implied consent of customers for the collection, use, disclosure, sharing or other processing of such information could increase our operating expenses, require us to modify our solutions, possibly in a material manner, or stop offering certain solutions, and could limit our ability to develop and implement new solutions.
In addition, several foreign countries and governmental bodies, including the European Union and Canada, have laws and regulations concerning the collection and use of their residents’ personal information and payment card information, which are often more restrictive than those in the United States. Laws and regulations in these jurisdictions apply broadly to the collection, use, storage, disclosure and security of personal information and payment card information identifying, or which may be used to identify, an individual, such as names, email addresses and, in some jurisdictions, Internet Protocol (IP) addresses, device identifiers and other data. Although we are working to comply with those laws and regulations applicable to us, these and other obligations may be modified and interpreted in different ways by courts, and new laws and regulations may be enacted in the future. We are subject to the E.U. General Data Protection Regulation 2016/679 (the “GDPR”), and following the United Kingdom’s exit from the European Union, from January 1, 2021, we are also subject to the United Kingdom GDPR (the “U.K. GDPR”), which, together with the amended U.K. Data Protection Act of 2018 (the “U.K. Data Protection Act”), retains the GDPR in U.K. national law. The U.K. GDPR mirrors the fines under the GDPR. It remains unclear how the U.K. GDPR, the U.K. Data Protection Act and other U.K. data protection laws or regulations will develop in the medium to longer term and how data transfers to and from the United Kingdom will be regulated after the expiration of the grace period to seek an adequacy ruling later this year. In addition, some countries are considering or have enacted legislation requiring local storage and processing of data that could increase the cost and complexity of delivering our solutions. Any new laws, regulations, other legal obligations or industry standards or any changed interpretation of existing laws, regulations or other standards may require us to incur additional costs and restrict our business operations.
The regulatory environment applicable to the handling of European Economic Area (“EEA”) and United Kingdom individuals’ personal data, and our actions taken in response, may cause us to face a risk of enforcement actions by data protection authorities in the EEA and the United Kingdom, assume additional liabilities or incur additional costs and could result in our business, financial condition and results of operations being harmed. In particular, with regard to transfers to the United States of personal data (as such term is used in the GDPR) of our European employees and our European and United Kingdom customers and their users, we historically relied upon the U.S.-E.U. Privacy Shield, as well as E.U. Model Clauses in certain circumstances. The U.S.-E.U. Privacy Shield was invalidated by the Court of Justice of the European Union in July 2020, and the E.U. Model Clauses have been subject to legal challenge and may be modified or invalidated. Draft guidance that has been issued by the European Data Protection Board casts doubt on the ability to transfer unencrypted data to the United States, however industry is lobbying for a risk-based approach. We are monitoring these developments, but depending on the outcome, we may be unsuccessful in maintaining a legitimate means for our transfer and receipt of personal data from the EEA and United Kingdom in the United States and any other countries that are not considered adequate by the European Union or the United Kingdom. We may, in addition to other impacts, experience additional costs associated with increased compliance burdens and be required to engage in new contract negotiations with third parties that aid in processing data on our behalf or localize certain data. We may experience reluctance or refusal by current or prospective European customers to use our solutions, and we may find it necessary or desirable to make further changes to our handling of personal data of EEA and United Kingdom residents.
We are also subject to evolving privacy laws on tracking technologies, including cookies and e-marketing. For example, in the European Union and the United Kingdom, regulators are increasingly focusing on compliance with requirements in the online behavioral advertising ecosystem, and current national laws that implement the ePrivacy Directive are highly likely to be replaced by an E.U. regulation known as the ePrivacy Regulation which will significantly increase fines for non-compliance. Recent guidance and case law in the European Union and the United Kingdom require opt-in consent for the placement of a cookie or similar tracking technologies on a customer’s device and for direct electronic marketing. Evolving privacy laws on cookies and e-marketing could lead to substantial costs, require significant systems changes, limit the effectiveness of our marketing activities, divert the attention of our technology personnel, adversely affect our margins, increase costs and subject us to additional liabilities. Regulation of cookies and similar technologies, and any decline of cookies or similar online tracking technologies as a means to identify and potentially target users, may lead to broader restrictions and impairments on our marketing and personalization activities and may negatively impact our efforts to understand our customers.
If our privacy or data security measures fail to comply with current or future laws, regulations, policies, legal obligations or industry standards, or are perceived to have failed to so comply, we may be subject to litigation, regulatory investigations and related actions, significant fines (which, for certain breaches of the GDPR or U.K. GDPR, may be up to the greater of €20 million or 4% of total global annual turnover), civil claims including representative actions and other class action type litigation (potentially amounting to significant compensation or damages liabilities) or other liabilities, negative publicity and a potential loss of business. Moreover, if future laws, regulations, other legal obligations or industry standards, or any changed interpretations of the foregoing, limit our customers’ ability to use and share personal information, including payment card information, or our ability to store, process and share such personal information or other data, demand for our solutions could decrease, our costs could increase and our business, financial condition and results of operations could be harmed.
Activities of our customers or the content of their websites could damage our brand, subject us to liability and harm our business, financial condition and results of operations.
Our terms of service and acceptable use policy prohibit our customers from using our platform to engage in illegal or otherwise prohibited activities and our terms of service and acceptable use policy permit us to terminate a customer’s account if we become aware of such use. Customers may nonetheless use our platform to engage in prohibited or illegal activities, such as uploading content in violation of applicable laws, which could subject us to liability. Furthermore, our brand may be negatively impacted by the actions of customers that are deemed to be hostile, offensive, inappropriate or illegal. We do not proactively monitor or review the appropriateness of our customers’ websites and we do not have control over customer activities or the activities in which their users engage. The safeguards we have in place may not be sufficient for us to avoid liability or avoid harm to our brand, especially if such hostile, offensive, inappropriate or illegal use is high profile, which could adversely affect our business, financial condition and results of operations. Customers using the platform may also operate businesses in regulated industries, which are subject to additional scrutiny, increasing the potential liability we could incur.
We are subject to export controls and economic sanctions laws that could impair our ability to compete in international markets and subject us to liability if we are not in full compliance with applicable laws.
Our business activities are subject to various restrictions under U.S. export controls and trade and economic sanctions laws, including the U.S. Commerce Department’s Export Administration Regulations and economic and trade sanctions regulations maintained by the U.S. Treasury Department’s Office of Foreign Assets Control (“OFAC”). If we fail to comply with these laws and regulations, we could be subject to civil or criminal penalties and reputational harm. U.S. export control laws and economic sanctions laws also prohibit certain transactions with U.S. embargoed or sanctioned countries, governments, persons and entities.
Even though we take precautions to prevent transactions with U.S. sanctions targets, there is risk that in the future we could provide our solutions to such targets despite such precautions. This could result in negative consequences to us, including government investigations, penalties and reputational harm. Changes in the list of embargoed countries and regions or prohibited persons may require us to modify these procedures in order to comply with governmental regulations.
Changes in our solutions, changes in export and import regulations or changes in the global environment may create delays in the introduction and sale of our solutions in international markets or, in some cases, prevent the sale of our solutions to certain countries, governments or persons altogether. Any change in export or import regulations, shift in the enforcement or scope of existing regulations or change in the countries, governments, persons or technologies targeted by such regulations, could result in decreased use of our platform or decreased ability to sell our solutions to existing or potential customers. Any decreased use of our solutions or limitation on our ability to sell our solutions internationally could adversely affect our growth prospects.
If we are found to be in violation of the export controls laws and regulations or economic sanctions laws and regulations, penalties may be imposed against us and our employees, including loss of export privileges and monetary penalties, which could have an adverse effect on our business, financial condition and results of operations.
Due to the global nature of our business, we could be adversely affected by violations of anti-bribery and anti-corruption laws.
The global nature of our business creates various domestic and local regulatory challenges. The U.S. Foreign Corrupt Practices Act of 1977, as amended (“FCPA”), the U.K. Bribery Act 2010 ( “U.K. Bribery Act”), the U.S. Travel Act of 1961 and similar anti-bribery and anti-corruption laws in other jurisdictions generally prohibit companies and their intermediaries from making improper payments to foreign government officials and other persons for the corrupt purpose of obtaining or retaining business, directing business to any person or securing any advantage. In addition, companies are required to maintain records accurately and fairly representing their transactions and having an adequate system of internal accounting controls. We face significant risks if we fail to comply with the FCPA and other anti-corruption and anti-bribery laws prohibiting companies and their employees and third-party intermediaries from authorizing, offering or providing, directly or indirectly, improper payments or benefits to foreign government officials, political parties and private-sector recipients for an illegal purpose.
We sell our solutions to customers around the world, including some in areas of the world that experience corruption by government officials to some degree and, in certain circumstances, compliance with anti-bribery laws may conflict with local customs and practices. In addition, changes in laws could result in increased regulatory requirements and compliance costs which could adversely affect our business, financial condition and results of operations. While we are committed to complying, and training our employees to comply, with all applicable anti-bribery and anti-corruption laws, we cannot assure our employees or other agents will not engage in prohibited conduct and render us responsible under the FCPA, the U.K. Bribery Act or other anti-bribery and anti-corruption laws.
If we are found to be in violation of the FCPA, the U.K. Bribery Act or other anti-bribery and anti-corruption laws (either due to acts or inadvertence of our employees, or due to the acts or inadvertence of others), we could suffer criminal or civil penalties or other sanctions, which could have an adverse effect on our business, financial condition and results of operations. Any violation of the FCPA or other applicable anti-corruption or anti-bribery laws could result in whistleblower complaints, adverse media coverage, investigations, loss of export privileges, severe criminal or civil sanctions and, in the case of the FCPA, suspension or debarment from U.S. government contracts, which could have an adverse effect on our reputation, business, financial condition and results of operations. In addition, responding to any enforcement action may result in a significant diversion of management’s attention and resources and significant defense costs and other professional fees.
Our business could be affected by new and evolving governmental regulations regarding the internet.
To date, laws, regulations and enforcement actions by governments have not materially restricted use of the internet in most parts of the world. However, the legal and regulatory environment relating to the internet is uncertain, and governments may impose regulation in the future. New laws may be passed, courts may issue decisions affecting the internet, existing but previously inapplicable or unenforced laws may be deemed to apply to the internet or regulatory agencies may begin to more rigorously enforce such formerly unenforced laws, or existing legal safe harbors may be narrowed, both by U.S. federal or state governments and by governments of foreign jurisdictions. The adoption of any new laws or regulations, or the narrowing
of any safe harbors, could hinder growth in the use of the internet and online services generally, and decrease acceptance of the internet and online services as a means of communications, e-commerce and advertising. In addition, such changes in laws could increase our costs of doing business or prevent us from delivering our solutions over the internet or in specific jurisdictions, which could harm our business, financial condition and results of operations. For example, we rely on a variety of statutory and common-law frameworks and defenses relevant to the content available on our platform, including the Digital Millennium Copyright Act (the “DMCA”), the Communications Decency Act (the “CDA”), the fair-use doctrine in the United States and the Electronic Commerce Directive in the European Union. The DMCA limits, but does not necessarily eliminate, our potential liability for caching, hosting, listing or linking to third-party content that may include materials that infringe copyrights or other rights. The CDA further limits our potential liability for content uploaded onto our platform by third parties. Defenses such as the fair-use doctrine (and related doctrines in other countries) may be available to limit our potential liability for featuring third-party intellectual property content for purposes such as reporting, commentary and parody. In the European Union, the Electronic Commerce Directive offers certain limitations on our potential liability for featuring third-party content. However, each of these statutes and doctrines is subject to uncertain or evolving judicial interpretation and regulatory and legislative amendments, and we cannot guarantee that such frameworks and defenses will be available for our protection. Regulators in the United States and in other countries may introduce new regulatory regimes that increase potential liability for content available on our platform, including liability for misleading or manipulative information, hate speech, privacy violations, copyrighted content and other types of online harm. For example, there have been various Congressional efforts to restrict the scope of the protections available to online platforms under Section 230 of the CDA, and current protections from liability for third-party content in the United States could decrease or change. There are also a number of legislative proposals in the United States, at both the federal and state level, and in the European Union and the United Kingdom, that could impose new obligations in areas affecting our business, such as liability for copyright infringement and other online harm. Any new legislation may be difficult to comply with in a timely and comprehensive manner and may expose our business or customers to increased costs. If the rules, doctrines or currently available defenses change, if international jurisdictions refuse to apply protections similar to those that are currently available in the United States or the European Union or if a court were to disagree with our application of those rules to our solutions, our potential liability for information or content created by third parties and posted to our platform could require us to expend significant resources to try to comply with the new rules and implement additional measures to reduce our exposure to such liability or we could incur liability and our business, financial condition and results of operations could be harmed.
Governmental and regulatory policies or claims concerning the domain registration system and the internet in general, and industry reactions to those policies or claims, may cause instability in the industry and disrupt our business.
The Internet Corporation for Assigned Names and Numbers (“ICANN”) is a multi-stakeholder, private sector, not-for-profit corporation formed in 1998 for the express purposes of overseeing a number of internet related tasks, including managing the Domain Name System’s (“DNS”) allocation of IP addresses, accreditation of domain name registrars and registries and the definition and coordination of policy development for all of these functions. ICANN has been subject to strict scrutiny by the public and governments around the world, as well as multi-governmental organizations such as the United Nations, with many of those bodies becoming increasingly interested in internet governance. Any instability in the domain name registration system may make it difficult for us to maintain our relationships with accredited domain name registrars and continue to offer our existing solutions and introduce new ones.
Natural catastrophic events and man-made problems such as power disruptions, computer viruses, global pandemics, data security breaches and terrorism may disrupt our business.
We rely heavily on our network infrastructure and IT systems for our business operations. An online attack (including illegal hacking, ransomware, phishing or criminal fraud or impersonation), earthquake, fire, flood, terrorist attack, power loss, global pandemic (such as the COVID-19 pandemic) or other future adverse public health developments, telecommunications failure or other similar catastrophic events could cause interruptions in the availability of our platform, delays in accessing our solutions, reputational harm and loss of critical data. Such events could prevent us from providing our solutions to our customers
and their users. A catastrophic event that results in the destruction or disruption of our data centers, network infrastructure or IT systems, including any errors, defects or failures in third-party services, could result in costly litigation or other claims and adversely affect our business, financial condition and results of operations.
Our level of indebtedness could have a material adverse effect on our ability to generate sufficient cash to fulfil our obligations under such indebtedness, to react to changes in our business and to incur additional indebtedness to fund future needs.
As of December 31, 2020, we have outstanding $543.4 million aggregate principal amount of borrowings under the Term Loan and $7.1 million aggregate principal amount of borrowings under the Revolving Credit Facility. If our cash flows and capital resources are insufficient to fund our debt service obligations, we may be forced to reduce or delay investments and capital expenditures or to sell assets, seek additional capital or restructure or refinance our indebtedness. Our ability to restructure or refinance our current or future debt will depend on the condition of the capital markets and our financial condition at such time. Any refinancing of our debt could be at higher interest rates and may require us to comply with more onerous covenants, which could further restrict our business operations. The terms of existing or future debt instruments may restrict us from adopting some of these alternatives. We cannot assure you that our business will be able to generate sufficient levels of cash or that future borrowings or other financings will be available to us in an amount sufficient to enable us to service our indebtedness and fund our other liquidity needs. In addition, our indebtedness under the Credit Agreement (as defined below) bears interest at variable rates. Because we have variable rate debt, fluctuations in interest rates may affect our business, financial condition and results of operations.
Our Credit Agreement contains financial covenants and other restrictions on our actions that may limit our operational flexibility or otherwise adversely affect our business, financial condition and results of operations.
The terms of our Credit Agreement include a number of covenants that limit our ability to (subject to negotiated exceptions), among other things, incur additional indebtedness or issue preferred stock, incur liens on assets, enter into agreements related to mergers and acquisitions, dispose of assets or pay dividends and make distributions. The terms of our Credit Agreement may restrict our current and future operations and could adversely affect our ability to finance our future operations or capital needs. In addition, complying with these covenants may make it more difficult for us to successfully execute our business strategy and compete against companies which are not subject to such restrictions.
A failure by us to comply with the covenants specified in the Credit Agreement could result in an event of default under the agreement, which would give the lenders the right to terminate their commitments to provide additional loans under our Revolving Credit Facility and to declare all borrowings outstanding, together with accrued and unpaid interest and fees, to be immediately due and payable. If the debt under the Credit Agreement were to be accelerated, we may not have sufficient cash or be able to borrow sufficient funds to refinance the debt or sell sufficient assets to repay the debt, which could adversely affect our business, financial condition and results of operations.
Because we generally recognize revenue from monthly and annual subscriptions over the term of an agreement, downturns or upturns in sales are not immediately reflected in our full results of operations.
We offer annual and monthly subscriptions and generally recognize revenue over the term of our customers’ contracts in accordance with GAAP. Accordingly, increases in annual subscriptions during a particular period do not translate into immediate, proportional increases in revenue during such period, and a substantial portion of the revenue we recognize during a quarter is derived from deferred revenue from annual subscriptions purchased during previous quarters. Conversely, a decline in new or renewed annual subscriptions in any one quarter may not significantly reduce revenue for that quarter but could negatively affect revenue in future quarters. Accordingly, the effect of significant downturns in new or renewed sales of our solutions may not be fully reflected in our results of operations until future periods.
Our business is susceptible to risks associated with international sales and the use of our platform in various countries as well as our ability to localize our platform in such countries.
As of December 31, 2020 we had customers in approximately 180 countries and expect to continue to expand our international operations in the future. However, international sales and the use of our platform in various countries subject us to risks that we do not generally face with respect to domestic sales. These risks include, but are not limited to:
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greater difficulty in enforcing contracts, including our terms of service and other agreements;
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lack of familiarity and burdens and complexity involved with complying with multiple, conflicting and changing foreign laws, standards, regulatory requirements, tariffs, export controls and other barriers;
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data privacy laws, which may require that customer and user data be stored and processed in a designated territory;
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differing technology standards and different strategic priorities for customers in various jurisdictions;
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weaker protection for intellectual property in certain jurisdictions;
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potentially adverse tax consequences, including the complexities of foreign value-added tax (or other tax) systems and restrictions on the repatriation of earnings;
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uncertain political and economic climates and increased exposure to global political, economic and social risks that may impact our operations or our customers’ operations and/or decrease consumer spending, including the impact of global health emergencies;
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difficulties in ensuring compliance with government regulations of e-commerce and other services, which could lead to lower adoption rates;
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potentially restrictive actions by foreign governments or regulators, including actions that prevent or limit access to our platform, solutions, apps or website;
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uncertainties and instability in European and global markets and increased regulatory costs and challenges and other adverse effects caused by the United Kingdom’s withdrawal from the European Union;
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lower levels of credit card usage and increased payment risks;
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currency exchange rates;
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reduced or uncertain protection for intellectual property rights and free speech in some countries;
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new and different sources of competition; and
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restricted access to and/or lower levels of use of the internet.
These factors may cause international costs of doing business to exceed comparable domestic costs and may also require significant management attention and financial resources. Any negative impact from our international business efforts could adversely affect our business, financial condition and results of operations.
Unanticipated changes in effective tax rates or adverse outcomes resulting from examination of our income or other tax returns could adversely affect our business, financial condition and results of operations.
With sales in various countries, we are subject to taxation in several jurisdictions around the world with increasingly complex tax laws, the application of which can be uncertain. The amount of taxes paid in these jurisdictions could increase substantially as a result of changes in the applicable tax principles, including increased tax rates, new tax laws or revised interpretations of existing tax laws and precedents, which could have an adverse impact on our liquidity and results of operations.
Our future effective tax rates could be subject to volatility or adversely affected by a number of factors, including:
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changes in the valuation of deferred tax assets and liabilities;
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expected timing and amount of the release of any tax valuation allowances;
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tax effects of stock-based compensation;
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expiration of, or unfavorable changes to, research and development tax credit laws;
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costs related to intercompany restructurings;
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changes in tax laws, regulations or interpretations thereof; or
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future earnings being lower than anticipated in countries that have lower statutory tax rates and higher than anticipated earnings in countries that have higher statutory tax rates.
Our corporate structure and associated transfer pricing policies consider the functions, risks and assets of the various entities involved in the intercompany transactions. If two or more affiliated companies are located in different countries, the tax laws or regulations of each country generally will require that transfer prices be the same as those between unrelated companies dealing at arm’s length. If tax authorities in any of these countries were to successfully challenge our transfer prices as not reflecting arm’s length transactions, they could require us to adjust our transfer prices and thereby reallocate income to reflect these revised transfer prices, which could result in a higher tax liability. Our financial statements could fail to reflect adequate reserves to cover such a contingency.
In addition, the authorities in several jurisdictions could review our tax returns and impose additional tax, interest and penalties, which could have an impact on us and our business, financial condition and results of operations.
We may be subject to additional obligations to collect and remit sales tax and other taxes. We may be subject to tax liability for past sales, which could harm our business, financial condition and results of operations.
State, local and foreign jurisdictions have differing rules and regulations governing sales, use, value added and other taxes, and these rules and regulations are subject to varying interpretations that may change over time. In particular, the applicability of such taxes to our platform in various jurisdictions is unclear. These jurisdictions’ rules regarding tax nexus are complex and vary significantly. Significant judgment is required on an ongoing basis to evaluate applicable tax obligations, and as a result, amounts recorded are estimates and are subject to adjustments. In many cases, the ultimate tax determination is uncertain because it is not clear how new and existing statutes might apply to our business.
One or more states, localities, the federal government or other countries may seek to impose additional reporting, record-keeping or indirect tax collection and remittance obligations on businesses like ours. An increasing number of jurisdictions have enacted laws or are considering enacting laws requiring e-commerce platforms to report user activity or collect and remit taxes on certain sales through a marketplace. Imposition of an information reporting, record-keeping or tax collection requirement could require us to incur substantial costs in order to comply, including costs associated with tax calculation, collection and remittance, which could adversely affect our business and results of operations. In some cases we also may not have sufficient notice to enable us to build systems and adopt processes to properly comply with new reporting, record-keeping or collection obligations by the effective date.
As a result, we could face tax assessments and audits. Our liability for these taxes and associated penalties could exceed our historical tax accruals. Jurisdictions in which we have not historically collected or accrued sales, use, value added or other taxes could assert our liability for such taxes. A successful assertion that we should be collecting additional taxes in jurisdictions where we have not historically done so could result in substantial tax liabilities for past sales. Further, even where we are collecting and remitting taxes to the appropriate authorities, we may fail to accurately calculate, collect, report and remit such taxes. Any of these events could result in substantial tax liabilities and related penalties for past sales. It could also discourage customers from using our platform or otherwise harm our business, financial condition and results of operations.
Exchange rate fluctuations may negatively affect our business, financial condition and results of operations.
Our business, financial condition and results of operations are affected by fluctuations due to changes in foreign currency exchange rates. While we generate the majority of our revenue in U.S. dollars, a portion
of our revenue is denominated in Euros. For the year ended December 31, 2020, 69.2% of our revenue was denominated in U.S. dollars and 30.8% of our revenue was denominated in Euros. As we expand globally, we will be further exposed to fluctuations in currency exchange rates to the extent that the revenue that we generate in currencies other than the U.S. dollar increases. Furthermore, currency exchange rates have been especially volatile in the recent past, and these currency fluctuations may make it difficult for us to predict our results of operations.
Risks Related to Being a Public Company
As a public company, we will be obligated to maintain an effective system of disclosure controls and internal controls over financial reporting that is compliant with Section 404 of the Sarbanes-Oxley Act. Our current internal control systems and procedures may not prove to be adequate to support our rapid growth. Any failure of our internal systems, controls and procedures could have an adverse effect on our business, financial condition and results of operations.
Pursuant to Section 404 of the Sarbanes-Oxley Act (“Section 404”) and the related rules adopted by the SEC and the Public Company Accounting Oversight Board, our management will be required to report on the effectiveness of our disclosure controls and internal control over financial reporting starting with our second Annual Report on Form 10-K. Because we are not currently required to comply with Section 404, we are not currently required to make an assessment of the effectiveness of our internal controls, or to deliver a report that assesses the effectiveness of our internal control over financial reporting. We have not yet determined whether our existing internal controls over financial reporting are compliant with Section 404. This process will require the investment of substantial time and resources, including by our Chief Financial Officer and other members of our senior management. In addition, we cannot predict the outcome of this determination and whether we will need to implement remedial actions. Management’s assessment of our internal control systems and procedures may identify weaknesses and conditions that need to be addressed or other matters that may raise concerns for investors, including confidence in the accuracy and completeness of our financial reports. The determination and any remedial actions required could result in us incurring additional costs that we did not anticipate. In addition, we could become subject to investigations by the SEC or other regulatory authorities. Additionally, any actual or perceived weakness or condition that needs to be addressed in our internal control systems may have an adverse impact on our business, financial condition and results of operations.
Irrespective of compliance with Section 404, as we mature, we will need to further develop our internal control systems and procedures to keep pace with our rapid growth and we are currently working to improve our controls. Our current controls and any new controls that we develop may become inadequate because, among other reasons, they may not keep pace with our growth or the conditions in our business may change.
We have made, and will continue to make, changes to our financial management control systems and other areas to manage our obligations as a public company, including corporate governance, corporate controls, disclosure controls and procedures and financial reporting and accounting systems. During the year ended December 31, 2020, Tock identified material weaknesses in its internal control over financial reporting. We are implementing measures to integrate Tock and improve its control systems and procedures. However, these and other measures that we might take may not be sufficient to allow us to satisfy our obligations as a public company on a timely basis. If we fail to maintain effective systems, controls and procedures, including disclosure controls and internal controls over financial reporting, our ability to produce timely and accurate financial statements or comply with applicable regulations and prevent fraud could be adversely impacted. Moreover, we may have to disclose in periodic reports we file with the SEC material weaknesses in our system of internal controls. The existence of a material weakness would preclude management from concluding that our internal controls over financial reporting are effective, and would preclude our independent auditors from issuing an unqualified opinion that our internal controls over financial reporting are effective. We may also experience higher than anticipated operating expenses during and after the implementation of these changes.
If we are unable to implement any of the changes to our internal control over financial reporting effectively or efficiently or are required to do so earlier than anticipated, it could adversely affect our business, financial condition and results of operations. Additionally, we do not expect that our internal
control systems, even if timely and well established, will prevent all errors and all fraud. Internal control systems, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met.
We are an “emerging growth company” and we cannot be certain if the reduced disclosure requirements applicable to emerging growth companies will make our Class A common stock less attractive to investors.
We are an “emerging growth company” as defined in the JOBS Act. Under the JOBS Act, emerging growth companies also can delay adopting new or revised accounting standards until such time as those standards would otherwise apply to private companies. We currently intend to take advantage of this exemption. As a result, our financial statements may not be comparable to the financial statements of companies that comply with public company effective dates.
For as long as we continue to be an emerging growth company, we may also take advantage of other exemptions from certain reporting requirements that are applicable to other public companies, including not being required to comply with the auditor attestation requirements of Section 404, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, exemptions from the requirements of holding a non-binding advisory vote on executive compensation and any golden parachute arrangements, such as “say-on-pay,” “say-on-frequency” and “say-on-golden-parachutes,” and reduced financial reporting requirements. Although we cannot predict with any certainty, investors may find our Class A common stock less attractive because we will rely on these exemptions, which could result in a less active trading market for our Class A common stock, increased price fluctuation and a decrease in the trading price of our Class A common stock. Moreover, the information that we provide to our stockholder may be different than the information you might receive from other public reporting companies in which you hold equity interests.
We will remain an emerging growth company until the earliest of: (i) the last day of the first fiscal year in which our annual gross revenue is $1.07 billion or more; (ii) the last day of the fiscal year during which the fifth anniversary of this listing occurs; (iii) the date on which we have issued more than $1.0 billion in nonconvertible debt during the previous three years; or (iv) the date on which we are deemed to be a large accelerated filer under the rules of the SEC.
Our management team has limited experience managing a public company.
Most members of our management team have limited experience managing a publicly traded company, interacting with public company investors and complying with the increasingly complex laws pertaining to public companies. Our management team may not successfully or efficiently manage our transition to being a public company that is subject to significant regulatory oversight and reporting obligations under the federal securities laws and the continuous scrutiny of securities analysts and investors. These new obligations and constituents will require significant attention from our senior management and could divert their attention away from the day-to-day management of our business, which could harm our business, financial condition and results of operations.
The requirements of being a public company may strain our resources, divert management’s attention and affect our ability to attract and retain qualified board members.
As a public company, we will be subject to the reporting requirements of the Exchange Act, the Sarbanes-Oxley Act, the Dodd-Frank Wall Street Reform and Consumer Protection Act, the listing requirements of the NYSE on which our Class A common stock will be traded and other applicable securities rules and regulations. The SEC and other regulators have continued to adopt new rules and regulations and make additional changes to existing regulations that require our compliance. Stockholder activism, the current political environment and the current high level of government intervention and regulatory reform may lead to substantial new regulations and disclosure obligations, which may lead to additional compliance costs and impact, in ways we cannot currently anticipate, the manner in which we operate our business. We will need to institute a comprehensive compliance function and establish internal policies to ensure we have the ability to prepare on a timely basis financial statements that are fully compliant with all SEC reporting requirements and establish an investor relations function. Compliance with these rules and regulations may cause us to incur additional accounting, legal and other expenses that we did not incur as a private
company. Any failure by us to file our periodic reports with the SEC in a timely manner could harm our reputation and reduce the trading price of our Class A common stock. We also anticipate that we will incur costs associated with corporate governance requirements, including requirements under securities laws, as well as rules and regulations implemented by the SEC and the NYSE, particularly after we are no longer an “emerging growth company.” We expect these rules and regulations to increase our legal and financial compliance costs and to make some activities more time-consuming and costly, while also diverting some of management’s time and attention from revenue-generating activities. Furthermore, these rules and regulations could make it more difficult or more costly for us to obtain certain types of insurance, including director and officer liability insurance, and we may be forced to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage. The impact of these requirements could also make it more difficult for us to attract and retain qualified persons to serve on our board of directors, our board committees or as executive officers. These rules and regulations are often subject to varying interpretations, in many cases due to their lack of specificity, and, as a result, their application in practice may evolve over time as new guidance is provided by regulatory and governing bodies. This could result in continuing uncertainty regarding compliance matters and higher costs necessitated by ongoing revisions to disclosure and governance practices. In addition, if we fail to comply with these rules and regulations, we could be subject to a number of penalties, including the delisting of our Class A common stock, fines, sanctions or other regulatory action or civil litigation.
Risks Related to Ownership of our Class A Common Stock
Our listing differs significantly from a traditional underwritten initial public offering.
This is not a traditional underwritten initial public offering of our Class A common stock. This listing of our Class A common stock on the NYSE differs from a traditional underwritten initial public offering in several significant ways, which include, but are not limited to, the following:
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There is no firm commitment underwriting. Consequently, prior to the opening of trading on the NYSE, there will be no book building process and no price at which underwriters initially sell shares to the public to help inform efficient and sufficient price discovery with respect to the opening trades on the NYSE. Therefore, buy and sell orders submitted prior to and at the opening of trading of our Class A common stock on the NYSE will not have the benefit of being informed by a published price range or a price at which the underwriters initially sell shares to the public, as would be the case in a traditional underwritten initial public offering. Moreover, there will be no underwriters assuming risk in connection with the initial resale of shares of our Class A common stock. Unlike the case in a traditional underwritten offering, this registration statement does not provide for an over-allotment option of the underwriters to purchase additional shares from us. Moreover, we will not engage in, and have not and will not, directly or indirectly, request the financial advisors to engage in, any special selling efforts or stabilization or price support activities in connection with any sales made pursuant to this registration statement. In a traditional underwritten initial public offering, the underwriters may engage in “covered” short sales in an amount of shares representing the underwriters’ option to purchase additional shares. To close a covered short position, the underwriters purchase shares in the open market or exercise the underwriters’ option to purchase additional shares. In determining the source of shares to close the covered short position, the underwriters typically consider, among other things, the price of shares available for purchase in the open market as compared to the price at which they may purchase shares through the underwriters’ option to purchase additional shares. Purchases in the open market to cover short positions, as well as other purchases underwriters may undertake for their own accounts, may have the effect of preventing a decline in the trading price of shares of our Class A common stock. Given that there will be no underwriters’ option to purchase additional shares and no underwriters engaging in stabilizing transactions with respect to the trading of our Class A common stock on the NYSE, there could be greater volatility in the public price of our Class A common stock during the period immediately following the listing. See “— The public trading price of our Class A common stock may be volatile, and could, upon listing on the NYSE, decline significantly and rapidly” below.
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There is not a fixed or determined number of shares of our Class A common stock available for sale in connection with the registration and the listing. Therefore, there can be no assurance that any
Registered Stockholders or other existing stockholders will sell any of their shares of our Class A common stock and there may initially be a lack of supply of, or demand for, shares of our Class A common stock on the NYSE. Alternatively, we may have a large number of Registered Stockholders or other existing stockholders who choose to sell their shares of our Class A common stock in the near term, resulting in potential excess supply of our Class A common stock, which could adversely impact the public price of our Class A common stock once listed on the NYSE and thereafter.
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None of our Registered Stockholders or other existing stockholders have entered into contractual lock-up agreements or other restrictions on transfer. In a traditional underwritten initial public offering, it is customary for an issuer’s officers, directors and most or all of its other stockholders to enter into a contractual lock-up arrangement with the underwriters to help promote orderly trading immediately after such initial public offering. Consequently, any of our stockholders who own our Class A common stock or Class B common stock, including our directors and officers and other significant stockholders, may sell any or all of their shares of Class A common stock or Class B common stock at any time (subject to any restrictions under applicable law, and in the case of shares of Class B common stock, upon conversion of any shares of Class B common stock into Class A common stock at the time of sale), including immediately upon listing on the NYSE. If such sales were to occur in a significant volume in a short period of time following the listing, it may result in an oversupply of our Class A common stock in the market, which could adversely impact the trading price of our Class A common stock. See “— None of our stockholders are party to any contractual lock-up agreement or other contractual restrictions on transfer. Following our listing, sales of substantial amounts of our Class A common stock in the public markets, or the perception that sales might occur, could cause the trading price of our Class A common stock to decline.”
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We will not conduct a traditional “roadshow” with underwriters prior to the opening of trading of our Class A common stock on the NYSE. Instead, we intend to host one investor day and engage in additional investor education meetings. In advance of the investor day, we will announce the date for such day over financial news outlets in a manner consistent with typical corporate outreach to investors. We intend to prepare an electronic presentation for this investor day, which will have content similar to a traditional roadshow presentation, and to make a version of the presentation publicly available, without restrictions, on our website. There can be no guarantee that the investor day and other investor education meetings will have the same impact on investor education as a traditional “roadshow” conducted in connection with a traditional underwritten initial public offering. As a result, there may not be efficient or sufficient price discovery with respect to our Class A common stock or sufficient demand among potential investors immediately after our listing, which could result in a more volatile public trading price of our Class A common stock.
Such differences from a traditional underwritten initial public offering could result in a volatile trading price for our Class A common stock and uncertain trading volume, which may adversely affect your ability to sell any shares of our Class A common stock that you may purchase.
The public trading price of our Class A common stock may be volatile, and could, upon listing on the NYSE, decline significantly and rapidly.
The listing of our Class A common stock and the registration of the Registered Stockholders’ shares of Class A common stock is a process that is not a traditional underwritten initial public offering. We engaged Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC, Barclays Capital Inc., RBC Capital Markets, LLC, Citigroup Global Markets Inc., BofA Securities, Inc., William Blair & Company, L.L.C., Raymond James & Associates, Inc., JMP Securities LLC, KeyBanc Capital Markets Inc., Piper Sandler & Co., Mizuho Securities USA LLC, Fifth Third Securities, Inc. and Citizens Capital Markets, Inc. as our financial advisors. There will be no book building process and no price at which underwriters initially sell shares to the public to help inform efficient and sufficient price discovery with respect to the opening trades on the NYSE.
As there has not been a recent sustained history of trading in our Class A common stock in a private placement market prior to listing, NYSE listing rules require that a designated market maker (“DMM”) consult with a financial advisor in order to effect a fair and orderly opening of trading of our Class A common stock without coordination with us, consistent with the applicable securities laws in connection with our direct listing on the NYSE. Accordingly, Goldman Sachs & Co. LLC and J.P. Morgan Securities LLC
will be available to consult with the DMM who will be setting the opening public trading price of our Class A common stock on the NYSE. In addition, the DMM may also consult with our other financial advisors, also without coordination with us, in connection with our direct listing. Pursuant to Rule 7.35A(g) of the NYSE Listed Company Manual, and based upon information known to them at the time, Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC and our other financial advisors are expected to provide input to the DMM regarding their understanding of the ownership of our outstanding Class A common stock and pre-listing selling and buying interest in our Class A common stock that they become aware of from potential investors and holders of our Class A common stock, including after consultation with certain investors (which may include certain of the Registered Stockholders). Such investor consultation by the financial advisors would not involve any coordination with or outreach on behalf of the Company. The financial advisors will not engage in a book building process as would typically be undertaken by underwriters in a registered initial public offering. Instead, the input that the financial advisors provide to the DMM will be based on information that they become aware of from potential investors and holders of our Class A common stock (which may include certain of the Registered Stockholders) in connection with investor education regarding the process and mechanics of the direct listing, the receipt of buy and sell orders and other customary brokerage activities undertaken without coordination with us. The DMM, in consultation with Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC and our other financial advisors, is also expected to consider the information in “Sale Price History of our Class A Common Stock.” Based on information provided to the NYSE, the opening public trading price of our Class A common stock on the NYSE will be determined by buy and sell orders collected by the NYSE from broker-dealers, and the NYSE is where buy orders can be matched with sell orders at a single price. Based on such orders, the DMM will determine an opening price for our Class A common stock pursuant to the NYSE rules. However, because our financial advisors will not have engaged in a book building process, they will not be able to provide input to the DMM that is based on or informed by that process. See the section titled “Plan of Distribution.”
Moreover, prior to the opening trade, there will not be a price at which underwriters initially sell shares of our Class A common stock to the public as there would be in a traditional underwritten initial public offering. The absence of a predetermined initial public offering price could impact the range of buy and sell orders collected by the NYSE from various broker-dealers. Consequently, upon listing on the NYSE, the public trading price of our Class A common stock may be more volatile than in a traditional underwritten initial public offering and could decline significantly and rapidly.
Further, because of our listing process, individual investors may have greater influence in setting the opening public trading price and subsequent public trading prices of our Class A common stock on the NYSE and may participate more in our initial and subsequent trading, leading to an increased amount of smaller orders at numerous prices, for example, than is typical for a traditional underwritten initial public offering with more institutional investor influence. These factors could result in more volatility in the public trading price of our Class A common stock and an unsustainable trading price if the price of our Class A common stock significantly rises upon listing and institutional investors believe our Class A common stock is worth less than retail investors, in which case the price of our Class A common stock may decline over time. Further, if the public trading price of our Class A common stock is above the level that investors determine is reasonable for our Class A common stock, some investors may attempt to short our Class A common stock after trading begins, which would create additional downward pressure on the public trading price of our Class A common stock. There will likely be more ability for such investors to short our Class A common stock in early trading than is typical for a traditional underwritten public offering given increased availability of our Class A common stock on the trading markets in part due to the lack of contractual lock-up agreements or other restrictions on transfer. To the extent that there is a lack of awareness among retail investors, such lack of awareness could reduce the value of our Class A common stock and cause volatility in the public trading price of our Class A common stock.
The public trading price of our Class A common stock following our direct listing is likely to be volatile and could be subject to wide fluctuations in response to many risk factors listed in this section, and others beyond our control, including:
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the number of shares of our Class A common stock made available for trading;
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sales or expectations with respect to sales of shares of our Class A common stock by holders of our Class A common stock;
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actual or anticipated fluctuations in our business, financial condition and results of operations;
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variance in our financial performance from expectations of securities analysts;
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changes in our revenue;
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announcements by us or our competitors of significant business developments, acquisitions or new offerings;
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our involvement in any litigation;
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our sale of our Class A common stock or other securities in the future;
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changes in senior management or key personnel;
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the trading volume of our Class A common stock;
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changes in the anticipated future size and growth rate of our market; and
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general economic, regulatory and market conditions.
Recently, the stock markets have experienced extreme price and volume fluctuations that have affected and continue to affect the market prices of equity securities of many companies. These fluctuations have often been unrelated or disproportionate to the operating performance of those companies. Broad market and industry fluctuations, as well as general economic, political, regulatory and market conditions (including the impact of the ongoing COVID-19 pandemic and other future adverse public health developments), may negatively impact the market price of our Class A common stock. These fluctuations may be even more pronounced in the trading market for our Class A common stock shortly following the listing of our Class A common stock on the NYSE as a result of the supply and demand forces described above and could cause you to lose all or part of your investment in our Class A common stock since you might be unable to sell your shares at or above the price you paid. In the past, companies that have experienced volatility in the market price of their securities have been subject to securities class action litigation. We may be the target of this type of litigation in the future, which could result in substantial costs and divert our management’s attention.
The trading price of our Class A common stock, upon listing on the NYSE, may have little or no relationship to the historical sales prices of our Class A common stock in private transactions.
Prior to the listing of our Class A common stock on the NYSE, our shares have not been listed on any stock exchange or other public trading market and have an extremely limited history of private purchases. In the section titled “Sale Price History of our Class A Common Stock,” we have provided the historical sales prices of our capital stock in private transactions. However, this information may have little or no relation to broader market demand for our Class A common stock and thus the initial public trading price of our Class A common stock on the NYSE once trading begins. As a result, you should not place undue reliance on these historical sales prices as they may differ materially from the opening public trading prices and subsequent public trading prices of our Class A common stock on the NYSE. For more information about how the initial listing price on the NYSE will be determined, see “Plan of Distribution.”
An active, liquid and orderly market for our Class A common stock may not develop or be sustained. You may be unable to sell your shares of Class A common stock at or above the price you bought them for.
We currently expect our Class A common stock to be listed and traded on the NYSE. Prior to listing on the NYSE, there has been no public market for our Class A common stock. Moreover, consistent with Regulation M and other federal securities laws applicable to our listing, we have not consulted with Registered Stockholders or other existing stockholders regarding their desire or plans to sell shares in the public market following the listing or discussed with potential investors their intentions to buy our Class A common stock in the open market following the listing. While our Class A common stock may be sold after our listing on the NYSE by the Registered Stockholders pursuant to this prospectus or by our other existing stockholders in accordance with Rule 144 of the Securities Act, unlike a traditional underwritten initial public offering, there can be no assurance that any Registered Stockholders or other existing stockholders will sell any of their shares of Class A common stock and there may initially be a lack of supply of, or demand
for, our Class A common stock on the NYSE. Conversely, there can be no assurance that the Registered Stockholders and other existing stockholders will not sell all of their shares of Class A common stock, resulting in excess supply of our Class A common stock on the NYSE. In the case of a lack of supply of our Class A common stock, the trading price of our Class A common stock may rise to an unsustainable level. Further, institutional investors may be discouraged from purchasing our Class A common stock if they are unable to purchase a block of our Class A common stock in the open market in a sufficient size for their investment objectives due to a potential unwillingness of our existing stockholders to sell a sufficient amount of Class A common stock at the price offered by such institutional investors and the greater influence individual investors have in setting the trading price. If institutional investors are unable to purchase our Class A common stock in a sufficient amount for their investment objectives, the market for our Class A common stock may be more volatile without the influence of long-term institutional investors holding significant amounts of our Class A common stock. In the case of a lack of demand for our Class A common stock, the trading price of our Class A common stock could decline significantly and rapidly after our listing. Therefore, an active, liquid and orderly trading market for our Class A common stock may not initially develop or be sustained, which could significantly depress the trading price of our Class A common stock and/or result in significant volatility, which could affect your ability to sell your shares of Class A common stock.
None of our stockholders are party to any contractual lock-up agreement or other contractual restrictions on transfer. Following our listing, sales of substantial amounts of our Class A common stock in the public markets, or the perception that sales might occur, could cause the trading price of our Class A common stock to decline.
In addition to the supply and demand and volatility factors discussed above, sales of a substantial number of shares of our Class A common stock into the public market, particularly sales by our Founder, directors, executive officers and principal stockholders, or the perception that these sales might occur in large quantities, could cause the trading price of our Class A common stock to decline. None of our securityholders are subject to any contractual lock-up or other contractual restriction on the transfer or sale of their shares.
As of March 31, 2021, after giving effect to (i) the Capital Stock Conversions and (ii) the filing and effectiveness of our amended and restated certificate of incorporation and the adoption and effectiveness of our amended and restated bylaws, we had 73,754,765 shares of Class A common stock outstanding and 64,880,264 shares of Class B common stock outstanding, all of which are “restricted securities” (as defined in Rule 144 under the Securities Act). Approximately of these shares of Class A common stock may be immediately sold either by the Registered Stockholders pursuant to this prospectus or by our other existing stockholders under Rule 144 since such shares held by such other stockholders will have been beneficially owned by non-affiliates for at least one year. Moreover, once we have been a reporting company subject to the reporting requirements of Section 13 or Section 15(d) of the Exchange Act for 90 days and assuming the availability of certain public information about us, (i) non-affiliates who have beneficially owned our common stock for at least six months may rely on Rule 144 to sell their shares of common stock, and (ii) our directors, executive officers and other affiliates who have beneficially owned our common stock for at least six months, including certain of the shares of Class A common stock covered by this prospectus to the extent not sold hereunder, will be entitled to sell their shares of our Class A common stock subject to volume limitations under Rule 144.
In addition, following the effectiveness of the registration statement of which this prospectus forms a part, we intend to file a registration statement on Form S-8 under the Securities Act to register all shares subject to options and RSUs outstanding or reserved for future issuance under our equity compensation plans. As of March 31, 2021, we had options outstanding that, if fully exercised, would result in the issuance of shares of Class B common stock, and we had shares of Class A common stock subject to RSU awards granted after March 31, 2021. Accordingly, these shares will be able to be freely sold in the public market upon issuance, subject to applicable vesting requirements and compliance by affiliates with Rule 144.
Following the effectiveness of the registration statement of which this prospectus forms a part, the holders of up to 56,166,646 shares of our Class A common stock and 54,044,755 shares of our Class B common stock will have rights, subject to some conditions, to require us to file registration statements for
the public resale of the Class A common stock issuable upon conversion of such shares or to include such shares in registration statements that we may file for us or other stockholders. Any registration statement we file to register additional shares, whether as a result of registration rights or otherwise, could cause the trading price of our Class A common stock to decline or be volatile.
The multi-class structure of our common stock will have the effect of concentrating voting control with those stockholders who hold our Class B common stock, including our Founder and Chief Executive Officer. This will limit or preclude your ability to influence corporate matters, including the election of directors, amendments to our organizational documents and any merger, consolidation, sale of all or substantially all of our assets or other major corporate transactions requiring stockholder approval.
Our Class A common stock registered in this listing has one vote per share, our Class B common stock has ten votes per share and our Class C common stock has no voting rights. The multi-class structure of our common stock has the effect of concentrating voting control with our Class B common stockholders. As of , 2021, Mr. Casalena holds % of the voting power of our outstanding capital stock. For more information, see “Principal and Registered Stockholders.” As a result, Mr. Casalena will have control over most matters that require approval by our stockholders, including the election of directors and approval of significant corporate transactions. He may also have interests that differ from yours and may vote in a way with which you disagree and which may be adverse to your interests. Corporate action might be taken even if other stockholders, including those who purchase shares from any of the Registered Stockholders, oppose them. This concentration of ownership may have the effect of delaying, preventing or deterring a change of control or other liquidity event of our company, could deprive our stockholders of an opportunity to receive a premium for their shares of Class A common stock as part of a sale or other liquidity event and might ultimately affect the trading price of our Class A common stock. Future transfers by holders of Class B common stock will generally result in those shares converting to Class A common stock, which will have the effect, over time, of increasing the relative voting power of those holders of Class B common stock who retain their shares in the long term.
Pursuant to our amended and restated certificate of incorporation, we will be authorized to issue 1,000,000,000 shares of Class C common stock, none of which will be outstanding following the effectiveness of the registration statement of which this prospectus forms a part. Although we have no current plans to issue any shares of Class C common stock in the future, we may issue shares of Class C common stock for a variety of corporate purposes, including financings, acquisitions, investments, dividends and equity incentives to our employees, consultants and directors. Under our amended and restated certificate of incorporation, our board of directors will have the authority, without stockholder approval except as required by the listing standards of the NYSE, to issue additional shares of our capital stock. Because the Class C common stock carries no voting rights, is not convertible into any other capital stock and is not listed for trading on an exchange or registered for sale with the SEC, shares of Class C common stock may be less liquid and less attractive to any future recipients of these shares than shares of Class A common stock, although we may seek to list the Class C common stock for trading and register shares of Class C common stock for sale in the future. In addition, because our Class C common stock carries no voting rights and is not counted when determining whether the seven percent ownership threshold related to automatic conversion of the Class B common stock is met, if we issue shares of Class C common stock in the future, the holders of our Class B common stock, including our Founder and Chief Executive Officer, may be able to elect all of our directors and to determine the outcome of most matters submitted to a vote of our stockholders for a longer period of time than would be the case if we issued Class A common stock rather than Class C common stock in such transactions. In addition, if we issue shares of Class C common stock in the future, such issuances would have a dilutive effect on the economic interests of our Class A common stock and Class B common stock.
We cannot predict the impact our capital structure may have on our stock price.
We cannot predict whether our multi-class structure will result in a lower or more volatile market price of our Class A common stock, in adverse publicity or other adverse consequences. For example, certain index providers have announced restrictions on including companies with multiple-class share structures in certain of their indexes. S&P, Dow Jones and FTSE Russell have each announced changes to their eligibility criteria for inclusion of shares of public companies on certain indices, including the S&P 500. These
changes exclude companies with multiple classes of shares of common stock from being added to these indices. In addition, several stockholder advisory firms have announced their opposition to the use of multiple class structures. As a result, the multi-class structure of our capital stock may prevent the inclusion of our Class A common stock in these indices and may cause stockholder advisory firms to publish negative commentary about our corporate governance practices or otherwise seek to cause us to change our capital structure. Any such exclusion from indices could result in a less active trading market for our Class A common stock. Any actions or publications by stockholder advisory firms critical of our corporate governance practices or capital structure could also adversely affect the trading price of our Class A common stock.
The multi-class structure of our common stock additionally has the effect of concentrating voting control with our Class B common stockholders, including our Founder and Chief Executive Officer. This concentrated control could delay, defer, or prevent a change of control, merger, consolidation, takeover, or other business combination involving us that you, as a stockholder, may otherwise support, and could allow us to take actions that some of our stockholders do not view as beneficial, which could reduce the trading price of our Class A common stock. Furthermore, this concentrated control could also discourage a potential investor from acquiring our Class A common stock due to the limited voting power of such stock relative to the Class B common stock and might harm the trading price of our Class A common stock. Any issuance of Class C common stock could also cause the trading price of our Class A common stock to decline.
Our business, financial condition and results of operations may differ from any projections that we disclose or any information that may be attributed to us by third parties.
From time to time, we may provide guidance via public disclosures regarding our projected business, financial condition or results of operations. However, any such projections involve risks, assumptions and uncertainties, and our actual results could differ materially from such projections. Factors that could cause or contribute to such differences include, but are not limited to, those identified in these Risk Factors, some or all of which are not predictable or within our control. Other unknown or unpredictable factors also could adversely impact our performance, and we undertake no obligation to update or revise any projections, whether as a result of new information, future events or otherwise. In addition, various news sources, bloggers and other publishers often make statements regarding our historical or projected business or financial performance, and you should not rely on any such information even if it is attributed directly or indirectly to us.
We do not intend to pay dividends on our Class A common stock for the foreseeable future and, consequently, your ability to achieve a return on your investment will depend on appreciation in the price of our Class A common stock.
We do not currently anticipate paying dividends on our Class A common stock, Class B common stock or Class C common stock. Any declaration and payment of future dividends to holders of our Class A common stock, Class B common stock or Class C common stock will be at the discretion of our board of directors and will depend on many factors, including our financial condition, earnings, capital requirements, level of indebtedness, statutory and contractual restrictions applying to the payment of dividends, the provisions of Delaware law affecting the payment of dividends and distributions to stockholders and other considerations that our board of directors deems relevant. In addition, the terms of the Credit Agreement currently limit our ability to pay dividends and future agreements governing our indebtedness may similarly limit our ability to pay dividends. Consequently, your only opportunity to achieve a return on your investment in our company will be if the trading price of our Class A common stock appreciates and you sell your shares at a profit. There is no guarantee that the price of our Class A common stock that will prevail in the market will ever exceed the price that you paid.
If securities or industry analysts do not publish or cease publishing research or reports about us, our business or our market, or if they change their recommendations regarding our Class A common stock adversely, the trading price of our Class A common stock and trading volume could decline.
The trading market for our Class A common stock will be influenced by the research and reports that industry or securities analysts publish about us or our business. We do not control these analysts. If any of
the analysts who cover us downgrade our Class A common stock or our industry, or the stock of any of our competitors, or publish inaccurate or unfavorable research about our business, the price of our Class A common stock may decline. If analysts cease coverage of us or fail to regularly publish reports on us, we could lose visibility in the financial markets, which in turn could cause the price or trading volume of our Class A common stock to decline and our Class A common stock to be less liquid.
Additional issuances of our stock could result in significant dilution to our stockholders.
Additional issuances of our stock, exercise of options or vesting of RSUs will result in dilution to existing holders of our capital stock. The amount of dilution could be substantial depending upon the size of the issuance, exercise or vesting. As part of our business strategy, we may acquire or make investments in companies, products or technologies and issue equity securities to pay for any such acquisition or investment. Any such issuances of additional capital stock may cause stockholders to experience significant dilution of their ownership interests and the trading price of our Class A common stock to decline.
Anti-takeover provisions contained in our charter documents and Delaware law could prevent a takeover that stockholders consider favorable and could also reduce the trading price of our Class A common stock.
Our amended and restated certificate of incorporation and our amended and restated bylaws will contain provisions that could delay or prevent a change in control of our company. These provisions could also make it more difficult for stockholders to elect directors and take other corporate actions. These provisions include:
•
our multi-class common stock structure, which provides holders of our Class B common stock with the ability to significantly influence the outcome of matters requiring stockholder approval, even if they own significantly less than a majority of the shares of our outstanding common stock;
•
our stockholders will only be able to take action at a meeting of stockholders and not by written consent;
•
special meetings of our stockholders may be called only by a majority of our board of directors, the chairperson of our board of directors or our chief executive officer;
•
advance notice procedures apply for stockholders to nominate candidates for election as directors or to bring matters before an annual meeting of stockholders.
•
certain amendments to our amended and restated certificate of incorporation or our amended and restated bylaws will require the approval of at least 662∕3% of the then-outstanding voting power of our capital stock;
•
our amended and restated bylaws will provide that certain litigation against us can only be brought in Delaware; and
•
authorizing blank check preferred stock, which could be issued with voting, liquidation, dividend and other rights superior to our common stock.
These and other provisions in our amended and restated certificate of incorporation and our amended and restated bylaws and under Delaware law could discourage potential takeover attempts, reduce the price investors might be willing to pay in the future for shares of our Class A common stock and result in the trading price of our Class A common stock being lower than it would be without these provisions. For more information, see “Description of Capital Stock — Anti-Takeover Provisions.”
Our amended and restated certificate of incorporation will contain exclusive forum provisions for certain claims, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers or employees.
Our amended and restated certificate of incorporation, to the fullest extent permitted by law, will provide that, unless we consent in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware will be the sole and exclusive forum for (i) any derivative action or proceeding brought on behalf of us; (ii) any action asserting a claim of breach of a duty (including any fiduciary duty) owed by any of our current or former directors, officers, stockholders, employees or agents to us or our stockholders; (iii) any action asserting a claim against us or any of our current or former directors, officers,
stockholders, employees or agents arising out of or relating to any provision of the General Corporation Law of the State of Delaware (the “DGCL”) or our amended and restated certificate of incorporation or our amended and restated bylaws; or (iv) any action asserting a claim against us or any of our current or former directors, officers, stockholders, employees or agents governed by the internal affairs doctrine of the State of Delaware. As described below, this provision will not apply to suits brought to enforce any duty or liability created by the Securities Act or Exchange Act, or rules and regulations thereunder.
Section 22 of the Securities Act creates concurrent jurisdiction for federal and state courts over all claims brought to enforce any duty or liability created by the Securities Act or the rules and regulations thereunder and our amended and restated certificate of incorporation will provide that the federal district courts of the United States of America will, to the fullest extent permitted by law, be the sole and exclusive forum for resolving any complaint asserting a cause of action arising under the Securities Act. Our decision to adopt such a federal forum provision followed a decision by the Supreme Court of the State of Delaware holding that such provisions are facially valid under Delaware law. While there can be no assurance that federal or state courts will follow the holding of the Delaware Supreme Court or determine that our federal forum provision should be enforced in a particular case, application of our federal forum provision means that suits brought by our stockholders to enforce any duty or liability created by the Securities Act must be brought in federal court and cannot be brought in state court.
Section 27 of the Exchange Act creates exclusive federal jurisdiction over all claims brought to enforce any duty or liability created by the Exchange Act or the rules and regulations thereunder and our amended and restated certificate of incorporation will provide that the exclusive forum provision does not apply to suits brought to enforce any duty or liability created by the Exchange Act. Accordingly, actions by our stockholders to enforce any duty or liability created by the Exchange Act or the rules and regulations thereunder must be brought in federal court. Our stockholders will not be deemed to have waived our compliance with the federal securities laws and the regulations promulgated thereunder.
Any person or entity purchasing or otherwise acquiring or holding any interest in any of our securities shall be deemed to have notice of and consented to our exclusive forum provisions, including the federal forum provision, provided, however, that stockholders will not be deemed to have waived our compliance with the federal securities laws and the rules and regulations thereunder. Additionally, our stockholders cannot waive compliance with the federal securities laws and the rules and regulations thereunder. These provisions may limit our stockholders’ ability to bring a claim in a judicial forum they find favorable for disputes with us or our directors, officers or other employees, which may discourage lawsuits against us and our directors, officers and other employees and agents. Alternatively, if a court were to find the choice of forum provision contained in our amended and restated certificate of incorporation to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could harm our business, operating results and financial condition.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus contains forward-looking statements that reflect our current views with respect to, among other things, future events and our future business, financial condition and results of operations. These statements are often, but not always, made through the use of words or phrases such as “may,” “should,” “could,” “predict,” “potential,” “believe,” “will likely result,” “expect,” “continue,” “will,” “anticipate,” “seek,” “estimate,” “intend,” “plan,” “projection,” “would” and “outlook,” or the negative version of those words or phrases or other comparable words or phrases of a future or forward-looking nature. These forward-looking statements are not statements of historical fact, and are based on current expectations, estimates and projections about our industry as well as certain assumptions made by management, many of which, by their nature, are inherently uncertain and beyond our control. These forward-looking statements are subject to a number of known and unknown risks, uncertainties and assumptions, which you should consider and read carefully, including but not limited to:
•
our ability to attract and retain customers and expand our customers’ use of our platform;
•
our ability to anticipate market needs and develop new or enhanced solutions to meet those needs;
•
our ability to compete successfully in our industry against current and future competitors;
•
the impact of the COVID-19 pandemic and the associated economic uncertainty on us, our customers and their users;
•
our ability to manage growth and maintain demand for our solutions;
•
our ability to protect and promote our brand;
•
our ability to successfully identify, manage and integrate any existing and potential acquisitions;
•
our ability to hire, integrate and retain highly skilled personnel;
•
our ability to adapt to and comply with existing and emerging regulatory developments, technological changes and cybersecurity needs;
•
our ability to establish and maintain intellectual property rights;
•
our ability to manage expansion into international markets; and
•
the other risks and uncertainties described under “Risk Factors.”
This list of factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included in this prospectus. We operate in a very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for us to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties and assumptions, the future events and trends discussed in this prospectus, and our future levels of activity and performance, may not occur and actual results could differ materially and adversely from those described or implied in the forward-looking statements. As a result, you should not regard any of these forward-looking statements as a representation or warranty by us or any other person or place undue reliance on any such forward-looking statements. Any forward-looking statement speaks only as of the date on which it is made, and we do not undertake any obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future developments or otherwise, except as required by law.
In addition, statements that contain “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based on information available to us as of the date of this prospectus. While we believe that this information provides a reasonable basis for these statements, this information may be limited or incomplete. Our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all relevant information. These statements are inherently uncertain, and investors are cautioned not to unduly rely on these statements.
You should read this prospectus and the documents that we reference in this prospectus and have filed as exhibits to the registration statement of which this prospectus forms a part completely and with the understanding that our actual future results may be materially different from what we expect. We qualify all of our forward-looking statements by the cautionary statements contained in this section and elsewhere in this prospectus.
MARKET AND INDUSTRY DATA
This prospectus includes estimates regarding market and industry data. Unless otherwise indicated, information concerning our industry and the markets in which we operate, including our general expectations, market position, market opportunity and market size, are based on our management’s knowledge and experience in the markets in which we operate, together with currently available information obtained from various sources, including publicly available information, industry reports and publications, surveys, our customers, trade and business organizations and other contacts in the markets in which we operate. Certain information is based on management estimates, which have been derived from third-party sources, as well as data from our internal research.
In presenting this information, we have made certain assumptions that we believe to be reasonable based on such data and other similar sources and on our knowledge of, and our experience to date in, the markets in which we operate. While we believe the estimated market and industry data included in this prospectus is generally reliable, such information is inherently uncertain and imprecise. Market and industry data is subject to change and may be limited by the availability of raw data, the voluntary nature of the data gathering process and other limitations inherent in any statistical survey of such data. In addition, projections, assumptions and estimates of the future performance of the markets in which we operate are necessarily subject to uncertainty and risk due to a variety of factors, including those described in “Risk Factors” and “Cautionary Note Regarding Forward-Looking Statements.” These and other factors could cause results to differ materially from those expressed in the estimates made by third parties and by us. Accordingly, you are cautioned not to place undue reliance on such market and industry data or any other such estimates.
TRADEMARKS, SERVICE MARKS, COPYRIGHTS AND TRADENAMES
We own or otherwise have rights to the trademarks, service marks and copyrights, including those mentioned in this prospectus, used in conjunction with the operation of our business. This prospectus includes our own trademarks, which are protected under applicable intellectual property laws, as well as trademarks, service marks, copyrights and tradenames of other companies, which are the property of their respective owners. We do not intend our use or display of other companies’ trademarks, service marks, copyrights or tradenames to imply a relationship with, or endorsement or sponsorship of us by, any other companies. Solely for convenience, trademarks and tradenames referred to in this prospectus may appear without the ®, ™ or SM symbols, but such references are not intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights to these trademarks and tradenames.
USE OF PROCEEDS
Registered Stockholders may, or may not, elect to sell shares of our Class A common stock covered by this prospectus. To the extent any Registered Stockholder chooses to sell shares of our Class A common stock covered by this prospectus, we will not receive any proceeds from any such sales of our Class A common stock. See “Principal and Registered Stockholders.”
DIVIDEND POLICY
We do not currently anticipate paying dividends on our Class A common stock, Class B common stock or Class C common stock. Any declaration and payment of future dividends to holders of our Class A common stock, Class B common stock or Class C common stock will be at the discretion of our board of directors and will depend on many factors, including our financial condition, earnings, capital requirements, level of indebtedness, statutory and contractual restrictions applying to the payment of dividends, the provisions of Delaware law affecting the payment of dividends and distributions to stockholders and other considerations that our board of directors deems relevant. In addition, the terms of the Credit Agreement currently limit our ability to pay dividends and future agreements governing our indebtedness may similarly limit our ability to pay dividends. See “Risk Factors — Risks Relating to Ownership of our Class A Common Stock — We do not intend to pay dividends on our Class A common stock for the foreseeable future and, consequently, your ability to achieve a return on your investment will depend on appreciation in the price of our Class A common stock.”
CAPITALIZATION
The following table sets forth our cash and cash equivalents, investment in marketable securities and capitalization as of March 31, 2021 as follows:
•
on an actual basis; and
•
on a pro forma basis to give effect to (i) the Private Placement, (ii) the Acquisition and (iii) the Listing (as defined under “Unaudited Pro Forma Condensed Combined Financial Information”).
You should read this information in conjunction with our consolidated financial statements and the related notes included elsewhere in this prospectus and the “Selected Consolidated Financial and Operating Information” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections of this prospectus.
|
|
|
|
As of March 31, 2021
|
|
|
($ in thousands, except share numbers)
|
|
|
Actual
|
|
|
Pro Forma
|
|
|
Cash and cash equivalents
|
|
|
|
$
|
|
|
|
|
|
$
|
|
|
|
|
Investment in marketable securities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Debt:
|
|
|
|
$
|
|
|
|
|
|
$
|
|
|
|
|
Debt, current portion
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Debt, non-current portion
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total debt
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Series A-1 redeemable convertible preferred stock, par value $0.0001 per share; shares authorized, actual; no shares authorized, as adjusted; shares issued and outstanding, actual; and no shares issued and outstanding, as adjusted
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Series A-2 redeemable convertible preferred stock, par value $0.0001 per share; shares authorized, actual; no shares authorized, as adjusted; shares issued and outstanding, actual; and no shares issued and outstanding, as adjusted
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Series B redeemable convertible preferred stock, par value $0.0001 per share;
shares authorized, actual; no shares authorized, as adjusted; shares issued
and outstanding, actual; and no shares issued and outstanding, as adjusted
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders’ equity/(deficit):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Convertible preferred stock, par value $0.0001 per share; no shares authorized,
actual; shares authorized, as adjusted; no shares issued and outstanding,
actual; and no shares issued and outstanding, as adjusted
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Class A common stock, par value $0.0001 per share; shares authorized, actual; shares authorized, as adjusted; shares issued and outstanding, actual; and shares of Class A common stock issued and outstanding, as adjusted
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Class B common stock, par value $0.0001 per share; shares authorized, actual; shares authorized, as adjusted; shares issued and outstanding, actual; and shares of Class B common stock issued and outstanding, as adjusted
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Class C common stock, par value $0.0001 per share; shares authorized, actual; shares authorized, as adjusted; shares issued and outstanding, actual; and no shares of Class C common stock issued and outstanding, as adjusted
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional paid-in capital
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated other comprehensive income/(loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated deficit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total stockholders’ equity/(deficit)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total capitalization
|
|
|
|
$
|
|
|
|
|
|
$
|
|
|
|
SELECTED HISTORICAL CONSOLIDATED FINANCIAL AND OPERATING INFORMATION
The following table sets forth our selected historical consolidated financial information for the periods and dates indicated. We have derived the consolidated statements of operations information and consolidated statements of cash flows information for the years ended December 31, 2019 and 2020 and the consolidated balance sheet information as of December 31, 2019 and 2020 from our audited consolidated financial statements included elsewhere in this prospectus. We have derived the unaudited consolidated statement of operations information and consolidated statement of cash flows information for the year ended December 31, 2018 from our accounting records. Our historical results are not necessarily indicative of the results that may be expected in the future. You should read the following selected consolidated financial and other data together with the information under the sections titled “Use of Proceeds,” “Capitalization,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and our consolidated financial statements and related notes included elsewhere in this prospectus.
|
|
|
|
Year Ended December 31,
|
|
|
|
|
|
2018
|
|
|
2019
|
|
|
2020
|
|
|
($ in thousands, except share and per share data)
|
|
|
(Unaudited)
|
|
|
|
|
Consolidated Statements of Operations Information:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
|
|
$
|
389,863
|
|
|
|
|
$
|
484,751
|
|
|
|
|
$
|
621,149
|
|
|
|
Cost of revenue
|
|
|
|
|
70,176
|
|
|
|
|
|
81,910
|
|
|
|
|
|
98,337
|
|
|
|
Gross profit
|
|
|
|
|
319,687
|
|
|
|
|
|
402,841
|
|
|
|
|
|
522,812
|
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and product development(1)
|
|
|
|
|
75,916
|
|
|
|
|
|
107,645
|
|
|
|
|
|
167,906
|
|
|
|
Marketing and sales(1)
|
|
|
|
|
149,022
|
|
|
|
|
|
184,278
|
|
|
|
|
|
260,039
|
|
|
|
General and administrative(1)
|
|
|
|
|
39,993
|
|
|
|
|
|
49,578
|
|
|
|
|
|
54,647
|
|
|
|
Total operating expenses
|
|
|
|
|
264,931
|
|
|
|
|
|
341,501
|
|
|
|
|
|
482,592
|
|
|
|
Operating income
|
|
|
|
|
54,756
|
|
|
|
|
|
61,340
|
|
|
|
|
|
40,220
|
|
|
|
Interest expense
|
|
|
|
|
(173)
|
|
|
|
|
|
(1,080)
|
|
|
|
|
|
(10,043)
|
|
|
|
Other income/(loss), net
|
|
|
|
|
2,632
|
|
|
|
|
|
3,815
|
|
|
|
|
|
(7,678)
|
|
|
|
Income before (provision for)/benefit from income taxes
|
|
|
|
|
57,215
|
|
|
|
|
|
64,075
|
|
|
|
|
|
22,499
|
|
|
|
(Provision for)/benefit from income taxes
|
|
|
|
|
(14,092)
|
|
|
|
|
|
(5,923)
|
|
|
|
|
|
8,089
|
|
|
|
Net income
|
|
|
|
$
|
43,123
|
|
|
|
|
$
|
58,152
|
|
|
|
|
$
|
30,588
|
|
|
|
Net income/(loss) per share attributable to Class A and Class B common stockholders, basic and diluted(2)
|
|
|
|
$
|
0.27
|
|
|
|
|
$
|
(14.91)
|
|
|
|
|
$
|
(14.10)
|
|
|
|
Weighted-average shares used in computing net income/(loss) per
share attributable to Class A and Class B common
stockholders, basic and diluted(2)
|
|
|
|
|
20,943,219
|
|
|
|
|
|
17,354,458
|
|
|
|
|
|
17,917,236
|
|
|
|
($ in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated Statements of Cash Flows Information:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by operating activities
|
|
|
|
$
|
111,918
|
|
|
|
|
$
|
102,333
|
|
|
|
|
$
|
150,030
|
|
|
|
Net cash (used in) provided by investing activities
|
|
|
|
|
(56,262)
|
|
|
|
|
|
(75,323)
|
|
|
|
|
|
34,262
|
|
|
|
Net cash used in financing activities
|
|
|
|
|
(13,680)
|
|
|
|
|
|
(45,827)
|
|
|
|
|
|
(170,709)
|
|
|
|
|
|
|
As of December 31,
|
|
|
($ in thousands)
|
|
|
2019
|
|
|
2020
|
|
|
Consolidated Balance Sheet Information:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
|
$
|
43,649
|
|
|
|
|
$
|
57,891
|
|
|
|
Investment in marketable securities
|
|
|
|
|
76,784
|
|
|
|
|
|
37,462
|
|
|
|
Total assets
|
|
|
|
|
336,729
|
|
|
|
|
|
306,766
|
|
|
|
Total liabilities
|
|
|
|
|
587,275
|
|
|
|
|
|
839,582
|
|
|
|
Redeemable convertible preferred stock
|
|
|
|
|
126,546
|
|
|
|
|
|
131,390
|
|
|
|
Total stockholders’ equity/(deficit)
|
|
|
|
|
(377,092)
|
|
|
|
|
|
(664,206)
|
|
|
(1)
Includes stock-based compensation as follows:
|
|
|
|
Year Ended December 31,
|
|
|
|
|
|
2018
|
|
|
2019
|
|
|
2020
|
|
|
($ in thousands)
|
|
|
(Unaudited)
|
|
|
|
|
Cost of revenue
|
|
|
|
$
|
281
|
|
|
|
|
$
|
532
|
|
|
|
|
$
|
780
|
|
|
|
Research and product development
|
|
|
|
|
4,090
|
|
|
|
|
|
12,087
|
|
|
|
|
|
21,619
|
|
|
|
Marketing and sales
|
|
|
|
|
708
|
|
|
|
|
|
1,737
|
|
|
|
|
|
3,144
|
|
|
|
General and administrative
|
|
|
|
|
1,939
|
|
|
|
|
|
3,619
|
|
|
|
|
|
5,711
|
|
|
|
Total stock-based compensation
|
|
|
|
$
|
7,018
|
|
|
|
|
$
|
17,975
|
|
|
|
|
$
|
31,254
|
|
|
(2)
For the years ended December 31, 2019 and 2020, see Note 2 of the notes to our audited consolidated financial statements included elsewhere in this prospectus for an explanation of the calculations of our net income/(loss) per share, basic and diluted.
Key Performance Indicators and Non-GAAP Financial Measures
We review the following key performance indicators and non-GAAP financial measures to evaluate our business, measure our performance, identify trends affecting our business, formulate financial projections and make strategic decisions. Increases or decreases in our key performance indicators and non-GAAP financial measures may not correspond with increases or decreases in our revenue and our key performance indicators and non-GAAP financial measures may be calculated in a manner different than similar key performance indicators and non-GAAP financial measures, respectively, used by other companies. To the extent that our key performance indicators and non-GAAP financial measures relate to the year ended December 31, 2018, they are based on unaudited financials from our accounting records.
We believe that our financial statements and the other financial data included in this prospectus have been prepared in a manner that complies, in all material respects, with GAAP and the regulations published by the SEC. However, management believes evaluating our ongoing operating results may be enhanced if investors have additional key performance indicators and non-GAAP financial measures. Specifically, we present adjusted EBITDA and unlevered free cash flow in various places in this prospectus, each of which is a non-GAAP financial measure. Non-GAAP financial measures are presented for supplemental informational purposes only, should not be considered a substitute for financial information presented in accordance with GAAP, and may be different from similarly titled non-GAAP financial measures used by other companies. A reconciliation of each non-GAAP financial measure to the most directly comparable financial measure stated in accordance with GAAP is provided below. Investors are encouraged to review the related GAAP financial measures and the reconciliation of these non-GAAP financial measures to their most directly comparable GAAP financial measures.
The following table summarizes our key performance indicators and non-GAAP financial measures for each period presented below (unaudited).
|
|
|
|
Year Ended
December 31,
|
|
|
|
|
|
2018
|
|
|
2019
|
|
|
2020
|
|
|
Unique subscriptions (in thousands)(1)
|
|
|
|
|
2,336
|
|
|
|
|
|
2,984
|
|
|
|
|
|
3,656
|
|
|
|
Total bookings (in thousands)(2)
|
|
|
|
$
|
426,926
|
|
|
|
|
$
|
514,418
|
|
|
|
|
$
|
664,739
|
|
|
|
ARRR (in thousands)(3)
|
|
|
|
$
|
425,849
|
|
|
|
|
$
|
549,156
|
|
|
|
|
$
|
705,546
|
|
|
|
ARPUS(4)
|
|
|
|
$
|
178
|
|
|
|
|
$
|
182
|
|
|
|
|
$
|
187
|
|
|
|
Adjusted EBITDA (in thousands)(5)
|
|
|
|
$
|
74,505
|
|
|
|
|
$
|
97,624
|
|
|
|
|
$
|
116,666
|
|
|
|
Unlevered free cash flow (in thousands)(6)
|
|
|
|
$
|
82,905
|
|
|
|
|
$
|
94,571
|
|
|
|
|
$
|
152,439
|
|
|
(1)
Unique subscriptions represent the number of unique sites, standalone scheduling subscriptions and Unfold (social) subscriptions, as of the end of a period. A unique site represents a single subscription and/or group of related subscriptions, including a website subscription and/or a domain subscription, and other subscriptions related to a single website or domain. Every unique site contains at least one domain subscription or one website subscription.
(2)
Total bookings represents cash receipts for all subscriptions purchased, as well as payments due under the terms of contractual agreements for obligations to be fulfilled.
(3)
ARRR is calculated as the monthly revenue from subscription fees and revenue generated in conjunction with associated fees (fees taken or assessed in conjunction with commerce transactions) in the last month of the period multiplied by 12.
(4)
ARPUS is calculated as the total revenue during the preceding 12-month period divided by the average of the number of total unique subscriptions at the beginning and end of the period.
(5)
Adjusted EBITDA is a supplemental performance measure that our management uses to assess our operating performance. We calculate adjusted EBITDA as net income excluding interest expense, other income/(loss), net, provision for/(benefit from) income taxes, depreciation and amortization, stock-based compensation expense and other items that we do not consider indicative of our ongoing operating performance, which includes expenses associated with a special bonus in 2020. Adjusted EBITDA has limitations as an analytical tool and should not be considered in isolation from, or as a substitute for, the analysis of other GAAP financial measures, such as net income. Some of these limitations include:
•
this measure does not reflect interest expense, or the cash requirements necessary to service interest or principal payments on our indebtedness;
•
this measure does not reflect our corporate taxes or the cash requirements to pay our corporate taxes;
•
although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and this measure does not reflect any cash requirements for such replacements; and
•
this measure does not reflect stock-based compensation expense.
The following is a reconciliation of adjusted EBITDA to the most comparable GAAP measure, net income:
|
|
|
|
Year Ended
December 31,
|
|
|
($ in thousands)
|
|
|
2018
|
|
|
2019
|
|
|
2020
|
|
|
Net income
|
|
|
|
$
|
43,123
|
|
|
|
|
$
|
58,152
|
|
|
|
|
$
|
30,588
|
|
|
|
Interest expense
|
|
|
|
|
173
|
|
|
|
|
|
1,080
|
|
|
|
|
|
10,043
|
|
|
|
Other income/(loss), net
|
|
|
|
|
(2,632)
|
|
|
|
|
|
(3,815)
|
|
|
|
|
|
7,678
|
|
|
|
Provision for /(benefit from) income taxes
|
|
|
|
|
14,092
|
|
|
|
|
|
5,923
|
|
|
|
|
|
(8,089)
|
|
|
|
Depreciation and amortization
|
|
|
|
|
12,731
|
|
|
|
|
|
18,309
|
|
|
|
|
|
21,703
|
|
|
|
Stock-based compensation expense
|
|
|
|
|
7,018
|
|
|
|
|
|
17,975
|
|
|
|
|
|
31,254
|
|
|
|
Special bonus*
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
23,489
|
|
|
|
Adjusted EBITDA
|
|
|
|
$
|
74,505
|
|
|
|
|
$
|
97,624
|
|
|
|
|
$
|
116,666
|
|
|
*
On December 7, 2020 we declared an extraordinary dividend payable to all stockholders of record as of December 14, 2020. In light of the extraordinary dividend, we concurrently approved a special bonus of approximately $23.5 million to be paid to current employees on record as of the date of the extraordinary dividend. The special bonus was designed to allow employees to participate in our overall successes in a manner commensurate with the stockholders receiving the extraordinary dividend. The special bonus was not tied to the employees’ individual performance, but rather, was calculated
as the greater of five hundred USD, EUR or PLN or $2.666 per vested stock option held by the employee, the same amount paid per share to our stockholders. Payment of these special bonuses was completed by January 2021.
We believe that it is meaningful to investors to adjust for this bonus in adjusted EBITDA because we do not routinely pay bonuses to employees and because this bonus was only paid in connection with our declaring an extraordinary dividend to stockholders. We do not expect to pay an extraordinary dividend and therefore special bonuses in the future.
|
|
|
|
2018
|
|
|
2019
|
|
|
2020
|
|
|
Cost of revenue
|
|
|
|
$
|
—
|
|
|
|
|
$
|
—
|
|
|
|
|
$
|
1,303
|
|
|
|
Research and product development
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
18,290
|
|
|
|
Marketing and sales
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
3,122
|
|
|
|
General and administrative
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
774
|
|
|
|
Total
|
|
|
|
$
|
—
|
|
|
|
|
$
|
—
|
|
|
|
|
$
|
23,489
|
|
|
(6)
Unlevered free cash flow is a supplemental liquidity measure that our management uses to evaluate our core operating business and our ability to meet our current and future financing and investing needs. We define unlevered free cash flow as cash flow from operating activities less cash paid for capital expenditures increased by cash paid for interest expense net of the associated tax benefit. The tax benefit is calculated using a blended rate of federal and state income tax rates of 24.76%, 24.52% and 24.48% in 2018, 2019 and 2020, respectively. Unlevered free cash flow has limitations as an analytical tool and should not be considered in isolation from, or as a substitute for, the analysis of other GAAP financial measures, such as cash flows from operating activities. Unlevered free cash flow does not reflect our cash expenditures, or future requirements, for capital expenditures or contractual commitments, limiting its usefulness as a comparative measure.
The following is a reconciliation of unlevered free cash flow to the most comparable GAAP measure, cash flows from operating activities:
|
|
|
|
Year Ended
December 31,
|
|
|
($ in thousands)
|
|
|
2018
|
|
|
2019
|
|
|
2020
|
|
|
Cash flow from operating activities
|
|
|
|
$
|
111,918
|
|
|
|
|
$
|
102,333
|
|
|
|
|
$
|
150,030
|
|
|
|
Cash paid for capital expenditures
|
|
|
|
|
(29,163)
|
|
|
|
|
|
(8,217)
|
|
|
|
|
|
(4,712)
|
|
|
|
Free cash flow
|
|
|
|
|
82,755
|
|
|
|
|
|
94,116
|
|
|
|
|
|
145,318
|
|
|
|
Cash paid for interest expense net of the associated tax benefit
|
|
|
|
|
150
|
|
|
|
|
|
455
|
|
|
|
|
|
7,121
|
|
|
|
Unlevered free cash flow
|
|
|
|
$
|
82,905
|
|
|
|
|
$
|
94,571
|
|
|
|
|
$
|
152,439
|
|
|
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
The unaudited pro forma condensed combined balance sheet as of December 31, 2020 and the unaudited pro forma condensed combined statement of operations for the year ended December 31, 2020 present our combined financial position and results of operations after giving effect to the following transactions (collectively, the “Transactions”):
•
the issuance of 4,452,023 Class C common stock for $304.4 million, net of issuance costs, in a private placement;
•
the acquisition of Tock, Inc. (“Tock”) for cash consideration of $226.8 million, the issuance of our Class C common stock with the fair value of $188.2 million and estimated working capital adjustments of $11.9 million; and
•
the conversion of our convertible preferred stock and our Class C common stock from the above transactions into Class A common stock or Class B common stock, as applicable, and the subsequent registration of our Class A common stock pursuant to this registration statement.
The unaudited pro forma condensed combined statement of operations for the year ended December 31, 2020, gives pro forma effect to the Transactions as if they had occurred on January 1, 2020. The unaudited pro forma condensed combined balance sheet as of December 31, 2020, gives effect to the Transactions as if they had occurred on December 31, 2020.
The unaudited pro forma condensed combined financial information was prepared in accordance with Article 11 of Regulation S-X as amended by the final rule, Release No. 33-10786 “Amendments to Financial Disclosures about Acquired and Disposed Businesses,” using the assumptions set forth in the notes to the unaudited pro forma condensed combined financial information. The unaudited pro forma condensed combined financial information has been adjusted to include Transactions adjustments, which reflect the application of the accounting required by generally accepted accounting principles in the United States (“GAAP”), and rules of the SEC, and linking the effects of the Transactions listed above to our historical combined financial statements (“Transaction Accounting Adjustments”).
Issuance of Class C Common Stock (the “Private Placement”)
On March 15, 2021, we amended our certificate of incorporation and created the Class C common stock with authorized shares of 7,673,154 and a par value of $0.0001. The Class C common stock has similar rights as our Class A and Class B common stock, except with respect to conversion and voting rights. Subsequent to the amendment, we issued 4,452,023 shares of our Class C common stock for proceeds of $304.4 million, net of issuance costs. For purposes of the unaudited pro forma condensed combined balance sheet, we have assumed that the Private Placement was consummated on December 31, 2020. For purposes of the unaudited pro forma condensed combined statement of operations, we have assumed the Private Placement was consummated on January 1, 2020.
Acquisition of Tock (the “Acquisition”)
On March 31, 2021, we acquired 100% of the outstanding stock of Tock. The purpose of the Acquisition was to expand our complimentary suite of services available with a platform for reservations, take-out, delivery and events for the hospitality industry. The unaudited pro forma combined financial information was prepared using the acquisition method of accounting under GAAP. The consideration for the Acquisition consists of cash consideration of $226.8 million, the issuance of 2,750,330 shares of our Class C common stock valued at $188.2 million and estimated working capital adjustments of $11.9 million. In addition, $30.0 million of restricted stock units in our Class C common stock were issued to the Tock shareholders, which are subject to clawback and forfeiture based on providing continued service to the combined company. Accordingly, the restricted stock units will be accounted for as compensation expense over the retention period of three years on a straight-line basis in the consolidated statement of operations assuming all restricted stock units will vest. For purposes of the unaudited pro forma condensed combined balance sheet, we have assumed the Acquisition was consummated on December 31, 2020. For purposes of the unaudited pro forma condensed combined statement of operations, we have assumed the Acquisition was consummated on January 1, 2020.
Registration Statement (the “Listing”)
For purposes of the unaudited pro forma condensed combined balance sheet, we have assumed that all shares of our convertible preferred stock had automatically converted into an aggregate of 54,862,435 shares of our Class A common stock and 49,583,897 shares of our Class B common stock and that all Class C common stock issued and outstanding had automatically converted into an aggregate of 7,202,353 shares of our Class A common stock, as if such conversions had occurred on December 31, 2020. For purposes of the unaudited pro forma condensed combined statement of operations, we have assumed that the Listing and the conversions of our convertible preferred stock and Class C common stock occurred on January 1, 2020.
The unaudited pro forma condensed combined financial information is for illustrative and informational purposes only and is not necessarily indicative of the operating results that would have occurred if the Transactions had been completed as of the dates set forth above, nor is it indicative of the future combined results of operations or financial position of the Company. Further, Transaction Accounting Adjustments represent management’s best estimates based on information available as of the date of this prospectus and are subject to change as additional information becomes available.
The unaudited pro forma condensed combined financial information is based on the assumptions and adjustments that are described in the accompanying notes. The application of the acquisition method of accounting is dependent upon certain valuations and other studies that have yet to be completed. Accordingly, the pro forma adjustments are preliminary, subject to further revision as additional information becomes available and additional analyses are performed and have been made solely for the purpose of providing unaudited pro forma combined financial information. There can be no assurances that the final valuations will not result in material changes to the preliminary estimated purchase price allocation. The unaudited pro forma condensed combined financial information does not give effect to the potential impact of current financial conditions, any anticipated synergies, operating efficiencies or cost savings that may result from the Acquisition or any integration costs. The actual results reported in periods following the Transactions may differ significantly from those reflected in this pro forma financial information presented herein for a number of reasons, including, but not limited to, differences between the assumptions used to prepare this pro forma financial information.
The assumptions and estimates underlying the unaudited adjustments to the pro forma combined financial statements are described in the accompanying notes, which should be read together with the unaudited pro forma condensed combined financial statements.
The unaudited pro forma condensed combined financial information should be read together with “Capitalization,” “Selected Historical Consolidated Financial and Operating Information,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Certain Relationships and Related Party Transactions” and the historical financial statements and related notes thereto included elsewhere in this prospectus.
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET AS OF DECEMBER 31, 2020
(in thousands)
|
|
|
|
Squarespace
(Historical)
|
|
|
Tock
(Historical)
|
|
|
Private
Placement
Adjustments
|
|
|
|
|
|
As Adjusted
Before
Acquisition and
Listing
Adjustments
|
|
|
Acquisition
Transaction
Adjustments
|
|
|
|
|
|
As Adjusted
Before Listing
Adjustments
|
|
|
Listing
Adjustments
|
|
|
|
|
|
Pro Forma
Combined
|
|
|
Cash and cash equivalents
|
|
|
|
$
|
57,891
|
|
|
|
|
$
|
15,996
|
|
|
|
|
$
|
304,609
|
|
|
|
a
|
|
|
|
$
|
378,496
|
|
|
|
|
$
|
(238,693)
|
|
|
|
c
|
|
|
|
$
|
139,803
|
|
|
|
|
$
|
—
|
|
|
|
|
|
|
|
$
|
139,803
|
|
|
|
Restricted cash
|
|
|
|
|
—
|
|
|
|
|
|
12,334
|
|
|
|
|
|
—
|
|
|
|
|
|
|
|
|
12,334
|
|
|
|
|
|
—
|
|
|
|
|
|
|
|
|
12,334
|
|
|
|
|
|
—
|
|
|
|
|
|
|
|
|
12,334
|
|
|
|
Investment in marketable securities
|
|
|
|
|
37,462
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
|
|
|
37,462
|
|
|
|
|
|
—
|
|
|
|
|
|
|
|
|
37,462
|
|
|
|
|
|
—
|
|
|
|
|
|
|
|
|
37,462
|
|
|
|
Accounts receivable
|
|
|
|
|
7,516
|
|
|
|
|
|
109
|
|
|
|
|
|
—
|
|
|
|
|
|
|
|
|
7,625
|
|
|
|
|
|
—
|
|
|
|
|
|
|
|
|
7,625
|
|
|
|
|
|
—
|
|
|
|
|
|
|
|
|
7,625
|
|
|
|
Prepaid expenses and other current assets
|
|
|
|
|
37,384
|
|
|
|
|
|
310
|
|
|
|
|
|
—
|
|
|
|
|
|
|
|
|
37,694
|
|
|
|
|
|
3,402
|
|
|
|
b
e
f
|
|
|
|
|
41,096
|
|
|
|
|
|
—
|
|
|
|
|
|
|
|
|
41,096
|
|
|
|
Deferred contract costs, current portion
|
|
|
|
|
—
|
|
|
|
|
|
239
|
|
|
|
|
|
—
|
|
|
|
|
|
|
|
|
239
|
|
|
|
|
|
(239)
|
|
|
|
b
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
|
|
|
—
|
|
|
|
Due from vendors
|
|
|
|
|
—
|
|
|
|
|
|
2,744
|
|
|
|
|
|
—
|
|
|
|
|
|
|
|
|
2,744
|
|
|
|
|
|
—
|
|
|
|
|
|
|
|
|
2,744
|
|
|
|
|
|
—
|
|
|
|
|
|
|
|
|
2,744
|
|
|
|
Total current assets
|
|
|
|
$
|
140,253
|
|
|
|
|
$
|
31,732
|
|
|
|
|
$
|
304,609
|
|
|
|
|
|
|
|
$
|
476,594
|
|
|
|
|
$
|
(235,530)
|
|
|
|
|
|
|
|
$
|
241,064
|
|
|
|
|
$
|
—
|
|
|
|
|
|
|
|
$
|
241,064
|
|
|
|
Property and equipment, net
|
|
|
|
|
49,249
|
|
|
|
|
|
2,798
|
|
|
|
|
|
—
|
|
|
|
|
|
|
|
|
52,047
|
|
|
|
|
|
(2,798)
|
|
|
|
e
|
|
|
|
|
49,249
|
|
|
|
|
|
—
|
|
|
|
|
|
|
|
|
49,249
|
|
|
|
Deferred income taxes
|
|
|
|
|
7,773
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
|
|
|
7,773
|
|
|
|
|
|
(7,773)
|
|
|
|
g
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
|
|
|
—
|
|
|
|
Goodwill
|
|
|
|
|
83,171
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
|
|
|
83,171
|
|
|
|
|
|
338,705
|
|
|
|
d
|
|
|
|
|
421,876
|
|
|
|
|
|
—
|
|
|
|
|
|
|
|
|
421,876
|
|
|
|
Intangible assets, net
|
|
|
|
|
18,868
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
|
|
|
18,868
|
|
|
|
|
|
93,000
|
|
|
|
d
|
|
|
|
|
111,868
|
|
|
|
|
|
—
|
|
|
|
|
|
|
|
|
111,868
|
|
|
|
Deferred contract costs, net of current
portion
|
|
|
|
|
—
|
|
|
|
|
|
365
|
|
|
|
|
|
—
|
|
|
|
|
|
|
|
|
365
|
|
|
|
|
|
(365)
|
|
|
|
b
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
|
|
|
—
|
|
|
|
Other assets
|
|
|
|
|
7,452
|
|
|
|
|
|
113
|
|
|
|
|
|
—
|
|
|
|
|
|
|
|
|
7,565
|
|
|
|
|
|
—
|
|
|
|
b
e
|
|
|
|
|
7,565
|
|
|
|
|
|
—
|
|
|
|
|
|
|
|
|
7,565
|
|
|
|
Total assets
|
|
|
|
$
|
306,766
|
|
|
|
|
$
|
35,008
|
|
|
|
|
$
|
304,609
|
|
|
|
|
|
|
|
$
|
646,383
|
|
|
|
|
$
|
185,239
|
|
|
|
|
|
|
|
$
|
831,622
|
|
|
|
|
$
|
—
|
|
|
|
|
|
|
|
$
|
831,622
|
|
|
|
Liabilities, redeemable convertible preferred stock and shareholders’ (deficit) equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
|
|
$
|
16,758
|
|
|
|
|
$
|
1,561
|
|
|
|
|
$
|
—
|
|
|
|
|
|
|
|
$
|
18,319
|
|
|
|
|
$
|
—
|
|
|
|
|
|
|
|
$
|
18,319
|
|
|
|
|
$
|
—
|
|
|
|
|
|
|
|
$
|
18,319
|
|
|
|
Accrued liabilities
|
|
|
|
|
46,779
|
|
|
|
|
|
1,629
|
|
|
|
|
|
200
|
|
|
|
a
|
|
|
|
|
48,608
|
|
|
|
|
|
3,922
|
|
|
|
f
h
|
|
|
|
|
52,530
|
|
|
|
|
|
34,587
|
|
|
|
i
|
|
|
|
|
87,117
|
|
|
|
Deferred revenue
|
|
|
|
|
210,392
|
|
|
|
|
|
21
|
|
|
|
|
|
—
|
|
|
|
|
|
|
|
|
210,413
|
|
|
|
|
|
(21)
|
|
|
|
e
|
|
|
|
|
210,392
|
|
|
|
|
|
—
|
|
|
|
|
|
|
|
|
210,392
|
|
|
|
Debt, current portion
|
|
|
|
|
13,586
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
|
|
|
13,586
|
|
|
|
|
|
—
|
|
|
|
|
|
|
|
|
13,586
|
|
|
|
|
|
—
|
|
|
|
|
|
|
|
|
13,586
|
|
|
|
Deferred rent and lease incentives, current portion
|
|
|
|
|
1,197
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
|
|
|
1,197
|
|
|
|
|
|
—
|
|
|
|
|
|
|
|
|
1,197
|
|
|
|
|
|
—
|
|
|
|
|
|
|
|
|
1,197
|
|
|
|
Funds payable and amounts due to customers
|
|
|
|
|
—
|
|
|
|
|
|
15,078
|
|
|
|
|
|
—
|
|
|
|
|
|
|
|
|
15,078
|
|
|
|
|
|
—
|
|
|
|
|
|
|
|
|
15,078
|
|
|
|
|
|
—
|
|
|
|
|
|
|
|
|
15,078
|
|
|
|
Total current liabilities
|
|
|
|
$
|
288,712
|
|
|
|
|
$
|
18,289
|
|
|
|
|
$
|
200
|
|
|
|
|
|
|
|
$
|
307,201
|
|
|
|
|
$
|
3,901
|
|
|
|
|
|
|
|
$
|
311,102
|
|
|
|
|
$
|
34,587
|
|
|
|
|
|
|
|
$
|
345,689
|
|
|
|
Debt, non-current portion
|
|
|
|
|
525,752
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
|
|
|
525,752
|
|
|
|
|
|
—
|
|
|
|
|
|
|
|
|
525,752
|
|
|
|
|
|
—
|
|
|
|
|
|
|
|
|
525,752
|
|
|
|
Deferred rent and lease incentives, non-current portion
|
|
|
|
|
24,856
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
|
|
|
24,856
|
|
|
|
|
|
—
|
|
|
|
|
|
|
|
|
24,856
|
|
|
|
|
|
—
|
|
|
|
|
|
|
|
|
24,856
|
|
|
|
Other liabilities
|
|
|
|
|
262
|
|
|
|
|
|
248
|
|
|
|
|
|
—
|
|
|
|
|
|
|
|
|
510
|
|
|
|
|
|
10,150
|
|
|
|
g
|
|
|
|
|
10,660
|
|
|
|
|
|
(6,717)
|
|
|
|
k
|
|
|
|
|
3,943
|
|
|
|
Total liabilities
|
|
|
|
$
|
839,582
|
|
|
|
|
$
|
18,537
|
|
|
|
|
$
|
200
|
|
|
|
|
|
|
|
$
|
858,319
|
|
|
|
|
$
|
14,051
|
|
|
|
|
|
|
|
$
|
872,370
|
|
|
|
|
$
|
27,870
|
|
|
|
|
|
|
|
$
|
900,240
|
|
|
|
Commitments and Contingencies
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Redeemable convertible preferred
stock
|
|
|
|
|
131,390
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
|
|
|
131,390
|
|
|
|
|
|
—
|
|
|
|
|
|
|
|
|
131,390
|
|
|
|
|
|
(131,390)
|
|
|
|
j
|
|
|
|
|
—
|
|
|
|
Shareholders’ (Deficit) Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred stock
|
|
|
|
|
—
|
|
|
|
|
|
1
|
|
|
|
|
|
—
|
|
|
|
|
|
|
|
|
1
|
|
|
|
|
|
(1)
|
|
|
|
c
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
|
|
|
—
|
|
|
|
Common stock
|
|
|
|
|
—
|
|
|
|
|
|
1
|
|
|
|
|
|
—
|
|
|
|
|
|
|
|
|
1
|
|
|
|
|
|
(1)
|
|
|
|
c
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
|
|
|
—
|
|
|
|
|
|
|
Squarespace
(Historical)
|
|
|
Tock
(Historical)
|
|
|
Private
Placement
Adjustments
|
|
|
|
|
|
As Adjusted
Before
Acquisition and
Listing
Adjustments
|
|
|
Acquisition
Transaction
Adjustments
|
|
|
|
|
|
As Adjusted
Before Listing
Adjustments
|
|
|
Listing
Adjustments
|
|
|
|
|
|
Pro Forma
Combined
|
|
|
Class A common stock
|
|
|
|
|
1
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
|
|
|
1
|
|
|
|
|
|
—
|
|
|
|
|
|
|
|
|
1
|
|
|
|
|
|
5
|
|
|
|
j
|
|
|
|
|
6
|
|
|
|
Class B common stock
|
|
|
|
|
1
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
|
|
|
1
|
|
|
|
|
|
—
|
|
|
|
|
|
|
|
|
1
|
|
|
|
|
|
5
|
|
|
|
j
k
|
|
|
|
|
6
|
|
|
|
Class C common stock
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
a
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
j
|
|
|
|
|
—
|
|
|
|
Additional paid-in capital
|
|
|
|
|
9,043
|
|
|
|
|
|
31,141
|
|
|
|
|
|
304,409
|
|
|
|
a
|
|
|
|
|
344,593
|
|
|
|
|
|
157,038
|
|
|
|
c
|
|
|
|
|
501,631
|
|
|
|
|
|
360,668
|
|
|
|
j
k
|
|
|
|
|
862,299
|
|
|
|
Accumulated other comprehensive
loss
|
|
|
|
|
2,455
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
|
|
|
2,455
|
|
|
|
|
|
—
|
|
|
|
|
|
|
|
|
2,455
|
|
|
|
|
|
—
|
|
|
|
|
|
|
|
|
2,455
|
|
|
|
Accumulated (deficit) equity
|
|
|
|
|
(675,706)
|
|
|
|
|
|
(14,672)
|
|
|
|
|
|
—
|
|
|
|
|
|
|
|
|
(690,378)
|
|
|
|
|
|
14,152
|
|
|
|
c
f
h
|
|
|
|
|
(676,226)
|
|
|
|
|
|
(257,158)
|
|
|
|
i
k
|
|
|
|
|
(933,384)
|
|
|
|
Total shareholders’ (deficit) equity
|
|
|
|
|
(664,206)
|
|
|
|
|
|
16,471
|
|
|
|
|
|
304,409
|
|
|
|
|
|
|
|
|
(343,326)
|
|
|
|
|
|
171,188
|
|
|
|
|
|
|
|
|
(172,138)
|
|
|
|
|
|
103,520
|
|
|
|
|
|
|
|
|
(68,618)
|
|
|
|
Total liabilities, redeemable convertible
preferred stock and shareholders’
(deficit) equity
|
|
|
|
$
|
306,766
|
|
|
|
|
$
|
35,008
|
|
|
|
|
$
|
304,609
|
|
|
|
|
|
|
|
$
|
646,383
|
|
|
|
|
$
|
185,239
|
|
|
|
|
|
|
|
$
|
831,622
|
|
|
|
|
$
|
—
|
|
|
|
|
|
|
|
$
|
831,622
|
|
|
|
|
The accompanying notes are an integral part of these unaudited pro forma combined financial statements.
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 2020
(in thousands, except share and per share amounts)
|
|
|
|
Squarespace
(Historical)
|
|
|
Tock
(Historical)
|
|
|
Private
Placement
Adjustments
|
|
|
As Adjusted
Before
Acquisition and
Listing
Adjustments
|
|
|
Acquisition
Transaction
Adjustments
|
|
|
|
|
|
As Adjusted
Before Listing
Adjustments
|
|
|
Listing
Adjustments
|
|
|
|
|
|
Pro Forma
Combined
|
|
|
|
|
|
Revenue
|
|
|
|
$
|
621,149
|
|
|
|
|
$
|
23,028
|
|
|
|
|
$
|
—
|
|
|
|
|
$
|
644,177
|
|
|
|
|
$
|
—
|
|
|
|
|
|
|
|
$
|
644,177
|
|
|
|
|
$
|
—
|
|
|
|
|
|
|
|
$
|
644,177
|
|
|
|
|
|
|
Cost of revenue
|
|
|
|
|
98,337
|
|
|
|
|
|
9,864
|
|
|
|
|
|
—
|
|
|
|
|
|
108,201
|
|
|
|
|
|
5,461
|
|
|
|
l
m
|
|
|
|
|
113,662
|
|
|
|
|
|
—
|
|
|
|
|
|
|
|
|
113,662
|
|
|
|
|
|
|
Gross profit
|
|
|
|
|
522,812
|
|
|
|
|
|
13,164
|
|
|
|
|
|
—
|
|
|
|
|
|
535,976
|
|
|
|
|
|
(5,461)
|
|
|
|
|
|
|
|
|
530,515
|
|
|
|
|
|
—
|
|
|
|
|
|
|
|
|
530,515
|
|
|
|
|
|
|
Operating expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and product development
|
|
|
|
|
167,906
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
167,906
|
|
|
|
|
|
12,178
|
|
|
|
l
n
|
|
|
|
|
180,084
|
|
|
|
|
|
—
|
|
|
|
|
|
|
|
|
180,084
|
|
|
|
|
|
|
Marketing and sales
|
|
|
|
|
260,039
|
|
|
|
|
|
4,949
|
|
|
|
|
|
—
|
|
|
|
|
|
264,988
|
|
|
|
|
|
7,664
|
|
|
|
l
m
|
|
|
|
|
272,652
|
|
|
|
|
|
—
|
|
|
|
|
|
|
|
|
272,652
|
|
|
|
|
|
|
General and administrative
|
|
|
|
|
54,647
|
|
|
|
|
|
9,026
|
|
|
|
|
|
—
|
|
|
|
|
|
63,673
|
|
|
|
|
|
(3,412)
|
|
|
|
l
m
o
|
|
|
|
|
60,261
|
|
|
|
|
|
263,875
|
|
|
|
q
r
|
|
|
|
|
324,136
|
|
|
|
|
|
|
Total operating expenses
|
|
|
|
|
482,592
|
|
|
|
|
|
13,975
|
|
|
|
|
|
—
|
|
|
|
|
|
496,567
|
|
|
|
|
|
16,430
|
|
|
|
|
|
|
|
|
512,997
|
|
|
|
|
|
263,875
|
|
|
|
|
|
|
|
|
776,872
|
|
|
|
|
|
|
Operating income / (loss)
|
|
|
|
|
40,220
|
|
|
|
|
|
(811)
|
|
|
|
|
|
—
|
|
|
|
|
|
39,409
|
|
|
|
|
|
(21,891)
|
|
|
|
|
|
|
|
|
17,518
|
|
|
|
|
|
(263,875)
|
|
|
|
|
|
|
|
|
(246,357)
|
|
|
|
|
|
|
Other income (expenses)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense
|
|
|
|
|
(10,043)
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
(10,043)
|
|
|
|
|
|
—
|
|
|
|
|
|
|
|
|
(10,043)
|
|
|
|
|
|
—
|
|
|
|
|
|
|
|
|
(10,043)
|
|
|
|
|
|
|
Other income / (expense), net
|
|
|
|
|
(7,678)
|
|
|
|
|
|
11
|
|
|
|
|
|
—
|
|
|
|
|
|
(7,667)
|
|
|
|
|
|
—
|
|
|
|
|
|
|
|
|
(7,667)
|
|
|
|
|
|
—
|
|
|
|
|
|
|
|
|
(7,667)
|
|
|
|
|
|
|
Income before (provision for) benefit
from income taxes
|
|
|
|
|
22,499
|
|
|
|
|
|
(800)
|
|
|
|
|
|
—
|
|
|
|
|
|
21,699
|
|
|
|
|
|
(21,891)
|
|
|
|
|
|
|
|
|
(192)
|
|
|
|
|
|
(263,875)
|
|
|
|
|
|
|
|
|
(264,067)
|
|
|
|
|
|
|
(Provision for) / benefit from income
taxes
|
|
|
|
|
8,089
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
8,089
|
|
|
|
|
|
(4,958)
|
|
|
|
p
|
|
|
|
|
3,131
|
|
|
|
|
|
(6,717)
|
|
|
|
s
|
|
|
|
|
(3,586)
|
|
|
|
|
|
|
Net income / (loss)
|
|
|
|
$
|
30,588
|
|
|
|
|
$
|
(800)
|
|
|
|
|
|
—
|
|
|
|
|
$
|
29,788
|
|
|
|
|
|
(26,849)
|
|
|
|
|
|
|
|
$
|
2,939
|
|
|
|
|
|
(270,592)
|
|
|
|
|
|
|
|
$
|
(267,653)
|
|
|
|
|
|
|
Accretion of redeemable convertible
preferred stock to redemption
value
|
|
|
|
$
|
(4,844)
|
|
|
|
|
$
|
—
|
|
|
|
|
$
|
—
|
|
|
|
|
$
|
(4,844)
|
|
|
|
|
$
|
—
|
|
|
|
|
|
|
|
$
|
(4,844)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
(4,844)
|
|
|
|
|
|
|
Deemed dividends upon repurchase
of redeemable convertible
preferred stock
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
|
|
|
—
|
|
|
|
|
|
|
Declared dividends to preferred shareholders
|
|
|
|
|
(278,454)
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
(278,454)
|
|
|
|
|
|
—
|
|
|
|
|
|
|
|
|
(278,454)
|
|
|
|
|
|
—
|
|
|
|
|
|
|
|
|
(278,454)
|
|
|
|
|
|
|
Net loss attributable to Class A and Class B common stockholders
|
|
|
|
$
|
(252,710)
|
|
|
|
|
$
|
(800)
|
|
|
|
|
$
|
—
|
|
|
|
|
$
|
(253,510)
|
|
|
|
|
$
|
(26,849)
|
|
|
|
|
|
|
|
$
|
(280,359)
|
|
|
|
|
$
|
(270,592)
|
|
|
|
|
|
|
|
$
|
(550,951)
|
|
|
|
|
|
|
Net loss per share attributable to common stockholders, basic and diluted
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
(4.11)
|
|
|
|
t
|
|
|
Weighted-average shares used in computing net loss per share attributable to common stockholders, basic and diluted
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
134,172,935
|
|
|
|
t
|
|
The accompanying notes are an integral part of these unaudited pro forma combined financial statements.
Notes to the Unaudited Pro Forma Combined Financial Information
Note 1 — Description of Transactions and Basis of Presentation
The unaudited pro forma condensed combined financial information was prepared in accordance with Article 11 of Regulation S-X, as amended by the final rule, Release No. 33-10786 “Amendments to Financial Disclosures about Acquired and Disposed Businesses,” and presents the pro forma financial condition and results of operations based upon the historical financial information after giving effect to the Transactions and related adjustments set forth in the notes to the unaudited pro forma condensed combined financial information.
The unaudited pro forma condensed combined balance sheet as of December 31, 2020 gives pro forma effect to the Transactions as if they had occurred on December 31, 2020. The unaudited pro forma condensed combined statement of operations for the year ended December 31, 2020 gives pro forma effect to the Transactions as if they had occurred on January 1, 2020. The statement of comprehensive loss was not included because it is not material to the Transactions. The historical financial statements of Squarespace and Tock have been adjusted to give pro forma effect to events that are (i) directly attributable to the Transactions, and (ii) factually supportable.
Description of Transactions
Private Placement
On March 15, 2021, we amended our Certificate of Incorporation and created the Class C common stock with authorized shares of 7,673,154 and a par value of $0.0001. The Class C common stock has similar rights as our Class A and Class B common stock, except with respect to conversion and voting rights. Subsequent to the amendment, we issued 4,452,023 of our Class C common stock for proceeds of $304.4 million, net of issuance costs.
Acquisition of Tock
The Acquisition was accounted for under the acquisition method in accordance with Accounting Standards Codification 805, Business Combinations (“ASC 805”). In accordance with ASC 805, the assets acquired and liabilities assumed have been measured at fair value based on various estimates and methodologies, including the income and market approaches. The excess of the fair value of purchase consideration over the values of the identifiable assets and liabilities is recorded as goodwill. When determining the fair value of assets acquired and liabilities assumed, management makes significant estimates and assumptions, especially with respect to intangible assets. These estimates are based on key assumptions related to the Acquisition, including reviews of publicly disclosed information for other acquisitions in the industry, historical experience of the Company, data that was available through the public domain and unobservable inputs, such as the due diligence reviews and historical financial information of the acquiree business.
We have not yet completed an external valuation analysis of the fair market value of Tock’s assets to be acquired and liabilities to be assumed. Using the estimated total consideration for the transaction, we have estimated the allocations to such assets and liabilities. This preliminary purchase price allocation has been used to prepare Transaction Accounting Adjustments in the unaudited pro forma condensed combined balance sheet. The final purchase price allocation will be determined when Squarespace has determined the final consideration and completed the detailed valuations and necessary calculations. The final purchase price allocation could differ materially from the preliminary purchase price allocation used to prepare the Transaction Accounting Adjustments. The final purchase price allocation may include (i) changes in allocations to intangible assets or goodwill based on the results of certain valuations that have yet to be completed and (ii) other changes to assets and liabilities.
For purposes of measuring the estimated fair value of the tangible and intangible assets acquired and the liabilities assumed, the Company has applied the guidance in Accounting Standards Codification 820, Fair Value Measurements (“ASC 820”), which establishes a framework for measuring fair value. ASC 820
defines fair value as “the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.”
Under the acquisition method, acquisition-related transaction costs (e.g., advisory, legal, valuation and other professional fees) are not included as consideration transferred but are accounted for as expenses in the periods in which the costs are incurred. These costs are presented in the unaudited pro forma condensed combined statement of operations. In addition, a portion of the cash consideration to be paid to the selling shareholders is subject to clawback and forfeiture based on providing continued service to us. Accordingly, we will recognize these payments as compensation expense over the retention periods in the consolidated statement of operations.
This unaudited pro forma condensed combined financial information is not intended to reflect the results which would have actually resulted had the Acquisition been effected on the dates indicated. Further, the pro forma condensed combined statement of operations are not necessarily indicative of the results of operations that may be obtained in the future.
Registration Statement
We are registering shares of Class A common stock for resale in this Registration Statement. Immediately prior to this Registration Statement being declared effective, all shares of our convertible preferred stock would automatically convert into an aggregate of 54,862,435 shares of our Class A common stock and 49,583,897 shares of our Class B common stock. In addition, all Class C common stock issued would automatically convert into 7,202,353 shares of our Class A common stock.
We have granted our Chief Executive Officer 4,460,858 shares of Class B common stock which would be forfeited as of August 22, 2021 unless one of the following occurs: (1) a Liquidation Event (other than a liquidation, dissolution or winding up of the Company) as defined by the Stock Grant Agreement or (2) an IPO, as defined by the Stock Grant Agreement. Upon the first sale of common stock to the general public pursuant to a registration statement being declared effective, the performance conditions associated with this Class B common stock would be met and we would recognize $229.3 million of compensation expenses.
The unaudited pro forma condensed combined financial information is for illustrative and informational purposes only and is not necessarily indicative of the operating results that would have occurred if the Transactions had been completed as of the dates set forth above, nor is it indicative of the future combined results of operations or financial position of the Company. Further, Transaction Accounting Adjustments represent management’s best estimates based on information available as of the date of this prospectus and are subject to change as additional information becomes available.
Note 2 — Significant accounting policies
The accounting policies used in the preparation of this unaudited pro forma condensed combined financial information are those set out in the Company’s audited combined financial statements as of and for the year ended December 31, 2020. Management has determined that certain adjustments, including those described in Note 4, are necessary to conform Tock’s historical financial statements to our accounting policies in the preparation of the unaudited pro forma condensed combined financial information. The adjustment amounts are subject to change as further assessment is performed and finalized for purchase accounting. These reclassifications and adjustments have no effect on our previously reported total assets, total liabilities, equity, or results of operations.
As part of the application of ASC 805, we will conduct a more detailed review of Tock’s accounting policies to determine if differences in accounting policies require further reclassification or adjustment of Tock’s results of operations, assets or liabilities to conform to our accounting policies and classifications. Therefore, we may identify additional differences between the accounting policies of the two companies that, when conformed, could have a material impact on the unaudited pro forma combined financial information.
Note 3 — Preliminary purchase price allocation
Under the acquisition method of accounting, the total purchase price is allocated to the acquired tangible and intangible assets and assumed liabilities of Tock based on their estimated fair values as of the transaction closing date. The excess of the acquisition consideration paid over the estimated fair values of net assets acquired will be recorded as goodwill in the unaudited pro forma condensed combined balance sheet. The allocation is dependent upon certain valuation and other studies that have not yet been finalized. Accordingly, the pro forma purchase price allocation is subject to further adjustment as additional information becomes available and as additional analyses and final valuations are completed, and such differences could be material.
The Acquisition closed on March 31, 2021. The following table sets forth a preliminary allocation of the purchase price to the fair value of the identifiable tangible and intangible assets acquired and liabilities assumed of Tock using Tock’s audited balance sheet as of December 31, 2020, with the excess recorded to goodwill (in thousands):
|
|
Cash and cash equivalents
|
|
|
|
$
|
15,996
|
|
|
|
|
Restricted cash
|
|
|
|
|
12,334
|
|
|
|
|
Accounts receivable
|
|
|
|
|
109
|
|
|
|
|
Prepaid expenses and other current assets
|
|
|
|
|
310
|
|
|
|
|
Prepaid expenses and other current assets – indemnification assets
|
|
|
|
|
3,402
|
|
|
|
|
Due from vendors
|
|
|
|
|
2,744
|
|
|
|
|
Other assets
|
|
|
|
|
113
|
|
|
|
|
Intangible assets
|
|
|
|
|
93,000
|
|
|
|
|
Accounts payable
|
|
|
|
|
(1,561)
|
|
|
|
|
Accrued expenses
|
|
|
|
|
(1,629)
|
|
|
|
|
Accrued expenses – sales tax
|
|
|
|
|
(3,402)
|
|
|
|
|
Funds payable and amounts due to customers
|
|
|
|
|
(15,078)
|
|
|
|
|
Other liabilities – deferred tax liabilities
|
|
|
|
|
(17,923)
|
|
|
|
|
Other liabilities
|
|
|
|
|
(248)
|
|
|
|
|
Estimated net asset assumed
|
|
|
|
$
|
88,167
|
|
|
|
|
Estimated consideration
|
|
|
|
|
426,872
|
|
|
|
|
Estimated goodwill
|
|
|
|
$
|
338,705
|
|
|
Goodwill represents the excess of acquisition consideration over the fair value of the underlying net assets acquired. Goodwill is not amortized but assessed for impairment annually, or more frequently, if an event occurs or circumstances change. Goodwill is attributable to the assembled workforce expected synergies from future growth and potential monetization opportunities.
The deferred tax liabilities represent the deferred tax impact associated with the differences in book and tax basis, including incremental differences created from the preliminary purchase price allocation and acquired net operating losses. Deferred taxes associated with estimated fair value adjustments reflect an estimated blended federal and state tax rate, net of tax effects on state valuation allowances. For balance sheet purposes, where U.S. tax rates were used, rates were based on recently enacted U.S. tax law. The effective tax rate of the combined company could be significantly different (either higher or lower) depending on post-merger activities, including cash needs, the geographical mix of income or loss, and changes in tax law. This determination is preliminary and subject to change based upon the final determination of the fair value of the acquired assets and assumed liabilities of Tock.
The pro forma historical net asset adjustments as shown above are further described below in Notes 4 and 5.
Intangible Assets
Preliminary identifiable intangible assets in the unaudited pro forma condensed combined financial information consist of the following:
|
Intangible Assets
|
|
|
Approximate
Fair Value
|
|
|
Estimated
Useful Life
|
|
|
|
|
|
(in thousands)
|
|
|
(in years)
|
|
|
Customer relationships – Restaurants
|
|
|
|
$
|
64,000
|
|
|
|
|
|
12.0
|
|
|
|
Customer relationships – Enterprise
|
|
|
|
|
19,000
|
|
|
|
|
|
12.0
|
|
|
|
Tradename
|
|
|
|
|
6,000
|
|
|
|
|
|
5.0
|
|
|
|
Software and technologies
|
|
|
|
|
4,000
|
|
|
|
|
|
3.0
|
|
|
|
Total
|
|
|
|
$
|
93,000
|
|
|
|
|
|
|
|
|
The amortization related to the identifiable intangible assets is reflected as a pro forma adjustment in the unaudited pro forma condensed combined statement of operations based on the estimated useful lives above and as further described in Note 5. The identifiable intangible assets are preliminary and are based on management’s estimates after consideration of similar transactions. As discussed above, the amount that will ultimately be allocated to identifiable intangible assets may differ materially from this preliminary allocation. In addition, the amortization impacts will ultimately be based upon the periods in which the associated economic benefits or detriments are expected to be derived. Therefore, the amount of amortization following the Acquisition may differ significantly between periods based upon the final value assigned and amortization methodology used for each identifiable intangible asset.
Note 4 — Notes to Unaudited Pro Forma Condensed Combined Balance Sheet
Transaction Accounting Adjustments include the following adjustments, which are based on our preliminary estimates and assumptions, related to the unaudited pro forma condensed combined balance sheet as of December 31, 2020:
Adjustments related to the Private Placement
a.
Represents the issuance of Class C common stock for aggregate proceeds of $304.4 million, net of issuance costs accrued. The Class C common stock is classified as permanent equity. A portion of the proceeds were used for the Acquisition.
Adjustments related to the Acquisition
b.
Reflects the reclassification of deferred contract costs, current portion and deferred contract costs, net of current portion to conform with our presentation of such costs in prepaid expenses and other current assets and other assets, respectively.
c.
Represents the elimination of the historical equity of Tock and the initial allocation of excess purchase price to goodwill (in thousands):
|
|
Total consideration
|
|
|
|
$
|
426,872
|
|
|
|
|
Less:
|
|
|
|
|
|
|
|
|
|
Preferred stock
|
|
|
|
|
1
|
|
|
|
|
Common Stock
|
|
|
|
|
1
|
|
|
|
|
Additional paid in capital
|
|
|
|
|
31,141
|
|
|
|
|
Accumulated deficit
|
|
|
|
|
(14,672)
|
|
|
|
|
Identifiable intangible assets
|
|
|
|
|
93,000
|
|
|
|
|
Other adjustments
|
|
|
|
|
(21,304)
|
|
|
|
|
Goodwill – related to the Acquisition
|
|
|
|
$
|
338,705
|
|
|
Total consideration of $426.8 million represents the sum of (1) cash consideration of $226.8 million, (2) $188.2 million related to the fair value of Class C common stock issued and (3) $11.9 million related to estimated net working capital adjustments.
d.
Adjustment to record the fair value of Tock’s identifiable intangible assets of $93.0 million and goodwill of $338.7 million.
e.
Represents the adjustments related to the provisional fair value of deferred contract costs, property and equipment and deferred revenue in purchase accounting.
f.
Adjustment to reflect preliminary estimated sales tax liability assumed as part of the Acquisition and related indemnification assets from the sellers of Tock of $3.4 million.
g.
Represents deferred tax liabilities of $17.9 million established due to the Acquisition at an estimated tax rate of 24.5% related to the intangible assets recognized of $22.8 million, the establishment of deferred tax assets primarily related to Tock’s net operating loss of $4.8 million and reclassification of deferred tax assets of $7.8 million to deferred tax liabilities.
h.
Reflects the recognition of non-recurring transaction costs associated with the acquisition of Tock of $0.5 million. These non-recurring transaction-related costs are reflected as if incurred on December 31, 2020, the date the Acquisition occurred for purposes of the unaudited pro forma condensed combined balance sheet.
Adjustments related to the Listing
i.
Reflects the recognition of non-recurring transaction-related costs of $34.6 million associated with the registration statement of which this prospectus forms a part that were not reflected in the historical condensed combined balance sheet and would be expensed as incurred. These non-recurring transaction-related costs are reflected as if incurred on December 31, 2020 for purposes of the unaudited pro forma condensed combined balance sheet.
j.
Represents the conversion of our convertible preferred stock into an aggregate of 54,862,435 shares of our Class A common stock and 49,583,897 shares of our Class A common stock and the conversion of our Class C common stock into 7,202,353 shares of our Class A common stock.
k.
Represents the stock-based compensation costs of $229.3 million, net of $6.7 million of income tax benefits, related to the vesting of 4,460,858 shares of our Class B common stock issued to our Chief Executive Officer upon the first sale of common stock to the general public pursuant to the registration statement of which this prospectus forms a part being declared effective and related tax impact.
Note 5 — Notes to Unaudited Pro Forma Condensed Combined Statement of Operations
Transaction Accounting Adjustments include the following adjustments, which are based on our preliminary estimates and assumptions, related to the unaudited pro forma condensed combined statement of operations for the year ended December 31, 2020:
Adjustments related to the Acquisition
l.
Reflects the reclassification of certain costs included in the financial statements of Tock to conform with our financial statement presentation.
m.
Reflects amortization expense recognized related to finite-lived intangible assets acquired in connection with the Acquisition. Amortization expense is as follows (in thousands):
|
Intangible Assets
|
|
|
Amortization
Expense
|
|
|
Classification
|
|
|
Customer relationships – Restaurants
|
|
|
|
$
|
5,333
|
|
|
|
Marketing and sales
|
|
|
Customer relationships – Enterprise
|
|
|
|
|
1,583
|
|
|
|
Marketing and sales
|
|
|
Tradename
|
|
|
|
|
1,200
|
|
|
|
General and administrative
|
|
|
Software and technologies
|
|
|
|
|
1,333
|
|
|
|
Cost of revenue
|
|
|
Total
|
|
|
|
$
|
9,449
|
|
|
|
|
|
n.
Represents annual compensation costs of $10.0 million related to restricted stock units issued to the shareholders of Tock which are subjected to clawback and forfeiture based on continued service over a three-year period.
o.
Reflects the recognition of non-recurring transaction costs of $2.4 million associated with the Acquisition. These non-recurring transaction-related costs are reflected as if incurred on January 1, 2020, the date the Acquisition occurred for purposes of the unaudited pro forma condensed combined statement of operations.
p.
Represents the tax impact of amortization of intangible assets, compensation costs as discussed in n. above and the operating results of Tock using Squarespace’s income tax rate of 24.5%
Adjustments related to the Listing
q.
Represents the stock-based compensation costs of $229.3 million related to the vesting of 4,460,858 shares of our Class B common stock issued to our CEO upon the first sale of common stock to the general public pursuant to a registration statement being declared effective as the performance condition associated with these Class B common stock being issued.
r.
Reflects the recognition of non-recurring Transaction-related costs of $34.6 million associated with the registration statement of which this prospectus forms a part that were not reflected in the historical condensed combined statement of operations. These non-recurring transaction-related costs are reflected as if incurred on January 1, 2020, the date the Listing occurred for purposes of the unaudited pro forma condensed combined statement of operations.
s.
Represents the tax impact of the reversal of deferred tax liability related to stock-based compensation costs recognized in q. using Squarepace’s estimated effective income tax rate of 24.5%. The transaction costs associated with the listing is assumed to be non-deductible expenses for tax purposes.
t.
We compute net loss per share of Class A common stock and Class B common stock under the two-class method required for multiple classes of common stock and participating securities. The rights, including the liquidation and dividend rights, of the Class A common stock and Class B common stock are substantially identical, other than conversion and voting rights. Accordingly, the Class A common stock and Class B common stock share in our net loss. The following table presents the calculation of pro forma basic and diluted net loss per share attributable to Class A and Class B common stockholders (in thousands except share and per share amounts):
|
|
Numerator:
|
|
|
|
|
|
|
|
|
|
Pro forma net loss attributable to Class A and Class B common stockholders
|
|
|
|
$
|
(550,951)
|
|
|
|
|
Denominator:
|
|
|
|
|
|
|
|
|
|
Weighted-average shares used in computing net loss per share attributable to Class A and Class B common stockholders, basic and diluted
|
|
|
|
|
17,917,236
|
|
|
|
|
Pro forma adjustment to reflect the issuance of Class C common stock in the Private Placement and conversion to Class A common stock
|
|
|
|
|
4,452,023
|
|
|
|
|
Pro forma adjustment to reflect the issuance of Class C common stock in the Acquisition and conversion to Class A common stock
|
|
|
|
|
2,750,330
|
|
|
|
|
Pro forma adjustment to reflect the vesting of restricted stock units issued related
to the Acquisition
|
|
|
|
|
146,156
|
|
|
|
|
Pro forma adjustment to reflect the assumed conversion of the redeemable convertible preferred stock to Class A and Class B common stock
|
|
|
|
|
104,446,332
|
|
|
|
|
Pro forma adjustment to reflect the vesting of Class B common stock as a result of the Listing
|
|
|
|
|
4,460,858
|
|
|
|
|
Weighted-average shares used in computing pro forma net loss per share attributable to Class A and Class B common stockholders, basic and diluted
|
|
|
|
|
134,172,935
|
|
|
|
|
Pro forma net loss per share attributable to Class A and Class B common stockholders, basic and diluted
|
|
|
|
$
|
(4.11)
|
|
|
|
|
For the year ended December 31, 2020, the impact of our stock options and restricted stock units were excluded from the computation of diluted net loss per share attributable to Class A and Class B common stockholders because the effect would have been anti-dilutive.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis of our financial condition and results of operations should be read together with our consolidated financial statements and the related notes and the other financial information included elsewhere in this prospectus. This discussion contains forward-looking statements that involve risks and uncertainties. Our actual business, financial condition and results of operations could differ materially from those anticipated in these forward-looking statements as a result of various factors, including those discussed below and elsewhere in this prospectus, particularly under “Risk Factors.” See also “Cautionary Note Regarding Forward-Looking Statements.” Our historical results are not necessarily indicative of the results that may be expected for any period in the future.
Overview
Squarespace is a leading all-in-one platform for businesses and independent creators to build a beautiful online presence, grow their brands and manage their businesses across the internet. We offer websites, domains, e-commerce, tools for managing a social media presence, marketing tools and scheduling capabilities. Our easy-to-customize and design-first platform empowers millions of customers across approximately 180 different countries. From individual entrepreneurs just starting out to the world’s most iconic businesses, Squarespace helps transform our customers’ visions into reality by creating an impactful, stylish and professional online presence.
We were founded in 2003 by our Chief Executive Officer, Anthony Casalena, and have achieved a number of significant milestones since then:
•
In 2004, we launched publicly as a blogging service to enable our customers to publish their content online.
•
In 2006, we hired our first employees.
•
In 2010, we raised a combined $38.5 million from Accel and Index Ventures.
•
In 2012, we surpassed 100 employees and transitioned the platform to service the next phase of the internet with sophisticated and design-forward presentations, enabling businesses and independent creators to tell their brand stories in a professional manner, including on mobile devices.
•
In 2013, we launched our commerce offerings, giving customers the ability to sell physical and digital goods directly from our platform.
•
In 2014, we raised $40 million from General Atlantic.
•
In 2015, we surpassed 500 employees and crossed $100 million in bookings.
•
In 2016, we began generating net income.
•
In 2019, we completed our first three acquisitions, continued to expand our commerce functionality and introduced Scheduling, Social, Marketing and Email Campaigns, which broadened our suite of solutions and points of entry to our platform.
•
In 2020, we reached $664.7 million in bookings and 1,200 employees.
We primarily derive revenue from monthly and annual subscriptions to our presence and commerce solutions. Subscription revenue accounted for 96.4% and 94.3% of our total revenue in 2019 and 2020, respectively. Payments for our subscription plans are generally collected at the beginning of the subscription period and we generally recognize the associated revenue ratably over the term of the customer contract. Non-subscription revenue primarily consists of commerce transaction fees received through revenue sharing arrangements with payment processors that handle our customers’ commerce transactions as well as revenue we generate from third-party services we offer that provide additional functionality to our customers.
We generated revenue of $484.8 million and $621.1 million in 2019 and 2020, respectively, and have generated net income every year since 2016, which includes net income of $58.2 million and $30.6 million in 2019 and 2020, respectively. We believe we have a stable and predictable business model driven by efficient customer acquisition and the adoption by our customers over time of higher value offerings and add-on
subscriptions. Our platform serves all types of customers, from SMBs and independent creators, such as restaurants, photographers, wedding planners, artists, musicians and bloggers, to iconic brands. No individual unique subscription accounted for more than 1% of our total bookings in 2019 or 2020.
Key Factors Affecting Our Performance
Acquisition of new and retention of existing unique subscriptions
The growth of new unique subscriptions to our platform is the primary driver of our revenue growth. Through December 31, 2020, the number of unique subscriptions to our platform has grown sequentially across 20 consecutive quarters, rising to 3.66 million unique subscriptions as of December 31, 2020, representing an increase of 22.5% relative to December 31, 2019. In order to continue to grow the number of unique subscriptions, we intend to continue to invest in our marketing efforts, develop new points of entry to our platform and expand internationally. In light of the accelerating trends in the amount of time and money consumers are spending online during the COVID-19 pandemic, we increased our marketing and sales spend over 40% in the year ended December 31, 2020 relative to the year ended December 31, 2019. We viewed this increased spending as a long-term investment in our business that would attract new unique subscriptions. As our revenue increases, we expect our marketing and sales expenses to continue to increase on an absolute dollar basis, but over time we expect our marketing and sales expenses to decrease as a percentage of revenue. We believe that our easy-to-customize and design-first solutions drive consistent cash retention. Our cash retention rate is the percentage of bookings received in the current period from website and domain subscriptions in existence during the same period in the prior year. In calculating cash retention, revenue share from contractual arrangements is allocated to the relevant subscription base based on the gross merchandise value (“GMV”) processed on the platform. Our cash retention rate for the years ended December 31, 2018, 2019 and 2020 was 83.2%, 83.5% and 85.6%, respectively.
Cumulative Cash from 1Q Cohorts
The chart represents cumulative cash from each website and domain subscription cohort. Cohorts are defined by the first payment date associated with the subscription. Revenue share from contractual arrangements is allocated to each cohort based on the GMV for that cohort in that period. For example, if the Q1 2019 cohort accounted for 3% of total GMV in Q1 2020, then 3% of the Q1 2020 revenue share from contractual arrangements is allocated to the Q1 2019 cohort in that period.
Expansion of our commerce offerings
We believe that our commerce offerings significantly expand our addressable market. Our comprehensive commerce offerings enable our customers to sell anything online, attracting a differentiated set of commerce-oriented brands to our platform. For the year ended December 31, 2020, our platform processed
approximately $3.9 billion of GMV, representing an increase of 90.7% from the same period in 2019. GMV represents the total dollar value of orders processed through our platform in the period, net of refunds and fraud.
We are continuing to invest and innovate in our commerce offerings to enable customers to build the most impactful online stores, deepen our functionality in physical commerce and establish leadership in services commerce. Our commerce revenue was $143.3 million for the year ended December 31, 2020, representing 77.8% growth from the same period in 2019. Ultimately, we believe the adoption of our commerce offerings by new and existing customers will help drive our long-term revenue growth.
Investments in product innovation
We rely on hiring and retaining a talented product development workforce. The success of our customers relies on the innovation tied to this workforce and our ability to remain agile to address customer needs. Our research and product development expenses were $167.9 million in 2020, representing 56.0% growth over 2019. As our revenue increases, we expect our research and product development expenses to continue to increase on an absolute dollar basis, but over time we expect our research and product development expenses to decrease as a percentage of revenue.
Foreign currency fluctuations
As of December 31, 2020, we had customers in approximately 180 countries and our international customers represented approximately 30% of our total bookings. As foreign currency exchange rates change, translation of the statements of operations of our international businesses into U.S. dollars may affect year-over-year comparability of our operating results.
Key Components of Results of Operations
Revenue
We primarily derive revenue from monthly and annual subscriptions. Typically, annual subscriptions represent 70% of the total subscriptions and monthly subscriptions represent 30%. Revenue is also derived from non-subscription services, including fixed fees earned on revenue share arrangements with third parties and fixed transaction fees we earn on sales made through our customers’ sites. Payments received for subscriptions in advance of fulfillment of our performance obligations are recorded as deferred revenue. Subscription plans automatically renew unless advanced notice is provided to us. We primarily recognize subscription revenue ratably on a straight-line basis, net of a reserve for refunds. Transaction fee revenue and revenue generated from third parties is recognized at a point in time, when the sale has been completed.
Cost of Revenue
Cost of revenue consists primarily of domain registration fees, credit card and payment processor fees, hosting costs and app fees. Cost of revenue also includes customer support, employee-related expenses, allocated shared costs and depreciation and amortization. Employee-related expenses consist of salaries, taxes, benefits and stock-based compensation. We expect that cost of revenue may fluctuate as a percentage of total revenue from period to period based on the subscriptions purchased and non-subscription transactions during that particular period.
Operating Expenses
Research and Product Development
Research and product development expenses are primarily employee-related expenses, costs associated with continuously developing new solutions and enhancing and maintaining our technology platform and allocated shared costs. These costs are expensed as incurred. Employee-related expenses consist of salaries, taxes, benefits and stock-based compensation. As our revenue increases, we expect our research and product development expenses to continue to increase on an absolute dollar basis, but over time we expect our research and product development expenses to decrease as a percentage of revenue.
Marketing and Sales
Marketing and sales expenses include costs related to advertisements used to drive customer acquisition, employee-related expenses related to our brand, customer acquisition and creative assets, affiliate fees on customer referrals and allocated shared costs. Depending on the nature of the advertising, costs are expensed at the time a commercial initially airs, when a promotion first appears in the media or as incurred. Affiliate fees on customer referrals are deferred and recognized ratably over the expected period of our relationship with the new customer. As our revenue increases, we expect our marketing and sales expenses to continue to increase on an absolute dollar basis, but over time we expect our marketing and sales expenses to decrease as a percentage of revenue.
General and Administrative
General and administrative expenses are primarily employee-related expenses associated with supporting business operations as well as expenses required to comply with government regulations in the markets in which we operate. The functional elements included in general and administrative are finance, people, legal, information technology and overall corporate support. Employee-related expenses consist of salaries, taxes, benefits and stock-based compensation. We expect general and administrative expenses to increase in absolute dollars over time as we continue to invest in the growth of our business and begin to operate as a publicly-traded company.
Specifically as it relates to operating as a publicly traded company, in the quarters leading up to the listing of our Class A common stock on the NYSE, we expect to incur additional professional fees and expenses, and in the quarter of our listing we expect to incur fees paid to our financial advisors in addition to other professional fees and expenses related to such listing. Following the listing of our Class A common stock on the NYSE, we expect to continue to incur additional expenses as a result of operating as a public company, including costs to comply with the rules and regulations applicable to companies listed on a U.S. securities exchange and costs related to compliance and reporting obligations pursuant to the rules and regulations of the SEC. In addition, as a public company, we expect to incur additional costs associated with accounting, compliance, insurance and investor relations.
Interest Expense
Interest expense primarily consists of the interest expense related to our debt facilities as well as the expense on acquisition liabilities. For further discussion on our interest expense related to our debt facilities, see “— Liquidity and Capital Resources — Indebtedness.”
Other Income
Other income/(loss), net is primarily comprised of net investment income and realized and unrealized foreign currency gains and losses. See “— Quantitative and Qualitative Disclosures About Market Risk — Foreign Currency Exchange Risk.”
Provision for/(Benefit from) Income Taxes
We are subject to income taxation and file U.S. federal income tax returns as well as income tax returns in the various U.S. states and foreign jurisdictions in which we conduct business.
Results of Operations
The following table sets forth our consolidated statements of operations information for the years ended December 31, 2019 and 2020.
|
|
|
|
Year Ended December 31,
|
|
|
($ in thousands)
|
|
|
2019
|
|
|
2020
|
|
|
Revenue
|
|
|
|
$
|
484,751
|
|
|
|
|
$
|
621,149
|
|
|
|
Cost of revenue(1)
|
|
|
|
|
81,910
|
|
|
|
|
|
98,337
|
|
|
|
Gross profit
|
|
|
|
|
402,841
|
|
|
|
|
|
522,812
|
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and product development(1)
|
|
|
|
|
107,645
|
|
|
|
|
|
167,906
|
|
|
|
Marketing and sales(1)
|
|
|
|
|
184,278
|
|
|
|
|
|
260,039
|
|
|
|
General and administrative(1)
|
|
|
|
|
49,578
|
|
|
|
|
|
54,647
|
|
|
|
Total operating expenses
|
|
|
|
|
341,501
|
|
|
|
|
|
482,592
|
|
|
|
Operating income
|
|
|
|
|
61,340
|
|
|
|
|
|
40,220
|
|
|
|
Interest expense
|
|
|
|
|
(1,080)
|
|
|
|
|
|
(10,043)
|
|
|
|
Other income/(loss), net
|
|
|
|
|
3,815
|
|
|
|
|
|
(7,678)
|
|
|
|
Income before (provision for)/benefit from income taxes
|
|
|
|
|
64,075
|
|
|
|
|
|
22,499
|
|
|
|
(Provision for)/benefit from income taxes
|
|
|
|
|
(5,923)
|
|
|
|
|
|
8,089
|
|
|
|
Net income
|
|
|
|
$
|
58,152
|
|
|
|
|
$
|
30,588
|
|
|
(1)
Includes stock-based compensation as follows:
|
|
|
|
Year Ended December 31,
|
|
|
($ in thousands)
|
|
|
2019
|
|
|
2020
|
|
|
Cost of revenue
|
|
|
|
$
|
532
|
|
|
|
|
$
|
780
|
|
|
|
Research and product development
|
|
|
|
|
12,087
|
|
|
|
|
|
21,619
|
|
|
|
Marketing and sales
|
|
|
|
|
1,737
|
|
|
|
|
|
3,144
|
|
|
|
General and administrative
|
|
|
|
|
3,619
|
|
|
|
|
|
5,711
|
|
|
|
Total stock-based compensation
|
|
|
|
$
|
17,975
|
|
|
|
|
$
|
31,254
|
|
|
The following table sets forth our consolidated statements of operations information as a percentage of total revenue for the years ended December 31, 2019 and 2020.
|
|
|
|
Year Ended
December 31,
|
|
|
|
|
|
2019
|
|
|
2020
|
|
|
Revenue
|
|
|
|
|
100%
|
|
|
|
|
|
100%
|
|
|
|
Cost of revenue
|
|
|
|
|
16.9
|
|
|
|
|
|
15.8
|
|
|
|
Gross profit
|
|
|
|
|
83.1
|
|
|
|
|
|
84.2
|
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and product development
|
|
|
|
|
22.2
|
|
|
|
|
|
27.0
|
|
|
|
Marketing and sales
|
|
|
|
|
38.0
|
|
|
|
|
|
41.9
|
|
|
|
General and administrative
|
|
|
|
|
10.2
|
|
|
|
|
|
8.8
|
|
|
|
Total operating expenses
|
|
|
|
|
70.4
|
|
|
|
|
|
77.7
|
|
|
|
Operating income
|
|
|
|
|
12.7
|
|
|
|
|
|
6.5
|
|
|
|
Interest expense
|
|
|
|
|
(0.2)
|
|
|
|
|
|
(1.6)
|
|
|
|
|
|
|
Year Ended
December 31,
|
|
|
|
|
|
2019
|
|
|
2020
|
|
|
Other income/(loss), net
|
|
|
|
|
0.8
|
|
|
|
|
|
(1.3)
|
|
|
|
Income before (provision for)/benefit from income taxes
|
|
|
|
|
13.3
|
|
|
|
|
|
3.6
|
|
|
|
(Provision for)/benefit from income taxes
|
|
|
|
|
(1.3)
|
|
|
|
|
|
1.3
|
|
|
|
Net income
|
|
|
|
|
12.0%
|
|
|
|
|
|
4.9%
|
|
|
|
|
The following table sets forth our consolidated revenue by geographic location and our consolidated revenue by geographic location as a percentage of total revenue for the years ended December 31, 2019 and 2020.
|
|
|
|
Year Ended December 31,
|
|
|
Change
|
|
|
($ in thousands, except percentages)
|
|
|
2019
|
|
|
2020
|
|
|
Amount
|
|
|
%
|
|
|
United States
|
|
|
|
$
|
343,051
|
|
|
|
|
$
|
430,118
|
|
|
|
|
$
|
87,067
|
|
|
|
|
|
25.4%
|
|
|
|
International
|
|
|
|
|
141,700
|
|
|
|
|
|
191,031
|
|
|
|
|
|
49,331
|
|
|
|
|
|
34.8%
|
|
|
|
Total revenue
|
|
|
|
$
|
484,751
|
|
|
|
|
$
|
621,149
|
|
|
|
|
$
|
136,398
|
|
|
|
|
|
28.1%
|
|
|
|
Percentage of total revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
United States
|
|
|
|
|
70.8%
|
|
|
|
|
|
69.2%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
International
|
|
|
|
|
29.2
|
|
|
|
|
|
30.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenue
|
|
|
|
|
100%
|
|
|
|
|
|
100%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comparison of the Years Ended December 31, 2019 and 2020
Revenue
|
|
|
|
Year Ended December 31,
|
|
|
Change
|
|
|
($ in thousands, except percentages)
|
|
|
2019
|
|
|
2020
|
|
|
Amount
|
|
|
%
|
|
|
Presence
|
|
|
|
$
|
404,156
|
|
|
|
|
$
|
477,831
|
|
|
|
|
$
|
73,675
|
|
|
|
|
|
18.2%
|
|
|
|
Commerce
|
|
|
|
|
80,595
|
|
|
|
|
|
143,318
|
|
|
|
|
|
62,723
|
|
|
|
|
|
77.8%
|
|
|
|
Total revenue
|
|
|
|
$
|
484,751
|
|
|
|
|
$
|
621,149
|
|
|
|
|
$
|
136,398
|
|
|
|
|
|
28.1%
|
|
|
|
Percentage of total revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Presence
|
|
|
|
|
83.4%
|
|
|
|
|
|
76.9%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commerce
|
|
|
|
|
16.6
|
|
|
|
|
|
23.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenue
|
|
|
|
|
100%
|
|
|
|
|
|
100%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Presence Revenue
Presence revenue increased $73.7 million, or 18.2%, for the year ended December 31, 2020 compared to the same period in 2019. The increase was primarily a result of stronger retention of our existing unique subscriptions and an increase in revenue from new subscriptions, which we believe stems from increased demand for an online presence as more brands look to operate digitally.
Commerce Revenue
Commerce revenue increased $62.7 million, or 77.8%, for the year ended December 31, 2020 compared to the same period in 2019. As a consequence of the acceleration of e-commerce trends, GMV processed through our platform increased $1.9 billion, or 90.7%, for the year ended December 31, 2020 compared to the same period in 2019 primarily as a result of an increase in physical goods sold as well as appointments scheduled through our platform.
Cost of Revenue and Gross Profit
|
|
|
|
Year Ended December 31,
|
|
|
Change
|
|
|
($ in thousands, except percentages)
|
|
|
2019
|
|
|
2020
|
|
|
Amount
|
|
|
%
|
|
|
Cost of revenue
|
|
|
|
$
|
81,910
|
|
|
|
|
$
|
98,337
|
|
|
|
|
$
|
16,427
|
|
|
|
|
|
20.1%
|
|
|
|
Gross profit
|
|
|
|
$
|
402,841
|
|
|
|
|
$
|
522,812
|
|
|
|
|
$
|
119,971
|
|
|
|
|
|
29.8%
|
|
|
|
Percentage of total revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of revenue
|
|
|
|
|
16.9%
|
|
|
|
|
|
15.8%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
|
|
83.1%
|
|
|
|
|
|
84.2%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of Revenue
Cost of revenue increased $16.4 million, or 20.1%, for the year ended December 31, 2020 compared to the same period in 2019. The increase was primarily driven by an increase in the number of unique subscriptions, which results in additional transaction processing and third party fees. The increase also reflects a $1.3 million special bonus paid in connection with our extraordinary dividend declared on December 7, 2020 payable to all stockholders of record as of December 14, 2020. We do not expect to pay an extraordinary dividend, or special bonuses, in the future.
Gross Profit
Gross profit increased $120.0 million, or 29.8%, for the year ended December 31, 2020 compared to the same period in 2019. As a percentage of total revenue, gross profit increased from 83.1% in the year ended December 31, 2019 to 84.2% in the year ended December 31, 2020, principally due to a mix shift towards commerce and additional operational efficiencies.
Operating Expenses
Research and Product Development
|
|
|
|
Year Ended December 31,
|
|
|
Change
|
|
|
($ in thousands, except percentages)
|
|
|
2019
|
|
|
2020
|
|
|
Amount
|
|
|
%
|
|
|
Research and product development
|
|
|
|
$
|
107,645
|
|
|
|
|
$
|
167,906
|
|
|
|
|
$
|
60,261
|
|
|
|
|
|
56.0%
|
|
|
|
Percentage of total revenue
|
|
|
|
|
22.2%
|
|
|
|
|
|
27.0%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and product development expenses increased $60.3 million, or 56.0%, for the year ended December 31, 2020 compared to the same period in 2019, primarily due to payroll and associated benefits expenses related to increased headcount in support of our product development roadmap. The increase also reflects an $18.3 million special bonus paid in connection with our extraordinary dividend declared on December 7, 2020 payable to all stockholders of record as of December 14, 2020. We do not expect to pay an extraordinary dividend, or special bonuses, in the future.
Marketing and Sales
|
|
|
|
Year Ended December 31,
|
|
|
Change
|
|
|
($ in thousands, except percentages)
|
|
|
2019
|
|
|
2020
|
|
|
Amount
|
|
|
%
|
|
|
Marketing and sales
|
|
|
|
$
|
184,278
|
|
|
|
|
$
|
260,039
|
|
|
|
|
$
|
75,761
|
|
|
|
|
|
41.1%
|
|
|
|
Percentage of total revenue
|
|
|
|
|
38.0%
|
|
|
|
|
|
41.9%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Marketing and sales expenses increased $75.8 million, or 41.1%, for the year ended December 31, 2020 compared to the same period in 2019, primarily due to increased spend in multiple brand and direct response advertising channels in domestic and international markets. The remainder of the increase was due to payroll and associated benefits related to increased headcount in support of our expanded marketing operations. The increase also reflects a $3.1 million special bonus paid in connection with our extraordinary dividend declared on December 7, 2020 payable to all stockholders of record as of December 14, 2020. We do not expect to pay an extraordinary dividend, or special bonuses, in the future.
General and Administrative
|
|
|
|
Year Ended December 31,
|
|
|
Change
|
|
|
($ in thousands, except percentages)
|
|
|
2019
|
|
|
2020
|
|
|
Amount
|
|
|
%
|
|
|
General and administrative
|
|
|
|
$
|
49,578
|
|
|
|
|
$
|
54,647
|
|
|
|
|
$
|
5,069
|
|
|
|
|
|
10.2%
|
|
|
|
Percentage of total revenue
|
|
|
|
|
10.2%
|
|
|
|
|
|
8.8%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General and administrative expenses increased $5.1 million, or 10.2%, for the year ended December 31, 2020 compared to the same period in 2019, primarily due to increases in payroll and associated benefits expenses due to increased headcount, as well as increased amortization expense related to acquisitions that were completed in the year ended December 31, 2019. These increases were partially offset by lower indirect tax expense. We expect general and administrative expenses to increase in absolute dollars over time as we continue to invest in the growth of our business and begin to operate as a publicly-traded company. In addition, our Founder and Chief Executive Officer was granted 4,460,858 shares of Class B common stock that included a forfeiture provision if certain liquidity events with respect to the Company, including the sale of Class A common stock hereunder, have not been completed prior to August 22, 2021. Upon consummation of a defined liquidity event prior to August 22, 2021, we will incur an additional $229.3 million of stock-based compensation expense.
Interest Expense
|
|
|
|
Year Ended December 31,
|
|
|
Change
|
|
|
($ in thousands, except percentages)
|
|
|
2019
|
|
|
2020
|
|
|
Amount
|
|
|
%
|
|
|
Interest expense
|
|
|
|
$
|
(1,080)
|
|
|
|
|
$
|
(10,043)
|
|
|
|
|
$
|
8,963
|
|
|
|
|
|
829.9%
|
|
|
|
Percentage of total revenue
|
|
|
|
|
(0.2)%
|
|
|
|
|
|
(1.6)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense increased $9.0 million, or 829.9%, for the year ended December 31, 2020 compared to the same period in 2019, primarily due to a new debt facility entered into in December 2019.
Other Income/(Loss), Net
|
|
|
|
Year Ended December 31,
|
|
|
Change
|
|
|
($ in thousands, except percentages)
|
|
|
2019
|
|
|
2020
|
|
|
Amount
|
|
|
%
|
|
|
Other income/(loss), net
|
|
|
|
$
|
3,815
|
|
|
|
|
$
|
(7,678)
|
|
|
|
|
$
|
(11,493)
|
|
|
|
|
|
(301.3)%
|
|
|
|
Percentage of total revenue
|
|
|
|
|
0.8%
|
|
|
|
|
|
(1.3)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income/(loss), net decreased $11.5 million, or 301.3%, for the year ended December 31, 2020 compared to the same period in 2019, primarily due to realized and unrealized losses on transactions denominated in currencies other than U.S. dollars.
Key Performance Indicators and Non-GAAP Financial Measures
We review the following key performance indicators and non-GAAP financial measures to evaluate our business, measure our performance, identify trends affecting our business, formulate financial projections and make strategic decisions. Increases or decreases in our key performance indicators and non-GAAP financial measures may not correspond with increases or decreases in our revenue and our key performance indicators and non-GAAP financial measures may be calculated in a manner different than similar key performance indicators and non-GAAP financial measures, respectively, used by other companies.
|
|
|
|
Year Ended
December 31,
|
|
|
|
|
|
2019
|
|
|
2020
|
|
|
Unique subscriptions (in thousands)
|
|
|
|
|
2,984
|
|
|
|
|
|
3,656
|
|
|
|
Total bookings (in thousands)
|
|
|
|
$
|
514,418
|
|
|
|
|
$
|
664,739
|
|
|
|
ARRR (in thousands)
|
|
|
|
$
|
549,156
|
|
|
|
|
$
|
705,546
|
|
|
|
|
|
|
Year Ended
December 31,
|
|
|
|
|
|
2019
|
|
|
2020
|
|
|
ARPUS
|
|
|
|
$
|
182
|
|
|
|
|
$
|
187
|
|
|
|
Adjusted EBITDA (in thousands)
|
|
|
|
$
|
97,624
|
|
|
|
|
$
|
116,666
|
|
|
|
Unlevered free cash flow (in thousands)
|
|
|
|
$
|
94,571
|
|
|
|
|
$
|
152,439
|
|
|
|
GMV (in thousands)
|
|
|
|
$
|
2,043,195
|
|
|
|
|
$
|
3,897,241
|
|
|
Unique subscriptions. Unique subscriptions represent the number of unique sites, standalone scheduling subscriptions and Unfold (social) subscriptions, as of the end of a period. A unique site represents a single subscription and/or group of related subscriptions, including a website subscription and/or a domain subscription, and other subscriptions related to a single website or domain. Every unique site contains at least one domain subscription or one website subscription. For instance, an active website subscription, a custom domain subscription and a Google Workspace subscription that represent services for a single website would count as one unique site, as all of these subscriptions work together and are in service of a single entity’s online presence. Unique subscriptions do not account for one-time purchases in Unfold. The total number of unique subscriptions is a key indicator of the scale of our business and is a critical factor in our ability to increase our revenue base.
Unique subscriptions increased 0.7 million, or 22.5%, for the year ended December 31, 2020 compared to the same period in 2019. The increase was primarily a result of an increase in new subscriptions and the retention of existing subscriptions.
Total bookings. Total bookings includes cash receipts for all subscriptions purchased, as well as payments due under the terms of contractual agreements for obligations to be fulfilled. In the case of multi-year contracts, total bookings only includes one year of committed revenue. Total bookings provides insight into the sales of our solutions and the performance of our business because, for a large portion of our business, we collect payment at the time of sale and recognize revenue ratably over the term of our subscription agreements.
Total bookings increased $150.3 million, or 29.2%, for the year ended December 31, 2020 compared to the same period in 2019. The increase was primarily a result of an increase in unique subscriptions and an increase in GMV processed through our platform.
Annual run rate revenue (“ARRR”). We calculate ARRR as the monthly revenue from subscription fees and revenue generated in conjunction with associated fees (fees taken or assessed in conjunction with commerce transactions) in the last month of the period multiplied by 12. We believe that ARRR is a key indicator of our future revenue potential. However, ARRR should be viewed independently of revenue, and does not represent our GAAP revenue on an annualized basis, as it is an operating metric that can be impacted by subscription start and end dates and renewal rates. ARRR is not intended to be a replacement or forecast of revenue.
ARRR increased $156 million, or 26.9%, for the year ended December 31, 2020 compared to the same period in 2019. The increase was primarily a result of an increase in unique subscriptions and an increase in GMV processed through our platform.
Average revenue per unique subscription. We calculate ARPUS as the total revenue during the preceding 12-month period divided by the average of the number of total unique subscriptions at the beginning and end of the period. We believe ARPUS is a useful metric in evaluating our ability to sell higher-value plans and add-on subscriptions.
ARPUS increased $5, or 2.8%, for the year ended December 31, 2020 compared to the same period in 2019. The increase was primarily a result of a mix shift toward commerce.
Adjusted EBITDA. Adjusted EBITDA is a supplemental performance measure that our management uses to assess our operating performance. We calculate adjusted EBITDA as net income excluding interest expense, other income/(loss), net, provision for/(benefit from) income taxes, depreciation and amortization, stock-based compensation expense and other items that we do not consider indicative of our ongoing
operating performance, which includes expenses associated with a special bonus in 2020. On December 7, 2020 we declared an extraordinary dividend payable to all stockholders of record as of December 14, 2020. In light of the extraordinary dividend, we concurrently approved a special bonus of approximately $23.5 million to be paid to current employees on record as of the date of the extraordinary dividend. The special bonus was designed to allow employees to participate in our overall successes in a manner commensurate with the stockholders receiving the extraordinary dividend. The special bonus was not tied to the employees’ individual performance, but rather was calculated as the greater of five hundred USD, EUR, or PLN or $2.666 per vested stock option held by the employee, the same amount paid per share to our stockholders. Payment of these special bonuses was completed by January 2021. We believe that it is meaningful to investors to adjust for this bonus in adjusted EBITDA because we do not routinely pay bonuses to employees and because this bonus was only paid in connection with our declaring an extraordinary dividend to stockholders. We do not expect to pay an extraordinary dividend or special bonuses in the future. Adjusted EBITDA is a non-GAAP financial measure. See “Selected Consolidated Financial and Operating Information” for a reconciliation of adjusted EBITDA to the most directly comparable financial measure calculated in accordance with GAAP.
Adjusted EBITDA increased $19.0 million, or 19.5%, for the year ended December 31, 2020 compared to the same period in 2019. The increase was primarily a result of increased revenue offset by investments in marketing spend and research and development costs.
Unlevered free cash flow. Unlevered free cash flow is a supplemental liquidity measure that our management uses to evaluate our core operating business and our ability to meet our current and future financing and investing needs. We define unlevered free cash flow as cash flow from operating activities less cash paid for capital expenditures increased by cash paid for interest expense net of the associated tax benefit. Unlevered free cash flow is a non-GAAP financial measure. See “Selected Consolidated Financial and Operating Information” for a reconciliation of unlevered free cash flow to the most directly comparable financial measure calculated in accordance with GAAP.
Unlevered free cash flow increased $57.9 million, or 61.2%, for the year ended December 31, 2020 compared to the same period in 2019. The increase was primarily a result of increased revenue and improved working capital performance.
Gross Merchandise Value. GMV represents the value of merchandise, physical goods, content and time sold, net of refunds, on our platform over a given period of time. GMV processed on our platform increased $1.9 billion, or 90.7%, for the year ended December 31, 2020 compared to the same period in 2019. The increase was primarily a result of an increase in physical goods sold as well as appointments scheduled through our platform.
Seasonality
Our business is impacted by seasonal fluctuations. We typically register a greater number of new unique subscriptions during the first quarter of a year. We believe this is related to, among other things, our customers’ buying habits and our increased marketing and sales spend in the first quarter of most years. We have also typically experienced a seasonal peak in the third quarter when customers engage more frequently with their users in advance of the holiday shopping season. In the future, seasonal trends may cause fluctuations in our quarterly results, which may impact the predictability of our business and operating results.
Liquidity and Capital Resources
To date, we have primarily financed our operations through cash flows from operations.
As of December 31, 2020, we had cash and cash equivalents and investment in marketable securities of $95.4 million and $17.9 million of available borrowing capacity under our Revolving Credit Facility. We believe our existing cash and cash equivalents and investment in marketable securities will be sufficient to meet our operating working capital and capital expenditure requirements over the next 12 months. Our future financing requirements will depend on many factors, including our growth rate, subscription renewal activity, the timing and extent of spending to support development of our platform, the expansion of marketing
and sales activities and any future investments or acquisitions we may make. Although we currently are not a party to any agreement and do not have any understanding with any third parties with respect to future investments in, or acquisitions of, businesses or technologies, we may enter into these types of arrangements following the effectiveness of the registration statement of which this prospectus forms a part, which could also require us to seek additional equity or debt financing. Additional funds may not be available on terms favorable to us or at all, including as a result of disruptions in the credit markets. See “Risk Factors.”
The following table summarizes our operating, investing and financing activities for the years ended December 31, 2019 and 2020.
|
|
|
|
Year Ended December 31,
|
|
|
($ in thousands)
|
|
|
2019
|
|
|
2020
|
|
|
Net cash provided by (used in):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating activities
|
|
|
|
$
|
102,333
|
|
|
|
|
$
|
150,030
|
|
|
|
Investing activities
|
|
|
|
$
|
(75,323)
|
|
|
|
|
$
|
34,262
|
|
|
|
Financing activities
|
|
|
|
$
|
(45,827)
|
|
|
|
|
$
|
(170,709)
|
|
|
Cash Flows Provided by Operating Activities
Net cash provided by operating activities in 2020 was $150.0 million, which reflected our net income of $30.6 million, which was increased by certain non-cash items primarily consisting of $31.3 million in stock-based compensation, $21.7 million in depreciation and amortization and partially offset by $4.9 million in deferred income taxes. Cash provided by operating activities included $40.1 million in deferred revenue and $27.1 million in accounts payable and accrued liabilities.
Net cash provided by operating activities in 2019 was $102.3 million, which reflected our net income of $58.2 million, which was increased by certain non-cash items primarily consisting of $18.3 million in depreciation and amortization, $18.0 million in stock-based compensation and partially offset by $4.0 million in deferred income taxes. Cash provided by operating activities included $30.3 million in deferred revenue, which was primarily offset by $17.9 million in prepaid expenses and other current assets.
Cash Flows Used in Investing Activities
Net cash provided by investing activities in 2020 was $34.3 million, which reflected $148.8 million in proceeds from the sale and maturities of marketable securities, partially offset by $110.0 million used to purchase marketable securities. We additionally spent $4.7 million in connection with the purchase of property and equipment.
Net cash used in investing activities in 2019 was $75.3 million, which reflected $145.9 million used to purchase marketable securities, partially offset by $174.6 million in proceeds from the sale and maturities of marketable securities. We additionally spent $8.2 million in connection with the purchase of property and equipment, and, over the course of 2019, we collectively spent $95.7 million, net of acquired cash, in connection with the acquisitions of Acuity Scheduling, Inc., Videolicious, Inc. and Unfold Creative, LLC.
Cash Flows From Financing Activities
Net cash used in financing activities in 2020 was $170.7 million, which primarily reflected dividends paid of $327.7 million, $20.2 million in stock purchases related to equity incentive plans, $15.0 million for contingent consideration associated with the Acuity Scheduling, Inc. acquisition and $6.6 million in principal payments on our Term Loan. These cash outflows were partially offset by borrowings of $197.3 million on our Term Loan.
Net cash used in financing activities in 2019 was $45.8 million. In December 2019, we borrowed $349.1 million pursuant to the Term Loan, which was partially offset by $0.9 million in debt issuance costs and $0.5 million in principal payments on other debt. We additionally received $4.4 million from stock sales related to equity incentive plans, which was partially offset by $3.3 million in stock purchases related to equity incentive plans. In November 2019, we announced a cash tender offer to repurchase from employees
shares of Class A common stock and Class B common stock and we ultimately repurchased 34,104 shares of Class A common stock and 1,779,290 shares of Class B common stock for an aggregate purchase price of $44.5 million. In addition, in December 2019, we repurchased 11,478 shares of Class A common stock, 591,177 shares of Class B common stock, 3,568,514 shares of Series A-1 redeemable convertible preferred stock, 8,348,512 shares of Series A-2 redeemable convertible preferred stock and 1,754,380 shares of Series B redeemable convertible preferred stock from existing stockholders for an aggregate purchase price of $350.0 million.
Indebtedness
On December 12, 2019, we entered into a credit agreement with various financial institutions that provided for a $350 million term loan (the “Term Loan”) and a $25 million revolving credit facility (“Revolving Credit Facility”), which included a $15 million letter of credit sub-facility. On December 11, 2020, we amended the credit agreement (as amended, the “Credit Agreement”) to increase the size of the Term Loan to $550 million and extend the maturity date for the Term Loan and the Revolving Credit Facility to December 11, 2025.
The original borrowings under the Term Loan were used to provide for the repurchase, and subsequent retirement, of outstanding capital stock in 2019 as described under “— Cash Flows from Financing Activities.” The additional borrowings were used to provide for a dividend on all outstanding capital stock.
Borrowings under the Credit Agreement are subject to an interest rate equal to, at our option, LIBOR or the bank’s alternative base rate (the “ABR”), in either case, plus an applicable margin. The ABR is the greater of the prime rate, the federal funds effective rate plus 0.5% or the LIBOR quoted rate plus 1.00%. The applicable margin is based on an indebtedness to consolidated EBITDA ratio as prescribed under the Credit Agreement and ranges from 1.25% to 2.25% on applicable LIBOR loans and 0.25% to 1.25% on ABR loans. In addition, the Revolving Credit Facility is subject to an unused commitment fee, payable quarterly, in an aggregate amount equal to 0.25% of the unutilized commitments (subject to reduction in certain circumstances).
As of December 31, 2020, $543.4 million was outstanding under the Term Loan. The Term Loan requires scheduled quarterly principal payments beginning March 31, 2021 in aggregate annual amounts equal to 2.50% for 2021 and 2022, 7.50% for 2023 and 2024 and 10.0% for 2025, in each case, on the amended Term Loan principal amount, with the balance due at maturity. In addition, the Credit Agreement includes certain customary prepayment requirements for the Term Loan, which are triggered by events such as asset sales, incurrences of indebtedness and sale leasebacks.
As of December 31, 2020, $7.1 million was outstanding under the Revolving Credit Facility in the form of outstanding letters of credit and $17.9 million remained available for borrowing by us. The outstanding letters of credit relate to security deposits for certain of our leased locations.
The Credit Agreement contains certain customary affirmative covenants and events of default. The negative covenants in the Credit Agreement include, among others, limitations on our ability (subject to negotiated exceptions) to incur additional indebtedness or issue additional preferred stock, incur liens on assets, enter into agreements related to mergers and acquisitions, dispose of assets or pay dividends and distributions. In addition, commencing with the fiscal quarter ending December 31, 2020, we are required to maintain an indebtedness to consolidated EBITDA ratio of not more than 4.50, tested as of the last day of each fiscal quarter, with a step-down to 4.25 for the fiscal quarters ending March 31, 2022 and June 30, 2022, a further step-down to 4.00 for the fiscal quarters ending September 30, 2022 and December 31, 2022 and a final step-down to 3.75 for the fiscal quarter ending March 31, 2023 and each fiscal quarter thereafter (the “Financial Covenant”), subject to customary equity cure rights. The Financial Covenant is subject to a 0.50 step-up in the event of a material permitted acquisition, which we can elect to implement up to two times during the life of the facility. If we are not in compliance with the covenants under the Credit Agreement or we otherwise experience an event of default, the lenders would be entitled to take various actions, including acceleration of amounts due under the Credit Agreement.
The obligations under the Credit Agreement are guaranteed by our wholly-owned domestic subsidiaries and are secured by substantially all of the assets of the guarantors, subject to certain exceptions.
Total interest expense related to our indebtedness was $0.6 million and $9.9 for the years ended December 31, 2019 and 2020, respectively.
Contractual Obligations
Our principal commitments consist of our obligations under our Credit Agreement and various long term operating leases for our offices. The following table summarizes our contractual obligations as of December 31, 2020.
|
|
|
|
Payments Due by Period
|
|
|
($ in thousands)
|
|
|
2021
|
|
|
2022
|
|
|
2023
|
|
|
2024
|
|
|
2025
|
|
|
Thereafter
|
|
|
Total
|
|
|
Credit Agreement
obligations
|
|
|
|
$
|
13,586
|
|
|
|
|
$
|
13,586
|
|
|
|
|
$
|
40,758
|
|
|
|
|
$
|
40,758
|
|
|
|
|
$
|
434,749
|
|
|
|
|
$
|
—
|
|
|
|
|
$
|
543,437
|
|
|
|
Operating lease payments
|
|
|
|
|
13,890
|
|
|
|
|
|
14,192
|
|
|
|
|
|
14,054
|
|
|
|
|
|
14,557
|
|
|
|
|
|
13,965
|
|
|
|
|
|
72,648
|
|
|
|
|
|
143,306
|
|
|
|
Total contractual obligations
|
|
|
|
$
|
27,476
|
|
|
|
|
$
|
27,778
|
|
|
|
|
$
|
54,812
|
|
|
|
|
$
|
55,315
|
|
|
|
|
$
|
448,714
|
|
|
|
|
$
|
72,648
|
|
|
|
|
$
|
686,743
|
|
|
Off-Balance Sheet Arrangements
We did not have any off-balance sheet arrangements as of December 31, 2019 and 2020.
Quantitative and Qualitative Disclosures about Market Risk
Foreign Currency Exchange Risk
While we generate the majority of our revenue in U.S. dollars, a portion of our revenue is denominated in Euros. For the year ended December 31, 2020, 69.2% of our revenue was denominated in U.S. dollars and 30.8% of our revenue was denominated in Euros. As we expand globally, we will be further exposed to fluctuations in currency exchange rates.
In addition, the assets and liabilities of our wholly-owned Irish subsidiary are denominated in Euros. Accordingly, assets and liabilities of this subsidiary are translated into U.S. dollars at exchange rates in effect on the applicable balance sheet date. Income and expense items are translated at average exchange rates for the applicable period. As a result, our results of operations will be impacted by any increase or decrease in the value of the Euro relative to the U.S. dollar. Transaction gains/(losses) for the years ended December 31, 2019 and 2020 were $1.2 million and $(8.8) million, respectively.
We currently do not hedge foreign currency exposure. We may in the future hedge our foreign currency exposure and may use currency forward contracts, currency options or other common derivative financial instruments to reduce foreign currency risk. It is difficult to predict the effect that future hedging activities would have on our operating results.
Interest Rate Sensitivity
We had cash equivalents and marketable securities totaling $38.3 million as of December 31, 2020. Our cash equivalents are held for working capital purposes. Our investments in marketable securities are made for capital preservation purposes. We do not enter into investments for trading or speculative purposes. Our cash equivalents and our portfolio of marketable securities are subject to market risk due to changes in interest rates. Fixed rate securities may have their market value adversely affected due to a rise in interest rates. Our future investment income may fall short of our expectations due to changes in interest rates or we may suffer losses in principal if we are forced to sell securities that decline in market value due to changes in interest rates.
Borrowings under the Credit Agreement are subject to an interest rate equal to, at our option, LIBOR or ABR, in either case, plus an applicable margin. Based on the outstanding balance of the Credit Agreement as of December 31, 2020, for every 100 basis point increase in LIBOR or ABR, we would incur approximately $5.4 million of additional annual interest expense. We currently do not hedge interest rate exposure. We may in the future hedge our interest rate exposure and may use swaps, caps, collars, structured
collars or other common derivative financial instruments to reduce interest rate risk. It is difficult to predict the effect that future hedging activities would have on our operating results.
Credit Risk
We maintain components of our cash and cash equivalents balance in various accounts, which from time to time exceed the federal depository insurance coverage limit. In addition, substantially all of our cash and cash equivalents, as well as our marketable securities, are held by one financial institution that we believe is of high credit quality. We have not experienced any losses on our deposits of cash and cash equivalents and accounts are monitored by our management team to mitigate risk. We are exposed to credit risk in the event of default by the financial institution holding our cash and cash equivalents or an event of default by the issuers of the corporate bonds and commercial paper we hold.
Critical Accounting Policies
Revenue Recognition
We primarily derive revenue from monthly and annual subscriptions. Revenue is also derived from non-subscription services including fixed fees earned on revenue share arrangements with third parties and fixed transaction fees we earn on sales made through our customers’ websites.
Revenue is recognized when control of the promised services is transferred to the customer, in an amount reflecting the consideration we expect to be entitled to in exchange for those services. Revenue is recognized net of expected refunds and any sales or indirect taxes collected from customers, which are subsequently remitted to governmental authorities. We typically receive payment at the time of sale and our customer arrangements do not include a significant financing component. The majority of our customer arrangements and the period between customer payment and transfer of control of the service is expected to be one year or less. Payments received in advance of transfer of control or satisfaction of the related performance obligation are recorded as deferred revenue with the aggregate amount representing the transaction price allocated to those performance obligations that are partially or fully unsatisfied. Subscription plans automatically renew unless advanced notice is provided to us.
Arrangements with our customers do not represent a license and do not provide our customers with the right to take possession of the software supporting our SaaS-based technology platform at any time.
We determine revenue recognition through the following steps:
•
identification of the contract, or contracts, with a customer;
•
identification of the performance obligations in the contract;
•
determination of the transaction price;
•
allocation of the transaction price to the performance obligations in the contract; and
•
recognition of revenue when, or as, we satisfy a performance obligation.
Subscription and domain managed services revenue is generally recognized over-time with the exception of cases where we act as a reseller of third-party software solutions. We have determined that subscriptions to our platform and social stories represent a stand-ready obligation to perform over the subscription term. These performance obligations are satisfied over time as the customer simultaneously receives and consumes the benefits. Subscription revenues related to third-party software solutions are recognized on a net basis at a point in time, upon purchase of the software solution, which is when we satisfy our obligation to facilitate the transfer between the customer and the third-party developer. Domain managed services revenue consists of consideration received from customers in exchange for domain registration and management services. We recognize consideration received from domain managed services on a gross basis over the subscription term since we are obligated to manage our customers’ domains over a contractual period, which is typically one year.
Revenue associated with non-subscription offerings is primarily recognized at a point in time. Included in non-subscription revenue are revenue share arrangements with payment processors and third-party
business applications (together “Commerce Partners”). Consideration received from Commerce Partners is recognized at a point in time as we are acting as an agent and facilitating the sale of products between our customers and third parties. Non-subscription revenue also includes transaction fees from certain plans where we charge customers fees for sales completed on their websites. This transaction fee revenue is recognized at a point in time, when the sale has been completed.
Business Combinations
Assets acquired and liabilities assumed as part of a business combination are recorded at their fair value at the date of acquisition. The purchase price is allocated to the identifiable net assets acquired, including intangible assets and liabilities assumed, based on estimated fair values at the date of acquisition. The excess of purchase price over the fair value of assets acquired and liabilities assumed, if any, is recorded as goodwill.
Unanticipated events and circumstances may occur which may affect the accuracy or validity of such assumptions, estimates or actual results. All subsequent changes to the estimated fair values of the acquired assets and liabilities assumed that occur within the measurement period and are based on facts and circumstances that existed at the acquisition date are recognized as an adjustment to goodwill.
Determining the fair value of assets acquired and liabilities assumed requires significant judgment, including the selection of valuation methodologies, estimates of future revenue and cash flows and discount rates in determining the fair value of intangible assets acquired and liabilities assumed. The assets purchased and liabilities assumed have been reflected on our consolidated balance sheet and the results are included on the consolidated statements of operations from the date of acquisition. We amortize intangible assets over their estimated useful lives on a straight-line basis.
Acquisition-related transaction costs, including legal and accounting fees and other external costs directly related to the acquisition, are recognized separately from the acquisition and expensed as incurred, primarily in general and administrative expense on the consolidated statements of operations.
We record estimates as of the acquisition date and reassess the estimates at each reporting period up to one year after the acquisition date. Changes in estimates made prior to finalization of purchase accounting are recorded to goodwill.
Goodwill and Long-Lived Assets
Our goodwill balance is tested for impairment at least annually. We perform our annual goodwill impairment analysis during the fourth quarter. If events or indicators of impairment occur between annual impairment analyses, we perform an impairment analysis of goodwill at that date. These events or circumstances could include a significant change in the business climate, legal factors, operating performance indicators, competition or sale or disposition of a significant asset.
The process of evaluating the potential impairment of goodwill is subjective and requires significant judgment at many points during the analysis, including the identification of reporting units, identification and allocation of the assets and liabilities to reporting units and determination of fair value. In estimating the fair value of a reporting unit for the purposes of our annual or periodic impairment analyses, we make estimates and significant judgments about the future cash flows of the reporting unit. Changes in judgment on these assumptions and estimates could result in goodwill impairment charges. We believe that the assumptions and estimates utilized are appropriate based on the information available to management.
Intangible assets with finite lives and property, plant and equipment are amortized or depreciated over their estimated useful life on a straight-line basis. We monitor conditions related to these assets to determine whether events and circumstances warrant a revision to the remaining amortization or depreciation period. We test these assets for potential impairment whenever we conclude events or changes in circumstances (triggering event) indicate that the carrying amount may not be recoverable. The impairment test requires a comparison of the estimated undiscounted future cash flows expected to be generated over the useful life of an asset group to the carrying amount of the asset group. An asset group is generally established by identifying the lowest level of cash flows generated by a group of assets that are largely independent of the cash flows of other assets. If the carrying amount of an asset group exceeds the estimated
undiscounted future cash flows, an impairment is measured as the difference between the fair value of the asset group and the carrying amount of the asset group. Determining whether a long-lived asset is impaired requires various estimates and assumptions, including whether a triggering event has occurred, the identification of asset groups, estimates of future cash flows and the discount rate used to determine fair values.
Stock-Based Compensation
We account for stock-based compensation in accordance with ASC 718, Stock-Based Compensation. Under the fair value recognition provisions of this accounting guidance, compensation cost for service-based awards, including options to purchase stock and restricted stock units, is measured at fair value on the date of grant and recognized over the service period, net of forfeitures. Forfeitures are recorded as they occur if the employee fails to meet the requisite service period. Compensation cost for performance-based awards is measured at fair value on the grant date and is recognized when the vesting trigger becomes probable. The fair value of stock options is estimated on the date of grant using a Black-Scholes option pricing model. The fair value of restricted stock units is estimated on the date of grant based on the fair value of our common stock. Stock-based compensation is allocated on a specific identification basis per each individual employee recipient and is classified into the corresponding line item where the related employee’s cash compensation and benefits reside within the consolidated statements of operations.
The assumptions used in the Black-Scholes option-pricing model are as follows:
•
Expected term. We estimate the expected term based on the simplified method for employees and the contractual term for non-employees.
•
Risk-free interest rate. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant.
•
Expected volatility. We estimate the volatility of our common stock on the date of grant based on the average historical stock price volatility of comparable publicly-traded companies in our industry group as there has been no public market for our shares to date.
•
Expected dividend yield. The expected dividend yield is 0%. While we declared a dividend in 2017 and subsequently in 2020, we view those to be special events associated with specific transactions; we do not expect to declare dividends on a routine basis.
We continue to use judgment in evaluating the expected volatility and expected term utilized in our stock-based compensation expense calculation on a prospective basis. As we continue to accumulate additional data related to our common stock, we may refine our estimates of expected volatility and expected term, which could materially impact our future stock-based compensation expense.
Common Stock Valuations
Prior to the effectiveness of the registration statement of which this prospectus forms a part, there has been no public market for our Class A common stock, Class B common stock and Class C common stock. The estimated fair value of our common stock has been determined by our board of directors at all relevant times. We and our board of directors utilized various valuation methodologies in accordance with the framework of the American Institute of Certified Public Accountants’ Technical Practice Aid, Valuation of Privately Held Company Equity Securities Issued as Compensation, to estimate the fair value of our common stock. Each valuation methodology includes estimates and assumptions that require judgment. These estimates and assumptions include a number of objective and subjective factors used to determine the value of our common stock at each grant date, including the following factors: (1) prices paid for our redeemable convertible preferred stock, which we had sold to outside investors in arm’s length transactions, and the rights, preferences and privileges of our redeemable convertible preferred stock and common stock; (2) valuations performed by an independent valuation specialist; (3) our stage of development and revenue growth; (4) the fact that the grants of stock-based awards involved illiquid securities in a private company; and (5) the likelihood of achieving a liquidity event for the common stock underlying the stock-based awards, such as an initial public offering, listing of our common stock on a stock exchange or sale of the company, given prevailing market conditions.
In valuing our common stock, our board of directors determined the value using both the income and the market value approach valuation methods. For each valuation, the equity value determined was then allocated to the common stock using the option pricing method (“OPM”). The OPM is based on a binomial lattice model, which allows for the identification of a range of possible future outcomes, each with an associated probability. The OPM is appropriate to use when the range of possible future outcomes is difficult to predict and thus creates highly speculative forecasts.
We believe this methodology was reasonable based upon our internal peer company analysis and further supported by arm’s length transactions involving our redeemable convertible preferred stock and common stock.. As our common stock was not actively traded, the determination of fair value involved assumptions, judgments and estimates. Application of these approaches involves the use of estimates, judgment and assumptions that are highly complex and subjective, such as those regarding our expected future revenue, expenses and cash flows, discount rates, market multiples, the selection of comparable companies and the probability of possible future events. If different assumptions had been made, the valuation of our common stock, stock-based compensation expense, consolidated net income and consolidated net income per share could have been significantly different.
Income Taxes
We recognized deferred income tax assets and liabilities for the expected future tax consequences attributable to both differences between financial statement carrying amounts of existing assets and liabilities and their respective tax basis as well as the existence of any net operating losses and certain income tax credit carryforwards. Income tax assets and liabilities are determined based on the differences between the financial statement and the tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse as well as the expected income tax effects of net operating loss and certain income tax credit carryforwards. Valuation allowances are established, when necessary, to reduce deferred tax assets when we expect the amount of tax benefit to be realized is less than the carrying value of the deferred tax asset.
We account for uncertainty in income taxes using a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For benefits to be recognized, a tax position must be more likely than not to be sustained upon examination by the taxing authorities. The amount recognized is measured as the largest amount of benefit that has a greater than 50% likelihood of being realized upon ultimate audit settlement.
Any tax-related penalties are included as part of the corresponding operating expense amount and tax-related interest is included within interest expense in the consolidated statements of operations. Accrued interest and penalties are included with the related income tax liability in other current liabilities on the consolidated balance sheet.
Recently Issued Accounting Standards
A discussion of recent accounting pronouncements is included in Note 2 to our audited consolidated financial statements included elsewhere in this prospectus.
Implications of Being an Emerging Growth Company
As a company with less than $1.07 billion in revenue during our last fiscal year, we qualify as an “emerging growth company” as defined in the JOBS Act. An emerging growth company may take advantage of specified reduced reporting and other requirements that are otherwise applicable generally to public companies. These provisions include that:
•
we are required to include only two years of audited consolidated financial statements in this prospectus in addition to any required interim financial statements and correspondingly required to provide only reduced disclosure in “Management’s Discussion and Analysis of Financial Condition and Results of Operations”;
•
we are not required to engage an auditor to report on our internal controls over financial reporting pursuant to Section 404(b);
•
we are not required to submit certain executive compensation matters to stockholder advisory votes, such as “say-on-pay,” “say-on-frequency” and “say-on-golden parachutes”; and
•
we are not required to disclose certain executive compensation related items such as the correlation between executive compensation and performance and comparisons of the chief executive officer’s compensation to our median employee compensation.
We may take advantage of these provisions until the last day of the fiscal year following the fifth anniversary of the effectiveness of the registration statement of which this prospectus forms a part or such earlier time that we are no longer an emerging growth company.
Under the JOBS Act, emerging growth companies also can delay adopting new or revised accounting standards until such time as those standards would otherwise apply to private companies. We currently intend to take advantage of this exemption.
For risks related to our status as an emerging growth company, see “Risk Factors — Risks Related to Being a Public Company — We are an “emerging growth company” and we cannot be certain if the reduced disclosure requirements applicable to emerging growth companies will make our Class A common stock less attractive to investors.”
BUSINESS
Our Mission
Squarespace exists to help people with creative ideas stand out and succeed. We enable millions to build a brand and transact with their customers in an impactful and beautiful online presence.
Overview
Squarespace is a leading all-in-one platform for businesses and independent creators to build a beautiful online presence, grow their brands and manage their businesses across the internet. We offer websites, domains, e-commerce, tools for managing a social media presence, marketing tools and scheduling capabilities. Our easy-to-customize and design-first platform empowers millions of customers in approximately 180 countries. From individual entrepreneurs just starting out to the world’s most iconic businesses, Squarespace helps transform our customers’ visions into reality by creating an impactful, stylish and professional online presence.
Consumer behavior continues to rapidly evolve in conjunction with changes in the internet and technology, and the amount of time and money consumers spend online is accelerating. As consumers increasingly engage with companies online to learn about and transact with new brands, the marketplace for consumer attention is intensely competitive. It is mission-critical for brands to differentiate themselves with a beautiful and effective online presence. Businesses and independent creators need a way to develop an impactful, professional-quality presence quickly and cost-effectively that also enables them to transact directly with their customer base.
The Squarespace platform empowers our customers to build, manage and grow compelling brands online. We bring together three primary pillars of functionality to create a unified, all-in-one platform to help our customers grow:
•
Presence: Our intuitive design tools make it possible to quickly and easily create a professional-quality, mobile and desktop friendly website, acquire a domain and have a differentiated social media presence. Since our founding, we have aggressively invested in our design and creative teams in an effort to create innovative, forward-thinking website designs that ensure our customers’ websites are seen as among the most sophisticated on the web.
•
Commerce: Through our comprehensive commerce solutions, we provide our customers everything they need to sell physical products, subscriptions, content or services online. Our commerce functionality is fully integrated with our presence products, eliminating the need for third-party tools.
•
Marketing: We provide brands with powerful, integrated marketing solutions, such as Email Campaigns, customer relationship management functionality, SEO and analytics tools to help them better understand and target their audiences while driving traffic, sales and conversion.
Squarespace is an engineering and design-led company and our platform features a modern architecture, scalable delivery platform and secure solutions that provide support for our global customer base. The Squarespace platform works for customers that are just getting started, as well as large brands that need scale, flexibility and reliability.
In addition to servicing customers from inception to at-scale, our customers span a wide variety of industries and use cases, from SMBs and independent creators, such as restaurants, photographers, wedding planners, artists, musicians and bloggers, to iconic brands. As of December 31, 2020, we had 3.66 million unique subscriptions to our platform.
We believe we have a significant existing and growing market opportunity with over 800 million small businesses and self-employed ventures globally. In addition, according to the Kauffman Index, nearly 540,000 new businesses are created each month in the United States. According to Clutch, approximately 46% of SMBs are not online today and we believe there is significant headroom for growth with increasing online penetration alone. We believe we have created a highly-efficient and multi-pronged go-to-market model that enables us to capitalize on our market opportunity and acquire customers in a cost effective manner. We
believe we have a stable and predictable business model driven by efficient customer acquisition and the adoption by our customers over time of higher value offerings and add-on subscriptions. We generated in 2019 and 2020, respectively:
•
revenue of $484.8 million and $621.1 million;
•
net income of $58.2 million and $30.6 million;
•
adjusted EBITDA of $97.6 million and $116.7 million;
•
cash flow from operating activities of $102.3 million and $150.0 million; and
•
unlevered free cash flow of $94.6 million and $152.4 million.
For additional information about our non-GAAP financial measures, including reconciliations of the non-GAAP financial measures to the most directly comparable financial measures stated in accordance with GAAP, see “Selected Consolidated Financial and Operating Information — Key Performance Indicators and Non-GAAP Financial Measures.”
Our Industry
With each year, the number of people connected to the internet via desktop and mobile devices has been increasing, leading to more time and money spent online. To take advantage of this global trend, businesses and independent creators are rapidly evolving how they engage with consumers.
Some of the key trends impacting our industry include:
•
The Criticality of Online Presence: The rise in global internet usage has resulted in a dynamic and competitive online environment where consumers are provided with more options and more ways to engage than ever before. Many customers’ first interaction with a new brand will be digital. In response, businesses and independent creators have rapidly transitioned online (a shift further accelerated by the recent pandemic). This movement is exemplified by the growing prevalence of digitally-native brands that connect and transact directly with their customers online without the need for a physical storefront. Despite the nearly 540,000 new businesses created each month in the United States according to the Kauffman Index, only an estimated 54% of small businesses in the United States have a website, as estimated by Clutch in 2018.
•
The Rise in Online Commerce: In addition to engaging with brands online from a discovery standpoint, consumers also expect to transact with them across digital channels, purchasing both goods and services. Statista projects over 2.1 billion people worldwide are expected to purchase goods and services online by 2021. This will accelerate the growth of global retail e-commerce, which eMarketer expects to increase from $3.5 trillion in 2019 to $6.5 trillion in 2023, representing 22% of overall retail spending in 2023. In 2020, online commerce sales accelerated with the onset of COVID-19, as consumers spent $347 billion online with U.S. retailers in the first six months of 2020, up 30% from $266 billion for the same period in 2019, according to Digital Commerce 360. In addition to businesses that have transitioned online, numerous digitally-native businesses have emerged in response to the rise in online commerce. Prioritizing ease-of-use and convenience with a consistent and high-quality experience across online channels, digitally-native businesses are growing nearly three times as fast as the average e-commerce retailer according to Digital Commerce 360.
•
The Rise of Direct to Consumer Relationships: As brands move online and gain more control over their technology stack, there is a trend towards brands being able to directly own the relationship with their customers. This allows businesses and independent creators to directly access their customer data, which is not possible when relying on social networks and other distribution channels that otherwise might control access to it.
•
The Preference for DIY and DIFM Solutions: DIY website creation tools have democratized the web, rapidly displacing expensive agencies and making equivalent design quality out-of-the-box, accessible and easy-to-use for all. Even customers not looking for a DIY solution will seek out professionals who will, many times, turn to DIY solutions to power their work. Affordable DIFM services leverage powerful DIY development tools due to the speed, scalability and maintenance
advantages of these platforms. In response to a recent survey of SMBs commissioned by Mono Solutions, 71% of SMBs prefer DIY or DIFM versus hiring an agency to create and maintain their online presence.
The Challenges of Creating and Growing an Online Brand
Businesses and independent creators face several key challenges as they build and market their brands online, including:
•
Growing Competition for Consumer Attention: As consumers increasingly engage online, the marketplace for consumer attention is intensely competitive, making it mission-critical for brands to differentiate themselves with an online presence that stands out. Based on a study by the Association for Computing Study and a study in Taylor & Francis’ Behavior and Information Technology Journal, 94% of first impressions are design-related and it takes less than 0.05 seconds for someone to form an opinion about whether they like a website or not. According to a survey conducted by Rareform New Media, 48% of people cite website design as the number one factor in determining the credibility of a business. As a result, brands are more focused than ever on building an impactful online presence to differentiate themselves. Unfortunately, creating a unique online presence has historically required a large design and development budget that is outside the reach of emerging brands.
•
Limited Ability to Transact with Consumers: Consumers are increasingly purchasing goods and services online, including products, subscriptions and content. Many traditional commerce offerings are primarily designed to sell physical products. We believe in order for businesses and independent creators to succeed, they require comprehensive solutions that enable them to transact with their consumers across the full range of commerce models, including sale of physical goods, subscriptions and content, as well as capabilities such as scheduling appointments.
•
Accessibility of Solutions: SMBs often lack the tools to develop a comprehensive and effective online presence quickly and affordably. Developing and maintaining a beautiful, fully functional website that addresses various use cases often requires extensive coding skills or the engagement of professional designers, agencies or developers. Professional services can be very expensive and customers often end up dependent on third-parties for ongoing maintenance and upgrades. Meanwhile, traditional DIY solutions often lack the complex functionality required to create and maintain high-quality, expressive content.
•
Lack of Integrated Solutions: Historically, brands have leveraged multiple separate solutions due to the lack of a comprehensive, integrated platform. For example, a wellness business that offers subscription services, sells products, distributes a newsletter and enables online appointment bookings typically requires multiple solutions from different vendors to provide all of these capabilities. This disjointed approach also makes it difficult for businesses to maintain a consistent brand across multiple solutions and to aggregate data and derive insights on how effectively they are serving their customers. As businesses continue to evolve and add new offerings, the integration of their solutions becomes crucial to maintain a cohesive brand expression across all touchpoints, to analyze data to grow their businesses and to provide an efficient and seamless customer experience across channels and devices.
•
Inability to Adapt Quickly to Rapidly Changing Consumer Behavior: Traditional solutions often lack the flexibility brands require to keep up with constantly changing consumer behavior. The rapid shift of social media becoming a commerce channel is one example of how businesses have had to alter their marketing strategy quickly to keep up with evolving consumer behavior. From new products and services to new digital channels, businesses and independent creators need flexible and dynamic solutions with broad functionality.
The Key Benefits of our Platform
Squarespace has solidified its position as a go-to premium offering for online presence and commerce. Our comprehensive, integrated platform provides a unified experience for our customers. The key tenets of our platform are:
•
Beautiful Design, Consistent Everywhere: We believe design is not a luxury. Our beautifully-designed, award-winning templates enable our customers to look professional from the start, while also
providing deep levels of customization so that no two websites look alike. This empowers our customers to stand out and express their story and brand in a beautiful, engaging and consistent way across digital channels, including websites, social media and Email Campaigns, among others.
•
Sell Anything: Our commerce solution supports a diverse set of business models, allowing our customers to sell physical products, subscriptions, content and services within the same platform. For example, a fitness instructor can market their brand professionally online and their clients can book personal training sessions through their website, attend virtual classes and buy custom apparel, all powered on the Squarespace platform.
•
Power with Simplicity: Our platform balances ease-of-use with a deep level of functionality required to run more complex businesses. Our platform is also accessible from anywhere — customers can update their website or manage their business on-the-go using our web application or our iPhone and Android applications.
•
All-in-One Platform: Our all-in-one platform offers businesses and independent creators everything they need to build and manage their online presence and commerce across devices and social media. Our fully-integrated SaaS-based content management solution combines a website builder, a commerce solution, social presence and blogging infrastructure, a hosting service, a domain name registrar, marketing tools and differentiated analytics across digital channels. This comprehensive approach enables customers to aggregate and analyze data across solutions to help our customers better understand their audience and drive higher traffic, sales and conversion through a single interface.
•
Built for Modern Use Cases: Our platform can adapt quickly to emerging channels and technology. For example, Unfold provides easy-to-use tools that empower storytellers to differentiate their content and brand on social media. With elevated design collections and intuitive photo and video editing, Unfold helps our customers look great beyond their websites. We aim to establish a foothold with the next generation of independent creators, because we understand that not all journeys may begin with a website.
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Our Customer Support: We supplement our all-in-one platform with customer service delivered by a global team of in-house product and operations specialists. To serve our worldwide customer base, we are available 24/7/365 through multiple channels of communication, including live chat, email and social. We address the diverse needs of our customers in six languages across eight time zones.
Our Market Opportunity
We believe that there is a meaningful opportunity to empower individuals and businesses to succeed by providing several offerings, including web presence, commerce and marketing. According to the World Trade Organization, SMBs represent over 90% of all global companies and contribute 55% of GDP in developed economies. Based on data from Intuit, as of 2019, there are an estimated 800 million SMBs and self-employed ventures worldwide. We believe that our near and medium-term addressable market is in excess of $150 billion based on the number of global SMBs and self-employed ventures and our ARPUS as of December 31, 2020.
Global spending on e-commerce is set to accelerate as well and Statista projects the size of the e-commerce software application market to grow from $6.3 billion in 2020 to $7.3 billion in 2024. In response to this accelerating growth, we continue to innovate and add new services and features that create incremental opportunities to further penetrate as well as expand our core addressable market through new use cases and entry points. Broader e-commerce growth and the increased prevalence of consumers transacting online create demand for our core web presence and commerce tools in addition to generating additional monetization opportunities through other features we offer, including online scheduling, exclusive Member Areas to promote and protect premium content and Email Campaigns. We believe the growth of SMBs and proliferation of commerce, both domestically and internationally, will continue to drive our market opportunity and unlock new monetization opportunities for our platform. We see this as just the beginning in a long journey between Squarespace and our user community, helping to define commerce and engagement in a digital world.
Our Growth Strategies
We exist to help people with creative ideas stand out and succeed. We want to be the platform for every business and independent creator around the world that wants to establish an online presence. To that end, we are pursuing the following growth strategies:
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Expand Our New Customer Base, Especially Internationally: We aim to continue to deploy offerings across the globe, both in English and non-English speaking regions, in order to continue to diversify and accelerate our growth. We currently serve customers in approximately 180 countries and approximately 30% of our bookings as of December 31, 2020 are from outside of the United States. We currently support six languages and we will continue to invest internationally and localize our product offerings. With worldwide internet penetration at 51% versus the United States at 90% according to eMarketer, there is significant growth potential within international markets. We intend to continue to invest in strategic marketing across brand, direct response and unpaid channels in order to deepen overall brand awareness and attract businesses and individuals seeking to establish an online presence.
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Expand and Deepen our Commerce Offerings: Our comprehensive commerce offerings enable our customers to sell anything online, while also attracting a differentiated set of commerce-oriented brands to our platform. We will continue to expand our commerce capabilities through the development of solutions that enable new ways for our customers to transact online. We also believe that ongoing investment in our partner ecosystem and integrations will allow us to deliver more value to our customers, further increasing adoption of e-commerce functionality. As we continue to scale our platform, both to more use cases and geographically, we intend to integrate partners in extensible commerce functions such as international payments and tax solutions.
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Continued Investment in our Design Platform: Design is fundamental to us and permeates not just our customer templates but our user experience and marketing messages. We integrate designers with our product and engineering teams from the outset to ensure that we weave our design sensibility into everything we do. We expect to continue to invest in our core design platform and technology to ensure that we maintain our position at the forefront of leading design on the web.
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Deepen Relationships with Existing Customers: As we continue to innovate and broaden our suite of solutions, we believe that we create significant incremental opportunities to partner with our customers and serve more of their needs. We plan to further invest in offerings that will enable our customers to grow their businesses by using more of our products and features, including online scheduling, exclusive Member Areas and Email Campaigns. We supplement our all-in-one platform with customer service delivered by a global team of in-house product and operations specialists. To serve our worldwide customer base, we are available 24/7/365 through multiple channels of communication including live chat, email and social.
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Promote and Develop our Enterprise Capabilities: Enterprise customers account for less than 1% of our bookings for the year ended December 31, 2020. Enterprise includes both larger businesses looking to build an online presence and volume customers who may require scalable solutions for many websites. For example, an agriculture e-commerce company relies on our enterprise solutions to power hundreds of websites for independent farmers to market and sell products. We offer dedicated, prioritized support to ensure they are able to fully leverage our all-in-one platform.
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Expand our Experts Community: Squarespace is host to a large community of experts that build sites for others on our platform. Squarespace Experts are experienced third-party designers and developers, often part of our Circle community, that are vetted by us for their years of experience and quality of work. We believe that this community provides us with a unique marketing channel to address the steadily growing DIFM website development industry. We provide these experts with knowledge, tools and support that they leverage to find clients and grow their businesses. This community also gives us a powerful feedback loop when we are testing new functionality or making adjustments to our platform.
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Opportunistically Pursue Strategic Acquisitions: We recently completed the acquisition of Tock and previously completed and integrated three strategic acquisitions: Acuity, an end-to-end scheduling service provider, in April 2019; Videolicious, a provider of video creation solutions, in August 2019;
and Unfold, a social toolkit for storytellers, in October 2019. We believe that future strategic acquisitions will enable us to accelerate key platform, product and marketing initiatives, and augment our organic growth strategy.
Our Platform and Products
Our platform brings together a comprehensive set of solutions across presence, commerce and marketing for businesses and independent creators to build a beautiful online presence, grow their brands and manage their businesses across customer touchpoints. Our design excellence, woven throughout our entire platform, provides customers with professional-quality branding and a differentiated digital presence.
Presence
We are a leader in website design and enable businesses and independent creators across industries to grow online and build brands. Our core products include websites, domains and our social product, Unfold, in addition to a number of complementary features such as Google Workspace. We also offer a set of plans for larger customers.
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Websites: We offer a comprehensive set of award-winning website templates created by our world-class designers. Our simple and intuitive drag-and-drop solutions enable our customers to build flexible, relevant and easy-to-customize pages with sections that are designed to help bring their ideas to life quickly and beautifully. Our platform provides hundreds of customizable settings, including fonts, custom color palettes and built-in photo editing capabilities, so every website can be made to stand out with just a few clicks.
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Domains: Buying a domain with Squarespace is simple and straightforward. We offer a large selection of domains, including the latest top-level domains. Our domain management tools allow customers to do everything from editing their DNS records to forwarding their URL. All of our sites come with the security tools needed to host a growing online presence and automatically provide free domain privacy for all eligible domains.
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Social (Unfold): With elevated design collections and intuitive photo and video editing, Unfold helps users create expert-looking stories for social media. As of December 2020, Unfold was the #1 ranked graphics app in the Apple Store in 52 countries, with over one billion stories across 40 million downloads. Unfold also enables businesses to create and manage brand assets on social platforms from a single place and enables stories to be shared to the web. Unfold+ and Unfold for Brands subscriptions offer more advanced experiences, including access to additional collections and features to expand a brand’s storytelling toolkit and the ability to create custom bio sites that connect social followers to a website.
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Enterprise: For our larger customers, we offer a set of premium plans combining Squarespace’s most advanced features with dedicated and prioritized support. We provide business solutions spanning from bulk purchase packaging, to custom contracting and payment methods, to premium support tailored to each customer’s needs. We also offer the ability for these customers to secure their accounts using customized Single Sign-On (SSO) providers.
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Google Workspace (Professional Email): Professional email on a custom domain is a necessity for our customers who are establishing a brand online. To offer this, we enable our customers to activate Google Workspace on their domains that are hosted by Squarespace. In addition to professional email, Google Workspace customers also get access to Google Calendar, Google Drive, Google Hangouts and more.
Commerce
Squarespace provides tools for customers to transact in the ways that work best for their businesses.
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Commerce: Squarespace offers deep e-commerce functionality in our integrated platform. Our easy-to-customize and award-winning designs help our customers sell more by making them look better. Being a true multi-modal commerce platform, we support the sale of physical products, subscriptions, content and services without the need for third-party tools or integrations. Our
commerce functionality includes inventory management, product merchandising, customer relationship management, customized purchase confirmation emails, product promotions, gift cards, selling on Instagram and more. We offer secure checkout and enable payment through credit or debit cards via our partnerships with payment processors. Squarespace customers can also sell offline via our Point-of-Sale integration with card reader hardware.
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Scheduling: As an add-on to our customers’ websites or as a standalone subscription, Squarespace Scheduling enables businesses to share availability and take bookings for appointments and classes. Scheduling integrates with the most popular calendars and video conference tools and includes customizable communications for appointment confirmations, reminders, follow-ups and intake forms. Consumers can pay online or reschedule appointments with a click, all in one place.
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Member Areas: Our customers can create exclusive members-only content and have full control over how to charge for access. As an add-on subscription, Member Areas enables many additional commerce use cases including virtual classes, private podcasts and paid newsletters.
Marketing
As add-ons to our presence and commerce subscriptions, we provide brands with powerful, integrated marketing products and features such as Email Campaigns, SEO and analytics.
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Email Campaigns: Our customers can amplify their message and make personal connections with their customers through our Email Campaigns product, which is available as an add-on subscription to their website subscription. Customers can seamlessly use and manage contact lists and drop content and products from their sites into Email Campaigns, giving them quick access to content and keeping their brand consistent between the web and email. Our platform is designed to make it easy to manage a growing audience, with features like smart client lists and easy access to customer profiles, which include things like customer order information.
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SEO: Every Squarespace website and online store comes optimized to be indexed and found online, with a suite of integrated features and guides that help maximize prominence among search results. Squarespace was the first website builder to integrate directly with Google Search Console, giving our customers a view into how they are being seen and found on Google. Everything on the Squarespace platform is optimized to be found online with no third-party plugins required.
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Analytics: We have developed our own custom analytics solution that incorporates data from our website, commerce and email solutions into a single view for our customers. Without an integrated platform, customers would be forced to use multiple third-party tools, resulting in a fragmented view of their data across multiple systems.
Our Technology
Our technology features a modern architecture and a scalable, secure delivery platform that provides support for our global customer base.
Managed Infrastructure: We take care of site hosting, software upgrades, network connectivity, content delivery network deployment and DNS on behalf of our customers to simplify the complexities of running a modern website.
Scalability: We are able to process and manage large-scale traffic on our customers’ websites. We process 2.3 billion website views monthly (averaging over 45,000 requests per second) from over one billion unique visitors. Our customers are also insulated from the costs of bandwidth and storage, which are included in an unlimited capacity for all of our customers’ websites.
Resiliency: We have 99.95% uptime for our products and aim for sub-second latencies for core user experience interactions. Our customers’ websites are hosted with full local and geographic redundancy in the case of infrastructure failures and our dedicated Squarespace operations team monitors incidents 24/7, helping to ensure that we are able to respond to customer incidents in a timely manner.
Security and DDoS Mitigation: We securely host our customers’ websites and defend against DDoS attacks on their behalf, which have the ability to impact network resources and services of our customers. We regularly run penetration tests against our own infrastructure, testing for security weaknesses.
Automatic Transport Layer Security: In order to help provide secure browsing experiences, we automatically generate and renew SSL certificates for all websites hosted on our platform for free.
Our Customers
Squarespace serves customers of all sizes across various industries. Our customers range from individuals and small businesses just getting started to some of the world’s most iconic brands. As of December 31, 2020, we had over 3.66 million unique subscriptions on our platform.
Marketing
We employ a full life cycle marketing plan that utilizes a mix of channels to highlight the power of our all-in-one platform and increase awareness of the unique values we offer to our customers to help them manage and grow their brand. These channels include:
Brand
Our marketing efforts are thoughtfully designed to target our core customer at every potential entry point to our platform, from domains to social presence, online stores and enterprise. We showcase our brand in a creative and memorable manner through strategic partnerships that increase customer affinity. For example, our long-term partnership with The Madison Square Garden Entertainment Corp. (“MSG”) has not only resulted in Squarespace becoming the New York Knicks’ first jersey sponsor, but has also provided national exposure during televised games and established prime advertising spots at MSG to local, Squarespace-powered SMBs. Other leading brands we have partnered with include Sesame Workshop, HBO and various design festivals around the world. Developed and executed in-house, we believe our ads showcase the creative talents of our customers in an effective and stand out way, which was recognized when we received the 2017 Emmy award for outstanding commercial. We track the success of our brand advertising by measuring metrics such as growth in brand awareness, organic searches and website landings.
Direct Response
We seek to optimize the efficiency of our direct response marketing spend by setting rigorous cost per acquisition targets. Our in-house programmatic buying team actively seeks out high growth channels such as Instagram and Pinterest to garner extensive reach of potential customers who value design and aesthetics when building their online presence. We also work closely with numerous Podcast hosts and YouTube creators to authentically share our product and brand story, and carefully manage the ad execution and performance at the individual host and creator level to sharpen our direct response marketing efforts.
CRM and Content
We believe that our marketing efforts do not end once we attract potential customers to our website or convert them to paid users. Our primary goal is to support our customers as they grow their businesses and we measure that through customer retention and lifetime value expansion.
We achieve this by content marketing in our own channels to inform existing customers of our latest features and platform updates to drive adoption of solutions that they may not be already subscribed to. Our content marketing also includes webinars, video tutorials and customer Q&As with tips and tricks for customers to be successful entrepreneurs and get the most of their Squarespace subscriptions through insights into our full platform capabilities.
Our targeted marketing efforts have resulted in continued unique subscription growth and increasing bookings over time.
Our marketing and sales expenses were $184.3 million and $260.0 for the years ended December 31, 2019 and 2020, respectively.
Our Employees and Culture
As of December 31, 2020, we had 1,256 full-time employees. Of these employees, 1,115 are located in the United States and 141 are located in the European Union.
We believe our culture serves as a strong competitive advantage, allowing us to build the kind of company that can truly lead a market and continue to innovate for our customers. The development and empowerment of our people are critical to our ability to deliver differentiated and creative solutions to our customers. We are continuously seeking to build an exceptional culture that strives to drive engagement and results in our employees exceeding expectations and directly impacting our success.
Our culture is focused on six core principles:
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Be the Customer. Developing deep empathy for our customers’ needs, challenges and dreams is critical. We want to provide the same standard of tools and services to our customers that we want for ourselves.
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Design is not a Luxury. We believe that great design should be available to everyone and we are relentless in our pursuit of great design in everything we do.
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Build the Ideal. We seek to shape the future of our industry by conceiving of and building game-changing products. To do this, we take bets on big ideas, while also recognizing that pursuit of perfection is a process that requires constant iteration.
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Learn Fast, Act Fast. We believe that pursuing the fastest path to learning and having a healthy bias to action are keys to our success. We seek to do both whenever possible.
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Protect Creativity. Ideas can come from anyone or anywhere, but they are fragile and require space to develop and grow. We believe the creative process is critical to our success and we seek to protect it as we develop new directions for our solutions and company.
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Simplify.
We are proud to be recognized for our focus on our people. We have been named a Top 10 New York-based Employer Brand by Hired every year since 2017 and we are Great Place to Work-certified. In 2021, we were recognized as #5 on Comparably’s Best Places to Work in New York list and earned a spot on their list of Best HR Teams. In 2021, the Irish Times also named Squarespace to their Top 10 Best Workplaces in Ireland list. In 2020, Fairygodboss named us to their lists for both Best Companies for Women and Best Tech Companies for Women. Inc’s 2020 Best in Business list recognized us as a General Excellence Winner within the Software category. We’ve consistently been named one of the Built In NYC 100 Best Places to Work In NYC. We were also named one of Fortune’s Top 50 Best Workplaces for Parents in 2017, and as a Top Workplace by The Oregonian in 2015, 2018 and 2019.
Our in-house Customer Operations team (comprising approximately 400 employees across many locations) has won 13 Stevie Awards for outstanding customer service since 2013. We have invested heavily in developing and producing self-help educational resources for customers of various levels of technical sophistication, including guides, video tutorials and webinars, while also offering personalized and timely support through live chat and email.
None of our employees are represented by a labor union or covered by collective bargaining agreements and we have not experienced any work stoppages.
Competition
We believe that the market for providing SaaS-based website design and management software is evolving and highly fragmented.
We face competition from specific providers across the different facets of our business model offering services or products that overlap with parts of our solutions, including:
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Online presence solutions such as Automattic, Wix and Weebly;
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E-commerce solutions such as Shopify and BigCommerce;
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Domain registration and website hosting services such as GoDaddy;
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Email marketing solutions such as MailChimp; and
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Scheduling solutions such as MindBody.
We believe that we compete favorably because of our comprehensive, all-in-one platform, multi-channel commerce capabilities, easy-to-use and design-first solutions and the overall depth and extensibility of our solutions.
Intellectual Property
We rely on a combination of trade secret, trademark, copyright, patent and other intellectual property laws to protect our intellectual property. We also rely on contractual arrangements, such as licenses, assignments and confidentiality agreements and technical measures.
We have been issued federal registrations for trademarks, including “Squarespace” and related stylized marks. We hold domestic and international domain names that include “Squarespace” and similar variations.
We control access to our intellectual property and confidential information through internal and external controls. We require our employees and independent contractors to enter into agreements assigning to us any inventions, trade secrets, works of authorship and other technology and intellectual property created for us and protecting our confidential information. We generally enter into confidentiality agreements with our vendors.
Government Regulations
The legal environment of internet-based businesses, both in the United States and internationally, is evolving rapidly and is often unclear. This ambiguity includes topics such as data privacy and security, pricing, advertising, taxation, content regulation and intellectual property ownership and infringement.
We are subject to several local, state, federal and foreign laws and regulations regarding privacy and data protection. Regulators around the world have adopted or proposed limitations on, or requirements regarding, the collection, distribution, use, security and storage of personal information, payment card information or other confidential information of individuals and the FTC and many state attorneys general are applying federal and state consumer protection laws to impose standards on the online collection, use and dissemination of data. In the event of a security breach, these laws may subject us to incident response, notice and remediation costs. Failure to safeguard data adequately or to destroy data securely could subject us to regulatory investigations or enforcement actions under applicable data security, unfair practices or consumer protection laws. The scope and interpretation of these laws could change and the associated burdens and our compliance costs could increase in the future.
We are also subject to U.S. and foreign laws and regulations that govern or restrict our business and activities in certain countries and with certain persons, including the U.S. Commerce Department’s Export Administration Regulations and economic and trade sanctions regulations maintained by OFAC, as well as anti-bribery and anti-corruption laws and regulations, including the FCPA and the U.K. Bribery Act.
Legal Proceedings
From time to time, we may be involved in various legal proceedings arising from the normal course of business activities. We are not presently a party to any litigation the outcome of which we believe, if determined adversely to us, would individually or taken together have a material adverse effect on our business, financial condition and results of operations.
Facilities
Our corporate headquarters is located in New York, New York. It covers approximately 165,000 square feet pursuant to an operating lease that expires in 2030. We also have office locations in Dublin, Ireland (approximately 25,000 square feet) as well as Portland, Oregon (approximately 26,000 square feet) and Los Angeles, California (approximately 6,000 square feet) in the United States.
MANAGEMENT
The following table provides information regarding our executive officers and our board of directors:
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Name
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Age
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Position
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Anthony Casalena
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38
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Founder, Chief Executive Officer and Chairperson of the Board
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Paul Gubbay
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53
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Chief Product Officer
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Marcela Martin
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49
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Chief Financial Officer
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Courtenay O’Connor
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41
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General Counsel and Secretary
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Andrew Braccia
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45
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Director
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Michael Fleisher
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56
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Director
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Jonathan Klein
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60
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Director
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Liza Landsman
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51
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Director
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Anton Levy
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46
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Director
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Executive Officers
Anthony Casalena is the Founder and Chief Executive Officer of Squarespace, which he started from his dorm room in 2003. During the Company’s early years, Mr. Casalena acted as the sole engineer, designer and support representative for the Squarespace platform. In addition to running the Company and setting overall product strategy, Mr. Casalena remains actively involved in many departments of the Company that he had previously run himself. Anthony holds a B.S. in Computer Science from the University of Maryland. We believe that Mr. Casalena is qualified to serve as a member of our board of directors because of the perspective and experience he brings as our Founder and Chief Executive Officer.
Paul Gubbay has served as our Chief Product Officer since July 2020. Prior to joining Squarespace, Mr. Gubbay spent 15 years at Adobe Inc. as Vice President of Design and Web, responsible for a wide span of Adobe’s Creative Cloud products including Illustrator, Indesign, XD and Spark.
Marcela Martin has served as our Chief Financial Officer since November 2020. Ms. Martin has more than 25 years of financial and operations experience at global technology and media companies, most recently as Senior Vice President and Chief Financial Officer of Booking.com B.V. from January 2019 to October 2020. Previously, she spent three years at National Geographic Partners, LLC as Executive Vice President, Chief Financial Officer and Chief Administrative Officer from January 2016 to December 2018. Originally from Argentina, Ms. Martin graduated from the University of Morón with expertise in accounting and received a MBA from the University of Liverpool.
Courtenay O’Connor has served as our General Counsel and Secretary since November 2017. From November 2016 to November 2017, Ms. O’Connor served as our Senior Counsel. From April 2015 to November 2016, Ms. O’Connor served as Deputy General Counsel of Gizmodo Media Group, LLC. Ms. O’Connor holds a J.D. from The University of Michigan Law School and a B.A. from Wellesley College.
Directors
Andrew Braccia has served as a member of our board of directors since July 2010. Since April 2007, Mr. Braccia has been a Partner at Accel. Mr. Braccia serves as a member of the board of directors of Slack Technologies, Inc. and is also a member of the board of directors of several private technology companies. Mr. Braccia holds a B.S. in Business Administration from the University of Arizona. We believe that Mr. Braccia is qualified to serve as a member of our board of directors because of his significant knowledge of and history with our Company, his experience as a director of publicly traded companies and his knowledge of our industry.
Michael Fleisher has served as a member of our board of directors since December 2018. Mr. Fleisher has served as Chief Financial Officer of Wayfair Inc. since October 2013. Mr. Fleisher received a B.S. from the University of Pennsylvania’s Wharton School of Business. We believe that Mr. Fleisher is qualified to serve as a member of our board of directors because of his extensive finance background, including
service as Chief Financial Officer of multiple companies, his experience as an executive of publicly traded companies and his knowledge of our industry.
Jonathan Klein has served as a member of our board of directors since July 2010. Mr. Klein led Getty Images as a Co-Founder and Chief Executive Officer for more than 20 years and currently serves as Deputy Chairman of the Board. Mr. Klein also serves on the boards of directors of Etsy, Inc. and as Chairman of the Board of Jumia Technologies AG. He currently serves as a director of multiple private companies and non-profit organizations. Mr. Klein received an LL.M. from the University of Cambridge. We believe that Mr. Klein is qualified to serve as a member of our board of directors because of his significant knowledge of and history with our Company, his experience as a director of several publicly traded companies and his knowledge of our industry.
Liza Landsman has served as a member of our board of directors since December 2018. Ms. Landsman joined New Enterprise Associates (NEA) in 2018, and is currently a General Partner. Prior to joining NEA, Ms. Landsman was President of Jet.com, Inc. where she was a founding member of the executive team and later, following Jet.com’s acquisition, of Walmart Inc.’s U.S. E-commerce leadership team. Ms. Landsman currently serves on the board of directors of Choice Hotels International, Inc. and previously served on the board of directors of Veritiv Corporation. Ms. Landsman received a B.A. from Cornell University. We believe that Ms. Landsman is qualified to serve as a member of our board of directors because of her extensive experience as a board member of publicly traded companies, her business acumen and her knowledge of our industry.
Anton Levy has served as a member of our board of directors since April 2014. Mr. Levy is Co-President, Managing Director and Global Head of Technology investing at General Atlantic. Mr. Levy also serves on General Atlantic’s Management, Investment and Portfolio Committees. Mr. Levy serves as a board observer for certain public companies and as a director, board observer or trustee for several private companies and organizations. Mr. Levy holds a B.S. in Commerce from the University of Virginia and a MBA from Columbia Business School. We believe that Mr. Levy is qualified to serve as a member of our board of directors because of his significant knowledge of and history with our company, his experience as a seasoned investor and as a current and former director of multiple companies and his knowledge of our industry.
Composition of our Board of Directors
Our board of directors is currently composed of six members. Our amended and restated bylaws will provide that the number of directors of our board shall be established from time to time by our board. Mr. Casalena will serve as the chairperson of the board of directors. Mr. Levy has been designated to serve on our board of directors by General Atlantic and Mr. Braccia has been designated to serve on the board of directors by Accel, in accordance with the stockholders’ agreement described in “Certain Relationships and Related Party Transactions — Stockholders’ Agreement.” Our existing stockholders’ agreement will terminate in connection with the effectiveness of the registration statement of which this prospectus forms a part and we will enter into a voting and support agreement with certain of our existing stockholders that will provide certain rights to General Atlantic. See also “Description of Capital Stock — Voting and Support Agreement” for additional information regarding these rights.
Director Independence
Our board of directors has undertaken a review of the independence of our directors and considered whether any director has a material relationship with us that could compromise that director’s ability to exercise independent judgment in carrying out that director’s responsibilities. Our board of directors has affirmatively determined that Andrew Braccia, Michael Fleisher, Jonathan Klein, Liza Landsman and Anton Levy are each an “independent director,” as defined under the rules of the NYSE. In making these determinations, our board of directors considered the current and prior relationships that each director has with our company and all other facts and circumstances our board of directors deemed relevant in determining their independence, including the beneficial ownership of our capital stock by each director and the transactions involving them described in the section titled “Certain Relationships and Related Party Transactions.” In addition to determining whether each director satisfies the director independence requirements set forth in the listing requirements of the NYSE, in the case of members of the audit committee
and compensation committee, our board of directors made an affirmative determination that such members also satisfy separate independence requirements and current standards imposed by the SEC and the NYSE.
There are no family relationships among any of our directors or executive officers.
Committees of the Board of Directors
Our board of directors will have an audit committee, a compensation committee and a nominating and corporate governance committee, each of which will have the composition and responsibilities described below.
Audit Committee
Our audit committee will be responsible for, among other things:
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appointing, compensating, retaining, evaluating, terminating and overseeing our independent registered public accounting firm;
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discussing with our independent registered public accounting firm its independence from management;
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reviewing with our independent registered public accounting firm the scope and results of their audit;
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approving all audit and permissible non-audit services to be performed by our independent registered public accounting firm;
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overseeing the financial reporting process and discussing with management and our independent registered public accounting firm the quarterly and annual financial statements that we file with the SEC;
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overseeing our financial and accounting controls and compliance with legal and regulatory requirements;
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reviewing our policies on risk assessment and risk management;
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reviewing related person transactions; and
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establishing procedures for the confidential, anonymous submission of concerns regarding questionable accounting, internal controls or auditing matters.
Our audit committee will consist of Michael Fleisher, Liza Landsman and Anton Levy, with Michael Fleisher serving as chair. Rule 10A-3 under the Exchange Act and the NYSE rules require that our audit committee have at least one independent member upon the listing of our Class A common stock, have a majority of independent members within 90 days of the date of this prospectus and be composed entirely of independent members within one year of the date of this prospectus. Our board of directors has affirmatively determined that Michael Fleisher, Liza Landsman and Anton Levy each meet the definition of “independent director” for purposes of serving on the audit committee under Rule 10A-3 under the Exchange Act and the NYSE rules. Each member of our audit committee also meets the financial literacy requirements of the NYSE listing standards. In addition, our board of directors has determined that Michael Fleisher, Liza Landsman and Anton Levy each qualify as an “audit committee financial expert,” as such term is defined in Item 407(d)(5) of Regulation S-K. Our board of directors will adopt a written charter for the audit committee, to be effective in connection with the effectiveness of the registration statement of which this prospectus forms a part, which will be available on our principal corporate website at www.squarespace.com. The information contained on, or that can be accessed through, our website is deemed not to be incorporated in this prospectus or to be part of this prospectus.
Compensation Committee
Our compensation committee will be responsible for, among other things:
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reviewing and approving the compensation of our directors, Chief Executive Officer and other executive officers;
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reviewing and approving the terms of any employment agreements, severance arrangements, change in control protections and any other compensatory arrangements for our executive officers;
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overseeing our compensation and employee benefit plans; and
•
appointing and overseeing any compensation consultants.
Our compensation committee will consist of Jonathan Klein, Anton Levy and Andrew Braccia, with Jonathan Klein serving as chair. Our board has determined that Jonathan Klein, Anton Levy and Andrew Braccia each meet the definition of “independent director” for purposes of serving on the compensation committee under the NYSE rules. All members of our compensation committee are “non-employee directors” as defined in Rule 16b-3 under the Exchange Act. Our board of directors will adopt a written charter for the compensation committee, to be effective in connection with the effectiveness of the registration statement of which this prospectus forms a part, which will be available on our principal corporate website at www.squarespace.com. The information contained on, or that can be accessed through, our website is deemed not to be incorporated in this prospectus or to be part of this prospectus.
Nominating and Corporate Governance Committee
Our nominating and corporate governance committee will be responsible for, among other things:
•
identifying individuals qualified to become members of our board of directors, consistent with criteria approved by our board of directors;
•
evaluating the overall effectiveness of our board of directors and its committees; and
•
reviewing developments in corporate governance compliance and developing and recommending to our board of directors a set of corporate governance guidelines.
Our nominating and corporate governance committee will consist of Liza Landsman, Michael Fleisher and Jonathan Klein, with Liza Landsman serving as chair. Our board has determined that Liza Landsman, Michael Fleisher and Jonathan Klein each meet the definition of “independent director” for purposes of serving on the nominating and corporate governance committee under the NYSE rules. Our board of directors will adopt a written charter for the nominating and corporate governance committee, to be effective in connection with the effectiveness of the registration statement of which this prospectus forms a part, which will be available on our principal corporate website at www.squarespace.com. The information contained on, or that can be accessed through, our website is deemed not to be incorporated in this prospectus or to be part of this prospectus.
Our board of directors may, from time to time, establish other committees.
Compensation Committee Interlocks and Insider Participation
None of the members of our compensation committee is or has been one of our officers or employees. None of our executive officers currently serves, or in the past year has served, as a member of the board of directors or compensation committee (or other committee performing equivalent functions) of any entity that has one or more executive officers serving on our board of directors or compensation committee.
Indemnification and Insurance
We maintain directors’ and officers’ liability insurance. Our amended and restated certificate of incorporation and amended and restated bylaws will include provisions limiting the liability of directors and officers and indemnifying them under certain circumstances. We have entered into indemnification agreements with all of our directors to provide our directors and certain of their affiliated parties with
additional indemnification and related rights. See “Description of Capital Stock — Limitation on Liability of Directors and Indemnification.”
Code of Conduct and Ethics
We will adopt a written code of business conduct and ethics that applies to our directors, officers and employees, including our principal executive officer, principal financial officer, principal accounting officer or controller or persons performing similar functions. In connection with the effectiveness of the registration statement of which this prospectus forms a part, our code of business conduct and ethics will be posted on our principal corporate website at www.squarespace.com. In addition, we intend to post on our website all disclosures that are required by law or the NYSE listing standards concerning any amendments to, or waivers from, any provision of the code.
EXECUTIVE COMPENSATION
This section sets forth the compensation of our named executive officers (“NEOs”) prior to the effectiveness of the registration statement of which this prospectus forms a part, and is presented based on the reduced executive compensation disclosure requirements applicable to emerging growth companies. Our NEOs for the year ended December 31, 2020 are as follows:
•
Anthony Casalena, Chief Executive Officer;
•
Marcela Martin, Chief Financial Officer; and
•
Paul Gubbay, Chief Product Officer.
Summary Compensation Table for 2020
The following table provides information regarding the compensation earned by our NEOs for the year ended December 31, 2020.
Name and Principal
Position
|
|
|
Year
|
|
|
Salary
($)(1)
|
|
|
Bonus
($)(2)
|
|
|
Stock
Awards
($)(3)
|
|
|
All Other
Compensation
($)
|
|
|
Total
($)
|
|
|
Anthony Casalena
Chief Executive Officer
|
|
|
|
|
2020
|
|
|
|
|
|
650,000
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
475,336(4)
|
|
|
|
|
|
1,125,336
|
|
|
|
Marcela Martin
Chief Financial Officer
|
|
|
|
|
2020
|
|
|
|
|
|
104,167
|
|
|
|
|
|
200,000
|
|
|
|
|
|
2,900,012
|
|
|
|
|
|
157,668(5)
|
|
|
|
|
|
3,361,847
|
|
|
|
Paul Gubbay
Chief Product Officer
|
|
|
|
|
2020
|
|
|
|
|
|
260,417
|
|
|
|
|
|
525,000
|
|
|
|
|
|
2,700,017
|
|
|
|
|
|
2,768(6)
|
|
|
|
|
|
3,488,202
|
|
|
(1)
Amounts shown in this column reflect the annual base salary earned by the NEO in respect of 2020. Ms. Martin commenced employment with us on November 1, 2020 and Mr. Gubbay commenced employment with us on July 27, 2020.
(2)
Amounts shown in this column represent the portion of the sign-on bonuses paid to each of Ms. Martin and Mr. Gubbay in connection with their commencement of employment with the Company in 2020.
(3)
Amounts shown in this column represent the grant date fair value, calculated in accordance with FASB ASC Topic 718, of the equity awards granted to the NEO in 2020. For a summary of the assumptions used in the valuation of these equity awards, please see Note 17 to our audited financial statements included in this prospectus. These equity awards are described in greater detail in the section entitled “— Elements of Compensation — Equity Awards” below.
(4)
Amount shown in this column for Mr. Casalena represents (a) the approximate aggregate incremental cost to the Company of $473,550 in respect of the provision of security services, (b) 401(k) matching contributions of $1,084 and (c) Company-paid premiums of $702 for group term life insurance. While we believe that the provision of security services did not provide a personal benefit to Mr. Casalena, and instead represented reasonable and necessary business expenses for the benefit of the Company to ensure the safety and protection of Mr. Casalena, we have included the approximate aggregate incremental cost to the Company of providing these services in this table in accordance with applicable SEC disclosure rules.
(5)
Amount shown in this column for Ms. Martin represents (a) cash payments and expense reimbursements of $157,522 in connection with her relocation to the Company’s New York office and (b) Company-paid premiums of $147 for group term life insurance.
(6)
Amount shown in this column for Mr. Gubbay represents (a) 401(k) matching contributions of $2,020 and (b) Company-paid premiums of $748 for group term life insurance.
Elements of Compensation
Our NEOs were provided with the following primary elements of compensation in 2020:
Base Salaries
Each of our NEOs received a fixed base salary from the Company in respect of 2020. The base salary payable to each NEO is reviewed on an annual basis and is determined taking into account numerous relevant factors, including (a) the individual’s qualifications, experience, scope of responsibilities and geographic location, (b) compensation amounts paid to similarly situated executives at peer companies, (c) the individual’s historical compensation level and (d) internal pay positioning.
The 2020 base salaries for our NEOs were as follows: (a) $650,000 for Mr. Casalena, (b) $625,000 for Ms. Martin and (c) $600,000 for Mr. Gubbay.
Annual Bonuses
We did not provide annual cash bonus payments to our NEOs or other employees with respect to 2020. We have a compensation philosophy that is focused on driving long-term, sustainable business value and leveraging compensation elements that are heavily weighted towards long-term employee retention and the creation of a “business ownership” mindset for our NEOs and other employees, and we believe that we are able to accomplish those goals through the payment of base salaries, the granting of equity award grants and the provision of employee benefits without the need for separate annual cash bonus payments. While we have not historically provided annual cash bonus payments to our NEOs or other employees, we may do so in the future if we think it is necessary to ensure that our overall compensation program remains competitive with our peers.
Sign-On Bonuses
We agreed to provide cash sign-on bonuses to each of Ms. Martin and Mr. Gubbay in connection with their initial hiring by the Company during 2020 as an incentive for them to accept employment with the Company.
The amount of the bonus is $400,000 for Ms. Martin and $1,000,000 for Mr. Gubbay. The portion of the bonuses listed in the “Summary Compensation Table for 2020” above were paid shortly after their commencement of employment, while the remainder was paid on March 31, 2021 for Ms. Martin and on January 29, 2021 for Mr. Gubbay, subject to their continued employment through the payment date. In addition, the sign-on bonuses are subject to repayment to the Company in whole or in part if the NEO either voluntarily terminates employment with the Company or is terminated by the Company for cause within two years following commencement of employment. We believe that these additional conditions on payment for the sign-on bonuses also provide an additional retention incentive for the Company.
Equity Awards
We granted restricted stock unit awards relating to shares of our Class A common stock to each of Ms. Martin and Mr. Gubbay in connection with their initial hiring by the Company during 2020 under our 2017 Equity Incentive Plan (the “ 2017 Plan”). These restricted stock unit grants were provided to them to align their interests with those of our stockholders and to serve as an additional retention incentive. Ms. Martin received a total of 61,480 restricted stock units and Mr. Gubbay received a total of 55,797 restricted stock units. These restricted stock units will vest in annual installments over a four-year period following the recipient’s date of hire, with 15% vesting shortly after the first anniversary of the date of hire, 25% vesting shortly after the second anniversary of the date of hire and 30% vesting shortly after each of the third and fourth anniversaries of the date of hire, subject to the recipient’s continued employment with the Company through the applicable vesting date.
Mr. Casalena did not receive any equity award grants in 2020.
Additional information regarding outstanding equity awards held by each of our NEOs is described in greater detail in the section entitled “— Outstanding Equity Awards at Fiscal Year End for 2020” below.
Employee Benefit Plans
Our NEOs participate on the same basis as our employees generally in a broad-based defined contribution retirement plan that provides our employees with an opportunity to save for retirement on a tax advantaged basis. Eligible employees may defer eligible compensation on a pre-tax or after-tax (Roth) basis, up to the statutorily prescribed annual limits on contributions under the Internal Revenue Code of 1986 (the “Code”). We currently make matching contributions into the 401(k) plan on behalf of participants equal to 100% on participant contributions up to 3% of their compensation and 50% on participant contributions up to an additional 2% of their compensation. Participants are immediately and fully vested in their voluntary contributions and all matching contributions.
Our NEOs are also eligible to participate in our other broad-based employee benefit plans, including our medical, dental, vision, disability and life insurance plans, in each case on the same basis as our employees generally.
Outstanding Equity Awards at Fiscal Year End for 2020
The following table sets forth information regarding outstanding stock awards held by our NEOs as of December 31, 2020.
|
|
|
|
Stock Awards
|
|
|
Name
|
|
|
Number of Shares or Units of Stock
That Have Not Vested
|
|
|
Market Value of Shares or Units of
Stock That Have Not Vested ($)(1)
|
|
|
Anthony Casalena
|
|
|
|
|
4,460,858(2)
|
|
|
|
|
|
218,582,042
|
|
|
|
Marcela Martin
|
|
|
|
|
61,480(3)
|
|
|
|
|
|
3,012,520
|
|
|
|
Paul Gubbay
|
|
|
|
|
55,797(4)
|
|
|
|
|
|
2,734,053
|
|
|
(1)
Amounts in this column are determined with reference to the value of a share of our Class A common stock and Class B common stock as of December 31, 2020.
(2)
The award listed in this column represents a grant of shares of our Class B common stock that was originally made to Mr. Casalena on August 22, 2017, as amended on August 24, 2020. While Mr. Casalena elected to pay the compensation taxes associated with these shares at the time of grant in 2017 and the shares are reflected as outstanding shares of stock held by Mr. Casalena, the award remains subject to forfeiture if certain liquidity events with respect to the Company, including the sale of our Class A common stock hereunder, do not occur on or before August 22, 2021, or if Mr. Casalena voluntarily terminates his employment before the occurrence of one of those events. As a result, we have included the award in this column in order to ensure compliance with applicable SEC disclosure rules.
(3)
The award listed in this column represents a grant of restricted stock units that was made to Ms. Martin on November 25, 2020. These restricted stock units are subject to vesting as follows: (a) 15% on November 20, 2021, (b) 25% on November 20, 2022, (c) 30% on November 20, 2023 and (d) 30% on November 20, 2024, subject to continued employment through the applicable vesting date.
(4)
The award listed in this column represents a grant of restricted stock units that was made to Mr. Gubbay on August 26, 2020. These restricted stock units are subject to vesting as follows: (a) 15% on August 20, 2021, (b) 25% on August 20, 2022, (c) 30% on August 20, 2023 and (d) 30% on August 20, 2024, subject to continued employment through the applicable vesting date.
Employment Agreements
The following is a description of our employment agreements with our NEOs.
Agreement with Mr. Casalena
We entered into an employment agreement with Anthony Casalena, our Founder and Chief Executive Officer, on April 15, 2021, which will become effective upon the effectiveness of the registration statement of which this prospectus forms a part.
The employment agreement provides that Mr. Casalena will receive an annual base salary of $1. The base salary is subject to periodic review by our compensation committee, but we do not expect that the salary will be modified prior to the fifth anniversary of the date the effectiveness of the registration statement of which this prospectus forms a part. The employment agreement does not provide for any severance payments or benefits upon a termination of Mr. Casalena’s employment.
Agreement with Ms. Martin
We entered into an employment agreement with Ms. Martin, our Chief Financial Officer, on August 18, 2020, in connection with her commencement of employment with the Company. Pursuant to her employment agreement, Ms. Martin is entitled to an annual base salary of $625,000 and a one-time signing bonus of $400,000, which is described in more detail in “— Elements of Compensation — Sign-On Bonuses” above.
The employment agreement provides for payment and reimbursement of certain relocation expenses in connection with Ms. Martin’s relocation to our New York office. These relocation expenses are subject to repayment if Ms. Martin voluntarily terminates her employment with the Company for any reason or is terminated by the Company for “cause” (as defined in the employment agreement) on or before the one year anniversary of her relocation date.
The employment agreement provides that if Ms. Martin’s employment with the Company is terminated without cause, or she resigns for “good reason” (as described below), she will receive the following severance benefits: (a) continued payment of six months of base salary, (b) payment of COBRA premiums to continue coverage for up to six months following termination and (c) if the termination occurs during the period beginning three months prior to, and ending 12 months following, a change in control, then her then-unvested equity awards will be deemed immediately vested as of the date of such termination.
For this purpose “good reason” means resignation by Ms. Martin generally due to (a) any reduction of her base salary by more than 10% (other than a general reduction that affects all comparable employees of the Company), (b) a material reduction in her duties or (c) a change in the geographic location at which she must perform services to a facility or location of 50 miles or more from her current office location.
Agreement with Mr. Gubbay
We entered into an employment agreement with Mr. Gubbay, our Chief Product Officer, on June 9, 2020, in connection with his commencement of employment with the Company. Pursuant to his employment agreement, Mr. Gubbay is entitled to an annual base salary of $600,000 and a one-time signing bonus of $1 million, which is described in more detail in “— Elements of Compensation — Sign-On Bonuses” above.
The employment agreement provides for payment and reimbursement of certain relocation expenses in connection with Mr. Gubbay’s relocation to our New York office so long as the relocation occurs within two years following his commencement of employment. Any of these relocation expenses that he ultimately receives are subject to repayment if Mr. Gubbay voluntarily terminates his employment with the Company for any reason or is terminated by the Company for “cause” (as defined in the employment agreement) on or before the one year anniversary of his relocation date.
The employment agreement provides that if Mr. Gubbay’s employment with the Company is terminated without cause, or he resigns for “good reason” (as described below), he will receive the following severance benefits: (a) continued payment of six months of base salary, (b) payment of COBRA premiums to continue coverage for up to six months following termination and (c) if the termination occurs during the period beginning three months prior to, and ending 12 months following, a change in control, then his then-unvested equity awards will be deemed immediately vested as of the date of such termination.
For this purpose “good reason” means resignation by Mr. Gubbay generally due to (a) any reduction of his base salary by more than 10% (other than a general reduction that affects all comparable employees of the Company), (b) a material reduction in his duties or (c) a change in the geographic location at which he must perform services to a facility or location of 50 miles or more from his current office location.
Equity Award Grants
Anthony Casalena Long-Term Performance Award
Overview
On April 15, 2021, our board of directors granted a long-term performance-based restricted stock unit award under our 2017 Equity Incentive Plan to Anthony Casalena, our Founder and Chief Executive Officer,
which provides Mr. Casalena with the ability to earn up to 2,750,000 shares of our Class A common stock (the “Casalena Performance Award”). The Casalena Performance Award is subject to vesting based upon the achievement of meaningful stock price targets and the satisfaction of service conditions, each as described in more detail below.
Our board of directors, in consultation with our independent compensation consultant, considered many factors in determining whether to grant the Casalena Performance Award and the size and terms of the Casalena Performance Award, including (i) Mr. Casalena’s significant ownership interest in the Company but absence of any incentive awards that would be unvested following the effectiveness of the registration statement of which this prospectus forms a part, (ii) the need to provide meaningful incentives for Mr. Casalena to help ensure he will continue serving as our Chief Executive Officer and thereby continue to use his experience and vision to drive our ongoing success in a manner aligned with the long-term interests of our stockholders and (iii) market data for similarly situated executives at comparable companies, including other individuals serving in a founder and chief executive officer role at the time of an initial public offering.
We expect that the Casalena Performance Award will serve as Mr. Casalena’s sole form of cash and equity compensation from the Company, other than a $1 annual base salary, through the fifth anniversary of the effectiveness of the registration statement of which this prospectus forms a part. We do not currently intend to provide Mr. Casalena with any additional base salary, cash incentive awards or equity awards during this five-year period.
Performance Conditions
The Casalena Performance Award is eligible to vest based on our achievement of specified stock price targets during the period beginning upon the effectiveness of the registration statement of which this prospectus forms a part and ending on the fifth anniversary of the grant date (the “Performance Period”). The Casalena Performance Award is divided into ten equal tranches that are eligible to vest based on our achievement of ten different and steadily increasing stock price targets, each of which will be deemed to have been achieved when the average closing price of a share of our Class A common stock on the trading days over any consecutive 30 calendar day period during the Performance Period equals or exceeds the applicable stock price goal.
The applicable stock price targets are as follows:
|
Company Stock Price Target
|
|
|
Cumulative Number
of Shares to Vest
|
|
|
$105.00
|
|
|
|
|
275,000
|
|
|
|
$140.00
|
|
|
|
|
550,000
|
|
|
|
$175.00
|
|
|
|
|
825,000
|
|
|
|
$210.00
|
|
|
|
|
1,100,000
|
|
|
|
$245.00
|
|
|
|
|
1,375,000
|
|
|
|
$280.00
|
|
|
|
|
1,650,000
|
|
|
|
$315.00
|
|
|
|
|
1,925,000
|
|
|
|
$350.00
|
|
|
|
|
2,200,000
|
|
|
|
$385.00
|
|
|
|
|
2,475,000
|
|
|
|
$420.00
|
|
|
|
|
2,750,000
|
|
|
If the average closing price of a share of our Class A common stock on the trading days over any consecutive 30 calendar day period during the Performance Period does not equal or exceed $105.00, then none of the shares subject to the Casalena Performance Award will become eligible to vest. The applicable stock price targets and the number of shares that are eligible to vest in respect of the Casalena Performance Award are subject to adjustment to reflect any mergers, consolidations, reorganizations, stock dividends, stock splits or similar transactions or events that impact our Class A common stock in accordance with the terms of our 2017 Equity Incentive Plan.
We believe that the Casalena Performance Award will provide an additional level of meaningful alignment between Mr. Casalena and our stockholders generally, since the Casalena Performance Award will only become eligible to vest if the Company achieves stock price targets over a five year period following the grant date that would result in returns to our stockholders that significantly exceed those generally applicable to our peer companies and the equity markets generally.
Service Conditions
In order to vest in any shares subject to the Casalena Performance Award for which the applicable stock price target has been achieved, Mr. Casalena must also meet a service condition based on his continued employment with the Company following the grant date.
The terms of the Casalena Performance Award provide that Mr. Casalena will satisfy the service condition with respect to 25% of the total shares subject to the Casalena Performance Award on each of the first four anniversaries of the grant date subject to Mr. Casalena’s continued employment through the applicable service vesting date. The shares subject to the Casalena Performance Award will become vested on the date that both the applicable performance condition and the applicable service condition have been satisfied. As a result of the service condition, Mr. Casalena will not become eligible to vest in the full amount of the shares subject to the Casalena Performance Award until the fourth anniversary of the grant date, even if the maximum stock price target described above is achieved before that date.
Termination and Change in Control Provisions
The Casalena Performance Award further provides that if Mr. Casalena’s employment is terminated as a result of Mr. Casalena’s death or “disability” or if Mr. Casalena’s employment is terminated by us without “cause” or by Mr. Casalena for “good reason”, in each case, prior to the fourth anniversary of the grant date, then all of the shares for which the applicable stock price targets have been achieved as of the date of such termination will immediately vest. The terms “disability”, “cause” and “good reason” are each defined in the applicable award agreement governing the Casalena Performance Award.
The Casalena Performance Award also provides that if a “change in control” (as defined in our 2017 Equity Incentive Plan) occurs prior to the fifth anniversary of the grant date, then the number of shares that will become eligible for vesting (in addition to any shares already eligible for vesting) in respect of the achievement of the applicable stock price targets will be based on the per-share price of a share of our Class A common stock payable in connection with the applicable transaction, with linear interpolation applied if the per-share price is between the applicable stock price target amounts listed in the table above. Any such shares that are or become eligible for vesting will remain subject to the applicable service condition following the transaction, but will vest in full if Mr. Casalena’s employment terminates prior to the fourth anniversary of the grant date as a result of his death or disability or a termination by us without cause or by Mr. Casalena for good reason.
Accounting Treatment
We estimated the grant date fair value of the Casalena Performance Award using a model based on multiple stock price paths developed through the use of a Monte Carlo simulation that incorporates into the valuation the possibility that the applicable stock price targets may not be satisfied. The weighted-average grant date fair value of the Casalena Performance Award was estimated to be $30.71 per Class A common share, and we estimate that we will recognize total stock-based compensation of approximately $84.5 million. We will recognize the fair value of the award as compensation expense using the accelerated attribution method over the longer of (i) the period of time the market condition for each tranche is expected to be met (i.e., the derived service period) or (ii) the service vesting condition of four years.
Marcela Martin Restricted Stock Unit Award
On March 19, 2021, our compensation committee granted a restricted stock unit award relating to 4,867 shares of our Class A common stock to Marcela Martin, our Chief Financial Officer, under the 2017 Plan (the “Martin RSU Award”). The Martin RSU Award will vest in equal 25% installments on May 20
of each of 2022, 2023, 2024 and 2025, subject to Ms. Martin’s continued employment with us through the applicable vesting date.
The compensation committee, in consultation with our independent compensation consultant, determined to grant the award to Ms. Martin (i) in recognition of her efforts in connection with our transition to a publicly traded company, (ii) to help ensure her continued employment with us as our Chief Financial Officer by requiring that she remain employed in order for the Martin RSU Award to become vested and (iii) to further align her interests with those of our stockholders.
2021 Equity Incentive Plan
Our board of directors adopted the Squarespace, Inc. 2021 Equity Incentive Plan on March 25, 2021 (the “2021 Plan”). Our 2021 Plan is a new plan and is not a successor to and is not a continuation of the 2017 Plan. The 2021 Plan will become effective upon, and no stock awards will be granted under the 2021 Plan until, the date immediately preceding the date of the effectiveness of the registration statement of which this prospectus forms a part, subject to prior stockholder approval. Upon the 2021 Plan’s effectiveness, no further grants will be made under the 2017 Plan.
Stock Awards
Our 2021 Plan provides for the grant of incentive stock options (“ISOs”) within the meaning of Section 422 of the Code, to employees, including employees of any parent or subsidiary, and for the grant of nonstatutory stock options (“NSOs”), stock appreciation rights, restricted stock awards, restricted stock unit awards, performance stock awards, performance cash awards and other forms of stock awards to employees, directors and consultants, including employees and consultants of our affiliates.
Authorized Shares
Initially, the maximum number of shares of Class A common stock that may be issued under our 2021 Plan after it becomes effective will be 19,250,000 shares, as increased on January 1 of each fiscal year of the Company beginning on January 1, 2022 by a number of shares of Class A common stock equal to 5% of the aggregate number of shares of all classes of our common stock outstanding on December 31st of the immediately preceding calendar year. The maximum number of shares of our Class A common stock that may be issued on the exercise of ISOs under our 2021 Plan is 19,250,000 shares.
Shares subject to stock awards granted under our 2021 Plan that expire or terminate without being exercised in full or that are paid out in cash rather than in shares do not reduce the number of shares available for issuance under our 2021 Plan. If any shares of Class A common stock issued pursuant to a stock award are forfeited back to or repurchased or reacquired by us due to certain specified events, the shares that are forfeited or repurchased or reacquired will revert to and again become available for issuance under the 2021 Plan. Any shares reacquired in satisfaction of tax withholding obligations or as consideration for the exercise or purchase price of a stock award will again become available for issuance under the 2021 Plan.
The maximum number of shares of Class A common stock subject to stock awards granted under the 2021 Plan or otherwise during any one calendar year to any non-employee director for service on our board of directors, taken together with any cash fees paid by us to such non-employee director during such calendar year for service on the board of directors, will not exceed $1,500,000 in total value (calculating the value of any such stock awards based on the grant date fair value of such stock awards for financial reporting purposes).
Plan Administration
Our board of directors, or committee or committees thereof, administers the 2021 Plan and is referred to as the “plan administrator” herein. The board of directors may also delegate to one or more of our officers the authority to (1) designate employees (other than officers) to receive specified stock awards, and to the extent permitted by applicable law, the terms of such stock awards and (2) determine the number of shares subject to such stock awards. Under our 2021 Plan, our board of directors has the authority to determine award recipients, grant dates, the numbers and types of stock awards to be granted, the applicable fair
market value and the provisions of each stock award, including the period of exercisability and the vesting schedule applicable to a stock award.
Stock Options
ISOs and NSOs are granted under stock option agreements adopted by the plan administrator. The plan administrator determines the exercise price for stock options, within the terms and conditions of the 2021 Plan; provided that the exercise price of a stock option generally cannot be less than 100% of the fair market value of our Class A common stock on the date of grant. Options granted under the 2021 Plan vest at the rate specified in the stock option agreement as determined by the plan administrator.
The plan administrator determines the term of stock options granted under the 2021 Plan, up to a maximum of 10 years. Unless the terms of an optionholder’s stock option agreement provide otherwise, if an optionholder’s service relationship with us or any of our affiliates ceases for any reason other than disability or death, the optionholder may generally exercise any vested options for a period of 90 days following the cessation of service. If an optionholder’s service relationship with us or any of our affiliates ceases due to disability, the optionholder may generally exercise any vested options for a period of 12 months following the cessation of service. If an optionholder’s service relationship with us or any of our affiliates ceases due to death, or an optionholder dies within a certain period following cessation of service, the optionholder’s estate or a person who acquired the right to exercise the option by bequest or inheritance may generally exercise any vested options for a period of 12 months following the date of death. In no event may an option be exercised beyond the expiration of its term.
Acceptable consideration for the purchase of Class A common stock issued upon the exercise of a stock option will be determined by the plan administrator and may include (1) cash, check, bank draft or money order, (2) a broker-assisted cashless exercise, (3) the tender of shares of our Class A common stock previously owned by the optionholder, (4) a net exercise of the option if it is an NSO or (5) other legal consideration approved by the plan administrator.
Unless the plan administrator provides otherwise, options generally are not transferable except by will or the laws of descent and distribution.
Tax Limitations on ISOs
The aggregate fair market value, determined at the time of grant, of our Class A common stock with respect to ISOs that are exercisable for the first time by an award holder during any calendar year under all of our stock plans may not exceed $100,000. Options or portions thereof that exceed such limit will generally be treated as NSOs. No ISO may be granted to any person who, at the time of the grant, owns or is deemed to own stock possessing more than 10% of our total combined voting power or that of any of our affiliates unless (1) the option exercise price is at least 110% of the fair market value of the stock subject to the option on the date of grant and (2) the term of the ISO does not exceed five years from the date of grant.
Restricted Stock Unit Awards
Restricted stock unit awards are granted under restricted stock unit award agreements adopted by the plan administrator. Restricted stock unit awards may be granted in consideration for any form of legal consideration that may be acceptable to our board of directors and permissible under applicable law. A restricted stock unit award may be settled by cash, delivery of stock, a combination of cash and stock as deemed appropriate by the plan administrator or in any other form of consideration set forth in the restricted stock unit award agreement. Additionally, dividend equivalents may be credited in respect of shares covered by a restricted stock unit award. Except as otherwise provided in the applicable award agreement, restricted stock unit awards that have not vested will be forfeited once the participant’s continuous service ends for any reason.
Restricted Stock Awards
Restricted stock awards are granted under restricted stock award agreements adopted by the plan administrator. A restricted stock award may be awarded in exchange for any form of legal consideration
that may be acceptable to our board of directors and permissible under applicable law. The plan administrator determines the terms and conditions of restricted stock awards, including vesting and forfeiture terms. If a participant’s service relationship with us ends for any reason, we may receive any or all of the shares of Class A common stock held by the participant that have not vested as of the date the participant terminates service with us through a forfeiture condition.
Stock Appreciation Rights
Stock appreciation rights are granted under stock appreciation right agreements adopted by the plan administrator. The plan administrator determines the purchase price or strike price for a stock appreciation right, which generally cannot be less than 100% of the fair market value of our Class A common stock on the date of grant. A stock appreciation right granted under the 2021 Plan vests at the rate specified in the stock appreciation right agreement as determined by the plan administrator.
The plan administrator determines the term of stock appreciation rights granted under the 2021 Plan, up to a maximum of 10 years. If a participant’s service relationship with us or any of our affiliates ceases for any reason other than disability or death, the participant may generally exercise any vested stock appreciation right for a period of 90 days following the cessation of service. If a participant’s service relationship with us or any of our affiliates ceases due to disability, the participant may generally exercise any vested stock appreciation rights for a period of 12 months following the cessation of service. If a participant’s service relationship with us or any of our affiliates ceases due to death, or a participant dies within a certain period following cessation of service, the participant’s estate or a person who acquired the right to exercise the stock appreciation right by bequest or inheritance may generally exercise any vested stock appreciation right for a period of 12 months following the date of death. In no event may a stock appreciation right be exercised beyond the expiration of its term.
Performance Awards
The 2021 Plan permits the grant of performance-based stock and cash awards. Our board of directors may structure awards so that the stock or cash will be issued or paid only following the achievement of certain pre-established performance goals during a designated performance period.
The performance goals that may be selected include one or more of the following: (1) earnings (including earnings per share and net earnings); (2) earnings before interest, taxes and depreciation; (3) earnings before interest, taxes, depreciation and amortization; (4) earnings before interest, taxes, depreciation, amortization and legal settlements; (5) earnings before interest, taxes, depreciation, amortization, legal settlements and other income (expense); (6) earnings before interest, taxes, depreciation, amortization, legal settlements, other income (expense) and stock-based compensation; (7) earnings before interest, taxes, depreciation, amortization, legal settlements, other income (expense), stock-based compensation and changes in deferred revenue; (8) total stockholder return; (9) return on equity or average stockholder’s equity; (10) return on assets, investment or capital employed; (11) stock price; (12) margin (including gross margin); (13) income (before or after taxes); (14) operating income; (15) operating income after taxes; (16) pre-tax profit; (17) operating cash flow; (18) sales or revenue targets; (19) increases in revenue or product revenue; (20) expenses and cost reduction goals; (21) improvement in or attainment of working capital levels; (22) economic value added (or an equivalent metric); (23) market share; (24) cash flow; (25) cash flow per share; (26) share price performance; (27) debt reduction; (28) implementation or completion of projects or processes; (29) stockholders’ equity; (30) capital expenditures; (31) debt levels; (32) operating profit or net operating profit; (33) workforce diversity; (34) growth of net income or operating income; (35) billings; (36) bookings; (37) employee retention; (38) user satisfaction; (39) the number of users, including unique users; (40) budget management; (41) partner satisfaction; (42) entry into or completion of strategic partnerships or transactions (including in-licensing and out-licensing of intellectual property); and (43) other measures of performance selected by the board of directors.
The performance goals may be based on company-wide performance or performance of one or more business units, divisions, affiliates or business segments, and may be either absolute or relative to the performance of one or more comparable companies or the performance of one or more relevant indices. Our board of directors is authorized at any time in its sole discretion, to adjust the calculation of a performance goal as it determines to be necessary or appropriate in its sole discretion, including without
limitation: (1) to exclude restructuring and/or other nonrecurring charges; (2) to exclude exchange rate effects; (3) to exclude the effects of changes to generally accepted accounting principles; (4) to exclude the effects of any statutory adjustments to corporate tax rates; (5) to exclude the effects of any items that are unusual in nature or occur infrequently as determined under generally accepted accounting principles; (6) to exclude the dilutive effects of acquisitions or joint ventures; (7) to assume that any business divested by us achieved performance objectives at targeted levels during the balance of a performance period following such divestiture; (8) to exclude the effect of any change in the outstanding shares of our Class A common stock by reason of any stock dividend or split, stock repurchase, reorganization, recapitalization, merger, consolidation, spin-off, combination or exchange of shares or other similar corporate change, or any distributions to common stockholders other than regular cash dividends; (9) to exclude the effects of stock based compensation and the award of bonuses under our bonus plans; (10) to exclude costs incurred in connection with potential acquisitions or divestitures that are required to be expensed under generally accepted accounting principles; (11) to exclude the goodwill and intangible asset impairment charges that are required to be recorded under generally accepted accounting principles; and (12) to exclude the effect of any other unusual, non-recurring gain or loss or other extraordinary item.
Our board of directors retains the discretion to reduce or eliminate the compensation or economic benefit due upon attainment of performance goals and to define the manner of calculating the performance criteria it selects to use for a performance period. Partial achievement of the specified criteria may result in the payment or vesting corresponding to the degree of achievement as specified in the stock award agreement or the written terms of a performance cash award.
Other Stock Awards
The plan administrator may grant other awards based in whole or in part by reference to our Class A common stock. The plan administrator will set the number of shares under the stock award and all other terms and conditions of such awards.
Changes to Capital Structure
In the event there is a specified type of change in our capital structure, such as a stock split, reverse stock split, or recapitalization, an equitable substitution or proportionate adjustment will be made to (1) the class and maximum number of shares reserved for issuance under the 2021 Plan, (2) the class and maximum number of shares by which the share reserve may increase automatically each year, (3) the class and maximum number of shares that may be issued on the exercise of ISOs, (4) the class and maximum number of shares that may be awarded to any non-employee director, (5) the class and number of shares and exercise price, strike price, or purchase price, if applicable, of all outstanding stock awards and (6) the performance goals or measures applicable to any award.
Section 280G
Pursuant to the 2021 Plan, we may reduce any payments and benefits that constitute “parachute payments” subject to the excise tax imposed by Section 4999 of the Code such that no portion of such amounts will be subject to the excise tax under Section 280G of the Code (if, and to the extent, such reduction would result in a greater after-tax return to the participant than receiving all of the payments and benefits and paying the resulting excise tax).
Corporate Transactions
Our 2021 Plan provides that in the event of certain specified significant corporate transactions (or a change in control, as defined below), unless otherwise provided in an award agreement or other written agreement between us and the award holder, the plan administrator may take one or more of the following actions with respect to such stock awards:
•
arrange for the assumption, continuation or substitution of a stock award by a successor corporation;
•
arrange for the assignment of any reacquisition or repurchase rights held by us to a successor corporation;
•
accelerate the vesting, in whole or in part, of the stock award and provide for its termination if not exercised (if applicable) at or before the effective time of the transaction;
•
arrange for the lapse, in whole or in part, of any reacquisition or repurchase rights held by us;
•
cancel or arrange for the cancellation of the stock award, to the extent not vested or not exercised before the effective time of the transaction, in exchange for a cash payment, if any; or
•
make a payment equal to the excess, if any, of (A) the value of the property the participant would have received upon the vesting, settlement or exercise of the award immediately before the effective time of the transaction, over (B) any exercise price payable by the participant in connection with the exercise.
The plan administrator is not obligated to treat all stock awards or portions of stock awards in the same manner and is not obligated to take the same actions with respect to all participants.
Under the 2021 Plan, a corporate transaction is generally the consummation of: (1) a sale of all or substantially all of our assets, (2) the sale or disposition of more than 50% of our outstanding securities, (3) a merger or consolidation where we do not survive the transaction or (4) a merger or consolidation where we do survive the transaction but the shares of our Class A common stock outstanding immediately before such transaction are converted or exchanged into other property by virtue of the transaction.
Change in Control
In the event of a change in control, the plan administrator may take any of the above-mentioned actions. Awards granted under the 2021 Plan may be subject to additional acceleration of vesting and exercisability upon or after a change in control as may be provided in the applicable stock award agreement or in any other written agreement between us or any affiliate and the participant. Under the 2021 Plan, a change in control is generally (1) the acquisition by any person or company of more than 50% of the combined voting power of our then outstanding stock, (2) a merger, consolidation or similar transaction in which our stockholders immediately before the transaction do not own, directly or indirectly, more than 50% of the combined voting power of the surviving entity (or the parent of the surviving entity) in substantially the same proportions as their ownership immediately prior to such transaction, (3) a sale, lease, exclusive license or other disposition of all or substantially all of our assets other than to an entity more than 50% of the combined voting power of which is owned by our stockholders in substantially the same proportions as their ownership of our outstanding voting securities immediately prior to such transaction, (4) a complete dissolution or liquidation of the company or (5) when a majority of our board of directors becomes comprised of individuals who were not serving on our board of directors on the date the 2021 Plan is adopted by the board of directors, or the incumbent board, or whose nomination, appointment or election was not approved by a majority of the incumbent board still in office.
Plan Amendment or Termination
Our board of directors has the authority to amend, suspend or terminate our 2021 Plan; provided that such action does not materially impair the existing rights of any participant without such participant’s written consent. Certain material amendments also require the approval of our stockholders. No awards may be granted after the tenth anniversary of the effective date of the 2021 Plan and no incentive stock options may be granted after the tenth anniversary of the date our board of directors approves our 2021 Plan. No stock awards may be granted under our 2021 Plan while it is suspended or after it is terminated.
2021 Employee Stock Purchase Plan
Our board of directors adopted the Squarespace, Inc. 2021 Employee Stock Purchase Plan (the “ESPP”) on March 25, 2021. The ESPP will become effective upon, and no purchases will be made under the ESPP until, the date immediately preceding the date of the effectiveness of the registration statement of which this prospectus forms a part, subject to prior stockholder approval. The purpose of the ESPP is to secure the services of new employees, to retain the services of existing employees and to provide incentives for such individuals to exert maximum efforts toward our success and that of our related corporations. The ESPP qualifies as an “employee stock purchase plan” within the meaning of Section 423 of the Code for U.S. employees.
Share Reserve
Following the effectiveness of the registration statement of which this prospectus forms a part, the ESPP authorizes the issuance of shares of our Class A common stock under purchase rights granted to our employees or to employees of our related corporations. The aggregate number of shares of Class A common stock that may be issued under the ESPP will be equal to 2% of the aggregate number of shares of all classes of our common stock outstanding as of the effective date, as increased on January 1 of each fiscal year of the Company beginning on January 1, 2022 by a number of shares equal to the lesser of (i) 1% of the total number of shares of all classes of our common stock outstanding on December 31 of the immediately preceding calendar year and (ii) 1,375,000 shares. Notwithstanding the foregoing, the board of directors may act prior to January 1 of a given year to provide that there will be no January 1 increase in the share reserve for such calendar year or that the increase in the share reserve for such calendar year will be a lesser number of shares than would otherwise occur. As of the date hereof, no shares have been purchased under the ESPP.
Administration
Our board of directors administers the ESPP and may delegate its authority to administer the ESPP to committees or subcommittees of the board of directors. The ESPP is implemented through a series of offerings under which eligible employees are granted purchase rights to purchase shares of our Class A common stock on specified dates during such offerings. Under the ESPP, we may specify offerings with durations of not more than 27 months, and may specify shorter purchase periods within each offering. Each offering will have one or more purchase dates on which shares of our Class A common stock will be purchased for employees participating in the offering. An offering under the ESPP may be terminated under certain circumstances.
Payroll Deductions
Generally, eligible employees employed by us or our related corporations, may participate in the ESPP and may contribute, normally through payroll deductions, up to 15% of their earnings (as defined by the board of directors in each offering) for the purchase of our Class A common stock under the ESPP. Notwithstanding the foregoing, the board of directors may provide in an offering that employees who are highly compensated employees within the meaning of Section 423(b)(4)(D) of the Code will not be eligible to participate.
The purchase price of shares of Class A common stock acquired pursuant to purchase rights will be determined by the board of directors with respect to each offering and will not be less than the lesser of: (1) 85% of the fair market value of a share of our Class A common stock on the first date of an offering or (2) 85% of the fair market value of a share of our Class A common stock on the date of purchase.
Limitations
Employees may have to satisfy one or more of the following service requirements before participating in the ESPP, as determined by our board of directors, including: (1) being customarily employed for more than 20 hours per week, (2) being customarily employed for more than five months per calendar year or (3) continuous employment with us or one of our related corporations for a period of time (not to exceed two years). No employee may purchase shares under the ESPP at a rate in excess of $25,000 worth of our Class A common stock based on the fair market value per share of our Class A common stock at the beginning of an offering for each calendar year such a purchase right is outstanding. Finally, no employee will be eligible for the grant of any purchase rights under the ESPP if immediately after such rights are granted, such employee has voting power over 5% or more of our outstanding capital stock measured by vote or value under Section 424(d) of the Code.
Changes to Capital Structure
In the event that a change in our capital structure occurs through such actions as a stock split, merger, consolidation, reorganization, recapitalization, reincorporation, stock dividend, dividend in property other than cash, large nonrecurring cash dividend, liquidating dividend, combination of shares, exchange of shares,
change in corporate structure or similar transaction, the board of directors will make an equitable substitution or proportionate adjustment with respect to: (1) the class(es) and maximum number of shares reserved under the ESPP, (2) the class(es) and maximum number of shares by which the share reserve may increase automatically each year, (3) the class(es) and number of shares subject to and purchase price applicable to outstanding offerings and purchase rights and (4) the class(es) and number of shares that are subject to purchase limits under ongoing offerings.
Corporate Transactions
In the event of certain significant corporate transactions, any then-outstanding rights to purchase our stock under the ESPP may be assumed, continued or substituted for by any surviving or acquiring entity (or its parent company). If the surviving or acquiring entity (or its parent company) elects not to assume, continue or substitute for such purchase rights, then the participants’ accumulated payroll contributions will be used to purchase shares of our Class A common stock within ten business days before such corporate transaction, and such purchase rights will terminate immediately.
Under the ESPP, a corporate transaction is generally the consummation of: (1) a sale of all or substantially all of our assets, (2) the sale or disposition of more than 50% of our outstanding securities, (3) a merger or consolidation where we do not survive the transaction and (4) a merger or consolidation where we do survive the transaction but the shares of our Class A common stock outstanding immediately before such transaction are converted or exchanged into other property by virtue of the transaction.
ESPP Amendment or Termination
Our board of directors has the authority to amend or terminate our ESPP; provided that except in certain circumstances such amendment or termination may not materially impair any outstanding purchase rights without the holder’s consent. We will obtain stockholder approval of any amendment to our ESPP as required by applicable law or listing requirements. Unless earlier terminated in accordance with the ESPP, the ESPP will terminate on the tenth anniversary of the effective date.
Share Ownership Guidelines
The compensation committee of our board of directors adopted the Squarespace, Inc. Share Ownership Guidelines on March 25, 2021 to become effective upon the date immediately preceding the date of the effectiveness of the registration statement of which this prospectus forms a part.
Our share ownership guidelines apply to all our employees at the level of senior vice president or above and the non-employee members of our board of directors who receive compensation from us for their service as members of the board of directors. Applicable employees and directors are expected to accumulate and hold a number of shares of our Class A common stock with a value equal to the applicable multiple set forth below multiplied by: (i) an employee’s annual base salary, (ii) an employee’s market median salary in an amount determined by us for the employee if the employee receives a nominal base salary or (iii) the non-employee director’s annual board compensation, excluding any lead director and committee cash retainers (described in greater detail in the section entitled “—Director Compensation Following the Listing of our Class A Common Stock on the NYSE” below).
|
Title
|
|
|
Ownership
Guideline
|
|
|
Chief Executive Officer
|
|
|
|
|
6x
|
|
|
|
Senior Vice President and Above
|
|
|
|
|
1x
|
|
|
|
Non-Employee Director
|
|
|
|
|
1x
|
|
|
Employees and directors subject to the share ownership guidelines are expected to achieve the applicable level of ownership by the fifth anniversary of the effective date of the share ownership guidelines, or within five years of becoming subject to the share ownership guidelines.
Director Compensation
Our director compensation policy provides for an annual cash retainer of $40,000 to each of our non-employee directors for their service on the board. In addition, our director compensation policy provides
for an additional annual cash retainer of $20,000 to any individual serving as our lead independent director or chair of the audit committee or compensation committee and $10,000 to any individual serving as the chair of the nominating and corporate governance committee. These annual cash payments are made in equal quarterly installments in arrears and are pro-rated for any partial quarters.
Our director compensation policy further provides for an annual grant of restricted stock units relating to shares of our Class A common stock for our non-employee directors with an aggregate grant date value of $170,000 on the date of each annual meeting of the Company’s stockholders, which vests in full on the first anniversary of the grant date, subject to the director’s continued service through the vesting date.
In addition, our director compensation policy provides for an initial grant of restricted stock units relating to shares of our Class A common stock for our non-employee directors with an aggregate grant date value of $250,000 when an individual is elected or appointed to the board of directors for the first time. The initial grant of restricted stock units will vest in equal 1/3 installments on the first, second and third anniversary of its date of grant, subject to the director’s continued service through the applicable vesting date. Upon a change in control, all outstanding restricted stock units held by each director will vest in full.
Director Compensation Table for 2020
The following table summarizes the total compensation paid to or earned by our non-employee directors in 2020.
|
Name(1)
|
|
|
Fees Earned or
Paid in Cash
($)(2)
|
|
|
Stock
Awards
($)(3)(4)
|
|
|
Total
($)
|
|
|
Jonathan Klein
|
|
|
|
|
40,000
|
|
|
|
|
|
169,987
|
|
|
|
|
|
209,987
|
|
|
|
Liza Landsman
|
|
|
|
|
40,000
|
|
|
|
|
|
169,987
|
|
|
|
|
|
209,987
|
|
|
|
Michael Fleisher
|
|
|
|
|
60,000
|
|
|
|
|
|
169,987
|
|
|
|
|
|
229,987
|
|
|
(1)
Messrs. Braccia and Levy, our other non-employee directors, did not receive any compensation from us for their service on the board of directors during 2020 and have therefore not been included in the table.
(2)
The amounts in this column represent the annual cash retainer payments made to each individual in respect of 2020.
(3)
Amounts shown in this column represent the grant date fair value, calculated in accordance with FASB ASC Topic 718, of a grant of 6,084 restricted stock units relating to shares of our Class A common stock that was made on June 30, 2020 and will vest on June 30, 2021, subject to continued service through the vesting date. For a summary of the assumptions used in the valuation of these equity awards, please see Note 17 to our audited financial statements included in this prospectus.
(4)
As of December 31, 2020, in addition to the 6,084 restricted stock units granted on June 30, 2020 described in the previous footnote that are subject to vesting on June 30, 2021, Ms. Landsman holds 5,783 restricted stock units that will vest on December 10, 2021 and Mr. Fleisher holds 5,783 restricted stock units that will vest on December 10, 2021.
Director Compensation Following the Listing of our Class A Common Stock on the NYSE
The compensation committee of our board of directors adopted the Squarespace, Inc. Non-Employee Director Compensation Policy on March 25, 2021 to become effective upon the date immediately preceding the date of the effectiveness of the registration statement of which this prospectus forms a part.
The non-employee director compensation policy provides for an annual cash retainer of (i) $20,000 to any individual serving as our lead independent director or chair of the audit committee or compensation committee, (ii) $10,000 to any individual serving as the chair of the nominating and corporate governance committee, (iii) $10,000 to any member of the audit committee or compensation committee and (iv) $5,000 to any member of the nominating and corporate governance committee. These annual cash payments are made in equal quarterly installments in arrears and are pro-rated for any partial quarters.
Our non-employee director compensation policy further provides for an annual grant of restricted stock units relating to shares of our Class A common stock for our non-employee directors with an aggregate grant date value of $250,000. The grant will be made on the date of each annual meeting of our stockholders and will vest in full on the first anniversary of the grant date, subject to the director’s continued service through the vesting date.
Upon a change in control, all outstanding restricted stock units held by each non-employee director will vest in full, subject to the director’s continued service until immediately prior to the change in control. Pursuant to our non-employee director compensation policy, we will reimburse each non-employee director for ordinary, necessary and reasonable out-of-pocket travel expenses to cover in-person attendance at and participation in board meetings and meetings of any committee of the board or directors. Our board of directors (or such committee) will have the sole discretion and authority to administer, interpret, amend and terminate our non-employee director compensation policy, and the decisions of our board of directors will be final and binding.
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
In addition to the director and executive officer compensation arrangements discussed above in the section entitled “Executive Compensation,” this section describes transactions, or series of related transactions, since January 1, 2018 to which we were a party or will be a party, in which:
•
the amount involved exceeded or will exceed $120,000; and
•
any of our directors, executive officers or beneficial owners of more than 5% of any class of our capital stock, or any members of the immediate family of or any entity affiliated with any such person, had or will have a direct or indirect material interest.
Stockholders’ Agreement
We are party to an amended and restated stockholders agreement, dated as of March 15, 2021 (the “Existing Stockholders’ Agreement”), with certain of our existing stockholders, including certain of our directors and executive officers and beneficial owners of more than 5% of a class of our capital stock. Pursuant to the Existing Stockholders’ Agreement, we have a right to purchase shares of our capital stock which certain stockholders, including certain of our directors and executive officers and beneficial owners of more than 5% of a class our capital stock, propose to sell to other parties. From time to time, we have waived our right of first refusal with respect to such sales.
In connection with the effectiveness of the registration statement of which this prospectus forms a part, the Existing Stockholders’ Agreement will terminate and we will enter into a voting and support agreement with certain of our existing stockholders that will provide certain rights to General Atlantic. See “Description of Capital Stock — Voting and Support Agreement” for additional information regarding these rights.
Registration Rights Agreement
In connection with the effectiveness of the registration statement of which this prospectus forms a part, we will have a registration rights agreement with certain of our existing stockholders, including certain of our directors and executive officers and beneficial owners of more than 5% of a class of our capital stock, that will provide them with certain rights with respect to the registration of their shares of common stock. See “Description of Capital Stock — Registration Rights” for additional information regarding these registration rights.
Indemnification Agreements
Our amended and restated certificate of incorporation and amended and restated bylaws will provide that we will indemnify our directors and executive officers to the fullest extent permitted by law. We have entered into indemnification agreements with all of our directors and executive officers. See “Description of Capital Stock — Limitation on Liability of Directors and Indemnification.”
Private Placement
In March 2021, we issued and sold in the Private Placement an aggregate of 4,452,023 shares of our Class C common stock at a purchase price of approximately $68.42 per share for aggregate gross proceeds of $304.6 million. The following table summarizes purchases of Class C common stock in the Private Placement by our directors, executive officers and beneficial holders of more than 5% of our outstanding capital stock:
|
Stockholder
|
|
|
Aggregate
Purchase
Price ($)
|
|
|
Entities affiliated with Accel
|
|
|
|
|
40,000,003
|
|
|
|
Entities affiliated with General Atlantic
|
|
|
|
|
40,000,003
|
|
|
Stock Repurchase
In December 2019, we repurchased 11,478 shares of Class A common stock, 591,177 shares of Class B common stock, 3,568,514 shares of Series A-1 redeemable convertible preferred stock, 8,348,512 shares of Series A-2 redeemable convertible preferred stock and 1,754,380 shares of Series B redeemable convertible preferred stock from existing stockholders for an aggregate purchase price of $350.0 million. The following table summarizes our stock repurchases from our directors, executive officers and beneficial holders of more than 5% of our outstanding capital stock:
|
Stockholder
|
|
|
Aggregate
Purchase Price ($)
|
|
|
Anthony Casalena
|
|
|
|
|
96,810,428
|
|
|
|
Johnathan Klein
|
|
|
|
|
4,145,940
|
|
|
|
Entities affiliated with Accel
|
|
|
|
|
60,505,503
|
|
|
|
Entities affiliated with General Atlantic
|
|
|
|
|
108,348,829
|
|
|
|
Entities affiliated with Index Ventures
|
|
|
|
|
78,868,580
|
|
|
Tender Offer
In November 2019, as part of a cash tender offer to all current employees at the time, we repurchased 34,104 shares of Class A common stock and 1,779,290 shares of Class B common stock for an aggregate purchase price of $44.5 million, which included repurchases from Courtenay O’Connor, our General Counsel, as well as from our former Chief Financial Officer.
Common Stock Purchase Agreement
In December 2018, we entered into a Class A Common Stock Purchase Agreement with Michael Fleisher, a member of our board of directors, pursuant to which Mr. Fleisher purchased 17,350 shares of our Class A common stock for an aggregate purchase price of $250,014.
Our Policy Regarding Related Party Transactions
Our board of directors recognizes the fact that transactions with related persons present a heightened risk of conflicts of interest (or the perception thereof). Our board of directors has adopted a written policy on transactions with related persons that is in conformity with the requirements for companies having common stock that is listed on the NYSE. This policy covers any transaction, arrangement or relationship, or any series of similar transactions, arrangements or relationships, that meets the disclosure requirements set forth in Item 404 under the Securities Act, in which we were or are to be a participant and in which a “related person,” as defined in Item 404, had, has or will have a direct or indirect material interest.
PRINCIPAL AND REGISTERED STOCKHOLDERS
The following table sets forth:
•
certain information with respect to the beneficial ownership of our common stock as of March 31, 2021 by:
•
each of our named executive officers;
•
each of our directors;
•
all of our directors and executive officers as a group; and
•
each person known by us to be the beneficial owner of more than 5% of any class of our voting securities; and
•
the number of shares of Class A common stock held by and registered for resale by means of this prospectus for the Registered Stockholders.
The Registered Stockholders may, or may not, elect to sell their shares of Class A common stock covered by this prospectus, as and to the extent they may determine. Such sales, if any, will be made through brokerage transactions on the NYSE at prevailing market prices. As such, we will have no input if and when any Registered Stockholder may, or may not, elect to sell their shares of Class A common stock or the prices at which any such sales may occur. See “Plan of Distribution.”
This prospectus registers for resale shares of Class A common stock that are held by certain Registered Stockholders that include (i) our affiliates and certain other stockholders with “restricted” securities under the applicable securities laws and regulations who, because of their status as affiliates of us pursuant to Rule 144 or because they acquired their capital stock from an affiliate or from us within the prior 12 months from the date of any proposed sale, would otherwise be unable to sell their securities pursuant to Rule 144 until we have been subject to the reporting requirements of Section 13 or Section 15(d) the Exchange Act for a period of at least 90 days, and (ii) our current and former non-executive officers who acquired shares from us within the prior 12 months from the date of any proposed sale under Rule 701 and hold “restricted” securities under the applicable securities laws and regulations. See “Shares Eligible for Future Sale” for further information regarding sales of such “restricted” securities if not sold pursuant to this prospectus.
Information concerning the Registered Stockholders may change from time to time and any changed information will be set forth in supplements to this prospectus, if and when necessary. Because the Registered Stockholders may sell all, some or none of the shares of Class A common stock covered by this prospectus, we cannot determine the number of such shares of Class A common stock that will be sold by the Registered Stockholders, or the amount or percentage of Class A common stock that will be held by the Registered Stockholders upon consummation of any particular sale. In addition, the Registered Stockholders listed in the table below may have sold, transferred or otherwise disposed of, or may sell, transfer or otherwise dispose of, at any time and from time to time, our Class A common stock in transactions exempt from the registration requirements of the Securities Act, after the date on which they provided the information set forth in the table below. See “Management” and “Certain Relationships and Related Party Transactions” for further information regarding the Registered Stockholders.
After the listing of our Class A common stock on the NYSE, certain of the Registered Stockholders are entitled to registration rights with respect to their shares of Class A common stock, Class B common stock and Class C common stock, as described in “Description of Capital Stock — Registration Rights.”
We currently intend to use our reasonable efforts to keep the registration statement of which this prospectus forms a part effective for a period of 90 days after the effectiveness of the registration statement. We are not party to any arrangement with any Registered Stockholder or any broker-dealer with respect to sales of shares of Class A common stock by the Registered Stockholders. However, we have engaged financial advisors with respect to certain other matters relating to our listing of our Class A common stock on the NYSE. See “Plan of Distribution.”
We have determined beneficial ownership in accordance with the rules of the SEC, and thus it represents sole or shared voting or investment power with respect to our securities. Unless otherwise indicated below,
to our knowledge, the persons and entities named in the table have sole voting and sole investment power with respect to all shares that they beneficially owned, subject to community property laws where applicable. The information does not necessarily indicate beneficial ownership for any other purpose, including for purposes of Sections 13(d) and 13(g) of the Securities Act.
We have based percentage ownership of our common stock on 71,004,435 shares of our Class A common stock, 64,880,264 shares of our Class B common stock and no shares of Class C common stock outstanding as of March 31, 2021, after giving effect to the Capital Stock Conversions. Although each outstanding share of our Class B common stock may at any time, at the option of the holder, be converted into one share of our Class A common stock, the beneficial ownership of our Class A common stock set forth below excludes the shares of our Class A common stock issuable upon conversion of outstanding shares of our Class B common stock. We have deemed shares of our Class A common stock and Class B common stock subject to stock options that are currently exercisable or exercisable within 60 days of March 31, 2021 or issuable pursuant to RSUs which are subject to vesting and settlement conditions expected to occur within 60 days of March 31, 2021 to be outstanding and to be beneficially owned by the person holding the stock option or RSU for the purpose of computing the percentage ownership of that person. We did not deem these shares outstanding, however, for the purpose of computing the percentage ownership of any other person.
Unless otherwise indicated, the business address of each such beneficial owner is c/o 225 Varick Street, 12th Floor, New York, NY 10014.
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Shares Beneficially Owned
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Class A
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Class B+
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Total
Voting†
%
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Shares of Class A
Common Stock
Being Registered
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Shares
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%
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Shares
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%
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Directors and Executive Officers:
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Anthony Casalena(1)
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—
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*
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49,086,410
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75.7
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68.2
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Paul Gubbay
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—
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*
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—
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*
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*
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Marcela Martin
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—
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*
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—
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*
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*
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Andrew Braccia(2)
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15,514,196
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21.9
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—
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*
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2.2
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Michael Fleisher
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38,236
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*
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—
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*
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*
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Jonathan Klein(3)
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208,438
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*
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680,064
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1.1
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*
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Liza Landsman
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20,886
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*
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—
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*
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*
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Anton Levy
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—
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*
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—
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*
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*
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All executive officers and directors as a group (9 persons)(4)
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15,816,201
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22.3
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49,772,374
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76.7
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71.3
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Other 5% Stockholders:
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Entities affiliated with Accel(5)
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15,514,196
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21.9
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—
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*
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2.2
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Entities affiliated with General Atlantic(6)
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22,361,073
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31.5
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4,958,345
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7.6
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9.9
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Entities affiliated with Index
Ventures(7)
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19,460,619
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27.4
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—
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*
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2.7
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Other Registered Stockholders:
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Non-Executive Officers Holding Common Stock
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All Other Registered Stockholders
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*
Denotes less than 1.0% of beneficial ownership.
†
Percentage of total voting power represents voting power with respect to all shares of our Class A common stock and Class B common stock, as a single class. Shares of our Class A common stock entitle the holder to one vote per share, shares of our Class B common stock entitle the holder to ten votes per share and shares of our Class C common stock entitle the holder to no votes.
+
The Class B common stock is convertible at any time by the holder into shares of Class A common stock on a share-for-share basis, such that each holder of Class B common stock beneficially owns an equivalent number of shares of Class A common stock.
(1)
Consists of (a) 4,460,858 shares of Class B common stock held by Mr. Casalena pursuant to the restricted stock grant described in “Executive Compensation — Outstanding Equity Awards at Fiscal Year End for 2020,” which included a forfeiture provision if certain liquidity events with respect to the Company, including the sale of Class A common stock hereunder, have not been completed prior to August 22, 2021, (b) 2,650,838 shares of Class B common stock held of record by the Anthony Casalena 2019 Family Trust, for which Mr. Casalena is the trustee and (c) 41,974,714 shares of Class B common stock held of record by the Anthony Casalena Revocable Trust, for which Mr. Casalena is the trustee. Mr. Casalena may be deemed to have voting power and dispositive power over the shares held by the Anthony Casalena 2019 Family Trust and the Anthony Casalena Revocable Trust.
(2)
Consists of shares held by the entities affiliated with Accel identified in footnote 5.
(3)
Consists of (a) 208,438 shares of Class A common stock and (b) 680,064 shares of Class B common stock.
(4)
Consists of (a) 15,816,201 shares of Class A common stock and (b) 49,772,374 shares of Class B common stock.
(5)
Consists of (a) 530,953 shares of Class A common stock held of record by Accel Leaders 3 L.P., (b) 21,982 shares of Class A common stock held of record by Accel Leaders 3 Entrepreneurs L.P., (c) 31,686 shares of our Class A common stock held of record by Accel Leaders 3 Investors (2020) L.P., (d) 933,100 shares of Class A common stock held of record by Accel Growth Fund Investors 2010 L.L.C., (e) 13,727,746 shares of Class A common stock held of record by Accel Growth Fund L.P. and (f) 268,729 shares of Class A common stock held of record by Accel Growth Fund Strategic Partners L.P. Accel Leaders 3 GP Associates L.L.C. (“AL3A”) is the general partner of Accel Leaders 3 L.P., Accel Leaders 3 Entrepreneurs L.P. and Accel Leaders 3 Investors (2020) L.P., and has the sole voting and investment power. Andrew Braccia, Sameer Gandhi, Ping Li, Tracy Sedlock, Ryan Sweeney and Richard Wong are the directors of AL3A and share such powers. Andrew Braccia, Kevin Efrusy, Sameer Gandhi, Ping Li, Tracy Sedlock and Richard Wong are the managing members of Accel Growth Fund Investors 2010 L.L.C., and share the voting and investment powers. Accel Growth Fund Associates L.L.C. (“AGFA”) is the general partner of both Accel Growth Fund L.P. and Accel Growth Fund Strategic Partners L.P., and has the sole voting and investment power. Andrew Braccia, Kevin Efrusy, Sameer Gandhi, Ping Li, Tracy Sedlock and Richard Wong are the managing members of AGFA and share such powers. The address of the foregoing Accel entities is 500 University Avenue, Palo Alto, California, 94301. Each managing member or director disclaims beneficial ownership except to the extent of their pecuniary interest therein. Mr. Braccia disclaims ownership of all such shares except to the extent that he has a pecuniary interest therein.
(6)
Consists of (a) 11,746,631 shares of Class A common stock held of record by General Atlantic (SQRS II) LP (“GA SQRS II”), (b) 10,614,442 shares of Class A common stock held of record by General Atlantic (SQRS) LP (“GA SQRS”) and (c) 4,958,345 shares of Class B common stock held of record by GA SQRS II. The limited partners that share beneficial ownership of the shares held by GA SQRS are the following investment funds: General Atlantic Partners 93, L.P. (“GAP 93”), GAP Coinvestments III, LLC (“GAPCO III”), GAP Coinvestments IV, LLC (“GAPCO IV”), GAP Coinvestments V, LLC (“GAPCO V”), GAPCO GmbH & Co. KG (“GAPCO KG”) and GAP Coinvestments CDA, L.P. (“GAPCO CDA”). The limited partners that share beneficial ownership of the shares held by GA SQRS II are GAPCO III, GAPCO IV, GAPCO V, GAPCO CDA and General Atlantic Partners 100, L.P. (“GAP 100”), GAP 93, GAP 100, GAPCO III, GAPCO IV, GAPCO V, GAPCO KG and GAPCO CDA are herein referred to as the “GA Funds.” The general partner of each of GA SQRS and GA SQRS II is General Atlantic (SPV) GP, LLC (“GA SPV”). The general partner of GAP 100 and GAP 93 is General Atlantic GenPar, L.P. (“GA GenPar”) and the general partner of GA GenPar is General Atlantic LLC (“GA LLC”). GA LLC is the managing member of GAPCO III, GAPCO IV and GAPCO V, the general partner of GAPCO CDA and is the sole member of GA SPV. The general partner of GAPCO KG is GAPCO Management GmbH (“GAPCO Management”). There are nine members of the management committee of GA LLC (the “GA Management Committee”) and the GA Management Committee controls the investment and voting
decisions of GAPCO Management. GA LLC, GA GenPar, GA SPV and the GA Funds (collectively, the “GA Group”) are a “group” within the meaning of Rule 13d-5 of the Exchange Act. The mailing address of the foregoing General Atlantic entities (other than GAPCO KG and GAPCO Management) is c/o General Atlantic Service Company, L.P., 55 East 52nd Street, 33rd Floor, New York, NY 10055. The mailing address of GAPCO KG and GAPCO Management is c/o General Atlantic GmbH, Luitpoldblock, Amiraplatz 3, 80333 München, Germany. Each of the members of the GA Management Committee disclaims ownership of the shares except to the extent of their pecuniary interest therein.
(7)
Consists of (a) 18,710,551 shares of Class A common stock held of record by Index Ventures Growth I (Jersey), L.P. (“Index Growth I”), (b) 652,768 shares of Class A common stock held of record by Index Ventures Growth I Parallel Entrepreneur Fund (Jersey), L.P. (“Index Growth I Parallel”) and (c) 97,300 shares of Class A common stock held of record by Yucca (Jersey) SLP (“Yucca”). Index Venture Growth Associates I Limited (“IVGA I”) is the managing general partner of Index Growth I and Index Growth I Parallel and may be deemed to have voting and dispositive power over the shares held by such fund. Yucca is the administrator of the Index co-investment vehicles that are contractually required to mirror the relevant Index funds’ investment, and IVGA I may be deemed to have voting and dispositive power over their respective allocation of shares held by Yucca. David Hall, Phil Balderson, Nigel Greenwood and Brendan Boyle are the members of the board of directors of IVGA I, and investment and voting decisions with respect to the shares over which IVGA I may be deemed to have voting and dispositive power are made by such directors collectively. The address of each of these entities is 5th Floor, 44 Esplanade, St Helier, Jersey JE1 3FG, Channel Islands, except for Yucca, the address of which is 44 Esplanade, St. Helier, Jersey JE4 9WG, Channel Islands.
DESCRIPTION OF CAPITAL STOCK
General
The following description summarizes certain important terms of our capital stock, as they are expected to be in effect in connection with the effectiveness of the registration statement of which this prospectus forms a part. We expect to adopt an amended and restated certificate of incorporation and amended and restated bylaws that will become effective in connection with the effectiveness of the registration statement of which this prospectus forms a part, and this description summarizes the provisions that are expected to be included in such documents. Because it is only a summary, it does not contain all the information that may be important to you. For a complete description of the matters set forth in this section titled “Description of Capital Stock,” you should refer to our amended and restated certificate of incorporation, amended and restated bylaws, our registration rights agreement and our voting and support agreement, which are included as exhibits to the registration statement of which this prospectus forms a part, and to the applicable provisions of Delaware law.
Following the effectiveness of the registration statement of which this prospectus forms a part, after giving effect to the filing and effectiveness of our amended and restated certificate of incorporation and the adoption of our amended and restated bylaws, our authorized capital stock will consist of:
•
1,000,000,000 shares of Class A common stock, par value $0.0001 per share;
•
100,000,000 shares of Class B common stock, par value $0.0001 per share;
•
1,000,000,000 shares of Class C common stock, par value $0.0001 per share; and
•
100,000,000 shares of preferred stock, par value $0.0001 per share.
Assuming the Capital Stock Conversions, which will occur in connection with the effectiveness of the registration statement of which this prospectus forms a part, as of , 2021, there were shares of our Class A common stock outstanding, held by stockholders of record, shares of our Class B common stock outstanding, held by stockholders of record, no shares of our Class C common stock outstanding and no shares of our preferred stock outstanding. We have no current plans to issue any Class C common stock. Pursuant to our amended and restated certificate of incorporation, our board of directors will have the authority, without stockholder approval except as required by the listing standards of the NYSE, to issue additional shares of our capital stock.
Common Stock
Following the effectiveness of the registration statement of which this prospectus forms a part, we will have three classes of authorized common stock: Class A common stock, Class B common stock and Class C common stock. The rights of the holders of Class A common stock, Class B common stock and Class C Common Stock are identical, except with respect to voting, conversion and transfer rights.
Voting rights
Shares of our Class A common stock are entitled to one vote per share, shares of our Class B common stock are entitled to ten votes per share and shares of our Class C common stock have no voting rights. The holders of our Class A common stock and the holders of our Class B common stock will generally vote together as a single class on all matters submitted to a vote of our stockholders, unless otherwise required by Delaware law or our amended and restated certificate of incorporation. Delaware law could require either holders of our Class A common stock or holders of our Class B common stock to vote separately in the following circumstances:
•
if we were to seek to amend our amended and restated certificate of incorporation to increase or decrease the par value of a class of our capital stock, then that class would be required to vote separately to approve the proposed amendment; and
•
if we were to seek to amend our amended and restated certificate of incorporation in a manner that alters or changes the powers, preferences or special rights of a class of our capital stock in a manner
that would affect its holders adversely, then that class would be required to vote separately to approve the proposed amendment.
Our amended and restated certificate of incorporation that will become effective in connection with the effectiveness of the registration statement of which this prospectus forms a part will provide that stockholders are not entitled to cumulative voting for the election of directors. As a result, the holders of a majority of our voting power can elect all of the directors then standing for election.
Conversion and transfer
Each outstanding share of our Class B common stock is convertible at any time at the option of the holder into one share of our Class A common stock. Each share of our Class B common stock will convert automatically into one share of our Class A common stock upon any transfer, whether or not for value, except for certain permitted transfers described in our amended and restated certificate of incorporation. Each share of our Class B common stock will also convert automatically into one share of our Class A common stock on the earliest to occur of (a) the first date on which the then outstanding shares of our Class B common stock held by our Founder and Chief Executive Officer and his permitted transferees represent less than seven percent of the aggregate number of outstanding shares of our Class A common stock and Class B common stock, (b) the date specified by the holders of a majority of the outstanding shares of Class B common stock or (c) the date of our Founder's death or disability. Once converted into Class A common stock, the Class B common stock may not be reissued.
Shares of our Class C common stock will not be convertible into any other shares of our capital stock.
Economic rights
Dividends. Any dividend or distribution paid or payable to the holders of shares of Class A common stock, Class B common stock and Class C common stock shall be paid pro rata, on an equal priority, pari passu basis, unless different treatment of the shares of each such class is approved by the affirmative vote of the holders of a majority of the outstanding shares of the applicable class of stock treated adversely, each voting separately as a class; provided, however, that if a dividend or distribution is paid in the form of Class A common stock, Class B common stock or Class C common stock (or rights to acquire shares of Class A common stock, Class B common stock or Class C common stock), then the holders of the Class A common stock shall receive Class A common stock (or rights to acquire shares of Class A common stock), holders of Class B common stock shall receive Class B common stock (or rights to acquire shares of Class B common stock) and holders of Class C common stock shall receive Class C common stock (or rights to acquire shares of Class C common stock)..
Liquidation. In the event of our liquidation, dissolution or winding-up and upon the completion of the distributions required with respect to any series of preferred stock that may then be outstanding, our remaining assets legally available for distribution to stockholders shall be distributed on an equal priority, pro rata basis to the holders of Class A common stock, Class B common stock and Class C common stock.
Change of Control Transactions. In the event of certain mergers, consolidations, business combinations or other similar transactions, shares of our Class A common stock, Class B common stock or Class C common stock will be treated equally, identically and will share ratably, on a per share basis, in any consideration related to such transaction, unless different treatment of the shares of each class is approved by the affirmative vote of the holders of a majority of the outstanding shares of Class A common stock, by the affirmative vote of the holders of a majority of the outstanding shares of Class B common stock and by the affirmative vote of the holders of a majority of the outstanding shares of Class C common stock, each voting separately as a class. In the event that the holders of shares of Class A common stock, Class B common stock or Class C common stock are granted rights to elect to receive one of two or more alternative forms of consideration in connection with such transaction, the foregoing will be satisfied if holders of shares of Class A common stock, the holders of Class B common stock and the holders of shares of Class C common stock are granted identical election rights.
Subdivisions and Combinations. If we subdivide or combine in any manner outstanding shares of Class A common stock, Class B common stock or Class C common stock, then the outstanding shares of
the other class will be subdivided or combined in the same proportion and manner, unless different treatment of the shares of each class is approved by the affirmative vote of the holders of a majority of the outstanding shares of Class A common stock, by the affirmative vote of the holders of a majority of the outstanding shares of Class B common stock and by the affirmative vote of the holders of a majority of the outstanding shares of Class C common stock, each voting separately as a class.
Class C Common Stock
Pursuant to our amended and restated certificate of incorporation, our board of directors will have the authority, without stockholder approval except as required by the listing standards of the NYSE, to issue shares of our Class C common stock. We have no current plans to issue any shares of Class C common stock in the future. However, we may issue shares of Class C common stock for a variety of corporate purposes, including financings, acquisitions, investments, dividends and equity incentives to our employees, consultants and directors, and the Class C common stock provides us with the flexibility to do so without diluting the existing voting power of our outstanding Class A common stock and Class B common stock. Because the Class C common stock carries no voting rights, is not convertible into any other capital stock, and is not listed for trading on an exchange or registered for sale with the SEC, shares of Class C common stock may be less liquid and less attractive to any future recipients of these shares than shares of Class A common stock, although we may seek to list the Class C common stock for trading and register shares of Class C common stock for sale in the future. In addition, because our Class C common stock carries no voting rights and is not counted when determining whether the seven percent ownership threshold related to automatic conversion of the Class B common stock is met, if we issue shares of Class C common stock in the future, the holders of our Class B common stock, including our Founder and Chief Executive Officer, may be able to elect all of our directors and to determine the outcome of most matters submitted to a vote of our stockholders for a longer period of time than would be the case if we issued Class A common stock rather than Class C common stock in such transactions.
No preemptive or similar rights
Holders of shares of our common stock do not have preemptive, subscription or redemption rights. There will be no redemption or sinking fund provisions applicable to our common stock.
Fully paid and non-assessable
In connection with the effectiveness of the registration statement of which this prospectus forms a part, our legal counsel will opine that the shares of our Class A common stock to be registered will be fully paid and non-assessable.
Preferred Stock
In connection with the effectiveness of the registration statement of which this prospectus forms a part, no shares of our preferred stock will be outstanding. Under the terms of our amended and restated certificate of incorporation that will become effective in connection with the effectiveness of the registration statement of which this prospectus forms a part, our board of directors is authorized to direct us to issue shares of preferred stock in one or more series without stockholder approval, unless required by law or by any stock exchange. Our board of directors has the discretion to determine the rights, preferences, privileges and restrictions, including voting rights, dividend rights, conversion rights, redemption privileges and liquidation preferences, of each series of preferred stock.
The purpose of authorizing our board of directors to issue preferred stock and determine its rights and preferences is to eliminate delays associated with a stockholder vote on specific issuances. The issuance of preferred stock could adversely affect the voting power of holders of our common stock and the likelihood that such holders will receive dividend payments and payments upon liquidation. The issuance of preferred stock, while providing flexibility in connection with possible acquisitions, future financings and other corporate purposes, could have the effect of making it more difficult for a third-party to acquire, or could discourage a third-party from seeking to acquire, a majority of our outstanding voting stock.
Choice of Forum
Our amended and restated certificate of incorporation will provide that the Court of Chancery of the State of Delaware is the sole and exclusive forum for: (i) any derivative action or proceeding brought on behalf of us; (ii) any action asserting a claim of breach of a duty (including any fiduciary duty) owed by any of our current or former directors, officers, stockholders, employees or agents to us or our stockholders; (iii) any action asserting a claim against us or any of our current or former directors, officers, stockholders, employees or agents arising out of or relating to any provision of the DGCL or our amended and restated certificate of incorporation or our amended and restated bylaws; or (iv) any action asserting a claim against us or any of our current or former directors, officers, stockholders, employees or agents governed by the internal affairs doctrine of the State of Delaware. Our amended and restated certificate of incorporation will also provide that the federal district courts of the United States of America will, to the fullest extent permitted by law, be the sole and exclusive forum for resolving any complaint asserting a cause of action arising under the Securities Act.
Section 22 of the Securities Act creates concurrent jurisdiction for federal and state courts over all claims brought to enforce any duty or liability created by the Securities Act or the rules and regulations thereunder and our amended and restated certificate of incorporation will provide that the federal district courts of the United States of America will, to the fullest extent permitted by law, be the sole and exclusive forum for resolving any complaint asserting a cause of action arising under the Securities Act.
Moreover, Section 27 of the Exchange Act creates exclusive federal jurisdiction over all claims brought to enforce any duty or liability created by the Exchange Act or the rules and regulations thereunder and our amended and restated certificate of incorporation will provide that the exclusive forum provision does not apply to suits brought to enforce any duty or liability created by the Exchange Act. Accordingly, actions by our stockholders to enforce any duty or liability created by the Exchange Act or the rules and regulations thereunder must be brought in federal court.
Our amended and restated certificate of incorporation will also provide that any person or entity purchasing or otherwise acquiring any interest in shares of our Class A common stock will be deemed to have notice of and to have consented to the foregoing provisions; provided, however, that stockholders will not be deemed to have waived our compliance with the federal securities laws and the rules and regulations thereunder. We recognize that the forum selection clause in our amended and restated certificate of incorporation may impose additional litigation costs on stockholders in pursuing any such claims, particularly if the stockholders do not reside in or near the State of Delaware. Additionally, the forum selection clause in our amended and restated certificate of incorporation may limit our stockholders’ ability to bring a claim in a forum that they find favorable for disputes with us or our directors, officers, employees or agents, which may discourage such lawsuits against us and our directors, officers, employees and agents even though an action, if successful, might benefit our stockholders. The Court of Chancery of the State of Delaware may also reach different judgments or results than would other courts, including courts where a stockholder considering an action may be located or would otherwise choose to bring the action, and such judgments may be more or less favorable to us than our stockholders.
For more information on the risks associated with our choice of forum provision, see “Risk Factors — Risks Related to Ownership of our Class A Common Stock — Our amended and restated certificate of incorporation will contain exclusive forum provisions for certain claims, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers or employees.”
Anti-Takeover Provisions
Our amended and restated certificate of incorporation and amended and restated bylaws will contain provisions that may delay, defer or discourage another party from acquiring control of us. We expect that these provisions, which are summarized below, will discourage coercive takeover practices or inadequate takeover bids. These provisions are also designed to encourage persons seeking to acquire control of us to first negotiate with our board of directors, which we believe may result in an improvement of the terms of any such acquisition in favor of our stockholders. However, they also give our board of directors the power to discourage acquisitions that some stockholders may favor. See “Risk Factors — Risks Related to Ownership
of our Class A Common Stock — Anti-takeover provisions contained in our charter documents and Delaware law could prevent a takeover that stockholders consider favorable and could also reduce the market price of our stock.”
Multi-class stock
As described above in “— Common Stock — Voting Rights,” our amended and restated certificate of incorporation may provide for a multi-class common stock structure, which will provide holders of our Class B common stock with the ability to control the outcome of matters requiring stockholder approval, even if such holders own significantly less than a majority of the shares of our outstanding common stock.
Stockholder action and special meetings of stockholders
Our amended and restated certificate of incorporation will provide that any action required or permitted to be taken by our stockholders must be effected at a duly called annual or special meeting of our stockholders and may not be effected by any consent in writing by our stockholders. Our amended and restated certificate of incorporation will further provide that special meetings of our stockholders may be called only by a majority of our board of directors, the chairperson of our board of directors or our chief executive officer, thus prohibiting a stockholder from calling a special meeting. These provisions might delay the ability of our stockholders to force consideration of a proposal or for stockholders to take any action, including the removal of directors.
Advance notice requirements for stockholder proposals and director nominations
Our amended and restated bylaws will provide advance notice procedures for stockholders seeking to bring business before our annual meeting of stockholders or to nominate candidates for election as directors at our annual meeting of stockholders. Our amended and restated bylaws will also specify certain requirements regarding the form and content of a stockholder’s notice. These provisions might preclude our stockholders from bringing matters before our annual meeting of stockholders or from making nominations for directors at our annual meeting of stockholders if the proper procedures are not followed. We expect that these provisions might also discourage or deter a potential acquirer from conducting a solicitation of proxies to elect the acquirer’s own slate of directors or otherwise attempting to obtain control of our company.
Supermajority requirements for amendments of our amended and restated certificate of incorporation and amended and restated bylaws
Certain amendments to our amended and restated certificate of incorporation and our amended and restated bylaws will require the approval of 66 2∕3% of the outstanding voting power of our capital stock.
Authorized but unissued shares
The authorized but unissued shares of our common stock and our preferred stock are available for future issuance without stockholder approval, subject to any limitations imposed by the listing standards of the NYSE. These additional shares may be used for a variety of corporate finance transactions, acquisitions and employee benefit plans. The existence of authorized but unissued and unreserved common stock and preferred stock could make more difficult or discourage an attempt to obtain control of us by means of a proxy contest, tender offer, merger or otherwise.
Section 203 of the DGCL
We will be subject to the provisions of Section 203 of the DGCL. This statute prevents certain Delaware corporations, under certain circumstances, from engaging in a “business combination” with an “interested stockholder.” In general, Section 203 defines an “interested stockholder” as an entity or person who, together with the person’s affiliates and associates, beneficially owns 15% or more of the outstanding voting stock of the corporation.
A “business combination” includes a merger or sale of more than 10% of our assets. However, the above provisions of Section 203 of the DGCL do not apply if:
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the business combination takes place more than three years after the interested stockholder became an “interested stockholder”;
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our board of directors approves the transaction that made the stockholder an “interested stockholder” prior to the date of the transaction;
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after the completion of the transaction that resulted in the stockholder becoming an interested stockholder, that stockholder owned at least 85% of our voting stock outstanding, other than statutorily excluded shares of common stock; or
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on or subsequent to the date of the transaction, the business combination is approved by our board of directors and authorized at a meeting of our stockholders, and not by written consent, by an affirmative vote of at least two-thirds of the outstanding voting stock not owned by the interested stockholder.
Limitation on Liability of Directors and Indemnification
Our amended and restated certificate of incorporation will provide that our directors will not be personally liable to us or our stockholders for monetary damages for any breach of fiduciary duty as a director, except to the extent such exemption from liability or limitation is not permitted under the DGCL, as may be amended, or for liability:
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for any breach of the director’s duty of loyalty to us or our stockholders;
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for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law;
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pursuant to Section 174 of the DGCL; or
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for any transaction from which the director derived an improper personal benefit.
Our amended and restated bylaws will provide that we must indemnify our directors and officers to the fullest extent permitted by law. We will also be expressly authorized to advance certain expenses (including attorneys’ fees) to our directors and officers and carry directors’ and officers’ insurance providing indemnification for our directors and officers for some liabilities. We believe that these indemnification provisions and insurance are useful to attract and retain qualified directors and executive officers.
Registration Rights
After the effectiveness of the registration statement of which this prospectus forms a part, certain holders of our capital stock will be entitled to rights with respect to the registration of their shares under the Securities Act. These registration rights are contained in our registration rights agreement. We and certain holders of our capital stock are parties to the registration rights agreement. The registration rights agreement will terminate (i) five years following the effectiveness of the registration statement of which this prospectus forms a part or (ii) with respect to any particular stockholder, when such stockholder holds 2% or less of the company’s outstanding common stock and is able to sell all of its shares pursuant to Rule 144 of the Securities Act during any three month period. We will pay the registration expenses (other than underwriting discounts and commissions) of the holders of the shares registered pursuant to the registrations described below. In an underwritten offering, the underwriters have the right, subject to specified conditions, to limit the number of shares such holders may include.
Demand Registration Rights
After the effectiveness of the registration statement of which this prospectus forms a part, the holders of up to 110,211,401 shares of our Class A common stock (including shares of our Class B common stock that are convertible into shares of our Class A common stock) will be entitled to certain demand registration rights. At any time beginning 90 days after the listing of our Class A common stock on the NYSE, the holders of at least 7,200,000 shares of registrable securities can request that we register the offer and sale of their shares. Such request for registration must cover securities the anticipated aggregate offering price of which is at least $20,000,000, net of any underwriters’ discounts or commissions. We are obligated to effect
up to two such registrations from entities affiliated with General Atlantic, up to one such registration from entities affiliated with Index and up to one such registration from entities affiliated with Accel. We will not be required to effect a demand registration during the period beginning 60 days prior to our good faith estimate of the date of the filing of, and ending on a date 180 days following the effectiveness of, a registration statement relating to the public offering of our common stock.
Piggyback Registration Rights
After the effectiveness of the registration statement of which this prospectus forms a part, if we propose to register the offer and sale of our Class A common stock under the Securities Act in connection with the public offering of such Class A common stock the holders of up to 110,211,401 shares (including shares of our Class B common stock that are convertible into shares of our Class A common stock) of our Class A common stock will be entitled to certain “piggyback” registration rights allowing the holders to include their shares in such registration, subject to certain marketing and other limitations. As a result, whenever we propose to file a registration statement under the Securities Act, other than with respect to (i) a demand registration, (ii) a registration relating solely to the sale of securities of participants in a company stock plan, a registration relating to a corporate reorganization or transaction under Rule 145 of the Securities Act, (iii) a registration on any registration form which does not include substantially the same information as would be required to be included in a registration statement covering the sale of such shares or (iv) a registration in which the only shares being registered are shares issuable upon conversion of debt securities that are also being registered, the holders of such shares are entitled to notice of the registration and have the right, subject to certain limitations, to include their shares in the registration.
S-3 Registration Rights
After the effectiveness of the registration statement of which this prospectus forms a part, the holders of up to 110,211,401 shares (including shares of our Class B common stock that are convertible into shares of our Class A common stock) of our Class A common stock will be entitled to certain Form S-3 registration rights. The holders of at least 7,200,000 shares of registrable securities or investors holding at least 20% of the registrable securities then outstanding and held by such investors may make a request that we register the offer and sale of their shares on a registration statement on Form S-3, if we are eligible to file a registration statement on Form S-3 and so long as the request covers securities the anticipated aggregate public offering price of which is at least $5,000,000, net of any underwriters’ discounts or commissions. These stockholders may make an unlimited number of requests for registration on Form S-3; however, we will not be required to effect a registration on Form S-3 if we have effected two such registrations within the 12-month period preceding the date of the request.
Following the effectiveness of a Form S-3, the holders of at least 7,200,000 shares of registrable securities or investors holding at least 20% of the registrable securities then outstanding and held by such investors may make a request that we initiate an offering or sale of all or part of their registrable securities pursuant to a shelf take-down, so long as the request covers securities the anticipated aggregate public offering price of which is at least $5,000,000, net of any underwriters’ discounts or commissions.
Voting and Support Agreement
In connection with the effectiveness of the registration statement of which this prospectus forms a part, our Founder and Chief Executive Officer, Anthony Casalena, certain entities affiliated with our Founder, certain entities affiliated with General Atlantic and the company will enter into a voting and support agreement. Pursuant to the voting and support agreement, the company will include one director nominated by General Atlantic on the slate of nominees recommended by the board and use commercially reasonable best efforts to cause such nominee to be elected to the board prior to the third annual meeting following the effectiveness of the registration statement of which this prospectus forms a part. Our Founder and certain entities affiliated with our Founder are obligated to vote the shares of Class A common stock and Class B common stock held by our Founder and certain entities affiliated with our Founder for one director nominated by General Atlantic at a regular or special meeting of stockholders called for the purpose of the election or removal of directors of the board. The obligations of our Founder and certain entities affiliated with our Founder will terminate upon the earliest to occur of (i) such time that General Atlantic elects to
terminate its rights, (ii) such time General Atlantic ceases to own 9,772,914 shares of our common stock, (iii) immediately prior to the third annual meeting following the effectiveness of the registration statement of which this prospectus forms a part or (iv) immediately prior to the consummation of certain change of control transactions.
If the voting and support agreement has not otherwise terminated, to the fullest extent permitted by law, the company will include one director nominated by General Atlantic on the slate of nominees recommended by the board commencing with the third annual meeting following the effectiveness of the registration statement of which this prospectus forms a part. If the director nominated by General Atlantic is not elected to serve on the board, the company will invite such nominee to attend all meetings of the board of directors in a nonvoting observer capacity. The obligations of the company will terminate upon the earliest to occur of (i) such time that General Atlantic elects to terminate its rights, (ii) such time General Atlantic ceases to own 9,772,914 shares of common stock or (iii) immediately prior to the consummation of certain change of control transactions.
Transfer Agent and Registrar
The transfer agent and registrar for our Class A common stock and Class B common stock is Computershare Trust Company, N.A. The transfer agent and registrar’s address is 150 Royall Street, Canton, Massachusetts 02021, and its telephone number is (866) 779-6659.
Listing
We intend to apply to list our Class A common stock on the NYSE under the symbol “SQSP.”
SHARES ELIGIBLE FOR FUTURE SALE
Prior to the listing of our Class A common stock on the NYSE, there has been no public market for our Class A common stock, and we cannot predict the effect, if any, that sales of shares of our Class A common stock or the availability of shares of our Class A common stock for sale will have on the market price of our Class A common stock prevailing from time to time. Future sales of our Class A common stock in the public market, or the availability of such shares for sale in the public market, could adversely affect market prices prevailing from time to time. Sales of substantial amounts of our Class A common stock in the public market following our listing on the NYSE or the perception that such sales could occur, could adversely affect the public price of our Class A common stock and may make it more difficult for you to sell your Class A common stock at a time and price that you deem appropriate. We will have no input if and when any Registered Stockholder may, or may not, elect to sell its shares of Class A common stock or the prices at which any such sales may occur. Future sales of our Class A common stock in the public market, or the availability of such shares for sale in the public market, could adversely affect the trading prices of shares of our Class A common stock prevailing from time to time.
Upon the effectiveness of the registration statement of which this prospectus forms a part, based on the number of shares of our capital stock outstanding as of , 2021, we will have a total of shares of Class A common stock, shares of Class B common stock and no shares of Class C common stock outstanding. Shares of our Class B common stock are convertible into an equivalent number of shares of our Class A common stock and generally convert into shares of our Class A common stock upon transfer.
Approximately of these shares may be immediately sold either by the Registered Stockholders pursuant to this prospectus or by our other existing stockholders under Rule 144 under the Securities Act since such shares held by such other stockholders will have been beneficially owned by non-affiliates for at least one year.
Following the listing of our Class A common stock on the NYSE, shares of our Class A common stock may be sold either by the Registered Stockholders pursuant to this prospectus or by our other existing stockholders in accordance with Rule 144 of the Securities Act. Shares of our Class A common stock and Class B common stock will be deemed “restricted securities” (as defined in Rule 144 under the Securities Act). Restricted securities may be sold in the public market only if they are registered or if they qualify for an exemption from registration under Rule 144 or Rule 701 under the Securities Act, which rules are summarized below.
As further described below, until we have been a reporting company for at least 90 days, only non-affiliates who have beneficially owned their shares of common stock for a period of at least one year will be able to sell their shares of Class A common stock under Rule 144, which is expected to include approximately shares of common stock immediately after the effectiveness of the registration statement of which this prospectus forms a part.
Rule 144
In general, under Rule 144 as currently in effect, once we have been subject to the public company reporting requirements of Section 13 or Section 15(d) of the Exchange Act for at least 90 days, a person who is not deemed to have been one of our affiliates for purposes of the Securities Act at any time during the 90 days preceding a sale and who has beneficially owned the shares of our Class A common stock proposed to be sold for at least six months, including the holding period of any prior owner other than our affiliates, is entitled to sell those shares without complying with the manner of sale, volume limitation or notice provisions of Rule 144, subject to compliance with the public information requirements of Rule 144. If such a person has beneficially owned the shares of Class A common stock proposed to be sold for at least one year, including the holding period of any prior owner other than our affiliates, then that person would be entitled to sell those shares of Class A common stock without complying with any of the requirements of Rule 144.
In general, under Rule 144, as currently in effect, our affiliates or persons selling shares of our Class A common stock on behalf of our affiliates are entitled to sell, within any three-month period, a number of shares of Class A common stock that does not exceed the greater of:
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1% of the number of shares of our Class A common stock then outstanding; and
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the average weekly trading volume of our Class A common stock on the NYSE during the four calendar weeks preceding the filing of a notice on Form 144 with respect to that sale.
Sales under Rule 144 by our affiliates or persons selling shares of our Class A common stock on behalf of our affiliates are also subject to certain manner-of-sale provisions and notice requirements and to the availability of current public information about us.
Rule 701
In general, under Rule 701, any of our employees, directors, officers, consultants or advisors who purchases shares of common stock from us in connection with a compensatory stock option plan or other written agreement before the effective date of the registration statement of which this prospectus forms a part is entitled to sell such shares 90 days after such effective date in reliance on Rule 144.
The SEC has indicated that Rule 701 will apply to typical stock options granted by a company before it becomes subject to the reporting requirements of the Exchange Act, along with the shares acquired upon exercise of such options, including exercises after a company becomes subject to the reporting requirements of the Exchange Act.
Registration Rights
The holders of approximately 110,211,401 shares of our Class A common stock (including shares of our Class B common stock that are convertible into shares of our Class A common stock), or their transferees, are entitled to certain rights with respect to the registration of those shares under the Securities Act. For a description of these registration rights, see “Certain Relationships and Related Party Transactions — Registration Rights Agreement.” If these shares are registered, in most cases they will be freely tradable without restriction under the Securities Act and a large number of shares may be sold into the public market.
Registration Statement on Form S-8
We intend to file one or more registration statements on Form S-8 under the Securities Act to register shares of our Class A common stock subject to stock options and RSUs outstanding, as well as shares reserved for future issuance, under our equity compensation plan. The registration statement on Form S-8 is expected to become effective immediately upon filing, and shares of our Class A common stock covered by the registration statement will then become eligible for sale in the public market, subject to the Rule 144 limitations applicable to affiliates and vesting restrictions. See “Executive Compensation — Squarespace, Inc. 2021 Equity Incentive Plan” for a description of our equity compensation plan.
SALE PRICE HISTORY OF OUR CLASS A COMMON STOCK
We intend to apply to list our Class A common stock on the NYSE. Prior to the listing of our Class A common stock on the NYSE, there has been no public market for our Class A common stock. Our Class A common stock has a limited history of private purchases. In the first quarter of 2021, we sold 4,452,023 shares of Class C common stock at a purchase price of approximately $68.42 per share in the Private Placement. In the first quarter of 2021, we also consummated the Acquisition and issued 2,750,330 shares of Class C common stock at approximately $68.42 per share. In the fourth quarter of 2019, we repurchased 45,582 shares of Class A common stock and 2,370,467 shares of Class B common stock at a purchase price of $24.52 per share. While the DMM, in consultation with our financial advisors, is expected to consider this information in connection with setting the opening public price of our Class A common stock, this information may, however, have little or no relation to broader market demand for our Class A common stock and thus the opening public price and subsequent public price of our Class A common stock on the NYSE. As a result, you should not place undue reliance on these historical private sales prices as they may differ materially from the opening public price and subsequent public price of our Class A common stock on the NYSE. See “Risk Factors — Risks Related to Ownership of our Class A Common Stock — The public trading price of our Class A common stock may be volatile, and could, upon listing on the NYSE, decline significantly and rapidly.”
U.S. FEDERAL INCOME TAX CONSIDERATIONS FOR NON-U.S. HOLDERS
The following discussion is a summary of the U.S. federal income tax considerations generally applicable to the ownership and disposition of our Class A common stock by a Non-U.S. Holder (as defined below) that acquires our Class A common stock and holds our Class A common stock as a capital asset (generally, property held for investment). The effects of other U.S. federal tax laws, such as estate and gift tax laws, and any applicable state, local or non-U.S. tax laws are not discussed. This discussion is based on the Code, Treasury Regulations promulgated or proposed thereunder, judicial decisions and published rulings and administrative pronouncements of the IRS, in each case in effect as of the date hereof. These authorities may change or be subject to differing interpretations. Any such change or differing interpretation may be applied retroactively in a manner that affects the tax consequences described herein. We have not sought and will not seek any rulings from the IRS regarding the matters discussed below. There can be no assurance that the IRS or a court will not take a contrary position to that discussed below regarding the tax consequences of the ownership and disposition of our Class A common stock.
Moreover, this discussion does not address all aspects of U.S. federal income tax consequences that may be applicable to a Non-U.S. Holder in light of its particular circumstances (including, for example the impact of the Medicare contribution tax on net investment income or alternative minimum tax) or subject to special rules (including, for example, banks and other financial institutions, insurance companies, brokers and dealers in securities or currencies, traders that have elected to mark securities to market, partnerships or other pass-through entities, corporations that accumulate earnings to avoid U.S. federal income tax, tax-exempt organizations, pension plans, persons that hold our shares as part of a straddle, hedge or other integrated investment, certain United States expatriates and foreign governments or agencies).
If an entity or arrangement treated as a partnership for U.S. federal income tax purposes holds our Class A common stock, the tax treatment of a partner in the partnership will depend on the status of the partner, the activities of the partnership and certain determinations made at the partner level. Accordingly, partnerships holding our Class A common stock and the partners in such partnerships should consult their tax advisors regarding the U.S. federal income tax consequences to them.
THIS DISCUSSION IS FOR INFORMATIONAL PURPOSES ONLY AND IS NOT TAX ADVICE. INVESTORS SHOULD CONSULT THEIR TAX ADVISORS WITH RESPECT TO THE APPLICATION OF THE U.S. FEDERAL INCOME TAX LAWS TO THEIR PARTICULAR SITUATIONS, AS WELL AS ANY TAX CONSEQUENCES OF THE OWNERSHIP AND DISPOSITION OF OUR CLASS A COMMON STOCK ARISING UNDER THE U.S. FEDERAL ESTATE OR GIFT TAX LAWS OR UNDER THE LAWS OF ANY STATE, LOCAL OR NON-U.S. TAXING JURISDICTION OR UNDER ANY APPLICABLE INCOME TAX TREATY.
Definition of a Non-U.S. Holder
For purposes of this discussion, a “Non-U.S. Holder” is any beneficial owner of our Class A common stock that is neither a “U.S. person” nor an entity treated as a partnership for U.S. federal income tax purposes. A U.S. person is any person that, for U.S. federal income tax purposes, is or is treated as any of the following:
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an individual who is a citizen or resident of the United States;
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a corporation (or other entity treated as a corporation for U.S. federal income tax purposes) created or organized under the laws of the United States, any state thereof, or the District of Columbia;
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an estate, the income of which is subject to U.S. federal income tax regardless of its source; or
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a trust (1) the administration of which is subject to the primary supervision of a court within the United States and for which one or more “United States persons” (within the meaning of Section 7701(a)(30) of the Code) have the authority to control all substantial decisions, or (2) that has in effect a valid election to be treated as a United States person for U.S. federal income tax purposes.
Distributions
As described in the section entitled “Dividend Policy,” we do not anticipate declaring or paying dividends to holders of our Class A common stock in the foreseeable future. However, if we do make distributions of cash or property on our Class A common stock, such distributions will constitute dividends for U.S. federal income tax purposes to the extent paid from our current or accumulated earnings and profits, as determined under U.S. federal income tax principles. Amounts of such distribution in excess of our current or accumulated earnings and profits will be treated, first, as a return of capital and be applied against and reduce a Non-U.S. Holder’s adjusted tax basis in its Class A common stock (but not below zero) and, thereafter, as capital gain, which is subject to the tax treatment described below under “— Sale or Other Taxable Disposition.” Because we may not know the extent to which a distribution is a dividend for U.S. federal income tax purposes at the time it is made, for purposes of the withholding rules discussed below, we or our paying agent may treat the entire distribution as a dividend.
Subject to the discussions in the immediately following paragraph on effectively connected income and below under “— Additional Withholding Tax on Payments Made to Foreign Accounts,” dividends paid to a Non-U.S. Holder of our Class A common stock will be subject to U.S. federal withholding tax at a rate of 30% of the gross amount of the dividends (or such lower rate specified by an applicable income tax treaty, provided the Non-U.S. Holder furnishes a valid IRS Form W-8BEN or W-8BEN-E (or other applicable documentation) certifying qualification for such lower treaty rate). A Non-U.S. Holder that does not timely furnish the required documentation, but that qualifies for a reduced treaty rate, may obtain a refund of any excess amounts withheld by timely filing an appropriate claim for refund with the IRS. Non-U.S. Holders should consult their tax advisors regarding their entitlement to benefits under any applicable income tax treaty.
If dividends paid to a Non-U.S. Holder are effectively connected with the Non-U.S. Holder’s conduct of a trade or business within the United States (and, if required by an applicable income tax treaty, attributable to a permanent establishment or fixed base maintained by the Non-U.S. Holder in the United States), the Non-U.S. Holder will be exempt from the U.S. federal withholding tax described above. To claim such exemption, the Non-U.S. Holder must furnish to the applicable withholding agent a valid IRS Form W-8ECI (or other applicable documentation), certifying under penalties of perjury that the dividends are effectively connected with the Non-U.S. Holder’s conduct of a trade or business within the United States (and, if required by an applicable income tax treaty, attributable to a permanent establishment or fixed base maintained by the Non-U.S. Holder in the United States). Any such effectively connected dividends will generally be subject to U.S. federal income tax on a net income basis at the regular graduated rates that apply to U.S. persons. A Non-U.S. Holder that is a corporation also may be subject to a branch profits tax at a rate of 30% (or a lower rate under an applicable income tax treaty) on its effectively connected earnings and profits, as adjusted for certain items. Non-U.S. Holders should consult their tax advisors regarding any applicable tax treaties that may provide for different rules.
Sale or Other Taxable Disposition
A Non-U.S. Holder will not be subject to U.S. federal income tax on any gain realized upon the sale or other taxable disposition of our Class A common stock unless:
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the gain is effectively connected with the Non-U.S. Holder’s conduct of a trade or business within the United States (and, if required by an applicable income tax treaty, attributable to a permanent establishment or fixed base maintained by the Non-U.S. Holder in the United States);
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the Non-U.S. Holder is a nonresident alien individual present in the United States for 183 days or more during the taxable year of the disposition and certain other requirements are met; or
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our Class A common stock constitutes a U.S. real property interest by reason of our status as a U.S. real property holding corporation (“USRPHC”) for U.S. federal income tax purposes.
Gain described in the first bullet point above generally will be subject to U.S. federal income tax on a net income basis at the regular graduated rates that apply to U.S. persons. A Non-U.S. Holder that is a corporation also may be subject to a branch profits tax as discussed above under “— Distributions.”
Gain described in the second bullet point above will be subject to U.S. federal income tax at a rate of 30% (or a lower rate under an applicable income tax treaty), which may be offset by U.S. source capital losses of the Non-U.S. Holder (even though such individual is not considered a resident of the United States), provided the Non-U.S. Holder has timely filed U.S. federal income tax returns with respect to such losses.
With respect to the third bullet point above, we believe we currently are not, and do not anticipate becoming, a USRPHC. Because the determination of whether we are a USRPHC depends, however, on the fair market value of our U.S. real property interests relative to the fair market value of our non-U.S. real property interests and our other business assets, there can be no assurance we currently are not a USRPHC or will not become one in the future. Even if we are or were to become a USRPHC, gain arising from the sale or other taxable disposition by a Non-U.S. Holder of our Class A common stock will not be subject to U.S. federal income tax if our Class A common stock is “regularly traded,” as defined by applicable Treasury Regulations, on an established securities market, and such Non-U.S. Holder owned, actually and constructively, 5% or less of our Class A common stock throughout the shorter of the five-year period ending on the date of the sale or other taxable disposition or such Non-U.S. Holder’s holding period.
Non-U.S. Holders should consult their tax advisors regarding potentially applicable income tax treaties that may provide for different rules.
Information Reporting and Backup Withholding
Payments of dividends on our Class A common stock will not be subject to backup withholding, provided the applicable withholding agent does not have actual knowledge or reason to know the holder is a United States person and the holder either certifies its non-U.S. status, such as by furnishing a valid IRS Form W-8BEN, W-8BEN-E or W-8ECI (or other applicable documentation), or otherwise establishes an exemption. However, information returns are required to be filed with the IRS in connection with any distributions on our Class A common stock paid to the Non-U.S. Holder, regardless of whether any tax was actually withheld. In addition, proceeds of the sale or other taxable disposition of our Class A common stock within the United States or conducted through certain U.S.-related brokers generally will not be subject to backup withholding or information reporting, if the applicable withholding agent receives the certification described above and does not have actual knowledge or reason to know that such holder is a United States person, or the holder otherwise establishes an exemption. Proceeds of a disposition of our Class A common stock conducted through a non-U.S. office of a non-U.S. broker generally will not be subject to backup withholding or information reporting.
Copies of information returns that are filed with the IRS may also be made available under the provisions of an applicable treaty or agreement to the tax authorities of the country in which the Non-U.S. Holder resides or is established.
Backup withholding is not an additional tax. Any amounts withheld under the backup withholding rules may be allowed as a refund or a credit against a Non-U.S. Holder’s U.S. federal income tax liability, provided the required information is timely furnished to the IRS.
Additional Withholding Tax on Payments Made to Foreign Accounts
Withholding taxes may be imposed under Sections 1471 to 1474 of the Code (such Sections commonly referred to as the Foreign Account Tax Compliance Act, or “FATCA”) on certain types of payments made to non-U.S. financial institutions and certain other non-U.S. entities. Specifically, a 30% withholding tax may be imposed on dividends on, or (subject to the proposed Treasury Regulations discussed below) gross proceeds from the sale or other disposition of, our Class A common stock paid to a “foreign financial institution” or a “non-financial foreign entity” (each as defined in the Code), unless (1) the foreign financial institution undertakes certain diligence and reporting obligations, (2) the non-financial foreign entity either certifies it does not have any “substantial United States owners” (as defined in the Code) or furnishes identifying information regarding each substantial United States owner, or (3) the foreign financial institution or non-financial foreign entity otherwise qualifies for an exemption from these rules. If the payee is a foreign financial institution and is subject to the diligence and reporting requirements in (1) above, it must enter into an agreement with the U.S. Department of the Treasury requiring, among other things, that it undertake to identify accounts held by certain “specified United States persons” or “United States
owned foreign entities” (each as defined in the Code), annually report certain information about such accounts, and withhold 30% on certain payments to non-compliant foreign financial institutions and certain other account holders. Foreign financial institutions located in jurisdictions that have an intergovernmental agreement with the United States governing FATCA may be subject to different rules.
Under the applicable Treasury Regulations and administrative guidance, withholding under FATCA generally applies to payments of dividends on our Class A common stock. While withholding under FATCA would have applied also to payments of gross proceeds from the sale or other disposition of such Class A common stock on or after January 1, 2019, proposed Treasury Regulations eliminate FATCA withholding on payments of gross proceeds entirely. Taxpayers generally may rely on these proposed Treasury Regulations until final Treasury Regulations are issued.
Prospective investors should consult their tax advisors regarding the potential application of withholding under FATCA to their investment in our Class A common stock.
PLAN OF DISTRIBUTION
The Registered Stockholders, and their pledgees, donees, transferees, assignees or other successors in interest may sell their shares of Class A common stock covered hereby pursuant to brokerage transactions on the NYSE, or other public exchanges or registered alternative trading venues, at prevailing market prices at any time after the shares of Class A common stock are listed for trading. We are not party to any arrangement with any Registered Stockholder or any broker-dealer with respect to sales of shares of Class A common stock by the Registered Stockholders, except we have engaged financial advisors with respect to certain other matters relating to the registration of shares of our Class A common stock and listing of our Class A common stock, as further described below. As such, we do not anticipate receiving notice as to if and when any Registered Stockholder may, or may not, elect to sell their shares of Class A common stock or the prices at which any such sales may occur, and there can be no assurance that any Registered Stockholders will sell any or all of the shares of Class A common stock covered by this prospectus.
We will not receive any proceeds from the sale of shares of Class A common stock by the Registered Stockholders. We will recognize costs related to this direct listing and our transition to a publicly-traded company consisting of professional fees and other expenses. We will expense these amounts in the period incurred and not deduct these costs from net proceeds to the issuer as they would be in an initial public offering.
We engaged Goldman Sachs & Co. LLC and J.P. Morgan Securities LLC as our financial advisors to advise and assist us with respect to certain matters relating to the registration of our Class A common stock and our listing, including defining our objectives with respect to the filing of the registration statement of which this prospectus forms a part and the listing of our Class A common stock on the NYSE, the preparation of the registration statement of which this prospectus forms a part and the preparation of investor communications and presentations in connection with investor education, and to be available to consult with the DMM who will be setting the opening public price of our Class A common stock on the NYSE. We also engaged Barclays Capital Inc., RBC Capital Markets, LLC, Citigroup Global Markets Inc., BofA Securities, Inc., William Blair & Company, L.L.C., Raymond James & Associates, Inc., JMP Securities LLC, KeyBanc Capital Markets Inc., Piper Sandler & Co., Mizuho Securities USA LLC, Fifth Third Securities, Inc. and Citizens Capital Markets, Inc. as additional financial advisors to advise and assist us with respect to certain matters relating to our listing, including the preparation of the registration statement of which this prospectus forms a part and the preparation of investor communications and presentations in connection with investor education. We will endeavor, and it is our understanding that the financial advisors and any affiliated persons each will endeavor, to conduct our and their activities in compliance with Regulation M (to the extent that Regulation M applies to such activities) and the other anti-manipulation and antifraud provisions of the U.S. securities laws, including, for example, Sections 9(a) and 10(b) of the Exchange Act and Rule 10b-5 thereunder.
The DMM, acting pursuant to its obligations under the rules of the NYSE, is responsible for facilitating an orderly market for our Class A common stock. Based on information provided to the NYSE, the opening public price of our Class A common stock on the NYSE will be determined by buy and sell orders collected by the DMM from various broker-dealers and will be set based on the DMM’s determination of where buy orders can be matched with sell orders at a single price. On the NYSE, buy orders priced equal to or higher than the opening public price and sell orders priced lower than or equal to the opening public price will participate in that opening trade. In accordance with Rule 7.35A(g) of the NYSE Listed Company Manual, because there has not been a recent sustained history of trading in our Class A common stock in a private placement market prior to listing, the DMM will consult with Goldman Sachs & Co. LLC and J.P. Morgan Securities LLC in order for the DMM to effect a fair and orderly opening of our Class A common stock on the NYSE, without coordination with us, consistent with the applicable securities laws in connection with our direct listing. In addition, the DMM may also consult with our other financial advisors, also without coordination with us, in connection with our direct listing. Pursuant to Rule 7.35A(g) of the NYSE Listed Company Manual, and based upon information known to them at that time, Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC and our other financial advisors are expected to provide input to the DMM regarding their understanding of the ownership of our outstanding Class A common stock and pre-listing selling and buying interest in our Class A common stock that the financial advisors become aware of from potential investors and holders of our Class A common stock, including after consultation with
certain investors (which may include certain of the Registered Stockholders). Such investor consultation by the financial advisors would not involve any coordination with or outreach on behalf of the Company. The financial advisors will not engage in a book building process as would typically be undertaken by underwriters in a registered initial public offering. Instead, the input that the financial advisors provide to the DMM will be based on information that the financial advisors become aware of from potential investors and holders of our Class A common stock (which may include certain of the Registered Stockholders) in connection with investor education regarding the process and mechanics of the direct listing, the receipt of buy and sell orders and other customary brokerage activities undertaken without coordination with us. Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC and certain of our other financial advisors, in their capacity as our financial advisors, and who are available to consult with the DMM in accordance with the NYSE rules, are expected to provide the DMM with the fair value per share determined by our most recently completed independent Class A common stock valuation report, dated as of March 15, 2021, which includes a fair value of $68.42 per share of Class A common stock and takes into account the sale price of our Class C common stock of approximately $68.42 per share. The Class A common stock valuation report was prepared by an independent third-party on our behalf, and no financial advisor participated in the preparation of such report. The DMM, in consultation with Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC and our other financial advisors, is also expected to consider the information in the section titled “Sale Price History of our Class A Common Stock.” The Registered Stockholders will not be involved in the DMM’s process to establish the opening public price, including any decision regarding the timing of the opening trade.
Similar to how a security being offered in a traditional underwritten initial public offering would open on the first day of trading, before the opening public price of our Class A common stock is determined, the DMM may publish one or more pre-opening indications, which provides the market with a price range of where the DMM anticipates the opening public price will be, based on the buy and sell orders entered on the NYSE. The pre-opening indications will be available on the consolidated tape and the NYSE market data feeds. As part of this opening process, the DMM will continue to update the pre-opening indication until the buy and sell orders reach equilibrium and can be priced by offsetting one another to determine the opening public price of our Class A common stock.
In connection with the process described above, a DMM in a direct listing may have less information available to it to determine the opening public price of our Class A common stock than a DMM would in a traditional underwritten initial public offering. For example, because the direct listing does not involve a firm commitment underwriting, the financial advisors will not have engaged in a book building process, and as a result, they will not be able to provide input to the DMM that is based on or informed by that process. Moreover, prior to the opening trade, there will not be a price at which underwriters initially sold shares of Class A common stock to the public as there would be in a traditional underwritten initial public offering. This lack of an initial public offering price could impact the range of buy and sell orders collected by the NYSE from various broker-dealers. Consequently, the public price of our Class A common stock may be more volatile than in a traditional underwritten initial public offering and could, upon listing on the NYSE, decline significantly and rapidly. See the section titled “Risk Factors — Risks Related to Ownership of our Class A Common Stock.”
In addition to sales made pursuant to this prospectus, the shares of Class A common stock covered by this prospectus may be sold by the Registered Stockholders in individually negotiated, private transactions exempt from the registration requirements of the Securities Act, and the Registered Stockholders may distribute the shares of Class A common stock covered by this prospectus to affiliates, managers, members, partners, equity holders and/or other interest holders of such Registered Stockholders.
Under the securities laws of some states, shares of Class A common stock may be sold in such states only through registered or licensed brokers or dealers.
Each Registered Stockholder may from time to time transfer, pledge, assign or grant a security interest in some or all of the shares of Class A common stock owned by it and, if it defaults in the performance of its secured obligations, the transferees, pledgees, assignees or secured parties may offer and sell the shares of Class A common stock from time to time under this prospectus, under an amendment to this prospectus under Rule 424(b)(3) or other applicable provision of the Securities Act amending the list of the Registered Stockholders to include the transferee, pledgee, assignee or other successors in interest as Registered
Stockholders under this prospectus. The Registered Stockholders also may transfer the shares of Class A common stock in other circumstances, in which case the transferees, pledgees or other successors in interest will be the registered beneficial owners for purposes of this prospectus.
If any of the Registered Stockholders utilize a broker-dealer in the sale of the shares of Class A common stock being offered by this prospectus, such broker-dealer may receive commissions in the form of discounts, concessions or commissions from such Registered Stockholder or commissions from purchasers of the shares of Class A common stock for whom they may act as agent or to whom they may sell as principal.
LEGAL MATTERS
Skadden, Arps, Slate, Meagher & Flom LLP, New York, New York, is our legal advisor. Latham & Watkins LLP, New York, New York, is legal advisor to the financial advisors.
EXPERTS
The consolidated financial statements of Squarespace, Inc. at December 31, 2020 and 2019, and for each of the two years in the period ended December 31, 2020, appearing in this prospectus and the registration statement of which this prospectus forms a part have been audited by Ernst & Young LLP, independent registered public accounting firm, as set forth in their report thereon appearing elsewhere herein, and are included in reliance upon such report given on the authority of such firm as experts in accounting and auditing.
The financial statements of Tock, Inc. as of December 31, 2020 and for the year then ended, have been included herein and in the registration statement of which this prospectus forms a part in reliance upon the report of Marcum LLP, independent auditors, appearing elsewhere herein, and upon the authority of said firm as experts in accounting and auditing.
WHERE YOU CAN FIND MORE INFORMATION
We have filed with the SEC a registration statement on Form S-1 under the Securities Act, with respect to the shares of Class A common stock covered by this prospectus. This prospectus, which constitutes a part of the registration statement, does not contain all of the information set forth in the registration statement or the exhibits and schedules to the registration statement. Please refer to the registration statement and exhibits for further information with respect to the Class A common stock covered by this prospectus. Statements contained in this prospectus regarding the contents of any contract or other document are only summaries. With respect to any contract or document that is filed as an exhibit to the registration statement, you should refer to the exhibit for a copy of the contract or document, and each statement in this prospectus regarding that contract or document is qualified by reference to the exhibit. The SEC maintains a website that contains reports, proxy and information statements and other information regarding companies, like us, that file documents electronically with the SEC. The address of that website is www.sec.gov.
Immediately upon the effectiveness of this registration statement of which this prospectus forms a part, we will become subject to the information and reporting requirements of the Exchange Act, and, in accordance with this law, will be required to file periodic reports, proxy statements and other information with the SEC. These periodic reports, proxy statements and other information will be available at the website of the SEC referred to above. We also maintain a website at www.squarespace.com, at which you may access these materials free of charge as soon as reasonably practicable after they are electronically filed with, or furnished to, the SEC. The information contained on, or that can be accessed through, these websites is not a part of this prospectus. We have included these website addresses in this prospectus solely as inactive textual references.
INDEX TO FINANCIAL STATEMENTS
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Page
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Squarespace, Inc.
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F-2
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Consolidated Financial Statements:
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F-3
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F-4
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F-5
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F-6
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F-7
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F-8
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Tock, Inc.
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F-46
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Financial Statements
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F-47
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F-49
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F-50
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F-51
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F-52
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Report of Independent Registered Public Accounting Firm
To the Shareholders and the Board of Directors of Squarespace, Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Squarespace, Inc. (the “Company”) as of December 31, 2019 and 2020, the related consolidated statements of operations, comprehensive income/(loss), changes in redeemable convertible preferred stock and stockholders’ equity/(deficit), and cash flows for each of the two years in the period ended December 31, 2020, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2019 and 2020, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2020, in conformity with U.S. generally accepted accounting principles.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
/s/ Ernst & Young LLP
We have served as the Company’s auditor since 2015.
New York, New York
March 11, 2021
SQUARESPACE, INC.
Consolidated Balance Sheets
(In thousands, except shares and per share amounts)
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December 31, 2019
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December 31, 2020
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Assets
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Current assets:
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Cash and cash equivalents
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$
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43,649
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$
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57,891
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Investment in marketable securities
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76,784
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37,462
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Account receivables
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4,573
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7,516
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Prepaid expenses and other current assets
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36,745
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37,384
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Total current assets
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161,751
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140,253
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Property and equipment, net
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60,137
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49,249
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Deferred income taxes
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2,896
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7,773
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Goodwill
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83,171
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83,171
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Intangible assets, net
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26,185
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18,868
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Other assets
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2,589
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7,452
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Total assets
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$
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336,729
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$
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306,766
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Liabilities, Redeemable Convertible Preferred Stock and Stockholders’ Equity/ (Deficit)
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Current liabilities:
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Accounts payable
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$
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3,204
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$
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16,758
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Accrued liabilities
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46,392
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46,779
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Deferred revenue
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164,428
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210,392
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Debt, current portion
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8,750
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13,586
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Deferred rent and lease incentives, current portion
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939
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1,197
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Total current liabilities
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223,713
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288,712
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Debt, non-current portion
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339,429
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525,752
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Deferred rent and lease incentives, non-current portion
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23,909
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24,856
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Other liabilities
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224
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262
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Total liabilities
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587,275
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839,582
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Commitments and contingencies (see Note 13)
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Redeemable convertible preferred stock, par value of $0.0001; 118,117,738 shares authorized; 104,446,332 shares issued and outstanding as of December 31, 2019 and 2020, respectively
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126,546
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131,390
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Stockholders’ equity/(deficit):
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Class A common stock, par value of $0.0001; 159,000,000 shares
authorized; 8,185,625 and 8,903,770 shares issued and outstanding
as of December 31, 2019 and 2020, respectively
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1
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1
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Class B common stock, par value of $0.0001; 93,782,222 shares authorized; 13,470,755 and 14,368,532 shares issued and outstanding as of December 31, 2019 and 2020, respectively
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1
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1
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Additional paid in capital
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1,196
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9,043
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Accumulated other comprehensive income/(loss)
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(108)
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2,455
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Accumulated deficit
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(378,182)
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(675,706)
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Total stockholders’ deficit
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(377,092)
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(664,206)
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Total liabilities, redeemable convertible preferred stock and stockholders’ equity/(deficit)
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$
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336,729
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$
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306,766
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The accompanying notes are an integral part of these financial statements.
SQUARESPACE, INC.
Consolidated Statements of Operations
(In thousands, except shares and per share amounts)
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Year Ended December 31,
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2019
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2020
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Revenue
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$
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484,751
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$
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621,149
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Cost of revenue
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|
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81,910
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|
|
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98,337
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Gross profit
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|
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402,841
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|
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522,812
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Operating expenses:
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|
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|
|
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|
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Research and product development
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107,645
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|
|
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167,906
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Marketing and sales
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|
184,278
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|
|
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260,039
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General and administrative
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|
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49,578
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|
|
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|
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54,647
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Total operating expenses
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|
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|
|
341,501
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|
|
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482,592
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Operating income
|
|
|
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|
61,340
|
|
|
|
|
|
40,220
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|
|
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Interest expense
|
|
|
|
|
(1,080)
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|
|
|
|
|
(10,043)
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|
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Other income/(loss), net
|
|
|
|
|
3,815
|
|
|
|
|
|
(7,678)
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|
|
|
Income before (provision for)/benefit from income taxes
|
|
|
|
|
64,075
|
|
|
|
|
|
22,499
|
|
|
|
(Provision for)/benefit from income taxes
|
|
|
|
|
(5,923)
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|
|
|
|
|
8,089
|
|
|
|
Net income
|
|
|
|
$
|
58,152
|
|
|
|
|
$
|
30,588
|
|
|
|
Accretion of redeemable convertible preferred stock to redemption value
|
|
|
|
|
(5,340)
|
|
|
|
|
|
(4,844)
|
|
|
|
Deemed dividends upon repurchase of redeemable convertible preferred
stock
|
|
|
|
|
(311,610)
|
|
|
|
|
|
—
|
|
|
|
Declared dividends to preferred shareholders
|
|
|
|
|
—
|
|
|
|
|
|
(278,454)
|
|
|
|
Net loss attributable to Class A and Class B common stockholders
|
|
|
|
$
|
(258,798)
|
|
|
|
|
$
|
(252,710)
|
|
|
|
Net loss per share attributable to Class A and Class B common stockholders,
basic and diluted
|
|
|
|
$
|
(14.91)
|
|
|
|
|
$
|
(14.10)
|
|
|
|
Weighted-average shares used in computing net loss per share attributable to Class A and Class B stockholders, basic and diluted
|
|
|
|
|
17,354,458
|
|
|
|
|
|
17,917,236
|
|
|
The accompanying notes are an integral part of these financial statements.
SQUARESPACE, INC.
Consolidated Statements of Comprehensive Income/(Loss)
(In thousands)
|
|
|
|
Year Ended December 31,
|
|
|
|
|
|
2019
|
|
|
2020
|
|
|
Net income
|
|
|
|
$
|
58,152
|
|
|
|
|
$
|
30,588
|
|
|
|
Other comprehensive income/(loss):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation adjustment
|
|
|
|
|
(86)
|
|
|
|
|
|
2,528
|
|
|
|
Unrealized gain on marketable securities, net of income taxes of $44 and $11, respectively
|
|
|
|
|
134
|
|
|
|
|
|
35
|
|
|
|
Total other comprehensive income/(loss)
|
|
|
|
|
48
|
|
|
|
|
|
2,563
|
|
|
|
Total comprehensive income/(loss)
|
|
|
|
$
|
58,200
|
|
|
|
|
$
|
33,151
|
|
|
The accompanying notes are an integral part of these financial statements.
SQUARESPACE, INC.
Consolidated Statements of Changes in Redeemable Convertible Preferred Stock and Stockholders’ Equity/(Deficit)
(In thousands, except share amounts)
|
|
|
|
Redeemable
Convertible
Preferred
Stock
|
|
|
|
Class A
Common Stock
|
|
|
Class B
Common Stock
|
|
|
Additional Paid
in Capital
|
|
|
Accumulated
Other
Comprehensive
Income/(Loss)
|
|
|
Accumulated
Deficit
|
|
|
Total
Stockholders’
Equity/ (Deficit)
|
|
|
|
|
|
Shares
|
|
|
Amount
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Balance at December 31, 2018
|
|
|
|
|
118,117,738
|
|
|
|
|
$
|
144,819
|
|
|
|
|
|
|
8,030,251
|
|
|
|
|
$
|
1
|
|
|
|
|
|
13,359,956
|
|
|
|
|
$
|
1
|
|
|
|
|
$
|
3,187
|
|
|
|
|
$
|
(156)
|
|
|
|
|
$
|
(81,098)
|
|
|
|
|
$
|
(78,065)
|
|
|
|
Stock based compensation
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
18,321
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
18,321
|
|
|
|
Stock option exercises
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
2,481,266
|
|
|
|
|
|
—
|
|
|
|
|
|
3,982
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
3,982
|
|
|
|
Vested RSUs converted to common shares
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
|
385,735
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
Repurchase of Class A common
stock and retirement
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
|
(184,779)
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
(3,340)
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
(3,340)
|
|
|
|
Tender offer repurchase and share retirement
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
|
(34,104)
|
|
|
|
|
|
—
|
|
|
|
|
|
(1,779,290)
|
|
|
|
|
|
—
|
|
|
|
|
|
(15,614)
|
|
|
|
|
|
—
|
|
|
|
|
|
(28,849)
|
|
|
|
|
|
(44,463)
|
|
|
|
Investor repurchase and share retirement
|
|
|
|
|
(13,671,406)
|
|
|
|
|
|
(23,613)
|
|
|
|
|
|
|
(11,478)
|
|
|
|
|
|
—
|
|
|
|
|
|
(591,177)
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
(326,387)
|
|
|
|
|
|
(326,387)
|
|
|
|
Accretion of redeemable convertible preferred stock
|
|
|
|
|
—
|
|
|
|
|
|
5,340
|
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
(5,340)
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
(5,340)
|
|
|
|
Net income
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
58,152
|
|
|
|
|
|
58,152
|
|
|
|
Total impact on comprehensive income, net of taxes
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
48
|
|
|
|
|
|
—
|
|
|
|
|
|
48
|
|
|
|
Balance at December 31, 2019
|
|
|
|
|
104,446,332
|
|
|
|
|
$
|
126,546
|
|
|
|
|
|
|
8,185,625
|
|
|
|
|
$
|
1
|
|
|
|
|
|
13,470,755
|
|
|
|
|
$
|
1
|
|
|
|
|
$
|
1,196
|
|
|
|
|
$
|
(108)
|
|
|
|
|
$
|
(378,182)
|
|
|
|
|
$
|
(377,092)
|
|
|
|
Stock based compensation
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
31,417
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
31,417
|
|
|
|
Stock option exercises
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
897,777
|
|
|
|
|
|
—
|
|
|
|
|
|
1,435
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
1,435
|
|
|
|
Vested RSUs converted to common shares
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
|
1,366,242
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
Repurchase of Class A common
stock and retirement
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
|
(648,097)
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
(20,161)
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
(20,161)
|
|
|
|
Investor repurchase and share retirement
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
Accretion of redeemable convertible preferred stock
|
|
|
|
|
—
|
|
|
|
|
|
4,844
|
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
(4,844)
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
(4,844)
|
|
|
|
Dividends declared
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
(328,112)
|
|
|
|
|
|
(328,112)
|
|
|
|
Net income
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
30,588
|
|
|
|
|
|
30,588
|
|
|
|
Total other comprehensive income, net of taxes
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
2,563
|
|
|
|
|
|
—
|
|
|
|
|
|
2,563
|
|
|
|
Balance at December 31, 2020
|
|
|
|
|
104,446,332
|
|
|
|
|
$
|
131,390
|
|
|
|
|
|
|
8,903,770
|
|
|
|
|
$
|
1
|
|
|
|
|
|
14,368,532
|
|
|
|
|
$
|
1
|
|
|
|
|
$
|
9,043
|
|
|
|
|
$
|
2,455
|
|
|
|
|
$
|
(675,706)
|
|
|
|
|
$
|
(664,206)
|
|
|
The accompanying notes are an integral part of these financial statements.
SQUARESPACE, INC.
Consolidated Statements of Cash Flows
(In thousands)
|
|
|
|
Year Ended December 31,
|
|
|
|
|
|
2019
|
|
|
2020
|
|
|
OPERATING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
|
$
|
58,152
|
|
|
|
|
$
|
30,588
|
|
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
|
|
18,309
|
|
|
|
|
|
21,703
|
|
|
|
Stock-based compensation
|
|
|
|
|
17,975
|
|
|
|
|
|
31,254
|
|
|
|
Deferred income taxes
|
|
|
|
|
(4,018)
|
|
|
|
|
|
(4,852)
|
|
|
|
Other
|
|
|
|
|
(310)
|
|
|
|
|
|
2,437
|
|
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts receivable
|
|
|
|
|
(133)
|
|
|
|
|
|
(2,936)
|
|
|
|
Prepaid expenses and other current assets
|
|
|
|
|
(17,910)
|
|
|
|
|
|
8,659
|
|
|
|
Accounts payable and accrued liabilities
|
|
|
|
|
987
|
|
|
|
|
|
27,115
|
|
|
|
Deferred revenue
|
|
|
|
|
30,347
|
|
|
|
|
|
40,104
|
|
|
|
Deferred rent and lease incentives
|
|
|
|
|
200
|
|
|
|
|
|
1,199
|
|
|
|
Other operating assets and liabilities
|
|
|
|
|
(1,266)
|
|
|
|
|
|
(5,241)
|
|
|
|
Net cash provided by operating activities
|
|
|
|
|
102,333
|
|
|
|
|
|
150,030
|
|
|
|
INVESTING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from the sale and maturities of marketable securities
|
|
|
|
|
174,583
|
|
|
|
|
|
148,762
|
|
|
|
Purchases of marketable securities
|
|
|
|
|
(145,850)
|
|
|
|
|
|
(109,966)
|
|
|
|
Purchase of property and equipment
|
|
|
|
|
(8,217)
|
|
|
|
|
|
(4,712)
|
|
|
|
Cash paid for acquisitions, net of acquired cash
|
|
|
|
|
(95,744)
|
|
|
|
|
|
—
|
|
|
|
Other
|
|
|
|
|
(95)
|
|
|
|
|
|
178
|
|
|
|
Net cash (used in)/provided by investing activities
|
|
|
|
|
(75,323)
|
|
|
|
|
|
34,262
|
|
|
|
FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Borrowings on term loan
|
|
|
|
|
349,100
|
|
|
|
|
|
197,325
|
|
|
|
Payment of debt issuance costs
|
|
|
|
|
(938)
|
|
|
|
|
|
—
|
|
|
|
Principal payments on debt
|
|
|
|
|
(556)
|
|
|
|
|
|
(6,563)
|
|
|
|
Contingent consideration paid for acquisition
|
|
|
|
|
—
|
|
|
|
|
|
(15,000)
|
|
|
|
Dividends paid
|
|
|
|
|
—
|
|
|
|
|
|
(327,745)
|
|
|
|
Surrender of Class A common stock for tax purposes
|
|
|
|
|
(3,340)
|
|
|
|
|
|
(20,161)
|
|
|
|
Proceeds from exercise of stock options
|
|
|
|
|
4,370
|
|
|
|
|
|
1,435
|
|
|
|
Payments for Tender Offer
|
|
|
|
|
(44,463)
|
|
|
|
|
|
—
|
|
|
|
Payments for Investor Repurchase
|
|
|
|
|
(350,000)
|
|
|
|
|
|
—
|
|
|
|
Net cash used in financing activities
|
|
|
|
|
(45,827)
|
|
|
|
|
|
(170,709)
|
|
|
|
Effect of exchange rate changes on cash and cash equivalents
|
|
|
|
|
(171)
|
|
|
|
|
|
659
|
|
|
|
Net increase/(decrease) in cash and cash equivalents
|
|
|
|
|
(18,988)
|
|
|
|
|
|
14,242
|
|
|
|
Cash and cash equivalents at the beginning of the period
|
|
|
|
|
62,637
|
|
|
|
|
|
43,649
|
|
|
|
Cash and cash equivalents at the end of the period
|
|
|
|
$
|
43,649
|
|
|
|
|
$
|
57,891
|
|
|
|
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash paid during the year for interest
|
|
|
|
$
|
603
|
|
|
|
|
$
|
9,429
|
|
|
|
Cash paid during the year for taxes
|
|
|
|
$
|
13,265
|
|
|
|
|
$
|
6,580
|
|
|
|
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCE ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchases of property and equipment included in accounts payable
|
|
|
|
$
|
293
|
|
|
|
|
$
|
104
|
|
|
|
Dividends declared included in accrued liabilities
|
|
|
|
$
|
—
|
|
|
|
|
$
|
367
|
|
|
|
Capitalized stock-based compensation
|
|
|
|
$
|
346
|
|
|
|
|
$
|
163
|
|
|
|
Payment withheld on acquisition
|
|
|
|
$
|
14,376
|
|
|
|
|
$
|
—
|
|
|
The accompanying notes are an integral part of these financial statements.
SQUARESPACE, INC.
Notes to Consolidated Financial Statements
(In thousands, except shares and per share amounts)
1. Description of Business
Squarespace, Inc., and its subsidiaries, (the “Company”) is a leading all-in-one platform for businesses and independent creators to build online presence, grow their brands and manage their businesses across the internet. The Company offers websites, domains, e-commerce, tools for managing a social media presence, marketing tools and scheduling capabilities. The Company is headquartered in New York, New York, with additional offices in Portland, Oregon, Los Angeles, California and Dublin, Ireland.
Emerging Growth Company Status
The Company is an emerging growth company, as defined in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act, until such time as those standards apply to private companies.
The Company has elected to use this extended transition period for complying with new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date that the Company (i) is no longer an emerging growth company or (ii) affirmatively and irrevocably opts out of the extended transition period provided in the JOBS Act. As a result, the Company’s consolidated financial statements may not be comparable to financial statements of issuers who are required to comply with the effective dates for new or revised accounting standards based on public company effective dates.
The Company will remain an emerging growth company until the earliest of (i) the last day of the fiscal year in which the Company’s total annual gross revenue is at least $1,070,000, (ii) the last day of the fiscal year following the fifth anniversary of the completion of this offering, (iii) the date on which the Company issued more than $1,000,000 in non-convertible debt securities during the prior three-year period, or (iv) the date on which the Company becomes a large accelerated filer.
2. Summary of Significant Accounting Policies
Basis of Presentation and Consolidation
The Company’s consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”) and include the Company’s wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation.
Functional Currency
The Company has two wholly-owned international subsidiaries, Squarespace Ireland Limited (“Limited”) and Videolicious Poland Sp. z o.o (“Videolicious Poland”), which are based in Ireland and Poland, respectively. The functional currency of these subsidiaries are their local currency; for Limited, it is the Euro, and for Videolicious Poland, it is the Zloty. Accordingly, assets and liabilities of Limited and Videolicious Poland are translated into U.S. dollars at exchange rates in effect on the balance sheet date. Retained earnings and other equity items are translated at historical rates, and revenue and expense items are translated at average exchange rates for the period. Translation adjustments are recorded as a component of accumulated other comprehensive income/(loss) in stockholders’ equity/(deficit) with the majority of the adjustments derived from Limited. Foreign currency impact on the statement of cash flows is translated to U.S. dollars using average exchange rates for the period, which approximates the timing of cash flows. The Company reports the effect of exchange rate changes on cash and cash equivalents balances held in foreign currencies as a separate item in the reconciliation of the changes in cash and cash equivalents during the period. Transactions denominated in currencies other than the functional currency are remeasured to the functional currency at the exchange rate on the transaction date. Monetary assets and liabilities denominated in currencies other than the functional currency are remeasured at period-end using the
SQUARESPACE, INC.
Notes to Consolidated Financial Statements
(In thousands, except shares and per share amounts)
period-end exchange rate. Gains and losses resulting from remeasurement are recorded in other income/(loss), net in the consolidated statement of operations. Transaction gains/(losses) for the years ended December 31, 2019 and 2020 were $1,241 and $(8,826), respectively.
Use of Estimates
The preparation of the consolidated financial statements in conformity with U.S. GAAP requires management to make estimates, judgments and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates.
Management’s estimates are based on historical experience and on various other market-specific and relevant assumptions that management believes to be reasonable under the circumstances. Significant estimates include but are not limited to (i) the recognition and measurement of loss contingencies, indirect tax liabilities and certain accrued liabilities; (ii) the inputs used in the valuation of acquired intangible assets; (iii) the estimated useful lives of intangible and depreciable assets; (iv) the grant date fair value of stock-based awards; and (v) the recognition, measurement and valuation of current and deferred income taxes. The Company evaluates its assumptions and estimates on an ongoing basis and adjusts prospectively, if necessary.
COVID-19
In March 2020, the World Health Organization declared the outbreak of the novel respiratory illness COVID-19 a pandemic. The new strain of COVID-19 emerged in China and is considered to be highly contagious and poses a serious public health threat. State mandated lockdowns have adversely impacted many companies, as many public health regulations transformed or even halted daily operations. The Company has not experienced a materially negative impact from COVID-19 and continues to monitor the global situation and the potential impact on the Company’s financial condition, liquidity, operations, suppliers, industry, and workforce. Given the daily evolution of the COVID-19 outbreak and the global responses to curb its spread, the Company is not able to estimate the effects on the Company’s results of operations, financial condition, or liquidity for fiscal year 2021 or thereafter.
Operating Segments and Reporting Units
Operating segments are defined as components of an enterprise for which separate financial information is evaluated regularly by the chief operating decision maker (“CODM”), who makes decisions about allocating resources and assessing performance. The Company defines its CODM as its Chief Executive Officer (“CEO”). An operating segment is determined to be a reporting unit if all of its components are similar or if it consists of a single component. A component consists of a business within the operating segment for which discrete financial information is available with a level of segment management that regularly reviews the operating results of that component. The Company’s business operates in one operating segment, with one component, as substantially all of the Company’s offerings operate on a single platform and are deployed in an identical way with the CODM evaluating the Company’s financial information, resources and performance of these resources on a consolidated basis. As the Company operates in one operating segment, with one reporting unit, all required financial segment information can be found in the consolidated financial statements. As of December 31, 2019 and 2020, the Company did not have material long-lived assets located outside of the United States.
Concentration of Risks Related to Credit, Interest Rates and Foreign Currencies
The Company is subject to credit risk, interest rate risk on any indebtedness the Company would potentially incur, market risk on investments and foreign currency risk in connection with the Company’s operations in Ireland and Poland.
SQUARESPACE, INC.
Notes to Consolidated Financial Statements
(In thousands, except shares and per share amounts)
The Company maintains the components of its cash and cash equivalents balance in various accounts, which from time to time exceed the federal depository insurance coverage limit. In addition, substantially all cash and cash equivalents, as well as marketable securities, are held by one financial institution. The Company has not experienced any concentration losses related to its cash, cash equivalents and marketable securities to date.
As of December 31, 2019 and 2020, no single customer accounted for more than 10% of the Company’s accounts receivable or revenue.
The Company is also subject to foreign currency risks that arise from normal business operations. These risks include the translation of local currency balances and intercompany loans with and as transactions are incurred in local customer currencies sold through Limited. Translations related to local currency balances of Videolicious Poland are immaterial.
Cash and Cash Equivalents
Cash and cash equivalents are stated at fair value. The Company considers all highly liquid investments purchased with an original maturity date of 90 days or less from the date of original purchase to be cash equivalents.
Investment in Marketable Securities
The Company classifies its investment in marketable securities as available for sale securities which are stated at fair value, as determined by quoted market prices. Unrealized gains and losses are reported in accumulated other comprehensive income/(loss). Unrealized losses are evaluated for impairment and those considered other than temporary impaired are recorded as a charge to other income, net on the consolidated statement of operations. Subsequent gains or losses realized upon redemption or sale of these securities in excess or below their adjusted cost basis are also recorded as other income/(loss), net on the consolidated statement of operations. The cost of securities sold is based upon the specific identification method.
The Company considers all of its investment in marketable securities, irrespective of the maturity date, as available for use in current operations, and therefore classifies these securities within current assets on the consolidated balance sheets.
Fair Value of Financial Instruments
Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. Accounting Standards Codification, “ASC” 820 describes a fair value hierarchy based on three levels of inputs, of which the first two are considered observable and the last unobservable, that may be used to measure fair value.
The three-level hierarchy for fair value measurements is defined as follows:
Level 1
Inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets;
Level 2
Inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability other than quoted prices, either directly or indirectly, including inputs in markets that are not considered to be active; and
Level 3
Inputs to the valuation methodology are unobservable and significant to the fair value measurement.
SQUARESPACE, INC.
Notes to Consolidated Financial Statements
(In thousands, except shares and per share amounts)
Refer to Note 6 — Fair Value of Financial Instruments for further information.
Accounts Receivable
Accounts receivable consists of receivables from third party credit card processors and other trade receivables. Accounts receivable are recorded at the invoiced amount and do not bear interest. There was no allowance for doubtful accounts as of December 31, 2019 and 2020 and changes in the Company’s allowance for doubtful accounts during the years ended December 31, 2019 and 2020 were immaterial.
Property and Equipment, net
Property and equipment is carried at cost and is depreciated over its estimated useful life using the straight-line method beginning on the date the asset is placed in service. Leasehold improvements are amortized using the straight-line method over the shorter of the remaining lease term or the estimated useful life. The Company regularly evaluates the estimated remaining useful lives of its property and equipment to determine whether events or changes in circumstances warrant a revision to the remaining period of depreciation. Cost and the related accumulated depreciation and amortization are deducted from property and equipment, net on the consolidated balance sheets upon retirement. Maintenance and repairs are charged to expense when incurred.
Capitalized Software Development Costs
The Company capitalizes certain software development costs, including employee-related expenses such as salaries and stock-based compensation, incurred in connection with additional functionality to its platform, as well as internal-use projects during the application development stage. These costs are amortized on a straight-line basis over an estimated useful life of three years.
Software development costs incurred during planning and maintenance and minor upgrades and enhancements of software without additional functionality are expensed as incurred.
Business Combinations
The Company evaluates acquisitions to determine whether it is a business combination or an asset acquisition. The Company accounts for business combinations under the acquisition method of accounting. The Company includes the results of operations of acquired businesses in its consolidated financial statements as of the respective dates of acquisition. The purchase price is allocated to the tangible and intangible assets acquired and liabilities assumed based on their estimated fair values as of the acquisition date, with the excess recorded to goodwill. Critical estimates used in valuing certain acquired intangible assets include, but are not limited to, future expected cash flows (primarily from customer relationships and technology) and discount rates.
The determination of fair value requires considerable judgment and is sensitive to changes in the underlying assumptions. The Company’s estimates are preliminary and subject to adjustment, which may result in material changes to the final valuation. During the measurement period, which will not exceed one year from closing, the Company will continue to obtain information to assist in finalizing the acquisition date fair values. Any qualifying changes to the preliminary estimates will be recorded as adjustments to the respective assets and liabilities, with any residual amounts allocated to goodwill. Any transaction costs are expensed as incurred.
Asset acquisitions are accounted for using a cost accumulation model, with the cost of the acquisition allocated to the acquired assets based on their relative fair values. Goodwill is not recognized in an asset acquisition.
SQUARESPACE, INC.
Notes to Consolidated Financial Statements
(In thousands, except shares and per share amounts)
Goodwill
Goodwill represents the excess of the purchase price over the estimated fair value of net tangible and identifiable intangible assets acquired in business combinations. The recognition of goodwill, which is generally amortizable for income tax purposes, represents the strategic and synergistic benefits the Company expects to realize from acquisitions.
Goodwill is not amortized to earnings, rather, assessed for impairment annually during the fourth quarter for its single reporting unit. The Company also performs an assessment at other times if events or changes in circumstances indicate the carrying value of the assets may not be recoverable.
In conducting the annual impairment test, the Company first reviews qualitative factors to determine whether it is more likely than not that the fair value of the reporting unit is less than its carrying amount. If factors indicate that the fair value of the reporting unit is less than its carrying amount, a quantitative assessment is performed and the fair value of the reporting unit is determined by analyzing the expected present value of future cash flows. If the carrying value of the reporting unit continues to exceed its fair value, the implied fair value of the reporting unit’s goodwill is calculated and an impairment loss equal to the excess is recorded. The Company’s analyses did not indicate impairment of goodwill during the years ended December 31, 2019 and 2020.
Intangible Assets
The Company’s finite-lived intangible assets are amortized on a straight-line basis, which is aligned to the economic benefit of the asset, over their estimated remaining life.
Long-Lived Assets
Long-lived assets or asset groups are reviewed for impairment whenever events or changes in circumstances indicate the carrying amount of an asset or asset group may not be fully recoverable. Upon occurrence, recoverability is measured by comparing the sum of the undiscounted expected future cash flows the asset or asset group is expected to generate to its carrying amount. If the carrying amount of the asset exceeds its undiscounted expected future cash flows, an impairment loss is recognized in the amount of the excess of the carrying amount over the fair value of the asset. Any write-downs are treated as permanent reductions in the carrying amount of the respective asset. There were no material impairments of long-lived assets recorded during the years ended December 31, 2019 and 2020.
Leases
The Company categorize leases at their inception as either operating or capital. In the ordinary course of business, the Company enters into long term operating leases for office space. The Company’s headquarters is located in New York, New York. The Company also has office leases in Portland, Oregon, Los Angeles, California, and Dublin, Ireland, all of which have varying commencement and expiration dates. The Company recognizes rent expense on a straight-line basis over the lease period and accrues for rent expense incurred, but not paid. Any related lease incentives are recorded as a reduction in rent expense on a straight-line basis over the lease term. The Company classifies deferred rent and lease incentives as current based on the rent expense that will be recognized during the succeeding 12-month period from the balance sheet date. All other deferred rent and lease incentives are recorded as non-current on the consolidated balance sheets. The Company recognizes any sublease rental income on a straight-line basis as an offset to rent expense.
Revenue Recognition
The Company primarily derives revenue from monthly and annual subscriptions, including domain managed services. Revenue is also derived from non-subscription services including fixed fees earned on
SQUARESPACE, INC.
Notes to Consolidated Financial Statements
(In thousands, except shares and per share amounts)
revenue share arrangements with third parties and fixed transaction fees the Company earns on sales made through its customers’ websites.
Revenue is recognized when control of the promised services is transferred to the customer, in an amount reflecting the consideration the Company expects to be entitled to in exchange for those services. Revenue is recognized net of expected refunds and any sales or indirect taxes collected from customers, which are subsequently remitted to governmental authorities. The Company typically receives payment at the time of sale and its customer arrangements do not include a significant financing component. The majority of the Company’s customer arrangements and the period between customer payment and transfer of control of the service is expected to be one year or less. Payments received in advance of transfer of control or satisfaction of the related performance obligation are recorded as deferred revenue with the aggregate amount representing the transaction price allocated to those performance obligations that are partially or fully unsatisfied. Subscription plans automatically renew unless advanced notice is provided to the Company.
Arrangements with the Company’s customers do not represent a license and do not provide the customer with the right to take possession of the software supporting the Company’s SaaS-based technology platform at any time.
The Company determines revenue recognition through the following steps:
•
identification of the contract, or contracts, with a customer;
•
identification of the performance obligations in the contract;
•
determination of the transaction price;
•
allocation of the transaction price to the performance obligations in the contract; and
•
recognition of revenue when, or as, the Company satisfies a performance obligation.
Subscription and domain managed services revenue is generally recognized over-time with the exception of cases where the Company acts as a reseller of third-party software solutions. The Company has determined that subscriptions represent a stand-ready obligation to perform over the subscription term. These performance obligations are satisfied over time as the customer simultaneously receives and consumes the benefits. Subscription revenues related to third-party software solutions are recognized on a net basis, at a point in time. The Company determined that it satisfies its performance obligation by facilitating the transfer between the customer and the third-party developer. Domain managed services revenue consists of consideration received from customers in exchange for domain registration and management services. The Company recognizes consideration received from domain managed services on a gross basis over the subscription term since the Company is obligated to manage its customers’ domains over a contractual period, which is typically one year.
Revenue associated with non-subscription offerings is primarily recognized at a point in time. Included in non-subscription revenue are revenue share arrangements with payment processors and third-party business applications (together “Commerce Partners”). Consideration received from reseller arrangements with its Commerce Partners is recognized at a point in time as the Company is acting as an agent and facilitating the sale of products between its customers and third parties. Non-subscription revenue also includes transaction fees where the Company charges customers fees for sales completed on their websites. This transaction fee revenue is recognized at a point in time, when the sale has been completed.
Performance Obligations
Certain customer arrangements include multiple performance obligations which consist of access or use of some or all of the Company’s products. For arrangements that include multiple performance obligations, the transaction price to each of the underlying performance obligations is allocated based on its relative stand-alone selling price (“SSP”) and other factors. The Company determines SSP based on the
SQUARESPACE, INC.
Notes to Consolidated Financial Statements
(In thousands, except shares and per share amounts)
price at which the distinct service is sold separately. If the SSP is not observable through past transactions, the Company estimates the SSP by taking into account available information such as market conditions, internally approved pricing and cost-plus expected margin guidelines related to the performance obligations. For new customers, the Company offers certain products free of charge for the first year. The Company has determined that this offer is a material right and accordingly, the transaction price is allocated to these performance obligations and recognized as the respective performance obligation is satisfied.
Revenue by Product Type
The following summarizes the Company’s revenue recognition policy for its disaggregated product types:
Presence
Presence revenue primarily consists of fixed-fee subscriptions to the Company’s plans that offer core platform functionalities (“presence plans”). Additionally, presence revenue consists of fixed-fee subscriptions to third-party software solutions, fixed-fee subscriptions to social media stories, and domain managed services.
Commerce
Commerce revenue primarily consists of fixed-fee subscriptions to the Company’s plans that offer all the features of presence plans including additional marketing and commerce transaction tools. Commerce revenue also includes fixed-fee subscriptions to the Company’s scheduling services, non-subscription revenue derived from fixed fees earned on revenue share arrangements with Commerce Partners, and fixed transaction fees earned on sales made through its customers’ sites.
Assets Recognized from Contract Costs
The Company capitalizes customer arrangement origination costs related to affiliate fees on customer referrals (“referral fees”) and costs related to fees on sales of our social media tools on third-party platforms (“app fees”). Amounts expected to be recognized within one year of the balance sheet date are recorded as prepaid expenses and other current assets, with the remaining portion recorded as other assets on the consolidated balance sheets. Capitalized referral and app fees are considered to be incremental and recoverable costs of obtaining a contract with a customer.
Referral fees are deferred and amortized on a straight-line basis over the future benefit period of approximately four years and are included within marketing and sales on the consolidated statement of operations. App fees are also deferred and amortized on a straight-line basis over the future benefit of approximately one year and are included within cost of revenue on the consolidated statement of operations. The period of benefit was estimated by considering factors such as historical customer attrition rates, the useful life of the Company’s technology, and the impact of competition in its industry. No referral fees are paid to third parties for renewals.
The Company’s fulfillment costs (such as setup costs) are expensed as incurred as these do not generate or enhance resources of the Company that will be used in satisfying future performance obligations and do not meet the criteria for capitalization. No other material contract costs were capitalized during the period.
The Company periodically reviews the estimated benefit period so that the amortization is consistent with the transfer of services to the customer to which the asset relates.
Cost of Revenue
Cost of revenue consists primarily of domain registration fees, credit card and payment processor fees, hosting costs and app fees. Cost of revenue also includes customer support employee-related expenses,
SQUARESPACE, INC.
Notes to Consolidated Financial Statements
(In thousands, except shares and per share amounts)
allocated shared costs and depreciation and amortization. Employee-related expenses consist of salaries, taxes, benefits, and stock-based compensation.
Research and Product Development
Research and product development expenses are primarily employee-related expenses, costs associated with continuously developing new solutions and enhancing the Company’s technology platform and allocated shared costs. These costs are expensed as incurred. Employee-related expenses consist of salaries, taxes, benefits, and stock-based compensation.
Marketing and Sales
Marketing and sales expenses include costs related to advertisements used to drive customer acquisition, employee-related expenses related to the Company’s brand, customer acquisition and creative assets, referral fees and allocated shared costs. Advertising costs primarily consist of fees paid to third parties for marketing and advertising campaigns across television and radio, search engines, online display and social media. Depending on the nature of the advertising, costs are expensed at the time a commercial initially airs, when a promotion first appears in the media or as incurred. The Company’s advertising costs for the years ended December 31, 2019 and 2020 were $160,129 and $220,152, respectively. Employee-related expenses consist of salaries, taxes, benefits, and stock-based compensation.
General and Administrative
General and administrative expenses are primarily employee-related expenses associated with supporting business operations, expenses required to comply with government regulations in the markets in which the Company operates and allocated shared costs. The functional elements included in general and administrative are finance, people, legal, information technology and overall corporate support. Employee-related expenses consist of salaries, taxes, benefits, and stock-based compensation.
Stock-Based Compensation
Stock-based compensation expense related to stock awards is recognized based on the fair value of the awards granted. Under the fair value recognition provisions, stock-based compensation cost is measured at the grant date based on the fair value of the award and is recognized ratably as expense, net of forfeitures, over the requisite service period, which is the vesting period. The determination of the grant date fair value of stock option awards issued is affected by a number of variables and subjective assumptions, including (i) the fair value of the Company’s Class A and Class B common stock, (ii) the expected Class A and Class B common stock price volatility over the expected life of the award, (iii) the expected term of the award, (iv) risk-free interest rates, (v) the exercise price, and (vi) the expected dividend yield of the Company’s Class A and Class B common stock. Forfeitures are recorded as they occur if the employee fails to meet the requisite service period. Stock-based compensation is allocated on a specific identification basis for each individual employee recipient and is classified into the corresponding line item where the related employee’s cash compensation and benefits reside within the consolidated statements of operations.
The fair value of the Company’s shares of Class A and Class B common stock underlying the awards has historically been determined by the board of directors with input from management and independent third-party valuation specialists, as there was no public market for the Company’s Class A and Class B common stock. The board of directors determines the fair value of the Class A and Class B common stock by considering a number of objective and subjective factors including: the valuation of comparable companies, the Company’s operating and financial performance, the lack of liquidity of Class A and Class B common stock, transactions in the Company’s Class A and Class B common stock, and general and industry specific economic outlook, amongst other factors.
SQUARESPACE, INC.
Notes to Consolidated Financial Statements
(In thousands, except shares and per share amounts)
Other income/(loss), net
Other income/(loss), net is primarily comprised of net investment income and realized and unrealized foreign currency gains and losses.
Income Taxes
The Company recognizes deferred income tax assets and liabilities for the expected future tax consequences attributable to both differences between financial statement carrying amounts of existing assets and liabilities and their respective tax basis as well as the existence of any net operating losses and certain income tax credit carryforwards. Income tax assets and liabilities are determined based on the differences between the financial statement and the tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse as well as the expected income tax effects of net operating loss and certain income tax credit carryforwards. The impact of tax law changes is recognized in periods when the change is enacted. Valuation allowances are established when necessary to reduce net deferred income tax assets to the amount expected to be realized. Significant judgment is required in determining any valuation allowance recorded against deferred tax assets. In assessing the need for a valuation allowance, the Company considers all available evidence for each jurisdiction including past operating results, estimates of future taxable income and the feasibility of ongoing tax planning strategies. No valuation allowance was recorded as of December 31, 2019 and 2020 and no significant changes in valuation allowances were recognized during the years ended December 31, 2019 and 2020.
A two-step approach is applied in the recognition and measurement of uncertain tax positions taken or expected to be taken in a tax return. The first step is to determine if the weight of available evidence indicates that it is more likely than not that the tax position will be sustained in an audit, including resolution of any related appeals or litigation processes. The second step is to measure the tax benefit as the largest amount that is more than 50% likely to be realized upon ultimate settlement.
Any tax-related penalties are included as part of the corresponding operating expense amount and tax-related interest is included within interest expense in the consolidated statements of operations.
Accretion of Redeemable Convertible Preferred Stock
The carrying value of the Series A-2 and Series B redeemable convertible preferred stock is accreted to redemption value from the date of issuance to the earliest redemption date using the effective interest method. Increases to the carrying value of redeemable convertible preferred stock recognized in each period are charged to retained earnings, or in the absence of retained earnings, to additional paid in capital, or in the absence of additional paid in capital, to accumulated deficit.
Share Repurchases and Retirement
Repurchases and retirements of shares are reflected as a reduction to additional paid in capital, or in the absence of additional paid in capital, to accumulated deficit.
Net Income/(Loss) Per Share Attributable to Common Stockholders
The Company calculates net income/(loss) per share attributable to Class A and Class B common stockholders using the two-class method required for companies with participating securities. The Company considers redeemable convertible preferred stock to be participating securities as holders of such securities have non-forfeitable dividend rights in the event of the Company’s declaration of a dividend for shares of Class A and Class B common stock. During periods when the Company is in a net loss position, the net loss attributable to Class A and Class B common stockholders is not allocated to the redeemable convertible preferred stock and unvested Class A and Class B common stock under the two-class method as these securities do not have a contractual obligation to share in the Company’s losses. Payment in excess of the
SQUARESPACE, INC.
Notes to Consolidated Financial Statements
(In thousands, except shares and per share amounts)
carrying value on the redemption of redeemable convertible preferred stock represents a deemed dividend to the redeemable convertible preferred stockholder. Accordingly, the difference between the amount paid upon redemption and the carrying value of the redeemable convertible preferred stock is deducted from (if a premium) or added to (if a discount) net income to arrive at net income/(loss) available to Class A and Class B common stockholders.
Distributed and undistributed earnings allocated to participating securities are subtracted from net income/(loss) in determining net income/(loss) attributable to Class A and Class B common stockholders. Basic net income/(loss) per share is computed by dividing net income/(loss) attributable to Class A and Class B common stockholders by the weighted-average number of shares of the Company’s Class A and Class B common stock outstanding.
The diluted net income/(loss) per share attributable to Class A and Class B common stockholders is computed by giving effect to all dilutive securities. Diluted net income/(loss) per share attributable to Class A and Class B common stockholders is computed by dividing the resulting net income/(loss) attributable to Class A and Class B common stockholders by the weighted-average number of fully diluted Class A and Class B common shares outstanding. The Company used the if-converted method as though the conversion, exchange or vesting, respectively, had occurred as of the beginning of the period or the original date of issuance, if later. During periods when there is a net loss attributable to Class A and Class B common stockholders, potentially dilutive Class A and Class B common stock equivalents are excluded from the calculation of diluted net loss per share attributable to Class A and Class B common stockholders as their effect is anti-dilutive. If the effect of a conversion of an instrument is neutral to earnings per share, the Company considers the security to be dilutive.
Recently Issued Accounting Pronouncements
Accounting Pronouncements Recently Adopted
In June 2018, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2018-07, Compensation — Stock Compensation (Topic 718): Improvements to Non-employee Share-Based Payment Accounting. This standard is intended to simplify aspects of share-based compensation issued to non-employees by making the guidance substantially consistent with the accounting for employee share-based compensation. The standard is effective for nonpublic companies for annual reporting periods beginning after December 15, 2019 and interim periods within annual reporting periods beginning after December 15, 2020. Early adoption is permitted, but no earlier than a company’s adoption date of ASU 2014-09. The Company adopted this standard as of January 1, 2020. The adoption of this standard did not have a material impact on the Company’s consolidated financial statements.
Accounting Pronouncements Pending Adoption
In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) (“ASU 2016-02”). This standard will require lessees to recognize a right-of-use asset and a lease liability for operating leases initially measured at the present value of the lease payments on its consolidated balance sheet. The standard also requires a lessee to recognize a single lease cost, calculated so that the cost of the lease is allocated over the lease term, on a generally straight-line basis. In July 2018, the FASB issued ASU 2018-10, Leases (Topic 842): Codification Improvements (“ASU 2018-10”) and ASU 2018-11, Leases (Topic 842): Targeted Improvements (“ASU 2018-11”), to provide additional guidance for the adoption of ASU 2016-02. ASU 2018-10 clarifies certain provisions and corrects unintended applications of the guidance. ASU 2018-11 provides an alternative transition method which allows entities the option to present all prior periods under previous lease accounting guidance while recognizing the cumulative effect of applying the new standard as an adjustment to the opening balance of retained earnings in the year of adoption. In June 2020, the FASB issued ASU No. 2020-05, Revenue from Contracts with Customers (Topic 606) and Leases (Topic 842): Deferral of the Effective Date, which requires nonpublic companies to adopt the provisions of ASU 2016-02 for
SQUARESPACE, INC.
Notes to Consolidated Financial Statements
(In thousands, except shares and per share amounts)
fiscal years beginning after December 15, 2021, and for interim periods within fiscal years beginning after December 15, 2022. The Company is currently evaluating the timing of its adoption of this standard and the impact on its consolidated financial statements. The Company currently believes the most significant impact upon adoption will be the recognition of material right-of-use assets and lease liabilities on the consolidated balance sheet associated with operating leases. The Company does not expect the adoption will have a material impact on its consolidated statements of operations.
In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. This standard will require entities to measure all expected credit losses for financial instruments held at the reporting date based on historical experience, current conditions and reasonable supportable forecasts. It also modifies the impairment model for available-for-sale debt securities and provides a simplified accounting model for purchased financial assets with credit deterioration since their origination. In November 2019, the FASB issued ASU No. 2019-10, Financial Instruments — Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842) — Effective Dates, which requires nonpublic companies to adopt the provisions of ASU 2016-13 for fiscal years and interim periods within fiscal years beginning after December 15, 2022. The Company is currently evaluating the timing of its adoption of this standard and the impact on its consolidated financial statements.
In January 2017, the FASB issued ASU No. 2017-04, Intangibles — Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment, which eliminates Step 2 from the prior guidance’s goodwill impairment test. Step 2 measures a goodwill impairment loss by comparing the implied fair value of a reporting unit’s goodwill with the carrying amount of that goodwill. Instead, entities will record an impairment charge based on the excess of a reporting unit’s carrying amount over its fair value. ASU No. 2017-04 is effective for fiscal years and interim periods within those years beginning after December 15, 2021 for nonpublic entities with early adoption permitted. The Company does not expect the adoption of this guidance to have a material impact on its consolidated financial statements.
In August 2018, the FASB issued ASU 2018-15, Intangibles — Goodwill and Other — Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract. This aligns the accounting for implementation costs incurred in cloud computing arrangements with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. The guidance is effective for nonpublic companies for annual reporting periods beginning after December 15, 2020 and interim periods within annual periods beginning after December 15, 2021 with early adoption permitted. The amendments in this standard can be applied either retrospectively or prospectively to all implementation costs incurred after the date of adoption. The Company expects to adopt this standard as of January 1, 2021 and does not expect the adoption to have a material impact on its consolidated financial statements.
In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. This standard will simplify the accounting for income taxes by removing certain exceptions to the general principles in ASC 740. The amendments also improve consistent application of and simplify GAAP for other areas of ASC 740 by clarifying and amending existing guidance. This standard is effective for nonpublic entities for annual reporting periods beginning after December 15, 2021 and interim periods within annual reporting periods beginning after December 15, 2022 with early adoption permitted. The Company is currently evaluating the timing of its adoption of this standard and the impact on its consolidated financial statements.
3. Revenue
The Company has disaggregated revenue from contracts with customers by product type, subscription type, revenue recognition pattern, and geography as these categories depict the nature, amount, timing and uncertainty of revenue and how cash flows are affected by economic factors.
SQUARESPACE, INC.
Notes to Consolidated Financial Statements
(In thousands, except shares and per share amounts)
Revenue by Product Type, Subscription Type and Revenue Recognition Pattern
The following table summarizes revenue by product type, subscription type, and revenue recognition pattern for the years ended December 31, 2019 and 2020:
|
|
|
|
Year Ended December 31, 2019
|
|
|
|
|
|
Presence
|
|
|
Commerce
|
|
|
Total
|
|
|
Subscription revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Transferred over time
|
|
|
|
$
|
395,721
|
|
|
|
|
$
|
64,388
|
|
|
|
|
$
|
460,109
|
|
|
|
Transferred at a point in time
|
|
|
|
|
7,347
|
|
|
|
|
|
—
|
|
|
|
|
|
7,347
|
|
|
|
Non-subscription revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Transferred over time
|
|
|
|
|
609
|
|
|
|
|
|
19
|
|
|
|
|
|
628
|
|
|
|
Transferred at a point in time
|
|
|
|
|
479
|
|
|
|
|
|
16,188
|
|
|
|
|
|
16,667
|
|
|
|
Total revenue
|
|
|
|
$
|
404,156
|
|
|
|
|
$
|
80,595
|
|
|
|
|
$
|
484,751
|
|
|
|
|
|
|
Year Ended December 31, 2020
|
|
|
|
|
|
Presence
|
|
|
Commerce
|
|
|
Total
|
|
|
Subscription revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Transferred over time
|
|
|
|
$
|
466,321
|
|
|
|
|
$
|
110,988
|
|
|
|
|
$
|
577,309
|
|
|
|
Transferred at a point in time
|
|
|
|
|
8,700
|
|
|
|
|
|
—
|
|
|
|
|
|
8,700
|
|
|
|
Non-subscription revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Transferred over time
|
|
|
|
|
1,430
|
|
|
|
|
|
208
|
|
|
|
|
|
1,638
|
|
|
|
Transferred at a point in time
|
|
|
|
|
1,380
|
|
|
|
|
|
32,122
|
|
|
|
|
|
33,502
|
|
|
|
Total revenue
|
|
|
|
$
|
477,831
|
|
|
|
|
$
|
143,318
|
|
|
|
|
$
|
621,149
|
|
|
Revenue by Geography
Revenue by geography is based on the customer’s self-reported country identifier or, if not available, the billing address or IP address, and was as follows:
|
|
|
|
Year Ended December 31,
|
|
|
|
|
|
2019
|
|
|
2020
|
|
|
United States
|
|
|
|
$
|
343,051
|
|
|
|
|
$
|
430,118
|
|
|
|
International
|
|
|
|
|
141,700
|
|
|
|
|
|
191,031
|
|
|
|
Total revenue
|
|
|
|
$
|
484,751
|
|
|
|
|
$
|
621,149
|
|
|
There are currently no countries considered in International that are greater than 10% of total revenue.
Deferred Revenue
The deferred revenue balance as of December 31, 2019 and 2020 represents the Company’s aggregate remaining performance obligations that are expected to be recognized as revenue within subsequent periods. Generally, the Company’s contracts are for one year or less and the value for contracts with terms greater than one year is immaterial. The change in deferred revenue for the years ended December 31, 2019 and 2020 primarily reflects cash payments received during the period for which the performance obligation was not satisfied prior to the end of the period partially offset by $132,515 and $164,428, respectively, of revenues recognized during the year.
SQUARESPACE, INC.
Notes to Consolidated Financial Statements
(In thousands, except shares and per share amounts)
Capitalized Contract Costs
Assets capitalized related to referral fees consisted of the following:
|
|
|
|
December 31, 2019
|
|
|
December 31, 2020
|
|
|
Prepaid referral fees, current
|
|
|
|
$
|
1,370
|
|
|
|
|
$
|
3,452
|
|
|
|
Prepaid referral fees, non-current
|
|
|
|
|
2,189
|
|
|
|
|
|
7,018
|
|
|
|
Prepaid app fees, current
|
|
|
|
|
295
|
|
|
|
|
|
1,016
|
|
|
|
Total capitalized contract costs
|
|
|
|
$
|
3,854
|
|
|
|
|
$
|
11,486
|
|
|
Amortization of referral fees for the years ended December 31, 2019 and 2020 were $1,466 and $2,792, respectively, and were included in marketing and sales on the consolidated statements of operations. Amortization of app fees for the years ended December 31, 2019 and 2020 were $317 and $2,845, respectively, and were included in marketing and sales on the consolidated statements of operations.
There were no impairment charges recognized related to capitalized contract costs for the years ended December 31, 2019 and 2020.
Obligations for Returns, Refunds and Other Similar Obligations
The Company did not have any material change in revenue recognition from a previous period due to refunds, change in transaction price or other consideration variables and obligations for refunds were not material as of the years ended December 31, 2019 and 2020.
4. Acquisitions
Acuity Scheduling, Inc.
On April 19, 2019, the Company acquired substantially all of the assets of Acuity Scheduling, Inc. (“Acuity”), an appointment scheduling and online bookings software solution, for $50,000 (“the Acuity Acquisition”). The acquisition complements the Company’s existing platform and is expected to accelerate growth in the Company’s scheduling service offering. The total consideration was paid as follows: $25,000 was paid to the seller at closing, $15,000 was paid on the first anniversary of the closing date (the “Acquisition Liability” as of December 31, 2019) and $10,000 was paid to a third party escrow agent at the date of closing and was distributed the second anniversary of the closing date.
The Acquisition Liability was recorded at its present value of $14,376 as of the acquisition date and was included in accrued liabilities on the consolidated balance sheet at December 31, 2019. The difference between the amount to be paid on the first anniversary of the closing date and the present value will be recorded ratably as interest expense. The inputs used to record the Acquisition Liability at its fair value is considered Level 3 on the fair value hierarchy and used an appropriate discount rate based upon the Company’s estimated borrowing rate. During the years ended December 31, 2019 and 2020, total interest expense related to the Acquisition Liability was $436 and $188, respectively.
The Company recorded $17,500 of identifiable intangible assets, including technology, trade name and customer relationships, and $32,160 of goodwill related to the Acuity Acquisition, all of which is amortizable for tax purposes. The acquired finite-lived intangible assets, consisting mainly of technology, were valued using various income-based approaches of which the inputs required the application of considerable judgment by management. The acquired finite-lived intangible assets have a total weighted-average amortization period of 4.5 years with the individual useful lives by asset disclosed below.
|
Identified Intangible Assets
|
|
|
Useful Life
|
|
|
Technology
|
|
|
5 years
|
|
|
Tradename
|
|
|
3 years
|
|
|
Customer relationships
|
|
|
3 years
|
|
SQUARESPACE, INC.
Notes to Consolidated Financial Statements
(In thousands, except shares and per share amounts)
Videolicious, Inc.
On August 23, 2019, the Company acquired all of the equity interests in Videolicious, Inc. (“Videolicious”), including its wholly-owned subsidiary Videolicious Poland, a leading provider of automatic video creation solutions, for approximately $11,670 (the “Videolicious Acquisition”). This acquisition complements the Company’s existing service offerings and management expects it to provide additional opportunities to enhance the online presence of individuals and businesses. The total consideration was paid as follows: $9,170 was paid to the seller at closing and $2,500 was paid to a third party escrow agent which will distribute such amount during February 2021.
The Company recorded $5,710 of identifiable intangible assets and $7,506 of goodwill related to the Videolicious Acquisition, all of which is amortizable for tax purposes. The acquired finite-lived intangible assets were valued using various income-based approaches. The acquired finite-lived intangible assets have a total weighted-average amortization period of 7.2 years with the individual useful lives by asset disclosed below.
|
Identified Intangible Assets
|
|
|
Useful Life
|
|
|
Technology
|
|
|
5 years
|
|
|
Tradename
|
|
|
3 years
|
|
|
Customer relationships
|
|
|
8 years
|
|
Unfold Creative, LLC.
On October 15, 2019, the Company acquired all of the equity interests in Unfold Creative, LLC, (“Unfold”), a leading provider of content and marketing tools for social media, for $50,016 subject to potential working capital adjustments (the “Unfold Acquisition”). This acquisition complements the Company’s existing service offerings and management expects it to provide additional opportunities to enhance the online presence of individuals and businesses. The Unfold Acquisition was accounted for as a business combination for accounting purposes and an asset purchase for tax purposes. The total consideration was paid as follows: $45,016 was paid to the seller at closing and $5,000 was paid to a third party escrow agent which will distribute such amount by April 2021.
The Company recorded $6,649 of identifiable intangible assets, including trade name, customer relationships and technology, and $43,505 of goodwill related to the Unfold Acquisition, all of which is amortizable for tax purposes. The acquired finite-lived intangible assets were valued using income and cost-based approaches. The acquired finite-lived intangible assets have a total weighted-average amortization period of 3.1 years with the individual useful lives by asset disclosed below.
|
Identified Intangible Assets
|
|
|
Useful Life
|
|
|
Technology
|
|
|
5 years
|
|
|
Tradename
|
|
|
3 years
|
|
|
Customer relationships
|
|
|
2 years
|
|
The following table sets forth the allocation of the purchase price to the fair value of the identifiable tangible and intangible assets acquired and liabilities assumed for each acquisition, with the excess recorded to goodwill and cash paid for acquisitions:
|
|
|
|
Acuity
|
|
|
Videolicious
|
|
|
Unfold
|
|
|
Total
|
|
|
Net tangible assets (liabilities) acquired
|
|
|
|
$
|
(349)
|
|
|
|
|
$
|
(1,546)
|
|
|
|
|
$
|
(138)
|
|
|
|
|
$
|
(2,033)
|
|
|
|
Technology
|
|
|
|
|
12,700
|
|
|
|
|
|
1,200
|
|
|
|
|
|
633
|
|
|
|
|
|
14,533
|
|
|
|
Customer relationships
|
|
|
|
|
3,700
|
|
|
|
|
|
4,300
|
|
|
|
|
|
830
|
|
|
|
|
|
8,830
|
|
|
SQUARESPACE, INC.
Notes to Consolidated Financial Statements
(In thousands, except shares and per share amounts)
|
|
|
|
Acuity
|
|
|
Videolicious
|
|
|
Unfold
|
|
|
Total
|
|
|
Tradename
|
|
|
|
|
1,100
|
|
|
|
|
|
210
|
|
|
|
|
|
5,186
|
|
|
|
|
|
6,496
|
|
|
|
Net assets acquired
|
|
|
|
$
|
17,151
|
|
|
|
|
$
|
4,164
|
|
|
|
|
$
|
6,511
|
|
|
|
|
$
|
27,826
|
|
|
|
Consideration
|
|
|
|
|
49,311
|
|
|
|
|
|
11,670
|
|
|
|
|
|
50,016
|
|
|
|
|
|
110,997
|
|
|
|
Goodwill
|
|
|
|
$
|
32,160
|
|
|
|
|
$
|
7,506
|
|
|
|
|
$
|
43,505
|
|
|
|
|
$
|
83,171
|
|
|
|
|
|
|
|
|
Year Ended
December 31,
2019
|
|
|
Consideration transferred
|
|
|
|
$
|
110,997
|
|
|
|
Less: Acquisition Liability
|
|
|
|
|
(14,376)
|
|
|
|
Less: Cash acquired
|
|
|
|
|
(877)
|
|
|
|
Cash paid for acquisitions, net of acquired cash
|
|
|
|
$
|
95,744
|
|
|
The Acquisition Liability was paid by the Company on April 19, 2020 for $15,000 and is included in cash used in financing activities in the consolidated statements of cash flows.
The goodwill acquired in each of the acquisitions above represents the future economic benefits expected to arise from other intangible assets acquired that do not qualify for separate recognition, including an experienced workforce and expected future synergies. The Company recognized immaterial acquisitions costs in connection with these acquisitions. These costs were expensed as incurred.
The results of operations for the acquisitions have been included in the consolidated statements of operations since their acquisition dates. Actual and pro forma revenue and earnings for the acquisitions have not been presented because they do not have a material impact to the Company’s consolidated revenue and results of operations, either individually or in aggregate.
5. Investment in Marketable Securities
The following tables represent the amortized cost, gross unrealized gains and losses and fair market value of the Company’s available-for-sale (“AFS”) marketable securities:
|
|
|
|
December 31, 2019
|
|
|
|
|
|
|
Amortized
Cost
|
|
|
Gross
Unrealized
Gains
|
|
|
Gross
Unrealized
Losses
|
|
|
Aggregate
Fair
Value
|
|
|
|
Corporate bonds and commercial paper
|
|
|
|
$
|
38,696
|
|
|
|
|
$
|
67
|
|
|
|
|
$
|
—
|
|
|
|
|
$
|
38,763
|
|
|
|
|
Asset backed securities
|
|
|
|
|
20,924
|
|
|
|
|
|
25
|
|
|
|
|
|
(4)
|
|
|
|
|
|
20,945
|
|
|
|
|
U.S. treasuries
|
|
|
|
|
17,059
|
|
|
|
|
|
18
|
|
|
|
|
|
(1)
|
|
|
|
|
|
17,076
|
|
|
|
|
|
|
Total investment in marketable securities
|
|
|
|
$
|
76,679
|
|
|
|
|
$
|
110
|
|
|
|
|
$
|
(5)
|
|
|
|
|
$
|
76,784
|
|
|
|
|
|
|
|
December 31, 2020
|
|
|
|
|
|
Amortized
Cost
|
|
|
Gross
Unrealized
Gains
|
|
|
Gross
Unrealized
Losses
|
|
|
Aggregate
Fair
Value
|
|
|
Corporate bonds and commercial paper
|
|
|
|
$
|
21,438
|
|
|
|
|
$
|
55
|
|
|
|
|
$
|
—
|
|
|
|
|
$
|
21,493
|
|
|
|
Asset backed securities
|
|
|
|
|
7,820
|
|
|
|
|
|
94
|
|
|
|
|
|
—
|
|
|
|
|
|
7,914
|
|
|
|
U.S. treasuries
|
|
|
|
|
8,053
|
|
|
|
|
|
2
|
|
|
|
|
|
—
|
|
|
|
|
|
8,055
|
|
|
|
Total investment in marketable securities
|
|
|
|
$
|
37,311
|
|
|
|
|
$
|
151
|
|
|
|
|
$
|
—
|
|
|
|
|
$
|
37,462
|
|
|
SQUARESPACE, INC.
Notes to Consolidated Financial Statements
(In thousands, except shares and per share amounts)
The following tables represent the AFS marketable securities that were in an unrealized loss position aggregated by investment category and the length of time that individual securities have been in a continuous loss position for December 31, 2019:
|
|
|
|
December 31, 2019
|
|
|
|
|
|
Less than 12 Months
|
|
|
12 Months or Greater
|
|
|
Total
|
|
|
|
|
|
Fair Value
|
|
|
Gross
Unrealized
Losses
|
|
|
Fair Value
|
|
|
Gross
Unrealized
Losses
|
|
|
Fair Value
|
|
|
Gross
Unrealized
Losses
|
|
|
Asset backed securities
|
|
|
|
$
|
3,017
|
|
|
|
|
$
|
(4)
|
|
|
|
|
$
|
—
|
|
|
|
|
$
|
—
|
|
|
|
|
$
|
3,017
|
|
|
|
|
$
|
(4)
|
|
|
|
U.S. treasuries
|
|
|
|
|
4,009
|
|
|
|
|
|
(1)
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
4,009
|
|
|
|
|
|
(1)
|
|
|
|
Total
|
|
|
|
$
|
7,026
|
|
|
|
|
$
|
(5)
|
|
|
|
|
$
|
—
|
|
|
|
|
$
|
—
|
|
|
|
|
$
|
7,026
|
|
|
|
|
$
|
(5)
|
|
|
There were no AFS marketable securities that were in an unrealized loss position as of December 31, 2020.
The Company believes that the losses incurred as of December 31, 2019 were temporary because it had no intention of selling the investments and the Company had the ability to retain the investments for a period of time sufficient to allow for recovery of their amortized cost basis.
The contractual maturities of the investments classified as marketable securities were as follows:
|
|
|
|
December 31, 2019
|
|
|
December 31, 2020
|
|
|
Due within 1 year
|
|
|
|
$
|
68,906
|
|
|
|
|
$
|
32,607
|
|
|
|
Due in 1 year through 5 years
|
|
|
|
|
7,878
|
|
|
|
|
|
4,855
|
|
|
|
Total investment in marketable securities
|
|
|
|
$
|
76,784
|
|
|
|
|
$
|
37,462
|
|
|
Investment Income/(Expense)
Investment income consists of interest income and accretion income/amortization expense on the Company’s cash, cash equivalents and marketable securities, and is recorded in other income/(loss), net on the consolidated statement of operations. The components of investment income were as follows:
|
|
|
|
Year Ended December 31,
|
|
|
|
|
|
2019
|
|
|
2020
|
|
|
Interest income
|
|
|
|
$
|
1,919
|
|
|
|
|
$
|
1,373
|
|
|
|
Accretion income/(expense)
|
|
|
|
|
998
|
|
|
|
|
|
(278)
|
|
|
|
Total investment income
|
|
|
|
$
|
2,917
|
|
|
|
|
$
|
1,095
|
|
|
6. Fair Value of Financial Instruments
A summary of the Company’s investments in marketable securities (including, if applicable, those marketable securities classified as cash and cash equivalents) were as follows:
|
|
|
|
December 31, 2019
|
|
|
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Total
|
|
|
Cash equivalents
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Money market funds
|
|
|
|
$
|
564
|
|
|
|
|
$
|
—
|
|
|
|
|
$
|
—
|
|
|
|
|
$
|
564
|
|
|
|
Available-for-sale debt securities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate bonds and commercial paper
|
|
|
|
|
—
|
|
|
|
|
|
38,763
|
|
|
|
|
|
—
|
|
|
|
|
|
38,763
|
|
|
SQUARESPACE, INC.
Notes to Consolidated Financial Statements
(In thousands, except shares and per share amounts)
|
|
|
|
December 31, 2019
|
|
|
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Total
|
|
|
Asset backed securities
|
|
|
|
|
—
|
|
|
|
|
|
20,945
|
|
|
|
|
|
—
|
|
|
|
|
|
20,945
|
|
|
|
U.S. treasuries
|
|
|
|
|
17,076
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
17,076
|
|
|
|
Total
|
|
|
|
$
|
17,640
|
|
|
|
|
$
|
59,708
|
|
|
|
|
$
|
—
|
|
|
|
|
$
|
77,348
|
|
|
|
|
|
|
|
|
December 31, 2020
|
|
|
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Total
|
|
|
Cash equivalents
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Money market funds
|
|
|
|
$
|
876
|
|
|
|
|
$
|
—
|
|
|
|
|
$
|
—
|
|
|
|
|
$
|
876
|
|
|
|
Available-for-sale debt securities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate bonds and commercial paper
|
|
|
|
|
—
|
|
|
|
|
|
21,493
|
|
|
|
|
|
—
|
|
|
|
|
|
21,493
|
|
|
|
Asset backed securities
|
|
|
|
|
—
|
|
|
|
|
|
7,914
|
|
|
|
|
|
—
|
|
|
|
|
|
7,914
|
|
|
|
U.S. treasuries
|
|
|
|
|
8,055
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
8,055
|
|
|
|
Total
|
|
|
|
$
|
8,931
|
|
|
|
|
$
|
29,407
|
|
|
|
|
$
|
—
|
|
|
|
|
$
|
38,338
|
|
|
The Company’s valuation techniques used to measure the fair value of money market funds and certain available-for-sale securities were derived from quoted prices in active markets for identical assets. The valuation techniques used to measure the fair value of the Company’s other debt securities, all of which have counterparties with high credit ratings, were valued based on quoted market prices or model driven valuations using significant inputs derived from or corroborated by observable market data. There were no transfers of financial instruments between Level 1, Level 2, and Level 3 during the periods presented.
For certain other financial instruments, including accounts receivables, accounts payable and accrued liabilities, the carrying amounts approximate the fair value of such instruments due to the relatively short maturity of these balances. The recorded amounts of the Company’s debt obligations approximate their fair values as they are based upon rates available to the Company for obligations of similar terms and maturities.
7. Prepaid expenses and other current assets
Prepaid expenses and other current assets consisted of the following:
|
|
|
|
December 31, 2019
|
|
|
December 31, 2020
|
|
|
Prepaid advertising
|
|
|
|
$
|
18,565
|
|
|
|
|
$
|
9,645
|
|
|
|
Prepaid income tax
|
|
|
|
|
7,152
|
|
|
|
|
|
16,924
|
|
|
|
Prepaid operational expenses
|
|
|
|
|
4,870
|
|
|
|
|
|
5,152
|
|
|
|
Other current assets
|
|
|
|
|
6,158
|
|
|
|
|
|
5,663
|
|
|
|
Total prepaid expenses and other current assets
|
|
|
|
$
|
36,745
|
|
|
|
|
$
|
37,384
|
|
|
8. Property and equipment, net
Property and equipment, net consisted of the following:
|
|
|
|
Estimated Useful Life (Years)
|
|
|
December 31, 2019
|
|
|
December 31, 2020
|
|
|
Computer hardware
|
|
|
3
|
|
|
|
$
|
24,803
|
|
|
|
|
$
|
27,088
|
|
|
|
Furniture and fixtures
|
|
|
7
|
|
|
|
|
4,515
|
|
|
|
|
|
4,675
|
|
|
|
Leasehold improvements
|
|
|
Shorter of estimated useful
life or remaining term of
lease
|
|
|
|
|
65,660
|
|
|
|
|
|
66,380
|
|
|
SQUARESPACE, INC.
Notes to Consolidated Financial Statements
(In thousands, except shares and per share amounts)
|
|
|
|
Estimated Useful Life (Years)
|
|
|
December 31, 2019
|
|
|
December 31, 2020
|
|
|
|
Capitalized software development
costs
|
|
|
3
|
|
|
|
|
10,857
|
|
|
|
|
|
11,228
|
|
|
|
|
Total property and equipment
|
|
|
|
|
|
|
|
105,835
|
|
|
|
|
|
109,371
|
|
|
|
|
Less: accumulated depreciation and
amortization
|
|
|
|
|
|
|
|
(45,698)
|
|
|
|
|
|
(60,122)
|
|
|
|
|
|
|
Total property and equipment, net
|
|
|
|
|
|
|
$
|
60,137
|
|
|
|
|
$
|
49,249
|
|
|
|
|
|
Depreciation and amortization expense related to property and equipment, net was included in the following line items on the consolidated statements of operations:
|
|
|
|
Year Ended December 31,
|
|
|
|
|
|
2019
|
|
|
2020
|
|
|
Cost of revenue
|
|
|
|
$
|
7,681
|
|
|
|
|
$
|
7,298
|
|
|
|
Research and product development
|
|
|
|
|
3,847
|
|
|
|
|
|
4,034
|
|
|
|
Marketing and sales
|
|
|
|
|
1,241
|
|
|
|
|
|
1,384
|
|
|
|
General and administrative
|
|
|
|
|
1,866
|
|
|
|
|
|
1,600
|
|
|
|
Total depreciation and amortization expense
|
|
|
|
$
|
14,635
|
|
|
|
|
$
|
14,316
|
|
|
Capitalized Software Development Costs
Amortization of capitalized software development costs included in depreciation and amortization expense was included in the following line items on the consolidated statements of operations:
|
|
|
|
Year Ended December 31,
|
|
|
|
|
|
2019
|
|
|
2020
|
|
|
Cost of revenue
|
|
|
|
$
|
1,161
|
|
|
|
|
$
|
2,469
|
|
|
|
General and administrative expenses
|
|
|
|
|
342
|
|
|
|
|
|
288
|
|
|
|
Total amortization of capitalized software development costs
|
|
|
|
$
|
1,503
|
|
|
|
|
$
|
2,757
|
|
|
Capitalized software development costs, net, included in property and equipment, net, are $8,851 and $6,465 as of December 31, 2019 and 2020, respectively.
9. Goodwill and Intangible Assets, net
Goodwill
During the year ended December 31, 2019 and 2020, the Company had goodwill of $83,171 as a direct result of the acquisitions included in Note 4 — Acquisitions. There have been no impairment charges recognized relating to the goodwill recorded to date.
SQUARESPACE, INC.
Notes to Consolidated Financial Statements
(In thousands, except shares and per share amounts)
Intangible assets, net
The following tables summarize the carrying value of the Company’s intangible assets:
|
|
|
|
Useful
Lives
(in years)
|
|
|
December 31, 2019
|
|
|
|
|
|
|
Gross Carrying
Value
|
|
|
Accumulated
Amortization
|
|
|
Net Carrying
Value
|
|
|
|
Technology
|
|
|
5
|
|
|
|
$
|
14,533
|
|
|
|
|
$
|
(1,905)
|
|
|
|
|
$
|
12,628
|
|
|
|
|
Customer relationships
|
|
|
2 to 8
|
|
|
|
|
8,830
|
|
|
|
|
|
(1,116)
|
|
|
|
|
|
7,714
|
|
|
|
|
Tradenames
|
|
|
3
|
|
|
|
|
6,496
|
|
|
|
|
|
(653)
|
|
|
|
|
|
5,843
|
|
|
|
|
Total intangible assets, net
|
|
|
|
|
|
|
$
|
29,859
|
|
|
|
|
$
|
(3,674)
|
|
|
|
|
$
|
26,185
|
|
|
|
|
|
|
|
|
|
Useful
Lives
(in years)
|
|
|
December 31, 2020
|
|
|
|
|
|
|
Gross Carrying
Value
|
|
|
Accumulated
Amortization
|
|
|
Net Carrying
Value
|
|
|
|
Technology
|
|
|
5
|
|
|
|
$
|
14,533
|
|
|
|
|
$
|
(4,818)
|
|
|
|
|
$
|
9,715
|
|
|
|
|
Customer relationships
|
|
|
2 to 8
|
|
|
|
|
8,830
|
|
|
|
|
|
(3,348)
|
|
|
|
|
|
5,482
|
|
|
|
|
Tradenames
|
|
|
3
|
|
|
|
|
6,496
|
|
|
|
|
|
(2,825)
|
|
|
|
|
|
3,671
|
|
|
|
|
Total intangible assets, net
|
|
|
|
|
|
|
$
|
29,859
|
|
|
|
|
$
|
(10,991)
|
|
|
|
|
$
|
18,868
|
|
|
|
|
|
Technology, customer relationships and tradenames have a weighted-average remaining useful life of 3.4 years, 4.7 years and 1.7 years, respectively. The weighted-average remaining useful life for finite-lived intangible assets was 3.4 years as of December 31, 2020.
Amortization of finite-lived intangible assets was included in the following line items on the consolidated statements of operations:
|
|
|
|
Year Ended December 31, 2020
|
|
|
|
|
|
2019
|
|
|
2020
|
|
|
Cost of revenue
|
|
|
|
$
|
1,905
|
|
|
|
|
$
|
2,915
|
|
|
|
Marketing and sales
|
|
|
|
|
—
|
|
|
|
|
|
2,232
|
|
|
|
General and administrative
|
|
|
|
|
1,769
|
|
|
|
|
|
2,240
|
|
|
|
Total amortization of finite-lived intangible assets
|
|
|
|
$
|
3,674
|
|
|
|
|
$
|
7,387
|
|
|
As of December 31, 2020, the expected future amortization expense for finite-lived intangible assets was as follows:
|
Year Ending December 31,
|
|
|
Amount
|
|
|
2021
|
|
|
|
$
|
7,168
|
|
|
|
2022
|
|
|
|
|
5,311
|
|
|
|
2023
|
|
|
|
|
3,444
|
|
|
|
2024
|
|
|
|
|
1,533
|
|
|
|
2025
|
|
|
|
|
538
|
|
|
|
Thereafter
|
|
|
|
|
874
|
|
|
|
Total
|
|
|
|
$
|
18,868
|
|
|
SQUARESPACE, INC.
Notes to Consolidated Financial Statements
(In thousands, except shares and per share amounts)
10. Accrued Liabilities
Accrued liabilities consisted of the following:
|
|
|
|
December 31, 2019
|
|
|
December 31, 2020
|
|
|
Accrued marketing expenses
|
|
|
|
$
|
14,042
|
|
|
|
|
$
|
26,459
|
|
|
|
Accrued indirect taxes
|
|
|
|
|
11,239
|
|
|
|
|
|
13,463
|
|
|
|
Accrued Acquisition Liability
|
|
|
|
|
14,812
|
|
|
|
|
|
—
|
|
|
|
Other accrued expenses
|
|
|
|
|
6,299
|
|
|
|
|
|
6,857
|
|
|
|
Total accrued liabilities
|
|
|
|
$
|
46,392
|
|
|
|
|
$
|
46,779
|
|
|
11. Debt
Debt outstanding as of December 31, 2019 and 2020 was as follows:
|
|
|
|
December 31, 2019
|
|
|
December 31, 2020
|
|
|
Term Loan
|
|
|
|
$
|
350,000
|
|
|
|
|
$
|
543,437
|
|
|
|
Less: unamortized original issue discount
|
|
|
|
|
(892)
|
|
|
|
|
|
(3,356)
|
|
|
|
Less: unamortized deferred financing costs
|
|
|
|
|
(929)
|
|
|
|
|
|
(743)
|
|
|
|
Less: debt, current
|
|
|
|
$
|
(8,750)
|
|
|
|
|
$
|
(13,586)
|
|
|
|
Total debt, non-current
|
|
|
|
$
|
339,429
|
|
|
|
|
$
|
525,752
|
|
|
Credit Facility
On December 12, 2019 (the “Closing Date”), the Company entered into a credit agreement (the “2019 Credit Agreement”) with certain lending institutions (the “2019 Credit Facility”) which included Initial Term A Loans for $350,000 (“2019 Term Loan”), Revolving Credit Loans of up to $25,000 (“2019 Revolver”), which included a Letters of Credit sub-facility available up to a total of $15,000 (“2019 Letter of Credit”). The 2019 Credit Facility has a maturity of five years.
On December 11, 2020 (the “Modification Date”), the Company amended the 2019 Credit Agreement (“2020 Credit Agreement”) to increase the total size of the 2019 Term Loan to $550,000 (collectively the “2020 Term Loan”) with the same lending institutions as the 2019 Credit Facility (collectively, the “Credit Facility”) and extend the maturity date for the 2020 Term Loan and the 2019 Revolver to December 11, 2025 (collectively, the “Modification”). The proceeds from the additional term loan of $200,000 was used to provide for the payment of a one-time dividend, see Note 14 — Redeemable Convertible Preferred Stock and Note — 15 Stockholder’s Equity/(Deficit) for further information. The Modification was accounted for in accordance with ASC 470-50, Debt — “Modifications and Extinguishments”. As a result, the Company continued to capitalize the $722 of unamortized original debt discount and $752 of the unamortized deferred financing costs. The 2019 Term Loan was used to provide for the repurchase, and subsequent retirement, of outstanding capital stock; see Note 15 — Stockholders’ Equity/(Deficit) for additional details. In addition, proceeds from the issuance of the 2019 Term Loan were used for certain transaction fees and expenses related to the issuance of the 2019 Credit Facility. Fees paid as a reduction to the proceeds to the lead arranger of the 2019 Credit Facility were capitalized as original issue discount. In addition, costs incurred directly related to the issuance of the 2019 Credit Facility were capitalized as deferred financing costs.
As of December 31, 2019 and 2020, the amount of unamortized original debt discount and deferred financing costs were $892 and $3,356 and $929 and $743, respectively, and are being amortized over the term of the Credit Facility using the effective interest method.
Borrowings under the Credit Facility are subject to an interest rate equal to LIBOR or Prime rate, defined as the rate of last interest quoted by the Wall Street Journal, plus an applicable rate, subject to a
SQUARESPACE, INC.
Notes to Consolidated Financial Statements
(In thousands, except shares and per share amounts)
2.25% cap and 1.25% floor, changed from a 1.75% cap and 1.25% floor on the 2019 Credit Facility, on applicable LIBOR loans and a 1.25% cap and 0.25% floor, changed from a 0.75% cap and 0.25% floor on the 2019 Credit Facility, on Prime loans. The applicable margin is based on a consolidated debt to consolidated EBITDA ratios as defined by the Credit Agreement. The effective interest rate as of December 31, 2019 and 2020 was 3.25% and 2.19%, respectively.
The 2019 Term Loan required scheduled quarterly payments beginning on March 31, 2020 in an amount equal to 0.625% on the amounts issued to the Company on the Closing Date through and including September 30, 2020. As a result of the Modification, the 2020 Term Loan requires quarterly payments beginning on March 31, 2021 in an amount equal to 0.625% on the total amounts outstanding as of the Modification Date through and including December 31, 2022, with 1.875% on the amounts issued on the Closing Date due beginning March 31, 2023 through and including December 31, 2024, 2.5% on the amounts issued on the Closing Date due beginning March 31, 2025 through and including September 30, 2025 with the balance due at maturity. In addition, the Credit Facility includes certain customary prepayment requirements based on events such as asset sales, debt issuances or incurrences and sale leasebacks.
As of December 31, 2020, $7,143 million was outstanding under the Revolving Credit Facility in the form of outstanding letters of credit and $17,857 million remained available for borrowing by the Company. Certain of the Company’s operating lease agreements require security deposits in the form of cash or an irrevocable letter of credit. The letters of credit issued as of December 31, 2020 were related to security deposits for the Company’s applicable leased locations. The letters of credit issued are subject to a fee equal to the interest rate on the Credit Facility. In addition, the Company is required to pay a commitment fee of 0.20% to 0.25%, depending on the consolidated total debt to consolidated EBITDA ratio as defined by the 2020 Credit Agreement, quarterly to the lenders in respect of the unutilized commitments.
The 2020 Credit Agreement contains certain customary affirmative covenants and events of default. The negative covenants in the Credit Facility include, among other items, limitations on the ability, subject to negotiated exceptions, to incur additional indebtedness or issue additional preferred stock of the Company, the creation or issuance of certain liens on certain assets, enter into agreements related to mergers and acquisitions, including the sale of certain assets, dispose of assets or declare, make or pay dividends and distributions. The 2019 Credit Agreement contained certain negative covenants for an indebtedness to consolidated EBITDA ratio, as defined by the 2019 Credit Agreement, and commencing with December 31, 2019 and all fiscal quarters thereafter through maturity, to be greater than 3.75, tested as of the last day of each fiscal quarter. As a result of the Modification, commencing with the fiscal quarter ending December 31, 2020, the Company is required to maintain an indebtedness to consolidated EBITDA ratio of not more than 4.50, tested as of the last day of each fiscal quarter, with a step-down to 4.25 for the fiscal quarters ending March 31, 2022 and June 30, 2022, a further step-down to 4.00 for the fiscal quarters ending September 30, 2022 and December 31, 2022 and a final step-down to 3.75 for the fiscal quarter ending March 31, 2023 and each fiscal quarter thereafter (the “Financial Covenant”), subject to customary equity cure rights. The Financial Covenant is subject to a 0.50 step-up in the event of a material permitted acquisition, which the Company can elect to implement up to two times during the life of the facility. If the Company is not in compliance with the covenants under the 2020 Credit Agreement or the Company otherwise experiences an event of default, the lenders would be entitled to take various actions, including acceleration of amounts due under the 2020 Credit Agreement. As of December 31, 2019 and 2020, the Company was in compliance with all applicable covenants.
The fair value of the 2020 Term Loan was approximately $350,000 and $543,437 as of December 31, 2019 and 2020, respectively. The fair market value estimate is based on Level 2 of the fair market value hierarchy.
2015 Credit Facility
On September 1, 2015, the Company entered into a loan agreement (the “2015 Loan Agreement”) providing up to $32,500 of total debt financing including a $20,000 Term Loan (the “2015 Term Loan”), a
SQUARESPACE, INC.
Notes to Consolidated Financial Statements
(In thousands, except shares and per share amounts)
$10,000 Revolver (the “2015 Revolver”), including a letter of credit sub-facility, and a line of credit of $2,500 (the “2015 Line of Credit”). The 2015 Line of Credit was closed during 2016 and the 2015 Term Loan matured during 2018. During 2018, the Company signed an amendment which extended the maturity date of the Revolver to August 31, 2021. On December 12, 2019, in connection with the issuance of the 2019 Credit Facility, the 2015 Revolver, including all outstanding letters of credit thereunder, were terminated. At the date of termination, there were no amounts outstanding under the 2015 Revolver and all outstanding letters of credit were transferred to the 2019 Credit Facility.
Interest Expense
Total interest expense related to debt was $613 and $9,851 for the years ended December 31, 2019 and 2020, respectively.
Scheduled Principal Payments
The scheduled principal payments required under the terms of the 2019 Credit Facility were as follows:
|
Year Ending December 31,
|
|
|
Amount
|
|
|
2021
|
|
|
|
$
|
13,586
|
|
|
|
2022
|
|
|
|
|
13,586
|
|
|
|
2023
|
|
|
|
|
40,758
|
|
|
|
2024
|
|
|
|
|
40,758
|
|
|
|
2025
|
|
|
|
|
434,749
|
|
|
|
Total
|
|
|
|
$
|
543,437
|
|
|
12. Income Taxes
As of December 31, 2020, the Company is subject to income taxation and files income tax returns in the U.S. federal jurisdiction, various U.S. state and foreign jurisdictions.
Income Tax Provision
The domestic and foreign components of the Company’s income before (provision for)/benefit from income taxes are as follows:
|
|
|
|
Year Ended December 31,
|
|
|
|
|
|
2019
|
|
|
2020
|
|
|
U.S.
|
|
|
|
$
|
55,896
|
|
|
|
|
$
|
16,672
|
|
|
|
Foreign
|
|
|
|
|
8,179
|
|
|
|
|
|
5,827
|
|
|
|
Income before (provision for)/benefit from income taxes
|
|
|
|
$
|
64,075
|
|
|
|
|
$
|
22,499
|
|
|
The Company’s (provision for)/benefit from income taxes for the years ended December 31, 2019 and 2020 is comprised of the following:
|
|
|
|
Year Ended December 31,
|
|
|
|
|
|
2019
|
|
|
2020
|
|
|
Current:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Federal
|
|
|
|
$
|
(7,663)
|
|
|
|
|
$
|
5,421
|
|
|
|
State
|
|
|
|
|
(975)
|
|
|
|
|
|
(660)
|
|
|
SQUARESPACE, INC.
Notes to Consolidated Financial Statements
(In thousands, except shares and per share amounts)
|
|
|
|
Year Ended December 31,
|
|
|
|
|
|
2019
|
|
|
2020
|
|
|
Foreign
|
|
|
|
|
(1,303)
|
|
|
|
|
|
(1,524)
|
|
|
|
Total current
|
|
|
|
|
(9,941)
|
|
|
|
|
|
3,237
|
|
|
|
Deferred:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Federal
|
|
|
|
|
3,243
|
|
|
|
|
|
4,340
|
|
|
|
State
|
|
|
|
|
646
|
|
|
|
|
|
(151)
|
|
|
|
Foreign
|
|
|
|
|
129
|
|
|
|
|
|
663
|
|
|
|
Total deferred
|
|
|
|
|
4,018
|
|
|
|
|
|
4,852
|
|
|
|
(Provision for)/benefit from income taxes
|
|
|
|
$
|
(5,923)
|
|
|
|
|
$
|
8,089
|
|
|
|
|
A reconciliation of the statutory federal income tax rate to the Company’s effective income tax rate for the years ended December 31, 2019 and 2020 is as follows:
|
|
|
|
Year Ended December 31,
|
|
|
|
|
|
2019
|
|
|
2020
|
|
|
Expected provision for income tax at federal statutory tax rate (21%)
|
|
|
|
$
|
(13,454)
|
|
|
|
|
$
|
(4,725)
|
|
|
|
Effect of:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
State and local income taxes, net of federal benefit
|
|
|
|
|
(651)
|
|
|
|
|
|
(230)
|
|
|
|
Nondeductible expenses
|
|
|
|
|
(791)
|
|
|
|
|
|
(283)
|
|
|
|
Stock-based compensation
|
|
|
|
|
7,722
|
|
|
|
|
|
5,192
|
|
|
|
Effect of foreign operations
|
|
|
|
|
477
|
|
|
|
|
|
231
|
|
|
|
Foreign-derived intangible income deduction
|
|
|
|
|
610
|
|
|
|
|
|
236
|
|
|
|
Research and development credits, net
|
|
|
|
|
—
|
|
|
|
|
|
10,644
|
|
|
|
Nondeductible compensation
|
|
|
|
|
—
|
|
|
|
|
|
(2,498)
|
|
|
|
Other adjustments
|
|
|
|
|
164
|
|
|
|
|
|
(478)
|
|
|
|
(Provision for)/benefit from income taxes
|
|
|
|
$
|
(5,923)
|
|
|
|
|
$
|
8,089
|
|
|
The Company’s (provision for)/benefit from income taxes differs from the statutory rate due to research and development tax credits, excess tax benefits from stock-based compensation, and earnings realized in foreign jurisdictions with statutory tax rates lower than the U.S. federal statutory tax rate.
With effect from January 1, 2018, certain foreign earnings (known as Global Intangible Low-Taxed Income (“GILTI”)) are subject to a minimum tax in accordance with the Tax Cuts and Jobs Act (the “TCJA”). The Company elected to account for the minimum tax on GILTI in the period in which it is incurred. As of December 31, 2019 and 2020, the Company incurred a GILTI tax impact of $190 and $105, respectively.
Deferred Income Taxes
Deferred tax assets and liabilities reflect the effects of net operating losses, income tax credits and the future income tax effects of temporary differences between the consolidated financial statement carrying amounts of existing assets and liabilities and their respective tax bases measured using enacted tax rates that apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.
Significant components of the Company’s deferred income tax assets and liabilities were as follows:
SQUARESPACE, INC.
Notes to Consolidated Financial Statements
(In thousands, except shares and per share amounts)
|
|
|
|
December 31, 2019
|
|
|
December 31, 2020
|
|
|
Deferred tax assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accrued expenses
|
|
|
|
$
|
1,206
|
|
|
|
|
$
|
1,020
|
|
|
|
Deferred lease incentives
|
|
|
|
|
2,341
|
|
|
|
|
|
2,085
|
|
|
|
Deferred rent
|
|
|
|
|
3,614
|
|
|
|
|
|
3,944
|
|
|
|
Unrealized foreign currency gain
|
|
|
|
|
—
|
|
|
|
|
|
1,345
|
|
|
|
Research and development tax credits
|
|
|
|
|
—
|
|
|
|
|
|
3,523
|
|
|
|
Net operating loss carryforwards
|
|
|
|
|
4,532
|
|
|
|
|
|
4,243
|
|
|
|
Total deferred tax assets
|
|
|
|
|
11,693
|
|
|
|
|
|
16,160
|
|
|
|
Deferred tax liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred expenses
|
|
|
|
|
(925)
|
|
|
|
|
|
(2,181)
|
|
|
|
Software development costs
|
|
|
|
|
(2,171)
|
|
|
|
|
|
(1,583)
|
|
|
|
Depreciation and amortization
|
|
|
|
|
(3,065)
|
|
|
|
|
|
(4,020)
|
|
|
|
Stock-based compensation
|
|
|
|
|
(2,433)
|
|
|
|
|
|
(602)
|
|
|
|
Capital loss carryforward
|
|
|
|
|
—
|
|
|
|
|
|
(1)
|
|
|
|
Other
|
|
|
|
|
(203)
|
|
|
|
|
|
—
|
|
|
|
Total deferred tax liabilities
|
|
|
|
|
(8,797)
|
|
|
|
|
|
(8,387)
|
|
|
|
Net deferred tax asset
|
|
|
|
$
|
2,896
|
|
|
|
|
$
|
7,773
|
|
|
As of December 31, 2020, no U.S. income taxes were provided on the earnings of foreign subsidiaries to the extent such earnings are considered indefinitely reinvested. Although the undistributed earnings can generally be distributed back without incurring additional U.S. federal income tax as a result of the one-time transition tax under the Tax Cuts and Jobs Act of 2017, the Company has not changed its indefinite reinvestment assertion with respect to these earnings. Upon distribution of these earnings in the form of dividends, the Company does not anticipate any material tax costs.
Net Operating Loss Carryovers
As of December 31, 2020, the Company had gross operating loss carryovers at the U.S. state and local level available to offset future taxable income, the most material of which are $32,317 million for the State of New York and $24,099 million for the City of New York. If unused, the State of New York and City of New York gross operating loss carryforwards will generally begin to expire in 2030.
The Company’s ability to utilize the aforementioned gross operating loss carryovers in the future may be subject to restrictions in the event of future ownership changes as defined in Section 382 of the U.S. Internal Revenue Code. Such annual limitations could result in the expiration of the gross operating loss carryovers before utilization.
Uncertain Tax Positions
A reconciliation of the beginning and ending amount of unrecognized tax benefits for the years ended December 31, 2020 is as follows:
|
|
|
|
Year Ended
December 31,
2020
|
|
|
Balance at beginning of year
|
|
|
|
$
|
—
|
|
|
|
Additions based on tax positions taken during a prior period
|
|
|
|
|
4,085
|
|
|
SQUARESPACE, INC.
Notes to Consolidated Financial Statements
(In thousands, except shares and per share amounts)
|
|
|
|
Year Ended
December 31,
2020
|
|
|
Additions based on tax positions taken during the current period
|
|
|
|
|
1,217
|
|
|
|
Balance at end of year
|
|
|
|
$
|
5,302
|
|
|
|
|
There were no unrecognized tax benefits for the year ended December 31, 2019 and changes during the year ended December 31, 2019 were immaterial.
The Company’s corporate income tax returns for the years ended December 31, 2016 through December 31, 2020 remain subject to examination by taxing authorities in various U.S. states and Ireland. The Company believes that amounts reflected in its income tax returns substantially comply with applicable U.S. federal, state, and foreign tax regulations. However, the outcome of tax audits cannot be predicted with certainty. The Company establishes reserves for tax-related uncertainties based on estimates of whether, and the extent to which, additional taxes may be due. The provision for income taxes includes the impact of reserve provisions and changes to reserves that are considered appropriate. If any issues addressed during the audit of the Company’s tax returns are resolved in a manner inconsistent with its expectations, the Company could be required to adjust its provision for income tax in the period such resolution occurs.
13. Commitments and Contingencies
Leases
The Company has entered into various long term operating lease space for its offices. As of December 31, 2020, a summary of each lease is as follows:
|
Location
|
|
|
Primary Purpose
|
|
|
Lease Expires
|
|
|
Varick Street, New York, New York
|
|
|
Headquarters, Office
|
|
|
October 2030
|
|
|
Portland, Oregon
|
|
|
Office
|
|
|
January 2031
|
|
|
Los Angeles, California
|
|
|
Office
|
|
|
January 2023
|
|
|
Dublin, Ireland
|
|
|
Office
|
|
|
March 2030
|
|
|
Broadway, New York, New York
|
|
|
Office(1)
|
|
|
June 2020
|
|
(1)
This location was fully subleased through the remaining term of the lease.
The Varick Street lease provides for rent increases every five years and the Company has the option to extend this lease for two renewal periods of five years each. The space was fully functional at the time of lease execution, however, the Company made significant improvements to the space. Those costs include those capitalized within leasehold improvements of $53,126 as of December 31, 2020 which are included in property and equipment, net on the consolidated balance sheets. The landlord provided tenant improvement allowances of $13,077 which are recorded as a reduction in rent expense on a straight-line basis over the lease period. The leasehold improvements are being amortized over the lease term, unless the useful life of a specific asset was determined to be shorter than the lease term.
The Company subleased all of its Broadway office and a portion of its Dublin, Ireland office during the years ended December 31, 2019 and 2020. The Broadway office sublease ended as of June 30, 2020 and the Dublin, Ireland office sublease ended as of December 31, 2020.
As noted in Note 11 — Debt, certain of the Company’s operating lease agreements require security deposits in the form of cash or an irrevocable letter of credit. The $7,143 letters of credit outstanding as of December 31, 2019 and 2020 were related to security deposits for the Company’s applicable leased locations.
SQUARESPACE, INC.
Notes to Consolidated Financial Statements
(In thousands, except shares and per share amounts)
As of December 31, 2019 and 2020, the Company maintained security deposits on the office leases of $295 and $118, respectively, which is recognized as other assets on the consolidated balance sheets.
As of December 31, 2020, future minimum lease commitments under long term operating leases were as follows:
|
|
|
|
Operating Lease Payments
|
|
|
Years Ending:
|
|
|
|
|
|
|
|
|
2021
|
|
|
|
$
|
13,890
|
|
|
|
2022
|
|
|
|
|
14,192
|
|
|
|
2023
|
|
|
|
|
14,054
|
|
|
|
2024
|
|
|
|
|
14,557
|
|
|
|
2025
|
|
|
|
|
13,965
|
|
|
|
Thereafter
|
|
|
|
|
72,648
|
|
|
|
Total
|
|
|
|
$
|
143,306
|
|
|
Total rent expense for the years ended December 31, 2019 and 2020, was $10,713, (net of sub-lease income of $1,084), and $11,905, (net of sub-lease income of $800), respectively.
Indirect Taxes
The Company is subject to indirect taxation in some, but not all, of the various U.S. states and foreign jurisdictions in which it conducts business. Therefore, the Company has an obligation to charge, collect and remit Value Added Tax (“VAT”) or Goods and Services Tax (“GST”) in connection with certain of its foreign sales transactions and sales and use tax in connection with eligible sales to subscribers in certain U.S. states. In addition, on June 21, 2018, the U.S. Supreme Court overturned the physical presence nexus standard and held that states can require remote sellers to collect sales and use tax. As a result of this ruling and given the scope of the Company’s operations, taxing authorities continue to provide regulations that increase the complexity and risks to comply with such laws and could result in substantial liabilities, prospectively as well as retrospectively. Based on the information available, the Company continues to evaluate and assess the jurisdictions in which indirect tax nexus exists and believes that the indirect tax liabilities are adequate and reasonable. However, due to the complexity and uncertainty around the application of these rules by taxing authorities, results may vary materially from the Company’s expectations. The Company had an indirect tax liability of $11,239 and $13,463 as of December 31, 2019 and 2020, respectively, which is included within accrued liabilities on the consolidated balance sheets.
Certain Risks and Concentrations
The Company’s revenues were principally generated from SaaS customers used to establish their online presence. The market is highly competitive and rapidly changing. Significant changes in this industry, technological advances or changes in customer buying behavior could adversely affect the Company’s future operating results.
Other
The Company is subject to litigation and other claims that arise in the ordinary course of business. While the ultimate result of outstanding legal matters cannot presently be determined, the Company does not expect that the ultimate disposition will have a material adverse effect on its results of operations or financial condition. However, legal matters are inherently unpredictable and subject to significant uncertainties, some of which are beyond the Company’s control. Based on the Company’s current knowledge, the final outcome of any particular legal matter will not have a material adverse effect on the Company’s financial condition.
SQUARESPACE, INC.
Notes to Consolidated Financial Statements
(In thousands, except shares and per share amounts)
14. Redeemable Convertible Preferred Stock
The authorized, issued and outstanding shares of the redeemable convertible preferred stock were as follows:
|
|
|
|
Authorized and
Originally Issued
Shares
|
|
|
December 31, 2019
|
|
|
|
|
|
Outstanding Shares
|
|
|
Net Carrying Value
|
|
|
A-1 Preferred Stock
|
|
|
|
|
57,999,960
|
|
|
|
|
|
54,431,446
|
|
|
|
|
$
|
6
|
|
|
|
A-2 Preferred Stock
|
|
|
|
|
47,483,380
|
|
|
|
|
|
39,134,868
|
|
|
|
|
|
62,368
|
|
|
|
B Preferred Stock
|
|
|
|
|
12,634,398
|
|
|
|
|
|
10,880,018
|
|
|
|
|
|
64,172
|
|
|
|
Total
|
|
|
|
|
118,117,738
|
|
|
|
|
|
104,446,332
|
|
|
|
|
$
|
126,546
|
|
|
|
|
|
|
Authorized and
Originally Issued
Shares
|
|
|
December 31, 2020
|
|
|
|
|
|
Outstanding Shares
|
|
|
Net Carrying Value
|
|
|
A-1 Preferred Stock
|
|
|
|
|
57,999,960
|
|
|
|
|
|
54,431,446
|
|
|
|
|
$
|
6
|
|
|
|
A-2 Preferred Stock
|
|
|
|
|
47,483,380
|
|
|
|
|
|
39,134,868
|
|
|
|
|
|
63,283
|
|
|
|
B Preferred Stock
|
|
|
|
|
12,634,398
|
|
|
|
|
|
10,880,018
|
|
|
|
|
|
68,101
|
|
|
|
Total
|
|
|
|
|
118,117,738
|
|
|
|
|
|
104,446,332
|
|
|
|
|
$
|
131,390
|
|
|
The Company’s Series A-1 redeemable convertible preferred stock does not have any liquidation preference. The liquidation preferences for Series A-2 and Series B redeemable convertible preferred stock were as follows:
|
|
|
|
As of December 31, 2019 and 2020
|
|
|
|
|
|
Liquidation
Preferences
|
|
|
Issuance
Price/Liquidation
Preference Per
Share
|
|
|
Series A-2
|
|
|
|
$
|
31,699
|
|
|
|
|
$
|
0.81
|
|
|
|
Series B
|
|
|
|
|
34,490
|
|
|
|
|
|
3.17
|
|
|
|
Total
|
|
|
|
$
|
66,189
|
|
|
|
|
|
|
|
|
The rights, preferences, restrictions, and privileges of the holders of redeemable convertible preferred stock are as follows:
Liquidation Preferences
Upon liquidation, dissolution, or winding up of the Company or a deemed liquidation event as defined in the Amended and Restated Certificate of Incorporation, the assets legally available for distribution to the Company’s stockholders will be distributed to the holders of Series A-1 redeemable convertible preferred stock and the holders of Class A common stock and Class B common stock after payment of liquidation proceeds to holders of Series A-2 redeemable convertible preferred stock and Series B redeemable convertible preferred stock as set forth in the Amended and Restated Certificate of Incorporation. The holders of the Series A-2 and Series B redeemable convertible preferred stock are entitled to receive an amount per share equal to the sum of i) the Series A-2 redeemable convertible preferred stock original issue price ($0.81 per share) or the Series B redeemable convertible preferred stock original issue price ($3.17) (dependent on the redeemable convertible preferred shares series owned) and ii) any declared but unpaid dividends on such shares. If the proceeds distributed amongst the holders of the Series A-2 and Series B redeemable convertible preferred stock are insufficient to permit full payment of the previously mentioned
SQUARESPACE, INC.
Notes to Consolidated Financial Statements
(In thousands, except shares and per share amounts)
liquidation preferences, then the entire proceeds legally available for distribution are to be distributed ratably amongst the holders of such shares in proportion to the full preferential amount that each such holder is otherwise entitled to receive.
Second, preferential payout will be made to the holders of Class A and Class B common stock, Series A-1 and A-2 redeemable convertible preferred stock pro rata on an as-converted to Class A and Class B common stock basis until the holders of the Series A-2 redeemable convertible preferred stock have received $3.24 per share.
Finally, if proceeds remain after the Series A-2 redeemable convertible preferred stockholders have received $3.24 per share, the holders of Class A and Class B common stock and Series A-1 redeemable convertible preferred stock will receive the remaining proceeds pro rata on an as-converted to Class A and Class B common stock basis.
Dividends
Redeemable convertible preferred stockholders are entitled to receive dividends when and if declared by the board of directors prior and in preference (or simultaneously on a pari passu basis) to the payment of any dividend or distribution on the shares of Class A and Class B common stock.
Dividends that are payable in Class A and Class B common stock are not subject to the preference above and Class A and Class B common stockholders may participate in any such stock dividends.
Redemption
Any time after March 12, 2021, the holders of at least 60% of the then outstanding shares of Series A-2 redeemable convertible preferred stock and Series B redeemable convertible preferred stock (which must include the approval of General Atlantic (SQRS II) LP and General Atlantic (SQRS) LP (“GA”) so long as GA holds at least 7,200,000 shares) can submit to the Company a request to redeem all of the then outstanding shares of Series A-2 redeemable convertible preferred stock and Series B redeemable convertible preferred stock at $1.62 per share, and $6.33 per share, respectively, in three annual installments (the date of each such installment the “Redemption Date”). If the funds of the Company are not sufficient to redeem the full number of shares, the funds legally available will be used to redeem the maximum number of shares ratably among the holders of such shares to be redeemed. The shares not redeemed shall remain outstanding and entitled to all the rights and preferences associated with such shares until additional funds are legally available for redemption.
The redemption value of the redeemable convertible preferred stock is as follows as of December 31, 2019 and 2020:
|
|
|
|
Redemption Value
|
|
|
Series A-2
|
|
|
|
$
|
63,462
|
|
|
|
Series B
|
|
|
|
|
68,891
|
|
|
|
Total redemption value
|
|
|
|
$
|
132,353
|
|
|
As noted in the “Liquidation Preferences” section above, the Series A-1 redeemable convertible preferred stock is redeemable upon a deemed liquidation event, the occurrence of which is not solely within the Company’s control. Since redemption is not probable (i.e., a deemed liquidation event is not probable), the Series A-1 redeemable convertible preferred stock has also been classified as temporary (mezzanine) equity.
Conversion Privileges
Series A-1 redeemable convertible preferred stock becomes Disqualified if the initial owner transfers its shares and their related control of the shares. The holders of Disqualified Series A-1 redeemable convertible
SQUARESPACE, INC.
Notes to Consolidated Financial Statements
(In thousands, except shares and per share amounts)
preferred stock (as defined in the Charter), Series A-2 redeemable convertible preferred stock and Series B redeemable convertible preferred stock can at any time, and in any event on or prior to the fifth day prior to the redemption date, if applicable, convert their stock to Class A common stock as determined by dividing the original issue price by the conversion price in effect at the time. The holders of Series A-1 redeemable convertible preferred stock (other than Disqualified Series A-1 redeemable convertible preferred stock) can at any time convert their shares into Class B common stock as determined by dividing the original issue price by the conversion price in effect at the time. As of December 31, 2020, the conversion price is $0.81, $0.81, and $3.17 for the Series A-1, Series A-2, and Series B redeemable convertible preferred stock, respectively. The conversion price will be adjusted for any issuances of common stock without consideration or for consideration per share less than the conversion price applicable to Series A-2 or Series B redeemable convertible preferred stock, stock splits or dividends, combinations, other distributions or recapitalizations.
As of December 31, 2020, 4,092,447 shares of outstanding Series A-1 redeemable convertible preferred stock were Disqualified and 50,338,999 shares of outstanding Series A-1 redeemable convertible preferred stock, primarily held by the CEO, were Qualified.
Automatic Conversion
Each share of Series A-1 redeemable convertible preferred stock (other than Disqualified Series A-1 redeemable convertible preferred stock) shall automatically be converted into a share of Class B common stock and all other series of redeemable convertible preferred stock shall automatically be converted into a share of Class A common stock at the applicable conversion rate for such series of redeemable convertible preferred stock immediately prior to the earlier of (i) the Company’s sale of its Class A and Class B common stock in a firm commitment, underwritten public offering pursuant to a registration statement on Form S-1 which exceeds $100,000 in aggregate proceeds, or (ii) (A) in regards to the Series A-1 redeemable convertible preferred stock (Qualified and Disqualified) or the Series B redeemable convertible preferred stock, the date specified by vote or written consent of the holders of a majority of the then outstanding shares of Series A-1 redeemable convertible preferred stock (Qualified and Disqualified) or Series B redeemable convertible preferred stock, respectively and (B) in regards to the Series A-2 redeemable convertible preferred stock, the date specified by vote or written consent of the holders of at least 60% of the then outstanding shares of Series A-2 redeemable convertible preferred stock.
Voting Rights
The holder of each share of Series A-1 redeemable convertible preferred stock, Series A-2 redeemable convertible preferred stock, and Series B redeemable convertible preferred stock shall have the right to one vote for each share of Class A and Class B common stock into which such redeemable convertible preferred stock could then be converted (assuming for such purposes only that all such redeemable convertible preferred stock is convertible into Class B common stock at its then applicable conversion rate), and with respect to such vote, such holder shall have full voting rights and powers equal to the voting rights and powers of the holders of Class A and Class B common stock, except as otherwise provided in the Charter or by law.
Series A-1, Series A-2 and Series B Redeemable Convertible Preferred Stock Purchase
On October 29, 2019, existing stockholders of the Company (the “Sellers”) agreed to sell certain shares of the Company’s Series A-1, Series A-2 and Series B redeemable convertible preferred stock to a new stockholder (the “Purchaser”) in exchange for cash. The Sellers collectively sold 509,788 shares of Series A-1 redeemable convertible preferred stock, 1,263,788 shares of Series A-2 redeemable convertible preferred stock and 265,576 shares of Series B redeemable convertible preferred stock to the Purchaser for $24.52 per share for an aggregate consideration of $50,000.
SQUARESPACE, INC.
Notes to Consolidated Financial Statements
(In thousands, except shares and per share amounts)
15. Stockholders’ Equity/(Deficit)
Class A Common Stock
Each holder of shares of Class A common stock shall be entitled to one-tenth of one vote for each share held; following an initial public offering (“IPO”), holders of shares of Class A common stock will be entitled to one vote for each share held.
Class B Common Stock
Each holder of shares of Class B common stock shall be entitled to one vote for each share held; following an IPO, holders of shares of Class B common stock will be entitled to ten votes for each share held.
Tender Offer
On November 5, 2019, the Company commenced a one-time cash tender offer to repurchase up to a combined 2,200,000 shares of Class A common stock and Class B common stock, including those issuable upon exercise of options, (together, the “Eligible Shares”) for the current fair value of $24.52 per share for an aggregate purchase price of $53,944 from employees (the “Tender Offer”). Unvested shares of Class A and Class B common stock, including those issuable upon exercise of unvested options and those issuable upon settlement of unvested restricted stock units (“RSUs”), were not eligible to participate in the Tender Offer. On December 11, 2019 (the “Tender Offer Closing date”), the Company completed the Tender Offer for the elected Eligible Shares in the amounts of 34,104 shares of Class A common stock and 1,779,290 shares of Class B common stock for a total consideration of $44,463. The Company recorded the transactions as a reduction to equity as the transaction completed at fair value.
The board of directors of the Company approved the immediate retirement of all of Class A common stock and Class B common stock that were repurchased from existing stockholders of the Company upon the Tender Offer Closing date.
Investor Repurchase
The Company agreed to repurchase outstanding Class A common stock, Class B common stock, Series A-1, Series A-2 and Series B redeemable convertible preferred stock from existing stockholders on December 13, 2019 (the “Repurchase Closing date”). The Company repurchased 11,478 shares of Class A common stock, 591,177 shares of Class B common stock, 3,568,514 shares of Series A-1 redeemable convertible preferred stock, 8,348,512 shares of Series A-2 redeemable convertible preferred stock and 1,754,380 shares of Series B redeemable convertible preferred stock for $24.52 per share for an aggregate purchase price of $350,000.
The board of directors of the Company approved the immediate retirement of all of Class A common stock, Class B common stock, Series A-1, Series A-2 and Series B redeemable convertible preferred stock that were repurchased from existing stockholders of the Company upon the Repurchase Closing date.
Dividends
The Company shall not declare or pay any dividends on Class A common stock or Class B common stock unless the same dividend or distribution with the same record date and payment dated shall be declared or paid on all shares of Class A and Class B common stock.
During the year ended December 31, 2019, the Company did not declare or pay any dividends. On December 7, 2020, the Company declared a one-time dividend of $2.666 per share, for a total of $328,112, for all stockholders of record as of December 14, 2020. Dividends of $327,745 were paid on December 29,
SQUARESPACE, INC.
Notes to Consolidated Financial Statements
(In thousands, except shares and per share amounts)
2020 to redeemable convertible preferred stockholders and Class A and Class B common stockholders with the remainder paid during January 2021.
The Company had reserved shares of Class A and Class B common stock for issuance, on an as-converted basis, as follows:
|
|
|
|
December 31, 2019
|
|
|
Shares reserved for redeemable convertible preferred stock outstanding
|
|
|
|
|
104,446,332
|
|
|
|
Options issued and outstanding
|
|
|
|
|
6,602,149
|
|
|
|
RSUs
|
|
|
|
|
5,723,783
|
|
|
|
Executive restricted stock
|
|
|
|
|
4,460,858
|
|
|
|
Shares available for future grants
|
|
|
|
|
1,787,435
|
|
|
|
Total
|
|
|
|
|
123,020,557
|
|
|
|
|
|
|
December 31, 2020
|
|
|
Shares reserved for redeemable convertible preferred stock outstanding
|
|
|
|
|
104,446,332
|
|
|
|
Options issued and outstanding
|
|
|
|
|
5,228,413
|
|
|
|
RSUs
|
|
|
|
|
5,441,475
|
|
|
|
Executive restricted stock
|
|
|
|
|
4,460,858
|
|
|
|
Shares available for future grants
|
|
|
|
|
8,727,557
|
|
|
|
Total
|
|
|
|
|
128,304,635
|
|
|
16. Accumulated Other Comprehensive Income/(Loss)
Accumulated other comprehensive income/(loss) activity was as follows:
|
|
|
|
December 31,
2018
|
|
|
Additions
|
|
|
Reclassifications
|
|
|
Provision for
income taxes
|
|
|
December 31,
2019
|
|
|
Foreign currency translation loss
|
|
|
|
$
|
(101)
|
|
|
|
|
|
(86)
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
$
|
(187)
|
|
|
|
Unrealized gains/(losses) on marketable securities
|
|
|
|
|
(55)
|
|
|
|
|
|
148
|
|
|
|
|
|
30
|
|
|
|
|
|
(44)
|
|
|
|
|
|
79
|
|
|
|
Accumulated other comprehensive income/(loss)
|
|
|
|
$
|
(156)
|
|
|
|
|
|
62
|
|
|
|
|
|
30
|
|
|
|
|
|
(44)
|
|
|
|
|
$
|
(108)
|
|
|
|
|
|
|
December 31,
2019
|
|
|
Additions
|
|
|
Reclassifications
|
|
|
Provision for
income taxes
|
|
|
December 31,
2020
|
|
|
Foreign currency translation loss
|
|
|
|
$
|
(187)
|
|
|
|
|
|
2,528
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
$
|
2,341
|
|
|
|
Unrealized gains/(losses) on marketable securities
|
|
|
|
|
79
|
|
|
|
|
|
41
|
|
|
|
|
|
5
|
|
|
|
|
|
(11)
|
|
|
|
|
|
114
|
|
|
|
Accumulated other comprehensive income/(loss)
|
|
|
|
$
|
(108)
|
|
|
|
|
|
2,569
|
|
|
|
|
|
5
|
|
|
|
|
|
(11)
|
|
|
|
|
$
|
2,455
|
|
|
17. Stock-based Compensation
Squarespace, Inc. Amended and Restated 2008 Equity Incentive Plan
In January 2008, the Company established and approved the Squarespace, Inc. 2008 Equity Incentive Plan which was ratified in 2010 and was subsequently amended and restated in March 2016 (“the 2008
SQUARESPACE, INC.
Notes to Consolidated Financial Statements
(In thousands, except shares and per share amounts)
Plan”). Under the 2008 Plan, which covers certain employees and consultants, the Company granted shares of its Class B common stock in the form of stock options. The stock options granted have a contractual life of ten years and generally vest over four years. The exercise price of the stock options was equal to the fair value of the Class B common stock of the Company as of the date of grant, as determined by the Company’s board of directors. After November 17, 2017, there were no additional grants from the 2008 Plan. Shares issued under the 2008 Plan shall be drawn from authorized and unissued shares. In addition to service based awards, the Company also granted certain options that contain both a service condition and performance condition, as discussed below.
A summary of the Company’s stock option activity for the 2008 Plan during the years ended December 31, 2019 and 2020 is as follows:
|
|
|
|
Number of
Options
|
|
|
Weighted-
Average
Exercise
Price
|
|
|
Weighted-
Average
Remaining
Life
(years)
|
|
|
Aggregate
Intrinsic
Value
|
|
|
As of December 31, 2018
|
|
|
|
|
9,334,493
|
|
|
|
|
$
|
2.08
|
|
|
|
|
|
5.46
|
|
|
|
|
$
|
115,122
|
|
|
|
Options granted
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options exercised
|
|
|
|
|
(2,481,266)
|
|
|
|
|
|
1.61
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options forfeited and cancelled
|
|
|
|
|
(251,078)
|
|
|
|
|
|
4.15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of December 31, 2019
|
|
|
|
|
6,602,149
|
|
|
|
|
$
|
2.18
|
|
|
|
|
|
4.69
|
|
|
|
|
$
|
147,482
|
|
|
|
Options granted
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options exercised
|
|
|
|
|
(897,777)
|
|
|
|
|
|
1.60
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options forfeited and cancelled
|
|
|
|
|
(475,959)
|
|
|
|
|
|
6.05
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of December 31, 2020
|
|
|
|
|
5,228,413
|
|
|
|
|
$
|
1.93
|
|
|
|
|
|
3.60
|
|
|
|
|
|
246,101
|
|
|
|
Options vested at December 31, 2020
|
|
|
|
|
5,138,861
|
|
|
|
|
$
|
1.87
|
|
|
|
|
|
3.55
|
|
|
|
|
$
|
242,178
|
|
|
|
Options expected to vest at December 31, 2020
|
|
|
|
|
89,552
|
|
|
|
|
$
|
5.19
|
|
|
|
|
|
0.48
|
|
|
|
|
$
|
3,923
|
|
|
|
Exercisable at December 31, 2020
|
|
|
|
|
5,138,861
|
|
|
|
|
$
|
1.87
|
|
|
|
|
|
3.55
|
|
|
|
|
$
|
242,178
|
|
|
As of December 31, 2019 and 2020, there was $1,919 and $128 of total unrecognized compensation costs, respectively, net of actual forfeitures, related to stock option grants that are expected to be recognized over a weighted-average period of 1.3 and 0.5 years, respectively. The tax benefit of stock option exercises was $8,719 and $1,291 for the years ended December 31, 2019 and 2020, respectively.
The Company recognizes the impact of forfeitures in the period that the option is forfeited. All of the Company’s stock-based payment awards are amortized on a straight-line basis over the requisite service periods of the awards.
On August 22, 2017 and September 10, 2017, the Company granted a total of 513,239 stock options to certain executives that contained both a service condition and a performance condition (“IPO Options”). These stock options have an exercise price of $6.15 per share of Class B common stock and total fair value of $1,351 on their respective grant dates. These stock options shall vest and become exercisable as follows: (i) 33.3% of the total number of shares underlying these options will vest upon an IPO or a change in control of the Company, as defined in the option agreements (the “Initial Vesting Date”) and (ii) thereafter, 33.3% of the total number of shares underlying these options shall vest on each of the one year anniversary of the Initial Vesting Date and the two year anniversary of the Initial Vesting Date, respectively, provided that each executive continues to provide services to the Company on the applicable vesting date. As of December 31, 2019, the Company did not record compensation expense related to the IPO Options since the performance condition was not deemed satisfied, as the closing of an IPO or change in control is not
SQUARESPACE, INC.
Notes to Consolidated Financial Statements
(In thousands, except shares and per share amounts)
deemed probable until consummated. During the year ended December 31, 2020, upon the departure of executives holding the IPO Options, 438,239 of the outstanding IPO Options were forfeited in accordance with the original terms of the award and 75,000 IPO Options were modified to waive the performance condition allowing one executive to vest in the award. Accordingly, the Company remeasured the fair value of the IPO Options that were allowed to vest on the modification date and recognized $1,180 of stock-based compensation expense included in general and administrative in the consolidated statements of operations.
Squarespace, Inc. 2017 Equity Incentive Plan
On November 17, 2017, the Company’s board of directors approved the Squarespace, Inc. 2017 Equity Incentive Plan (“the 2017 Plan”). Under the 2017 Plan, the Company may grant shares of its Class A common stock in the form of restricted stock units (“RSUs”), stock options, stock appreciation rights, performance stock awards and other stock awards. RSUs generally vest over four years and are measured based on the fair market value of the underlying Class A common stock on the date of grant, as determined by the Company’s board of directors. The maximum number of shares available for issuance under the 2017 Plan as of December 31, 2020 was 7,501,393.
A summary of the Company’s RSU activity for the 2017 Plan during the years ended December 31, 2019 and 2020 is as follows:
|
|
|
|
Number of RSUs
|
|
|
Weighted Average
Grant Date Fair
Value Per RSU
|
|
|
RSUs outstanding – December 31, 2018
|
|
|
|
|
2,012,399
|
|
|
|
|
$
|
13.65
|
|
|
|
RSUs granted
|
|
|
|
|
4,465,569
|
|
|
|
|
|
17.55
|
|
|
|
RSUs vested
|
|
|
|
|
(385,735)
|
|
|
|
|
|
13.58
|
|
|
|
RSUs forfeited and cancelled
|
|
|
|
|
(368,450)
|
|
|
|
|
|
13.86
|
|
|
|
RSUs outstanding – December 31, 2019
|
|
|
|
|
5,723,783
|
|
|
|
|
$
|
16.70
|
|
|
|
RSUs granted
|
|
|
|
|
1,585,618
|
|
|
|
|
|
33.43
|
|
|
|
RSUs vested
|
|
|
|
|
(1,366,242)
|
|
|
|
|
|
16.16
|
|
|
|
RSUs forfeited and cancelled
|
|
|
|
|
(501,684)
|
|
|
|
|
|
16.79
|
|
|
|
RSUs outstanding – December 31, 2020
|
|
|
|
|
5,441,475
|
|
|
|
|
$
|
21.27
|
|
|
As of December 31, 2019 and 2020, the fair value of share units vested was $7,099 and $42,616, respectively. As of December 31, 2019 and 2020, there was $79,860 and $95,101 of total unrecognized compensation costs related to RSU grants that are expected to be recognized, respectively, over a weighted-average period of 1.9 and 2.9 years, respectively.
In connection with the vesting of the RSUs, the Company reacquired 184,779 shares for $3,340 and 648,097 shares for $20,161 during the years ended December 31, 2019 and 2020, respectively, in order to satisfy employee tax withholding obligations. The employees received the net number of shares after consideration to those reacquired. The reacquired shares subsequently became available again for issuance under the Plan.
SQUARESPACE, INC.
Notes to Consolidated Financial Statements
(In thousands, except shares and per share amounts)
The following table summarizes the shares available for future grants:
|
|
|
|
Shares
Available for
Future Grant
|
|
|
Balance at December 31, 2018
|
|
|
|
|
5,448,697
|
|
|
|
Granted
|
|
|
|
|
(4,465,569)
|
|
|
|
Forfeited and cancelled
|
|
|
|
|
619,528
|
|
|
|
Reacquired to satisfy employee tax withholding obligations
|
|
|
|
|
184,779
|
|
|
|
Balance as of December 31, 2019
|
|
|
|
|
1,787,435
|
|
|
|
Additional Class A common shares available for issuance
|
|
|
|
|
6,900,000
|
|
|
|
Granted
|
|
|
|
|
(1,585,618)
|
|
|
|
Forfeited and expired
|
|
|
|
|
977,643
|
|
|
|
Reacquired to satisfy employee tax withholding obligations
|
|
|
|
|
648,097
|
|
|
|
Balance as of December 31, 2020
|
|
|
|
|
8,727,557
|
|
|
On April 28, 2020, the board of directors amended the 2017 Equity Incentive Plan to include an additional 6,900,000 Class A common shares available for issuance.
Executive Restricted Stock Grant
On August 22, 2017, the Company granted its CEO 4,460,858 shares of Class B common stock with a grant date fair value of $27,434 (the “CEO Stock Grant”). Under the terms of the initial agreement, these shares were to be forfeited as of a date that is three years and six months following the date of grant unless one of the following occurs prior to that date: (1) a Liquidation Event (other than a liquidation, dissolution or winding up of the Company) as defined by the Stock Grant Agreement or (2) an IPO, as defined by the Stock Grant Agreement.
On August 24, 2020, the board of directors modified the forfeiture provision of the CEO Stock Grant by extending the forfeiture date from February 22, 2021 to August 22, 2021. The modification of the forfeiture date is accounted for as the grant of the new award, accordingly, the Company updated the fair value of the CEO Stock Grant on the modification date. The Company estimated the fair value of the Class B common stock to be $51.40 per share on the modification date and the revised measured but unrecognized compensation expense of the award is $229,288.
The Company has not recorded stock-based compensation related to the CEO Stock Grant since the award is subject to forfeiture if a Liquidation Event or an IPO does not occur prior to August 22, 2021 and neither provision is deemed probable of occurring until consummated. Upon consummation of a Liquidation Event or an IPO prior to August 22, 2021, the Company will record compensation expense of $229,288 in its statements of operations.
SQUARESPACE, INC.
Notes to Consolidated Financial Statements
(In thousands, except shares and per share amounts)
Stock-Based Compensation
The classification of stock-based compensation by line item within the consolidated statement of operations is as follows:
|
|
|
|
Year Ended December 31,
|
|
|
|
|
|
2019
|
|
|
2020
|
|
|
Cost of revenue
|
|
|
|
$
|
532
|
|
|
|
|
$
|
780
|
|
|
|
Research and product development
|
|
|
|
|
12,087
|
|
|
|
|
|
21,619
|
|
|
|
Marketing and sales
|
|
|
|
|
1,737
|
|
|
|
|
|
3,144
|
|
|
|
General and administrative
|
|
|
|
|
3,619
|
|
|
|
|
|
5,711
|
|
|
|
Total stock-based compensation
|
|
|
|
$
|
17,975
|
|
|
|
|
$
|
31,254
|
|
|
The amount above excludes $346 and $163 of stock compensation capitalized as property and equipment, net, for the years ended December 31, 2019 and 2020, respectively. The tax benefit associated with stock-based compensation recognized was $9,130 and $6,260 for the years ended December 31, 2019 and 2020, respectively.
18. Retirement Plans
The Company has a 401(k) savings plan in which the employees of the Company may participate. Employees may elect to defer portions of their salary pursuant to a formula upon meeting certain age and service requirements. The Company make matching contributions on behalf of participants equal to 100% on participant contributions up to 3% of their compensation and 50% for participant contributions up to an additional 2% of their compensation. Participants are immediately and fully vested in their voluntary contributions and all matching contributions. Participants are immediately and fully vested in their voluntary contributions and all matching contributions.
The Company’s 401(k) matching payments, totaling $3,368 and $4,329 for the years ended December 31, 2019 and 2020, respectively, are included on a specific identification basis per applicable employee to the consolidated statement of operations line item to which the employee’s compensation is recorded.
Limited offers a tax efficient Defined Contribution Pension plan to all of its employees, and after completing three months of service, will contribute up to 4% of the employee’s annual salary. During the years December 31, 2019 and 2020, Limited contributed $117 and $140, respectively, to this plan.
19. Related Party Transactions
On September 1, 2014, the Company entered into an agreement with Getty Images to resell certain content to the Company’s customers. The Deputy Chairman of Getty Images is a member of the Company’s board of directors. Amounts recorded in connection with this agreement were not material for the years ended December 31, 2019 and 2020.
20. Net Income/(Loss) per Share Attributable to Class A and Class B Common Stockholders
The Company computes net income/(loss) per share of Class A common stock and Class B common stock under the two-class method required for multiple classes of common stock and participating securities. The rights, including the liquidation and dividend rights, of the Class A common stock and Class B common stock are substantially identical, other than voting rights. Accordingly, the Class A common stock and Class B common stock share in the Company’s net income/(loss).
SQUARESPACE, INC.
Notes to Consolidated Financial Statements
(In thousands, except shares and per share amounts)
The following table sets forth the computation of basic and diluted loss per share attributable to Class A and Class B common stockholders:
|
|
|
|
Year Ended December 31,
|
|
|
|
|
|
2019
|
|
|
2020
|
|
|
Numerator:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
|
$
|
58,152
|
|
|
|
|
$
|
30,588
|
|
|
|
Less: accretion of redeemable convertible preferred stock to redemption value
|
|
|
|
|
(5,340)
|
|
|
|
|
|
(4,844)
|
|
|
|
Less: deemed dividends upon redemption of redeemable convertible preferred stock
|
|
|
|
|
(311,610)
|
|
|
|
|
|
—
|
|
|
|
Less: declared dividends to preferred shareholders
|
|
|
|
|
—
|
|
|
|
|
|
(278,454)
|
|
|
|
Net loss attributable to Class A and Class B common stockholders, basic and diluted
|
|
|
|
$
|
(258,798)
|
|
|
|
|
$
|
(252,710)
|
|
|
|
Denominator:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average shares used in computing net loss per share
attributable to Class A and Class B common stockholders, basic
and diluted
|
|
|
|
|
17,354,458
|
|
|
|
|
|
17,917,236
|
|
|
|
Net loss per share attributable to Class A and Class B common stockholders, basic and diluted
|
|
|
|
$
|
(14.91)
|
|
|
|
|
$
|
(14.10)
|
|
|
The following weighted-average outstanding shares of potentially dilutive securities were excluded from the computation of diluted income per share attributable to Class A and Class B common stockholders for the periods presented because including them would have been antidilutive:
|
|
|
|
Year Ended December 31,
|
|
|
|
|
|
2019
|
|
|
2020
|
|
|
Redeemable convertible preferred stock
|
|
|
|
|
104,446,332
|
|
|
|
|
|
104,446,332
|
|
|
|
Outstanding stock options
|
|
|
|
|
6,602,149
|
|
|
|
|
|
5,228,413
|
|
|
|
Restricted stock units
|
|
|
|
|
5,723,783
|
|
|
|
|
|
5,441,475
|
|
|
|
Executive restricted stock
|
|
|
|
|
4,460,858
|
|
|
|
|
|
4,460,858
|
|
|
|
Total
|
|
|
|
|
121,233,122
|
|
|
|
|
|
119,577,078
|
|
|
21. Subsequent Events
The Company has evaluated subsequent events through March 11, 2021, the date the consolidated financial statements were available to be issued.
Stock-Based Compensation
During 2021, the Company granted 721,806 RSUs in Class A common stock, vested 525,815 RSUs in Class A common stock, and 487,307 stock options in Class B common stock were exercised for cash consideration of $420.
22. Subsequent Events (Unaudited)
Issuance of Class C Common Stock
On March 15, 2021, the Company amended its certificate of incorporation and created the Class C common stock with authorized shares of 7,673,154 and a par value of $0.0001. The Class C common stock
SQUARESPACE, INC.
Notes to Consolidated Financial Statements
(In thousands, except shares and per share amounts)
has similar rights as our Class A common stock and Class B common stock, except as to conversion and voting rights. Subsequent to the amendment, the Company issued 4,452,023 shares of its Class C common stock for proceeds of $304,409, net of issuance costs.
Acquisition of Tock, Inc.
On March 31, 2021, the Company acquired all of the equity interests in Tock, Inc. (“Tock”), a reservation platform for prepaid reservations, access to restaurant management data, and other customization features. The purpose of the acquisition was to expand the Company’s complimentary suite of services available with a platform for reservations, take-out, delivery and events for the hospitality industry. The total consideration for the transaction was $426,872, consisting of $226,821 of cash, $188,179 of the Company’s Class C common stock and $11,872 of net working capital adjustments. The initial purchase accounting, including the identification and allocation of consideration to assets acquired, is not complete and the preliminary purchase price allocation is subject to further adjustment as additional information becomes available and as additional analyses and final valuations are completed. The Company expects to recognize approximately $93,000 of identifiable finite-lived intangible assets and $336,194 of goodwill related to the acquisition of Tock. The identifiable finite-lived intangible assets are expected to be amortized over their useful lives which are estimated to be between 3 to 12 years. In addition, the Company issued $30,000 of Class C common stock in the form of RSUs to Tock shareholders, which will vest over three years contingent upon the continued service. Accordingly, the Company will recognize this $30,000 as stock-based compensation expense over the three year service period on a straight-line basis.
The following table sets forth the preliminary allocation of the purchase price to the fair value of the identifiable tangible and intangible assets acquired and liabilities assumed, with the excess recorded to goodwill:
|
|
|
|
Tock
|
|
|
Net tangible assets (liabilities) assumed
|
|
|
|
$
|
(2,322)
|
|
|
|
Customer relationships – restaurants
|
|
|
|
|
64,000
|
|
|
|
Customer relationships – enterprise
|
|
|
|
|
19,000
|
|
|
|
Tradename
|
|
|
|
|
6,000
|
|
|
|
Developed technology
|
|
|
|
|
4,000
|
|
|
|
Net assets acquired
|
|
|
|
$
|
90,678
|
|
|
|
Consideration
|
|
|
|
|
426,872
|
|
|
|
Goodwill
|
|
|
|
$
|
336,194
|
|
|
Casalena Performance Award
On April 15, 2021 (“Grant Date”), the board of directors of the Company approved an RSU grant to Anthony Casalena, CEO, of 2,750,000 Class A common shares (“Casalena Performance Award”). The Casalena Performance Award vesting is contingent on both service- and market-based vesting conditions. The market-based vesting condition is based on the achievement of specified Class A common stock price targets during the period beginning upon the effectiveness of the registration statement and ending on the fifth anniversary of the Grant Date (“Performance Period”). The Casalena Performance Award is divided into ten equal tranches. The market-based vesting condition is eligible to vest based on the achievement of ten different and progressively increasing stock price targets. The targets will be deemed to have been achieved when the average closing price of a share of the Company’s Class A common stock on the trading days over any consecutive 30 calendar day period during the Performance Period equals or exceeds the applicable Class A common stock price target. The service-based vesting condition is deemed met in four equal installments over four years starting on the first anniversary of the Grant Date. Although the service-based
SQUARESPACE, INC.
Notes to Consolidated Financial Statements
(In thousands, except shares and per share amounts)
vesting condition period is four years, Mr. Casalena must be employed by the Company at the time the market condition is met in order to vest in any tranche of the award.
The Company estimated the fair value of the Casalena Performance Award on the grant date to be approximately $84,450 using a Monte Carlo simulation with a weighted-average grant date fair value of $30.71 per Class A common share. The Company will recognize the fair value of the award as stock-based compensation expense using the accelerated attribution method over the longer of (i) the period of time the market condition for each tranche is expected to be met (i.e., the derived service period) or (ii) the service vesting condition of four years.
Stock-Based Compensation
The Company has completed its estimate of the fair value of its Class A common stock for financial reporting purposes as a weighted-average $63.70 per share for shares granted prior to March 11, 2021.
Following March 11, 2021, the Company has granted 4,867 shares of Class A common stock in the form of RSUs based on an average fair market value of the underlying Class A common stock of $68.42 per share on the date of grant, vested 105 RSUs in Class A common stock and 440,207 stock options in Class B common stock were exercised for cash consideration of $384. In addition, the Company issued 438,468 shares of Class C common stock in the form of RSUs to the shareholders of Tock, which will vest over three years contingent upon continued service. The average fair market value of these RSUs was $68.42 per share. Accordingly, the Company will recognize $30,000 as stock-based compensation expense over the requisite three year service period on a straight-line basis.
INDEPENDENT AUDITORS’ REPORT
To the Board of Directors and Stockholders of
Tock, Inc.
Report on the Financial Statements
We have audited the accompanying financial statements of Tock, Inc. (the “Company”), which comprise the balance sheet as of December 31, 2020, and the related statements of operations, changes in stockholders’ equity and cash flows for the year then ended, and the related notes to the financial statements.
Management’s Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.
Auditors’ Responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors’ judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Tock, Inc. as of December 31, 2020, and the results of its operations and its cash flows for the year then ended in accordance with accounting principles generally accepted in the United States of America.
/s/ Marcum LLP
Marcum LLP
Deerfield, IL
February 26, 2021
TOCK, INC.
BALANCE SHEET
DECEMBER 31, 2020
|
|
Assets
|
|
|
|
|
|
|
|
|
|
Current Assets
|
|
|
|
|
|
|
|
|
|
Cash
|
|
|
|
$
|
15,996,479
|
|
|
|
|
Restricted cash
|
|
|
|
|
12,333,574
|
|
|
|
|
Accounts receivable, net
|
|
|
|
|
109,342
|
|
|
|
|
Prepaid expenses and other current assets
|
|
|
|
|
309,578
|
|
|
|
|
Deferred contract costs, current portion
|
|
|
|
|
239,371
|
|
|
|
|
Due from vendors
|
|
|
|
|
2,743,999
|
|
|
|
|
Total Current Assets
|
|
|
|
|
31,732,343
|
|
|
|
|
Property, Equipment and Software, Net
|
|
|
|
|
2,798,206
|
|
|
|
|
Other Assets
|
|
|
|
|
|
|
|
|
|
Deferred contract costs, net of current portion
|
|
|
|
|
365,427
|
|
|
|
|
Other assets
|
|
|
|
|
111,701
|
|
|
|
|
Total Other Assets
|
|
|
|
|
477,128
|
|
|
|
|
Total Assets
|
|
|
|
$
|
35,007,677
|
|
|
The accompanying notes are an integral part of these financial statements.
TOCK, INC.
BALANCE SHEET (CONTINUED)
DECEMBER 31, 2020
|
|
Liabilities and Stockholders’ Equity
|
|
|
|
|
Current Liabilities
Accounts payable
|
|
|
|
$
|
1,561,501
|
|
|
|
|
Accrued expenses
|
|
|
|
|
1,628,887
|
|
|
|
|
Deferred revenue
|
|
|
|
|
20,695
|
|
|
|
|
Funds payable and amounts due to customers
|
|
|
|
|
15,077,573
|
|
|
|
|
Total Current Liabilities
|
|
|
|
|
18,288,656
|
|
|
|
|
Other Liabilities
|
|
|
|
|
247,964
|
|
|
|
|
Total Liabilities
|
|
|
|
|
18,536,620
|
|
|
|
|
Stockholders’ Equity
|
|
|
|
|
|
|
|
|
|
Preferred stock, $.00001 par value 106,931,596 shares authorized; 106,931,596 shares issued and outstanding
|
|
|
|
|
1,069
|
|
|
|
|
Common stock, $.00001 par value 303,496,542 shares authorized; 121,392,684 shares issued; 120,787,253 shares outstanding
|
|
|
|
|
1,214
|
|
|
|
|
Additional paid-in capital
|
|
|
|
|
31,141,171
|
|
|
|
|
Treasury stock, 605,431 shares, at par value
|
|
|
|
|
(6)
|
|
|
|
|
Accumulated deficit
|
|
|
|
|
(14,672,391)
|
|
|
|
|
Total Stockholders’ Equity
|
|
|
|
|
16,471,057
|
|
|
|
|
Total Liabilities and Stockholders’ Equity
|
|
|
|
$
|
35,007,677
|
|
|
The accompanying notes are an integral part of these financial statements.
TOCK, INC.
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2020
|
|
Net Sales
|
|
|
|
$
|
23,027,648
|
|
|
|
|
Cost of Sales
|
|
|
|
|
9,863,508
|
|
|
|
|
|
|
|
|
|
13,164,140
|
|
|
|
|
Operating Expenses
Sales and marketing expenses
|
|
|
|
|
4,948,987
|
|
|
|
|
General and administrative expenses
|
|
|
|
|
9,026,016
|
|
|
|
|
Total Operating Expenses
|
|
|
|
|
13,975,003
|
|
|
|
|
Other Income (Expense)
Foreign currency transaction losses
|
|
|
|
|
(1,738)
|
|
|
|
|
Interest income
|
|
|
|
|
5,886
|
|
|
|
|
Other income
|
|
|
|
|
7,126
|
|
|
|
|
Total Other Income
|
|
|
|
|
11,274
|
|
|
|
|
Net Loss
|
|
|
|
$
|
(799,589)
|
|
|
The accompanying notes are an integral part of these financial statements.
TOCK, INC.
STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY
FOR THE YEAR ENDED DECEMBER 31, 2020
|
|
|
|
Preferred Stock
|
|
|
|
|
|
|
|
|
|
|
|
|
Series A-3
|
|
|
Series A
|
|
|
Series A-2
|
|
|
Series Seed
|
|
|
Common Stock
|
|
|
Additional
Paid in
Capital
|
|
|
Treasury Stock
|
|
|
Accumulated
Deficit
|
|
|
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Total
|
|
|
Balance — January 1, 2020
|
|
|
|
|
—
|
|
|
|
|
$
|
—
|
|
|
|
|
|
20,616,548
|
|
|
|
|
$
|
206
|
|
|
|
|
|
40,893,799
|
|
|
|
|
$
|
409
|
|
|
|
|
|
13,888,889
|
|
|
|
|
$
|
139
|
|
|
|
|
|
119,268,939
|
|
|
|
|
$
|
1,193
|
|
|
|
|
$
|
20,634,480
|
|
|
|
|
|
(605,431)
|
|
|
|
|
$
|
(6)
|
|
|
|
|
$
|
(13,872,802)
|
|
|
|
|
$
|
6,763,619
|
|
|
|
Exercise of options
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
2,123,745
|
|
|
|
|
|
21
|
|
|
|
|
|
509,677
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
509,698
|
|
|
|
Issuance of Series A-3 preferred stock
|
|
|
|
|
31,532,360
|
|
|
|
|
|
315
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
9,999,682
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
9,999,997
|
|
|
|
Stock issuance costs (Series A-3)
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
(130,000)
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
(130,000)
|
|
|
|
Stock based compensation expense
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
127,332
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
127,332
|
|
|
|
Net loss
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
(799,589)
|
|
|
|
|
|
(799,589)
|
|
|
|
Balance — December 31, 2020
|
|
|
|
|
31,532,360
|
|
|
|
|
$
|
315
|
|
|
|
|
|
20,616,548
|
|
|
|
|
$
|
206
|
|
|
|
|
|
40,893,799
|
|
|
|
|
$
|
409
|
|
|
|
|
|
13,888,889
|
|
|
|
|
$
|
139
|
|
|
|
|
|
121,392,684
|
|
|
|
|
$
|
1,214
|
|
|
|
|
$
|
31,141,171
|
|
|
|
|
|
(605,431)
|
|
|
|
|
$
|
(6)
|
|
|
|
|
$
|
(14,672,391)
|
|
|
|
|
$
|
16,471,057
|
|
|
The accompanying notes are an integral part of these financial statements.
TOCK, INC.
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 2020
|
|
Cash Flows From Operating Activities
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
|
$
|
(799,589)
|
|
|
|
|
Adjustments to reconcile net loss to net cash provided by operating activities:
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
|
|
1,465,947
|
|
|
|
|
Amortization of contract costs
|
|
|
|
|
113,313
|
|
|
|
|
Stock based compensation
|
|
|
|
|
127,332
|
|
|
|
|
Bad debt expense
|
|
|
|
|
16,248
|
|
|
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
|
Accounts receivable
|
|
|
|
|
417,508
|
|
|
|
|
Prepaid expenses
|
|
|
|
|
35,295
|
|
|
|
|
Due from vendors
|
|
|
|
|
(1,010,205)
|
|
|
|
|
Other assets
|
|
|
|
|
(703,234)
|
|
|
|
|
Accounts payable
|
|
|
|
|
1,305,745
|
|
|
|
|
Accrued expenses
|
|
|
|
|
830,424
|
|
|
|
|
Deferred revenue
|
|
|
|
|
(325,543)
|
|
|
|
|
Funds payable and amounts due to customers
|
|
|
|
|
10,064,770
|
|
|
|
|
Other liabilities
|
|
|
|
|
233,564
|
|
|
|
|
Total Adjustments
|
|
|
|
|
12,571,164
|
|
|
|
|
Net Cash Provided by Operating Activities
|
|
|
|
|
11,771,575
|
|
|
|
|
Cash Flows Used in Investing Activities
Purchases of property, equipment and software
|
|
|
|
|
(2,111,131)
|
|
|
|
|
Cash Flows From Financing Activities
|
|
|
|
|
|
|
|
|
|
Proceeds from issuance of Series A-3 preferred stock
|
|
|
|
|
9,999,997
|
|
|
|
|
Payments for stock issuance costs (Series A-3)
|
|
|
|
|
(130,000)
|
|
|
|
|
Proceeds from exercise of stock options
|
|
|
|
|
509,698
|
|
|
|
|
Net Cash Provided by Financing Activities
|
|
|
|
|
10,379,695
|
|
|
|
|
Net Increase in Cash and Restricted Cash
|
|
|
|
|
20,040,139
|
|
|
|
|
Cash and Restricted Cash − Beginning
|
|
|
|
|
8,289,914
|
|
|
|
|
Cash and Restricted Cash − Ending
|
|
|
|
$
|
28,330,053
|
|
|
|
|
Reconciliation of cash and restricted cash reported in the balance sheet:
|
|
|
|
|
|
|
|
|
|
Cash
|
|
|
|
$
|
15,996,479
|
|
|
|
|
Restricted Cash
|
|
|
|
|
12,333,574
|
|
|
|
|
Total Cash and Restricted Cash
|
|
|
|
$
|
28,330,053
|
|
|
|
|
Cash Paid During the Year for:
|
|
|
|
|
|
|
|
|
|
Interest
|
|
|
|
$
|
871
|
|
|
The accompanying notes are an integral part of these financial statements.
TOCK, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2020
NOTE 1 — NATURE OF OPERATIONS AND BASIS OF PRESENTATION
Tock, Inc. (the “Company”) provides a hospitality platform and application system for restaurants and other businesses that facilitates reservation, guest and table management, pickup and delivery and event management ticketing systems and related services. The Company conducts its operations out of its headquarters in Chicago, Illinois.
RECLASSIFICATION
Certain prior year amounts have been reclassified to conform to the current period presentation. These reclassifications had no effect on the statement of operations net loss.
NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
USE OF ESTIMATES
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) requires management to make estimates, judgements and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The Company’s significant estimates and assumptions include those related to stock-based compensation and revenue recognition. Actual results could differ from those estimates.
CASH CONCENTRATIONS
The Company maintains its cash in accounts which, at times, exceed federally insured limits of $250,000. At December 31, 2020 the Company had approximately $28 million in excess of this limit. The Company has not experienced any losses in such accounts and believes it is not exposed to any significant credit risk with respect to these accounts.
CASH AND RESTRICTED CASH
The Company considers all highly liquid investments with original maturities of 90 days or less at acquisition to be cash equivalents.
The Company holds funds on behalf of restaurant customers under transactions described in Note 4. While the Company does not have any contractual obligations to hold such cash as restricted, the Company has presented such amounts as restricted cash in the accompanying balance sheet.
ACCOUNTS RECEIVABLE
Accounts receivable are recorded at net realizable value consisting of the carrying amount less an allowance for uncollectible accounts, as needed. The Company uses the allowance method to account for uncollectible accounts receivable balances. Factors used to establish an allowance include the age of the outstanding receivable, credit quality of the customer and other customer specific circumstances. The collectability of accounts receivable are assessed regularly and the policy to write off any past due amounts is based on management’s discretion. The allowance for doubtful accounts was $0 as of December 31, 2020.
PROPERTY, EQUIPMENT AND SOFTWARE, NET
Property, equipment and software are stated at cost less accumulated depreciation and amortization. Expenditures for major additions and improvements are capitalized, and minor replacements, maintenance and repairs are charged to expense as incurred. When property, equipment and software are retired or
TOCK, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2020
NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
otherwise disposed of, the cost and accumulated depreciation and amortization are removed from the accounts and any resulting gain or loss is included in the results of operations for the respective period. Depreciation and amortization is computed on a straight-line basis over the estimated useful lives of the assets or, when applicable, the life of the lease related to leasehold improvements, whichever is shorter, over the following estimated useful lives:
|
|
|
|
Years
|
|
|
Computer equipment and software
|
|
|
3 – 5
|
|
|
Website and software development costs
|
|
|
3
|
|
|
Furniture and fixtures
|
|
|
7
|
|
|
Leasehold improvements
|
|
|
Lesser of useful life or
remaining lease term
|
|
WEBSITE AND SOFTWARE DEVELOPMENT COSTS
The Company capitalizes certain direct costs associated with its website and software development. The Company begins to capitalize its costs to develop software when preliminary development efforts are successfully completed, management has authorized and committed project funding, and it is probable that the project will be completed and the software will be used as intended. Costs incurred prior to meeting these criteria, including preliminary project costs, as well as maintenance and training costs, are expensed as incurred. Capitalized costs primarily include external direct costs of services and payroll costs for employees devoting time to the software projects principally related to website and mobile app development, including support systems, software coding, designing system interfaces and installation and testing of the software.
Capitalized costs are amortized on a straight-line basis over the estimated useful life of the related asset, generally estimated at three years beginning when the asset is substantially ready for use. Costs incurred for enhancements that are expected to result in additional features or functionality are capitalized and amortized over the estimated useful life of the enhancements.
IMPAIRMENT OF LONG-LIVED ASSETS
The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. The assessment of possible impairment is based upon the Company’s ability to recover the carrying value of the assets from the estimated undiscounted future net cash flows, before interest and taxes, of the related operations. The amount of impairment loss, if any, is measured as the excess of the carrying value of the asset over the present value of estimated future cash flows, using a discount rate commensurate with the risks involved and based on assumptions representative of market participants. As of December 31, 2020 there was no impairment recognized on long-lived assets.
ADOPTION OF TOPIC 606
The Company adopted Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers (“Topic 606”), effective as of January 1, 2020, using the modified retrospective method applied to those contracts that were not completed as of January 1, 2020. Results for reporting periods beginning after January 1, 2020 are presented under Topic 606, while prior period amounts are not adjusted and continue to be reported in accordance with historic accounting under Topic 605. There was no significant impact to retained earnings as of January 1, 2020, or to revenue for the year ended December 31, 2020, after adopting Topic 606, as revenue recognition and timing of revenue did not change as a result of implementing Topic 606.
TOCK, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2020
NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Topic 606 requires revenue to be recognized when an entity transfers control of goods or services to a customer in an amount that reflects the consideration to which a company also expects to be entitled to for those goods or services.
To achieve this core principle, the Company recognizes revenue from contracts with customers based on the following five steps:
1)
Identify the contract with a customer;
2)
Identify the performance obligations in the contract;
3)
Determine the transaction price;
4)
Allocate the transaction price to performance obligations in the contract; and
5)
Recognize revenue when or as the Company satisfies a performance obligation.
NATURE OF SERVICES
The Company’s revenues are primarily derived from subscription fees, payment-processing fees, engineering services, and metered GMV fees earned from referrals to certain payment processing vendors.
Subscription fees include Software-as-a-Service (“SaaS”) revenue for the right to use of Company’s internally developed software for a limited period of time in an environment hosted by the Company. The customer accesses and uses the software on an as needed basis or at a fixed fee arrangement over the Internet; however, the customer has no right to take delivery of the software. The underlying arrangements typically include a single fee for the service that is billed monthly. The Company’s SaaS solutions represent a series of distinct services that are substantially the same and have the same pattern of transfer to the customer. Revenue from a SaaS solution is generally recognized ratably over the term of the arrangement.
Payment-processing fee revenue is recognized at the time that payments are processed. Payments for the Company’s restaurant customers are processed either through the Company’s proprietary Tock Payment Platform (“TPP”) system or through a third-party payment processor referred by the Company. The Company bills its customers monthly or as frequently as may be set forth in the contract.
•
TPP payment-processing: For payments processed through TPP, the Company is the merchant of record and is responsible for establishing pricing directly with customers, has discretion in vendor selection, and is ultimately responsible for the fulfillment of the payment processing. The Company also assumes the credit risk under these transactions and is responsible for remitting the amounts collected, less the Company’s fees, to the restaurant customers.
The Company determined that it is the primary obligor under payments processed through TPP because it is acting as the principal in providing the service and records all processing fees collected as revenues on a gross basis under this arrangement. See Note 4 for additional information over such gross merchandise volume transactions.
•
Non-TPP payment-processing: For payments processed through a third-party payment processor referred by the Company, the Company is not responsible for processing the transaction or remitting the funds to the restaurant customers. In such cases, the Company settles up with this third-party monthly for its portion of fees earned. The Company determined that it is not the primary obligor under this arrangement and records revenues on a net basis.
TOCK, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2020
NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
NATURE OF SERVICES (CONTINUED)
The Company recognizes revenues earned from engineering services, which consist of integration services, and monthly program support and exclusivity fees, pursuant to a Master Services Agreement between the Company and a third-party. Integration services revenue is recognized over time as the services are performed. The Company believes the output method of hours worked provides the best depiction of the transfer of the Company’s services since the customer is receiving the benefit from the Company’s services as the service is performed. Monthly program support and exclusivity fee revenue is recognized ratably over the contractual period that the services are delivered. The Company recognizes revenue ratably because the customer received and consumes the benefits of the service throughout the contract period. The Company bills the customer monthly.
Metered GMV fees are additional fees earned by the Company from referrals of restaurant customers to specific vendors and are recognized in the month that such services are provided by the Company.
Other revenues consist of fees generated from shipping and order fees and are recognized in the period the services are performed.
Beginning in November 2020, the Company sells gift cards, which do not have expiration dates and accepts gift cards as a payment method on its platform. The Company records the proceeds from the sale of gift cards as a liability as the Company holds the funds on behalf of its restaurant customers. As of December 31, 2020, gift cards liability amounted to $475,651, which is included in Funds Payable and Amounts due to Customers and recorded a corresponding balance in Restricted Cash on the accompanying balance sheet (see Note 4). The Company recognizes the estimated breakage amount as revenue in proportion of the rights exercised by the gift card holders.
For the year ended December 31, 2020, no gift card breakage revenue is recognized as the Company determined none of the gift cards should be considered for breakage as none were older than 60 days.
The Company accounts for sales taxes collected from customers on a net basis. Payments are typically due 15 days after month end.
CONTRACT BALANCES
A contract asset is the right to consideration for transferred goods or services when the amount is conditioned on something other than the passage of time. As of December 31, 2020, there were no contract assets recorded on the Company’s balance sheet.
A contract liability is an entity’s obligation to transfer goods or services to a customer for which the entity has received consideration (or the amount is due) to the customer. Deferred revenue at December 31, 2020 amounted to $20,695 of prepayments received from customers.
DISAGGREGATED REVENUE
During the year ended December 31, 2020 the Company recognized revenues from the following sources:
|
Source:
|
|
|
2020
|
|
|
%
|
|
|
Subscription fee revenue
|
|
|
|
$
|
3,401,989
|
|
|
|
|
|
15%
|
|
|
|
TPP payment-processing
|
|
|
|
|
9,613,388
|
|
|
|
|
|
42%
|
|
|
|
Non-TPP payment-processing
|
|
|
|
|
397,406
|
|
|
|
|
|
2%
|
|
|
TOCK, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2020
NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
|
Source:
|
|
|
2020
|
|
|
%
|
|
|
Engineering services revenue
|
|
|
|
|
2,973,952
|
|
|
|
|
|
13%
|
|
|
|
Metered GMV fees
|
|
|
|
|
5,020,047
|
|
|
|
|
|
22%
|
|
|
|
Other revenue
|
|
|
|
|
1,620,866
|
|
|
|
|
|
6%
|
|
|
|
Total
|
|
|
|
$
|
23,027,648
|
|
|
|
|
|
100%
|
|
|
|
|
In April 2020, Tock added a “Tock to Go” feature that allowed customers to offer delivery and take-out on their Tock page as a result of the changes in the restaurant industry under the COVID 19 pandemic. This new offering to customers played a key role in the Company’s revenue growth in 2020.
During the year ended December 31, 2020, one customer individually accounted for approximately 13% of net sales.
SIGNIFICANT JUDGMENTS AND ESTIMATES
Certain contracts include multiple performance obligations, consisting of integration services, and monthly program support and exclusivity fees related to engineering services. As these services generally do not require a significant amount of integration or interdependency; therefore, these performance obligations are not combined.
The Company allocates the transaction price for each contract to each performance obligation based on the relative standalone price (“SSP”) for each performance obligation within each contract. The Company uses judgment in determining the SSP for each of the services. For substantially all performance obligations, except for integration services, and monthly program support and exclusivity fees, the Company is able to establish the SSP based on observable prices of services sold separately. As a result, the SSP for integration services included in a contract with multiple performance obligations was determined using the cost plus margin approach. The SSP for monthly program support and exclusivity fees was determined by applying a residual approach whereby the other performance obligation within the contract is first allocated a portion of the transaction price based upon its respective SSP, with any residual amount of transaction price allocated to the monthly program support and exclusivity fees.
Variable consideration, including chargebacks and discounts, which are estimated and reduced from the transaction price at the time the related revenue is recognized. Estimates of the variable consideration are reviewed and revised periodically by management. Although the amounts of variable consideration are dependent on estimates and assumptions, historically the amounts have not been material.
PRACTICAL EXPEDIENTS AND EXEMPTIONS
The Company has applied Topic 606’s practical expedient that permits for the non-disclosure of the value of unsatisfied performance obligations for (i) contracts with an original expected length of one year or less and (ii) contracts for which the Company recognizes revenue at the amount to which it has the right to invoice for services performed.
The Company also applied Topic 606’s practical expedient that allows for no adjustment to consideration due to a significant financing component if the expectation at contract inception is such that the period between payment by the customer and the transfer of the promised goods or service to the customer will be one year or less.
CONTRACT COSTS
The Company defers certain selling and commission costs that meet the capitalization criteria under ASC 340-40, which were expensed as incurred prior to the adoption of Topic 606.
TOCK, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2020
NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
The Company utilizes the portfolio approach to account for both the cost of obtaining a contract and the cost of fulfilling a contract. These capitalized costs are amortized over the expected period of benefit, which has been determined to be over 3 years based on the Company’s average client life and other qualitative factors, including rate of technological changes. The Company does not incur any additional costs to obtain or fulfill contracts upon renewal.
Deferred contract costs are recorded within deferred contract costs and long-term deferred contract costs on the balance sheet. Amortization of deferred contract costs is recorded in General and administrative in the statements of operations. Amortization expense related to deferred contract costs totaled $113,313 for the year ended December 31, 2020.
STOCK-BASED COMPENSATION
The Company measures stock-based awards at fair value and recognizes compensation expense for all share-based payment awards made to its employees and directors, including employee stock options, warrants and restricted stock awards.
The Company estimates the fair value of stock options and warrants granted using the Black-Scholes valuation model. This model requires the Company to make estimates and assumptions including, among other things, estimates regarding the length of time an employee will retain vested stock options before exercising them, the estimated volatility of its Common Stock price and the number of options or warrants that will be forfeited prior to vesting for options and achievement of certain performance-based milestones for warrants. The fair value is then amortized over the respective vesting periods, which is generally four years. Changes in these estimates and assumptions can materially affect the determination of the fair value of stock-based compensation and consequently, the related amount recognized in the statement of operations.
INCOME TAXES
Deferred taxes are provided for based on the cumulative timing differences between income reported on the financial statements and the tax return. These differences relate primarily to the difference in depreciation methods and net operating loss carryforwards (“NOL”). The Company had approximately $12,500,000 of NOL carryforwards at December 31, 2020, of which approximately $3,700,000 expires in 2036 and 2037, and $8,800,000 of which has an indefinite carryforward life.
Deferred income tax assets of approximately $3.8 million as of December 31, 2020, were fully offset by a valuation allowance due to the probability that NOLs will not be utilized. The Company’s deferred income tax assets increased by approximately $0.9 million during the year ended December 31, 2020, which was offset by a corresponding increase in the Company’s valuation allowance.
The Company accounts for any potential interest or penalties related to possible future liabilities for unrecognized income tax benefits as interest/other expense.
FOREIGN EXCHANGE TRANSACTIONS
The Company has sales to customers that are receivable in foreign currencies. Foreign currency gains or losses occur in the normal course of business due to timing differences that occur between the recording of the amounts receivable and the receipt of payment in the foreign currency. Any gain or loss upon payment is reported as other income or expense at the date of payment. The Company incurred net foreign currency transaction losses of $1,738 during the year ended December 31, 2020.
TOCK, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2020
NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
SUBSEQUENT EVENTS
The Company evaluated all significant events or transactions that occurred through February 26, 2021, the date these financial statements were available to be issued. No subsequent events have been identified that would require adjustment to, or disclosure in, the financial statements.
NOTE 3 — PROPERTY, EQUIPMENT AND SOFTWARE
Property, equipment and software are stated at cost less accumulated depreciation and amortization and consist of the following at December 31, 2020:
|
|
|
|
2020
|
|
|
Computer equipment and software
|
|
|
|
$
|
401,873
|
|
|
|
Website and software development costs
|
|
|
|
|
6,316,649
|
|
|
|
Furniture and fixtures
|
|
|
|
|
183,504
|
|
|
|
Leasehold improvements
|
|
|
|
|
21,892
|
|
|
|
Total Cost
|
|
|
|
|
6,923,918
|
|
|
|
Less: Accumulated depreciation and amortization
|
|
|
|
|
(4,125,712)
|
|
|
|
Property, Equipment and Software, Net
|
|
|
|
$
|
2,798,206
|
|
|
Depreciation and amortization expense related to property, equipment and software totaled $114,609 and $1,351,338, respectively, for the year ended December 31, 2020.
As of December 31, 2020, accumulated amortization related to website and software development costs was $3,811,096. Future expected amortization expense related to the website and software development costs as of December 31, 2020 are as follows:
|
For the Years Ending December 31,
|
|
|
Amount
|
|
|
2021
|
|
|
|
$
|
1,292,119
|
|
|
|
2022
|
|
|
|
|
888,960
|
|
|
|
2023
|
|
|
|
|
324,474
|
|
|
|
Total
|
|
|
|
$
|
2,505,553
|
|
|
NOTE 4 — GROSS MERCHANDISE VOLUME TRANSACTIONS
The Company processes certain payments on behalf of its restaurant customers through its proprietary TPP system. Gross merchandise volume (“GMV”) corresponds to the total gross funds processed through TPP, consisting of diner prepayments for restaurant reservations. For any GMV processed through TPP by the Company, the Company charges the restaurant customers a fee which is recognized as revenue. For any GMV that is not processed through TPP, the Company recognizes its share of the fees as revenue on a monthly basis (Non-TPP payment-processing revenue). See Revenue Recognition under Note 2 for additional information on recognition of revenues under this arrangement. The Company recognizes the net liability (prepayment less the Company’s fees) due to restaurant customers as funds payable and amounts due to customers in the accompanying balance sheet for all GMV transactions processed through the reporting period. Funds are remitted to the restaurant customers based on the stipulated agreement terms between the Company and its restaurant customers. In addition to restricted cash held on behalf of restaurant customers, the Company recognizes in-transit receivables from certain third-party vendors which assist in processing and settling payment transactions due to a clearing period before the related cash is received or settled.
TOCK, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2020
NOTE 4 — GROSS MERCHANDISE VOLUME TRANSACTIONS (continued)
The Company recognized the following assets and liabilities in the accompanying balance sheet underlying the GMV transactions processed by the Company at December 31, 2020:
|
|
|
|
2020
|
|
|
Restricted cash
|
|
|
|
$
|
12,333,574
|
|
|
|
Due from vendors
|
|
|
|
|
2,743,999
|
|
|
|
Total GMV Assets
|
|
|
|
$
|
15,077,573
|
|
|
|
Funds payable and amounts due to customers
|
|
|
|
$
|
15,077,573
|
|
|
|
Total GMV Liabilities
|
|
|
|
$
|
15,077,573
|
|
|
The Company classifies the above assets and liabilities as current in the accompanying balance sheet based on their purpose and expected settlement within one year.
As mentioned in Note 2, the Company began offering Gift Cards in 2020. The liability associated with those gift cards is included in funds payable and amounts due to customers in the balance sheet. The gift cards issued by the Company are expected to be redeemed within a year. The Company recognized the following liabilities in the accompanying balance sheets underlying the GMV transactions processed by the Company at December 31, 2020:
|
|
|
|
2020
|
|
|
Due to restaurants and other businesses
|
|
|
|
$
|
14,601,922
|
|
|
|
Gift card liability
|
|
|
|
|
475,651
|
|
|
|
Total funds payable and amounts due to customer
|
|
|
|
$
|
15,077,573
|
|
|
NOTE 5 — STOCKHOLDERS’ EQUITY
AUTHORIZED CAPITAL
As of December 31, 2020, the Company was authorized to issue 296,986,905 shares of Common Stock with a $.00001 par value, 6,509,637 shares of Class A Common Stock with a $0.00001 par value, and 106,931,596 shares of Preferred Stock, $.00001 par value.
The holders of the Company’s Common Stock are entitled to one vote per share. As of December 31, 2020 there was no outstanding Class A Common Stock. The Class A Common Stock does not have voting rights.
In May 2020, the Company amended and restated its Certificate of Incorporation to increase the number of authorized shares of Common Stock from 250,000,000 to 287,000,000, and to increase the number of authorized shares of Preferred Stock from 76,000,000 to 106,931,596.
In June 2020, the Company amended and restated its Certificate of Incorporation to increase the number of authorized shares of Common Stock from 287,000,000 to 296,986,905, and to create a new class of Class A Common Stock with 6,509,637 shares authorized.
RESTRICTED STOCK AWARDS
The cost of each restricted stock award is determined using the fair value of the Company’s Common Stock on the date of grant and is recorded based on the vesting term. The fair value of the Company’s Common Stock is determined annually by an independent valuation firm (see Note 6).
TOCK, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2020
NOTE 5 — STOCKHOLDERS’ EQUITY (continued)
As of January 1, 2020 and December 31, 2020, there are no unrecognized compensation costs. Forfeited shares were recorded as treasury stock at par value.
For the year ended December 31, 2020, the Company recorded no stock-based compensation expense related to restricted stock, as there were no remaining unvested shares as of December 31, 2019.
Total shares vested and outstanding as of December 31, 2020 were 60,169,804 with a grant date weighted average fair value of $0.05 per share.
PREFERRED STOCK
In May 2020, the Company amended and restated its Certificate of Incorporation to, among other things, increase the number of authorized shares of Preferred Stock from 76,000,000 to 106,931,596, and to designate 31,532,360 of such shares as Series A-3 Preferred Stock (“Series A-3”). The outstanding Preferred Stock is designated as follows: 13,888,889 to Series Seed Preferred Stock (“Series Seed”), 20,616,548 shares to Series A Preferred Stock (“Series A”), 40,893,799 shares to Series A-2 Preferred Stock (“Series A-2”), and 31,532,360 shares to Series A-3, and shall be convertible at any time, without the payment of additional consideration, into Common Stock based on the applicable conversion price in effect at the time of conversion.
The Company shall not declare, pay or set aside any dividends on shares or any other class or series of capital stock (other than dividends on shares of Common Stock payable in shares of Common Stock) unless first, the holders of Series A, Series A-2 and Series A-3 stock receive an equal or greater dividend, and second, the holders of the Series Seed stock receive an equal or greater dividend.
SERIES A-3 PREFERRED STOCK (“SERIES A-3”)
The Series A-3 conversion price is equal to the amount of the Series A-3 Original Issue Price of $0.31713444. These conversion prices are subject to adjustment in the event of any stock dividend, stock split, combination or other similar recapitalization with respect to the Series A-3. In the event of the Company’s voluntary or involuntary liquidation, dissolution or winding up, holders of the Series A-3 will be entitled to be paid out of the assets of the Company before any payment will be made to the holders of Series A, Series A-2, Common Stock, Class A Common Stock or Series Seed, an amount per share equal to the greater of (i) the Series A-3 Original Issue Price, plus any dividends declared but unpaid, or (ii) such amounts per share as would have been payable had all Series A-3 shares been converted into Common Stock prior to such an event.
At any time when at least 10,308,274.50 shares of Series A, 20,446,899.5 shares of Series A-2 or 15,801,210 shares of Series A-3 (subject to adjustment) are outstanding, the Company shall not do any of the following without written consent or affirmative vote of the holders of at least a majority of the then outstanding shares of Series A, Series A-2 and Series A-3 voting together, on an as-converted basis: (i) liquidate, dissolve or wind-up the business, (ii) amend alter or repeal any provision of the Company’s Certificate of Incorporation or Bylaws, (iii) create an additional class of stock unless it ranks junior to the Series A, Series A-2 and Series A-3, (iv) increase the authorized number of shares of Series A, Series A-2 or Series A-3, and other actions that would be detrimental to the rights and preferences granted to the Series A-3 stockholders.
Series A-3 stockholders are entitled to cast the number of votes equal to the number of whole shares of Common Stock into which the shares held by the holder are convertible. Series A-3 stockholders vote together with the holders of Common Stock as a single class other than as provided for by law or by the Certificate of Incorporation.
TOCK, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2020
NOTE 5 — STOCKHOLDERS’ EQUITY (continued)
SERIES A AND SERIES A-2 PREFERRED STOCK (“SERIES A” AND “SERIES A-2”)
The effective Series A Conversion Price is currently equal to $0.3374261662, while the Series A Original Issue Price is $0.36378549. The Series A-2 conversion price is equal to the amount of Series A-2 Original Issue Price of $0.22863634. These conversion prices are subject to adjustment in the event of any stock dividend, stock split, combination or other similar recapitalization with respect to the Series A and Series A-2 stock.
In the event of the Company’s voluntary or involuntary liquidation, dissolution or winding up, holders of the Series A and Series A-2 stock will be entitled to be paid out of the assets of the Company before any payment will be made to the holders of Common Stock, Class A Common Stock or Series Seed, an amount per share equal to the greater of (i) the Series A Original Issue Price or Series A-2 Original Issue Price, plus any dividends declared but unpaid, or (ii) such amounts per share as would have been payable had all Series A and Series A-2 shares been converted into Common Stock prior to such an event.
At any time when at least 10,308,274.50 shares of Series A, 20,446,899.5 shares of Series A-2, or 15,801,210 shares of Series A-3 (subject to adjustment) are outstanding, the Company shall not do any of the following without written consent or affirmative vote of the holders of at least a majority of the then outstanding shares of Series A, Series A-2 and Series A-3 voting together, on an as-converted basis: (i) liquidate, dissolve or wind-up the business, (ii) amend alter or repeal any provision of the Company’s Certificate of Incorporation or Bylaws, (iii) create an additional class of stock unless it ranks junior to the Series A, Series A-2 and Series A-3, (iv) increase the authorized number of shares of Series A, Series A-2 or Series A-3, and other actions that would be detrimental to the rights and preferences granted to the Series A-3 stockholders.
Series A and Series A-2 stockholders are entitled to cast the number of votes equal to the number of whole shares of Common Stock into which the shares held by the holder are convertible. Series A and Series A-2 stockholders vote together with the holders of Common Stock as a single class other than as provided for by law or by the Certificate of Incorporation.
SERIES SEED PREFERRED STOCK (“SERIES SEED”)
As of December 31, 2020, the Series Seed conversion price is equal to the amount of the Series Seed Original Issue Price of $0.144. This conversion price is subject to adjustment in the event of any stock dividend, stock split, combination or other similar recapitalization with respect to the Series Seed stock. In the event of the Company’s voluntary or involuntary liquidation, dissolution or winding up, holders of the Series Seed stock will be entitled to be paid out of the assets of the Company before any payment will be made to the holders of Common Stock or Class A Common Stock, an amount per share equal to the greater of (i) the Series Seed Original Issue Price, plus any dividends declared but unpaid, or (ii) such amounts per share as would have been payable had all Series Seed shares been converted into Common Stock prior to such an event, subject to the preferential rights of the Series A and Series A-2 and series A-3 preferred stock.
Series Seed stockholders have no voting rights.
WARRANTS
In June 2020, the Company issued a warrant to a customer that enables them to purchase common stock in consideration of and as an inducement for them to enter into a Master Services Agreement (see Note 2), if performance-based milestones relating to the agreement are achieved. 13,019,273 shares were issued with an exercise price of $0.40 per share. Vesting is based on five performance milestones, and expire seven years after the grant date.
TOCK, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2020
NOTE 5 — STOCKHOLDERS’ EQUITY (continued)
The Company utilized a Black-Scholes calculator and determined that the grant-date fair value is $0.045 per share of Warrant Stock. The assumptions used in this computation were as follows: 7 years to maturity, 0.55% annual risk-free interest rate, 65% annualized volatility, $0.40 exercise price and a stock price of $0.12. At December 31, 2020, the Company estimates that it is not probable that the customer will meet any vesting conditions dictated in the Warrant agreement. Therefore, the amount to be recognized as a reduction in the transaction price would be $0.
The probable or actual outcomes will be reassessed in each reporting period, and the final measurement of the award associated with the ultimate outcomes of those conditions will be reflected as a reduction of the transaction price at the point in time in which it is probable the vesting conditions will be met.
NOTE 6 — EQUITY INCENTIVE PLAN AND OPTIONS
In 2016, the Company adopted its 2016 Equity Incentive Plan (the “Plan”) for the purpose of enhancing the Company’s ability to attract, retain, and motivate, persons who make important contributions to the Company by granting stock options to employees and directors. The total size of the Plan as of December 31, 2020, including all options to purchase Common Stock available for grant, outstanding and exercised, is 56,880,717. The exercise price of each option is specified in each award agreement, but shall be no less than 100% of the fair market value on the date of the option. The duration of each option is not to exceed 10 years.
The fair value of each option award is estimated on the date of grant using the Black-Scholes option pricing model. The Company’s valuation assumptions are as follows:
•
Volatility — The computation of expected volatility includes the historical and implied stock volatility of comparable companies from a representative peer group selected based on industry and market capitalization data. For the year ended December 31, 2020, volatility approximated 55%.
•
Expected term — The expected term was estimated using the simplified method allowed under ASC Topic 718. For the year ended December 31, 2020, the expected term was approximately 6 years.
•
Risk free rate — The risk free interest rate is based on the yields of U.S. Treasury securities with maturities similar to the expected term of the options for each option group. For the year ended December 31, 2020, the risk-free rate ranged from 0.34% — 1.37%.
•
Forfeiture rate — The Company uses the actual forfeiture rate based on the date forfeitures occur. Total forfeitures are expected to be immaterial over the life of the options. For the year ended December 31, 2020, the forfeiture rate was 30.87%.
•
Dividend yield — The Company has never declared or paid any cash dividends and does not presently plan to pay cash dividends in the foreseeable future. Consequently, the Company used an expected dividend yield of zero.
TOCK, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2020
NOTE 6 — EQUITY INCENTIVE PLAN AND OPTIONS (continued)
The following table summarizes the activity of outstanding options during the year ended December 31, 2020:
|
|
|
|
Options
Outstanding
|
|
|
Weighted-Average
Fair Value
|
|
|
Outstanding at January 1, 2020
|
|
|
|
|
40,466,067
|
|
|
|
|
$
|
0.01
|
|
|
|
Granted
|
|
|
|
|
6,986,000
|
|
|
|
|
|
0.04
|
|
|
|
Exercised
|
|
|
|
|
(2,123,745)
|
|
|
|
|
|
0.01
|
|
|
|
Forfeited
|
|
|
|
|
(2,613,123)
|
|
|
|
|
|
0.02
|
|
|
|
Expired
|
|
|
|
|
(1,907,846)
|
|
|
|
|
|
0.01
|
|
|
|
Outstanding at December 31, 2020
|
|
|
|
|
40,807,353
|
|
|
|
|
$
|
0.02
|
|
|
Options outstanding at December 31, 2020 had a weighted average remaining contractual term of approximately 6.8 years. The exercise price of all option grants is $0.24 per share. The fair value of the Company’s stock was $0.12 as of December 31, 2020. The fair value was determined by an independent valuation firm based on a market approach model which utilized the May 2020 Series A-3 Preferred Stock issuance as the primary input to the valuation model. Total options vested/exercisable as of December 31, 2020 were 30,820,774. Based on the fair value of the Common Stock as of December 31, 2020, there was no intrinsic value arising from the options vested/exercisable.
For the year ended December 31, 2020, the Company recorded stock based compensation expense related to options that totaled $127,332. The total unrecognized compensation costs related to non-vested stock options was $184,040, which is expected to be recognized over the next 2.26 years.
NOTE 7 — OPERATING LEASES
The Company leases its office space under a long-term operating lease agreement which expires on May 31, 2023. Rental payments are payable monthly and the Company is recognizing rent expense on a straight line basis over the term of the lease. Additional monthly payments (“additional expenses”) for parking, real estate taxes, insurance, common area maintenance and the Company’s proportionate share of annual operating expenses are charged separately under the lease. The Company and a related party under common ownership are sharing the cost of the lease based on approximate usage of the square footage used by each party. The Company is potentially liable for the entire lease agreement. The Company’s rent expense, including additional expenses, totaled $625,364 for the year ended December 31, 2020.
The Company’s minimum future payments, net of costs expected to be paid by the Company’s related party, as of December 31, 2020 are as follows:
|
For the Years Ending December 31,
|
|
|
Amount
|
|
|
2021
|
|
|
|
$
|
451,379
|
|
|
|
2022
|
|
|
|
|
460,407
|
|
|
|
2023
|
|
|
|
|
193,416
|
|
|
|
Total
|
|
|
|
$
|
1,105,202
|
|
|
NOTE 8 — RELATED PARTY TRANSACTIONS
The majority shareholder of the Company owns several restaurants which purchase subscriptions for the use of the Company’s internally developed software. Sales to such related parties were $57,138 for the year ended December 31, 2020.
TOCK, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2020
NOTE 8 — RELATED PARTY TRANSACTIONS (continued)
The Company previously had an agreement in place to pay salaries for the use of certain employees of a related party under common ownership. There were no payments made for use of such employees for the year ended December 31, 2020.
As of December 31, 2020, total accounts payable to related parties was $10,485. As of December 31, 2020, total accounts receivable from related parties was $12,491.
See Note 7 regarding the lease shared with a related party under common ownership.
NOTE 9 — EMPLOYEE BENEFIT PLAN
The Company has a retirement savings plan under Internal Revenue Code Section 401(k). Eligible employees are allowed to make elective deferrals with the employer. The Company matches, on behalf of each of the employees who are participants in the Plan, 100% of deferred salary up to 4% of the employees’ compensation. In addition, the Company may decide to make discretionary profit sharing contribution to the Plan subject to a 4-year vesting period.
The Company’s matching contributions totaled approximately $241,000 for the year ended December 31, 2020.
NOTE 10 — CONTINGENCIES AND ECONOMIC RISK
LITIGATION
From time to time, the Company may be subject to litigation claims and administrative proceedings resulting from the conduct of its business. In the opinion of management, the ultimate disposition of such matters will not have a materially adverse effect on the Company.
OTHER
The Company is subject to Marketplace Facilitator Regulations in certain states and potentially could be subject to contingent liabilities from non-payment by its customers. The Company continues to evaluate any potential contingent liabilities related to this matter by looking at historical experience or known claims, of which there were none as of December 31, 2020 and as of the report date. Management has concluded the potential contingent liability related to this matter is not material as of December 31, 2020, and as of the report date.
The Company is subject to Sales and Use Tax in certain states and potentially could be subject to contingent liabilities related to this matter. Management has concluded the potential contingent liability related to this matter is not material as of December 31, 2020 and as of the report date.
The Company continues to evaluate the Marketplace Facilitator and Sales and Use Tax regulations along with their related potential contingent liabilities.
COVID-19
In March 2020, the World Health Organization declared the outbreak of a novel coronavirus (COVID-19) as a pandemic. The Company is monitoring this, and although the Company’s operations have not been materially affected by the COVID-19 outbreak as of and for the year ended December 31, 2020, the Company is unable to predict the impact that COVID-19 will have on its future financial position and operating results due to numerous uncertainties.
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 13. Other Expenses of Issuance and Distribution
The following table sets forth the costs and expenses payable by the Registrant in connection with this registration statement and the listing of the Registrant’s Class A common stock. All amounts shown are estimates except for the SEC registration fee and the exchange listing fee.
|
|
|
|
Amount
Paid or
to Be Paid
|
|
|
SEC registration fee
|
|
|
|
$
|
*
|
|
|
|
Exchange listing fee
|
|
|
|
|
*
|
|
|
|
Printing and engraving expenses
|
|
|
|
|
*
|
|
|
|
Legal fees and expenses
|
|
|
|
|
*
|
|
|
|
Accounting fees and expenses
|
|
|
|
|
*
|
|
|
|
Custodian, transfer agent and registrar fees and expenses
|
|
|
|
|
*
|
|
|
|
Other advisor fees
|
|
|
|
|
*
|
|
|
|
Miscellaneous expenses
|
|
|
|
|
*
|
|
|
|
Total
|
|
|
|
$
|
*
|
|
|
*
To be provided by amendment
Item 14. Indemnification of Directors and Officers
Section 145 of the DGCL authorizes a court to award, or a corporation’s board of directors to grant, indemnity to directors and officers under certain circumstances and subject to certain limitations. The terms of Section 145 of the DGCL are sufficiently broad to permit indemnification under certain circumstances for liabilities, including reimbursement of expenses incurred, arising under the Securities Act of 1933, as amended (the “Securities Act”).
The Registrant expects to adopt an amended and restated certificate of incorporation, which will become effective in connection with the effectiveness of the registration statement of which this prospectus forms a part, and will provide that the Registrant will indemnify, to the fullest extent permitted under the DGCL, each person who was or is a party or threatened to be made a party to or is otherwise involved in any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (a “Proceeding”), by reason of the fact that such person, or a person for whom such person is the legal representative, is or was a director or officer or while a director or officer of the Registrant, is or was serving at the request of the Registrant as a director, member, manager, officer, employee or agent of another corporation, partnership, joint venture, limited liability company, trust, enterprise or nonprofit entity, including service with respect to employee benefit plans (all such persons being referred to as an “Indemnitee”), against all liability and loss suffered and expenses (including attorneys’ fees) reasonably incurred by such Indemnitee in such Proceeding.
In addition, the Registrant’s amended and restated certificate of incorporation will allow the Registrant, by the action of the Registrant’s board of directors, to indemnify and advance expenses to any person (and the heirs, executors or administrators of such person) who was or is made or is threatened to be made or is otherwise involved in any Proceeding by reason of the fact that such person, or a person for whom such person is the legal representative, is or was an employee or agent of the Registrant or, while an employee or agent of the Registrant, is or was serving at the request of the Registrant as a director, member, manager, officer, employee or agent of another corporation or of a partnership, joint venture, limited liability company, trust, enterprise or nonprofit entity, including service with respect to employee benefit plans, against all liability and loss suffered and expenses (including attorneys’ fees) reasonably incurred by such person in connection with such Proceeding, including in defending any Proceeding in advance of its final disposition.
The Registrant has entered into indemnification agreements with each of its current directors and executive officers. Each indemnification agreement provides, among other things, for indemnification to the fullest extent permitted by law against any and all expenses, judgments, fines, penalties and amounts paid in settlement (with the Registrant’s consent) of any Proceeding. The indemnification agreements provide for the advancement or payment of all expenses to the Indemnitee and for reimbursement of such advanced expenses to the Registrant if it is found that such Indemnitee is not entitled to such indemnification under applicable law.
The Registrant maintains a general liability insurance policy that covers certain liabilities of directors and officers of the Registrant arising out of Proceedings based on acts or omissions in their capacities as directors or officers.
Insofar as indemnification for liabilities arising under the Securities Act may be permitted to the Registrant or the Registrant’s directors or the Registrant’s officers or persons who control the Registrant pursuant to the foregoing provisions, the Registrant has been informed that, in the opinion of the SEC, such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable.
Item 15. Recent Sales of Unregistered Securities
Set forth below is information regarding all securities issued by the Registrant without registration under the Securities Act since January 1, 2018. The Registrant believes that each of these transactions was exempt from the registration requirements of the Securities Act pursuant to Section 4(a)(2), Regulation D, Regulation S or Rule 701 of the Securities Act or as transactions not involving the sale of securities.
(a) Stock Options and Restricted Stock Units
Since January 1, 2018, the Registrant has issued and sold to its employees and others an aggregate of shares of Class B common stock in connection with the exercise of options granted under its equity compensation plans at a weighted average price of $ per share.
Since January 1, 2018, the Registrant has granted to its employees and others restricted stock units for an aggregate of shares of Class A common stock under its equity compensation plans.
(b) Class C Common Stock Issuance
In March 2021, the Registrant issued and sold an aggregate of 4,452,023 shares of Class C common stock at a purchase price of approximately $68.42 per share to accredited investors, for an aggregate purchase price of $304.6 million.
In March 2021, the Registrant issued 2,750,330 shares of Class C common stock to accredited investors in connection with the Acquisition of Tock, Inc.
Item 16. Exhibits and Financial Statement Schedules
(a) Exhibits
The exhibit index attached hereto is incorporated herein by reference.
(b) Financial Statement Schedules.
No financial statement schedules are provided because the information called for is not applicable or is shown in the financial statements or notes thereto.
Item 17. Undertakings
The undersigned Registrant hereby undertakes:
(1)
To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:
(i)
To include any prospectus required by Section 10(a)(3) of the Securities Act.
(ii)
To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement.
(iii)
To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement.
(2)
That, for the purpose of determining any liability under the Securities Act, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
(2)
To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.
Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the SEC, such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.
The undersigned Registrant hereby undertakes that:
(1)
for purposes of determining any liability under the Securities Act, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective; and
(2)
for the purpose of determining any liability under the Securities Act, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
INDEX TO EXHIBITS
The following exhibits are filed as part of this registration statement.
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Exhibit No.
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2.1
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3.1
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3.2
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3.3
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3.4
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4.1
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5.1*
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Opinion of Skadden, Arps, Slate, Meagher & Flom LLP.
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10.1
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10.2
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10.3†
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10.4†
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10.5†
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Form of Restricted Stock Unit Award Agreement pursuant to the Squarespace, Inc. 2021 Equity Incentive Plan.
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10.6†
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Form of Stock Option Award Agreement pursuant to the Squarespace, Inc. 2021 Equity Incentive Plan.
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10.7†
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10.8†
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10.9†
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10.10†
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10.11†
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10.12†
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10.13†
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10.14†
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Employment Agreement between Squarespace, Inc. and Anthony Casalena, dated April 15, 2021.
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10.15†
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Performance Restricted Stock Unit Agreement between Squarespace, Inc. and Anthony Casalena, dated April 15, 2021.
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10.16
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10.17
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10.18
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10.19
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10.20
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Exhibit No.
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10.21
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21.1
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23.1*
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Consent of Skadden, Arps, Slate, Meagher & Flom LLP (included in Exhibit 5.1).
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23.2
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23.3
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24.1
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*
To be filed by amendment.
†
Indicates a management contract or compensatory plan.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the city of New York, state of New York, on April 16, 2021.
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Squarespace, Inc.
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By:
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/s/ Anthony Casalena
Anthony Casalena
Chief Executive Officer
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We, the undersigned directors and officers of the Registrant, hereby severally constitute and appoint Anthony Casalena, Marcela Martin and Courtenay O’Connor, and each of them singly, our true and lawful attorneys, with full power to them, and to each of them singly, to sign for us and in our names in the capacities indicated below, the registration statement on Form S-1 filed herewith, and any and all pre-effective and post-effective amendments to said registration statement, and any registration statement filed pursuant to Rule 462(b) under the Securities Act of 1933, as amended, in connection with the registration under the Securities Act of 1933, as amended, of equity securities of the Registrant, and to file or cause to be filed the same, with all exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith, as fully to all intents and purposes as each of us might or could do in person, and hereby ratifying and confirming all that said attorneys, and each of them, or their substitute or substitutes, shall do or cause to be done by virtue of this Power of Attorney.
Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated.
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Signature
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Title
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Date
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/s/ Anthony Casalena
Anthony Casalena
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Chief Executive Officer and Director
(Principal Executive Officer)
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April 16, 2021
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/s/ Marcela Martin
Marcela Martin
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Chief Financial Officer
(Principal Financial Officer and Principal Accounting Officer)
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April 16, 2021
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/s/ Andrew Braccia
Andrew Braccia
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Director
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April 16, 2021
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/s/ Michael Fleisher
Michael Fleisher
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Director
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April 16, 2021
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/s/ Liza Landsman
Liza Landsman
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Director
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April 16, 2021
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/s/ Anton Levy
Anton Levy
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Director
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April 16, 2021
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/s/ Jonathan Klein
Jonathan Klein
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Director
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April 16, 2021
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Exhibit 2.1
AGREEMENT
AND PLAN OF MERGER
BY
AND AMONG
SQUARESPACE,
INC.,
TREMONT
2021 ACQUISITION CORP,
TREMONT
2021 ACQUISITION II LLC,
TOCK,
INC.,
EACH
OF THE OTHER PERSONS IDENTIFIED AS SELLERS HEREIN,
AND
SHAREHOLDER
REPRESENTATIVE SERVICES LLC, AS THE STOCKHOLDER REPRESENTATIVE
DATED
AS OF MARCH 31, 2021
TABLE
OF CONTENTS
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Page
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Article I
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THE MERGERS
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1.1
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The
Mergers
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3
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1.2
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Effect
of the Mergers
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3
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1.3
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The
Closing
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4
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1.4
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The
Effective Times
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4
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1.5
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Actions
to be Taken on the Closing Date
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4
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1.6
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Organizational
Documents of the First-Step Surviving Corporation and the Surviving Company
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6
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1.7
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Directors
and Officers of the First-Step Surviving Corporation and the Surviving Company
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6
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1.8
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Effect
of the Mergers on Company Securities
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7
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1.9
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Effect
of the Mergers on First Merger Sub Securities
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9
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1.10
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Exchange
Procedures
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10
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1.11
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No
Further Ownership Rights in the Company Shares
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11
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1.12
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Appraisal
Rights
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11
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1.13
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Adjustments
to Merger Consideration
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12
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1.14
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Withholding
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16
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1.15
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Post-Closing
Payment Cooperation
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16
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Article II
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REPRESENTATIONS AND WARRANTIES OF THE COMPANY
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2.1
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Organization
and Qualification
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16
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2.2
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Organizational
Documents
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17
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2.3
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Capitalization
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17
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2.4
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Authority;
Enforceability
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19
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2.5
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No
Conflict; Required Filings and Consents
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20
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2.6
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Material
Contracts
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20
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2.7
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Compliance
with Laws
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23
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2.8
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Financial
Statements
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24
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2.9
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Absence
of Certain Changes or Events
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24
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2.10
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Absence
of Litigation, Claims and Orders
|
26
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2.11
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Employee
Benefit Plans
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26
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2.12
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Labor
Matters
|
29
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2.13
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Real
Property
|
30
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2.14
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Taxes
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31
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2.15
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Intellectual
Property, Information Technology, Privacy
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33
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2.16
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Insurance
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37
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2.17
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Sufficiency
of Assets
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37
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2.18
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Environmental
Matters
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37
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2.19
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Brokers
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38
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|
2.20
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Affiliated
Transactions
|
38
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|
2.21
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Customers
and Vendors
|
38
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2.22
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Accounts
Receivable and Accounts Payable
|
39
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2.23
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Books
and Records
|
39
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2.24
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Bank
Accounts; Deposits and Letters of Credit
|
39
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2.25
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Disclaimer
|
39
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Article III
|
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REPRESENTATIONS AND WARRANTIES OF BUYER, FIRST MERGER SUB AND SECOND MERGER SUB
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3.1
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Organization
and Qualification
|
40
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|
3.2
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Authority;
Enforceability
|
40
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|
3.3
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No
Conflict; Required Filings and Consents
|
41
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3.4
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Compliance
with Laws
|
41
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|
3.5
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Absence
of Litigation, Claims and Orders
|
42
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|
3.6
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Financial
Statements
|
42
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3.7
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Brokers
|
42
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3.8
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Investment
Intent; Restricted Securities
|
43
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3.9
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Capitalization
|
43
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|
3.10
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Rights
of Buyer Common Stock Holders
|
44
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3.11
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Reorganization
Treatment
|
44
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3.12
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Disclaimer
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44
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Article IV
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ADDITIONAL AGREEMENTS
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4.1
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Fees
and Expenses
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44
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4.2
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Stockholder
Information Statement
|
44
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4.3
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Disclosure
|
45
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|
4.4
|
Further
Assurances
|
45
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|
4.5
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Director
and Officer Indemnification
|
45
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|
Article V
|
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TAX MATTERS
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|
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5.1
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Filing
of Tax Returns
|
46
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5.2
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Straddle
Periods
|
46
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5.3
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Contests
Related to Taxes
|
47
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|
5.4
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Procedures
for Specified Tax Matters
|
47
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5.5
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Cooperation
on Tax Matters
|
49
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5.6
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Transfer
Taxes
|
49
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|
5.7
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Safe
Harbor Election
|
49
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|
5.8
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Reorganization
Treatment
|
49
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|
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|
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|
Article VI
|
|
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EMPLOYEE MATTERS
|
|
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6.1
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Benefit
Protection
|
49
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6.2
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Buyer
Benefit Plan Treatment
|
50
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|
6.3
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Buyer
401(k) Plan
|
50
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6.4
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Treatment
of Covenants
|
50
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|
|
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|
Article VII
|
|
|
|
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|
SURVIVAL AND INDEMNIFICATION
|
|
|
|
|
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7.1
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Survival
of Representations and Warranties and Covenants
|
51
|
|
7.2
|
Indemnification
|
52
|
|
7.3
|
Third
Party Claims
|
53
|
|
7.4
|
Procedures
Relating to Indemnification for Non-Third Party Claims
|
54
|
|
7.5
|
Specific
Indemnity Procedures
|
55
|
|
7.6
|
Calculation
of Losses; Determination of Application
|
55
|
|
7.7
|
Limitations
on Indemnification
|
56
|
|
7.8
|
Sources
of Recovery; Indemnity Escrow Account; Specific Indemnity Escrow Amount
|
56
|
|
7.9
|
Adjustment
to Closing Cash Consideration
|
58
|
|
7.10
|
No
Circular Recovery
|
58
|
|
7.11
|
Exclusive
Remedy
|
59
|
|
7.12
|
Fraud
|
59
|
|
7.13
|
Stockholder
Representative
|
59
|
|
|
|
|
|
Article VIII
|
|
|
|
|
|
MISCELLANEOUS
|
|
|
|
|
|
8.1
|
Amendment
|
61
|
|
8.2
|
Waiver
|
61
|
|
8.3
|
Notices
|
62
|
|
8.4
|
Specific
Performance
|
63
|
|
8.5
|
Interpretation
|
63
|
|
8.6
|
Severability
|
64
|
|
8.7
|
Entire
Agreement
|
64
|
|
8.8
|
Assignment
|
64
|
|
8.9
|
No
Third Party Beneficiaries
|
64
|
|
8.10
|
Failure
or Indulgence Not Waiver; Remedies Cumulative
|
65
|
|
8.11
|
Non-Recourse
|
65
|
|
8.12
|
Governing
Law; Venue
|
65
|
|
8.13
|
Waiver
of Jury Trial
|
65
|
|
8.14
|
Counterparts
|
65
|
|
8.15
|
Termination
|
65
|
|
8.16
|
Representation
of the Company Holders
|
66
|
|
EXHIBITS
|
|
|
|
|
|
|
Exhibit
A
|
—
|
Form
of Joinder
|
|
Exhibit
B
|
—
|
Form
of Incorporation of the First-Step Surviving Corporation
|
|
Exhibit
C
|
—
|
Form
of Letter of Transmittal
|
|
Exhibit
D
|
—
|
Form
of Escrow Agreement
|
|
Exhibit
E
|
—
|
Form
of Payment Administration Agreement
|
|
|
|
|
|
ANNEXES
|
|
|
|
|
|
|
Annex
A
|
—
|
Defined
Terms
|
|
Annex
B
|
—
|
Distribution
Allocation Schedule
|
|
Annex
C
|
—
|
Example
Calculation
|
AGREEMENT
AND PLAN OF MERGER
THIS
AGREEMENT AND PLAN OF MERGER (this “Agreement”) is made and entered
into as of March 31, 2021, by and among Squarespace, Inc., a Delaware corporation (“Buyer”),
Tremont 2021 Acquisition Corp, a Delaware corporation and a wholly-owned Subsidiary of Buyer (“First Merger
Sub”), Tremont 2021 Acquisition II LLC, a Delaware limited liability company and a wholly-owned Subsidiary of
Buyer (“Second Merger Sub”), Tock, Inc., a Delaware corporation (the “Company”),
each of the Persons set forth on Schedule I who executes and delivers a joinder to this Agreement substantially in the form attached
hereto as Exhibit A (a “Joinder”) (collectively, “Sellers”),
and Shareholder Representative Services LLC, a Colorado limited liability company, solely in its capacity as the representative,
agent and attorney-in-fact of the Company Holders (the “Stockholder Representative”
and, together with Buyer, First Merger Sub, Second Merger Sub, and the Company, each a “Party”
and together the “Parties”). Capitalized terms used and not otherwise
defined herein have the meanings set forth in Annex A attached hereto.
RECITALS
WHEREAS,
upon the terms and subject to the conditions set forth in this Agreement, and in accordance with the Delaware General Corporation
Law, as amended (the “DGCL”) and the Delaware Limited Liability Company Act (the “DLLCA”),
(a) First Merger Sub will merge with and into the Company, the separate corporate existence of First Merger Sub will cease
and the Company will be the surviving corporation and a wholly-owned subsidiary of Buyer (the “First Merger”);
and (b) the surviving corporation of the First Merger will merge with and into Second Merger Sub, the separate corporate existence
of such surviving corporation of the First Merger will cease and Second Merger Sub will be the surviving limited liability company
(the “Second Merger” and together with the First Merger, the “Mergers”);
WHEREAS,
the board of directors of the Company (the “Company Board”) unanimously
(i) approved and declared advisable and in the best interests of the Stockholders, this Agreement and the transactions contemplated
hereby upon the terms and subject to the conditions set forth in this Agreement and in accordance with the DGCL and the DLLCA,
as applicable, and (ii) recommended this Agreement to the Stockholders for approval and adoption;
WHEREAS,
immediately following the execution and delivery of this Agreement by the Parties and prior to the Closing, on the date hereof,
the Company shall obtain all requisite approvals of the Stockholders to effect the Merger under the DGCL and the Organizational
Documents of the Company, pursuant to the execution and delivery of an irrevocable written consent by Stockholders that, in the
aggregate, hold at least (i) a majority of all outstanding Company Shares entitled to vote on the Merger and (ii) a majority the
outstanding shares of the Company’s Series A Preferred Stock, Series A-2 Preferred Stock and Series A-3 Preferred Stock
(voting as a single class on an as-converted-to-Common Stock basis) (clauses (i) and (ii) together, the “Requisite
Stockholders”), which will include, among other things, a waiver of such Stockholder’s statutory appraisal
rights under Section 262 of the DGCL with respect to such Company Shares (the “Written
Consent”);
WHEREAS,
as a condition to the willingness of Buyer, First Merger Sub and Second Merger Sub to enter into this Agreement, Stockholders
constituting the Requisite Shareholders shall each execute a Joinder;
WHEREAS,
the respective boards of directors of Buyer and First Merger Sub have unanimously (i) approved and declared advisable and in the
best interests of their respective stockholders, this Agreement and the transactions contemplated hereby upon the terms and subject
to the conditions set forth in this Agreement and in accordance with the DGCL and the DLLCA, as applicable, and (ii), with respect
to First Merger Sub, recommended this Agreement to its sole stockholder for approval and adoption;
WHEREAS,
Buyer has approved and adopted this Agreement in its capacity as (i) the sole stockholder of First Merger Sub and (ii) the sole
and managing member of Second Merger Sub;
WHEREAS,
pursuant to the Merger, each Company Share (other than Dissenting Shares and Treasury Shares), upon the terms and subject to the
conditions set forth herein, shall be converted into the right to receive a portion of the Final Merger Consideration in accordance
with the Distribution Allocation Schedule attached hereto as Annex B (the “Distribution Allocation Schedule”)
and based upon the applicable liquidation preferences and other rights, preferences and privileges of such class of Company Shares
as set forth in the Organizational Documents of the Company;
WHEREAS,
as an inducement of Buyer to enter into this Agreement and concurrent with the execution and delivery of this Agreement, each
of the Key Executives has entered into an employment agreement, non-competition and non-solicitation agreement and restricted
stock unit award agreement (collectively, “Employment Documents”) with Buyer (or an Affiliate of Buyer), each
to be effective as of the Closing;
WHEREAS,
the Mergers taken together as an integrated plan in accordance with Rev. Rul. 2001-46, 2001-2 C.B. 231, are intended to qualify
as a “reorganization” within the meaning of Section 368(a) of the Code (the “Intended Tax Treatment”)
and this Agreement is intended to constitute a “plan of reorganization” as described in Treasury Regulations Section
1.368-3(a); and
WHEREAS,
the Company, Sellers, First Merger Sub, Second Merger Sub, and Buyer desire to make certain representations, warranties, covenants
and agreements in connection with the transactions contemplated by this Agreement and the Transaction Documents, and also to prescribe
various conditions to the transactions contemplated by this Agreement and the Transaction Documents, as set forth herein and therein,
and subject to the provisions of, this Agreement and the Transaction Documents.
NOW,
THEREFORE, in consideration of the premises and the mutual representations, warranties, covenants and agreements herein contained,
and for other good and valuable consideration (the receipt and sufficiency of which are hereby acknowledged), the Parties, intending
to be legally bound, hereby agree as follows.
Article I
THE MERGERS
1.1 The Mergers.
(a) Upon the terms and subject to the conditions set forth in this Agreement, Buyer, First Merger Sub and the Company shall cause
First Merger Sub to be merged with and into the Company, with the Company being the surviving corporation in the First Merger.
The First Merger shall be consummated in accordance with this Agreement and shall be evidenced by a certificate of merger with
respect to the First Merger (as so filed, the “First Merger Certificate”),
executed by the Company in accordance with the relevant provisions of the DGCL, such First Merger to be effective as of the First
Effective Time.
(b) Upon consummation of the First Merger, the separate corporate existence of First Merger Sub shall cease and the Company, as the
surviving corporation of the First Merger (hereinafter referred to for the periods at and after the First Effective Time as the
“First-Step Surviving Corporation”), shall continue its corporate existence under the DGCL as a wholly-owned
subsidiary of Buyer.
(c) Upon the terms and subject to the conditions set forth in this Agreement, Buyer, Second Merger Sub and the First-Step Surviving
Corporation shall cause the First-Step Surviving Corporation to be merged with and into Second Merger Sub, with Second Merger
Sub being the surviving limited liability company in the Second Merger. The Second Merger shall be consummated in accordance with
this Agreement and evidenced by a certificate of merger with respect to the Second Merger (as so filed, the “Second Merger
Certificate”) executed by Second Merger Sub in accordance with the relevant provisions of the DGCL and the DLLCA.
(d) Upon consummation of the Second Merger, the separate corporate existence of the First-Step Surviving Corporation shall cease and
Second Merger Sub, as the surviving limited liability company of the Second Merger (hereinafter referred to for the periods at
and after the Second Effective Time as the “Surviving Company”), shall continue its limited liability company
existence under the DLLCA.
1.2 Effect of the Mergers.
(a) The First Merger shall have the effects set forth in this Agreement and the applicable provisions of the DGCL. Without limiting
the generality of the foregoing, from and after the First Effective Time, the First-Step Surviving Corporation shall possess all
properties, rights privileges, powers and franchises of the Company and First Merger Sub, and all of the claims, obligations,
liabilities, debts and duties of the Company and First Merger Sub shall become the claims, obligations, liabilities, debts and
duties of the First-Step Surviving Corporation.
(b) The Second Merger shall have the effects set forth in this Agreement and the applicable provisions of the DGCL and the DLLCA.
Without limiting the generality of the foregoing, from and after the Second Effective Time, the Surviving Company shall possess
all properties, rights privileges, powers and franchises of the First-Step Surviving Corporation and Second Merger Sub, and all
of the claims, obligations, liabilities, debts and duties of the First-Step Surviving Corporation and Second Merger Sub shall
become the claims, obligations, liabilities, debts and duties of the Surviving Company.
1.3 The Closing. In accordance with the terms and subject to the conditions set forth in this Agreement, the closing of the
First Merger (the “Closing”) shall be effected by the electronic exchange of documents substantially concurrently
with the execution and delivery of this Agreement on the date hereof (the “Closing
Date”).
1.4 The Effective Times.
(a) Buyer, First Merger Sub, and the Company shall cause the First Merger Certificate to be executed and duly submitted for filing
with the Secretary of State of the State of Delaware in accordance with the applicable provisions of the DGCL. The First Merger
shall become effective at the time when the First Merger Certificate has been accepted for filing by the Secretary of State of
the State of Delaware, or at such later time as may be agreed by Buyer and the Company in writing and specified in the First Merger
Certificate (the “First Effective Time”).
(b) Promptly after the First Effective Time, but in all cases within one (1) Business Day thereafter, Buyer, Second Merger Sub
and the First-Step Surviving Corporation shall cause the Second Merger Certificate to be executed and duly submitted for filing
with the Secretary of State of the State of Delaware in accordance with the applicable provisions of the DGCL and the DLLCA. The
Second Merger shall become effective at the time when the Second Merger Certificate has been accepted for filing by the Secretary
of State of the State of Delaware, or at such later time as may be agreed by Buyer and the Company in writing and specified in
the Second Merger Certificate (the “Second Effective Time”).
1.5 Actions to be Taken on the Closing Date:
(a) Immediately prior to the Closing:
(i) the Escrow Agreement shall have been duly executed by each of Buyer, the Escrow Agent and the Stockholder Representative;
(ii) the Payment Administration Agreement shall have been duly executed by each of Buyer, the Payment Agent and the Stockholder Representative;
(iii) the Company shall deliver to Buyer either evidence of removal of, or written resignations, effective as of the Closing, of each
of the Persons set forth on Schedule 1.5(a)(iii);
(iv) the Company shall deliver to Buyer a certificate dated as of the Closing sworn under penalty of perjury and in form and substance
required under the Treasury Regulations issued pursuant to Section 1445(c)(3) of the Code, stating that the Company is not and
has not been a “United States real property holding corporation” (as defined in Section 897(c)(2) of the Code) during
the applicable period specified in Section 897(c)(1)(A)(ii) of the Code and a notice to the Internal Revenue Service, in accordance
with the provisions of Treasury Regulations Section 1.897-2(h), for Buyer to deliver to the Internal Revenue Service on behalf
of the Company after Closing;
(v) the Company shall deliver to Buyer a copy of the resolutions adopted by the Company Board authorizing and approving the applicable
matters contemplated hereunder (including, without limitation, this Agreement and the other Transaction Documents) in accordance
with the DGCL and the Company’s Organizational Documents;
(vi) the Company shall deliver to Buyer the requisite consents or approvals from the Persons set forth on Schedule 1.5(a)(vi),
each in form and substance satisfactory to Buyer;
(vii) the Company shall deliver to Buyer the Employment Documents, duly executed by each of the Key Executives and the individual set
forth on Schedule 1.5(a)(vii);
(viii) the Company shall deliver to Buyer invention assignment agreements in favor of the Company, in form and substance reasonably acceptable
to Buyer, executed by all employees and contributors listed on Schedule 1.5(a)(viii);
(ix) the Company shall deliver to Buyer a digital copy of the contents of the Data Room as of the Closing Date; and
(x) the Company shall deliver to Buyer an agreement between the Company and The Alinea Group LLC (“Alinea”), in
form and substance reasonably satisfactory to Buyer, pursuant to which Alinea agrees to delete and certify the deletion of, and
not to use from and after the Closing for any purpose, any proprietary or confidential information of the Company disclosed to
Alinea prior to the Closing.
(b) At the Closing:
(i) Buyer shall file, or cause to be filed, with the Secretary of State of the State of Delaware the First Merger Certificate, executed
in accordance with the relevant provisions of the DGCL, and shall make all other filings or recordings required under the DGCL;
(ii) Buyer shall deliver or cause to be delivered by wire transfer of immediately available funds (A) the Closing Cash Consideration
(less the Aggregate Option Closing Cash Consideration) to the Payment Agent (for further distribution to the Stockholders in accordance
with the Distribution Allocation Schedule), (B) the applicable Transaction Bonus Cash Amount to the Surviving Company, for further
distribution by the Surviving Company to each recipient thereof pursuant to the Transaction Bonus Letters through the Surviving
Company’s payroll system (subject to withholding for all Tax amounts, if any, required to be withheld under applicable Law,
including any Tax amounts required to be withheld with respect to any equity consideration to be received by recipients of the
Transaction Cash Bonus Amount), (C) the Bonus Award Amount to the Surviving Company, for further distribution by the Surviving
Company to each recipient thereof set forth on Schedule 1.5(b)(ii)(C) through the Surviving Company’s payroll system
(subject to withholding for all Tax amounts, if any, required to be withheld under applicable Law) and (D) an amount in cash equal
to the Aggregate Option Closing Cash Consideration, to the Surviving Company, for further distribution by the Company to each
holder of Cashed-Out Company Options through the Surviving Company’s payroll system (subject to withholding for all Tax
amounts, if any, required to be withheld under applicable Law, including any Tax amounts required to be withheld with respect
to any equity consideration to be received by recipients of the Aggregate Option Closing Cash Consideration);
(iii) Buyer shall deliver or cause to be delivered such documents and instruments evidencing the issuance of the Closing Equity Consideration,
and the Transaction Bonus Equity Consideration to each of Nick Kokonas and Jeff Kaplan pursuant to the Transaction Bonus Letters,
in each case subject to withholding for all Tax amounts, if any, required to be withheld under applicable Law, which shall be
withheld from any amounts of cash consideration to be received pursuant to this Agreement by recipients of the Closing Equity
Consideration and Transaction Bonus Equity Consideration;
(iv) Buyer shall deliver or cause to be delivered to the Escrow Agent (A) the Adjustment Escrow Amount for deposit into an escrow account
(the “Adjustment Escrow Account”) to be held by the Escrow Agent in accordance with the terms of this Agreement
and the Escrow Agreement, (B) the Indemnity Escrow Amount for deposit into an escrow account (the “Indemnity Escrow Account”)
to be held by the Escrow Agent in accordance with the terms of this Agreement and the Escrow Agreement, and (C) the Specific Indemnity
Escrow Amount for deposit into an escrow account (the “Specific Indemnity Escrow Account”) to be held by the
Escrow Agent in accordance with the terms of this Agreement and the Escrow Agreement; and
(v) Buyer shall deliver or cause to be delivered to the Stockholder Representative, the Stockholder Representative Expense Amount
to be utilized pursuant to Section 7.13(e).
1.6 Organizational Documents of the First-Step Surviving Corporation and the Surviving Company.
(a) The certificate of incorporation of the First-Step Surviving Corporation shall be substantially in the form attached hereto as
Exhibit B until thereafter amended as provided therein and under the DGCL. The bylaws of First Merger Sub in effect immediately
prior to the First Effective Time, shall be the bylaws of the First-Step Surviving Corporation until thereafter amended as provided
therein and under the DGCL.
(b) The certificate of formation and operating agreement of Second Merger Sub in effect immediately prior to the Second Effective
Time, shall be the certificate of formation and operating agreement of the Surviving Company until thereafter amended as provided
therein and under the DLLCA.
1.7 Directors and Officers of the First-Step Surviving Corporation and the Surviving Company.
(a) The directors and officers of First Merger Sub, as of immediately prior to the First Effective Time, shall be the initial directors
and officers of the First-Step Surviving Corporation from and after the First Effective Time, each to hold office in accordance
with the Organizational Documents of the First-Step Surviving Corporation.
(b) The officers of Second Merger Sub, as of immediately prior to the Second Effective Time, shall be the officers of the Surviving
Company from and after the Second Effective Time, each to hold office in accordance with the Organizational Documents of the Surviving
Company.
1.8 Effect of the Mergers on Company Securities.
(a) Effect on the Company Shares. As of the First Effective Time, by virtue of the First Merger and without any action on part
of First Merger Sub, the Company or the Stockholders, each class, series and subclass of Company Shares (other than Dissenting
Shares or Treasury Shares) issued and outstanding immediately prior to the First Effective Time, upon the terms and subject to
the conditions set forth in this Section 1.8(a) and throughout this Agreement, will be cancelled and extinguished
and will be converted automatically into the right of the holder thereof to receive that portion of the Final Merger Consideration
as set forth herein.
(i) Each class, series and subclass of Company Shares (other than Dissenting Shares or Treasury Shares) that is issued and outstanding
immediately prior to the First Effective Time shall be converted into the right of the holder thereof to receive (i) a portion
of the Closing Cash Consideration and Closing Equity Consideration in accordance with the Distribution Allocation Schedule (in
the portions of Closing Cash Consideration and Closing Equity Consideration set forth therein) (provided, that for each
Company Share that is not Beneficially Owned by an Accredited Investor, in Buyer’s and the Company’s reasonable determination
(provided, further, that Buyer shall make the final determination in the event that Buyer and Company reasonably
disagree on whether a holder is an Accredited Investor) (each, a “Cash-Only Share”), if any, such holder thereof
shall receive an amount of cash equal to the value of such holder’s portion of the Closing Equity Consideration (as set
forth in the Distribution Allocation Schedule) in lieu of receiving such portion of the Closing Equity Consideration (such amount
of cash, in the aggregate, the “Cash-Only Share Consideration”)) and (ii) a contingent right to receive the
applicable portion of any payments made pursuant to Section 1.13 or Article VII with respect to each Company Share, determined
in accordance with this Agreement and as set forth in the Distribution Allocation Schedule.
(ii) Each Dissenting Share shall be converted into the right of the holder thereof to receive payment from the Surviving Company with
respect thereto in accordance with Section 1.12.
(iii) Any Company Share held in the treasury of the Company (the “Treasury
Shares”) as of the First Effective Time, shall be automatically cancelled, retired and cease to exist without
any conversion thereof, and no payment of cash or any other consideration shall be made with respect thereto.
(iv) For purposes of calculating the amount to be paid to each Stockholder (other than to holders of Dissenting Shares or Treasury
Shares) at the Closing, the amounts described in this Section 1.8(a) shall be calculated assuming that the Final Merger
Consideration is equal to the sum of (A) the Closing Cash Consideration plus (B) the Closing Equity Consideration, and
shall be adjusted following the Closing as set forth herein. The amount of the Closing Cash Consideration to be paid in connection
herewith to each Stockholder for each class, series and subclass of Company Shares (other than to holders of Dissenting Shares)
held shall be rounded down to the nearest whole cent.
(v) Notwithstanding anything to the contrary contained in this Agreement, no fractional share of Buyer Common Stock shall be issued
in the First Merger. Each Stockholder who would otherwise be entitled to a fraction of a share of Buyer Common Stock (after aggregating
all fractional shares of Buyer Common Stock that otherwise would be issued to such holder) will be entitled to receive the number
of shares of Buyer Common Stock rounded down to the nearest whole share; provided, that the Closing Cash Consideration
to be paid to such Stockholder shall be increased by an amount equal to the value of such fraction of a share of Buyer Common
Stock.
(vi) All classes, series and subclasses of Company Shares, when cancelled, extinguished, and converted pursuant to this Section 1.8(a),
shall no longer be outstanding and shall automatically be cancelled and retired, and each former holder thereof shall cease to
have any rights with respect thereto, except the right to receive the consideration provided for in this Section 1.8(a),
except with respect to holders of Dissenting Shares.
(b) Effect on Company Options.
(i) As of immediately prior to the First Effective Time, (A) each Company Option (or portion thereof) that is unvested but would have
become vested on or before April 1, 2021, shall become vested, and (B) each Company Option shall terminate (including any vested
and unvested portions thereof), except as to the payment rights with respect to each such Company Option provided in this Agreement.
Prior to the First Effective Time, the Company shall take all actions necessary or advisable, including obtaining any consents,
to effect the cancellation and termination of the Company Option Plan, the Company Options, any promises or other rights to receive
the Company Options, if any, and all other equity incentive plans as of the First Effective Time. All of the Company Options that
are not Cashed-Out Company Options, if any, shall, without further action or on the part of any Person, (A) automatically cease
to vest, (B) never become vested, (C) be forfeited, terminated and cancelled and of no further force or effect, without payment
of any consideration therefor, and (D) no longer be deemed issued or outstanding for any purpose.
(ii) Each Cashed-Out Company Option shall be terminated and cancelled as of the First Effective Time and the holder thereof shall have:
(1) the right to receive, pursuant to the terms of this Agreement and as set forth in the Distribution Allocation Statement, a portion
of the Closing Cash Consideration (rounded down to the nearest whole cent) and Closing Equity Consideration in accordance with
the Distribution Allocation Schedule (in the portions of Closing Cash Consideration and Closing Equity Consideration set forth
therein) provided, that for each Cashed-Out Company Option that is not Beneficially Owned by an Accredited Investor, in
Buyer’s and the Company’s reasonable determination (provided, further, that Buyer shall make the final
determination in the event that Buyer and Company reasonably disagree on whether a holder is an Accredited Investor), such holder
thereof shall receive an amount of cash equal to the value of such holder’s portion of the Closing Equity Consideration
(as set forth in the Distribution Allocation Schedule) in lieu of receiving such portion of the Closing Equity Consideration (such
amount of cash, in the aggregate, the “Cash-Only Option Consideration” and all Closing Cash Consideration payable
to holders of Cashed-Out Company Options, the “Aggregate Option Closing Cash Consideration”)); and
(2) a
contingent right to receive the applicable portion of any payments made pursuant to Section 1.13 or Article
VII with respect to each Cashed-Out Company Option, determined in accordance with this Agreement and as set forth in the
Distribution Allocation Schedule.
(iii) Notwithstanding anything to the contrary contained in this Agreement, no fractional share of Buyer Common Stock shall be issued
in the First Merger. Each holder of Cashed-Out Company Options who would otherwise be entitled to a fraction of a share of Buyer
Common Stock (after aggregating all fractional shares of Buyer Common Stock that otherwise would be issued to such holder) will
be entitled to receive the number of shares of Buyer Common Stock rounded down to the nearest whole share; provided, that
the Closing Cash Consideration to be paid to such Option Holder shall be increased by an amount equal to the value of such fraction
of a share of Buyer Common Stock.
(iv) Any payments to holders of Cashed-Out Company Options pursuant to this Section 1.8, whether made in the form of cash or equity,
shall be subject to withholding for all Tax amounts, if any, required to be withheld under applicable Law; provided, however,
that any Tax amounts required to be withheld with respect to any equity consideration received in respect of Cashed-Out Company
Options shall be withheld from any cash consideration that is payable to such holder pursuant to this Agreement.
1.9 Effect of the Mergers on First Merger Sub Securities. (a) At the First Effective Time, by virtue of the First Merger and
without any action on the part of Buyer or First Merger Sub, the equity interests in First Merger Sub issued and outstanding immediately
prior to the Effective Time shall be cancelled and converted into and exchanged for all of the outstanding equity interests in
the First-Step Surviving Corporation; and (b) at the Second Effective Time, by virtue of the Second Merger and without any action
on the part of Buyer or the First-Step Surviving Corporation (i) all of the outstanding equity interests in the First-Step Corporation
shall be cancelled and (ii) each equity interest in Second Merger Sub issued and outstanding immediately prior to the Second Effective
Time shall be converted into and become one validly issued, fully paid and non-assessable equity interest in the Surviving Company,
which shall constitute the only outstanding equity interests of the Surviving Company. From and after the Second Effective Time,
all certificates, if any, representing the equity interests in Second Merger Sub shall be deemed for all purposes to represent
the number of equity interests of the Surviving Company into which they were converted in accordance with the immediately preceding
sentence.
1.10 Exchange Procedures.
(a) Immediately prior to the execution and delivery of this Agreement, Buyer and the Stockholder Representative entered into the Payment
Administration Agreement with the Payment Agent for the purpose of paying that portion of the Final Merger Consideration payable
to the Stockholders in accordance with the Distribution Allocation Schedule. Prior to or substantially concurrently with the First
Effective Time, Buyer shall deposit or cause to be deposited with the Payment Agent, for exchange in accordance with this Section
1.10 through the Payment Agent, an amount of cash equal to the Closing Cash Consideration (less the Aggregate Option Closing
Cash Consideration) (the “Payment Fund”). Buyer shall make available to the Payment Agent, for addition to
the Payment Fund, from time to time as needed, cash sufficient to pay cash in lieu of fractional shares in accordance with Section
1.8(a)(v). The Payment Fund shall not be used for any purpose other than to fund payments specified in Section 1.8(a)
pursuant to the Distribution Allocation Schedule, except as expressly provided for in this Agreement. No investment losses resulting
from investment of the funds deposited with the Payment Agent shall diminish the rights of any former holder of Company Shares
to receive the Final Merger Consideration as provided herein.
(b) Immediately
following the execution and delivery of this Agreement, the Company shall prepare and mail, or cause the Payment Agent to
prepare and mail, (i) a letter of transmittal substantially in the form attached hereto as Exhibit C (the
“Letter of Transmittal”), an Accredited
Investor questionnaire, and a joinder to Buyer’s Amended and Restated Stockholders Agreement (“SHA
Joinder”), to each Stockholder and (ii) an Accredited Investor questionnaire and a SHA Joinder to each holder of
Cashed-Out Company Options. At or after the Closing, (i) each Stockholder may deliver to the Payment Agent a duly executed
Letter of Transmittal, and each Stockholder and holder of Cashed-Out Company Options may deliver to the Payment Agent a duly
executed Accredited Investor questionnaire, and if such Stockholder or holder of Cashed-Out Company Options is an Accredited
Investor, a duly executed SHA Joinder, and (ii) if so surrendered, the Payment Agent shall, as soon as reasonably
practicable after the First Effective Time or, if surrendered after the First Effective Time, as soon as reasonably
practicable after the date of surrender, (A) pay to such Stockholder the applicable portion of Closing Cash Consideration, in
accordance with the Distribution Allocation Schedule, to which it is entitled under this Article I and (B)
instruct Buyer to issue to such Stockholder the applicable portion of Closing Equity Consideration, if applicable, in
accordance with the Distribution Allocation Schedule, to which it is entitled under this Article I, and Buyer shall
promptly issue to such Stockholder such applicable portion of Closing Equity Consideration. In the event a Stockholder does
not deliver to the Payment Agent a Letter of Transmittal, Accredited Investor questionnaire and, if applicable, a SHA
Joinder, at or prior to Closing, such failure shall not alter, limit or delay the Closing or the conversion of such Company
Shares, but such Stockholder shall not be entitled to receive the payments contemplated by this Article I unless
and until such Stockholder delivers a duly executed Letter of Transmittal, duly executed Accredited Investor questionnaire,
and, if applicable, duly executed SHA Joinder, to the Payment Agent. After the First Effective Time, the Payment Agent shall
act as agent for payment of the applicable portion of the consideration specified in Section 1.8(a) pursuant to
the Distribution Allocation Schedule upon delivery by such Stockholder of a Letter of Transmittal, Accredited Investor
questionnaire and, if applicable, a SHA Joinder, if not so delivered prior to the Closing Date. No interest or dividends will
be paid or accrued on the consideration payable upon the delivery of any delivery by such Stockholder of a Letter of
Transmittal, Accredited Investor questionnaire or, if applicable, a SHA Joinder. Until surrendered in accordance with the
provisions of this Section 1.10(b), each book-entry Company Share (other than those representing Dissenting
Shares or Treasury Shares) shall represent, for all purposes, only the right to receive an amount equal to the portion of the
Final Merger Consideration payable in respect thereof pursuant to Section 1.8(a) in respect of such Company
Shares, without any interest or dividends thereon.
(c)
Neither Buyer nor the Surviving Company shall be liable to a holder of Company Shares or any other Person in respect of any cash
delivered to a public official pursuant to any applicable abandoned property, escheat or similar law; provided, that Buyer or
the Surviving Company, as applicable, shall work in good faith to deliver such cash to the applicable Stockholder before delivering
any such cash to a public official pursuant to any applicable abandoned property, escheat or similar law. If any Company Shares
shall not have been surrendered or transferred by the sixth (6th) anniversary of the Closing Date (or immediately prior
to such earlier date on which any Final Merger Consideration, dividends (whether in cash, stock or property) or other distributions
with respect to such Company Shares would otherwise escheat to or become the property of any Governmental Authority), any such
shares, cash, dividends or distributions shall, to the extent permitted by applicable Law, become the property of the Surviving
Company (and the Payment Agent shall remit any such shares, cash, dividends or distributions to the Surviving Company), free and
clear of all claims or interests of any Person previously entitled thereto.
1.11 No Further Ownership Rights in the Company Shares. The portion of the Final Merger Consideration paid in respect of the
surrender for exchange of Company Shares in accordance with the terms hereof shall be deemed to be full satisfaction of all rights
pertaining to such Company Shares, and, upon the First Effective Time, there shall be no further registration of transfers on
the records of the First-Step Surviving Corporation of Company Shares which were outstanding immediately prior to the First Effective
Time.
1.12 Appraisal Rights.
(a) Notwithstanding any other provision of this Agreement to the contrary, any Company Share (other than any Treasury Share) that
is outstanding immediately prior to the First Effective Time and that is held by a Stockholder who shall not have voted in favor
of the Merger or consented thereto in writing and who shall have properly demanded appraisal for such Company Share in accordance
with Section 262 of the DGCL (such Company Share, each a “Dissenting Share” and collectively, the “Dissenting
Shares”) shall not be converted into or represent the right to receive the applicable portion of the Final Merger
Consideration payable pursuant to the terms of this Agreement. Such Stockholder shall instead be entitled to receive payment of
the appraised value of each Dissenting Share owned by such Stockholder in accordance with the provisions of Section 262 of the
DGCL, except that any Dissenting Share held by a Stockholder that shall have failed to perfect, or shall have effectively withdrawn
or otherwise lost his, her or its rights to appraisal of such Dissenting Share under Section 262 of the DGCL shall thereupon be
deemed to have been converted into and to have become exchangeable, as of the First Effective Time, for the right to receive,
without any interest thereon, the applicable portion of the consideration specified in Section 1.8 this Agreement,
subject in all respects to the terms and conditions hereof. At the First Effective Time, any holder of Dissenting Shares shall
cease to have any rights with respect to such shares, except for the rights provided in Section 262 of the DGCL.
(b) The Company shall provide Buyer with (i) prompt notice of any written demands for appraisal or purchase of any Company Shares,
withdrawal of such demands and any other instruments or correspondence served pursuant to Section 262 of the DGCL and received
by the Company prior to the Closing which relate to any such demand for appraisal or purchase and (ii) the opportunity to participate
in and direct all negotiations, proceedings and correspondence with respect to such demands for appraisal or purchase under Section
262 of the DGCL. Prior to the Closing, the Company (A) shall not make any voluntary payment with respect to any demands for appraisal
or purchase of Company Shares, or any offer to settle any such demand, (B) shall not settle any such demands and (C) shall not
make any offer to buy, or accept any offer to sell, any Company Shares, in each case, without the express written consent of Buyer,
to be granted or withheld in its sole and absolute discretion.
1.13 Adjustments to Merger Consideration.
(a) Determination of Closing Adjustment. At least three (3) days prior to the date of this Agreement, the Company delivered
to Buyer a statement (the “Preliminary Closing Statement”) which sets forth a good faith estimate of the following:
(i) the aggregate amount of all Cash of the Company as of immediately prior to the Closing (“Estimated
Cash”), (ii) the aggregate amount of all Indebtedness of the Company as of immediately prior to the Closing (including
any per diem interest accruals, prepayment fees, breakage costs, and other Indebtedness amounts to be accrued or paid prior to
or concurrently with the Closing) (“Estimated Indebtedness”),
(iii) all Sellers’ Transaction Expenses (“Estimated Sellers’
Transaction Expenses”), and (iv) the Working Capital as of immediately prior to the Closing (the “Estimated
Working Capital”), in each case as set forth on a schedule in reasonable detail, along with reasonable supporting documentation
(and, in the case of Estimated Sellers’ Transaction Expenses, together with wire instructions and invoices for each payee),
and the resulting calculation of the Closing Cash Consideration (the “Estimated Closing Cash Consideration”)
and the Distribution Allocation Schedule reflecting such calculation. The Preliminary Closing Statement shall be prepared by the
Company in accordance with the Accounting Methodology.
(b) Determination of Post-Closing Adjustment. As soon as reasonably practicable after the Closing Date, but not later than
sixty (60) days after the Closing Date, Buyer shall prepare and deliver to the Stockholder Representative a statement (the “Post-Closing
Financial Statement”) which sets forth a good faith calculation of the (i) actual Cash of the Company as of immediately
prior to the Closing (“Actual Cash”), (ii)
actual Indebtedness of the Company as of immediately prior to the Closing (including any per diem interest accruals, prepayment
fees, breakage costs and other Indebtedness amounts accrued or paid prior to or concurrently with the Closing) (“Actual
Indebtedness”), (iii) actual Sellers’ Transaction Expenses (“Actual
Sellers’ Transaction Expenses”) and (iv) actual Working Capital as of immediately prior to the Closing
(“Actual Working Capital”), in each case as set forth on a schedule in reasonable detail, along with reasonable
supporting documentation, and the resulting calculation of the Closing Cash Consideration and an updated version of the Distribution
Allocation Schedule reflecting such calculation. The Post-Closing Financial Statement shall be prepared by Buyer in accordance
with the Accounting Methodology. The Stockholder Representative shall reasonably cooperate with Buyer in its preparation of the
Post-Closing Financial Statement. In the event Buyer does not deliver the Post-Closing Financial Statement to the Stockholder
Representative within sixty (60) days after the Closing Date (or such later date as Buyer and the Stockholder Representative
mutually agree in writing), the Estimated Cash, Estimated Indebtedness, Estimated Sellers’ Transaction Expenses, Estimated
Working Capital, and calculation of the Closing Cash Consideration based on such amounts, as set forth in the Preliminary Closing
Statement shall be the “Final Cash”, “Final Indebtedness”, “Final Sellers’
Transaction Expenses”, “Final Working Capital”, respectively, which, in each case, shall be deemed
to be final and binding on the Parties.
(c) Disputed Final Adjustment.
(i) Within forty-five (45) days after delivery of the Post-Closing Financial Statement, the Stockholder Representative may deliver
written notice (a “Protest Notice”) to Buyer of
any objections that the Stockholder Representative may have with respect to the accuracy of any individual items in the Post-Closing
Financial Statement, setting forth in reasonable detail the basis of such objection(s) together with the amount(s) in dispute.
Any amount not disputed in a Protest Notice shall be final, conclusive and binding on the Parties. During such period, upon reasonable
request of the Stockholder Representative, Buyer shall reasonably cooperate with the Stockholder Representative in its review
of the calculations set forth in the Post-Closing Financial Statement, including by using commercially reasonable efforts to provide
to the Stockholder Representative and its representatives reasonable access to all books, records and accountants’ working
papers (after the Stockholder Representative has signed and delivered customary agreements required by such accountants) of the
Company directly relevant to evaluating the calculations set forth in the Post-Closing Financial Statement, subject to applicable
legal privileges and confidentiality obligations.
(ii) If the Stockholder Representative does not timely deliver a Protest Notice within such forty-five (45) day period, then the calculation
of Actual Cash determined pursuant to Section 1.13(b) shall be the “Final
Cash”, the calculation of the Actual Indebtedness determined pursuant to Section 1.13(b) shall be the
“Final Indebtedness”, the calculation of the Actual
Sellers’ Transaction Expenses determined pursuant to Section 1.13(b) shall be the “Final
Sellers’ Transaction Expenses”, and the calculation of Actual Working Capital determined pursuant to Section
1.13(b) shall be the “Final Working Capital”,
which, in each case, shall deemed to be final and conclusive and binding on the Parties.
(iii) Upon receipt of a Protest Notice, Buyer and the Stockholder Representative shall attempt in good faith to resolve any items in
dispute in the Post-Closing Financial Statement. If Buyer and the Stockholder Representative resolve their differences over the
disputed items in accordance with the foregoing procedure, Final Cash, Final Indebtedness, and Final Sellers’ Transaction
Expenses (if any) and Final Working Capital shall be the amounts agreed upon by them. If Buyer and the Stockholder Representative
are unable to resolve any disagreement with respect to the Post-Closing Financial Statement within thirty (30) days following
Buyer’s receipt of the Protest Notice, then Buyer and the Stockholder Representative shall forthwith jointly request and
submit such dispute(s) to the dispute resolution group of Alvarez & Marsal (the “Accountant”)
for resolution in accordance with this Agreement.
(iv) The Stockholder Representative and Buyer shall use their respective commercially reasonable efforts to cause the Accountant to
resolve all items submitted to the Accountant as soon as practicable, and in any event within thirty (30) days from the date of
referral (and only with respect to any unresolved disputed items set forth in the Protest Notice), and the final calculation of
Actual Cash, Actual Indebtedness, Actual Sellers’ Transaction Expenses (if any) and Actual Working Capital shall be based
solely on the resolution of such disputed items. The Accountant’s determination shall be based solely on this Agreement
(including, as applicable, the Accounting Methodology) and written submissions by Buyer and the Stockholder Representative and
not by independent review, and which shall only be as to those issues in dispute (it being understood that in making such determination,
the Accountant shall be functioning as an expert and not as an arbitrator). The determination of the Accountant shall be between
the determinations prepared by the Stockholder Representative in the Protest Notice and Buyer in the Post-Closing Financial Statement.
Except as expressly set forth in this Agreement, neither Buyer nor the Stockholder Representative may have ex parte conversations
or meetings with the Accountant in connection with the subject matter herein without the prior consent of the other (which consent
shall not be unreasonably withheld or delayed). During such thirty (30) day period Buyer and the Stockholder Representative shall
make available to the Accountant all relevant financial books and records of the Company and other items reasonably requested
by the Accountant, subject to applicable legal privileges and confidentiality obligations. Neither Buyer nor the Stockholder Representative
will disclose to the Accountant, and the Accountant will not consider for any purpose, any settlement discussions or settlement
offer made by or on behalf of Buyer and the Stockholder Representative, unless otherwise agreed by Buyer and the Stockholder Representative.
The Accountant’s final determination of Actual Cash shall be deemed the “Final
Cash,” the Accountant’s final determination of Actual Indebtedness shall be deemed the “Final
Indebtedness”, the Accountant’s final determination of Actual Sellers’ Transaction Expenses shall
be deemed the “Final Sellers’ Transaction Expenses”,
and the Accountant’s final determination of Actual Working Capital shall be deemed the “Final
Working Capital”, absent manifest error or fraud. The Party (either Buyer or the Stockholder Representative (on
behalf of the Company Holders)) whose determination of the Closing Cash Consideration was furthest from the final determination
of the Closing Cash Consideration shall bear the fees and expenses of the Accountant plus any out-of-pocket expenses (including
attorneys’ fees and accountants’ fees) of the Party whose determination of the Closing Cash Consideration was closest
to the final determination by the Accountants. If the determination by the Accountant is equidistant between the determination
of the Parties, the fees of the Accountants shall be borne equally by Buyer and the Stockholder Representative (on behalf of the
Company Holders) and each of Buyer and the Stockholder Representative (on behalf of the Company Holders) shall bear their own
out-of-pocket cost and expenses.
(d) Adjustment Payments.
(i) Following the determination of Final Cash, Final Indebtedness, Final Sellers’ Transaction Expenses (if any) and Final Working
Capital, the Closing Cash Consideration shall be recalculated substituting the Final Working Capital for the Estimated Working
Capital in Section 1.13(a), the Final Cash for the Estimated Cash in Section 1.13(a), the Final Indebtedness for
the Estimated Indebtedness in Section 1.13(a) and the Final Sellers’ Transaction Expenses for the Estimated Sellers’
Transaction Expenses in Section 1.13(a) (the “Adjusted Closing
Cash Consideration”) and if (after taking into account any Upward Closing Working Capital Adjustment or Downward
Closing Working Capital Adjustment at the Closing) (A) the Adjusted Closing Cash Consideration is greater than the Closing Cash
Consideration on the Closing Date (the amount of such difference, the “Shortfall Adjustment Amount”), then
(x) Buyer and the Stockholder Representative shall deliver a joint instruction to the Escrow Agent directing the Escrow Agent
to release the portion of the Adjustment Escrow Amount then-remaining in the Adjustment Escrow Account to the Payment Agent (for
further distribution to the Company Holders in accordance with each such Company Holder’s Pro Rata Amount) and (y) Buyer
shall pay to the Payment Agent (for further distribution to the Company Holders in accordance with each such Company Holder’s
Pro Rata Amount) the Shortfall Adjustment Amount; provided, that if the Shortfall Adjustment Amount is greater than the
Adjustment Escrow Amount, then Buyer shall not have any obligation to pay the amount of any such difference to the Payment Agent
(for further distribution to the Company Holders in accordance with each such Company Holder’s Pro Rata Amount), and (B)
the Closing Cash Consideration on the Closing Date is greater than the Adjusted Closing Cash Consideration (the amount of such
difference, the “Excess Adjustment Amount”), then Buyer and the Stockholder Representative shall deliver a
joint instruction to the Escrow Agent directing the Escrow Agent to pay the Excess Adjustment Amount to Buyer from the Adjustment
Escrow Account; provided, that (x) if the Excess Adjustment Amount is greater than the Adjustment Escrow Amount, then the
Company Holders shall not have any obligation to pay the amount of any such difference to Buyer and (y) if the Excess Adjustment
Amount is less than the Adjustment Escrow Amount, Buyer and the Stockholder Representative shall deliver a joint instruction to
the Escrow Agent directing the Escrow Agent to release such difference to the Payment Agent (for further distribution to the Company
Holders in accordance with each such Company Holder’s Pro Rata Amount). As soon as reasonably practicable following the
determination of any amounts pursuant to clause (A) or (B) of the preceding sentence in accordance with the terms hereof, Buyer
and the Stockholder Representative shall deliver a joint instruction to the Escrow Agent directing the Escrow Agent to release
to the Payment Agent (for further distribution to the Company Holders in accordance with each such Company Holder’s Pro
Rata Amount) or Buyer, as applicable, the applicable portion of the Adjustment Escrow Amount due to such party from the Adjustment
Escrow Account.
(ii) All payments pursuant to this Section 1.13(d) shall be made by wire transfer of immediately available funds to an
account designated in advance by the Payment Agent or Buyer, as applicable, and shall be made on or prior to the fifth (5th) Business
Day following the later of: (A) the sixty (60)-day period following Buyer’s delivery of the calculation of the Actual Cash,
Final Indebtedness, Final Sellers’ Transaction Expenses (if any) and Actual Working Capital, pursuant to Section 1.13(b)
if the Stockholder Representative does not timely dispute any of such amounts pursuant to Section 1.13(c); (B)
the date of the Stockholder Representative’s and Buyer’s mutual written determination of Final Cash, Final Indebtedness,
Final Sellers’ Transaction Expenses (if any) and Final Working Capital, in the event the Stockholder Representative timely
disputes either of such amounts pursuant to Section 1.13(c)(i) and the Stockholder Representative’s and Buyer’s
differences are resolved without the engagement of the Accountant pursuant to Section 1.13(c)(iii); and (C) the date
of the Accountant’s determination of Final Cash, Final Indebtedness, Final Sellers’ Transaction Expenses (if any)
and/or Final Working Capital pursuant to Section 1.13(c)(iv) in the event the Stockholder Representative timely disputes
either of such amounts pursuant to Section 1.13(c)(i) and the Stockholder Representative and Buyer are unable to resolve
their differences pursuant to Section 1.13(c)(iii).
(e) The Parties agree that, upon payment of the amounts provided in Section 1.13(d), none of the Parties may make or assert
any claim for any Loss in respect of any financial line item to the extent addressed in accordance with this Section 1.13.
(f) Any payments made pursuant to this Section 1.13 shall be treated for U.S. federal income Tax purposes as an adjustment
to the Final Merger Consideration, unless otherwise required by applicable Law.
1.14 Withholding. Notwithstanding anything to the contrary set forth herein, Buyer, the Payment Agent, the Company (including,
after the First Effective Time and Second Effective Time, the First-Step Surviving Corporation and the Surviving Company, respectively)
and any other withholding agent shall be entitled to deduct and withhold (or cause to be deducted and withheld) from any amount
payable pursuant to this Agreement only such amounts as are required to be deducted and withheld under applicable Tax Law. Amounts
so deducted and withheld shall be treated for all purposes of this Agreement as having been paid to the Person in respect of which
such deduction and withholding was made to the extent such amounts have been promptly remitted to the appropriate Governmental
Authority.
1.15 Post-Closing Payment Cooperation. In connection with any payment to be made following the Closing, the Stockholder Representative
shall cooperate with any reasonable request from Buyer and to the extent within the Stockholder Representative’s possession
or control, provide Buyer with such information as Buyer shall reasonably request.
Article II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
As
a material inducement to Buyer to enter into this Agreement, except as set forth in the schedule delivered by the Company to Buyer,
First Merger Sub and Second Merger Sub concurrently with the execution of this Agreement setting forth specific exceptions to
the Company’s representations and warranties set forth herein (the “Company Disclosure
Schedule”), the Company represents and warrants to Buyer, First Merger Sub and Second Merger Sub as follows:
2.1 Organization and Qualification. The Company is duly organized, validly existing and in good standing under the Laws of
the State of Delaware, and has all the requisite corporate power and authority to own, lease and operate its properties and assets
and to carry on its business as it is now being conducted. The Company is duly qualified to do business and is in good standing
in each of the jurisdictions in which the Laws of such jurisdiction, the ownership, operation or leasing of its properties or
assets, or the conduct of its business require it to be so qualified, except for any deficiencies that, individually or in the
aggregate, are not adverse in any material respect to the Company. Section 2.1 of the Company Disclosure Schedule
sets forth a true, correct and complete list of all foreign jurisdictions in which the Company is qualified or licensed.
2.2 Organizational Documents. The Company has made available to Buyer true, correct and complete copies of all of the Company’s
Organizational Documents. The Company is not in violation of any of its Organizational Documents.
2.3 Capitalization.
(a) The
authorized equity securities of the Company (collectively, the “Company
Shares”) consist of (i) 296,986,905 shares of Common Stock (the “Common
Shares”), of which 129,978,589 Common Shares are issued and outstanding, (ii) 6,509,637 shares of Class A
Common Stock (“Class A Common Shares”), of which 0 Class A Common Shares are issued and outstanding, (iii)
20,616,548 shares of Series A Preferred Stock (the “Series A Preferred
Shares”), of which 20,616,548 Series A Preferred Shares are issued and outstanding, (iv) 40,893,799 shares
of Series A-2 Preferred Stock (the “Series A-2 Preferred
Shares”), of which 40,893,799 Series A-2 Preferred Shares are issued and outstanding, (v) 31,532,360 shares
of Series A-3 Preferred Stock (the “Series A-3 Preferred
Shares”), of which 31,532,360 Series A-3 Preferred Shares are issued and outstanding, (vi) 13,888,889 shares
of Series Seed Preferred Stock (the “Series Seed Preferred
Shares”), of which 13,888,889 Series Seed Preferred Shares are issued and outstanding, and, together with
the Series A Preferred Shares, the Series A-2 Preferred Shares, the Series A-3 Preferred Shares, and the Series Seed
Preferred Shares, collectively, the “Preferred Shares”). Except
as set forth on Section 2.3(a) of the Company Disclosure Schedule, other than the Company Shares and the Company
Options issued under the Company Option Plan, the Company does not have any equity securities authorized, designated, issued
or outstanding. The issued and outstanding Company Shares are held beneficially and of record by the Persons and in the
amounts set forth in Section 2.3(a) of the Company Disclosure Schedule (which lists whether each Stockholder is a
current employee, former employee or advisor of the Company) and with respect to the Preferred Shares, Section 2.3(a)
of the Company Disclosure Schedule sets forth the applicable conversion rate on the date hereof. All of the issued and
outstanding Company Shares are validly issued, fully paid and nonassessable and have been issued in compliance with all
applicable Laws (including any Laws concerning the issuance of securities), the Certificate of Incorporation, Company Bylaws
and any other Organizational Documents of the Company. The rights, privileges and preferences of the Company Shares at the
Closing (including the terms and conditions upon which the Preferred Shares are convertible into Common Stock) shall be as
stated in the Certificate of Incorporation, Company Bylaws and any other Organizational Documents of the Company and as
provided by the DGCL, and are not contained in any other Contract. The Distribution Allocation Schedule (and all calculations
set forth therein) complies in all respects with the terms of the Certificate of Incorporation, the Company Bylaws and any
other Organizational Documents of the Company.
(b) The Company has duly reserved (i) sufficient Common Shares for issuance upon conversion
of the Series A Preferred Shares, (ii) sufficient Common Shares for issuance upon conversion
of the Series A-2 Preferred Shares, (iii) sufficient Common Shares for issuance upon conversion
of the Series A-3 Preferred Shares, and (iv) sufficient Common Shares for issuance upon conversion of the Series Seed Preferred
Share. None of such reserved shares have been issued as of the Closing Date.
(c) None of the outstanding equity securities of the Company are subject to, nor were they issued in violation of, any federal or
state securities Law, purchase, profits interest, option, call option, warrant, right of first refusal, first offer, co-sale or
participation, preemptive right, subscription right or any similar right.
(d) Section 2.3(d) of the Company Disclosure Schedule identifies each warrant to purchase Company Shares issued and outstanding
as of the Closing Date, setting forth the name of the warrant holder, the aggregate amount and type of shares of capital stock
issuable upon exercise of such warrant, the expiration date of the warrant and the exercise price in respect thereof. Except as
set forth in Section 2.3(d) and (e) of the Company Disclosure Schedule: (i) there are no outstanding Other
Convertible Securities or other securities, options, warrants, profits interests, calls, rights, convertible or exchangeable securities
or obligations of any kind (contingent or otherwise) to which the Company is a party or by which it is bound obligating the Company
to issue, deliver or sell any equity securities, debt securities or securities convertible into or exchangeable for equity securities
of the Company or obligating the Company to issue, grant, extend or enter into any such security, option, warrant, profits interest,
call, right or obligation, (ii) there are no outstanding obligations of the Company to repurchase, redeem or otherwise acquire,
directly or indirectly, any securities (or options or warrants to acquire any such securities) of the Company, (iii) the Company
is not a party to or bound by any Contract granting any equity, warrant, option, equity appreciation, phantom equity, profit participation
or similar right or any participation right in the revenue or profits of the Company and (iv) there are no Contracts with respect
to the (A) voting of any Company Shares (including any proxy or director nomination rights) or (B) transfer of, or transfer restrictions
on, any Company Shares. There are no declared or accrued but unpaid dividends with respect to the Company Shares.
(e) Except
for the Company Option Plan, a copy of which has been made available to Buyer prior to the date hereof, or as set forth on Section
2.3(e)(i) of the Company Disclosure Schedule, the Company has never adopted, sponsored or maintained any stock option
plan or any other plan or agreement providing for equity compensation to any Person under which any rights to a stock
option or other equity is currently outstanding. The Company Option Plan has been duly authorized, approved and adopted by
the Company Board and the Stockholders and is in full force and effect. The Company has reserved for issuance up to
56,880,717 Common Shares under the Company Option Plan of which options to purchase 33,633,948 Common Shares have been
granted and are outstanding as of the date hereof. Section 2.3(e)(ii) of the Company Disclosure Schedule set
forth, for each outstanding Company Option (i) the name of the holder thereof (ii) the date of grant or issuance of such
option and the number of Common Shares subject to such option upon such date, (iii) the exercise price per Company Share
subject to such option, (iv) the vesting schedule for such option, including the extent vested through the date of this
Agreement and whether and to what extent the exercisability of such option will be accelerated and become exercisable as a
result of the transactions contemplated by this Agreement, and (v) whether such Company Option is or is not an incentive
stock option as defined in Section 422 of the Code. Other than as set forth in Section 2.3(e) of the Company
Disclosure Schedule, the Company has not granted or issued any equity securities or other rights to any Person under the
Company Option Plan or any other equity incentive plan or agreement. The treatment of Company Options as contemplated by Section 1.8(b)
of this Agreement is permissible under and complies with the terms of the Company Option Plan, the applicable stock option
award agreements and applicable Laws.
(f) With respect to each Company Option set forth (or required to be set forth) in Section 2.3(e) of the Company Disclosure
Schedule, (i) each such Company Option was granted in compliance with all applicable Laws and all of the terms and conditions
of the Company Option Plan and has an exercise price that is equal or greater than the fair market value of the underlying shares
of stock on the applicable date on which the grant of such Company Option was by its terms effective (the “Grant Date”),
and (ii) other than as set forth in Section 2.3(f)(i) of the Company Disclosure Schedule, no modifications have been
made to any such Company Option following the Grant Date. Section 2.3(f)(ii) of the Company Disclosure Schedule sets
forth each employee or other Person with an offer letter or other contract or arrangement that contemplates a grant of, or right
to purchase or receive (A) options or other equity awards with respect to the equity of the Company or (B) other securities of
the Company, that in each case, have not been issued or granted, together with the number or value of such options, other equity
awards or other equity securities and any promised terms thereof.
(g) Except as set forth on Section 2.3(g) of the Company Disclosure Schedule, the Company has no Indebtedness.
(h) The allocation of the amounts payable in connection with the Mergers and the other transactions contemplated by this Agreement
and the other Transaction Documents set forth in the Distribution Allocation Schedule is true, correct and complete and is in
compliance with the terms of the Company’s Organizational Documents, the Company Option Plan, any applicable Contract or
stock option agreement and applicable Law. Except as set forth in the Distribution Allocation Schedule, no Person has any right
to receive any portion of the Closing Cash Consideration or the Closing Equity Consideration (as the same may be adjusted).
(i) The Company does not have any Subsidiaries.
2.4 Authority; Enforceability. The Company has the requisite corporate power and authority to execute and deliver each Transaction
Document to which it is a party and each instrument required to be executed and delivered by it at the Closing thereunder and
to perform its obligations thereunder and to consummate the transactions contemplated thereby. The execution and delivery by the
Company of each Transaction Document and each instrument required to be executed and delivered by it at the Closing thereunder,
the performance of its obligations thereunder, and the consummation of the transactions contemplated thereby have been duly and
validly authorized by all corporate or similar action, and no other corporate or similar proceedings on the part of the Company
are necessary to authorize, any Transaction Document to which it is a party or any instrument required to be executed and delivered
by it at the Closing or the consummation of transactions contemplated thereby. The affirmative vote of the Requisite Stockholders,
in favor of the approval of the transactions contemplated hereby (including the Mergers) (the “Company Stockholder Approval”)
are the only votes of the holders of any of the Company’s capital stock necessary in connection with the consummation of
the transactions contemplated hereby (including the Mergers) and the Company Stockholder Approval has been obtained through the
execution and delivery of the Written Consent. The execution and delivery of each Transaction Document to which the Company is
a party and each instrument required to be executed and delivered by it at the Closing has been duly and validly executed and
delivered by the Company and, assuming the due authorization, execution and delivery thereof by the other parties thereto, constitutes
a legal, valid and binding obligation of the Company, enforceable against it in accordance with its terms, subject to the effects
of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar Laws relating to or affecting creditors’
rights generally and general equitable principles (whether considered in a Proceeding in equity or at law).
2.5 No Conflict; Required Filings and Consents.
(a) Except as set forth on Section 2.5(a) of the Company Disclosure Schedule, the execution and delivery by the Company
of this Agreement and each of the other Transaction Documents to which the Company is party or any instrument required by this
Agreement to be executed and delivered by the Company immediately prior to or at the Closing hereunder or thereunder do not, and
the performance by the Company of this Agreement and each of the other Transaction Documents to which it is a party and any instrument
required by this Agreement to be executed and delivered by the Company immediately prior to or at the Closing shall and each of
the other Transaction Documents to which it is a party do not, with or without the passage of time, the giving of notice or both,
(i) conflict with, require a consent or notice under or violate the Organizational Documents of the Company, (ii) conflict with,
require a consent or notice under or violate any Law or Order applicable to the Company or by which any of its properties, rights
or assets is bound or affected, or (iii) result in any breach or violation of, require a consent or notice under, or constitute
a default under, or impair the Company’s rights or alter the rights or obligations of any party under, or give to others
any rights of termination, amendment, acceleration or cancellation of, or result in the creation of a Lien on any of the properties,
rights or assets of the Company pursuant to, any Material Contract to which the Company is a party or by which the Company or
its properties, rights or assets is bound, except, with respect to clauses (ii) and (iii) as would not be or reasonably be expected
to be adverse in any material respect to the Company.
(b) Except as set forth on Section 2.5(b) of the Company Disclosure Schedule, no Governmental Approval of, or Filing to,
any Governmental Authority or other Person is required to be obtained or made by the Company in connection with the execution,
delivery and performance of this Agreement or the other Transaction Documents or the consummation of the transactions contemplated
hereby or thereby, except as would not materially delay, impair or prevent the Company’s ability to consummate the transactions
contemplated by this Agreement.
2.6 Material Contracts.
(a) Section 2.6(a) of the Company Disclosure Schedule sets forth a true, correct and complete list as of the date hereof
of all Contracts (or group of related Contracts), excluding any Employee Plan, in effect on the date hereof to which the Company
is a party or is otherwise bound (collectively, the “Material Contracts”),
consisting of:
(i) Contracts for the employment or services of any officer, employee or other individual on a full-time, part-time or consulting
basis which: (A) provide for annual base salary payments by the Company in excess of $100,000; (B) provide for the payment of
any cash or other compensation or benefits upon the consummation of the transactions contemplated by the Transaction Documents,
(C) restrict the Company’s ability to terminate the employment or services of any employee or independent contractor of
the Company at any time for any lawful reason or for no reason without penalty, or (D) provide for severance or similar termination
payments, retention or change in control payments, or for the acceleration of vesting or grant of any incentive equity or similar
compensation;
(ii) Contracts involving (A) revenues or receipts in excess of $75,000 or (B) expenditures or payables in excess of $75,000, in each
case, for the year ended December 31, 2020;
(iii) Contracts relating to the direct or indirect creation, incurrence, assumption or guaranty of Indebtedness for borrowed money by
the Company;
(iv) Contracts (A) limiting the freedom of the Company to (1) operate its business or compete with any Person or engage in any activity,
market or line of business or in any geographic area or the internet, or (2) hire, solicit or make an offer of employment to any
Person (except for such restrictions contained in non-disclosure agreements or as are not binding on Affiliates of the Company),
(B) including a “right of first offer”, “right of first refusal” or other similar requirement in favor
of any Person (other than the Company), or (C) requiring the Company to purchase a minimum amount, or applicable percentage, of
products or services;
(v) Contracts involving, establishing or governing a joint venture, partnership, limited liability company, or similar arrangement
relating to any revenue or profit sharing, joint development, joint ownership or operation, strategic alliance or similar arrangement,
including with any employee, independent contractor or third party;
(vi) Contracts relating to an acquisition, divestiture, business combination, merger or similar transaction, including any Contracts
pursuant to which the Company has an existing obligation (contingent or otherwise) to pay any amounts in respect of indemnification
obligations, purchase price adjustment, any earn-out or other contingent payment;
(vii) leases, subleases, licenses, sublicenses or other Contracts representing an interest in or in respect of (A) any real property
or (B) any other tangible rights, assets or properties;
(viii) leases, subleases, licenses, sublicenses or other Contracts pursuant to which the Company (A) has been granted a license, covenant
not-to-sue, co-existence agreement, settlement agreement or other right, title or interest with respect to any Third Party Intellectual
Property, other than Off-the-Shelf IP and Open Source Materials, and other than nonexclusive licenses incidental to services (other
than software-as-a-service) provided by service providers in the ordinary course of business, or (B) has granted a license, covenant
not-to-sue, co-existence agreement, settlement agreement or other right, title or interest with respect to any Company Intellectual
Property to any third Person, other than nonexclusive licenses granted by the Company to its customers or service providers in
the ordinary course of business (collectively, and including licenses to Off-the-Shelf IP and Open Source Materials, the “IP
Licenses”);
(ix) Contracts that require expenditures by the Company in excess of $75,000 per annum;
(x) Contracts under which the Company anticipates future payments to the Company in excess of $75,000 per annum;
(xi) Contracts pursuant to which the Company has agreed to settle or compromise any pending or threatened Proceeding or under which
there remains any contingent Liability;
(xii) collective bargaining agreements, labor Contracts or other Contracts with any Labor Union, any employee organization, or any other
employee representative body;
(xiii) Contracts (A) relating to the future disposition or acquisition of a material business or substantial amount of assets by the
Company, or any merger or business combination with respect to the Company, or any completed material business or substantial
asset acquisition or disposition by the Company or (B) containing an earn-out, deferred purchase price or other contingent payment
obligation under which the Company may have Liability after the date hereof;
(xiv) Contracts granting any Person a right to “most favored nation” or any other similar preferred pricing terms;
(xv) Contracts with a Material Customer or a Material Vendor;
(xvi) any sales channel, referral, agency, dealer, distributor, sales representative, marketing or other similar Contracts involving
payment by the Company in excess of $100,000 annually;
(xvii) Contracts with any Governmental Authority;
(xviii) Contracts for capital expenditures or the acquisition of fixed assets in excess of $100,000;
(xix) Contracts by which the Company advanced or loaned an amount to any Person, other than immaterial advances to employees for business-related
expenses in the ordinary course of business or loans that are no longer outstanding;
(xx) Contracts between the Company and any current or former stockholder, officer or director of the Company, or any Affiliate of such
Persons, including any agreement or other arrangement providing for the furnishing of services by, rental of real or personal
property from, or otherwise requiring payments to, any such Person;
(xxi) Contracts relating to the disposition of a material portion of the Company’s assets (other than for the sale of products
or services to customers in the ordinary course of business); and
(xxii) Contracts to enter into any of the foregoing Contracts.
(b) True, correct and complete copies of all Material Contracts have been made available to Buyer by the Company. Each Material Contract
is in full force and effect, is a valid, legal and binding obligation of the Company and each other party thereto, and is enforceable
in accordance with its terms against the Company and each other party thereto, subject in each case to the effects of bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and other similar Laws relating to or affecting creditors’
rights generally and general equitable principles (whether considered in a Proceeding in equity or at law). Neither the Company
nor, to the Knowledge of the Company, any other party to any Material Contract, is in default, breach or violation of any Material
Contract, nor, to the Knowledge of the Company, has any event occurred that with the lapse of time, or the giving of notice, or
both, would constitute a material default, breach or violation under any Material Contract. The Company has not given to, or received
from, any other party to any Material Contract, any written (or, to the Knowledge of the Company, oral) notice regarding any default,
breach or violation under any Material Contract. No party to any Material Contract has exercised, or to the Knowledge of the Company,
plans to exercise, any termination rights with respect thereto, and to the Knowledge of the Company there are no disputes with
respect to any Material Contract between or among the parties thereto.
2.7 Compliance with Laws.
(a) The Company is, and has at all times during the past three (3) years been, in all material respects, in compliance with all applicable
Laws. The Company has not (i) received any written (or, to the Knowledge of the Company, oral) notice alleging any non-compliance
with any Law, or (ii) to the Knowledge of the Company, been investigated, or formally reviewed, by any Governmental Authority
with regard to any Law, nor is any such investigation or formal review pending or threatened to the Knowledge of the Company.
To the Knowledge of the Company, there are no facts or circumstances which would reasonably be expected to form the basis for
any such material violation. The Company (A) does not have Knowledge of the issuance of, or facts that would reasonably be likely
to result in the issuance of, any notice of, or been made the subject of any claims, charges, or investigations alleging the failure
of the Company to comply with any applicable Laws, and (B) has complied with all Orders applicable to the Company or to any of
the Company’s operations, assets or properties. To the Company’s Knowledge, no event has occurred and no circumstances
exist which, with or without the delivery of notice, passage of time or both, would constitute or reasonably be likely to result
in a violation by the Company of, or failure on the part of the Company to comply with, in any material respect, any Laws or Orders
that are applicable to it or the conduct or operation of its business or the ownership or use of any of its assets.
(b) Section 2.7(b) of the Company Disclosure Schedule contains a true, correct and complete list of all material Permits
owned or held by the Company that are material to the business of the Company as it is currently conducted (the “Company
Permits”). The Company Permits are valid and in full force and effect. The Company complies in all material respects
with the Company Permits. No Governmental Authority has given written (or, to the Knowledge of the Company, oral) notice to the
Company that it intends to commence a Proceeding to revoke, cancel, terminate, suspend, restrict or modify any Company Permit,
or given notice to the Company that it intends not to renew any Company Permit.
2.8 Financial Statements.
(a) Section 2.8(a) of the Company Disclosure Schedule sets forth true, correct and complete copies of the audited balance
sheets of the Company as of December 31, 2020 (the “Balance Sheet
Date”) and as of December 31, 2019, and the related statements of operations, statements of changes in stockholders’
equity and statements of cash flows for the fiscal years ended December 31, 2020 and 2019 ended (the “Financial
Statements”). The Financial Statements were prepared from and in accordance with the books and records of the
Company and are true, correct and complete and present fairly, in all material respects, the financial position and results of
operations and cash flows of the Company as of the dates and for the periods indicated in such Financial Statements in conformity
with the Accounting Methodology.
(b) Except as set forth on Section 2.8(b) of the Company Disclosure Schedule, the Company has no material Liabilities,
except for Liabilities (i) reflected or reserved for on the face of the Financial Statements, (ii) that have arisen since the
Balance Sheet Date in the ordinary course of the operation of business of the Company (consistent with past practice) and that
do not arise from any material breach by the Company of Contract or material violation by the Company of Law, (iii) relating to
future performance under any Contract or Employee Plan made available to Buyer to the extent identifiable by reference to the
text of such Contract or Employee Plan, or (iv) incurred directly pursuant to the transactions contemplated by this Agreement
or the other Transaction Documents.
(c) The Company maintains a standard system of accounting established and administered in accordance with the Accounting Methodology
(subject to the absence of footnotes and normal year-end adjustments, none of which would be, individually or in the aggregate,
material to the Company). The Company maintains a system of internal accounting controls reasonably designed to provide reasonable
assurance that (i) transactions are executed in accordance with management’s general or specific authorizations, (ii) transactions
are recorded as necessary to permit preparation of financial statements in conformity with the Accounting Methodology and (iii)
access to assets is permitted only in accordance with management’s general or specific authorization.
2.9 Absence of Certain Changes or Events. Since the Balance Sheet Date the Company has conducted its business in the ordinary
course of business (consistent with past practice) and there has not been any:
(a) Event that, individually or in the aggregate, has had or would reasonably be expected to have, a Material Adverse Effect;
(b) material change in its methods of accounting or accounting practices (including with respect to revenue recognition), except in
so far as was required by a change in GAAP;
(c) amendment or modification to the Organizational Documents;
(d) payment of any material bonuses or severance, or material increases in salaries or other compensation or benefits, by the Company
to any of its directors, officers, current or former employees or current or former independent contractors, other than increases,
bonus payments or commission payments made in the ordinary course of business;
(e) sale, acquisition, assignment, transfer, conveyance or abandonment of any Company Intellectual Property owned by the Company or
any other asset or properties of the Company (other than inventory, product or obsolete assets, the grant of non-exclusive licenses
of Company Intellectual Property to customers in the ordinary course of business (consistent with past practice) and sale of products
to customers in the ordinary course of business (consistent with past practice));
(f) damage to or destruction or loss of any material asset or property of the Company, whether or not covered by insurance;
(g) incurrence, creation, guarantee or assumption of any Indebtedness;
(h) dividend, distribution, sale, redemption, repurchase, recapitalization, reclassification, issuance, split, combination, subdivision
or other similar transaction involving the Company Shares or securities convertible into, or options with respect to, warrants
to purchase, or rights to subscribe for, the Company Shares;
(i) amendment or termination of any existing Employee Plan (other than an amendment required by Law), or adoption of any new Employee
Plan, other than in the ordinary course of business;
(j) capital expenditures or commitments therefor, other than in the ordinary course of business (consistent with past practice);
(k) adoption of a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or
other reorganization or merger or consolidation with any other Person or other acquisition of any business or substantial assets
of any Person;
(l) failure to pay in a timely manner any Taxes as they became due and payable;
(m) theft, damage, destruction or casualty loss, or Claim therefor, in excess of $100,000 in the aggregate to any of the Company’s
assets, whether or not covered by insurance;
(n) making of, alteration of, modification of, change of, termination of or revocation of any election relating to Taxes, any annual
accounting period or any method of accounting for Tax purposes, agreement to any audit assessment by any Tax authority, entry
into any closing agreement, settlement of any Tax claim or assessment, surrendering of any right to claim a refund of Taxes, consent
to any extension or waiver of the limitation period applicable to any Tax claim or assessment, or filing of any amended Tax Return,
which, in each case, would materially affect the Tax position of the Company or materially decrease any Tax attribute of the Company
after Closing; and
(o) authorization or commitment to do any of the foregoing.
2.10 Absence of Litigation, Claims and Orders. Except as set forth on Section 2.10 of the Company Disclosure Schedule,
there are no (a) Claims or Proceedings pending or, to the Knowledge of the Company, that have been threatened against the Company,
the Company’s properties, rights or assets or any officer, director or employee of the Company (in his or her capacity as
such), (b) Orders outstanding to which the Company or any of the Company’s properties, rights or assets is or are subject
or (c) Claims or Proceedings pending, brought or threatened in writing by the Company against any Person. There are no Claims
or Proceedings as of the date hereof pending or, to the Knowledge of the Company, threatened on behalf of or against the Company,
that challenge (i) the validity of this Agreement or any other Transaction Document to which the Company is a party or (ii) any
action taken or to be taken by it pursuant to this Agreement or any other Transaction Documents to which the Company is a party
or in connection with the transactions contemplated hereby and thereby.
2.11 Employee Benefit Plans.
(a) Section 2.11(a)
of the Company Disclosure Schedule sets forth a true, correct, and complete list of each material Employee Plan; provided, however,
that the requirement to disclose any employment agreement under Section 2.11(a) of the Company Disclosure
Schedule shall be limited to any employment agreement the terms of which deviate in any material respect from the form
employment agreements, as applicable, made available to Buyer. “Employee Plan” means each (i) “employee
benefit plan” (as that term is defined in Section 3(3) of the Employee Retirement Income Security Act of 1974, as
amended (“ERISA”), whether or not subject to
ERISA), (ii) stock option, equity compensation or other equity-based plan or arrangement, and (iii) employment,
consulting, offer letter, bonus, compensation, deferred compensation, retirement, severance, termination, retention, change
in control, vacation, disability, death benefit, hospitalization, medical, welfare-benefit, reimbursement, profit-sharing,
incentive or fringe-benefit or similar agreement, practice, policy, plan, program or arrangement (whether or not reduced to
writing), in each case, that the Company sponsors, administers, maintains, or to which the Company contributes or is
obligated to contribute, or under which the Company has any obligations or Liability. The Company has not announced orally or
in writing to employees any plan or commitment to establish any new Employee Plan or to modify any Employee Plan (except to
the extent required by applicable Law, as previously disclosed to Buyer in writing, or as required by this
Agreement).
(b) Except as set forth on Section 2.11(b) of the Company Disclosure Schedule, each Employee Plan has been established and maintained,
funded, operated and administered in all material respects in compliance with its terms, ERISA, the Code and all other applicable
Laws. Neither the Company, nor its current or former directors, officers or employees, nor, to the Knowledge of the Company, any
other “disqualified person” or “party in interest” (as defined in Section 4975(e)(2) of the Code and Section
3(14) of ERISA, respectively) has engaged in any prohibited transaction (within the meaning of Section 4975 of the Code and Section
406 of ERISA) with respect to an Employee Plan for which no exemption exists under Section 408 of ERISA and Section 4975 of the
Code.
(c) Neither the Company nor any ERISA Affiliate thereof has within
the past six (6) years maintained, sponsored, contributed to, been required to contribute or has or could reasonably be expected
to have any Liability with respect to any (i) “multiemployer plan” as defined in Section 4001(a)(3) of ERISA, (ii)
“single employer pension plan” as defined in Section 4001(a)(15) of ERISA, or (iii) “multiple employer plan”
subject to Section 413(c) of the Code. The Company has not, within the past six (6) years maintained any “multiple employer
welfare arrangement” as defined in Section 3(40) of ERISA. Neither the Company nor any ERISA Affiliate has any Liability
or obligation with respect to any plan that is or was within the past six (6) years subject to Title IV of ERISA or Sections 412
or 430 of the Code. No Employee Plan is or at any time was funded through a “welfare benefit fund” as defined in Section
419(e) of the Code, and no benefits under any Employee Plan are or at any time have been provided through a voluntary employees’
beneficiary association (within the meaning of subsection 501(c)(9) of the Code) or a supplemental unemployment benefit plan (within
the meaning of Section 501(c)(17) of the Code).
(d) Each Employee Plan that is intended to be qualified under Section 401(a) of the Code, and the trust forming a part thereof, has
received a favorable determination from the Internal Revenue Service or is entitled to rely on an advisory or opinion letter from
the Internal Revenue Service, no such determination or opinion letter has been revoked and, to the Knowledge of the Company, no
revocation has been threatened and no fact or event has occurred that could be reasonably expected to cause the revocation of
such letter.
(e) All material contributions (including all employer contributions and employee salary reduction contributions) and other material
payments required to have been made under any of the Employee Plans or by Law (without regard to any waivers granted under Section
412 of the Code), to any funds or trusts established thereunder or in connection therewith have been made by the due date thereof
(including any valid extension), and all contributions for any period ending on or before the Closing Date that are not yet due
will have been paid on or before the Closing Date or accruals for such contributions and/or payments are provided for in the Financial
Statements.
(f) There is no pending or, to the Knowledge of the Company, threatened Claim relating to any Employee Plan, other than routine claims
in the ordinary course of business for benefits provided for by such Employee Plan. No Employee Plan is the subject of an examination
or audit by a Governmental Authority.
(g) Except as set forth on Section 2.11(g) of the Company Disclosure Schedule, or as required under Part 6 of Subtitle
B of Title I of ERISA, Section 4980B of the Code or any similar legal requirement (“COBRA”), no Employee Plan
provides health, life or disability benefits to any current or former employees or service providers or their beneficiaries following
termination of employment or service or after retirement, and there has been no communication to any current or former employees
or service providers which promises or guarantees such health, life or other disability benefits. No Employee Plan that provides
health insurance or medical coverage is self-funded or self-insured. Each of the Company and any ERISA Affiliate which maintains
a “group health plan” within the meaning Section 5000(b)(1) of the Code has materially complied with the notice and
continuation requirements of COBRA and the regulations thereunder.
(h) The Company has provided to Buyer or to Buyer’s counsel true, correct and complete copies of the following documents relating
to the Employee Plans: (i) if the Employee Plan has been reduced to writing, a current copy of the plan documents together with
all amendments thereto; (ii) if the plan has not been reduced to writing, a written summary of all material plan terms; (iii)
if applicable, any trust agreements, and insurance policies or contracts currently in effect; (iv) any current summary plan description
and any summaries of material modifications thereto; (v) in the case of any plan that is intended to be qualified under Code section
401(a), the most recent determination, advisory or opinion letter from the Internal Revenue Service, and any pending request for
determination with respect to the plan’s qualification; (vi) the three (3) most recently filed Forms 5500 for each Employee
Plan for which a Form 5500 is required to be filed; (vii) any non-routine notices, letters or other material correspondence from
the Internal Revenue Service or the U.S. Department of Labor relating to an Employee Plan within the past three (3) years; or
(viii) non-discrimination and coverage test results for the three (3) most recent plan years.
(i) Each Employee Plan that is a “nonqualified deferred compensation plan” (within the meaning of Section 409A of the
Code) has been in documentary compliance with, and has been operated and administered in compliance with, Section 409A of the
Code and any proposed and final guidance promulgated under Section 409A of the Code.
(j) Except as set forth on Section 2.11(j) of the Company Disclosure Schedule, neither the execution, delivery or performance
of this Agreement nor the consummation of the transactions contemplated hereby (alone or together with any other event which standing
alone would not by itself trigger such entitlement or acceleration) will (i) entitle any current or former officer, employee or
other service provider of the Company to severance pay, termination pay, or any other payment or benefit, (ii) result in any payment
or benefit becoming due to any such current or former officer, employee or other service provider, or (iii) accelerate the time
of payment, funding or vesting, or increase the amount of compensation or benefit due to any such current or former director,
manager, officer, employee or other service provider.
(k) No amount or benefit that could be received (whether in cash, property, the vesting of property or otherwise) as a result of this
Agreement or any transaction contemplated by this Agreement (whether alone or in connection with any other event) by any current
or former employee, officer, directors, or other service provider of the Company who is a “disqualified individual”
(as such term is defined in Treasury Regulation Section 1.280G-1) under any Employee Plan or any other plan, policy, program or
understanding (solely excluding any agreement to which Buyer and such disqualified individual are a party to the extent not disclosed
to the Company no later than three (3) Business Days prior to the date hereof) could be characterized as an “excess parachute
payment” (as defined in Section 280G(b)(1) of the Code). The Company has no indemnity or gross-up obligations for any Taxes
imposed under Section 4999 or Section 409A of the Code.
(l) Prior to the date hereof, the Company has used commercially reasonable efforts to (i) cause its and its Subsidiaries’ service
providers who are “disqualified individuals” under Section 280G of the Code, to waive the portion of any payments
with respect to the transactions contemplated by this Agreement that, if not waived, would result in certain payments to such
disqualified individual not being deductible pursuant to Section 280G of the Code absent such waiver (the “Waived 280G
Benefits”) and (ii) take all actions necessary to submit such Waived 280G Benefits to a shareholder vote intended to
comply with the requirements set forth in Section 280G(b)(5) of the Code and the regulations promulgated thereunder (the “280G
Shareholder Vote”).
2.12 Labor Matters.
(a) The Company is not nor has at any time been a party to, or bound by or otherwise subject to, any collective bargaining agreement,
Contract or other agreement or understanding with a labor union, labor organization, trade union, works council or other employee
representative body (each, a “Labor Union”), and
no such Contract is being negotiated by the Company. No employee of the Company is or has at any time been represented by a Labor
Union. At all times the Company has not been subject to, nor to the Knowledge of the Company has there been any threat of, any
strike, slowdown, work stoppage, lockout, picketing, or other material labor activity or dispute. There are no organizational
efforts with respect to the formation of a collective bargaining unit presently being made or to the Knowledge of the Company,
threatened involving employees of the Company. At all times, no petition or demand for recognition of a bargaining representative
has been made or filed, or to the Knowledge of the Company, threatened to be made or filed, with any labor relations board or
other Governmental Authority, by or on behalf of any Labor Union involving employees of the Company. The Company has not and is
not engaged in any unfair labor practice. The Company does not have any unsatisfied obligation to any of its former employees
or consultants and their terminations were in compliance in all material respects with all applicable Laws.
(b) During the past three (3) years, there have been no pending or, to the Knowledge of the Company, threatened Claims or Proceedings,
charges or complaints against the Company before any Governmental Authority with respect to the Company’s compliance with
Employment Laws. During the past three (3) years no current or former employee or independent contractor of the Company has filed
a Claim, suit or charge with a Governmental Authority with respect to the Company’s (or any current or former employee or
independent contractor of the Company’s) compliance with Employment Laws. The Company has at all times during the past three
(3) years been in compliance in all material respects with all Employment Laws. Each current and former independent contractor
or consultant of the Company is and has been properly characterized as an independent contractor or consultant for all purposes
based on the applicable standards under applicable Law. The Company has properly classified all employees under the Fair Labor
Standards Act at any point. There has been no “mass layoff” or “plant closing” (as defined by WARN) with
respect to the Company.
(c) During the past three (3) years, the Company has not been delinquent to, nor has it failed to pay when due, any current or former
employee or service provider for any wages (including overtime, meals breaks or waiting time penalties, if applicable), salaries,
commissions, reimbursement, accrued and unused vacation, on-call payments or equal pay, or collective bargaining payments, for
any services performed by any current or former employee or service provider.
(d) True, correct and complete information as to the (i) name, (ii) current job title, (iii) status as full-time or part-time, (iv)
if an employee, his or her status as exempt or non-exempt, (v) date of hire or commencement of service, (vi) current rate of compensation,
(vii) current bonus and commission compensation opportunity, (viii) primary work location, (ix) immigration or visa status, (x)
whether the individual is on a leave of absence, and if so, the reason and the expected date of return, and (xi) accrued but unpaid
vacation, sick leave or other paid time off for all current employees and independent contractors of the Company have made available
to Buyer. To the Knowledge of the Company, no current employee has given notice of termination of employment or otherwise disclosed
plans to terminate employment with the Company within the twelve (12) month period following the date hereof. Except as set forth
in Section 2.12(d) of the Company Disclosure Schedule, no employee of the Company is employed under a nonimmigrant work
visa or other work authorization that is limited in duration.
(e) During the past three (3) years, there have not been (i) any allegations or formal or, to the Knowledge of the Company, informal
complaints made to or filed with the Company related to sexual harassment, sexual misconduct or racial discrimination; (ii) any
other claims initiated, filed or, to the Knowledge of the Company, threatened, against the Company related to sexual harassment,
sexual misconduct or racial discrimination; or (iii) to the Knowledge of the Company, any other allegations, formal or informal
complaints or any other claims initiated, filed or threatened against any Person other than the Company related to sexual harassment,
sexual misconduct or racial discrimination, in each case by or against any current or former director, officer or senior level
management employee of the Company.
2.13 Real Property.
(a) The Company does not own, nor has it ever owned, any real property.
(b) Section 2.13(b) of the Company Disclosure Schedule lists (i) all real property with respect to which the Company holds
a leasehold interest or otherwise has a license to use (the “Leased
Real Property”), including for each such Leased Real Property, the common name and physical address and a listing
of the applicable lease agreements for such Leased Real Property, together with all amendments thereto and guarantees thereof
and (ii) each agreement under which the Company leases or otherwise has the right to use any Leased Real Property (each, a “Lease”).
Except as set forth on Section 2.13(b) of the Company Disclosure Schedule, the Company has not entered into any subleases,
arrangements, licenses or other agreements relating to the use or occupancy of all or any portion of the Leased Real Property
by any Person. Except as set forth in Section 2.13(b) of the Company Disclosure Schedule, the Company has not agreed
to (A) purchase or lease, nor is the Company obligated to purchase or lease, any real property or (B) dispose of any interest
in any of the Leased Real Property or any Lease. True, correct and complete copies of the Leases have been made available by the
Company to Buyer. Except as set forth in Section 2.13(b) of the Company Disclosure Schedule, (i) each Lease is in
full force and effect and the Company has a valid and enforceable leasehold estate in, and enjoys peaceful and undisturbed possession
of, all Leased Real Property and (ii) there are no existing defaults or conditions, matters or events that, with or without the
passage of time, the giving of notice or both, would constitute an event of default by the Company, nor, to the Knowledge of the
Company, does there exist any default, event or circumstance that, with notice or lapse of time, or both, would constitute a default
by any other party to the Leases.
(c) Except as set forth on Section 2.13(c) of the Company Disclosure Schedule, (i) the Company owns and has good title
to, or holds pursuant to valid and enforceable leases or licenses to use, all of the personal property or assets (whether tangible
or intangible) shown to be owned, licensed or leased by it on the Financial Statements, free and clear of all Liens, and except
for assets disposed of in the ordinary course of business, (ii) such personal property and assets are sufficient in all material
respects to carry on the businesses of the Company as presently conducted, (iii) there are no outstanding rights of first refusal,
rights of first title, rights of reverter, purchase options or other similar rights or options relating to any such personal property
and/or assets and (iv) in respect of material equipment and other assets, maintenance of such material equipment or other asset
has not been deferred at any time within the last twelve (12) months, in each case, relative to the ordinary course practices
of the Company during the twelve (12)-month period ending as of the date hereof. Without limiting the generality of the foregoing,
immediately prior to the Closing, the Company will own or hold a valid leasehold interest in, or a valid lease (including the
Leases) or license to use, all such material assets and properties (whether real, personal, tangible or intangible) necessary
and sufficient for the conduct of the business of the Company as presently conducted, and such assets and properties, taken as
a whole, are suitable and adequate for the purposes for which such properties and assets are presently used.
2.14 Taxes.
(a) The Company has timely filed (after giving effect to applicable extensions) with the appropriate Governmental Authority all state
and federal income Tax Returns and all other material Tax Returns required to be filed by or with respect to it. All such Tax
Returns were true, correct and complete in all material respects.
(b) All federal income Taxes and all other material Taxes owed by the Company (whether or not shown on any Tax Return) have been timely
paid in full. The current but unpaid income and franchise Tax liabilities of the Company attributable to Pre-Closing Tax Periods
(determined under the principles of Section 5.2) and Deferred Payroll Taxes will not in the aggregate, as of the close of business
on the Closing Date, exceed the amount of Tax Liability expressly taken into account in the final determination of Indebtedness
and Working Capital.
(c) The Company has timely and properly withheld all material Taxes from payments to employees, agents, contractors, nonresidents,
or other third parties required by applicable Law to be withheld from any such Person and remitted such amounts to the appropriate
Governmental Authority. The Company has properly collected all material Taxes (including, without limitation, sales Taxes) required
to be collected by it and has remitted such collected amounts to the appropriate Governmental Authority, in each case, as required
pursuant to applicable Law.
(d) No written claim has ever been made by a Governmental Authority in a jurisdiction where the Company has not filed Tax Returns
that the Company is or may be subject to taxation by that jurisdiction.
(e) There are no outstanding Liens for Taxes upon any assets of the Company.
(f) No Claims or Proceedings with regard to any Taxes or Tax Returns of the Company are pending, in progress, or have been threatened
in writing.
(g) There are no outstanding waivers or written agreements regarding the application of the statute of limitations with respect to
any Taxes or Tax Returns of the Company (other than pursuant to an extension of time to file any Tax Return).
(h) The Company has never been a member of an affiliated, consolidated, unitary or similar group for federal or applicable state income
Tax purposes. The Company is not a party to any agreement relating to Tax sharing, Tax indemnification, or Tax allocation (in
each case, other than contracts the principal purpose of which is not the allocation of Taxes). The Company has no Liability for
the Taxes of any Person by operation of Law, as a transferee or successor, by Contract (other than contracts the principal purpose
of which is not the allocation of Taxes).
(i) The Company has never participated in any “listed transaction” within the meaning of Treasury Regulations section
1.6011-4(b) (or any similar provision of applicable Law) or any “tax shelter” within the meaning of Section 6662 of
the Code (or any similar provision of applicable Law).
(j) The Company will not be required to include any amount in taxable income or exclude any item of deduction or loss from taxable
income for any taxable period (or portion thereof) ending after the Closing Date as a result of (i) any “closing agreement”
as described in Code section 7121 (or any corresponding or similar provision of state, local or non-U.S. income Tax Law) executed
on or prior to the Closing Date, (ii) any deferred intercompany gain or excess loss account described in Treasury Regulations
under Code section 1502 (or any corresponding or similar provision or administrative rule of federal, state, local or non-U.S.
Law), (iii) any installment sale or open transaction disposition made on or prior to Closing Date, (iv) adjustments pursuant to
Code section 481(a) or any other similar or analogous provision of applicable Law as a result in a change in method of accounting
for a taxable period ending on or prior to the Closing Date, or (v) any prepaid amount received on or prior to the Closing Date.
The Company has no deferred obligations to pay Taxes under Section 965 of the Code (or any corresponding or similar provision
of state, local, or non-U.S. income Tax Law).
(k) The Company has never executed any power of attorney with respect to any Tax, other than powers of attorney to the Company’s
payroll service provider and relating to the preparation of Tax Returns in the ordinary course of business or powers of attorney
that are no longer in force.
(l) At no time during the period specified in Section 897(c)(1)(A)(ii) of the Code (applied as if the Closing were a sale of shares)
has the Company been a “United States real property holding corporation” (as such term is defined for purposes of
Section 897 of the Code).
(m) The Company (i) has not, and never has been, subject to Tax in any country other than its country of incorporation and (ii) has
not, and has never had, a permanent establishment or other taxable presence or other place of business outside the country of
its incorporation, including any resulting from the activities of any third party agent of the Company.
2.15 Intellectual Property, Information Technology, Privacy.
(a) Section 2.15(a) of the Company Disclosure Schedule contains a true, correct and complete list of all (i) Company Intellectual
Property that is owned by the Company and that is currently registered or applied for before any Governmental Authority or domain
name registry (“Registered Intellectual Property”),
(ii) unregistered trademarks, service marks, and copyrights owned by the Company that are material to the business of the Company
and (iii) Software that is owned by the Company (the “Company Software”)
(clauses (i) through (iii), collectively, “Scheduled Intellectual
Property”). The Company is the exclusive beneficial and, as applicable, record owner of all rights, title and
interests in, to and under the Scheduled Intellectual Property, free and clear of all Liens. Except as set forth in Section 2.15(a)
of the Company Disclosure Schedule, none of the Registered Intellectual Property (i) has lapsed, expired or been abandoned
or (ii) is the subject of any opposition, interference, cancellation, invalidity, interference, re-examination or other Proceeding
(other than routine office actions) before any Governmental Authority. Each item of Registered Intellectual Property is valid,
subsisting and to the Knowledge of the Company, enforceable. All necessary documents and certifications in connection with the
Registered Intellectual Property have been filed with, and all relevant fees have been paid to, the relevant Governmental Authority
or domain name registry, as the case may be, for the purposes of perfecting, prosecuting and maintaining the Registered Intellectual
Property.
(b) In addition to the Scheduled Intellectual Property, the Company owns and possesses good title to, or has a valid license or right
to use, all Intellectual Property used by the Company in connection with the operation of the business of the Company as currently
conducted (the “Company Intellectual Property”).
The consummation of the transactions contemplated hereby will not result in the termination or any material alteration of the
Company’s ownership of or licensed rights in any Company Intellectual Property, and will not immediately following the Closing
result in any licenses or Liens being granted under or imposed on any Company Intellectual Property. The Company has not misrepresented,
or failed to disclose, any facts or circumstances in any application for any Registered Intellectual Property that would constitute
fraud with respect to such application.
(c) To the Knowledge of the Company, except as set forth in Section 2.15(c) of the Company Disclosure Schedule no third
Person is infringing upon, misappropriating or otherwise violating any Company Intellectual Property that is owned by the Company.
No Intellectual Property misappropriation or infringement Claim has been brought or threatened by the Company against any other
Person.
(d) Except for the IP Licenses, the Company and any Company Intellectual Property that is owned by the Company is not subject to any
Contract containing any covenant or other provision that in any way limits or restricts the ability of the Company to, in any
way, use, assert, enforce, or otherwise exploit any Company Intellectual Property that is owned by the Company anywhere in the
world, other than confidentiality requirements entered into in the ordinary course of business. Except for the IP Licenses and
as otherwise set forth in Section 2.15(d) of the Company Disclosure Schedule, the Company is not a party to any Contract
that requires it to indemnify any Person for or against any interference, infringement, dilution, misappropriation, or violation
of any Intellectual Property in an amount that may exceed the amount of payments received by the Company pursuant to such Contract.
(e) The conduct of the Company’s business does not infringe, dilute, misappropriate or otherwise violate, and has not in the
past three (3) years infringed, diluted, misappropriated or otherwise violated, the Intellectual Property rights of any third
Person. In the past three (3) years, there has been no Claim, or written notice threatening any Claim, made to the Company (i)
alleging any interference, infringement, misappropriation or other violation of the Intellectual Property rights of any third
Person by the Company or in connection with the conduct of the Company’s business (including any offer to license Intellectual
Property rights of any third Person) or (ii) challenging the Company’s ownership or questioning the validity or enforceability
of any Company Intellectual Property that is owned by the Company.
(f) The Company has taken commercially reasonable steps to prevent the unauthorized disclosure or use of its Trade Secrets and Confidential
Information, and has required any employee or third Person with access to the Company’s Trade Secrets or Confidential Information
to execute Contracts requiring them to maintain the confidentiality of such Trade Secrets and Confidential Information and to
use such Trade Secrets and Confidential Information only to the benefit of the Company. The Company has implemented and maintains
a reasonable information security plan consistent with industry practices of similarly sized companies offering similar products
or services. To the Knowledge of the Company, there has been no breach of information security, cybersecurity incident (including
ransomware or distributed denial of service attack) or otherwise unauthorized access, use or disclosure of any Trade Secrets or
Confidential Information of the Company.
(g) Except as set forth on Section 2.15(g) of the Company Disclosure Schedule: (i) all current and former employees and
contractors of the Company who contributed to the creation of any material Company Intellectual Property have executed enforceable
contracts that specify that all Intellectual Property created as part of the services provided by such Person to the Company was
provided on a “work made for hire” basis, or that assign to the Company all of such Person’s respective rights,
title and interests in, to and under such Intellectual Property, and (ii) no current or former employee or contractor of the Company
holds or retains any right, title or interest in or to any Company Intellectual Property.
(h) All rights in, to and under all Company Intellectual Property created by the Company’s founders for or on behalf, or in
contemplation of, the Company (i) prior to the inception of Company, or (ii) prior to their commencement of employment with the
Company have been duly and assigned to the Company, and the Company does not have any reason to believe that any such Person is
unwilling to provide the Company, or Buyer, with such cooperation as may reasonably be required to complete and prosecute all
appropriate U.S. and foreign patent, copyright and other filings related thereto.
(i) No funding, facilities or personnel of any educational institution or Governmental Authority were used, directly or indirectly,
to develop or create, in whole or in part, any Company Intellectual Property owned or purported to be owned by the Company, including
any portion of any of its products or services. The Company has never been a member or promoter of, or a contributor to, any industry
standards body or similar organization that could compel the Company to grant or offer to any third party any license or right
to any Company Intellectual Property owned or purported to be owned by the Company.
(j) Section 2.15(j) of the Company Disclosure Schedule lists (i) all Open Source Materials used, distributed with, or
otherwise incorporated into any Company Intellectual Property that is owned by the Company, including Company Software; and (ii)
with respect to all such Open Source Materials, the Contract under which such Open Source Materials are licensed to or used by
the Company. The Company is in compliance with all terms and conditions of all such Contracts for the Open Source Materials in
all material respects. The Company has not (i) incorporated Open Source Materials into, or combined Open Source Materials with,
any Company Intellectual Property that is owned by the Company or Company Software; (ii) distributed Open Source Materials in
conjunction with any Company Intellectual Property or Company Software (other than with respect to such Open Source Materials
themselves); or (iii) used Open Source Materials, in such a way that requires, as a condition of use, modification and/or distribution
of such Open Source Materials, that other Software incorporated into, derived from or distributed with such Open Source Materials
be (x) disclosed or distributed in source code form, (y) be licensed for the purpose of making derivative works, or (z) be redistributable
at no charge.
(k) To the Company’s Knowledge, no Software used in the conduct of the Company’s business contains any “back door,”
“drop dead device,” “time bomb,” “Trojan
horse,” “virus,” or “worm” (as such terms are commonly understood in the software industry)
or any other code designed or intended to have, or capable of performing, any of the following functions: (A) disrupting, disabling,
harming, or otherwise impeding in any manner the operation of, or providing unauthorized access to, a computer system or network
or other device on which such code is stored or installed or (B) damaging or destroying any data or file without the user’s
consent, other than, in each case, Software and industry-standard technological means of a typical nature that are designed to
allow Company to monitor, analyze, audit, support and disable the Company Software as used by its customers (collectively, “Contaminants”).
(l) The Company has no duty or obligation (whether present, contingent or otherwise) to deliver, license, or make available the source
code for any Company Software to any escrow agent or other Person. No event has occurred, and no circumstance or condition exists,
that (with or without notice or lapse of time, or both) will, or would reasonably be expected to, result in the disclosure, delivery
or license by the Company of any source code for any Company Software, other than disclosures to employees and consultants involved
in the development of products or otherwise subject to an agreement imposing on such Person reasonable and customary confidentiality
obligations to the Company with respect to such source code. Without limiting the foregoing, neither the execution of this Agreement
nor any of the transactions contemplated by this Agreement will result in a release from escrow or other delivery to a third Person
of any source code for any Company Software. The Company Software: (i) has sufficiently documented source code enabling a reasonably
skilled software developer to understand, modify, compile and otherwise utilize the Company Software without reliance on the special
knowledge or memory of others; (ii) is free from material known defects or deficiencies, errors in design, and operating defects;
and (iii) to the Company’s Knowledge, does not require a material upgrade or replacement within the six (6)-month period
after the Closing Date and none are planned.
(m) The Systems that are used or relied on by the Company are adequate for the operation of the Company’s business as currently
conducted. With respect to the Systems, during the past three (3) years, (i) there has not been any material malfunction, unplanned
downtime or service interruption that has not been remedied, (ii) the Company has implemented or is in the process of implementing
(or, in the exercise of reasonable business judgment, has determined that implementation is not yet in the best interest of the
Company) in a reasonably timely manner all security patches or security upgrades that are generally available for the Systems
in the Company’s possession and control, and (iii) the Company has taken commercially reasonable steps and implemented commercially
reasonable procedures to avoid introduction of Contaminants into the Systems that are in the Company’s possession and control.
The Company has implemented commercially reasonable security, back-ups, disaster recovery arrangements, and hardware and Software
support and maintenance to minimize the risk of material error, breakdown, failure, or security breach occurring.
(n) The Company is, and has at all times during the past three (3) years been in compliance in all material respects with, all Privacy
and Data Security Requirements. Without limiting the foregoing, during the past three (3) years, to the extent required by any
Privacy Law, the Company has maintained, published, and posted privacy policies providing notice of its privacy, data protection
and data security practices regarding the Processing of Personal Information in connection with the operation of the Company’s
business (the “Privacy Policies”), and true, correct
and complete copies of all current Privacy Policies have been provided to Buyer.
(o) The Company has at all times during the past three (3) years, implemented and maintained in place reasonable and appropriate security
measures, plans, controls and programs required by applicable Privacy and Data Security Requirements, including the following
reasonable measures: (i) a written information security program, security policy and security procedures as required by Privacy
Law to protect Personal Information that the Company Processes in connection with the operation of the Company’s business
from loss, damage, and illegal or unauthorized Processing; and (ii) notification procedures in compliance with applicable Privacy
and Data Security Requirements in the case of any breach of security compromising Personal Information, in each case (i) and (ii)
that are followed in all material respects in the conduct of the business of the Company.
(p) The Company has in the past three (3) years (i) made all required disclosures and notices to, and obtained all consents from,
users, customers, employees, contractors, applicable Governmental Authorities and other applicable third Persons, in each case,
to the extent necessary under applicable Privacy and Data Security Requirements for the Company’s Processing of Personal
Information in connection with the conduct of the Company’s business, and (ii) filed any and all required registrations
with, the applicable Governmental Authorities, in each case except as would not reasonably be expected to have an adverse effect
on the Company in any material respect.
(q) The Company has in the past three (3) years, obtained written agreements from all subcontractors to which it has provided or disclosed
Personal Information that require such subcontractors to implement reasonable and appropriate means for protecting such Personal
Information except as would not reasonably be expected to have an adverse effect on the Company in any material respect.
(r) In the past three (3) years there has been no unauthorized access to any Personal Information Processed by or on behalf of the
Company, that under applicable Privacy and Data Security Requirements required notice to an individual, Governmental Authority
or other Person.
2.16
Insurance. Section 2.16 of the Company Disclosure Schedule sets forth a true, correct and complete list of
all insurance policies covering the assets, business, equipment, properties, operations, employees, consultants, officers and
directors of the Company, excluding any insurance policies relating to any Employee Plan (collectively, the “Policies”),
including insurer, policy number and effective dates. The Company has made available to Buyer complete and accurate copies of
all of the Policies. Except as set forth on Section 2.16 of the Company Disclosure Schedule, (a) there is no claim
by the Company currently pending, and the Company has not made a claim, under any Policy as to which coverage has been questioned,
denied or disputed by the insurers of such Policy and (b) no insurer has threatened in writing to cancel any Policy except for
customary annual nonrenewal notices. All Policies are in full force and effect, all premiums covering all periods up to and including
the Closing Date under all Policies have been paid or will have been paid as of the Closing, and the Company is otherwise in compliance
in all material respects with the terms of the Policies. No written notice of cancellation or termination has been received by
the Company with respect to any Policy and, to the Knowledge of the Company, (i) neither Company has done or omitted to do anything
that might render any Policy void or unenforceable or otherwise limit, prejudice or reduce recovery under any Policy and (ii)
no other circumstance exists that might render any Policy void or unenforceable or otherwise limit, prejudice or reduce recovery
under any Policy. The Company does not have any self-insurance or co-insurance programs.
2.17
Sufficiency of Assets. As of the Closing, the Company will have ownership of (free and clear of all Liens) or other valid
rights to use, all of the intangible and tangible assets, real property and services, and will possess all Permits, necessary
to conduct in all material respects the business as conducted as of the date of this Agreement and, except as set forth on Section
2.17 of the Company Disclosure Schedule, no such assets are used in the operation of any business other than the Company’s
business as conducted as of the date of this Agreement. As of the Closing, neither Sellers nor any of their respective Affiliates
(other than the Company) will own or have any interest in any of the assets, properties, employees, or rights used in the operation
of the Company’s business as it is presently conducted.
2.18
Environmental Matters.
(a) The Company is, and has at all times since January 1, 2018, been, in all material respects, in compliance with all Environmental
Laws, except for any violation that has been fully resolved with no present or future material Liability for the Company.
(b) The Company has obtained and is in material compliance with all Environmental Permits necessary to conduct the business of the
Company as currently conducted and, except for any noncompliance that has been fully resolved with no present or future Liability
for the Company, has been in material compliance with such Environmental Permits.
(c) There are no actions, Orders, claims or notices pending or received or, to the Knowledge of the Company, threatened against the
Company alleging violations of or Liability under any Environmental Law or otherwise concerning the Release or management of Hazardous
Substances.
(d) Since January 1, 2018, has been no Release of any Hazardous Substances at, on or from the Leased Real Property or any other real
property operated by the Company, or, to the Knowledge of the Company, any real property formerly operated by the Company, in
each case, in a manner that could reasonably be expected to result in material Liability for the Company under Environmental Laws.
(e) The Company is not subject to any contractual obligation to indemnify a third party against material liabilities arising under
Environmental Laws.
2.19
Brokers. Except as set forth on Section 2.19 of the Company Disclosure Schedule, no broker, financial advisor,
finder or investment banker or other Person is entitled to any broker’s, financial advisor’s, finder’s or other
fee or commission in connection with the transactions contemplated by this Agreement or the other Transaction Documents based
upon any arrangement or agreement made by or on behalf of the Company or any of its Affiliates.
2.20
Affiliated Transactions. Except as set forth on Section 2.20 of the Company Disclosure Schedule, no officer,
director, equityholder holding 5% or more of the issued and outstanding Company Shares (on a fully-diluted basis) or other Affiliate
of the Company or, to the Company’s Knowledge, any individual in such officer’s, director’s, or equityholder’s
immediate family is a party to any agreement or transaction with the Company (other than Employee Plans) or (a) has any interest
in any property, asset or property right, in each case, tangible or intangible, which is used by the Company, (b) possesses, directly
or indirectly, any financial interest in, or is a manager, director, officer or employee of, any Person which is a customer, vendor,
lessor or lessee of the Company, (c) provides, or has provided within the last twelve (12) months, services to the Company other
than in the capacity of an employee, officer or director, or (iv) has paid or received any payments either to or from the Company
(other than distributions made by the Company and the payment of any compensation or benefits).
2.21
Customers and Vendors.
(a) Section 2.21(a) of the Company Disclosure Schedule sets forth a true, correct and complete list of the ten (10) largest
customers (the “Material Customers”) of the Company
(measured by revenue), and the ten (10) largest vendors (the “Material
Vendors”) of the Company (measured by aggregate spend), in each case, for the twelve (12) months ended December
31, 2020.
(b) Except as set forth on Section 2.21(b) of the Company Disclosure Schedule, the Company has not received any written
notice that any Material Customer or Material Vendor plans to terminate its relationship, materially decrease the amount of business
done or materially change the terms of business done with the Company.
(c) Except as set forth on Section 2.21(c) of the Company Disclosure Schedule, the Company has not been involved in any
dispute with any Material Customer or Material Vendor that would have the effect of materially and adversely affecting the commercial
relationship between the Company, on the one hand, and the Material Customer or Material Vendor, as applicable, on the other hand.
(d) True, correct and complete copies of the Form Customer Contracts are attached to Section 2.21(d) of the Company Disclosure
Schedule. Except as set forth on Section 2.21(d) of the Company Disclosure Schedule, no contract between the Company
and any of its customers deviates from the applicable Form Customer Contract in a manner that is materially adverse to the Company
with respect to termination rights, liabilities of the Company or Company Intellectual Property.
2.22
Accounts Receivable and Accounts Payable. Section 2.22(a) of the Company Disclosure Schedule provides an accurate
and complete breakdown and aging of all Accounts Receivable as of the Closing Date. Except as set forth on Section 2.22(b) of the Company Disclosure Schedule, all Accounts Receivable of the Company (i) are valid, genuine, enforceable and existing
and have arisen pursuant to bona fide transactions, (ii) are not subject to any material defenses, setoffs or counterclaims, (iii)
are current (not more than ninety (90) days past due) and (iv) to the extent collected, have been collected in the in the ordinary
course of business and the collection thereof has not been accelerated. Except as set forth on Section 2.22(c) of
the Company Disclosure Schedule, all accounts payable of the Company (A) are valid, genuine, enforceable and existing and have
arisen pursuant to bona fide transactions, (B) have not been outstanding for more than three (3) months, except for amounts payable
that are being contested in good faith and (C) to the extent paid, have been paid in the ordinary course of business and the payment
thereof has not been delayed.
2.23
Books and Records. The Company has made available to Buyer true, correct and complete copies of the transfer books and
the minutes books of the Company from January 1, 2018 to the date hereof, which contain materially complete records of actions
taken at all meetings and by written consents in lieu of meetings of the Company Board, or committees thereof, and the Stockholders
since such date. The Company has not taken any action that is inconsistent in any material respect with any resolution adopted
by the Company Board or the Stockholders.
2.24
Bank Accounts; Deposits and Letters of Credit. Section 2.24 of the Company Disclosure Schedule sets forth a
true, correct and complete list of: (a) all deposits, letters of credit, surety bonds, guarantees or similar collateral or security
arrangements currently being provided by or on behalf of the Company; (b) the names and locations of all banks in which the Company
has accounts or safe deposit boxes; (c) the account numbers of all such accounts; and (d) the names of all Persons authorized
to draw thereon or to have access thereto. Except as set forth on Section 2.24 of the Company Disclosure Schedule,
no Person holds a power of attorney to act on behalf of the Company.
2.25
Disclaimer. Except as expressly set forth in this Article II hereof, the Company does not make any representation
or warranty, express or implied, at law or in equity and any such other representations or warranties are hereby expressly disclaimed.
Notwithstanding anything to the contrary, the Company shall not be deemed to make to the Buyer, First Merger Sub or Second Merger
Sub any representation or warranty other than as expressly made by the Company in this Agreement.
Article III
REPRESENTATIONS AND WARRANTIES OF BUYER, FIRST MERGER SUB AND SECOND MERGER SUB
As
a material inducement to Sellers and the Company to enter into this Agreement, except as set forth in the schedule delivered by
Buyer to the Company concurrently with the execution of this Agreement setting forth specific exceptions to Buyer’s representations
and warranties set forth herein (the “Buyer Disclosure Schedule”),
Buyer, First Merger Sub and Second Merger Sub represent and warrant to Sellers and the Company as follows:
3.1 Organization and Qualification. Each of Buyer, First Merger Sub and Second Merger Sub is a corporation duly organized,
validly existing and in good standing under the Laws of the State of Delaware and has all the requisite corporate or limited liability
company power and authority to own, lease and operate its properties and assets and to carry on its business as it is now being
conducted. Each of Buyer, First Merger Sub and Second Merger Sub is duly qualified to do business and is in good standing in each
of the jurisdictions in which the Laws of such jurisdiction, the ownership, operation or leasing of its properties or assets,
or the conduct of its business require it to be so qualified, except where the failure to be so qualified would not materially
and adversely affect its ability to consummate the transactions contemplated hereby.
3.2 Authority; Enforceability.
(a) Each of Buyer, First Merger Sub and Second Merger Sub has all necessary corporate power and authority to execute and deliver this
Agreement and each other Transaction Document to which it is a party and each instrument required to be executed and delivered
by it at the Closing hereunder or thereunder and to perform its obligations hereunder and thereunder and to consummate the transactions
contemplated hereby and thereby. The execution and delivery by each of Buyer, First Merger Sub and Second Merger Sub of this Agreement,
each other Transaction Document to which it is a party and each instrument required to be executed and delivered by it at the
Closing hereunder or thereunder, the performance of its obligations hereunder and thereunder and the consummation of the transactions
contemplated hereby and thereby have been duly and validly authorized by all necessary action on its part, and no other corporate
or similar proceedings on the part of Buyer, First Merger Sub or Second Merger Sub are necessary to authorize this Agreement,
any Transaction Document to which it is a party or any instrument required to be executed and delivered by it prior to or at the
Closing hereunder or thereunder or the consummation of the transactions contemplated hereby or thereby. This Agreement, each other
Transaction Document to which either of Buyer, First Merger Sub and Second Merger Sub is a party and each instrument required
to be executed and delivered by it at the Closing hereunder or thereunder has been duly and validly executed and delivered by
it and, assuming the due authorization, execution and delivery thereof by the other parties thereto, constitutes a legal, valid
and binding obligation of it, enforceable against it in accordance with its terms, subject to the effects of bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and other similar Laws relating to or affecting creditors’ rights generally
and general equitable principles (whether considered in a Proceeding in equity or at law).
(b) The Closing Equity Consideration and the Buyer Common Shares, when issued in accordance with the terms hereof, shall be duly authorized
and validly issued, fully paid and non-assessable and issued in compliance with all applicable Laws and not subject to, and not
issued in violation of, any Lien, purchase option, call option, right of first refusal, preemptive right, subscription right or
any similar right under any provision of applicable Law, Buyer’s Organizational Documents, or any Contract to which Buyer
is a party or otherwise bound.
3.3 No Conflict; Required Filings and Consents. The execution and delivery by each of Buyer, First Merger Sub and Second Merger
Sub of this Agreement, the other Transaction Documents to which it is a party or any instrument required by this Agreement to
be executed and delivered by it immediately prior to or at the Closing hereunder or thereunder do not, and the performance of
this Agreement, the other Transaction Documents to which it is a party and any instrument required by this Agreement to be executed
and delivered by it immediately prior to or at the Closing hereunder or thereunder shall not, with or without the passage of time,
the giving of notice or both, (a) conflict with, require a consent or notice under or violate its Organizational Documents, (b)
conflict with, require a consent or notice under or violate any Law or Order applicable to it or by which any of its properties,
rights or assets is bound or affected, except any such conflict or violation that would not materially and adversely affect its
ability to consummate the transactions contemplated hereby, or (c) result in any breach or violation of, require a consent or
notice under, or constitute a default under, or impair its rights or alter the rights or obligations of any party under, or give
to others any rights of termination, amendment, acceleration or cancellation of, or result in the creation of a Lien on any of
its properties, rights or assets pursuant to, any material Contract to which it is a party or by which it or its properties, rights
or assets is bound, except any such breach, violation, default or other event that would not materially and adversely affect its
ability to consummate the transactions contemplated hereby. Subject to the accuracy of the Company’s representations and
warranties set forth in Section 2.5(b), no Governmental Approval of, or Filing to, any Governmental Authority or other
Person is required to be obtained or made by it in connection with the execution, delivery and performance by it of this Agreement
or the Transaction Documents to which it is a party or the consummation of the transactions contemplated hereby or thereby, except
for Governmental Approvals that, if not obtained or made, would not materially and adversely affect its ability to consummate
the transactions contemplated hereby.
3.4 Compliance with Laws. Each of Buyer, First Merger Sub and Second Merger Sub is, and has at all times during the past three
(3) years been, in all material respects, in compliance with all applicable Laws. Neither Buyer, First Merger Sub nor Second Merger
Sub has (i) received any written notice alleging any non-compliance with any Law, or (ii) to the knowledge of Buyer, First Merger
Sub or Second Merger Sub been investigated, or formally reviewed, by any Governmental Authority with regard to any Law, nor is
any such investigation or formal review pending or threatened to the knowledge of Buyer, First Merger Sub or Second Merger Sub.
To the knowledge of Buyer, First Merger Sub or Second Merger Sub there are no facts or circumstances which would reasonably be
expected to form the basis for any such material violation. Neither Buyer, First Merger Sub nor Second Merger Sub (A) has knowledge
of the issuance of, or facts that would reasonably be likely to result in the issuance of, any notice of, or been made the subject
of any claims, charges, or investigations alleging the failure of Buyer, First Merger Sub or Second Merger Sub to comply with
any applicable Laws, and (B) has failed to comply with all Orders applicable to Buyer, First Merger Sub or Second Merger Sub or
to any of Buyer’s, First Merger Sub’s or Second Merger Sub’s operations, assets or properties. To Buyer’s,
First Merger Sub’s or Second Merger Sub’s knowledge, no event has occurred and no circumstances exist which, with
or without the delivery of notice, passage of time or both, would constitute or reasonably be likely to result in a violation
by Buyer, First Merger Sub or Second Merger Sub of, or failure on the part of Buyer, First Merger Sub or Second Merger Sub to
comply with, in any material respect, any Laws or Orders that are applicable to it or the conduct or operation of its business
or the ownership or use of any of its assets.
3.5 Absence of Litigation, Claims and Orders. There are no Claims or Proceedings pending or, to the knowledge of Buyer, First
Merger Sub and Second Merger Sub, threatened on behalf of or against either of Buyer, First Merger Sub or Second Merger Sub that
challenge (i) the validity of this Agreement or any other Transaction Document to which it is a party or (ii) any action taken
or to be taken by it pursuant to this Agreement or any other Transaction Documents to which it is a party or in connection with
the transactions contemplated hereby and thereby. There are no material (a) Claims or Proceedings pending or, to the knowledge
of Buyer, First Merger Sub or Second Merger Sub, that have been threatened against Buyer or its Affiliates or their respective
properties, rights or assets or any officer, director or employee of the Buyer or its Affiliates (in his or her capacity as such),
(b) Orders outstanding to which the Buyer or its Affiliates’ properties, rights or assets is or are subject or (c) Claims
or Proceedings pending, brought or threatened in writing by the Buyer or its Affiliates against any Person.
3.6 Financial Statements.
(a) Section 3.6(a) of the Buyer Disclosure Schedule sets forth true, correct and complete copies of the audited consolidated
balance sheets of Buyer and its Subsidiaries as of the Balance Sheet Date and as of December 31, 2019, and the related consolidated
statements of operations, statements of changes in stockholders’ equity and statements of cash flows for the fiscal years
ended December 31, 2020 and 2019 ended (the “Buyer Financial Statements”).
The Buyer Financial Statements were prepared from and in accordance with the books and records of Buyer and are true, correct
and complete and present fairly, in all material respects, the financial position and results of operations and cash flows of
Buyer as of the dates and for the periods indicated in such Buyer Financial Statements in conformity with GAAP.
(b) Buyer maintains a standard system of accounting established and administered in accordance with GAAP (subject to the absence of
footnotes and normal year-end adjustments, none of which would be, individually or in the aggregate, material to Buyer). Buyer
maintains a system of internal accounting controls reasonably designed to provide reasonable assurance that (i) transactions are
executed in accordance with management’s general or specific authorizations, (ii) transactions are recorded as necessary
to permit preparation of financial statements in conformity with GAAP and (iii) access to assets is permitted only in accordance
with management’s general or specific authorization.
3.7 Brokers. No broker, financial advisor, finder or investment banker or other Person is entitled to any broker’s, financial
advisor’s, finder’s or other fee or commission in connection with the transactions contemplated by this Agreement
or the other Transaction Documents based upon arrangements made by or on behalf of Buyer, First Merger Sub or Second Merger Sub
or any of their respective Affiliates.
3.8 Investment Intent; Restricted Securities. Buyer is acquiring the Company Shares solely for Buyer’s own account, for
investment purposes only, and not with a view to, or with any present intention of, reselling or otherwise distributing Company
Shares or dividing its participation herein with others. Buyer understands and acknowledges that (a) none of the Company Shares
have been registered or qualified under the Securities Act, or under any securities Laws of any state of the United States or
other jurisdiction, in reliance upon specific exemptions thereunder for transactions not involving any public offering; (b) all
of the Company Shares constitute “restricted securities” as defined in Rule 144 under the Securities Act; (c) none
of the Company Shares is traded or tradable on any securities exchange or over-the-counter; and (d) none of the Company Shares
may be sold, transferred or otherwise disposed of unless a registration statement under the Securities Act with respect to such
Company Shares and qualification in accordance with any applicable state securities Laws becomes effective or unless such registration
and qualification is inapplicable, or an exemption therefrom is available. Buyer will not transfer or otherwise dispose any of
the Company Shares acquired hereunder or any interest therein in any manner that may cause any Stockholder to be in violation
of the Securities Act or any applicable state securities Laws. Buyer is an “accredited investor” as defined in Rule
501(a) of the Securities Act.
3.9 Capitalization.
(a) The authorized equity securities of Buyer (collectively, the “Buyer
Shares”) consist of (i) 157,839,411 shares of Class A Common Stock (the “Buyer Class
A Common Shares”), of which 9,159,888 Buyer Class A Common Shares are
issued and outstanding as of March 30, 2021, (ii) 69,987,398 shares of Class B Common Stock (“Buyer Class B Common Shares”),
of which 15,269,008 Buyer Class B Common Shares are issued and outstanding as of March 30, 2021, (iii) 7,673,154 shares of Buyer
Common Stock, of which 4,452,023 shares of Buyer Common Stock are issued and outstanding
as of March 30, 2021, (iv) 54,431,446 shares of Series A-1 Preferred Stock (the “Buyer Series
A-1 Preferred Shares”), of which 54,431,446 Buyer Series A-1 Preferred
Shares are issued and outstanding as of March 30, 2021, (v) 39,134,868 shares of Series A-2 Preferred Stock (the “Buyer
Series A-2 Preferred Shares”), of which 39,134,868 Buyer
Series A-2 Preferred Shares are issued and outstanding as of March 30, 2021 and (vi) 10,880,018 shares of Series B Preferred Stock
(the “Buyer Series B Preferred Shares”), of which 10,880,018
Buyer Series B Preferred Shares are issued and outstanding as of March 30, 2021. Except as set
forth on Section 3.9(a)(1) of the Buyer Disclosure Schedule, other than the Buyer Shares listed above, options relating
to 4,324,501 Buyer Class B Common Shares outstanding under the Squarespace, Inc. Amended
and Restated 2008 Equity Incentive Plan and restricted stock unit awards relating to 5,561,188 Buyer
Class A Common Shares outstanding under the Squarespace, Inc. 2017 Equity Incentive Plan, Buyer does not have any equity securities
authorized, designated, issued or outstanding. All of the issued and outstanding Buyer Shares are validly issued, fully paid and
nonassessable and have been issued in compliance with all applicable Laws (including any Laws concerning the issuance of securities)
and any Organizational Documents of the Buyer that as of the date hereof have been made available to the Company. Except as set
forth on Section 3.9(a)(2) of the Buyer Disclosure Schedule, the rights, privileges and preferences of the Buyer Shares
are stated in such Organizational Documents of Buyer.
(b) The Buyer Common Stock to be issued as Closing Equity Consideration and Transaction Bonus Equity Consideration is the same class
and series of common stock of Buyer issued to the purchasers (the “Private Placement Purchasers”) pursuant
to that certain Stock Purchase Agreement, dated as of March 15, 2021, by and among the Buyer and the purchasers signatory thereto,
which common stock was sold to such purchasers at a price of $68.4204 per share.
3.10
Rights of Buyer Common Stock Holders. Except for registration rights set forth in the Organizational Documents of Buyer,
the Stockholders who receive Closing Equity Consideration (and Jeff Kaplan and Nick Kokonas in respect of their respective Transaction
Bonus Equity Consideration) (i) have no less favorable rights or terms in his, her or its capacity as a holder of Buyer Common
Stock with respect to registration rights and (ii) will have no (and Buyer will ensure that such persons have no) less favorable
rights or terms in his, her or its capacity as a holder of Buyer Common Stock with respect to any time periods related to “market
standoff” or “lock-up” provisions, in each case, as any other holder of Buyer Common Stock in his, her or its
capacity as such.
3.11
Reorganization Treatment. None of Buyer, First Merger Sub, Second Merger Sub or
any of their respective Affiliates has taken any action or knows of any fact, agreement, plan or other circumstance that would
prevent or impede the Intended Tax Treatment. The Second Merger Sub is properly classified as an entity disregarded as separate
from the Buyer, and no action has been taken (and Buyer has no plan or intention to take any action) that would cause the Second
Merger Sub to be treated other than as an entity disregarded as separate from the Buyer for U.S. federal income tax purposes.
3.12
Disclaimer. Except as expressly set forth in this Article III hereof, none of Buyer, First Merger Sub or Second
Merger Sub makes any representation or warranty, express or implied, at law or in equity and any such other representations or
warranties are hereby expressly disclaimed. Notwithstanding anything to the contrary, none of Buyer, First Merger Sub or Second
Merger Sub shall be deemed to make to the Company or Sellers any representation or warranty other than as expressly made by such
Person in this Agreement.
Article IV
ADDITIONAL AGREEMENTS
4.1 Fees and Expenses. Except as otherwise set forth in this Agreement, each of the Parties hereto shall be solely responsible
for and shall bear all of its own costs and expenses incident to its obligations under and in respect of this Agreement and the
transactions contemplated hereby, including any such costs and expenses incurred by any Party hereto in connection with the negotiation,
preparation and performance of and compliance with the terms of this Agreement (including the fees and expenses of legal counsel,
accountants, investment bankers or other representatives and consultants).
4.2 Stockholder Information Statement.
(a) Immediately after the execution and delivery of this Agreement (and in any event, no later than 2:00 PM New York time on the Closing
Date), the Company shall use its best efforts to obtain the Written Consent, duly executed by the Requisite Stockholders in accordance
with the DGCL and the Company’s Organizational Documents, and shall deliver true, correct and complete copies of the same
to Buyer. The Parties acknowledge and agree that Buyer’s receipt of the documents specified in the immediately preceding
sentence shall be a condition of Buyer’s obligation to consummate the Closing (and the other transactions contemplated hereby)
in accordance with this Agreement.
(b) At least three (3) Business Days prior to the Closing Date, the Company shall have prepared an information statement to be distributed
to the Company Holders, in form and substance reasonably acceptable to Buyer (the “Information
Statement”), which shall include, among other things, (i) the notice required by Section 262 of the DGCL, (ii)
the unanimous recommendation of the Company Board in favor of the adoption of this agreement and approval of the transactions
contemplated hereby, including the Mergers, (iii) a form of the Letter of Transmittal, and (iv) instructions for the surrender
of the Company Shares.
(c) Promptly (but in no event later than ten (10) Business Days) following the date hereof, the Company shall deliver, or cause the
delivery of, a notice pursuant to Section 228 of the DGCL to those Stockholders that did not execute the Written Consent to the
extent required by applicable Law.
4.3 Disclosure. Neither the Stockholder Representative nor any Company Holder will issue or cause the publication of any press
release or other public announcement with respect to this Agreement or the transactions contemplated hereby, including the consideration
payable hereunder, without the prior written consent of Buyer; provided, that such consent shall not apply to any public
disclosure that is required, in such Person’s reasonable discretion, by applicable Law or Governmental Authority. Buyer
shall not issue or cause the publication of any press release or other public announcement with respect to the initial announcement
of the Agreement or the transactions contemplated hereby without the prior written consent of the Stockholder Representative (after
the Closing); provided, that such written consent shall not apply to any public disclosure that is required, in Buyer’s
reasonable discretion, by applicable Law or any rule or Regulation of any national securities exchange, national securities quotation
system or Governmental Authority. Notwithstanding anything in this Agreement to the contrary, following Closing, the Stockholder
Representative shall be permitted to disclose information as required by law or to employees, advisors, agents or consultants
of the Stockholder Representative and to the Stockholders, in each case who have a need to know such information, provided that
such persons are subject to confidentiality obligations with respect thereto.
4.4 Further Assurances. From time to time, as and when requested by any Party, each Party shall execute and deliver, or cause
to be executed and delivered, all such documents and instruments and shall take, or cause to be taken, all such further or other
actions, as such other Party may reasonably deem necessary or desirable to consummate the transactions contemplated hereby.
4.5 Director and Officer Indemnification. All rights to indemnification by the Company existing in favor of those Persons who
are managers, officers, directors or control Persons of the Company as of the date of this Agreement for their acts and omissions
occurring prior to the Closing, as provided in the Company’s organizational documents (in each case, as in effect as of
the date of this Agreement) shall survive the Closing and shall be observed by the Buyer to the fullest extent available under
applicable Law for a period of at least six (6) years following the Closing, and any claim made requesting indemnification pursuant
to such indemnification rights shall continue to be subject to this Section 4.5 and the indemnification rights provided
under this Section 4.5 until disposition of such claim. Prior to the First Effective Time, the Company has purchased
a D&O tail insurance policy (the “D&O Tail Policy”), in form, substance and amount reasonably satisfactory
to Buyer, sufficient to cover the Company’s obligations, during the six (6) year period following the Closing Date, for
the indemnification, advancement of expenses and exculpation of current or former directors, managers, officers and employees
of the Company for any occurrence on or prior to the Closing Date. Buyer shall cause the D&O Tail Policy to be maintained
in full force and effect, for its full term.
Article V
TAX MATTERS
The
following provisions shall govern the allocation of responsibility as between Buyer, on the one hand, and the Company Holders
and the Stockholder Representative, on the other, for certain Tax matters following the Closing Date:
5.1 Filing of Tax Returns.
(a) Buyer shall cause the Company to prepare and timely file all Tax Returns of the Company due after the Closing Date (the “Buyer
Prepared Returns”). All such Buyer Prepared Returns, to the extent related in whole or in part to a taxable period
(or portion thereof) ending on or prior to the Closing Date (such Tax Returns, the “Pre-Closing
Buyer Prepared Returns”), will be prepared in accordance with past practice, except as otherwise required by
Law. Not later than thirty-five (35) days prior to the due date for filing thereof, Buyer shall provide the Stockholder Representative
with drafts of all Pre-Closing Buyer Prepared Returns. The Stockholder Representative shall have the right to review and comment
on any Pre-Closing Buyer Prepared Returns during the thirty (30) day period following the receipt of such Tax Returns and Buyer
shall consider the Stockholder Representative’s reasonable comments in good faith. Any dispute between Buyer and Stockholder
Representative regarding Pre-Closing Buyer Prepared Returns shall be resolved by the Accountant in accordance with the principles
set forth in Section 1.13(d).
(b) Buyer shall timely file, or cause to be timely filed, all Buyer Prepared Returns and remit, or cause to be remitted, payment for
any Taxes shown as due on such Buyer Prepared Returns.
5.2 Straddle Periods. For purposes of this Agreement, whenever it is necessary to determine the liability for Taxes of the
Company for any Straddle Period, the determination of the Taxes for the portion of the Straddle Period ending on and including,
and the portion of the Straddle Period beginning after, the Closing Date shall be determined by assuming that the Straddle Period
consisted of two (2) taxable years or periods, one which ended at the close of business on the Closing Date (and for this purpose
the tax year of any entity treated as a partnership for federal income Tax purposes shall be treated as ending on the Closing
Date) and the other which began at the beginning of the day following the Closing Date, and items of income, gain, deduction,
loss or credit for the Straddle Period, shall be allocated between such two (2) taxable years or periods on a “closing of
the books basis” by assuming that the books of the Company were closed at the close of the Closing Date; provided,
however, that Taxes not based on or measured by income, receipts or payroll of the Company, such as real and personal property
Taxes, shall be apportioned ratably between such periods based on the number of days for the portion of the Straddle Period ending
on and including the Closing Date, on the one hand, and the number of days for the portion of the Straddle Period beginning after
the Closing Date, on the other hand.
5.3 Contests Related to Taxes.
(a) Buyer (or at the election of Buyer, Buyer’s designee) shall have the right to, at its sole cost and expense, represent the
interests of the Company in all Claims or Proceedings in respect of Taxes of the Company, other than Claims or Proceedings described
in Section 5.3(c); provided, however, that Stockholder Representative shall be permitted, at the cost and
expense of the Company Holders, to be present at, and participate in, the portion of any such Claims or Proceedings relating to
Pre-Closing Taxes for which the Stockholder Indemnitors may be liable under this Agreement (a “Stockholders’ Tax
Claim”).
(b) Buyer agrees to give written notice to the Stockholder Representative of the receipt of any written notice by Buyer or an Affiliate
of Buyer (including, following the Closing, the Company) which involves (i) the assertion or commencement of any Stockholders’
Tax Claim or (ii) the assertion or commencement of any Claim or Proceeding relating to the Intended Tax Treatment.
(c) Notwithstanding Section 5.3(a), the Stockholder Representative, at the cost and expense of the Company Holders, shall have
the sole right, with counsel of its choosing, to represent the interests of the Company in all Stockholders’ Tax Claims;
provided, however, that Buyer and its representatives shall be permitted, at Buyer’s expense, to be present
at, and participate in, any such Stockholders’ Tax Claim. Stockholder Representative shall keep the Buyer reasonably informed
of all material developments in a Stockholders’ Tax Claim the Stockholder Representative does not control.
(d) Neither Buyer nor any Affiliate of Buyer shall be entitled to settle, either administratively or after the commencement of litigation,
(i) any Stockholders’ Tax Claim or (ii) any Claim or Proceeding relating to the Intended Tax Treatment, in each case, without
the prior written consent of Stockholder Representative, which consent shall not be unreasonably withheld, conditioned, or delayed.
(e) This Section 5.3, and not Section 7.3 or Section 7.4, shall control with respect to Claims
and Proceedings in respect of Taxes; provided that Sections 5.4 and 7.5 shall govern with respect to Specified Taxes.
5.4 Procedures for Specified Tax Matters. Notwithstanding anything in this Article V or Article VII to the contrary, the following
procedures shall govern with respect to Specified Taxes:
(a) Except as otherwise permitted pursuant to this Section 5.4, during the Survival Period Buyer shall not, and shall not cause
or permit any of its Affiliates, without Stockholder Representative’s prior written consent (not to be unreasonably withheld
conditioned or delayed), to (i) file any Tax Returns relating to Specified Taxes, (ii) enter into any Voluntary Disclosure Agreement
or enter into in any similar arrangement relating to Specified Taxes, (iii) amend any Tax Returns filed with respect to any Tax
period (or portion thereof) ending on or before the Closing Date that reasonably relates to Specified Taxes, or (iv) make any
Tax election that would reasonably be expected to affect Stockholder Indemnitors’ liability for Specified Taxes.
(b) During the Survival Period, Buyer shall control any ultimate decision as to whether to pursue any Voluntary Disclosure Agreement;
provided, that Buyer shall not be permitted to submit a Voluntary Disclosure Agreement on behalf of the Company or the
Surviving Company, as applicable, without the prior consent of Stockholder Representative (not to be unreasonably withheld conditioned
or delayed). In the event that Buyer determines to pursue a Voluntary Disclosure Agreement:
(i) Prior to submitting any initial VDA Documents (or any subsequent VDA Documents to the extent Buyer proposes amounts higher than
those contained in any such initial VDA Document) or any final VDA Documents to a Governmental Authority, such VDA Documents shall
be delivered to the Stockholder Representative for review. Stockholder Representative shall have five (5) Business Days to review
and provide reasonable comments to such VDA Documents. If Buyer does not receive comments within such five (5) Business Day period,
Buyer shall be permitted to file such VDA Documents to the applicable Governmental Authority. If within such five (5) Business
Day period Stockholder Representative objects in writing to such VDA Documents, Stockholder Representative and Buyer shall cooperate
in good faith to resolve such objection.
(ii) Buyer shall keep Stockholder Representative reasonably informed of any communications relating to any such Voluntary Disclosure
Agreement and Stockholder Representative shall be permitted, at Stockholder Representative’s expense, to be present at and
participate in any meeting relating to such Voluntary Disclosure Agreement.
(c) Buyer shall (and shall cause its Affiliates, including the Surviving Company, to) (i) use commercially reasonable efforts to reasonably
facilitate and reasonably cooperate with Stockholder Representative’s efforts in contacting customers and vendors of the
Company in order to determine whether such customers have paid Taxes relating to any potential liability for Specified Taxes and
obtaining documentary evidence of such payments and (ii) timely execute and file any VDA Documents, Voluntary Disclosure Agreements,
or Tax Returns relating to Specified Taxes.
(d) Any claims or proceedings arising out of the submission of any VDA Documents or Voluntary Disclosure Agreements shall be controlled
by Section 7.5.
(e) Buyer shall be solely responsible for all costs and expenses incurred in the process of remediating any Specified Taxes (but for
the avoidance of doubt, not the amount of such Specified Taxes or any expenses incurred by Stockholder’s Representative).
5.5 Cooperation on Tax Matters. Buyer and the Stockholder Representative shall cooperate fully, as and to the extent
reasonably requested by the other Party, in connection with the preparation and Filing of any Tax Returns and any Claim or Proceeding
with respect to Taxes. Such cooperation shall include the retention and (upon the other Party’s request) the provision of
records and information in such Party’s possession that are reasonably relevant to any such Claim or Proceeding and making
employees available on a mutually convenient basis to provide additional information and explanation of any material provided hereunder.
Any information obtained pursuant to this Section 5.5 or pursuant to any other Section hereof providing for the sharing
of information or review of any Tax Return or other schedule relating to Taxes with respect to the Company shall be kept confidential
by the Parties hereto and their respective legal and tax advisors; provided, the Stockholder Representative shall be permitted
to disclose information as to its employees, advisors, agents or consultants and to the Stockholders, in each case who have a need
to know such information, provided that such persons are subject to confidentiality obligations with respect thereto. Notwithstanding
anything to the contrary herein, nothing in this Agreement shall be interpreted as requiring Buyer to provide to any other party
any consolidated, affiliated, combined, unitary or similar Tax Return that includes Buyer.
5.6 Transfer Taxes. Any transfer, documentary, sales, use, stamp, registration and other similar Taxes, fees, and charges
(including any penalties and interest imposed with respect thereto) incurred in connection with the transactions contemplated herein
shall be borne fifty percent (50%) by Buyer and fifty percent (50%) by the Company Holders (as a Sellers’ Transaction Expense).
Buyer shall prepare and file all necessary Tax Returns and other documentation with respect to all such Taxes, fees, and charges.
5.7 Safe Harbor Election. To the extent permitted by applicable Law, Buyer shall cause the Company to elect the safe
harbor under Rev. Proc. 2011-29, 2011-18 I.R.B., on any applicable Pre-Closing Buyer Prepared Return.
5.8 Reorganization Treatment. None of Buyer, First Merger Sub, Second Merger Sub or any of their respective Affiliates
shall take, or omit to take, any action that would, or would reasonably be expected to, prevent or impede the Intended Tax Treatment.
Article VI
EMPLOYEE
MATTERS
6.1 Benefit Protection. Employees of the Company as of immediately prior to the Closing who continue their employment
with the Buyer immediately following the Closing are referred to herein as the “Continuing Employees.” During
the period commencing on the Closing Date and ending on December 31, 2021 (the “Benefit Protection Period”)
(or such earlier date as the applicable Continuing Employee’s employment terminates for any reason), Buyer shall, or shall
cause a Subsidiary (including the Surviving Company) to, provide to each Continuing Employee with: (a) an annual base salary or
base wages, as applicable, which is no less than the annual base salary or base wages, as applicable, provided to such Company
Employee immediately prior to the First Effective Time; (b) short-term cash-incentive commission opportunities which are made pursuant
to a commission plan substantially similar to the Company’s plan providing such cash-incentive commissions to Company Employees
immediately prior to the First Effective Time; and (c) employee benefits (excluding equity or equity-based compensation, defined
benefit pension or post-retiree medical benefits) in the aggregate which are substantially comparable in the aggregate to the employee
benefits (excluding equity or equity-based compensation, defined benefit pension or post-retirement benefits) provided to such
Company Employee immediately prior to the First Effective Time. Buyer shall, or shall cause a Subsidiary (including the Surviving
Company) to, continue to maintain each medical and pharmaceutical insurance policy which the Company sponsored or maintained immediately
prior to the First Effective Time in which the Continuing Employees shall remain eligible to participate and shall not amend the
network of providers or benefits provided thereunder, in each case, through the end of the Benefit Protection Period. As soon as
practicable following the Closing, Buyer shall provide each Continuing Employee (other than Key Executives) who holds unvested
Company Options as of immediately prior to the First Effective Time with an equity award relating to shares of Buyer’s Class
A common stock with an aggregate value (based on either Buyer’s most recent Internal Revenue Code Section 409A valuation
or the publicly traded price of the Buyer’s Class A common stock, as applicable) that has been agreed upon between the Parties
as memorialized in the email dated as of March 27, 2021 at 17:49 p.m. from the Company to Buyer.
6.2 Buyer Benefit Plan Treatment. Each Continuing Employee shall receive credit for their service with the Company (i)
for all purposes (including eligibility, vesting, benefit accruals and level of benefits) under each employee benefit plan, program,
policy, agreement or arrangement (other than for purposes of any benefit accruals under any defined benefit pension or eligibility
under any post-retiree medical plan or arrangement) sponsored, maintained or contributed to by Buyer and any of its Affiliates
(including the Surviving Company) (collectively, the “Buyer Benefit Plans”) in which such employee is eligible to participate
following the Closing. Buyer shall, or shall cause, (a) any pre-existing condition limitations, exclusions, actively-at-work requirements
and waiting periods to be waived under each Buyer Benefit Plan with respect to each Continuing Employee and (b) the dollar amount
of all co-payments, deductibles and similar out-of-pocket expenses incurred by each Continuing Employee (and his or her eligible
dependents) under any Employee Plan providing health benefits to be recognized and credited under any Buyer Benefit Plan providing
health benefits during the year in which such Continuing Employee becomes eligible to participate in such plan for purposes of
satisfying such year’s co-payments, deductibles and similar out-of-pocket limitations.
6.3 Buyer 401(k) Plan. Buyer shall, or shall cause one of its Affiliates to, continue to maintain the Tock, Inc. 401(k)
Plan (the “Company 401(k) Plan”) through December 31, 2021. Effective as of January 1, 2022, Buyer shall, or
shall cause one of its Affiliates to, maintain or establish, a defined contribution plan that is intended to be tax-qualified (the
“Buyer 401(k) Plan”) and in which the Continuing Employees shall be eligible to participate as of January 1,
2022, subject to satisfaction of eligibility provisions and after taking into account Section 0.
6.4 Treatment of Covenants. Notwithstanding the foregoing, nothing contained herein: (i) shall be treated as an amendment
of or an undertaking to amend any Employee Plan or any employee benefit plan, program or arrangement maintained by the Company,
Buyer, the Surviving Company or any of their respective Affiliates; (ii) is intended to confer any rights, benefits, remedies,
obligations or liabilities hereunder upon any person (including, without limitation, any director, officer or employee and any
dependent or beneficiary thereof) other than the parties hereto and their respective successors and assigns; or (iii) entitles
any Continuing Employee or any other person to remain employed by the Surviving Company or any other entity.
Article VII
SURVIVAL
AND INDEMNIFICATION
7.1 Survival of Representations and Warranties and Covenants.
(a) Except as set forth in the immediately succeeding sentences of this Section 7.1(a), each of the representations
and warranties contained in this Agreement and all indemnification obligations pursuant to Section 7.2(a)(i)(1) and
Section 7.2(b)(i) with respect thereto, shall survive the Closing and expire on the twelve (12) month anniversary of the
Closing Date. The Fundamental Representations and all indemnification obligations pursuant to Section 7.2(a)(i)(1)
and Section 7.2(b)(i) with respect to the Fundamental Representations, shall survive the Closing and expire on the three
(3) year anniversary of the Closing Date. The Extended Representations shall survive the Closing and expire on the two (2) year
anniversary of the Closing Date. All indemnification obligations pursuant to Section 7.2(a)(ii) survive the Closing and
expire on the eighteen (18) month anniversary of the Closing Date. The survival period of each representation or warranty provided
for in this Section 7.1(a) is hereinafter referred to as the “Survival
Period.”
(b) The obligations, covenants and agreements contained in this Agreement and any Transaction Document shall survive the Closing
until the earliest of (i) two (2) years following the Closing, (ii) their earlier expiration or termination by their respective
terms and (iii) until no further performance may be due thereunder.
(c) Any representation, warranty, covenant, obligation or other agreement in respect of which indemnity may be sought under
this Article VII, and any indemnification right (or potential right) or obligation with respect thereto provided for
herein, shall survive the time at which it would otherwise terminate pursuant to Section 7.1(a) or Section 7.1(b)
if written notice of the claim giving rise to such right (or potential right) of indemnification shall have been given to the Person
from whom such indemnification may be sought prior to such time and, in any such case, notwithstanding anything herein to the contrary,
such representation, warranty, covenant, obligation or other agreement shall survive in its entirety until any claim for indemnification
related thereto is settled or resolved in accordance with the terms, conditions and procedures set forth in this Article VII.
7.2 Indemnification.
(a) Subject to the limitations set forth in this Article VII, from and after the Closing, (x) the Company Holders
(solely to the extent amounts pursuant to this Section 7.2(a) are recoverable from the Escrow Amount) and (y) the Sellers
(as applicable, the “Stockholder Indemnitors”), severally and not jointly based on the pro rata allocation of
each such Seller as set forth on Schedule 7.2(a), agrees to the fullest extent permitted by Law to indemnify, defend and
hold harmless Buyer and its Affiliates (including the Surviving Company), and its and their respective Affiliates, directors, officers,
employees, direct or indirect equityholders, agents and other authorized representatives and their respective successors and permitted
assigns (the “Buyer Indemnified Persons”):
(i) from and against any costs, fees or expenses (including reasonable and documented out-of-pocket fees of attorneys, accountants
and other experts, costs of investigation and the costs of enforcing this Agreement and the other Transaction Documents), judgments,
fines, claims, damages, assessments, losses, Liabilities, offsets, interest, awards, fines, penalties, payments, settlements, deficiencies,
interest, disgorgements, suits, actions, royalties and diminution in value (collectively, “Losses”),
which such Buyer Indemnified Person suffers resulting from or arising out of, any of the following matters:
(1) any breach of or inaccuracy in any of the representations and warranties of the Company contained in Article II or
of a Seller contained in any Joinder (disregarding all qualifications or limitations as to “materiality” and “Material
Adverse Effect” and words of similar import set forth therein both for determining whether a breach has occurred and any
Losses relating to such breach);
(2) any nonfulfillment or breach by the Company or Sellers of any of their respective covenants or agreements contained in this
Agreement or any Joinder required to be performed by the Company or Sellers from and after the Closing;
(3) any Indebtedness or Sellers’ Transaction Expenses to the extent not included in the determination of the Final Merger
Consideration;
(4) any action, arbitration, audit, hearing, investigation, litigation, petition, grievance, complaint, suit or Proceeding by
any current, former or alleged security holder of the Company (including against current or former directors of the Company or
the Surviving Company) arising out of or relating to an inaccuracy in the calculation of the Distribution Allocation Schedule or
the distribution of the Closing Cash Consideration, the Closing Equity Consideration, the Final Merger Consideration or any portion
of the Escrow Amount or the Stockholder Representative Expense Amount distributed to the Company Holders; and
(5) any Dissenting Share Payments.
(ii) subject to Section 5.4 and Section 7.5, the specific matters set forth on Schedule 7.2(a)(ii).
(b) Subject to the limitations set forth in this Article VII, from and after the Closing, Buyer agrees to the fullest
extent permitted by Law to indemnify, defend and hold harmless the Company Holders and their respective Affiliates, successors
and permitted assigns (the “Stockholder Indemnified Persons”)
from and against any Losses which such Stockholder Indemnified Person suffers resulting from, based upon, attributable to, or arising
out of, any of the following matters:
(i) any breach of or inaccuracy in any of the representations and warranties of Buyer, First Merger Sub and Second Merger Sub
made in Article III; and
(ii) any nonfulfillment or breach by Buyer, First Merger Sub or Second Merger Sub of any of the covenants or agreements contained
in this Agreement or any nonfulfillment or breach by the Surviving Company of any covenant or agreement contained in this Agreement
required to be performed by the Surviving Company from and after the Closing.
7.3 Third Party Claims.
(a) In order for a Person entitled to indemnification pursuant to Section 7.2 (an “Indemnified
Party”) to seek any indemnification thereunder in respect of any claim asserted by any third party against the
Indemnified Party (a “Third Party Claim”), the Indemnified
Party must, within the applicable Survival Period, deliver a Notice of Claim to Buyer (in circumstances where Buyer is the Responsible
Party) or the Stockholder Representative (in circumstances where the Sellers are the Responsible Party) of the Third Party Claim
promptly (and in any event within ten (10) Business Days) after the Indemnified Party receives any written notice of any action
against or involving the Indemnified Party by a third-party or otherwise discovers the liability, obligation or facts giving rise
to such claim for indemnification. The failure by an Indemnified Party to promptly deliver a Notice of Claim in accordance with
this Section 7.3 (so long as the Notice of Claim is delivered before the expiration of the Survival Period) shall not
affect the Indemnified Party’s right to receive indemnification under Section 7.2 with respect to such matter,
except and only to the extent the Responsible Party is actually prejudiced by such failure. The Indemnified Party will reasonably
cooperate and assist the Responsible Party in determining the validity of any claim for indemnity by the Indemnified Party and
in otherwise resolving such matters.
(b) Responsible Party shall have the right to assume and control the defense of any Third Party Claim at the its expense (subject
to the limitations set forth in Section 7.7(b)), and the Indemnified Party and the Stockholder Representative (if the Sellers
are the Indemnified Party) shall cooperate in good faith in such defense, including by making employees, information and documentation
reasonably available; provided, that in the event the Sellers are (or are alleged to be the Responsible Party), the
Sellers shall not have the right to control the defense of any Third Party Claim if the Indemnified Party is pursuing such Third
Party Claim under the R&W Insurance Policy. In the event that Responsible Party assumes the defense of any Third Party Claim,
it shall have the right to take such action as it deems necessary to avoid, dispute, defend, appeal, settle, compromise, resolve,
make counterclaims or take any other actions pertaining to any such Third Party Claim in the name and on behalf of the Indemnified
Party as it may determine in its sole and absolute discretion and without the prior consent of the Indemnified Party; provided,
that Responsible Party shall keep the Indemnified Party and the Stockholder Representative (if the Sellers are the Indemnified
Party), reasonably apprised of all material developments relating to such Third Party Claim, except where doing so would prejudice
the Responsible Party’s rights.
(c) If the Sellers are (or are alleged to be) the Responsible Party and have not assumed the defense of a Third Party Claim
and Buyer has assumed the defense of such Third Party Claim (a “Buyer
Indemnity Claim”) and Buyer receives the written consent of the Stockholder Representative with respect to the
settlement, compromise or other resolution thereof, then the amount of such settlement, compromise or other resolution (including
any fees or expenses of Buyer in connection with such Third Party Claim) shall be conclusively deemed to constitute Losses for
which Buyer is entitled to indemnification from the Sellers under Section 7.2(a), and Buyer shall not be required to
deliver a Notice of Dispute (or otherwise comply with the procedures set forth in Section 7.4) in respect of its indemnification
for such Losses and shall receive recovery of such Losses in accordance with Section 7.8. If Buyer does receive the
written consent of the Stockholder Representative with respect to the settlement, compromise or other resolution of all or any
portion of a Buyer Indemnity Claim, then with respect to the portion of such Buyer Indemnity Claim for which consent was not received,
Buyer’s right to indemnification with respect to its Losses arising from the settlement, compromise or other resolution which
was not approved by the Stockholder Representative shall be subject to, and resolved in accordance with, the procedures set forth
Section 7.4. In the event that the Stockholder Representative shall have consented in writing to the terms (including
the amount) of any settlement, compromise or other resolution of a Third Party Claim, the Stockholder Representative shall not
have any power or authority to object to the amount of any Losses covered by such settlement, compromise or other resolution.
(d) Notwithstanding the foregoing, where the provisions of this Section 7.3 conflict with the provisions of Section 5.3
or Section 5.4 relating to any Claims or Proceedings in respect of the Taxes described therein, the provisions of Section 5.3
or Section 5.4, as applicable, shall control.
7.4 Procedures Relating to Indemnification for Non-Third Party Claims.
(a) In order for an Indemnified Party to seek indemnification provided for under this Article VII in respect of,
arising out of or involving a claim or demand that is not a Third Party Claim (or a Third Party Claim for which the Sellers may
be the Responsible Party that was settled by Buyer without the consent of the Stockholder Representative), such Indemnified Party
(or Buyer or the Stockholder Representative, as applicable, on such Person’s behalf) must provide Buyer (in circumstances
where Buyer is the Responsible Party) or the Stockholder Representative (in circumstances where the Sellers are the Responsible
Party) with a Notice of Claim setting forth in reasonable detail the basis for such Claim, the underlying facts then known to such
Indemnified Party and a reasonable estimate based on the facts then known of the anticipated Losses with respect thereto. If the
Responsible Party disputes all or any portion of the claim set forth in the Notice of Claim, it shall deliver written notice (a
“Notice of Dispute”) of its objection to such claim
to Buyer or the Stockholder Representative, as applicable, within thirty (30) days after receipt of such Notice of Claim (the “Claim
Dispute Period”). The Notice of Dispute shall describe in reasonable detail the basis for such objection and the
amount of the claim which the Responsible Party or the Stockholder Representative (if the Responsible Party is the Sellers) does
not believe should be subject to indemnification. Notwithstanding anything herein to the contrary, Buyer shall not be precluded
from making a claim for indemnification under this Section 7.4 in accordance with Section 7.3(c).
(b) Upon receipt of any Notice of Dispute, both the Indemnified Party, the Responsible Party and the Stockholder Representative
(if the Responsible Party is the Sellers) shall negotiate in good faith a resolution of such dispute. If a resolution cannot be
reached by the Indemnified Party and the Responsible Party or the Stockholder Representative (if the Responsible Party is the Sellers)
within thirty (30) day after the Indemnified Party’s receipt of the Notice of Dispute, the Parties may thereupon proceed
to pursue any and all available remedies at Law.
(c) Notwithstanding the foregoing, where the provisions of this Section 7.4 conflict with the provisions of Section 5.3
or Section 5.4 relating to Claims or Proceedings in respect of the Taxes described therein, the provisions of Section 5.3
or Section 5.4, as applicable, shall control.
7.5 Specific Indemnity Procedures. Notwithstanding anything to the contrary in this Article VII, subject to Section
5.4, the Responsible Party shall control the defense of any claim or proceeding related to claims for indemnification pursuant
to Section 7.2(a)(ii) during the Survival Period (provided, that there is an amount then remaining in the Specific
Indemnity Escrow Account) (the “Claim Control Period”). The Responsible Party shall consult with and consider
in good faith the views of the Indemnified Party in connection with obtaining any consent, license, settlement, confirmation, action,
or non-action from any Governmental Authority and on strategy and communications with any Governmental Authority; provided,
that the Responsible Party shall not participate independently in any meeting or communication with a Governmental Authority without
providing reasonable advance notice to the Indemnified Party and an opportunity to attend and participate in such meeting or communication.
The Responsible Party must obtain the prior written consent of the Indemnified Party prior to entering into any settlement, decree,
agreement or disposition of any claim or proceeding with respect to a claim or proceeding related to claims for indemnification
pursuant to Section 7.2(a)(i)(4) during the Claim Control Period, unless the proposed settlement, decree, agreement or other
disposition involves only the payment of money damages less than the amount then remaining in the Specific Indemnity Escrow Account
and does not impose an injunction or other equitable relief on the Indemnified Party and does not involve any criminal matters
or require any admission of wrongdoing. Any legal or other third party advisors and consultants retained by Buyer shall be at Buyer’s
sole cost and expense.
7.6 Calculation of Losses; Determination of Application. For the purposes of calculating Losses to which the Buyer Indemnified
Persons and the Stockholder Indemnified Persons are entitled under this Article VII, (i) such Losses shall not include any
punitive, exemplary, special, indirect or punitive damages, except to the extent awarded to a third party in connection with a
Third Party Claim, (ii) such Losses shall be reduced by the amount of any proceeds that an Indemnified Party actually receives
from insurance policies, net of any costs of recovery or premium increases incurred in connection therewith, and such Indemnified
Party shall use commercially reasonable efforts to seek recovery of such insurance proceeds, provided, however, that
the failure to secure any such insurance proceeds shall not (A) be a condition of such Indemnified Party’s rights to any
indemnification payments hereunder, or (B) reduce the amount of any such indemnification payments to such Indemnified Party, and
(iii) such Losses shall be reduced by the amount of any recovery actually received by an Indemnified Party from any other Person
in the form of contribution, indemnification or similar payments with respect to such Losses, net of any costs of recovery or premium
increases incurred in connection therewith, and such Indemnified Party shall use good faith efforts to seek recovery of such amounts,
provided, however, that the failure to secure any such amounts shall not (A) be a condition of such Indemnified Party’s
rights to any indemnification payments hereunder, or (B) reduce the amount of any such indemnification payments to such Indemnified
Party.
7.7 Limitations on Indemnification.
(a) The Indemnified Parties shall be intended third party beneficiaries of this Article VII and are entitled to
directly enforce the provisions thereof.
(b) Except in the case of Fraud or a breach of a Fundamental Representation, the aggregate amount of all payments made by the
Stockholder Indemnitors in satisfaction of claims for indemnification pursuant to Section 7.2(a)(i)(1) shall not exceed
an amount equal to the Indemnity Escrow Amount and shall be payable solely out of the Indemnity Escrow Account.
(c) Except in the case of Fraud, the aggregate amount of all payments made by the Stockholder Indemnitors in satisfaction of
claims for indemnification for a breach of a Fundamental Representation pursuant to Section 7.2(a)(i)(1) shall not exceed
the applicable portion of Final Merger Consideration actually received by such Stockholder.
(d) Except in the case of Fraud, the aggregate amount of all payments made by the Stockholder Indemnitors in satisfaction of
claims for indemnification pursuant to Section 7.2(a)(ii) shall not exceed an amount equal to the Specific Indemnity Escrow
Amount and shall be payable solely out of the Specific Indemnity Escrow Account.
(e) Each Stockholder Indemnitor shall only be responsible for indemnification for a breach of or inaccuracy in its own Joinder
pursuant to Section 7.2(a)(i)(1), and no Stockholder Indemnitor shall be responsible for any breach of or inaccuracy in
the Joinder of any other Stockholder Indemnitor.
(f) Except in the case of Fraud, the aggregate amount of all payments made by Buyer in satisfaction of claims for indemnification
pursuant to Section 7.2(b) shall not exceed an amount equal to the Final Merger Consideration.
(g) Nothing contained in this Article VII shall restrict or prohibit Buyer from making and pursuing any claim under the
R&W Insurance Policy.
7.8 Sources of Recovery; Indemnity Escrow Account; Specific Indemnity Escrow Amount.
(a) From and after the Closing, to satisfy a claim by a Buyer Indemnified Person for indemnification pursuant to Section
7.2(a)(i)(1) (except in respect of breaches of Fundamental Representations or in the case of indemnification pursuant to Section
7.2(a)(i)(5)), such Buyer Indemnified Person shall have recourse, subject to the Survival Period with respect to any such claim
not having passed and other limitations set forth in Article VII, to recover amounts owed in respect of such claim (i) first,
from the Indemnity Escrow Account and (ii) second, solely under the R&W Insurance Policy in accordance with its terms.
(b) From and after the Closing, to satisfy a claim by a Buyer Indemnified Person for indemnification pursuant to Section
7.2(a)(i)(1) (in respect of breaches of Fundamental Representations), Section 7.2(a)(i)(2), Section 7.2(a)(i)(3),
Section 7.2(a)(i)(4), or Section 7.2(a)(i)(5), a Buyer Indemnified Person shall have recourse, subject to the Survival
Period with respect to any such claim not having passed, to recover amounts owed in respect of such claim (i) first, from the Indemnity
Escrow Account (provided, that a Buyer Indemnified Person shall have the right (but not the obligation) in its sole discretion,
to recover from the Indemnity Escrow Account), (ii) second, with respect to Section 7.2(a)(i)(1) (in respect of breaches
of Fundamental Representations) under the R&W Insurance Policy in accordance with its terms and (iii) third, to the extent
not recoverable under the preceding clauses (i) or (ii), if applicable, from each Stockholder Indemnitor on a several, but not
joint, basis in proportion to each such Stockholder Indemnitor’s Pro Rata Amount of the amounts owed in respect of such claim;
provided, that, except in the case of Fraud by such Stockholder Indemnitor, the indemnification obligations of any Stockholder
Indemnitor shall not exceed the applicable portion of the Final Merger Consideration received by such Stockholder Indemnitor.
(c) From and after the Closing, to satisfy a claim by a Buyer Indemnified Person for indemnification pursuant to Section
7.2(a)(ii), a Buyer Indemnified Person shall have recourse, subject to the Survival Period with respect to any such claim not
having passed, to recover amounts owed in respect of such claim only from the Specific Indemnity Escrow Account; provided,
that, in the case of Fraud, a Buyer Indemnified Person shall have recourse, from each Stockholder Indemnitor on a several, but
not joint, basis in proportion to each such Stockholder Indemnitor’s Pro Rata Amount of the amounts owed in respect of such
claim.
(d) In the event any Buyer Indemnified Person brings a claim for indemnification with respect to any Losses and such Losses
are or are alleged to be indemnifiable pursuant to both (i) Section 7.2(a)(i)(1) and (ii) one or more of Sections 7.2(a)(ii)-(v),
such Buyer Indemnified Person shall pursue recovery for such Losses (A) first, pursuant to Section 7.2(a)(i)(1) and, (B)
second, to the extent not recoverable pursuant to Section 7.2(a)(i)(1), pursuant to the applicable provisions of Sections
7.2(a)(ii)-(v).
(e) In the event Losses are to be paid out of the Indemnity Escrow Account in accordance with any of the provisions of this
Article VII, Buyer and the Stockholder Representative shall each execute and deliver joint written instructions to the Escrow
Agent and the Stockholder Representative as to (i) the amount of funds to be disbursed from the Indemnity Escrow Account and (ii)
the manner in which such funds shall be disbursed by the Escrow Agent (an “Escrow
Release Notice”). Such Escrow Release Notice shall be executed and delivered by the Stockholder Representative
promptly (and in any event, no later than two (2) Business Days) after it is determined that Losses are to be paid out of the Indemnity
Escrow Account in accordance with any of the provisions of this Article VII.
(f) On the date that is the twelve (12) month anniversary of the Closing Date, the Stockholder Representative and Buyer shall
jointly instruct the Escrow Agent to release the amount then remaining in the Indemnity Escrow Account less the aggregate
amount of all unresolved claims against the Indemnity Escrow Funds made in good faith prior to such date pursuant to a duly delivered
Notice of Claim or Notice of Dispute in accordance with the terms of this Article VII to the Payment Agent (for further
distribution to the Company Holders in accordance with each such Company Holder’s Pro Rata Amount), subject to withholding
for any Tax amounts required to be withheld under applicable Law.
(g) On the date that is the six (6) month anniversary of the Closing Date, and the twelve (12) month anniversary of the Closing
Date, the Stockholder Representative and Buyer shall jointly instruct the Escrow Agent to release the Specific Indemnity Incremental
Release Amount from the Specific Indemnity Escrow Account less the aggregate amount of any claims recovered against the
Specific Indemnity Escrow Funds and the aggregate amount of all unresolved claims against the Specific Indemnity Escrow Funds made
in good faith prior to such date pursuant to a duly delivered Notice of Claim or Notice of Dispute in accordance with the terms
of this Article VII to the Payment Agent (for further distribution to the Company Holders in accordance with each such Company
Holder’s Pro Rata Amount), subject to withholding for any Tax amounts required to be withheld under applicable Law.
(h) On the date that is the eighteen (18) month anniversary of the Closing Date, the Stockholder Representative and Buyer shall
jointly instruct the Escrow Agent to release the amount then remaining in the Specific Indemnity Escrow Account less the
aggregate amount of all unresolved claims against the Specific Indemnity Escrow Funds made in good faith prior to such date pursuant
to a duly delivered Notice of Claim or Notice of Dispute in accordance with the terms of this Article VII to the Payment
Agent (for further distribution to the Company Holders in accordance with each such Company Holder’s Pro Rata Amount), subject
to withholding for any Tax amounts required to be withheld under applicable Law.
(i) Upon final resolution of any dispute relating to a claim for Losses which Buyer is responsible pursuant to this Article VII,
Buyer shall pay, or cause to be paid, such Losses to the Payment Agent (for further distribution to the Company Holders in accordance
with each such Company Holder’s Pro Rata Amount), subject to withholding for any Tax amounts required to be withheld under
applicable Law.
7.9 Adjustment to Closing Cash Consideration. The Parties agree that any indemnification payments made pursuant to this
Agreement to Buyer or to the Company Holders shall be treated for U.S. federal income Tax purposes and applicable state, local
or non-U.S. Tax purposes, as an adjustment to the Closing Cash Consideration, unless otherwise required pursuant to a final determination
within the meaning of Section 1313 of the Code, or any analogous provision of applicable Law.
7.10 No Circular Recovery. Without limiting its rights under Section 7.2(b) of this Agreement, each Company
Holder hereby agrees that it will not make any claim for indemnification against Buyer or the Surviving Company by reason of the
fact that such Company Holder was a stockholder, option holder, controlling person, director, manager, employee or representative
of the Company or was serving as such for another Person at the request of the Company (whether such claim is for Losses of any
kind or otherwise and whether such claim is pursuant to any Law, Organizational Document, Contract or otherwise) with respect to
any claim brought by a Buyer Indemnified Person against any Company Holder under this Agreement (or the underlying facts and circumstances
of any such claim) or otherwise relating to this Agreement or any of the transactions contemplated hereby. With respect to any
claim brought by a Buyer Indemnified Person against the Sellers under this Agreement or otherwise relating to this Agreement or
any of the transactions contemplated hereby, the Stockholder Representative shall not claim and the Sellers expressly waive any
right of subrogation, contribution, advancement, indemnification or other claim against the Company with respect to any amounts
owed by the Sellers or any Seller pursuant to this Article VII or otherwise. The R&W Insurance Policy will expressly
exclude any right of subrogation against the Sellers by the insurer underwriting the R&W Insurance Policy; provided,
however, that the R&W Insurance Policy shall not be required to exclude the R&W insurer’s right of subrogation
with respect to Buyer’s rights against the Sellers in the case of Fraud by the Company.
7.11 Exclusive Remedy. Each of the parties hereto acknowledges and agrees that from and after the Closing, the indemnification
provisions in this Article VII and Section 8.4 hereto shall be the exclusive remedy of the Buyer Indemnified Persons
with respect to the transactions contemplated by this Agreement except for disputes under Section 1.13, which disputes
under Section 1.13 will be resolved in accordance with the dispute resolution mechanism set forth in Section 1.13.
After the Closing Date, no party may seek the rescission of the transactions contemplated by this Agreement.
7.12 Fraud. Nothing in this Agreement shall limit the liability of any Stockholder Indemnitor in the event of Fraud.
7.13 Stockholder Representative.
(a)
By voting in favor of the adoption of this Agreement, the approval of the principal terms of the Merger, and the consummation
of the Merger or participating in the Merger and receiving the benefits thereof, including the right to receive the consideration
payable in connection with the Merger, each Company Holder shall be deemed to have approved the designation of, and hereby designates,
Shareholder Representative Services LLC as the Stockholder Representative of the Closing for all purposes in connection with this
Agreement and the agreements ancillary hereto. Each of the Company, the Surviving Company, Buyer, First Merger Sub and the Company
Holders hereby acknowledges and agrees that the Stockholder Representative shall have full, sole and exclusive power and authority
to enter into this Agreement, any other Transaction Documents and/or any other document or agreement reasonably related to the
powers and duties of the Stockholder Representative set forth herein, and to take all actions which it believes are necessary or
appropriate under this Agreement and any other Transaction Document (whether on behalf of itself and/or any of the Company Holders),
including without limitation: (i) giving and receiving any notices, documents and instructions permitted or required under this
Agreement or any other Transaction Document; (ii) receiving and accepting legal process in connection with any suit or Proceeding
arising under this Agreement or any other Transaction Document; (iii) interpreting all of the terms and provisions of this Agreement
or any other Transaction Document; (iv) authorizing payments to be made with respect to this Agreement and any other Transaction
Document; (v) bringing claims with respect to, or waiving, any inaccuracies in the representation and warranties of Buyer and First
Merger Sub contained in this Agreement or any other Transaction Document; (vi) defending and making: (A) any post-closing adjustment
claim pursuant to Section 1.13), (B) any indemnity claim pursuant to Section 7.2 of this Agreement and/or
(C) any other claims arising under or related to this Agreement and/or any other Transaction Document (including any and all transactions
contemplated thereby) (each, a “Stockholder Claim”
and collectively, the “Stockholder Claims”), (vii)
consenting to, compromising or settling any and all Stockholder Claims; (viii) conducting negotiations with any Buyer Indemnified
Person, any other Person and/or their respective agents regarding any and all Stockholder Claims; (ix) being indemnified pursuant
to Section 7.2(b) or otherwise; (x) taking all other actions specified in or contemplated by this Agreement or any
other Transaction Document; and (xi) engaging counsel, accountants or other representatives in connection with any of the foregoing
matters. Without limiting the generality of the foregoing, the Stockholder Representative shall have the full, sole and exclusive
power and authority on behalf of itself and the Company Holders, to execute and deliver all documents necessary or desirable to
carry out the intent, and to consent to any amendment hereof or any other Transaction Document. Any decision and/or action taken
by the Stockholder Representative pursuant to the authority granted herein shall be effective and absolutely binding upon all of
the Company Holders and no Company Holder shall have the right to object, dissent, protest or otherwise contest the same. It is
acknowledged that the Stockholder Representative and its representatives have the sole and exclusive authority to negotiate, settle
and/or resolve claims against the Company Holders hereunder and/or any other Transaction Document (other than claims which relate
solely to a particular Company Holder).
(b) The Stockholder Representative will incur no liability of any kind with respect to any action or omission by the Stockholder
Representative in connection with the Stockholder Representative’s services pursuant to this Agreement and any agreements
ancillary hereto, except in the event of liability directly resulting from the Stockholder Representative’s Fraud, gross
negligence or willful misconduct. The Company Holders will indemnify, defend and hold harmless the Stockholder Representative from
and against any and all losses, liabilities, damages, claims, penalties, fines, forfeitures, actions, fees, costs and expenses
(including the fees and expenses of counsel and experts and their staffs and all expense of document location, duplication and
shipment) (collectively, “Representative Losses”) arising out of or in connection with the Stockholder Representative’s
execution and performance of this Agreement and any agreements ancillary hereto, in each case as such Representative Loss is suffered
or incurred; provided, that in the event that any such Representative Loss is finally adjudicated to have been directly caused
by the Fraud, gross negligence or willful misconduct of the Stockholder Representative, the Stockholder Representative will reimburse
the Company Holders the amount of such indemnified Representative Loss to the extent attributable to such gross negligence or willful
misconduct. If not paid directly to the Stockholder Representative by the Company Holders, any such Representative Losses may be
recovered by the Stockholder Representative from (i) the funds in the Stockholder Representative Expense Amount and (ii) any other
funds that become payable to the Company Holders under this Agreement at such time as such amounts would otherwise be distributable
to the Company Holders; provided, that while this section allows the Stockholder Representative to be paid from the aforementioned
sources of funds, the Company Holders are not relieved from their obligation to promptly pay such Representative Losses as they
are suffered or incurred, nor is the Stockholder Representative prevented from seeking any remedies available to it at law or otherwise.
In no event will the Stockholder Representative be required to advance its own funds on behalf of the Company Holders or otherwise.
Notwithstanding anything in this Agreement to the contrary, any restrictions or limitations on liability or indemnification obligations
of, or provisions limiting the recourse against non-parties otherwise applicable to, the Company Holders set forth elsewhere in
this Agreement are not intended to be applicable to the indemnities provided to the Stockholder Representative under this section.
The foregoing indemnities will survive the Closing, the resignation or removal of the Stockholder Representative or the termination
of this Agreement.
(c) The Stockholder Representative is authorized, in its sole discretion, to comply with final, nonappealable Orders or decisions
issued or process entered by any court of competent jurisdiction or arbitrator and if the Stockholder Representative complies with
any such Order, writ, judgment or decree, it shall not be liable to any Company Holder by reason of such compliance even though
such Order, writ, judgment or decree may be subsequently reversed, modified, annulled set aside or vacated.
(d) The appointment of the Stockholder Representative hereunder is coupled with an interest and therefore is irrevocable and
shall survive the bankruptcy, dissolution or liquidation of any Company Holder, and any action taken by the Stockholder Representative
pursuant to the authority granted in this Section 7.13 shall be effective and absolutely binding as the action of the
Stockholder Representative; provided, however, that (i) all of the rights and obligations of the Stockholder Representative
hereunder may be assigned by the Stockholder Representative to any successor-in-interest or Affiliate of the Stockholder Representative
upon prior written notice to Buyer; and (ii) the Stockholder Representative may resign at any time, in which case a majority-in-interest
of the Company Holders according to each Company Holder’s Pro Rata Amount shall appoint a new Stockholder Representative.
(e) The Stockholder Representative Expense Amount will be deposited into an account as designated in the Distribution Allocation
Schedule (the “Stockholder Representative Expense Account”)
for the purpose of paying directly, or reimbursing the Stockholder Representative for, any third-party expenses arising in connection
with the administration of the Stockholder Representative duties under this Agreement and the agreements ancillary hereto. The
Company Holders will not receive any interest or earnings on the Stockholder Representative Expense Amount and irrevocably transfer
and assign to the Stockholder Representative any ownership right that they may otherwise have had in any such interest or earnings.
The Stockholder Representative will not be liable for any loss of principal of the Stockholder Representative Expense Amount other
than as a result of its Fraud gross negligence or willful misconduct. The Stockholder Representative will hold these funds separate
from its corporate funds, will not use these funds for its operating expenses or any other corporate purposes and will not voluntarily
make these funds available to its creditors in the event of bankruptcy. As soon as practicable following the completion of the
Stockholder Representative’s responsibilities, the Stockholder Representative will deliver any remaining balance of the Stockholder
Representative Expense Amount (i) for the account of the Stockholders to the Payment Agent for further distribution to such Stockholders
and (ii) for the account of Option Holders to the Surviving Company for further distribution to such Option Holders via the Surviving
Company’s payroll agent, in each case in proportion to their respective Pro Rata Amount, as set forth in the Distribution
Allocation Schedule. For tax purposes, the Stockholder Representative Expense Amount will be treated as having been received and
voluntarily set aside by the Company Holders at the time of Closing.
Article VIII
MISCELLANEOUS
8.1 Amendment. This Agreement may only amended other than in an instrument in writing signed by Buyer and the Stockholder
Representative, which amendment, once so executed, shall be binding on all Parties as though direct signatories thereto.
8.2 Waiver. Any Party hereto may extend the time for the performance of any of the obligations or other acts required
to be performed by another Party hereunder, waive any inaccuracies in the representations and warranties of another Party contained
herein or in any document delivered pursuant hereto and waive compliance with any of such Party’s agreements or conditions
contained herein. Any such extension or waiver shall be valid only if set forth in an instrument in writing signed by the Party
or Parties to be bound thereby.
8.3 Notices. All notices or other communications which are required or permitted hereunder shall be in writing and sufficient
if delivered personally, sent by nationally recognized overnight courier for next Business Day delivery or by registered or certified
mail (postage prepaid, return receipt requested) or by email (followed by nationally recognized overnight courier) as follows:
|
|
(a)
|
If to Buyer or Surviving Company:
|
Squarespace, Inc.
225 Varick Street
New York, NY 10014
E-mail: legal@squarespace.com
Attention: Legal Department
with a copy (which shall not constitute
notice) to:
Skadden, Arps, Slate, Meagher
& Flom LLP
One Manhattan West
New York, NY 10001
E-mail: Christopher.Barlow@skadden.com
Attention: Christopher Barlow
|
|
(b)
|
If to the Company Holders or to the Stockholder Representative:
|
|
Shareholder Representative
Services LLC
950 17th Street,
Suite 1400
Denver, CO 80202
Attention: Managing Director
Email: deals@srsacquiom.com
Facsimile: (303)
623-0294
|
Telephone: (303) 648-4085
|
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(c)
|
If to the Company (prior
to the Closing):
|
Tock, Inc.
406 N Sangamon St, Fl 3
Chicago, IL 60642
E-mail: nick@tockhq.com
Attention: Nick Kokonas, CEO
with a copy (which shall not constitute
notice) to:
Sidley Austin LLP
One South Dearborn
Chicago, IL 60603
E-mail: cabbinante@sidley.com; jblackburn@sidley.com
Attention: Chris E. Abbinante;
Jonathan A. Blackburn
or to such other address as the Party to
whom notice is to be given may have furnished to the other Parties in writing in accordance with this Section 8.3.
All such notices or communications shall be deemed to be received (i) in the case of personal delivery, upon delivery, (ii) in
the case of nationally recognized overnight courier, on the Business Day immediately following the date of deposit with such courier,
(iii) in the case of registered or certified mail, on the third (3rd) Business Day following the date of deposit in the mail and
(iv) in the case of email, upon delivery if delivered prior to 6:00 P.M. New York, New York time on a Business Day (or, if after
6:00 P.M., on the next Business Day).
8.4 Specific Performance. The Parties recognize and agree that if for any reason any of the provisions of this Agreement
are not performed in accordance with their specific terms or are otherwise breached, immediate and irreparable harm or injury could
be caused for which monetary damages may not be an adequate remedy. Accordingly, the Parties hereto acknowledge and hereby agree
that in the event of any breach or threatened breach by any Company Holder, on the one hand, or Buyer, on the other hand, of any
of their respective covenants or obligations set forth in this Agreement, any Company Holder, on the one hand, and Buyer, on the
other hand, shall be entitled to an injunction or injunctions to prevent or restrain breaches or threatened breaches of this Agreement
and to seek to specifically enforce the terms and provisions of this Agreement to prevent breaches or threatened breaches of, or
to enforce compliance with, the covenants and obligations of the other (as applicable) under this Agreement. None of the Parties
shall be required to provide any bond or other security, or prove damages, in connection with seeking an order to specifically
enforce this Agreement.
8.5 Interpretation. The term “this Agreement” means this Agreement and Plan of Merger together with all schedules
(including the Company Disclosure Schedule), exhibits and annexes hereto, as the same may from time to time be amended, modified,
supplemented or restated in accordance with the terms hereof. When a reference is made in this Agreement to Sections, subsections
or exhibits, such reference shall be to a Section, subsection, or exhibit to this Agreement unless otherwise indicated. The words
“include,” “includes” and “including,” when used herein, shall be deemed in each case to be
followed by the words “without limitation.” The word “herein” and similar references mean, except where
a specific Section or Article reference is expressly indicated, the entire Agreement rather than any specific Section or Article.
Except as otherwise specifically provided herein, the word “material,” when used in reference to any Party’s
representations, warranties, covenants or agreements, shall mean material in relation to such Party. The table of contents and
the headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation
of this Agreement. Any document or item will be deemed “delivered,” “provided” or “made available”
(or words of similar import) within the meaning of this Agreement if a true, correct and complete copy of such document or item
(together with all amendments, supplements or other modifications thereto) has been included in the Data Room at least two (2)
Business Days prior to the date of this Agreement. The definitions contained in this Agreement are applicable to the singular as
well as the plural forms of such terms and to the masculine as well as to the feminine and neuter genders of such terms. Unless
expressly provided otherwise, the measure of a period of one month or year for purposes of this Agreement shall be that date of
the following month or year corresponding to the starting date, provided that if no corresponding date exists, the measure shall
be that date of the following month or year corresponding to the next day following the starting date. For example, one month following
February 18 is March 18, and one month following March 31 is May 1. If the last day for the giving of any notice or the performance
of any act required or permitted under this Agreement is a day that is not a Business Day, then the time for the giving of such
notice or the performance of such action shall be extended to the next succeeding Business Day. All references in this Agreement
to dollars or to $ are expressed in United States currency unless otherwise specifically indicated.
8.6 Severability. If any provision of this Agreement (or any portion thereof) or the application of any such provision
(or any portion thereof) to any Person or circumstance shall be held invalid, illegal or unenforceable in any respect by a court
of competent jurisdiction, such invalidity, illegality or unenforceability shall not affect any other provision hereof (or the
remaining portion thereof) or the application of such provision to any other Persons or circumstances. Upon such a determination,
the Parties shall negotiate in good faith to modify this Agreement so as to effect the original intent of the Parties as closely
as possible in an acceptable manner in order that the transactions contemplated by this Agreement be consummated as originally
contemplated to the fullest extent possible.
8.7 Entire Agreement. This Agreement and the other Transaction Documents (including all exhibits and schedules hereto
and thereto) and other documents and instruments delivered in connection herewith or therewith constitute the entire agreement
and supersede all prior representations, agreements, understandings and undertakings, whether written or oral, among the Parties,
or any of them, with respect to the subject matter hereof and thereof, and no Party is relying on any other prior oral or written
representations, agreements, understandings or undertakings with respect to the subject matter hereof and thereof.
8.8 Assignment. This Agreement and the rights and obligations hereunder may not be assigned without the prior written
consent of Buyer and the Stockholder Representative; provided, that Buyer may assign its rights and obligations hereunder
to any Affiliate of Buyer or in connection with a direct or indirect change of control transaction with respect to the equity interests
of the Surviving Company without the consent of the Stockholder Representative. Subject to the preceding sentence, this Agreement
will be binding upon, inure to the benefit of and be enforceable by the Parties and their respective successors and permitted assigns.
8.9 No Third Party Beneficiaries. Except as set forth in Article VII, nothing in this Agreement, express
or implied, is intended to or shall confer upon any Person other than the Parties hereto any right, benefit or remedy under or
by reason of this Agreement.
8.10 Failure or Indulgence Not Waiver; Remedies Cumulative. No failure or delay on the part of any Party hereto in the
exercise of any right hereunder will impair such right or be construed to be a waiver of, or acquiescence in, any breach of any
representation, warranty, covenant or agreement herein, nor will any single or partial exercise of any such right preclude any
other (or further) exercise thereof or of any other right. Any and all remedies herein expressly conferred upon a party will be
deemed cumulative with and not exclusive of any other remedy expressly conferred hereby, and the exercise by a Party of any one
remedy will not preclude the exercise of any other remedy.
8.11 Non-Recourse. Except to the extent expressly provided herein, no directors, managers, officers, employees, consultants,
agents, direct or indirect equity holders or Affiliates of the Company, any Company Holder or Buyer shall have any personal liability
to the Buyer, the Company, Company Holders, or any other Person as a result of the breach of any representation, warranty, covenant,
agreement or obligation of the Company, Buyer, First Merger Sub or Second Merger Sub in this Agreement or any other Transaction
Documents. Notwithstanding the foregoing, this Section 8.11 shall not apply to Section 7.12, which shall be enforceable by the
Stockholder Representative in its entirety against the Company Holders.
8.12 Governing Law; Venue. This Agreement and the legal relations between the Parties hereto shall be governed by and
construed in accordance with the Law of the State of Delaware, without regard to the conflict of laws rules thereof. Each party
agrees to personal jurisdiction in any action brought in any court, Federal or State, within the State of Delaware having subject
matter jurisdiction over the matters arising under this Agreement. Any suit, action or Proceeding arising out of or relating to
this Agreement shall only be instituted in the State of Delaware. Each Party waives any objection which it may have now or hereafter
to the laying of the venue of such action or Proceeding and irrevocably submits to the jurisdiction of any such court in any such
suit, action or Proceeding.
8.13 Waiver of Jury Trial. EACH PARTY HERETO ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT
IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE IT HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT
IT MAY HAVE TO A TRIAL BY JURY WITH RESPECT TO ANY ACTION DIRECTLY OR INDIRECTLY RELATED TO OR ARISING OUT OF THIS AGREEMENT OR
ANY TRANSACTION DOCUMENT OR ANY TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
8.14 Counterparts. This Agreement may be executed in one or more counterparts including by electronic transmission in
portable document format (.pdf), which when taken together shall constitute one and the same agreement.
8.15 Termination. Notwithstanding anything herein to the contrary, this Agreement may be terminated by Buyer, by written
notice to the Company (including by electronic mail), at any time prior to the First Effective Time if the Company has not delivered
to Buyer the duly executed Written Consent signed by the Requisite Stockholders prior to the date that is one (1) Business Day
after the date hereof. In the event of the termination of this Agreement pursuant to this Section 8.15, this Agreement
shall thereafter become void and have no further force and effect, and no Party hereto (nor any of its Affiliates) shall have any
liability to any other Person under this Agreement; provided that (i) the obligations of the Parties hereto contained in
Section 7.12(b), in this Section 8.15 and Article VIII (other than Section 8.4) shall
survive the termination of this Agreement and (ii) nothing herein shall relieve any Party hereto from any liability or damages
for breach of this Agreement.
8.16 Representation of the Company Holders. The parties to this Agreement acknowledge and agree that Sidley Austin LLP
has represented the Company Holders in connection with the entry into this Agreement and the consummation of the transactions contemplated
hereby, provided that all files of Sidley Austin LLP relating to this Agreement or any of the transactions contemplated by this
Agreement shall be deemed to be files relating to Sidley Austin LLP’s representation of the Company Holders and not the Company.
Buyer agrees, on its own behalf and on behalf of the Buyer Indemnified Persons, that, following the Closing, Sidley Austin LLP
may serve as counsel to Company Holders or any of their respective officers, directors or Affiliates in connection with any matters
related to this Agreement and the transactions contemplated hereby, including any litigation, claim or obligation arising out of
or relating to this Agreement or the transactions contemplated by this Agreement, or any other matters, notwithstanding any representation
by Sidley Austin LLP prior to the Closing of the Company. Buyer and the Company hereby (i) waive any claim they have or may
have that Sidley Austin LLP has a conflict of interest or is otherwise prohibited from engaging in such representation, and (ii) agree
that, in the event that a dispute arises after the Closing between Buyer, the Company and any Company Holder or any Affiliate of
a Company Holder, Sidley Austin LLP may represent such Company Holder or any of Affiliates of such Company Holder in such dispute
even though the interests of such person(s) may be directly adverse to Buyer or the Company and even though Sidley Austin LLP may
have represented the Company in a matter substantially related to such dispute. Buyer and the Company also further agree that,
as to all communications among Sidley Austin LLP and the Company, the Company Holders and the Company Holders’ Affiliates
and representatives, that relate in any way to this Agreement or the transactions contemplated by this Agreement, the attorney-client
privilege and the expectation of client confidence belongs to and may be controlled by the Company Holders and shall not pass to
or be claimed by Buyer or the Company. To the extent any files of Sidley Austin LLP in respect of this Agreement or the transactions
contemplated by this Agreement constitute property of the client, only the Company Holders (and not the Company) will hold such
property rights. Notwithstanding the foregoing, in the event that a dispute arises between Buyer or the Company and a third party
other than a party to this Agreement after the Closing, the Company may assert the attorney-client privilege to prevent disclosure
of confidential communications by Sidley Austin LLP to such third party; provided, however, that the Company may not waive such
privilege voluntarily without the prior written consent of the Stockholder Representative.
[Remainder of this page intentionally
left blank]
IN WITNESS WHEREOF,
the undersigned have caused this Agreement to be executed as of the date first written above.
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BUYER
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SQUARESPACE, INC.
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By:
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/s/ Anthony Casalena
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Name: Anthony Casalena
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Title: Founder & CEO
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FIRST MERGER SUB
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TREMONT 2021 ACQUISITION CORP.
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By:
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/s/ Marcela Martin
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Name: Marcela Martin
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Title: President
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SECOND MERGER SUB
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TREMONT 2021 ACQUISITION II LLC
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By:
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/s/ Marcela Martin
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Name: Marcela Martin
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Title: Officer
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[Signature Page to Agreement and Plan
of Merger]
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COMPANY
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TOCK, INC.
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By:
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/s/ Nicholas Kokonas
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Name: Nicholas Kokonas
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Title: Chief Executive Officer
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[Signature Page to Agreement and Plan
of Merger]
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STOCKHOLDER REPRESENTATIVE
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SHAREHOLDER REPRESENTATIVE SERVICES
LLC, solely in its capacity as Stockholder Representative
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By:
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/s/ Sam Riffe
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Name: Sam Riffe
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Title: Managing Director
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[Signature Page to Agreement and Plan
of Merger]
Annex A
Defined Terms
For purposes of this
Agreement, the following terms shall have the following meanings:
“280G Shareholder
Vote” has the meaning set forth in Section 2.11(l).
“Accountant”
has the meaning set forth in Section 1.13(c).
“Accounting
Methodology” means, to the extent consistent with GAAP, the accounting principles, methodologies, judgments, procedures
and practices of the Company, as applied in the preparation of the Financial Statements, and if inconsistent with GAAP, then GAAP.
“Accounts
Receivable” means the Company’s accounts and notes receivable, net of reserves related thereto, plus all
deposits receivable, advances receivable and rights to rebates and refunds of any type, in each case, to the extent receivable
within the ninety (90) days following the Closing Date.
“Accredited
Investor” has the meaning ascribed to that term is defined in Rule 501 of Regulation D of the Securities Act.
“Actual Cash”
has the meaning set forth in Section 1.13(b).
“Actual Indebtedness”
has the meaning set forth in Section 1.13(b).
“Actual Sellers’
Transaction Expenses” has the meaning set forth in Section 1.13(b).
“Actual Working
Capital” has the meaning set forth in Section 1.13(b).
“Adjusted
Closing Cash Consideration” has the meaning set forth in Section 1.13(d).
“Adjustment
Escrow Account” has the meaning set forth in Section 1.5(b)(iv).
“Adjustment
Escrow Amount” means $400,000.
“Adjustment
Escrow Funds” means the Adjustment Escrow Amount, and all interest and earnings thereon, as may be reduced from
time to time as a result of disbursements thereof pursuant to the Escrow Agreement.
“Affiliate”
means, with respect to any Person, any other Person who directly or indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with, such Person. The term “control” means the possession, directly or indirectly,
of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting
securities, by contract or otherwise, and the terms “controlled” and “controlling” have meanings correlative
thereto.
“Aggregate
Option Closing Cash Consideration” has the meaning set forth in Section 1.8(b)(ii).
“Aggregate
Option Exercise Price” means the aggregate exercise prices of each of the Cashed-Out Company Options, if any.
“Agreement”
has the meaning set forth in the Preamble.
“Alinea”
has the meaning set forth in Section 1.5(a)(x).
“Balance
Sheet Date” has the meaning set forth in Section 2.8(a).
“Beneficially
Own” means, with respect to any securities, having “beneficial ownership” for purposes of Rule 13d-3 or 13d-5
under the Exchange Act as in effect on the date hereof. Similar terms such as “Beneficial Ownership” and “Beneficial
Owner” have the corresponding meanings.
“Benefit Protection
Period” has the meaning set forth in Section 6.1.
“Bonus Award
Amount” means $972,500.
“Business”
means the business of the Company of creating, developing, operating and maintaining a platform and application that facilitates
reservation, guest, table management, takeout, pickup and delivery, and event management ticketing systems and related services.
“Business
Day” means a day, other than a Saturday or Sunday, on which commercial banks in New York City are open for the
general transaction of business.
“Buyer”
has the meaning set forth in the Preamble.
“Buyer 401(k)
Plan” has the meaning set forth in Section 6.3.
“Buyer Benefit
Plans” has the meaning set forth in Section 0.
“Buyer Class
A Common Shares” has the meaning set forth in Section 3.9(a).
“Buyer Class
B Common Shares” has the meaning set forth in Section 3.9(a).
“Buyer Class
C Common Shares” has the meaning set forth in Section 3.9(a).
“Buyer Common
Stock” means Class C Common Stock of Buyer, $0.0001 par value per share.
“Buyer Disclosure
Schedule” has the meaning set forth in Article III.
“Buyer Financial
Statements” has the meaning set forth in Section 3.6(a).
“Buyer
Indemnified Persons” has the meaning set forth in Section 7.2(a).
“Buyer
Indemnity Claim” has the meaning set forth in Section 7.3(c).
“Buyer
Prepared Returns” has the meaning set forth in Section 5.1(a).
“Buyer Series
A-1 Preferred Shares” has the meaning set forth in Section 3.9(a).
“Buyer Series
A-2 Preferred Shares” has the meaning set forth in Section 3.9(a).
“Buyer Series
B Preferred Shares” has the meaning set forth in Section 3.9(a).
“Buyer Shares”
has the meaning set forth in Section 3.9(a).
“Cash”
means all cash and the fair market value of all cash equivalents that are immediately convertible into cash of the Company (without
giving effect to the transactions contemplated by this Agreement), in each case, determined in accordance with the Accounting Methodology
and held in any account of the Company, (i) excluding the amount of any (A) issued but uncleared checks, wires or drafts and any
cash overdrafts or other negative balances (B) any cash or cash equivalents not freely distributable due to legal, regulatory or
contractual constraints or otherwise of the type commonly referred to as “restricted” or “trapped” cash,
(C) any deposits of third parties, cash held as collateral, and any sales, condemnation or insurance proceeds from the occurrence
of any sale, condemnation, casualty or loss event with respect to any properties or assets of the Company, and (D) GMV Cash, and
(ii) including checks and drafts deposited, and deposits in transit, occurring from the normal course of business for typical receipts
or collections from third parties, for the account of the Company or on hand at the Company or available for deposit for the account
of the Company. All GMV clearing accounts shall be included in the calculation of GMV Cash.
“Cash-Only
Share” has the meaning set forth in Section 1.8(a)(i).
“Cash-Only
Share Consideration” has the meaning set forth in Section 1.8(a)(i).
“Cashed-Out
Company Option” means each Company Option (or portion thereof) that, as of immediately prior to the First Effective
Time, is vested, unexpired, outstanding and unexercised (including any portion of a Company Option that becomes vested as a result
of the transactions contemplated by this Agreement pursuant to the terms of the under award agreement or action taken by the Company
in accordance with Section 1.8(b)(i) of this Agreement) and has a per share exercise price that is lower than the Closing Per Share
Merger Consideration.
“Certificate
of Incorporation” means that certain Third Amended and Restated Certificate of Incorporation of the Company, dated
as of June 16, 2020, as amended, modified or supplemented from time to time prior to the Closing.
“Claim”
means any claim, suit, action, arbitration, cause of action, complaint, criminal prosecution, demand letter, charge, audit, assessment,
inquiry, investigation, or Proceeding, whether at law or in equity, before or by any Governmental Authority.
“Claim Control
Period” has the meaning set forth in Section 7.5.
“Claim
Dispute Period” has the meaning set forth in Section 7.4(a).
“Class A Common
Shares” has the meaning set forth in Section 2.3(a).
“Class
A Common Stock” means Class A common stock of the Company, $0.00001 par value per share.
“Closing”
has the meaning set forth in Section 1.3.
“Closing
Cash Consideration” means an amount in U.S. dollars equal to (i) $225,000,000, plus (ii) the aggregate
amount of Estimated Cash, minus (iii) the aggregate amount of the Estimated Indebtedness, minus (iv) the aggregate
amount of Estimated Sellers’ Transaction Expenses, minus (v) the amount, if any, by which Estimated Working Capital
is less than Target Working Capital (a “Downward Closing Working Capital Adjustment”),
plus (vi) the amount, if any, by which Estimated Working Capital is greater than Target Working Capital (an “Upward
Closing Working Capital Adjustment”), plus (vii) the Cash-Only Share Consideration, plus (viii)
the Cash-Only Option Consideration minus (ix) the Escrow Amount, minus (ix) the Stockholder Representative Expense
Amount.
“Closing
Date” has the meaning set forth in Section 2.2.
“Closing Equity
Consideration” means 2,776,949 shares of Buyer Common Stock less the number of shares of Buyer Common Stock with
an aggregate value equal to the sum of (i) the Cash-Only Share Consideration and (ii) the Cash-Only Option Consideration.
“Closing
Per Share Merger Consideration” means an amount equal to (i) the sum of (A) the Closing Cash Consideration, (B)
the cash value of the Closing Equity Consideration (as set forth in the Distribution Allocation Schedule), and (C) the Aggregate
Option Exercise Price, divided by (ii) the Fully Diluted Number of Shares.
“COBRA”
has the meaning set forth in Section 2.11(g).
“Code”
means the U.S. Internal Revenue Code of 1986, as amended.
“Common
Shares” has the meaning set forth in Section 2.3(a).
“Common
Stock” means common stock of the Company, $0.00001 par value per share.
“Company”
has the meaning set forth in the Preamble.
“Company
Board” has the meaning set forth in the Recitals.
“Company
Bylaws” means those certain Bylaws of the Company, adopted as of September 30, 2016, as amended, modified or supplemented
from time to time prior to the Closing.
“Company
Disclosure Schedule” has the meaning set forth in Article II.
“Company
Holders” means the Stockholders and the Option Holders.
“Company
Intellectual Property” has the meaning set forth in Section 2.15(b).
“Company Option
Plan” means the Tock, Inc. 2016 Equity Incentive Plan.
“Company
Options” means each unexercised option to purchase Common Shares that is outstanding immediately prior to the
First Effective Time, whether or not vested or exercisable, granted under the Company Option Plan or otherwise.
“Company
Permits” has the meaning set forth in Section 2.7(b).
“Company
Shares” has the meaning set forth in Section 2.3(a).
“Company Software”
has the meaning set forth in Section 2.15(a).
“Company Stockholder
Approval” has the meaning set forth in Section 2.4.
“Confidential
Information” means nonpublic information, knowledge, or data relating to the business of the Company, including
(i) any information, knowledge, or data which the Company treat as proprietary, (ii) any and all Company Intellectual Property,
know-how, research and development information, plans, proposals, technical data, copyright works, financial, trade secrets, marketing
and business data, customer lists, pricing and cost information, information related to the Company Intellectual Property, business
and marketing plans, customer and supplier lists, or Personal Information, and (iii) all copies of any of the foregoing or any
analyses, studies or reports that contain, are based on, or reflect any of the foregoing, in each case, whether oral or in writing,
and whether or not marked, labeled, or otherwise identified as “confidential” or the like and whether or not developed
independently prior to or during any affiliation with the Company.
“Contaminants”
has the meaning set forth in Section 2.15(k).
“Continuing
Employees” has the meaning set forth in Section 6.1.
“Contract”
means any written or oral contract, lease, agreement, bond, note, mortgage, indenture agreement, subcontract, license, purchase
order, or other legally binding arrangement, understanding, undertaking, commitment or obligation.
“Current
Assets” means, with respect to the Company, without duplication, all current assets of the Company as calculated
in accordance with the Accounting Methodology and in a manner consistent with the example calculation set forth on Annex C
hereto.
“Current Liabilities”
means, with respect to the Company, without duplication, all current liabilities of the Company as calculated in accordance with
the Accounting Methodology and in a manner consistent with the example calculation set forth on Annex C hereto.
“D&O Tail
Policy” has the meaning set forth in Section 4.5.
“Data
Room” means the online data room hosted by Datasite entitled “Data Room 2021”.
“Deferred
Payroll Taxes” means any “applicable employment taxes” of the Company the payment of which has, as of the
date of this Agreement, been deferred pursuant to Section 2302 of the Coronavirus Aid, Relief and Economic Security (CARES) Act.
“DGCL”
has the meaning set forth in the Recitals.
“Dissenting
Share Payments” means (i) any payment in respect of Dissenting Shares in excess of the consideration that otherwise would
have been payable in respect of such Dissenting Shares in accordance with this Agreement, and (ii) any Losses, including attorneys’
fees, costs and expenses in connection with any Claim, action or Proceeding or in connection with any investigation, in respect
of any Dissenting Shares.
“Dissenting
Shares” has the meaning set forth in the Section 1.12.
“Distribution
Allocation Schedule” has the meaning set forth in the Recitals.
“DLLCA”
has the meaning set forth in the Recitals.
“Employee
Plan” has the meaning set forth in Section 2.11(a).
“Employment
Documents” has the meaning set forth in the Recitals.
“Employment
Laws” means all Laws governing labor and employment, including Laws relating to employment practices, wages, hours,
classification of workers, affirmative action, collective bargaining, discrimination, harassment, sexual harassment, disability,
unemployment insurance, termination, retaliation, civil rights, terms and conditions of employment, immigration, safety and health,
mass layoff, plant closings, and termination of service, including to the extent applicable, the Age Discrimination in Employment
Act, Title VII of the Civil Rights Act of 1964, the Civil Rights Act of 1991, the Fair Labor Standards Act (29 U.S.C. 201, et seq.),
the Americans with Disabilities Act, the Occupational Safety and Health Act, the Family Medical and Leave Act (29 U.S.C. 2601,
et seq.), the National Labor Relations Act of 1935, Executive Order 11246 and any other executive orders or regulations governing
affirmative action, the Worker Readjustment and Notification Act (29 U.S.C. § 2101) (collectively, with any similar foreign,
state, or local Law, “WARN”) and other applicable employment Laws,
including foreign Laws.
“Environmental
Laws” means any Laws relating to (i) Releases or threatened Releases of Hazardous Substances or materials containing
Hazardous Substances, (ii) the manufacture, handling, transport, use, treatment, storage, emission, discharge, or disposal of Hazardous
Substances or materials containing Hazardous Substances, or (iii) pollution or protection of the environment or of human health
and safety as such is affected by Hazardous Substances or materials containing Hazardous Substances.
“Environmental
Permits” means any Permit issued pursuant to the Environmental Laws.
“ERISA”
has the meaning set forth in Section 2.11(a).
“ERISA
Affiliate” means each trade or business (whether or not incorporated) under common control with, or otherwise
treated as a single employer with, the Company within the meaning of Section 414(b), (c), (m) or (o) of the Code or Section 4001
of ERISA.
“Escrow
Agent” means American Stock Transfer & Trust Company, LLC.
“Escrow
Agreement” means that certain Escrow Agreement, by and among the Escrow Agent, Buyer and the Stockholder Representative,
substantially in the form attached hereto as Exhibit D.
“Escrow
Amount” means an amount in U.S. dollars equal to the sum of (i) the Adjustment Escrow Amount, plus (ii)
the Indemnity Escrow Amount plus (iii) the Specific Indemnity Amount.
“Escrow Release
Notice” has the meaning set forth in Section 7.8(e).
“Estimated
Cash” has the meaning set forth in Section 1.13(a).
“Estimated
Indebtedness” has the meaning set forth in Section 1.13(a).
“Estimated
Sellers’ Transaction Expenses” has the meaning set forth in Section 1.13(a).
“Estimated
Working Capital” has the meaning set forth in Section 1.13(a).
“Excess
Adjustment Amount” has the meaning set forth in Section 1.13(d)(i).
“Exchange
Act” means the U.S. Securities Exchange Act of 1934, as amended.
“Extended
Representations” means the representations and warranties set forth in Section 2.15 (Intellectual
Property and Information Technology, Privacy).
“Filing”
means any registration, petition, statement, application, schedule, form, declaration, notice, notification, report, submission
or other filing.
“Final Cash”
has the meaning set forth in Section 1.13(b).
“Final Indebtedness”
has the meaning set forth in Section 1.13(b).
“Final Merger
Consideration” means an amount equal to the sum of (i) the Closing Cash Consideration, (ii) the Closing Equity Consideration,
(iii) the payments, if any, required to be made to the Payment Agent for the benefit of the Stockholders pursuant to Section 1.13,
(iv) the Escrow Amount less any amounts payable therefrom to Buyer or any Buyer Indemnified Person pursuant to this Agreement or
the Escrow Agreement, and (iv) any amounts with respect to the Stockholder Representative
Expense Account returned pursuant to Section 7.13(e).
“Final Sellers’
Transaction Expenses” has the meaning set forth in Section 1.13(b).
“Final Working
Capital” has the meaning set forth in Section 1.13(b).
“Financial
Statements” has the meaning set forth in Section 2.8(a).
“First Effective
Time” has the meaning set forth in Section 1.4(a).
“First Merger”
has the meaning set forth in the Recitals.
“First Merger
Certificate” has the meaning set forth in Section 1.1(a).
“First
Merger Sub” has the meaning set forth in the Preamble.
“First-Step
Surviving Corporation” has the meaning set forth in Section 1.1(b).
“Form
Customer Contracts” has the meaning set forth in Section 2.21(d).
“Fraud”
means common law fraud, but not equitable fraud or fraud by negligent or innocent mistake, in each case, as defined under applicable
Law.
“Fully
Diluted Number of Shares” means the number of Company Shares issued and outstanding as of immediately prior to
the First Effective Time and shall be calculated assuming that all Cashed-Out Company Options are vested and exercised and all
Other Convertible Securities that are directly or indirectly exercisable, convertible or exchangeable for Company Shares have been
so exercised, converted or exchanged.
“Fundamental
Representations” means the representations and warranties set forth in Section 2.1 (Organization and
Qualification), Section 2.3 (Capitalization), Section 2.4 (Authority; Enforceability), Section 2.5
(No Conflict; Required Filings and Consents), Section 2.19 (Brokers), Section 3.1 (Organization and Qualification),
Section 3.2 (Authority; Enforceability), Section 3.3 (No Conflict; Required Filings and Consents) and Section 3.7
(Brokers) and the representations and warranties of the Seller set forth in the Joinder.
“GAAP”
means United States generally accepted accounting principles, consistently applied.
“GMV Cash”
means gross merchandise volume cash held by the Company in a temporary capacity on behalf of its customers as calculated in accordance
with the Accounting Methodology and in a manner consistent with the example calculation set forth on Annex C hereto.
“Governmental
Approval” means any consent, approval, Order or authorization of, or registration, declaration or Filing with,
any Governmental Authority.
“Governmental
Authority” means any (i) supernational, federal, national, regional, state, provincial, municipal, local, foreign
or other government, (ii) governmental or quasi-governmental entity of any nature (including any court, branch, department, official,
entity or political subdivision or agency thereof, including any administrative agency or commission), or (iii) body exercising
or entitled to exercise any administrative, executive, judicial, legislative, police, regulatory or taxing authority or power of
any nature, including any arbitral tribunal, arbitrator or mediator.
“Grant
Date” has the meaning set forth in Section 2.3(f).
“Hazardous
Substances” means (i) those substances, materials or wastes defined as toxic, hazardous, acutely hazardous, pollutants
or contaminants, in, or regulated under, any Environmental Law, and all Regulations thereunder and any analogous foreign or state
statutes, (ii) petroleum and petroleum products, including crude oil and any fractions thereof, (iii) natural gas, synthetic gas,
and any mixtures thereof, and (iv) polychlorinated biphenyls, asbestos, molds that would reasonably be expected to have an adverse
effect on human health and urea formaldehyde foam insulation.
“Indebtedness”
means, without duplication, all obligations of the Company consisting of all (i) indebtedness for borrowed money, whether current,
short-term or long-term, secured or unsecured, (ii) indebtedness represented by bonds, notes, debentures or other securities or
similar instruments, in each case, including the outstanding principal amount and accrued and unpaid interest related thereto,
and any fees, expenses and other payment obligations related thereto (including any prepayment penalties, premiums, costs, breakage
or other amounts payable as a result of the consummation of the transactions contemplated by this Agreement), (iii) liabilities
with respect to any lease (or other arrangement conveying the right to use) real or personal property, or a combination thereof,
which are required to be classified and accounted for as capital leases under GAAP, (iv) obligations for the deferred purchase
price of property, assets or services, including “purchase price adjustments”, “earn-outs” and “seller
notes” (but excluding any trade payables or accrued expenses arising in the ordinary course of business), (v) reimbursement
and other obligations with respect to letters of credit, bank guarantees, bankers’ acceptances, performance bonds, bank overdrafts
or other similar instruments, in each case, solely to the extent drawn, (vi) off-balance-sheet arrangements within the meaning
of Item 303 of Regulation S-K of the Securities Act and the rules and regulations promulgated thereunder, (vii) obligations, including
any costs or fees, with respect to any interest rate, currency swap, cap, forward, or other similar arrangements designed to provide
protection against fluctuations in any price or rate, (viii) all current but unpaid income and franchise Tax liabilities of the
Company attributable to Pre-Closing Tax Periods (determined under the principles of Section 5.2) and liabilities for the
Deferred Payroll Taxes of the Company, (ix) obligations under sale-and-lease back transactions, (x) aggregate amounts of any declared
but unpaid distributions or dividends to equityholders and (xi) guarantees by the Company (to the extent of the amount of such
guarantees) of any obligations of the type described in the foregoing clauses (i) through (ix), (xii) obligations of the type
described in the foregoing clauses (i) through (xi), that are secured by any Lien on any property or asset of the Company
(whether or not such obligation is assumed by such Person), the amount of such obligation being deemed to be the lesser of the
value of such property or assets or the amount of the obligation so secured, and (xiii) amounts necessary and sufficient to retire
each of the foregoing items of indebtedness, including principal (including the current portion thereof) and/or scheduled payments,
accrued interest or finance charges and other fees, penalties, premiums, indemnities, brokerage costs or payments (prepayment or
otherwise) necessary and sufficient to retire such indebtedness at Closing.
“Indemnified
Party” has the meaning set forth in Section 7.3(a).
“Indemnity
Escrow Account” has the meaning set forth in Section 1.5(b)(iv).
“Indemnity
Escrow Amount” means $ 1,556,250.
“Indemnity
Escrow Funds” means the Indemnity Escrow Amount, and all interest and earnings thereon, as may be reduced from
time to time as a result of disbursements thereof pursuant to the Escrow Agreement.
“Information
Statement” has the meaning set forth in Section 4.2(b).
“Intellectual
Property” means all intellectual property of any type or nature, however denominated, protected, created or arising
under the Law anywhere in the world, including (i) all trademarks, trade names, service marks, service names, logos, product names,
corporate names, assumed names, trade dress and all other indicia of source and origin, whether registered or unregistered, and
all applications for the registration thereof, together will all of the goodwill associated therewith, (ii) Internet domain names
and social media accounts, (iii) all works of authorship and all copyrights (whether registered or unregistered), including all
copyrights in websites, and applications for registration thereof, (iv) proprietary data, database rights, and proprietary rights
in Software, (v) all classes and types of patents, including originals, reissues, divisions, renewals, extensions, provisionals,
continuations and continuations-in-part, patent applications and patent disclosures, (vi) trade secrets, inventions (whether patentable
or unpatentable and whether or not reduced to practice), and other confidential and proprietary know-how, information, ideas, methods,
procedures, processes, specifications, plans, proposals, improvements, inventions, applications, tools, supplier lists, that in
each case derive independent economic value from not being generally known and not being readily ascertainable by proper means
(all of the foregoing in subsection (vi) collectively, “Trade Secrets”),
(vii) rights of publicity, (viii) moral rights and rights of attribution, (ix) any and all registrations, applications for registration,
renewals, extensions, revisions or restorations, common-law rights and statutory and contractual rights relating to any of the
foregoing and (x) all claims or causes of action arising out of or related to past, present or future infringement or misappropriate
of the foregoing.
“IP
Licenses” has the meaning set forth in Section 2.6(a)(viii).
“Joinder”
has the meaning set forth in the Preamble.
“Key Executives”
means Nick Kokonas, Brian Fitzpatrick and Jeff Kaplan.
“Knowledge”
means, with respect to the Company, the knowledge of Nick Kokonas, Brian Fitzpatrick, Jeff Kaplan, Stephen Bernacki and Alexandra
Kleiman.
“Labor
Union” has the meaning set forth in Section 2.12(a).
“Law”
means all federal, provincial, state, municipal, local and foreign laws (including common law), statutes, rules, standards, formal
guidance, ordinances, directives, Regulations, codes, promulgations, treaties, resolutions, decrees, writs, agency requirements
and similar mandates and Orders of any Governmental Authority.
“Lease”
has the meaning set forth in Section 2.13(b).
“Leased
Real Property” has the meaning set forth in Section 2.13(b).
“Letter
of Transmittal” has the meaning set forth in Section 1.10(b).
“Liability”
means any debt, liability or obligation of any nature or kind whatsoever (whether direct or indirect, absolute or contingent, accrued
or unaccrued, liquidated or unliquidated, known or unknown, asserted or unasserted, determined, determinable or otherwise, directly
incurred or consequential, due or to become due, and whether or not required to be accrued on financial statements prepared in
accordance with GAAP and on a consistent basis with the Company’s past practices).
“Lien”
means any lien (statutory or otherwise), charge, pledge, Claim, encumbrance, security interest, mortgage, deed of trust, hypothecation,
encumbrance, community property interest, limitation on voting rights, option, buy/sell agreement, servitude, or any other lien
of any nature or kind whatsoever (other than, in the case of a security, any restriction on transfer of such security arising solely
under federal or state securities Laws); provided, however, that the term “Lien” shall not include
(i) liens for Taxes that are not yet due and payable or that are being contested in good faith through appropriate proceedings
and which are adequately reserved or accrued for in the Financial Statements in accordance with GAAP, (ii) statutory liens in favor
of carriers, warehousemen, mechanics and materialmen or other similar liens, (iii) general restrictions on transfer of securities
imposed by applicable state, federal and foreign securities Laws, and (iv) non-exclusive licenses of Company Intellectual Property
granted by the Company in the ordinary course of business.
“Losses”
has the meaning set forth in Section 7.2(a).
“Marketplace”
means a physical or electronic medium through which persons other than the owner or operator of the medium make sales of taxable
items, which may include a store, Internet website, software application, or catalog.
“Marketplace
Facilitator Laws” means any law that shifts responsibility for tax collection and remittance from a Marketplace Seller
to a Marketplace Facilitator.
“Marketplace
Facilitator” means a Person who, pursuant to an agreement with an unrelated third-party Marketplace Seller, directly or indirectly
through one or more Affiliates facilitates a sale by such unrelated third-party Marketplace Seller by (i) providing the Marketplace
in which, or by means of which, such sale takes place or the offer of sale is accepted and (ii) collecting receipts paid by a purchaser
to a Marketplace Seller for the underlying item of property.
“Marketplace
Seller” means a Person that sells or offers to sell property through a Marketplace operated by an unrelated third-party
Marketplace Facilitator.
“Material
Adverse Effect” means any change, event, effect, change of facts, circumstance, or occurrence (collectively, “Events”)
that, (a) individually or in the aggregate, has had or would reasonably be expected to have, a material adverse effect on the assets,
liabilities, business, condition or results of operations of the Company; provided that none of the following (either alone
or in combination with any other Event) shall be deemed to constitute, and none of the following shall be taken into account in
determining whether there has been, a Material Adverse Effect: any Event arising from (i) an event or circumstance or series of
events or circumstances affecting the United States or the global or regional economy generally or capital, credit or financial
markets generally, including changes in interest or exchange rates and any suspension of trading in securities, (ii) political
conditions of the United States or any other country or jurisdiction in which the Company operates, (iii) any changes that are
generally applicable to the industries in which the Company operates or in which services of the Company are used, (iv) any changes
in applicable Law or GAAP, (v) any hostilities, acts of war, sabotage, terrorism or military actions or escalation of any hostilities,
acts of war, sabotage, terrorism or military actions, or (vi) any failure by the Company to meet its financial projections (it
being understood and agreed that the underlying facts and circumstances may be taken into account in determining whether there
has been a Material Adverse Effect); provided, further, that with respect to any matter described in the foregoing clauses (i),
(ii), (iii), (iv) or (v), such matter shall only be excluded to the extent such matter does not have a disproportionate effect
on the Company relative to other comparable entities operating in the industry or industries in which the Company operates; or
(b) materially delays, impairs or prevents the Company’s ability to consummate the transactions contemplated by this Agreement.
“Material
Contracts” has the meaning set forth in Section 2.6(a).
“Material
Customers” has the meaning set forth in Section 2.21(a).
“Material
Vendors” has the meaning set forth in Section 2.21(a).
“Mergers”
has the meaning set forth in the Recitals.
“Notice
of Claim” means a written notice that describes the nature of the breach of covenant, warranty or representation
set forth in this Agreement or any certificate furnished under this Agreement (including the sections of this Agreement that are
the subject of such breach) or claim pursuant to which actual or reasonably anticipated Losses are being claimed by the Indemnified
Party.
“Notice
of Dispute” has the meaning set forth in Section 7.4(a).
“Off-the-Shelf
IP” means Software or other Intellectual Property obtained from a third Person on general commercial terms that
was licensed for payments of less than $25,000 in the aggregate and requires license, maintenance, support and other ongoing fees
of less than $25,000 per year.
“Open
Source Materials” means any Software or materials that are distributed as “free software” (as defined
by the Free Software Foundation), “open source software” (meaning software distributed under any license approved by
the Open Source Initiative as set forth at www.opensource.org) or under any similar licensing or distribution model (including
but not limited to the GNU General Public License (GPL), GNU Lesser General Public License (LGPL), Mozilla Public License (MPL),
BSD licenses, the Artistic License, the Netscape Public License, the Sun Community Source License (SCSL) the Sun Industry Standards
License (SISL) and the Apache License).
“Option
Holder” means each holder of Company Options.
“Order”
means any judgment, order, injunction, ruling, decree, determination or award of, any settlement under the jurisdiction of, or
other restriction of, any Governmental Authority.
“Organizational
Documents” means, with respect to any Person (other than an individual), the certificate of incorporation, the
articles of incorporation, bylaws, articles of organization, certificate of formation, operating agreement, limited liability company
agreement, partnership agreement, formation agreement, joint venture agreement, all stockholders’ agreements, all voting
agreements, all voting trusts, all buy-sell agreements, all investor rights agreements, or any other legal document(s) by which
any Person (other than an individual) establishes its legal existence or which govern its internal affairs.
“Other
Convertible Securities” means any right, option, indebtedness or security of the Company (excluding the Company
Options and the Preferred Shares) that is directly or indirectly exercisable, convertible or exchangeable for Company Shares or
other equity interests or securities of the Company and that is outstanding immediately prior to the First Effective Time.
“Party”
has the meaning set forth in the Preamble.
“Payment
Administration Agreement” means that certain Payment Administration Agreement, by and among Buyer, the Stockholder
Representative and the Payment Agent, substantially in the form attached hereto as Exhibit E.
“Payment
Agent” means American Stock Transfer & Trust Company, LLC.
“Payment Fund”
has the meaning set forth in Section 1.10(a).
“Permits”
mean all franchises, authorizations, consents, approvals, licenses, registrations, certificates, Orders, permits or other rights
and privileges issued by any Governmental Authority.
“Person”
means an individual, Governmental Authority, corporation, partnership, association, trust, unincorporated organization, limited
liability company or other entity or group (as defined in Section 13(d)(3) of the Exchange Act).
“Personal
Information” means any information that is considered personally identifiable information, personal information
or personal data under applicable Privacy Laws.
“Policies”
has the meaning set forth in Section 2.16.
“Post-Closing
Financial Statement” has the meaning set forth in Section 1.13(b).
“Pre-Closing
Buyer Prepared Returns” has the meaning set forth in Section 5.1(a).
“Pre-Closing
Tax Period” means any taxable period ending on or before the Closing Date and the portion of any Straddle Period
that ends at the close of the Closing Date.
“Pre-Closing
Taxes” means any and all Taxes of the Company for any Pre-Closing Tax Period (with the Taxes of the Company for
any Straddle Period that are attributable to the portion of such Straddle Period that is a Pre-Closing Tax Period determined in
accordance with the principles of Section 5.2), regardless of whether a Tax Return is required to be filed or such
Taxes are required to be paid before the Closing Date, including, (i) Taxes of another Person for which the Company is liable as
a result of having been a member of an affiliated, consolidated, combined or unitary group prior to the Closing, including pursuant
to Treasury Regulations section 1.15026 or any analogous or similar state, local or non-U.S. Law or Regulation, (ii) Taxes of
any Person for which any of the Company is liable as a transferee or successor (where the Company’s status as a transferee
or successor arose at or prior to the Closing) or by Law, Contract or otherwise (where the legal, contractual or other relationship
making the Company liable for Taxes of such Person arose prior to the Closing), (ii) any Taxes, fees or charges for which the Company
Holders are responsible under Section 5.1 and (iv) any Deferred Payroll Taxes of the Company.
“Preferred
Shares” has the meaning set forth in Section 2.3(a).
“Preliminary
Closing Statement” has the meaning set forth in Section 1.13(a).
“Privacy
and Data Security Requirements” means all (i) Privacy Laws, (ii) contracts to which the Company is a party or
is otherwise bound that impose obligations the Company relating to Personal Information and (iii) Privacy Policies.
“Privacy
Laws” means (i) any applicable Laws in any applicable jurisdiction in the relating to the Processing of any Personal
Information including, to the extent applicable, (A) Title V of the Gramm-Leach-Bliley Act, 15 U.S.C. 6801 et seq., the Fair Credit
Reporting Act, 15 U.S.C. § 1681, the Identity Theft Red Flags Rule (16 C.F.R. Part 681), the General Data Protection Regulation
(GDPR) and each European Union Member States’ national implementation thereof, the Canadian Personal Information Protection
and Electronic Documents Act, SC 2000, c 5 (PIPEDA), CANSPAM Act of 2003 (codified at 15 U.S.C. §§ 7701-7713 and 18 U.S.C.
§ 1037), the California Consumer Privacy Act, the Illinois Biometric Information Privacy Act, the Junk Fax Prevention Act
of 2005 (Pub.L. 109–21), the Do-Not-Call Implementation Act of 2003 (Pub.L. 108–10), the Communications Act of 1934,
as amended by the Telecommunications Act of 1996, the Telephone Consumer Protection Act of 1991 (Pub.L. 102–243), the E-Privacy
Directive (i.e., Directive 2002/58/EC of the European Parliament and of the Council of 12 July 2002, including any European Union
member’s implementing legislation thereunder), all similar Law to the foregoing, (B) the requirements set forth in regulations
published by regulatory authorities such as the Federal Trade Commission, Federal Communications Commission, and applicable European
Union data protection authorities that are legally binding and carry the force of Law, and (C) the Health Insurance Portability
and Accountability Act of 1996, as amended; (ii) any such Laws in any applicable jurisdiction requiring a Person to be notified
of any actual or suspected loss, unauthorized access, disclosure or acquisition of Personal Information, (iii) any rules or requirements
of any applicable self-regulatory organizations that the Company is or has been contractually obligated to comply with, and any
requirements arising of any self-certification mechanisms of such self-regulatory organizations, (iv) any successor legislation
or regulations to any of the foregoing, and (v) the Payment Card Industry Data Security Standard (“PCI-DSS”).
“Privacy
Policies” has the meaning set forth in Section 2.15(n).
“Pro
Rata Amount” means, with respect to any Company Holder, the percentage set forth opposite such Stockholder’s
name on the Distribution Allocation Schedule under the heading “Pro Rata Amount”.
“Proceeding”
means any legal, administrative, arbitral or other proceeding, suit, action, governmental or regulatory investigation, mediation,
audit or inquiry by or before any Governmental Authority.
“Process”
means any operation or set of operations which is performed upon Personal Information, whether or not by automatic means, such
as collection, recording, organization, storage, adaptation or alteration, retrieval, consultation, use, disclosure by transmission,
dissemination or otherwise making available, alignment or combination, erasure or destruction.
“Protest
Notice” has the meaning set forth in Section 1.13(c).
“R&W
Insurance Expenses” means all costs and expenses related to the R&W Insurance Policy, including all premiums,
underwriting costs, brokerage commissions, Taxes related to such policy, other fees and expenses in connection with such policy
or the satisfaction of conditions in any binding agreement therefor, and any fees and expenses of the R&W Insurance Policy
broker incurred in connection with obtaining such R&W Insurance Policy.
“R&W
Insurance Policy” means the representation and warranty insurance policy to be obtained by Buyer or First Merger
Sub in connection with this Agreement and the transactions contemplated hereby on terms and conditions reasonably satisfactory
to Buyer.
“Registered
Intellectual Property” has the meaning set forth in Section 2.15(a).
“Regulation”
means any rule, regulation, policy or binding interpretation (regarding such rule, regulation or policy) of any Governmental Authority.
“Release”
means any release, spilling, leaking, pumping, pouring, discharging, emitting, emptying, escaping, leaching, injecting, dumping,
disposing or migrating into or through the indoor or outdoor environment.
“Representative
Losses” has the meaning set forth in Section 7.12(b).
“Requisite
Stockholders” has the meaning set forth in the Recitals.
“Responsible
Party” means a party from whom indemnification is sought under Section 7.2.
“Scheduled
Intellectual Property” has the meaning set forth in Section 2.15(a).
“Second Effective
Time” has the meaning set forth in Section 1.4(b).
“Second Merger”
has the meaning set forth in the Recitals.
“Second Merger
Certificate” has the meaning set forth in Section 1.1(c).
“Second
Merger Sub” has the meaning set forth in the Preamble.
“Securities
Act” means the Securities Act of 1933, as amended from time to time.
“Sellers”
has the meaning set forth in the Preamble.
“Sellers’
Transaction Expenses” means, in each case solely to the extent not paid prior to the Closing, all out-of-pocket fees, costs
and expenses incurred or otherwise payable by or on behalf of the Company (whether or not invoiced) in connection with this Agreement
and the other Transaction Documents, including (i) all fees and expenses payable by the Company to any attorneys engaged by the Company
Holders or the Company, (ii) any and all fees and expenses payable by the Company to any financial advisors, accountants or other advisors
engaged by any Company Holder or the Company, (iii) any and all fees and expenses with respect to (A) change-in-control payments, transaction
bonuses (including the Transaction Bonus Letters, the Bonus Award Amount and any amounts that remain outstanding in connection with the
promised options, retention payments or similar payments payable by the Company to any Person, employee, independent contractor, officer
or director, in each case, arising under a contract or other arrangement in existence as of the Closing (and excluding any contract or
other arrangement entered into between Buyer and such Person following the Closing) and (B) any severance payments that are or may become
due and payable as of the Closing Date from the Company to any employee, independent contractor, officer or director of the Company,
as well as the employer portion of payroll or other employment Taxes arising from any of the foregoing or in respect of any payments
in respect of the Cashed-Out Company Options pursuant to Section 1.8(b), (iv) any and all fees and expenses associated with the
Data Room, (v) fifty percent (50%) of R&W Insurance Expenses, (vi) any and all fees and expenses payable to the Payment Agent pursuant
to the Payment Administration Agreement, (vii) fifty percent (50%) of any and all fees and expenses payable to the Escrow Agent pursuant
to the Escrow Agreement, (viii) fifty percent (50%) of any Taxes, fees, and charges specified in Section 5.6 and (ix) the
cost of the D&O Tail Policy).
“Series
A Preferred Shares” has the meaning set forth in Section 2.3(a).
“Series
A-2 Preferred Shares” has the meaning set forth in Section 2.3(a).
“Series
A-3 Preferred Shares” has the meaning set forth in Section 2.3(a).
“Series
A Preferred Stock” means Series A preferred stock of the Company, $0.00001 par value per share.
“Series
A-2 Preferred Stock” means Series A-2 preferred stock of the Company, $0.00001 par value per share.
“Series
A-3 Preferred Stock” means Series A-3 preferred stock of the Company, $0.00001 par value per share.
“Series
Seed Preferred Shares” has the meaning set forth in Section 2.3(a).
“Series
Seed Preferred Stock” means Series Seed preferred stock of the Company, $0.00001 par value per share.
“SHA Joinder”
has the meaning set forth in Section 1.10(b).
“Shortfall
Adjustment Amount” has the meaning set forth in Section 1.13(d).
“Software”
means computer software and databases, together with object code, source code, firmware and embedded versions thereof and documentation
related thereto, including, without limitation, Off-the-Shelf IP.
“Specified
Taxes” means (i) any Taxes imposed on the Company in a taxable period or portion thereof ending on or prior to the Closing
Date arising as a result of or in connection with Marketplace Facilitator Laws or (ii) any Taxes imposed on the Company in a taxable
period or portion thereof ending on or prior to the Closing Date arising as a result of tax collection obligations related to services
provided to customers, including software as a service, or similar service revenues.
“Specific
Indemnity Escrow Account” has the meaning set forth in Section 1.5(b)(iv).
“Specific
Indemnity Escrow Amount” means $12,500,000.
“Specific
Indemnity Escrow Funds” means the Specific Indemnity Escrow Amount, and all interest and earnings thereon, as
may be reduced from time to time as a result of disbursements thereof pursuant to the Escrow Agreement.
“Specific
Indemnity Incremental Release Amount” means $4,166,666.67.
“Stockholder
Claims” has the meaning set forth in Section 7.13(a).
“Stockholder
Indemnitors” has the meaning set forth in Section 7.2(a).
“Stockholder
Indemnified Persons” has the meaning set forth in Section 7.2(b).
“Stockholder
Representative” has the meaning set forth in the Preamble.
“Stockholder
Representative Expense Account” has the meaning set forth in Section 7.13(e).
“Stockholder
Representative Expense Amount” means $150,000.
“Stockholders”
means the holders of all issued and outstanding Company Shares as of immediately prior to the First Effective Time.
“Stockholders’
Tax Claim” has the meaning set forth in Section 5.3(a).
“Straddle
Period” means any taxable period beginning on or before and ending after the Closing Date.
“Subsidiary”
with respect to any Person, means any corporation, partnership, joint venture, limited liability company or other legal entity
of which such Person owns, directly or indirectly, greater than fifty percent (50%) of the capital stock or other equity interests
that are generally entitled to vote for the election of the board of directors or other governing body of such corporation, partnership,
joint venture, limited liability company or other legal entity or to vote as a general partner thereof.
“Survival
Period” has the meaning set forth in Section 7.1(a).
“Surviving
Company” has the meaning set forth in Section 1.1(d).
“Systems”
means the Software, hardware, firmware, networks, platforms, servers, interfaces, applications, websites and related information
technology systems used by the Company for the transmission, storage, maintenance, organization, presentation, generation, processing
or analysis of electronic or other data and information in connection with the conduct of the business of the Company.
“Target
Working Capital” means $2,500,000.
“Tax”
or “Taxes” means any federal, state, local or non-U.S. income, excise,
environmental, capital stock, profits, social security (or similar), disability, registration, value added, estimated, gross receipts,
sales, use, ad valorem, transfer, franchise, license, withholding, payroll, employment, unemployment, severance, stamp, occupation,
premium, property or windfall profits taxes, alternative or add-on minimum taxes, customs duties and other taxes or comparable
assessments of any kind whatsoever, together with all interest and penalties imposed by any taxing authority (domestic or non-U.S.)
with respect thereto.
“Tax
Returns” means all returns, declarations, reports, elections, claims for refund and information statements and
returns filed or required to be filed with a Governmental Authority, or provided to any Person, relating to Taxes, including any
schedules or attachments to, or amendments of any of the foregoing.
“Third
Party Claim” has the meaning set forth in Section 7.3(a).
“Third
Party Intellectual Property” means any and all Company Intellectual Property that is owned by any third Person
and licensed to the Company under an IP License.
“Transaction
Bonus Letters” means the letter agreements, dated as of February 9, 2021, between the Company and each of Nick
Kokonas and Jeff Kaplan, respectively.
“Transaction
Bonus Cash Amount” means that portion of the transaction bonuses payable in cash to Nick Kokonas and Jeff Kaplan pursuant
to the Transaction Bonus Letters.
“Transaction
Bonus Equity Consideration” means that portion of the transaction bonuses payable in Buyer Common Stock to Nick Kokonas
and Jeff Kaplan pursuant to the Transaction Bonus Letters.
“Transaction
Documents” means this Agreement, the Escrow Agreement, the Payment Administration Agreement, the Employment Documents,
the Written Consent, the Letters of Transmittal and all other instruments, documents or agreements executed and delivered in connection
with the consummation of the transactions contemplated herein or therein.
“Treasury
Shares” has the meaning set forth in Section 1.8(a)(iii).
“VDA Documents”
means any documentation or filing relating to a Voluntary Disclosure Agreement.
“Voluntary
Disclosure Agreement” means (i) any voluntary disclosure agreement, settlement agreement, closing agreement, or other
similar agreement with any Governmental Authority relating to Specified Taxes and (ii) any Tax ruling or other similar determination
relating to any Specified Taxes.
“Waived 280G
Benefits” has the meaning set forth in Section 2.11(l).
“Working
Capital” means Current Assets minus Current Liabilities. For purposes of this Agreement, Working Capital
shall be calculated in accordance with the Accounting Methodology and in a manner consistent with the example calculation set forth
on Annex C hereto.
“Written
Consent” has the meaning set forth in the Recitals.
Exhibit 3.1
AMENDED
AND RESTATED CERTIFICATE
OF
INCORPORATION OF SQUARESPACE, INC.
(Pursuant
to Sections 242 and 245 of the
General Corporation Law of the State of Delaware)
March
15, 2021
Squarespace,
Inc., a corporation organized and existing under and by virtue of the provisions of the General Corporation Law of the State of
Delaware (the “General Corporation Law”),
DOES
HEREBY CERTIFY:
FIRST:
That the name of this corporation is Squarespace, Inc. The original certificate of incorporation of this corporation was filed
in the office of the Secretary of State of the State of Delaware on October 29, 2007. An amended and restated certificate of incorporation
was filed in the office of the Secretary of State of the State of Delaware on July 1, 2010. An amended and restated certificate
of incorporation was filed in the office of the Secretary of State of the State of Delaware on April 15, 2014. An amended and
restated certificate of incorporation was filed in the office of the Secretary of State of the State of Delaware on November 9,
2017. Certificates of amendment were filed in the office of the Secretary of State of the State of Delaware on November 30, 2017
and May 4, 2020.
SECOND:
That the Board of Directors of the corporation (the “Board”) duly
adopted resolutions proposing to amend and restate the Certificate of Incorporation of this corporation, declaring said amendment
and restatement to be advisable and in the best interests of this corporation and its stockholders, and authorizing the appropriate
officers of this corporation to solicit the consent of the stockholders therefor, which resolution setting forth the proposed
amendment and restatement is as follows:
RESOLVED,
that the Certificate of Incorporation, as amended through the date hereof, of this corporation be amended and restated in
its entirety as follows:
Article
I
The
name of this corporation is Squarespace, Inc.
Article
II
The
address of the registered office of this corporation in the State of Delaware is 3500 South DuPont Highway, County of Kent, Dover,
DE USA 19901. The name of its registered agent at such address is Incorporating Services, Ltd.
Article
III
The
nature of the business or purposes to be conducted or promoted is to engage in any lawful act or activity for which corporations
may be organized under the General Corporation Law.
Article
IV
A. Authorization of Stock. The total number of shares of all classes of stock that this corporation is authorized to issue
is (i) One Hundred Fifty-Seven Million Eight Hundred Thirty-Nine Thousand Four Hundred Eleven (157,839,411) shares of Class A
Common Stock, par value $0.0001 per share (“Class A Common Stock”),
(ii) Sixty-Nine Million Nine Hundred Eighty-Seven Thousand Three Hundred Ninety-Eight (69,987,398) shares of Class B Common
Stock, par value $0.0001 per share (“Class B Common Stock” and,
together with the Class A Common Stock, collectively, the “Voting Common Stock”), (iii) Seven Million Six Hundred
Seventy-Three Thousand One Hundred Fifty-Four (7,673,154) shares of Class C Common Stock, par value $0.0001 per share (“Class
C Common Stock” and, together with the Voting Common Stock, collectively, the “Common Stock”) and
(iv) One Hundred Four Million Four Hundred Forty-Six Thousand Three Hundred Thirty-Two (104,446,332) shares of preferred stock,
par value $0.0001 per share (the “Preferred Stock”). Fifty-Four Million Four Hundred Thirty-One Thousand Four
Hundred Forty-Six (54,431,446) shares of Preferred Stock are designated as “Series A-1 Preferred Stock”, and
Thirty-Nine Million One Hundred Thirty-Four Thousand Eight Hundred Sixty-Eight (39,134,868) shares of Preferred Stock are designated
as “Series A-2 Preferred Stock” and Ten Million Eight Hundred
Eighty Thousand Eighteen (10,880,018) shares of Preferred Stock are designated as “Series B
Preferred Stock.”
B. Rights, Preferences, Privileges and Restrictions of Preferred Stock. The rights, preferences, privileges and restrictions
granted to and imposed on the Preferred Stock are as set forth below in this Article IV(B).
1. Dividend Provisions. The corporation shall not declare, pay or set aside any dividends on shares of any other class or
series of capital stock of the corporation (other than dividends on shares of Common Stock payable in shares of Common Stock)
unless (in addition to the obtaining of any consents required elsewhere in this Amended and Restated Certificate of Incorporation)
the holders of Series A-1 Preferred Stock, Series A-2 Preferred Stock and Series B Preferred Stock shall first
receive, or simultaneously receive, on a pari passu basis, a dividend on each outstanding share of Series A-1 Preferred
Stock, Series A-2 Preferred Stock and Series B Preferred Stock equal to the product of (i) the dividend payable on each
share of such other class or series determined, if applicable, as if all shares of such class or series had been converted into
Common Stock at the applicable Conversion Rate, times (ii) the number of shares of Common Stock issuable upon conversion
of a share of Series A-1 Preferred Stock, Series A-2 Preferred Stock and Series B Preferred Stock, as the case
may be, calculated on the record date for determination of holders entitled to receive such dividend. Except as provided in Section
3 of this Article IV, any redemption of Series A-2 Preferred Stock or Series B Preferred Stock shall be offered to the
holders of each such series of Preferred Stock on a pro rata basis, in accordance with their respective Series A-2 Preferred
Stock or Series B Preferred Stock holdings (on an as-converted to Common Stock basis). Participation in any such redemption
or repurchase shall be at the sole option of each holder of Preferred Stock.
2. Liquidation Preference.
(a) In the event of any Liquidation Event (as defined below), either voluntary or involuntary, the holders of the Series A-2
Preferred Stock and the Series B Preferred Stock then outstanding shall be entitled to receive, on a pari passu basis,
out of the assets of the corporation available for distribution to its stockholders prior and in preference to any distribution
of the proceeds of such Liquidation Event (the “Proceeds”) to the
holders of Series A-1 Preferred Stock and the holders of Common Stock by reason of their ownership thereof, an amount per
share equal to the sum of, as applicable, the Series A-2 Original Issue Price (as defined below) for such Series A-2
Preferred Stock, plus any declared but unpaid dividends on such share (such sum, the “Series A-2
Liquidation Preference”), or the Series B Original Issue Price (as defined below) for such Series B
Preferred Stock, plus any declared but unpaid dividends on such share (such sum, the “Series B
Liquidation Preference”). If, upon the occurrence of any Liquidation Event, the Proceeds thus distributed among
the holders of the Series A-2 Preferred Stock and the Series B Preferred Stock shall be insufficient to permit the payment
to such holders of the full aforesaid preferential amounts, then the entire Proceeds legally available for distribution shall
be distributed ratably among the holders of the Series A-2 Preferred Stock and the Series B Preferred Stock in proportion
to the full preferential amount that each such holder is otherwise entitled to receive under this subsection (a). For purposes
of this Amended and Restated Certificate of Incorporation, “Series A-2 Original
Issue Price” shall equal $0.81081 per share for each share of Series A-2 Preferred Stock (as adjusted for
any stock splits, stock dividends, combinations, subdivisions, recapitalizations or the like with respect to the Series A-2
Preferred Stock), and “Series B Original Issue Price” shall equal
$3.16596 per share for each share of Series B Preferred Stock (as adjusted for any stock splits, stock dividends, combinations,
subdivisions, recapitalizations or the like with respect to the Series B Preferred Stock).
(b) Upon completion of the distribution required by subsection (a) of this Section 2, all of the remaining Proceeds available for
distribution to stockholders shall be distributed among the holders of Common Stock and the holders of Series A-1 Preferred
Stock and Series A-2 Preferred Stock pro rata on an as-converted to Common Stock basis, until, with respect to the Series A-2
Preferred Stock, such holders shall have received the applicable Participation Cap (as defined below) per share; thereafter, if
Proceeds remain, the holders of the Common Stock and the holders of Series A-1 Preferred Stock of this corporation shall
receive all of the remaining Proceeds pro rata on an as-converted to Common Stock basis. For purposes of this Amended and Restated
Certificate of Incorporation, “Participation Cap” shall mean $3.2432
for the Series A-2 Preferred Stock (as adjusted for any stock splits, stock dividends, combinations, subdivisions, recapitalizations
or the like with respect to such series of Preferred Stock), which includes amounts paid pursuant to subsection (a) of this Section
2.
(c) Notwithstanding the above, for purposes of determining the amount each holder of shares of Series A-2 Preferred Stock and
Series B Preferred Stock is entitled to receive with respect to a Liquidation Event, each such holder of shares of Series A-2
Preferred Stock or Series B Preferred Stock shall be deemed to have converted (regardless of whether such holder actually
converted) such holder’s shares of Series A-2 Preferred Stock or Series B Preferred Stock, as applicable, into
shares of Common Stock immediately prior to the Liquidation Event if, as a result of an actual conversion, such holder would receive,
in the aggregate, an amount greater than the amount that would be distributed to such holder if such holder did not convert such
shares of Series A-2 Preferred Stock or Series B Preferred Stock, as applicable, into shares of Common Stock. If any
such holder shall be deemed to have converted shares of Series A-2 Preferred Stock or Series B Preferred Stock into
Common Stock pursuant to this paragraph, then such holder shall not be entitled to receive any distribution that would otherwise
be made to holders of Series A-2 Preferred Stock or Series B Preferred Stock (whether pursuant to subsection (a) or
(b) of this Section 2) that have not converted (or have not been deemed to have converted) into shares of Common Stock and such
holder shall be entitled to participate with respect to such converted shares only as holders of Common Stock pursuant to subsection
(b) of this Section 2.
(d) (i) For purposes of this Section 2, a “Liquidation Event” shall include in one transaction or a series of
related transactions:
(A) the closing of the sale, transfer or other disposition (whether by merger, consolidation or otherwise) of all or substantially
all of (1) the assets of the corporation or (2) the assets of one or more direct or indirect subsidiaries of the corporation constituting
all or substantially all of the assets of the corporation (determined on a consolidated basis with all of the corporation’s
direct and indirect subsidiaries);
(B) the consummation of the merger or consolidation of the corporation with or into another entity (except a merger or consolidation
of the corporation in which the holders of capital stock of the corporation immediately prior to such merger or consolidation
continue to hold (1) at least fifty percent (50%) of the voting power and equity of the capital stock of the corporation or the
surviving or acquiring entity in substantially the same proportions (relative to all such holders) as immediately prior to such
transaction or related transactions and (2) securities with rights, preferences and powers that are substantially identical to
the rights, preferences and powers of the securities they held immediately prior to such merger or consolidation);
(C) the consummation of the merger or consolidation of one or more direct or indirect subsidiaries of the corporation, the assets
of which subsidiary or subsidiaries (including, without limitation, the capital stock of such subsidiary or subsidiaries) constitute
all or substantially all of the assets of the corporation (determined on a consolidated basis with all of the corporation’s
direct and indirect subsidiaries) with or into another entity (except a merger or consolidation of such subsidiary or subsidiaries
in which (1) the holders of capital stock of the corporation immediately prior to such merger or consolidation continue to hold
(x) at least fifty percent (50%) of the voting power and equity of the capital stock of the corporation in substantially the same
proportions (relative to all such holders) as immediately prior to such transaction or related transactions and (y) securities
with rights, preferences and powers that are substantially identical to the rights, preferences and powers of the securities they
held immediately prior to such merger or consolidation and (2) the surviving or acquiring entity in such merger or consolidation
is a wholly owned direct or indirect subsidiary of the corporation);
(D) the closing of the transfer (whether by merger, consolidation or otherwise) in one transaction or series of related transactions
to a person or group of affiliated persons (other than an underwriter of the corporation’s securities) of the corporation’s
securities if, after such closing, such person or group of affiliated persons would hold fifty percent (50%) or more of the outstanding
voting power or equity of the capital stock of the corporation (or the surviving or acquiring entity), provided, however, that
the sale of the corporation’s securities in one transaction or a series of related transactions solely for capital raising
purposes, which sale has been approved in writing by the holders of at least sixty percent (60%) of the then outstanding shares
of Series A-2 Preferred Stock and Series B Preferred Stock, voting together as a single class and separate from the
Series A-1 Preferred Stock and Common Stock, which must include the approval of General Atlantic (as defined in the Amended
and Restated Stockholders Agreement of the corporation, dated as of November 9, 2017 (as amended, the “Stockholders
Agreement”) for so long as General Atlantic is a Major Holder (as defined in the Stockholders Agreement), (the
“Requisite Investors”), shall not be deemed a Liquidation Event pursuant
to this Section 2(d); or
(E) a liquidation, dissolution or winding up of the corporation.
Notwithstanding
the foregoing, a transaction shall not constitute a Liquidation Event if its sole purpose is to change the state of incorporation
of the corporation. The treatment of any particular transaction or series of related transactions as a Liquidation Event may be
waived by the vote or written consent of the Requisite Investors; provided, however, that if the proceeds to be received in any
such transaction or series of related transactions by any holder of any such series of Preferred Stock would be less if the treatment
of such transaction or series of related transactions as a Liquidation Event were so waived than if not so waived, then any holder
of any such series of Preferred Stock which has not approved the waiver of such transaction or series of related transactions
as a Liquidation Event shall be entitled to receive the same amount of proceeds such holder would otherwise be entitled to receive
pursuant to Section 2 of this Article IV had such transaction or series of related transactions been treated as a Liquidation
Event.
(ii) In any Liquidation Event, if Proceeds received by the corporation or its stockholders are other than cash, its value will be deemed
its fair market value as reasonably determined in good faith by the Board; provided, however, that any securities shall be valued
as follows:
(A) Securities not subject to investment letters or other similar restrictions on free marketability covered by (iii) below:
(1) If traded on a securities exchange or through the Nasdaq Global Market, the value shall be deemed to be the average of the closing
prices of the securities on such exchange or system over the twenty (20) trading-day period ending three (3) trading days prior
to the closing of the Liquidation Event;
(2) If actively traded over-the-counter, the value shall be deemed to be the average of the closing bid or sale prices (whichever
is applicable) over the twenty (20) trading-day period ending three (3) trading days prior to the closing of the Liquidation Event;
and
(3) If there is no active public market, the value shall be the fair market value thereof, as determined in good faith by the Board
(including the approval of at least two of the Investor Directors).
(B) The method of valuation of securities subject to investment letter or other restrictions on free marketability (other than restrictions
arising solely by virtue of a stockholder’s status as an affiliate or former affiliate) shall be to make an appropriate
discount from the market value determined as above in (A) (1), (2) or (3) to reflect the approximate fair market value thereof,
as determined in good faith by the Board (including the approval of at least two of the Investor Directors);
(C) The foregoing methods for valuing non-cash consideration to be distributed in connection with a Liquidation Event shall be superseded
by any determination of such value set forth in the definitive agreements governing such Liquidation Event.
(iii) In the event the requirements of this Section 2 are not complied with, the corporation shall forthwith either:
(A) cause the closing of such Liquidation Event to be postponed until such time as the requirements of this Section 2 have been complied
with; or
(B) cancel such transaction, in which event the rights, preferences and privileges of the holders of Series A-2 Preferred Stock
and Series B Preferred Stock shall revert to and be the same as such rights, preferences and privileges existing immediately
prior to the date of the first notice referred to in subsection 2(d)(iv) hereof.
(iv) The corporation shall give each holder of record of Series A-2 Preferred Stock and Series B Preferred Stock written
notice of such impending Liquidation Event not later than twenty (20) days prior to the stockholders’ meeting called to
approve such transaction, or twenty (20) days prior to the closing of such transaction, whichever is earlier, and shall also notify
such holders in writing of the final approval of such transaction. The first of such notices shall describe the material terms
and conditions of the impending transaction and the provisions of this Section 2, and the corporation shall thereafter give such
holders prompt notice of any material changes. The transaction shall in no event take place sooner than twenty (20) days after
the corporation has given the first notice provided for herein; provided, however, that subject to compliance with the General
Corporation Law such periods and the requirement that the corporation provide written notice may be shortened or waived upon the
vote or written consent of the holders of the Requisite Investors.
3. Redemption.
(a) At any time after March 12, 2021, commencing within ninety (90) days after the receipt by this corporation of a written request
(the “Redemption Demand”) from the Requisite Investors this corporation
shall, to the extent it may lawfully do so, redeem all then outstanding shares of Series A-2 Preferred Stock and Series B
Preferred Stock (other than Excluded Shares (as defined below)) from each holder of shares of Series A-2 Preferred Stock
and Series B Preferred Stock, as applicable, and each such holder shall surrender for redemption, the shares of Series A-2
Preferred Stock and Series B Preferred Stock, as applicable, then held by each such holder by paying in cash the Redemption
Price (as defined below) in three annual. installments. The date of each such installment shall be referred to as a “Redemption
Date”. On each Redemption Date, the corporation shall redeem, on a pro rata basis in accordance with the number
of shares of Series A-2 Preferred Stock or Series B Preferred Stock, as applicable, owned by each holder, that number
of outstanding shares of Series A-2 Preferred Stock or Series B Preferred Stock, as applicable, determined by dividing
(i) the total number of shares of Series A-2 Preferred Stock or Series B Preferred Stock, as applicable, outstanding
immediately prior to such Redemption Date by (ii) the number of remaining Redemption Dates (including the Redemption Date to which
such calculation applies); provided, however, that Excluded Shares (as defined below) shall not be redeemed and shall be excluded
from the calculations set forth in this sentence.
(b) The corporation shall send written notice of the mandatory redemption (the “Redemption
Notice”) to each holder of record of Series A-2 Preferred Stock and Series B Preferred Stock not less
than thirty (30) days prior to each Redemption Date. Each Redemption Notice shall state: (i) the number of shares of Series A-2
Preferred Stock or Series B Preferred Stock, as applicable, held by the holder that the corporation shall redeem on the Redemption
Date specified in the Redemption Notice; (ii) the Redemption Date and the Redemption Price (as defined below); (iii) the date
upon which the holder’s right to convert such shares terminates (as determined in accordance with subsection 4(a)(i) below);
and (iv) that the holder is to surrender to the corporation, in the manner and at the place designated, his, her or its certificate
or certificates representing the shares of Series A-2 Preferred Stock or Series B Preferred Stock, as applicable, to
be redeemed. if the corporation receives, on or prior to the 20th day after the date of mailing of the Redemption Notice to a
holder of Series A-2 Preferred Stock or Series B Preferred Stock, written notice from such holder that such holder elects
to be excluded from the redemption provided in this subsection 3, then the shares of Series A-2 Preferred Stock or Series B
Preferred Stock, as applicable, registered on the books of the corporation in the name of such holder at the time of the corporation’s
receipt of such notice shall thereafter be “Excluded Shares”. Excluded
Shares shall not be redeemed or redeemable pursuant to this subsection 3, whether on such Redemption Date or thereafter.
(c) The “Redemption Price” for each share of Series A-2 Preferred
Stock to be redeemed shall be $1.62162 and for each share of Series B Preferred Stock to be redeemed shall be $6.33192 (each
as adjusted for any stock splits, stock dividends, combinations, subdivisions, recapitalizations or the like with respect to the
Series A-2 Preferred Stock or Series B Preferred Stock, as applicable).
(d) Any redemption of Series A-2 Preferred Stock or Series B Preferred Stock effected pursuant to this subsection 3 shall
be made on a pro rata basis among the holders of Series A-2 Preferred Stock or Series B Preferred Stock, as applicable,
in proportion to the aggregate Redemption Price each such holder of Series A-2 Preferred Stock or Series B Preferred
Stock, as applicable, would otherwise be entitled to receive on the Redemption. Date.
(e) From and after the Redemption Date, unless there shall have been a default in payment of the Redemption Price, all rights of the
holders of shares of Series A-2 Preferred Stock or Series B Preferred Stock, as applicable, designated for redemption
on the Redemption Date in the Redemption Notice as holders of Series A-2 Preferred Stock or Series B Preferred Stock,
as applicable (except the right to receive the applicable Redemption Price without interest upon surrender of their certificate
or certificates) shall cease with respect to such shares, and such shares shall not thereafter be transferred on the books of
this corporation or be deemed to be outstanding for any purpose whatsoever. If the funds of this corporation legally available
for redemption of shares of Series A-2 Preferred Stock and Series B Preferred Stock, as applicable, to be redeemed on
a Redemption Date are insufficient to redeem the total number of shares of Series A-2 Preferred Stock and Series B Preferred
Stock, as applicable, to be redeemed on such date, those funds that are legally available will be used to redeem the maximum possible
number of such shares ratably among the holders of such shares to be redeemed in proportion to the aggregate Redemption Price
that each such holder would be entitled to receive pursuant to subsection 3(d). The shares of Series A-2 Preferred Stock
and Series B Preferred Stock, as applicable, not redeemed shall remain outstanding and entitled to all the rights and preferences
provided herein. Subject to the terms and conditions of this subsection 3, at any time thereafter when additional funds of this
corporation are legally available for the redemption of shares of Series A-2 Preferred Stock and Series B Preferred
Stock such funds will immediately be used to redeem the balance of the shares that this corporation has become obliged to redeem
on the Redemption Date but that it has not redeemed.
(f) To the extent this corporation fails to pay the Redemption Price with respect to any shares of Series A-2 Preferred Stock
or Series B Preferred Stock to be redeemed on the Redemption Date out of funds legally available therefor on or prior to
the Redemption Date, beginning thirty (30) days after the failure to pay such Redemption Price, any unpaid balance of the Redemption
Price shall accrue interest at the rate of ten percent (10.0%) per annum (“Redemption
Interest”), and such Redemption Interest shall be distributed quarterly, in arrears, to the holders of Series A-2
Preferred Stock and Series B Preferred Stock, as applicable, which this corporation was obliged to redeem on the Redemption
Date but have not been redeemed, pro rata in proportion to the aggregate unpaid Redemption Price each such holder is entitled
to receive in respect of its shares of unredeemed Series A-2 Preferred Stock or Series B Preferred Stock, as applicable.
At any time thereafter when additional funds of this corporation are legally available for the redemption of shares of Series A-2
Preferred Stock and Series B Preferred Stock, such funds will immediately be used first to pay Redemption Interest due and
owing to the holders of Series A-2 Preferred Stock and Series B Preferred Stock, as applicable, which this corporation
was obliged to redeem on the Redemption Date but have not been redeemed, pro rata in accordance with the number of shares of unredeemed
Series A-2 Preferred Stock or Series B Preferred Stock, as applicable, held by each, and then to redeem the balance
of the shares that this corporation has become obliged to redeem on the Redemption Date but that it has not redeemed.
(g) On or prior to each Redemption Date, this corporation shall deposit the Redemption Price of all shares of Series A-2 Preferred
Stock and Series B Preferred Stock designated for redemption on such Redemption Date in the Redemption Notice, and not yet
redeemed or converted, with a bank or trust corporation having aggregate capital and surplus in excess of One Billion Dollars
($1,000,000,000) as a trust fund for the benefit of the respective holders of the shares designated for redemption and not yet
redeemed, with irrevocable instructions and authority to the bank or trust corporation to publish the notice of redemption thereof
and pay the Redemption Price for such shares to their respective holders on or after the Redemption Date, upon receipt of notification
from this corporation that such holder has surrendered his, her or its share certificate to this corporation pursuant to subsection
(3)(c) above. Such instructions shall also provide that any moneys deposited by this corporation pursuant to this subsection (3)(g)
for the redemption of shares converted into shares of this corporation’s Common Stock pursuant to Article IV(B)(4) hereof
prior to the Redemption Date shall be returned to this corporation forthwith upon such conversion. The balance of any moneys deposited
by this corporation pursuant to this subsection (3)(g) remaining unclaimed at the expiration of two (2) years following the Redemption
Date shall thereafter be returned to this corporation upon its request expressed in a resolution of its Board.
(h) Notwithstanding anything contained herein, if the funds of this corporation legally available for redemption of shares of Series A-2
Preferred Stock and Series B Preferred Stock to be redeemed on a Redemption Date are insufficient to redeem the total number
of shares of Series A-2 Preferred Stock and Series B Preferred Stock to be redeemed on such date and the funds that
are legally available are used to redeem the maximum possible number of such shares ratably among the holders of Series A-2
Preferred Stock and Series B Preferred Stock, then the shares of Series A-2 Preferred Stock and Series B Preferred
Stock actually redeemed pursuant to subsection 3 shall be deemed to have not been redeemed for purposes of determining the rights
available to the holders of Series A-2 Preferred Stock and Series B Preferred Stock, as applicable, pursuant to subsections
5 and 6 below.
4. Conversion. The holders of the Preferred Stock shall have conversion rights as follows (the “Conversion
Rights”):
(a) Right to Convert. Each share of Series A-2 Preferred Stock and Series B Preferred Stock and each Disqualified
Series A-1 Preferred Share, shall be convertible, at the option of the holder thereof, at any time after the date of issuance
and in any event on or prior to the fifth (5th) day prior to the Redemption Date, if any, as may have been fixed in any Redemption
Notice with respect to such share of Series A-2 Preferred Stock, Series B Preferred Stock or Disqualified Series A-1
Preferred Share, as applicable, at the office of this corporation or any transfer agent for such stock, into such number of fully
paid and nonassessable shares of Class A Common Stock as is determined by dividing the Applicable Original Issue Price (as
defined below) of the Series A-2 Preferred Stock, Series B Preferred Stock or Disqualified Series A-1 Preferred
Share, as the case may be, by the applicable Conversion Price of the Series A-2 Preferred Stock, Series B Preferred
Stock or Disqualified Series A-1 Preferred Share determined as hereafter provided, in effect on the date the certificate
is surrendered for conversion. Each share of Series A-1 Preferred Stock (other than any Disqualified Series A-1 Preferred
Share) shall be convertible, at the option of the holder thereof, at any time after the date of issuance at the office of this
corporation or any transfer agent for such stock, into such number of fully paid and nonassessable shares of Class B Common
Stock as is determined by dividing the Applicable Original Issue Price of the Series A-1 Preferred Stock by the applicable
Conversion Price of the Series A-1 Preferred Stock determined as hereafter provided, in effect on the date the certificate
is surrendered for conversion. The conversion rate of a series of Preferred Stock into the applicable class of Common Stock is
referred to herein as the “Conversion Rate.” The “Conversion
Price” per share for each series of Preferred Stock as of the date on which this Amended and Restated Certificate
of Incorporation is accepted for filing by the Secretary of State of the State of Delaware (the “Filing Date”)
is equal to the Applicable Original Issue Price for such series as of the Filing Date; provided, however, that the applicable
Conversion Price for each series of Preferred Stock shall be subject to adjustment as set forth below. For purposes of this Amended
and Restated Certificate of Incorporation, “Series A-1 Original Issue Price”
shall mean $0.81081 per share for each share of the Series A-1 Preferred Stock (as adjusted for any stock splits, stock dividends,
combinations, subdivisions, recapitalizations or the like with respect to the Series A-1 Preferred Stock). The Series A-1
Original Issue Price, the Series A-2 Original Issue Price and the Series B Original Issue Price (each as defined in
Section 2(a)), as applicable, is referred to herein as the “Applicable Original Issue
Price.”
(b) Automatic Conversion. Each share of Series A-1 Preferred Stock (other than any Disqualified Series A-1 Preferred
Share) shall automatically be converted into shares of Class B Common Stock and each share of Series A-2 Preferred Stock,
Series B Preferred Stock and Disqualified Series A-1 Preferred Share shall automatically be converted into shares of
Class A Common Stock, in each case at the Conversion Rate at the time in effect for such series of Preferred Stock immediately
prior to the earliest of (i) this corporation’s sale of its Class A Common Stock in a firm commitment underwritten public
offering pursuant to a registration statement on Form S-1 under the Securities Act of 1933, as amended (the “Securities
Act”) resulting in at least $100,000,000 of proceeds to the corporation in the aggregate (net of underwriting discounts
and commissions) after which the Class A Common Stock will be listed on a Qualified Exchange (as defined below) (a “Qualified
Public Offering”), (ii) the effectiveness of a registration statement on Form S-1 under the Securities Act in respect
of shares of Class A Common Stock after which the Class A Common Stock will be listed on a Qualified Exchange in a ‘direct
listing’ (the “Direct Listing Effectiveness”), or (iii) (A) in regards to the Series A-1 Preferred
Stock, the date specified by vote or written consent of the holders of a majority of the then outstanding shares of Series A-1
Preferred Stock (voting as a separate class), (B) in regards to the Series B Preferred Stock, the date specified by vote
or written consent of the holders of a majority of the then outstanding shares of Series B Preferred Stock (voting as a separate
class) and (C) in regards to the Series A-2 Preferred Stock, the date specified by vote or written consent of the holders
of at least sixty percent (60%) of the then outstanding shares of Series A-2 Preferred Stock (voting as a separate class).
“Qualified Exchange” means the New York Stock Exchange LLC, the Nasdaq Stock Market LLC, or (if approved by
the Requisite Investors) any other national securities exchange registered pursuant to Section 6 of the Securities Exchange Act
of 1934, as amended.
(c) Mechanics of Conversion. Before any holder of Preferred Stock shall be entitled to voluntarily convert the same into shares
of Common Stock, he or she shall surrender the certificate or certificates therefor, duly endorsed, at the office of this corporation
or of any transfer agent for the Preferred Stock, and shall give written notice to this corporation at its principal corporate
office, of the election to convert the same and shall state therein the number of shares of Preferred Stock being converted and
the name or names in which the certificate or certificates for shares of Common Stock are to be issued. This corporation shall,
as soon as practicable thereafter, issue and deliver at such office to such holder of Preferred Stock, or to the nominee or nominees
of such holder, a certificate or certificates for the number and type of shares of Common Stock to which such holder shall be
entitled as aforementioned. Such conversion shall be deemed to have been made immediately prior to the close of business on the
date of such surrender of the shares of Preferred Stock to be converted, and the person or persons entitled to receive the shares
of Common Stock issuable upon such conversion shall be treated for all purposes as the record holder or holders of such shares
of Common Stock as of such date. If the conversion is in connection with an underwritten offering of securities registered pursuant
to the Securities Act or the Direct Listing Effectiveness, the conversion may, at the option of any holder tendering Preferred
Stock for conversion, be conditioned upon the closing with the underwriters of the sale of securities pursuant to such offering
or the Direct Listing Effectiveness, as the case may be, in which event the persons entitled to receive the Common Stock upon
conversion of the Preferred Stock shall not be deemed to have converted such Preferred Stock until immediately prior to the closing
with the underwriters of such sale of securities or the Direct Listing Effectiveness. If the conversion is in connection with
automatic conversion provisions of subsection 4(b)(i), 4(b)(ii) or 4(b)(iii) above, such conversion shall be deemed to have been
made on the date of consummation of the Qualified Public Offering, the date of effectiveness of the registration statement or
the date described in the stockholder consent approving the conversion, respectively, and the persons entitled to receive shares
of Common Stock upon such conversion shall be treated for all purposes as the record holders of such shares of Common Stock as
of such date.
(d) Conversion Price Adjustments of Preferred Stock for Certain Dilutive Issuances, Splits and Combinations. The Conversion
Price of the Preferred Stock shall be subject to adjustment from time to time as follows:
(i)
(A) If this corporation shall issue, on or after November 9, 2017 (the “Original Issue Date”), any Additional Stock
(as defined below) without consideration or for a consideration per share less than the Conversion Price applicable to the Series A-2
Preferred Stock or Series B Preferred Stock, as applicable, in effect immediately prior to the issuance of such Additional
Stock, the Conversion Price for the Series A-2 Preferred Stock or Series B Preferred Stock, as applicable, shall forthwith
(except as otherwise provided in this clause (i)) be adjusted to a price determined by multiplying such Conversion Price in effect
immediately prior to such issuance by a fraction, the numerator of which shall be the number of shares of Common Stock Outstanding
(as defined below) immediately prior to such issuance plus the number of shares of Common Stock that the aggregate consideration
received by this corporation for such issuance would purchase at such Conversion Price (determined by dividing the aggregate consideration
received by the corporation in respect of such issue as determined herein by the applicable Conversion Price in effect immediately
prior to such issuance); and the denominator of which shall be the number of shares of Common Stock Outstanding immediately prior
to such issuance plus the number of shares of such Additional Stock. For purposes of this subsection 4(d)(i)(A), the term “Common
Stock Outstanding” shall mean and include the following: (1) outstanding Common Stock, (2) Common Stock issuable
upon conversion or exchange of outstanding securities convertible into or exchangeable for Common Stock (other than Class A Common
Stock issuable upon conversion or exchange of Class C Common Stock) (for the purpose of this sentence, “convertible securities”),
(3) Common Stock issuable upon exercise of outstanding stock options and other securities exercisable for Common Stock (for the
purpose of this sentence, “options”) and (4) Common Stock issuable upon exercise, conversion or exchange of
options and convertible securities issuable upon the exercise, conversion or exchange of securities exercisable, convertible or
exchangeable for options and convertible securities. Shares described in (1) through (4) above shall be included whether vested
or unvested, whether contingent or non-contingent and whether exercisable or not yet exercisable.
(B) No adjustment of the Conversion Price for a series of Preferred Stock shall be made in an amount less than one-hundredth of a
cent ($0.0001) per share, provided that any adjustments that are not required to be made by reason of this sentence shall be carried
forward and shall be either taken into account in any subsequent adjustment made prior to three (3) years from the date of the
event giving rise to the adjustment being carried forward, or shall be made at the end of three (3) years from the date of the
event giving rise to the adjustment being carried forward. Except to the limited extent provided for in subsections (E)(3) and
(E)(4), no adjustment of the Conversion Price of Series A-2 Preferred Stock or Series B Preferred Stock pursuant to
this subsection 4(d)(i) shall have the effect of increasing such Conversion Price above the Conversion Price of such series of
Preferred Stock in effect immediately prior to such adjustment.
(C) In the case of the issuance of Additional Stock for cash, the consideration shall be deemed to be the amount of cash paid therefor
before deducting any reasonable discounts, commissions or other expenses allowed, paid or incurred by this corporation for any
underwriting or otherwise in connection with the issuance and sale thereof.
(D) In the case of the issuance of the Additional Stock for a consideration in whole or in part other than cash, the consideration
other than cash shall be deemed to be the fair market value thereof as reasonably determined by the Board (including the approval
of a Series A-2 Preferred Director and the Series B Director) irrespective of any accounting treatment.
(E) In the case of the issuance of options to purchase or rights to subscribe for Common Stock, securities by their terms convertible
into or exchangeable for Common Stock or options to purchase or rights to subscribe for such convertible or exchangeable securities,
the following provisions shall apply for purposes of determining the number of shares of Additional Stock issued and the consideration
paid therefor:
(1) The aggregate maximum number of shares of Common Stock deliverable upon exercise (assuming the satisfaction of any conditions
to exercisability, including without limitation, the passage of time, but without taking into account potential antidilution adjustments)
of such options to purchase or rights to subscribe for Common Stock shall be deemed to have been issued at the time such options
or rights were issued and for a consideration equal to the consideration (determined in the manner provided in subsections 4(d)(i)(C)
and (d)(i)(D)), if any, received by this corporation upon the issuance of such options or rights plus the minimum exercise price
provided in such options or rights (without taking into account potential antidilution adjustments) for the Common Stock covered
thereby. To the extent that an adjustment of the Conversion Price of the Series A-2 Preferred Stock or Series B Preferred
Stock shall have been made upon the issuance of such options or rights, a readjustment of the Conversion Price of the Series A-2
Preferred Stock or Series B Preferred Stock, as applicable, shall be made upon the actual issuance of such Common Stock upon
the exercise of such options or rights to the extent that the aggregate amount of additional consideration paid to this corporation
upon such exercise exceeds the minimum exercise price provided in such options or rights.
(2) The aggregate maximum number of shares of Common Stock deliverable upon conversion of, or in exchange (assuming the satisfaction
of any conditions to convertibility or exchangeability, including, without limitation, the passage of time, but without taking
into account potential antidilution adjustments) for, any such convertible or exchangeable securities or upon the exercise of
options to purchase or rights to subscribe for such convertible or exchangeable securities and subsequent conversion or exchange
thereof shall be deemed to have been issued at the time such securities were issued or such options or rights were issued and
for a consideration equal to the consideration, if any, received by this corporation for any such securities and related options
or rights (excluding any cash received on account of accrued interest), plus the minimum additional consideration, if any, to
be received by this corporation (without taking into account potential antidilution adjustments) upon the conversion or exchange
of such securities or the exercise of any related options or rights (the consideration in each case to be determined in the manner
provided in subsections 4(d)(i)(C) and 4(d)(i)(D)). To the extent that an adjustment of the Conversion Price of the Series A-2
Preferred Stock or Series B Preferred Stock shall have been made upon the issuance of such convertible or exchangeable securities
or upon the exercise of options or rights for such securities, a readjustment of the Conversion Price of the Series A-2 Preferred
Stock or Series B Preferred Stock, as applicable, shall be made upon the actual issuance of such Common Stock upon the conversion
or exchange of such securities to the extent that the aggregate amount of additional consideration paid to this corporation upon
such conversion or exchange exceeds the minimum exercise price provided in such convertible or exchangeable securities.
(3) In the event of any change in the number of shares of Common Stock deliverable or in the consideration payable to this corporation
upon exercise of such options or rights or upon conversion of or in exchange for such convertible or exchangeable securities,
the Conversion Price of the Series A-2 Preferred Stock or Series B Preferred Stock, as applicable, to the extent in
any way affected by or computed using such options, rights or securities, shall be recomputed to reflect such change.
(4) Upon the expiration of any such options or rights, the termination of any such rights to convert or exchange or the expiration
of any options or rights related to such convertible or exchangeable securities, the Conversion Price of the Series A-2 Preferred
Stock or Series B Preferred Stock, as applicable, to the extent in any way affected by or computed using such options, rights
or securities or options or rights related to such securities, shall be recomputed to reflect the issuance of only the number
of shares of Common Stock (and convertible or exchangeable securities that remain in effect) actually issued upon the exercise
of such options or rights, upon the conversion or exchange of such securities or upon the exercise of the options or rights related
to such securities.
(5) The number of shares of Additional Stock deemed issued and the consideration deemed paid therefor pursuant to subsections 4(d)(i)(E)(1)
and (2) shall be appropriately adjusted to reflect any change, termination or expiration of the type described in either subsection
4(d)(i)(E)(3) or (4).
(ii) “Additional Stock” shall mean any shares of Common Stock issued (or
deemed to have been issued pursuant to subsection 4(d)(i)(E)) by this corporation on or after the Filing Date other than:
(A) Common Stock issued pursuant to a transaction described in subsection 4(d)(iii) hereof;
(B) shares of Common Stock issued to employees, directors, consultants and other service providers other than for equity financing
purposes pursuant to plans or agreements approved by the Board and the Requisite Investors;
(C) Common Stock issued pursuant to the conversion or exercise of convertible or exercisable securities outstanding on the Filing
Date and Class A Common Stock issued pursuant to the conversion of Class C Common Stock;
(D) Common Stock issued or deemed issued pursuant to subsection 4(d)(i)(E) as a result of a decrease in the Conversion Price of the
Series A-2 Preferred Stock or Series B Preferred Stock, as applicable, resulting from the operation of subsection 4(d);
(E) Common Stock issued or deemed issued to a bona fide commercial operating entity in connection with a bona fide strategic business
transaction with this corporation or any affiliate of this corporation which is directly related to this corporation’s business,
which transaction is (1) approved by the Board and the Requisite Investors and (2) other than primarily for equity financing purposes;
or
(F) Common Stock issued or deemed issued pursuant to strategic transactions, equipment lease financings or bank credit arrangements
entered into for primarily non-equity financing purposes, in each case which has been approved by (1) the Board and (2) the Requisite
Investors.
(iii) In the event this corporation should at any time or from time to time after the Filing Date fix a record date for the effectuation
of a split or subdivision of the outstanding shares of Common Stock or the determination of holders of Common Stock entitled to
receive a dividend or other distribution payable in additional shares of Common Stock or other securities or rights convertible
into, or entitling the holder thereof to receive directly or indirectly, additional shares of Common Stock (hereinafter referred
to as “Common Stock Equivalents”) without payment of any consideration
by such holder for the additional shares of Common Stock or the Common Stock Equivalents (including the additional shares of Common
Stock issuable upon conversion or exercise thereof) then, as of such record date (or the date of such dividend, distribution,
split or subdivision if no record date is fixed), the Conversion Price of each series of the Preferred Stock shall be appropriately
decreased so that the number of shares of Common Stock issuable on conversion of each share of Preferred Stock shall be increased
in proportion to such increase of the aggregate of shares of Common Stock outstanding and those issuable with respect to such
Common Stock Equivalents.
(iv) If the number of shares of Common Stock outstanding at any time after the Filing Date is decreased by a combination of the outstanding
shares of Common Stock, then, following the record date of such combination, the Conversion Price of each series of the Preferred
Stock shall be appropriately increased so that the number of shares of Common Stock issuable on conversion of each share of Preferred
Stock shall be decreased in proportion to such decrease in outstanding shares.
(e) Other Distributions. In the event this corporation shall declare a distribution payable in securities of other persons,
evidences of indebtedness issued by this corporation or other persons, assets (excluding cash dividends) or options or rights
not referred to in subsection 4(d)(iii) or Section 2, then, in each such case for the purpose of this subsection 4(e), the holders
of each series of Preferred Stock shall be entitled to a proportionate share of any such distribution as though they were the
holders of the number of shares of Common Stock of this corporation into which their shares of Preferred Stock are convertible
as of the record date fixed for the determination of the holders of Common Stock of this corporation entitled to receive such
distribution.
(f) Recapitalizations. If at any time or from time to time after the Filing Date there shall be a recapitalization of the Common
Stock (other than a subdivision, combination or merger or sale of assets transaction provided for elsewhere in this Section 4
or in Section 2) provision shall be made so that the holders of each series of the Preferred Stock shall thereafter be entitled
to receive upon conversion of the Preferred Stock the number of shares of stock or other securities or property of this corporation
or otherwise, to which a holder of the number of shares of Common Stock deliverable upon conversion of the Preferred Stock held
by such holder on the date of such recapitalization would have been entitled on such recapitalization. In any such case, appropriate
adjustment shall be made in the application of the provisions of this Section 4 with respect to the rights of the holders of the
Preferred Stock after the recapitalization to the end that the provisions of this Section 4 (including adjustment of the Conversion
Price then in effect for the Preferred Stock and the number of shares purchasable upon conversion of the Preferred Stock) shall
be applicable after that event as nearly equivalently as may be practicable.
(g) No Impairment. This corporation will not, without the appropriate vote of the stockholders under the General Corporation
Law or Section 6 of this Article IV(B), by amendment of its Certificate of Incorporation or through any reorganization, recapitalization,
transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek
to avoid the observance or performance of any of the terms to be observed or performed hereunder by this corporation, but will
at all times in good faith assist in the carrying out of all the provisions of this Section 4 and in the taking of all such action
as may be necessary or appropriate in order to protect the Conversion Rights of the holders of the Preferred Stock against impairment.
(h) No Fractional Shares and Certificate as to Adjustments.
(i) No fractional shares shall be issued upon the conversion of any share or shares of Preferred Stock and the aggregate number of
shares of Common Stock to be issued to particular stockholders, shall be rounded down to the nearest whole share and this corporation
shall pay in cash the fair market value of any fractional shares as of the time when entitlement to receive such fraction is determined.
Whether or not fractional shares would be issuable upon such conversion shall be determined on the basis of the total number of
shares of Preferred Stock the holder is at the time converting into Common Stock and the number of shares of Common Stock issuable
upon such conversion.
(ii) Upon the occurrence of each adjustment or readjustment of the Conversion Price of Preferred Stock pursuant to this Section 4,
this corporation, at its expense, shall promptly compute such adjustment or readjustment in accordance with the terms hereof and
prepare and furnish to each holder of Preferred Stock a certificate setting forth such adjustment or readjustment and showing
in detail the facts upon which such adjustment or readjustment is based. This corporation shall, upon the written request at any
time of any holder of Preferred Stock, furnish or cause to be furnished to such holder a like certificate setting forth (A) such
adjustment and readjustment, (B) the Conversion Price for such series of Preferred Stock at the time in effect, and (C) the number
of shares of Common Stock and the amount, if any, of other property that at the time would be received upon the conversion of
a share of Preferred Stock.
(i) Notices of Record Date. In the event of any taking by this corporation of a record of the holders of any class of securities
for the purpose of determining the holders thereof who are entitled to receive any dividend (other than a cash dividend) or other
distribution, this corporation shall mail to each holder of Preferred Stock, at least ten (10) days prior to the date specified
therein, a notice specifying the date on which any such record is to be taken for the purpose of such dividend or distribution,
and the amount and character of such dividend or distribution.
(j) Reservation of Stock Issuable Upon Conversion. This corporation shall at all times reserve and keep available out of its
authorized but unissued shares of Common Stock, solely for the purpose of effecting the conversion of the shares of Preferred
Stock, such number and type of its shares of Common Stock as shall from time to time be sufficient to effect the conversion of
all outstanding shares of Preferred Stock; and if at any time the number of authorized but unissued shares of Common Stock shall
not be sufficient to effect the conversion of all then outstanding shares of Preferred Stock, in addition to such other remedies
as shall be available to the holder of such Preferred Stock, this corporation will take such corporate action as may, in the opinion
of its counsel, be necessary to increase its authorized but unissued shares of Common Stock to such number of shares as shall
be sufficient for such purposes, including, without limitation, engaging in best efforts to obtain the requisite stockholder approval
of any necessary amendment to this Amended and Restated Certificate of Incorporation.
(k) Notices. Any notice required by the provisions of this Section 4 to be given to the holders of shares of Preferred Stock
shall be deemed given if deposited in the United States mail, postage prepaid, and addressed to each holder of record at his address
appearing on the books of this corporation.
(l) Waiver of Adjustment to Conversion Price. Notwithstanding anything herein to the contrary, any downward adjustment of the
Conversion Price of any series of Preferred Stock may be waived, either prospectively or retroactively and either generally or
in a particular instance, by the vote or written consent of the holders of at least sixty percent (60%) of the then outstanding
shares of such series of Preferred Stock (voting as a separate class). Any such waiver shall bind all future holders of shares
of such series of Preferred Stock.
5. Voting Rights.
(a) General Voting Rights. The holder of each share of Preferred Stock shall have the right to one (1) vote for each share
of Common Stock into which such Preferred Stock could then be converted (assuming for such purposes only that all such Preferred
Stock is convertible into Class B Common Stock (not Class A Common Stock) at its then applicable Conversion Rate), and,
subject to the foregoing provision regarding the number of votes, such holder shall have full voting rights and powers equal to
the voting rights and powers of the holders of Class B Common Stock, and shall be entitled, notwithstanding any provision hereof,
to notice of any stockholders’ meeting in accordance with the Bylaws of this corporation, and except as provided in subsection
5(b) below with respect to the election of directors by the separate class vote of the holders of Common Stock and except as provided
by law, shall be entitled to vote, together with holders of Voting Common Stock, with respect to any question upon which holders
of Voting Common Stock have the right to vote. Fractional votes shall not, however, be permitted and any fractional voting rights
available on an as-converted to Common Stock basis (assuming for such purposes only that all Preferred Stock is convertible into
Class B Common Stock (not Class A Common Stock) at its then applicable Conversion Rate and after aggregating all shares
into which shares of Preferred Stock held by each holder could be converted) shall be rounded to the nearest whole number (with
one-half (1/2) being rounded upward).
(b) Voting for the Election of Directors. As long as Fourteen Million Four Hundred Ninety Nine Thousand Nine Hundred Ninety
(14,499,990) shares of Series A-1 Preferred Stock (as adjusted for any stock splits, stock dividends, combinations, subdivisions,
recapitalizations or the like with respect to the Series A-1 Preferred Stock) remain outstanding, the holders of the Series A-1
Preferred Stock (voting as a separate class) shall be entitled to elect four (4) directors of this corporation at any election
of directors (each, a “Series A-1 Preferred Director”). Subject
to subsection 3(h) and as long as Eleven Million Eight Hundred Seventy Thousand Eight Hundred Forty Five (11,870,845) shares of
Series A-2 Preferred Stock (as adjusted for any stock splits, stock dividends, combinations, subdivisions, recapitalizations
or the like with respect to the Series A-2 Preferred Stock) remain outstanding, the holders of the Series A-2 Preferred
Stock (voting as a separate class) shall be entitled to elect two (2) directors of this corporation at any election of directors
(each, a “Series A-2 Preferred Director”). Subject to subsection
3(h) and as long as Three Million One Hundred Fifty Eight Thousand Six Hundred (3,158,600) shares of Series B Preferred Stock
(as adjusted for any stock splits, stock dividends, combinations, subdivisions, recapitalizations or the like with respect to
the Series B Preferred Stock) remain outstanding, the holders of the Series B Preferred Stock (voting as a separate
class) shall be entitled to elect one (1) director of this corporation at any election of directors (the “Series B
Preferred Director” and collectively with the Series A-2 Preferred Directors, the “Investor
Directors”).
Notwithstanding
the provisions of Section 223(a)(1) and 223(a)(2) of the General Corporation Law, (i) any vacancies and newly created directorships
resulting from any increase in the authorized number of directors elected by all of the stockholders having the right to vote
as a single class may be filled by a majority of the directors then in office, although less than a quorum, or by a sole remaining
director; and (ii) any vacancy in any directorship filled by the holders of any class or series shall be filled only by vote or
written consent in lieu of a meeting of the holders of such class or series or by any remaining director or directors elected
by the holders of such class or series pursuant to this Subsection 5(b). Any director may be removed during his or her term of
office, either with or without cause, by, and only by, the affirmative vote of the holders of the shares of the class or series
of stock entitled to elect such director or directors, given either at a special meeting of such stockholders duly called for
that purpose or pursuant to a written consent of such stockholders, and any vacancy thereby created may be filled as provided
in this Subsection 5(b).
6. Protective Provisions.
(a) Subject to Subsection 3(h) of this Article IV and as long as more than Eleven Million Eight Hundred Seventy Thousand Eight Hundred
Forty Five (11,870,845) shares of the Series A-2 Preferred Stock (as adjusted for any stock splits, stock dividends, combinations,
subdivisions, recapitalizations or the like with respect to the Series A-2 Preferred Stock) remain outstanding or Three Million
One Hundred Fifty Eight Thousand Six Hundred (3,158,600) shares of Series B Preferred Stock (as adjusted for any stock splits,
stock dividends, combinations, subdivisions, recapitalizations or the like with respect to the Series B Preferred Stock)
remain outstanding, and in any event subject to applicable law, this corporation shall not (by amendment, merger, consolidation
or otherwise) without first obtaining the approval (by vote or written consent, as provided by law) of the Requisite Investors,
unless the outstanding share amount of any such series of stock at such time is less than its applicable outstanding share amount
set forth in this subsection 6(a), in which case the foregoing approval (by vote or written consent, as provided by law) of the
holder or holders of such series need not be obtained (and, for the avoidance of doubt, such series shall no longer be entitled
to the benefit of the following protective provisions):
(i) consummate or agree to consummate a Liquidation Event;
(ii) alter, change, modify or repeal the rights, preferences or privileges of the shares of the Series A-2 Preferred Stock or
the Series B Preferred Stock so as to affect adversely the shares or the holders thereof, other than terms with respect to
which alteration, change, modification or repeal the holders of Series A-2 Preferred Stock or Series B Preferred Stock,
as applicable, are entitled to vote as a separate class or series pursuant to the General Corporation Law or any other provision
of this Amended and Restated Certificate of Incorporation, the alteration, change, modification or repeal of which shall require
the requisite separate class or series vote;
(iii) amend, waive, repeal or otherwise effect any other change (whether by merger, consolidation or otherwise) to this corporation’s
Amended and Restated Certificate of Incorporation or Bylaws;
(iv) increase or decrease (other than by redemption or conversion) the total number of authorized shares of Preferred Stock or any
series thereof;
(v) authorize or issue, or obligate itself to issue, any security (whether equity, convertible debt or a unit of debt and equity securities
or any other security convertible into or exercisable for any such security) having a preference over, or being on a parity with,
any series of Preferred Stock;
(vi) issue, or obligate itself to issue, any security (whether equity, convertible debt or a unit of debt and equity securities or
any other security convertible into or exercisable for any such security) other than a security issued pursuant to an equity incentive
plan adopted by this corporation (the “Option Plan”) which Option Plan is approved by the Board and the Requisite
Investors;
(vii) redeem, purchase or otherwise acquire (or pay into or set aside for a sinking fund for such purpose) any share or shares of Preferred
Stock or Common Stock; provided, however, that without limiting the other consent rights under this Section 6(a), this restriction
shall not apply to (A) the repurchase by this corporation of shares of Common Stock held by employees, officers, directors, consultants,
independent contractors, advisors, or other persons (in each case, other than the Founder) performing services for the corporation
or a subsidiary pursuant to agreements under which the corporation has the option to repurchase such shares at the lower of cost
or fair market value upon the termination of employment or service, (B) the net exercise, settlement or cashless exercise of awards
issued pursuant to an Option Plan or the forfeiture of shares of the corporation’s capital stock issued pursuant to an Option
Plan to satisfy tax liabilities upon the exercise, settlement or vesting of awards issued pursuant to an Option Plan, or (C) the
redemption of any share or shares of Preferred Stock in accordance with Section 3;
(viii) except as required by the General Corporation Law and as provided otherwise in this Amended and Restated Certificate of Incorporation,
pay or declare any dividend or distribution on the Common Stock or Preferred Stock of this corporation or any series or class
of any of the foregoing;
(ix) enter into or be a party to any transaction with any director, officer or any holder of greater than ten percent (10%) of this
corporation’s outstanding Common Stock (assuming the exercise, exchange or conversion of all outstanding securities exercisable,
exchangeable or convertible for or into Common Stock) (or any affiliate or immediate family member of any of the foregoing, provided,
that if a person specified in this Section 6(a)(ix) holds less than 10% of the outstanding voting securities of any entity, such
entity shall not be an “affiliate” of such person for this Section 6(a)(ix)) except (i) transactions made in the ordinary
course of business and pursuant to reasonable requirements of the this corporation’s business and upon fair and reasonable
terms that are approved by the disinterested directors of the Board and (ii) in connection with any Covered Transfer (as defined
in that certain Amended and Restated Stockholders Agreement dated on or about the Filing Date by and among the corporation and
certain of its stockholders, as may be amended and/or restated from time to time).
(x) change the authorized number of, or method of electing, the directors of this corporation;
(xi) appoint or remove auditors of this corporation or change the fiscal year of this corporation;
(xii) increase the number of shares of Common Stock reserved for issuance to employees and consultants, whether wider any equity incentive
plan or scheme of the corporation;
(xiii) issue (i) additional shares of Class B Common Stock or (ii) Series A-1 Preferred Stock or any other shares convertible
into Class B Common Stock, in each case other than (x) shares of Class B Common Stock issued upon conversion of Series A-1
Preferred Stock, or (y) shares of Class B Common Stock issued pursuant to an Option Plan that is in effect as of the Filing
Date (such shares described in clauses (x) and (y), “Permitted Class B Shares”);
or
(xiv) permit any direct or indirect subsidiary of this corporation to consummate or agree to consummate any of the actions contemplated
by clauses (i) through (xiii) of this Section 6(a) or to authorize or issue or obligate itself to issue, any equity security of
such subsidiary other than to this corporation or a direct or indirect wholly-owned subsidiary of this corporation.
(b) As long as more than Fourteen Million Four Hundred Ninety Nine Thousand Nine Hundred Ninety (14,499,990) shares of the Series A-1
Preferred Stock (as adjusted for any stock splits, stock dividends, combinations, subdivisions, recapitalizations or the like
with respect to the Series A-1 Preferred Stock) remain outstanding, and in any event subject to applicable law, this corporation
shall not (by amendment, merger, consolidation or otherwise) without first obtaining the approval (by vote or written consent,
as provided by law) of the holders of at least a majority of the then outstanding shares of Series A-1 Preferred Stock (voting
as a separate class):
(i) alter, change, modify or repeal the rights, preferences or privileges of the shares of the Series A-1 Preferred Stock so
as to affect adversely the shares or the holders thereof; or
(ii) increase or decrease (other than by redemption or conversion) the total number of authorized shares of Series A-1 Preferred
Stock.
(c) As long as more than Three Million One Hundred Fifty Eight Thousand Six Hundred (3,158,600) shares of Series B Preferred
Stock (as adjusted for any stock splits, stock dividends, combinations, subdivisions, recapitalizations or the like with respect
to the Series B Preferred Stock) remain outstanding, and in any event subject to applicable law, this corporation shall not
(by amendment, merger, consolidation or otherwise) without first obtaining the approval (by vote or written consent, as provided
by law) of the holders of at least a majority of the then outstanding shares of Series B Preferred Stock (voting as a separate
class):
(i) alter, change, modify or repeal the rights, preferences or privileges of the shares of the Series B Preferred Stock so as
to affect adversely the shares or the holders thereof; or
(ii) increase or decrease (other than by redemption or conversion) the total number of authorized shares of Series B Preferred
Stock.
7. Status of Redeemed or Converted Stock. In the event any shares of Preferred Stock shall be redeemed or converted pursuant
to Section 3 or Section 4 hereof, the shares so redeemed or converted shall be cancelled and shall not be issuable by this corporation.
The Amended and Restated Certificate of Incorporation of this corporation shall be appropriately amended to effect the corresponding
reduction in this corporation’s authorized capital stock.
8. Waiver. Not by way of limitation, any of the rights, powers, preferences and other terms of the Preferred Stock set forth
herein may be waived on behalf of all holders of Preferred Stock by the affirmative written consent or vote of the holders of
a majority of the then outstanding shares of Series A-1 Preferred Stock (voting as a separate class) and Requisite Investors,
other than with respect to those rights, powers, preferences and other terms with respect to which the holders of a class or series
of Preferred Stock (including for such purpose, the proviso to the paragraph following Clause (E) to Section 2(d)(i) of Article
IV) are entitled to vote as a separate class or series pursuant to the General Corporation Law or any other provision of this
Amended and Restated Certificate of Incorporation, the waiver of which shall require the requisite separate class or series vote.
C. Common Stock. The rights, preferences, privileges and restrictions granted to and imposed on the Common Stock are as set
forth below in this Article IV(C).
1. General. The voting, dividends, liquidation rights of holders, privileges, restrictions and other matters relating to the
Class A Common Stock, Class B Common Stock and Class C Common Stock are subject to and qualified by the rights, powers
and preferences of the holders of Preferred Stock as set forth herein.
2. Rights Relating to Dividends, Subdivisions and Combinations.
(a) Subject to the prior rights of holders of all classes and series of stock at the time outstanding having prior rights as to dividends,
the holders of the Class A Common Stock, Class B Common Stock and Class C Common Stock shall be entitled to receive,
when, as and if declared by the Board, out of any assets of the corporation legally available therefor, such dividends as may
be declared from time to time by the Board. Any dividends paid to the holders of shares of Class A Common Stock, Class B
Common Stock and Class C Common Stock shall be paid pro rata, on an equal priority, pari passu basis.
(b) The corporation shall not declare or pay any dividend or make any other distribution to the holders of Class A Common Stock,
Class B Common Stock or Class C Common Stock payable in securities of the corporation unless the same dividend or distribution
with the same record date and payment date shall be declared and paid on all shares of Common Stock; provided, however, that (i)
dividends or other distributions payable in shares of Class A Common Stock or rights to acquire shares of Class A Common
Stock may be declared and paid to the holders of Class A Common Stock without the same dividend or distribution being declared
and paid to the holders of the Class B Common Stock and Class C Common Stock if, and only if, (A) a dividend payable in shares
of Class B Common Stock, or rights to acquire shares of Class B Common Stock, as applicable, are declared and paid to
the holders of Class B Common Stock at the same rate and with the same record date and payment date and (B) a dividend payable
in shares of Class C Common Stock, or rights to acquire shares of Class C Common Stock, as applicable, are declared
and paid to the holders of Class C Common Stock at the same rate and with the same record date and payment date; (ii) dividends
or other distributions payable in shares of Class B Common Stock or rights to acquire shares of Class B Common Stock
may be declared and paid to the holders of Class B Common Stock without the same dividend or distribution being declared
and paid to the holders of the Class A Common Stock or Class C Common Stock if, and only if, (A) a dividend payable in shares
of Class A Common Stock, or rights to acquire shares of Class A Common Stock, as applicable, are declared and paid to
the holders of Class A Common Stock at the same rate and with the same record date and payment date and (B) a dividend payable
in shares of Class C Common Stock, or rights to acquire shares of Class C Common Stock, as applicable, are declared
and paid to the holders of Class C Common Stock at the same rate and with the same record date and payment date; and (iii)
dividends or other distributions payable in shares of Class C Common Stock or rights to acquire shares of Class C Common
Stock may be declared and paid to the holders of Class C Common Stock without the same dividend or distribution being declared
and paid to the holders of the Class A Common Stock or Class B Common Stock if, and only if, (A) a dividend payable in shares
of Class A Common Stock, or rights to acquire shares of Class A Common Stock, as applicable, are declared and paid to
the holders of Class A Common Stock at the same rate and with the same record date and payment date and (B) a dividend payable
in shares of Class B Common Stock, or rights to acquire shares of Class B Common Stock, as applicable, are declared
and paid to the holders of Class B Common Stock at the same rate and with the same record date and payment date.
(c) If the corporation in any manner subdivides or combines the outstanding shares of Class A Common Stock, Class B Common
Stock or Class C Common Stock, then the outstanding shares of all Common Stock will be subdivided or combined in the same proportion
and manner.
3. Voting Rights.
(a) Class A Common Stock. Each holder of shares of Class A Common Stock shall (i) before the Initial Public Event,
be entitled to one-tenth (1/10) of one (1) vote for each share thereof held and (ii) after the Initial Public Event, be entitled
to one (1) vote for each share thereof held.
(b) Class B Common Stock. Each holder of shares of Class B Common Stock shall (i) before the Initial Public Event,
be entitled to one (1) vote for each share thereof held and (ii) after the Initial Public Event, be entitled to ten (10) votes
for each share thereof held.
(c) Class C Common Stock. Each holder of shares of Class C Common Stock shall be entitled to no votes for each share thereof
held.
(d) Class B Common Stock Protective Provisions. So long as any shares of Class B Common Stock remain outstanding
or issuable upon conversion of Series A-1 Preferred Stock, in addition to any vote required hereunder, by applicable law
or in the Bylaws of the corporation, the corporation shall not, without the approval by vote or written consent of the holders
of a majority of the voting power of the Class B Common Stock and Series A-1 Preferred Stock, voting together as a single
class and on an as-converted to Class B Common Stock basis, directly or indirectly, or whether by amendment, or through merger,
recapitalization, consolidation or otherwise:
(i) amend, alter, or repeal any provision of this Amended and Restated Certificate of Incorporation or the Bylaws of the corporation
(including any filing of a Certificate of Designation), in a manner that adversely modifies the voting, conversion or other powers,
preferences, or other special rights or privileges, or restrictions of the Class B Common Stock or amend, alter or repeal
Part B.4(a) or Part B.4(b) of Article IV of this Amended and Restated Certificate of Incorporation;
(ii) (A) create, or authorize the creation of, or issue or obligate itself to issue shares of, any additional class or series of capital
stock having the right to more than either (x) in the case of Common Stock held before the Initial Public Event, one-tenth (1/10)
of one (1) vote for each share thereof, (y) in the case of Preferred Stock held before the Initial Public Event, one (1) vote
for each share Common Stock issuable upon such share of Preferred Stock or (z) in the case of both Common Stock and Preferred
Stock held from and after the Initial Public Event, one (1) vote for each share thereof, or (B) increase the authorized number
of shares of any additional class or series of capital stock of the corporation having the right to more than either (x) in the
case of Common Stock held before the Initial Public Event, one-tenth (1/10) of one (1) vote for each share thereof, (y) in the
case of Preferred Stock held before the Initial Public Event, one (1) vote for each share of Common Stock issuable upon such share
of Preferred Stock or (z) in the case of both Common Stock and Preferred Stock held from and after the Initial Public Event, one
(1) vote for each share thereof, in each case other than Permitted Class B Shares;
(iii) reclassify, alter or amend any existing security of the corporation if such reclassification, alteration or amendment would provide
such other security with the right to more than either (x) in the case of Common Stock held before the Initial Public Event, one-tenth
(1/10) of one (1) vote for each share thereof, (y) in the case of Preferred Stock held before the Initial Public Event, one (1)
vote for each share of Common Stock issuable upon such share of Preferred Stock or (z) in the case of both Common Stock and Preferred
Stock held from and after the Initial Public Event, one (1) vote for each share thereof; or
(iv) consummate or agree to consummate a Liquidation Event in which the Class B Common Stock, Class A Common Stock and Class
C Common Stock do not receive Equivalent Consideration paid pursuant to Part B.2 and Part C. 4 of Article IV.
(e) Class A Common Stock Protective Provisions. So long as any shares of Class A Common Stock remain outstanding
or issuable upon conversion of Series A-2 Preferred Stock, Series B Preferred Stock or Class C Common Stock, in addition
to any vote required hereunder, by applicable law or in the Bylaws of the corporation, the corporation shall not, without the
approval by vote or written consent of the holders of a majority of the voting power of the Class A Common Stock, Series A-2
Preferred Stock and Series B Preferred Stock, voting together as a single class and on an as-converted to Class A Common
Stock basis, directly or indirectly, or whether by amendment, or through merger, recapitalization, consolidation or otherwise:
(i) amend, alter, or repeal any provision of this Amended and Restated Certificate of Incorporation or the Bylaws of the corporation
(including any filing of a Certificate of Designation), in a matter that adversely modifies the voting, conversion or other powers,
preferences, or other special rights or privileges, or restrictions of the Class A Common Stock or amend, alter or repeal
Part B.4(a) or Part B.4(b) of Article IV of this Amended and Restated Certificate of Incorporation;
(ii) issue additional shares of Class B Common Stock or any other shares convertible into Class B Common Stock, in each case
other than Permitted Class B Shares; or
(iii) consummate or agree to consummate a Liquidation Event in which the Class B Common Stock, Class A Common Stock and Class
C Common Stock do not receive Equivalent Consideration paid pursuant to Part B.2 and Part Article IVC.4 of Article IV.
(f) Class C Common Stock Protective Provisions. So long as any shares of Class C Common Stock remain outstanding
or issuable, in addition to any vote required hereunder, by applicable law or in the Bylaws of the corporation, the corporation
shall not, without the approval by vote or written consent of the holders of a majority of the Class C Common Stock, directly
or indirectly, or whether by amendment, or through merger, recapitalization, consolidation or otherwise:
(i) amend, alter, or repeal any provision of this Amended and Restated Certificate of Incorporation or the Bylaws of the corporation
(including any filing of a Certificate of Designation), in a manner that adversely modifies the voting, conversion or other powers,
preferences, or other special rights or privileges, or restrictions of the Class C Common Stock or amend, alter or repeal
Part B.4(a) or Part B.4(b) of Article IV of this Amended and Restated Certificate of Incorporation; or
(ii) consummate or agree to consummate a Liquidation Event in which the Class B Common Stock, Class A Common Stock and Class
C Common Stock do not receive Equivalent Consideration paid pursuant to Part B.2 and Part CArticle IVC.4 of Article IV.
(g) General. Except as otherwise expressly provided herein or as required by law, the holders of Preferred Stock and Voting
Common Stock shall (i) vote together and not as separate series or classes on all matters (including the election of directors)
submitted to a vote of the stockholders of the corporation, (ii) be entitled to notice of any stockholders’ meeting in accordance
with the Bylaws of the corporation and (iii) be entitled to vote upon such matters and in such manner as may be provided by applicable
law. There shall be no cumulative voting.
(h) Increases and Decreases to Common Stock. The number of authorized shares of each class of Common Stock may be increased
or decreased (but not below the number of shares thereof then outstanding or the number required to be reserved hereunder to effectuate
the conversion of shares of Preferred Stock, Class B Common Stock and Class C Common Stock into Class A Common Stock)
by the affirmative vote of the holders of shares of stock of this corporation representing a majority of the votes represented
by all outstanding shares of Common Stock and Preferred Stock entitled to vote, irrespective of the provisions of Section 242(b)(2)
of the General Corporation Law.
4. Liquidation Rights. In the event of a Liquidation Event, upon the completion of the distributions required with respect
to each series of Preferred Stock as provided below in Part B.2 of Article IV, that may then be outstanding, the remaining assets
of the corporation legally available for distribution to stockholders shall be distributed on an equal priority, pro rata basis
to the holders of Class A Common Stock, Class B Common Stock and Class C Common Stock; provided, however, that for the
avoidance of doubt, consideration to be paid or received by a holder of Common Stock in connection with any Deemed Liquidation
Event pursuant to any bona fide employment, consulting, severance or similar services arrangement shall not be deemed to be “distribution
to stockholders” for the purpose of this Part C.4 of Article IV.
5. Optional Conversion of the Class B Common Stock.
(a) At the option of the holder thereof, each share of Class B Common Stock shall be convertible, at any time or from time to
time, into one fully paid and nonassessable share of Class A Common Stock as provided herein.
(b) Each holder of Class B Common Stock who elects to convert the same into shares of Class A Common Stock shall surrender
the certificate or certificates therefor, duly endorsed, at the office of the corporation or any transfer agent for the Class B
Common Stock, and shall give written notice to the corporation at such office that such holder elects to convert the same and
shall state therein the number of shares of Class B Common Stock being converted. Thereupon, the corporation shall promptly
issue and deliver at such office to such holder, or to the nominee or nominees of such holder, a certificate or certificates for
the number of shares of Class A Common Stock to which such holder is entitled upon such conversion. Such conversion shall
be deemed to have been made immediately prior to the close of business on the date of such surrender of the certificate or certificates
representing the shares of Class B Common Stock to be converted, and the person entitled to receive the shares of Class A
Common Stock issuable upon such conversion shall be treated for all purposes as the record holder of such shares of Class A
Common Stock on such date. If a conversion election under this Section 5(b) is made in connection with an Initial Public Event,
the conversion may, at the option of the holder tendering shares of Class B Common Stock for conversion, be conditioned upon the
closing with the underwriters of the sale of the corporation’s securities pursuant to such offering or the Direct Listing
Effectiveness, as applicable, in which event the holders making such elections who are entitled to receive Class A Common
Stock upon conversion of their Class B Common Stock shall not be deemed to have converted such shares of Class B Common
Stock until immediately prior to the closing with the underwriters of such sale of the corporation’s securities in the offering
or the Direct Listing Effectiveness, as applicable.
6. Automatic Conversion of the Class B Common Stock.
(a) Automatic Conversion Upon Transfer. Each share of Class B Common Stock shall automatically be converted into one fully
paid and nonassessable share of Class A Common Stock upon a Transfer of such share of Class B Common Stock, other than
a Permitted Transfer. Such conversion shall occur automatically without the need for any further action by the holders of such
shares and whether or not the certificates representing such shares are surrendered to the corporation or its transfer agent;
provided, however, that the corporation shall not be obligated to issue certificates evidencing the shares of Class A Common
Stock issuable upon such conversion unless the certificates evidencing such shares of Class B Common Stock are either delivered
to the corporation or its transfer agent as provided below, or the holder notifies the corporation or its transfer agent that
such certificates have been lost, stolen or destroyed and executes an agreement satisfactory to the corporation to indemnify the
corporation from any loss incurred by it in connection with such certificates. Upon the occurrence of such automatic conversion
of the Class B Common Stock, the holders of Class B Common Stock so converted shall surrender the certificates representing
such shares at the office of the corporation or any transfer agent for the Class A Common Stock. Thereupon, there shall be
issued and delivered to such holder promptly at such office and in its name as shown on such surrendered certificate or certificates,
a certificate or certificates for the number of shares of Class A Common Stock into which the shares of Class B Common
Stock surrendered were convertible on the date on which such automatic conversion occurred.
(b) Automatic Conversion Upon Death. Each share of Class B Common Stock held of record by a natural person shall automatically,
without any further action, convert into one fully paid and nonassessable share of Class A Common Stock upon the death of
such stockholder.
7. Automatic Conversion of Class C Common Stock. Each share of Class C Common Stock shall automatically be converted into
shares of Class A Common Stock immediately prior to the Initial Public Event; provided that if HSR Clearance is required
to be obtained by a holder and has not been obtained by such holder at the time of the Initial Public Event, the conversion of
such holder’s Class C Common Stock into Class A Common Stock shall be delayed until the time that such HSR Clearance has been
obtained. Such conversion shall be deemed to have been made on the date of the Initial Public Event (or, if later, two (2)
business days following the date that HSR Clearance is obtained), and the persons entitled to receive shares of Class A Common
Stock upon such conversion shall be treated for all purposes as the record holders of such shares of Class A Common Stock as of
such date. Such conversion shall occur automatically without the need for any further action by the holders of such shares
and whether or not the certificates representing such shares are surrendered to the corporation or its transfer agent; provided,
however, that the corporation shall not be obligated to issue certificates evidencing the shares of Class A Common Stock issuable
upon such conversion unless, if certificates were issued, the certificates evidencing such shares of Class C Common Stock are
either delivered to the corporation or its transfer agent as provided below, or the holder notifies the corporation or its transfer
agent that such certificates have been lost, stolen or destroyed and executes an agreement satisfactory to the corporation to
indemnify the corporation from any loss incurred by it in connection with such certificates. Upon the occurrence of such automatic
conversion of the Class C Common Stock, the holders of Class C Common Stock so converted shall surrender the certificates representing
such shares, if such certificates were issued, at the office of the corporation or any transfer agent for the Class A Common Stock.
Thereupon, there shall be issued and delivered to such holder promptly at such office or through an electronic platform maintained
by the corporation and in its name as shown on such surrendered certificate or certificates or in the platform maintained by the
corporation, a certificate or certificates or in the electronic book entry records maintained by the corporation for the number
of shares of Class A Common Stock into which the shares of Class C Common Stock surrendered were convertible on the date on which
such automatic conversion occurred. “HSR Clearance” means the expiration or earlier termination of applicable
waiting periods under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.
8. Final Conversion of Class B Common Stock. On the Final Conversion Date (as defined below), each one (1) issued share of
Class B Common Stock shall automatically, without any further action, convert into one (1) share of Class A Common Stock.
Following the Final Conversion Date, the corporation may no longer issue any additional shares of Class B Common Stock.
9. Reservation of Stock Issuable Upon Conversion. The corporation shall at all times reserve and keep available out of its
authorized but unissued shares of Class A Common Stock, solely for the purpose of effecting the conversion of the shares
of the Class B Common Stock and Class C Common Stock, such number of its shares of Class A Common Stock as shall from
time to time be sufficient to effect the conversion of all outstanding shares of Class B Common Stock and Class C Common
Stock; and if the number of authorized but unissued shares of Class A Common Stock shall not be sufficient to effect the
conversion of all then-outstanding shares of Class B Common Stock and Class C Common Stock, the corporation will take such
corporate action as may, in the opinion of its counsel, be necessary to increase its authorized but unissued shares of Class A
Common Stock to such numbers of shares as shall be sufficient for such purpose.
10. Policies and Procedures. The corporation may, from time to time, establish such policies and procedures, not in violation
of applicable law or this Amended and Restated Certificate of Incorporation or the Bylaws, relating to the conversion of shares
of the Class B Common Stock or Class C Common Stock into shares of Class A Common Stock as it may deem necessary or
advisable. If the corporation has reason to believe that a Transfer that is not a Permitted Transfer has occurred, the corporation
may request that the purported transferor furnish affidavits or other evidence to the corporation as it reasonably deems necessary
to determine whether a Transfer that is not a Permitted Transfer has occurred, and if such transferor does not within thirty (30)
days after the date of such request furnish sufficient (as determined by the Board) evidence to the corporation (in the manner
provided in the request) to enable the corporation to determine that no such Transfer that is not a Permitted Transfer has occurred,
any such shares of Class B Common Stock, to the extent not previously converted, shall be automatically converted into shares
of Class A Common Stock and such conversion shall thereupon be registered on the books and records of the corporation. In
connection with any action of the stockholders of the corporation taken at a meeting, the stock ledger of the corporation shall
be presumptive evidence as to who are the stockholders entitled to vote in person or by proxy at any meeting of stockholders and
the classes of shares held by each such stockholder and the number of shares of each class held by such stockholder.
11. Definitions. For purposes of Part B and this Part C of Article IV, the following definitions shall apply:
(a) “Disability” means, with respect to the Founder, permanent and total
disability such that the Founder is unable to engage in any substantial gainful activity by reason of any medically determinable
mental impairment which can be expected to result in death or which has lasted or can be expected to last for a continuous period
of not less than 12 months as determined by a licensed medical practitioner.
(b) “Disqualified Series A-1 Preferred Share” shall mean each share
of Series A-1 Preferred Stock that is Transferred following the Original Issue Date in any transaction other than a Permitted
Transfer except for any share of Series A-1 Preferred Stock that is Transferred to General Atlantic (SQRS II) LP pursuant
to the transactions contemplated by that certain Stock Purchase Agreement, dated as of October 12, 2017, by and among the corporation,
General Atlantic (SQRS II) LP and the sellers party thereto (including the tender offer contemplated thereby).
(c) “Equivalent Consideration” shall mean (i) with respect to the Class A
Common Stock, the same consideration paid or otherwise distributed in respect of the Class B Common Stock and Class C Common Stock,
(ii) with respect to the Class B Common Stock, the same consideration paid or otherwise distributed in respect of the Class
A Common Stock and Class C Common Stock and (iii) with respect to the Class C Common Stock, the same consideration paid or
otherwise distributed in respect of the Class A Common Stock and Class B Common Stock; provided, however, that in the event that
consideration is paid in capital stock or other securities of another entity, such securities need not be identical with respect
to voting rights in order to be Equivalent Consideration. For the avoidance of doubt, compensation pursuant to any bona fide employment,
consulting, severance or other compensatory arrangement to be paid to or received by a person who is also a holder of Class A
Common Stock, Class B Common Stock or Class C Common Stock does not constitute consideration in respect of the Class A
Common Stock, Class B Common Stock or Class C Common Stock.
(d) “Family Member” shall mean with respect to any Qualified Stockholder
who is a natural person, the spouse, parents, grandparents, lineal descendants, siblings and lineal descendants of siblings (in
each case whether by blood relation or adoption) of such Qualified Stockholder.
(e) “Final Conversion Date” means 5:00 p.m. in New York City, New York
on the earliest to occur of (i) the first date on which the outstanding shares of Series A-1 Preferred Stock and Class B
Common Stock held by the Founder and his Permitted Transferees represent less than ten percent (10%) of the aggregate number of
shares of the then outstanding Class A Common Stock and Class B Common Stock on an as-converted basis, (ii) the date
specified by the holders of a majority of the outstanding shares of Class B Common Stock (including the Series A-1 Preferred
Stock voting on an as-converted basis) or (iii) date of the Founder’s death or Disability.
(f) “Founder” means Anthony Casalena.
(g) “Initial Public Event” means the earliest of (i) the closing of the
corporation’s first firmly underwritten public offering pursuant to an effective registration statement under the Securities
Act covering the offer and sale of Class A Common Stock or (ii) the effectiveness of a registration statement under the Securities
Act that registers shares of the corporation’s Class A Common Stock in a ‘direct listing’, in each case (i)
or (ii) where the Class A Common Stock and Class B Common Stock are each a “covered security” as described
in Section 18(b) of the Securities Act of 1933, as amended.
(h) “Permitted Entity” shall mean, any corporation, partnership, limited
liability company, foundation (including a private foundation), donor-advised fund, or supporting organization within the meaning
of Section 509(a)(3) of the Internal Revenue Code of 1986, as amended, in which a Qualified Stockholder directly, or indirectly
through one or more Permitted Transferees, either (i) owns shares, partnership interests or membership interests, as applicable,
with sufficient voting power in the corporation, partnership, limited liability company, foundation (including a private foundation),
donor-advised fund, or supporting organization, as the case may be, or (ii) otherwise has legally enforceable rights, in each
case such that the Qualified Stockholder retains exclusive Voting Control with respect to all shares of Class B Common Stock
or Series A-1 Preferred Stock, as applicable, held of record by such corporation, partnership, limited liability company,
foundation (including a private foundation), donor-advised fund, or supporting organization, as the case may be.
(i) “Permitted Transfer” shall mean, and be restricted to, any Transfer
of a share of Class B Common Stock or Series A-1 Preferred Stock, as applicable, as set forth below, in each case so
long as such Qualified Stockholder retains sufficient Voting Control, as the case may be, or otherwise has legally enforceable
rights, such that the Qualified Stockholder retains exclusive Voting Control with respect to all shares of Class B Common
Stock or Series A-1 Preferred Stock, as applicable, held of record by the applicable transferee:
(i) by a Qualified Stockholder to the trustee of a Permitted Trust of such Qualified Stockholder;
(ii) by a Permitted Trust of a Qualified Stockholder, to such Qualified Stockholder or the trustee of any other Permitted Trust of
such Qualified Stockholder;
(iii) by a Qualified Stockholder to a Family Member of such Qualified Stockholder;
(iv) by a Family Member of a Qualified Stockholder, to such Qualified Stockholder;
(v) by a Qualified Stockholder to any Permitted Entity of such Qualified Stockholder; or
(vi) by a Permitted Entity of a Qualified Stockholder, to such Qualified Stockholder or any other Permitted Entity of such Qualified
Stockholder.
(j) “Permitted Transferee” shall mean a transferee of shares of Class B
Common Stock or Series A-1 Preferred Stock, as applicable received in a Transfer that constitutes a Permitted Transfer.
(k) “Permitted Trust” shall mean a bona fide trust for the benefit of
a Qualified Stockholder or Family Members of the Qualified Stockholder, if such Transfer does not involve any payment of cash,
securities, property or other consideration (other than an interest in such trust) to the Qualified Stockholder, or a trust under
the terms of which such Qualified Stockholder has retained a “qualified interest” within the meaning of §2702(b)(1)
of the Internal Revenue Code and/or a reversionary interest, in each case so long as the Qualified Stockholder has exclusive Voting
Control with respect to the shares of Class B Common Stock or Series A-1 Preferred Stock, as applicable, held by such
trust.
(l) “Qualified Stockholder” shall mean (i) the registered holder of a
share of Class B Common Stock or Series A-1 Preferred Stock (A) immediately prior to the Initial Public Event (in the
case of any Transfer occurring upon or following the Initial Public Event) or (B) as of November 9, 2017 (in the case of any Transfer
occurring prior to the Initial Public Event); (ii) the initial registered holder of any shares of Class B Common Stock that
are originally issued by the corporation (including, without limitation, upon conversion of the Preferred Stock or upon exercise
of options or warrants), subject to the provisions of Part B.6(a)(xii) or Part C.3(d)(ii) of Article IV; and (iii) a Permitted
Transferee.
(m) “Transfer” of a share of Class B Common Stock or Series A-1
Preferred Stock shall mean any direct or direct sale, assignment, transfer, conveyance, hypothecation or other transfer or disposition
of such share or any legal or beneficial interest in such share, whether or not for value and whether voluntary or involuntary
or by operation of law, including, without limitation, a transfer of a share of Class B Common Stock or Series A-1 Preferred
Stock to a broker or other nominee (regardless of whether there is a corresponding change in beneficial ownership), or the transfer
of, or entering into a binding agreement with respect to, Voting Control (as defined below) over such share by proxy or otherwise,
such that the previous holders of such voting power no longer retain exclusive Voting Control with respect to the shares of Class B
Common Stock or Series A-1 Preferred Stock held by such holder; provided, however, that the following shall not be considered
a “Transfer” within the meaning of this Article IV:
(i) the granting of a revocable proxy to officers or directors of the corporation at the request of the Board of Directors of the
corporation in connection with actions to be taken at an annual or special meeting of stockholders;
(ii) entering into a voting trust, agreement or arrangement (with or without granting a proxy) solely with stockholders who are holders
of Class B Common Stock or Series A-1 Preferred Stock that (A) is disclosed either in a Schedule 13D filed with the
Securities and Exchange Commission or in writing to the Secretary of the corporation, (B) either has a term not exceeding one
(1) year or is terminable by the holder of the shares subject thereto at any time and (C) does not involve any payment of cash,
securities, property or other consideration to the holder of the shares subject thereto other than the mutual promise to vote
shares in a designated manner;
(iii) the pledge of shares of Class B Common Stock or Series A-l Preferred Stock by a stockholder that creates a mere security
interest in such shares pursuant to a bona fide loan or indebtedness transaction for so long as such stockholder continues to
exercise Voting Control over such pledged shares; provided, however, that a foreclosure on such shares or other similar action
by the pledgee shall constitute a “Transfer” unless such foreclosure or similar action qualifies as a “Permitted
Transfer”; or
(iv) entering into a support or similar voting agreement (with or without granting a proxy) in connection with a Liquidation Event.
A
“Transfer” shall also be deemed to have occurred with respect to a
share of Class B Common Stock or Series A-1 Preferred Stock beneficially held by (i) an entity that is a Permitted Entity,
if there occurs any act or circumstance that causes such entity to no longer be a Permitted Entity or (ii) an entity that is a
Qualified Stockholder, if there occurs a Transfer on a cumulative basis, from and after November 9, 2017, of a majority of the
voting power of the voting securities of such entity or any direct or indirect Parent of such entity, other than a Transfer to
parties that were, as of November 9, 2017, holders of voting securities of any such entity or Parent of such entity. “Parent”
of an entity shall mean any entity that directly or indirectly owns or controls a majority of the voting power of the voting securities
of such entity.
(n) “Voting Control” shall mean, with respect to a share of Class B
Common Stock or Series A-1 Preferred Stock, as applicable, the power (whether exclusive or shared) to vote or direct the
voting of such share by proxy, voting agreement or otherwise.
Article
V
Except
as otherwise provided in this Amended and Restated Certificate of Incorporation, in furtherance and not in limitation of the powers
conferred by statute, the Board of Directors is expressly authorized to make, repeal, alter, amend and rescind any or all of the
Bylaws of this corporation.
Article
VI
Subject
to any additional vote required by this Amended and Restated Certificate of Incorporation, the number of directors of this corporation
shall be determined in the manner set forth in the Bylaws of this corporation.
Article
VII
Elections
of directors need not be by written ballot unless the Bylaws of this corporation shall so provide.
Article
VIII
Meetings
of stockholders may be held within or without the State of Delaware, as the Bylaws of this corporation may provide. The books
of this corporation may be kept (subject to any provision contained in the statutes) outside the State of Delaware at such place
or places as may be designated from time to time by the Board of Directors or in the Bylaws of this corporation.
Article
IX
A
director of this corporation shall not be personally liable to this corporation or its stockholders for monetary damages for breach
of fiduciary duty as a director, except for liability (i) for any breach of the director’s duty of loyalty to this corporation
or its stockholders, (ii) for acts or omissions not in good faith or that involve intentional misconduct or a knowing violation
of law, (iii) under Section 174 of the General Corporation Law, or (iv) for any transaction from which the director derived any
improper personal benefit. If the General Corporation Law is amended after approval by the stockholders of this Article IX to
authorize corporate action further eliminating or limiting the personal liability of directors, then the liability of a director
of this corporation shall be eliminated or limited to the fullest extent permitted by the General Corporation Law as so amended.
Any
repeal or modification of the foregoing provisions of this Article IX by the stockholders of this corporation shall not adversely
affect any right or protection of a director of this corporation existing at the time of, or increase the liability of any director
of this corporation with respect to any acts or omissions of such director occurring prior to, such repeal or modification.
Article
X
This
corporation reserves the right to amend, alter, change or repeal any provision contained in this Amended and Restated Certificate
of incorporation, in the manner now or hereafter prescribed by statute, and all rights conferred upon stockholders herein are
granted subject to this reservation.
Article
XI
To
the fullest extent permitted by applicable law, this corporation is authorized to provide indemnification of (and advancement
of expenses to) directors, officers and agents of this corporation (and any other persons to which General Corporation Law permits
this corporation to provide indemnification) through Bylaw provisions, agreements with such agents or other persons, vote of stockholders
or disinterested directors or otherwise, in excess of the indemnification and advancement otherwise permitted by Section 145 of
the General Corporation Law, subject only to limits created by applicable General Corporation Law (statutory or non-statutory),
with respect to actions for breach of duty to this corporation, its stockholders, and others.
Any
amendment, repeal or modification of the foregoing provisions of this Article XI shall not adversely affect any right or protection
of a director, officer, agent, or other person existing at the time of, or increase the liability of any director of this corporation
with respect to any acts or omissions of such director, officer or agent occurring prior to, such amendment, repeal or modification.
Article
XII
To
the fullest extent permitted by the General Corporation Law, this corporation acknowledges that: (i) each stockholder (subject
to the proviso below) and each Preferred Director (each, an “Exempted Person”)
shall have no duty (contractual or otherwise) not to, directly or indirectly, engage in the same or similar business activities
or lines of business as this corporation or any of its subsidiaries, including those deemed to be competing with this corporation
or any of its subsidiaries; and (ii) in the event that any Exempted Person acquires knowledge of a potential transaction or matter
that may be a corporate opportunity for this corporation, then such Exempted Person shall have no duty (contractual or otherwise)
to communicate or present such corporate opportunity to this corporation or any of its subsidiaries, as the case may be, and shall
not be liable to this corporation or its affiliates or stockholders for breach of any duty (contractual or otherwise) by reason
of the fact that such Exempted Person, directly or indirectly, pursues or acquires such opportunity for itself, directs such opportunity
to another person, or does not present such opportunity to this corporation or any of its subsidiaries; provided, however, that
(i) this Article XII shall not limit any non-compete or other restrictive covenant agreement entered into between the corporation
and an officer or employee of this corporation or any subsidiary of this corporation and (ii) this Article XII shall not apply
to stockholders who are also officers or employees of this corporation or any subsidiary of this corporation (other than officers
affiliated with any Series A-2 Preferred Director or Series B Director) or who are permitted transferees of any such
person.
*
* *
THIRD:
The foregoing amendment and restatement was approved by the holders of the requisite number of shares of said corporation
in accordance with Section 228 of the General Corporation Law.
FOURTH:
That said Amended and Restated Certificate of Incorporation, which restates and integrates and further amends the provisions
of this corporation’s Certificate of Incorporation, has been duly adopted in accordance with Sections 242 and 245 of the
General Corporation Law.
In
Witness Whereof, this Amended and Restated
Certificate of Incorporation has been executed by a duly authorized officer of this corporation on the date first set forth above.
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By:
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/s/ Anthony Casalena
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Anthony Casalena, Chief Executive Officer
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Signature Page to Amended and Restated Certificate
of Incorporation
Exhibit 3.2
AMENDED AND RESTATED CERTIFICATE
OF
INCORPORATION OF SQUARESPACE, INC.
(Pursuant to Sections 242 and 245 of the
General Corporation Law of the State of Delaware)
Squarespace, Inc., a corporation
organized and existing under and by virtue of the provisions of the General Corporation Law of the State of Delaware (the “General
Corporation Law”),
DOES HEREBY CERTIFY:
FIRST: That the name
of this corporation is Squarespace, Inc. The original certificate of incorporation of this corporation was filed in the office of the
Secretary of State of the State of Delaware on October 29, 2007.
SECOND: That the Board
of Directors of the corporation (the “Board”) duly adopted resolutions proposing
to amend and restate the Certificate of Incorporation of this corporation, declaring said amendment and restatement to be advisable and
in the best interests of this corporation and its stockholders, and authorizing the appropriate officers of this corporation to solicit
the consent of the stockholders therefor, which resolution setting forth the proposed amendment and restatement is as follows:
RESOLVED, that the
Certificate of Incorporation, as amended through the date hereof, of this corporation be amended and restated in its entirety as follows:
Article
I
The name of this corporation is Squarespace, Inc.
Article
II
The address of the registered
office of this corporation in the State of Delaware is 3500 South DuPont Highway, County of Kent, Dover, DE USA 19901. The name of its
registered agent at such address is Incorporating Services, Ltd.
Article
III
The nature of the business
or purposes to be conducted or promoted is to engage in any lawful act or activity for which corporations may be organized under the General
Corporation Law.
Article
IV
The total number of shares
of all classes of stock that this corporation is authorized to issue is Two Billion Two Hundred Million (2,200,000,000) shares, consisting
of (a) One Billion (1,000,000,000) shares of Class A Common Stock, par value $0.0001 per share (“Class A Common Stock”),
(b) One Hundred Million (100,000,000) shares of Class B Common Stock, par value $0.0001 per share (“Class B Common Stock”),
(c) One Billion (1,000,000,000) shares of Class C Common Stock, par value $0.0001 per share (“Class C Common Stock”)
and (d) One Hundred Million (100,000,000) shares of Preferred Stock, par value $0.0001 per share (“Preferred Stock”),
undesignated as to series and issuable in accordance with the provisions of Article VI and the General Corporation Law.
Article
V
1.
General. Except as otherwise expressly provided in this Amended and Restated Certificate of Incorporation or as required
by applicable law, the holders of Common Stock shall vote together and not as separate series or classes on all matters (including the
election of directors) submitted to a vote of the stockholders of the corporation; provided, however, that, except as otherwise required
by the General Corporation Law or other applicable law, holders of shares of Common Stock, as such, shall not be entitled to vote on any
amendment to this Amended and Restated Certificate (including any certificate of designations relating to any class or series of Preferred
Stock) that relates solely to the terms of one or more outstanding classes or series of Preferred Stock if the holders of such affected
class or series are entitled, either separately or together with the holders of one or more other such classes or series of Preferred
Stock, to vote thereon pursuant to this Amended and Restated Certificate (including any certificate of designations relating to any class
or series of Preferred Stock) or pursuant to the General Corporation Law.
2.
Identical Rights. Except as otherwise provided in this Amended and Restated Certificate of Incorporation or as required
by applicable law, shares of Common Stock shall have the same rights and powers (including as to dividends, distributions and any liquidation,
dissolution or winding up of the corporation but excluding voting as described in Section 4 below), share ratably and be identical in
all respects as to all matters, including:
(a)
Subject to the prior rights of holders of all classes and series of stock at the time outstanding having prior rights as to dividends,
the holders of the Class A Common Stock, Class B Common Stock and Class C Common Stock shall be entitled to receive, when, as
and if declared by the Board, out of any assets of the corporation legally available therefor, such dividends as may be declared from
time to time by the Board. Any dividends paid to the holders of shares of Class A Common Stock, Class B Common Stock and Class C
Common Stock shall be paid pro rata, on an equal priority, pari passu basis, unless different treatment of the shares of each such
class is approved by the affirmative vote of the holders of a majority of the outstanding shares of the applicable class of Common Stock
treated adversely, voting separately as a class.
(b) The
corporation shall not declare or pay any dividend or make any other distribution to the holders of Class A Common Stock,
Class B Common Stock or Class C Common Stock payable in securities of the corporation unless the same dividend or distribution
with the same record date and payment date shall be declared and paid on all shares of Common Stock; provided, however, that (i)
dividends or other distributions payable in shares of Class A Common Stock or rights to acquire shares of Class A Common
Stock may be declared and paid to the holders of Class A Common Stock without the same dividend or distribution being declared
and paid to the holders of the Class B Common Stock and Class C Common Stock if, and only if, (A) a dividend payable in shares of
Class B Common Stock, or rights to acquire shares of Class B Common Stock, as applicable, is declared and paid to the
holders of Class B Common Stock at the same rate and with the same record date and payment date and (B) a dividend payable in
shares of Class C Common Stock, or rights to acquire shares of Class C Common Stock, as applicable, is declared and paid to the
holders of Class C Common Stock at the same rate and with the same record date and payment date; (ii) dividends or other
distributions payable in shares of Class B Common Stock or rights to acquire shares of Class B Common Stock may be declared and
paid to the holders of Class B Common Stock without the same dividend or distribution being declared and paid to the holders of the
Class A Common Stock or Class C Common Stock if, and only if, (A) a dividend payable in shares of Class A Common Stock, or
rights to acquire shares of Class A Common Stock, as applicable, is declared and paid to the holders of Class A Common
Stock at the same rate and with the same record date and payment date and (B) a dividend payable in shares of Class C Common
Stock, or rights to acquire shares of Class C Common Stock, as applicable, is declared and paid to the holders of Class C
Common Stock at the same rate and with the same record date and payment date; and (iii) dividends or other distributions payable in
shares of Class C Common Stock or rights to acquire shares of Class C Common Stock may be declared and paid to the holders of
Class C Common Stock without the same dividend or distribution being declared and paid to the holders of the Class A Common
Stock or Class B Common Stock if, and only if, (A) a dividend payable in shares of Class A Common Stock, or rights to acquire
shares of Class A Common Stock, as applicable, is declared and paid to the holders of Class A Common Stock at the same
rate and with the same record date and payment date and (B) a dividend payable in shares of Class B Common Stock, or rights to
acquire shares of Class B Common Stock, as applicable, is declared and paid to the holders of Class B Common Stock at the same
rate and with the same record date and payment date. For the avoidance of doubt, nothing in this paragraph (b) shall prevent the
corporation from declaring and paying an identical dividend or other distribution payable in shares of one class of Common Stock or
rights to acquire one class of Common Stock to holders of each class of Common Stock.
(c)
If the corporation in any manner subdivides or combines the outstanding shares of Class A Common Stock, Class B Common
Stock or Class C Common Stock, then the outstanding shares of all other classes of Common Stock shall be subdivided or combined in the
same proportion and manner, unless different treatment is approved by (i) the holders of a majority of the outstanding Class A Common
Stock, (ii) the holders of a majority of the outstanding Class B Common Stock and (iii) the holders of a majority of the outstanding Class
C Common Stock, each of (i) through (iii) voting as separate class.
3.
Reservation of Stock Issuable Upon Conversion. This corporation shall at all times reserve and keep available out of its
authorized but unissued shares of Class A Common Stock, solely for the purpose of effecting the conversion of the shares of Class B Common
Stock, such number and type of its shares of Class A Common Stock as shall from time to time be sufficient to effect the conversion of
all outstanding shares of Class B Common Stock.
4.
Voting Rights.
(a)
Class A Common Stock. Each holder of shares of Class A Common Stock shall be entitled to one (1) vote for each share
thereof held.
(b)
Class B Common Stock. Each holder of shares of Class B Common Stock shall be entitled to ten (10) votes for each share
thereof held.
(c)
Class C Common Stock. Each holder of shares of Class C Common Stock shall be entitled to no votes for each share thereof
held.
5.
Class B Common Stock Protective Provisions. Prior to the Final Conversion Date, in addition to any vote required hereunder,
by applicable law or in the Bylaws of the corporation (the “Bylaws”), the corporation shall not, without the approval
of a majority of the voting power of the Class B Common Stock, voting as a separate class, directly or indirectly, or whether by amendment,
or through merger, recapitalization, consolidation or otherwise:
(a)
amend, alter, or repeal any provision of this Amended and Restated Certificate of Incorporation (including any filing of a Certificate
of Designation) in a manner that adversely modifies the voting, conversion or other powers, preferences, or other special rights or privileges,
or restrictions of the Class B Common Stock;
(b)
(A) create, or authorize the creation of, or issue or obligate itself to issue shares of, any additional class or series of capital
stock having the right to more than one (1) vote for each share thereof, or (B) increase the authorized number of shares of any additional
class or series of capital stock of the corporation having the right to more than one (1) vote for each share thereof; or
(c)
reclassify, alter or amend any existing security of the corporation if such reclassification, alteration or amendment would provide
such other security with the right to more than one (1) vote for each share thereof.
6.
Authorized Shares. Except as required by applicable law, the number of authorized shares of each class of Common Stock may
be increased or decreased (but not below the number of shares thereof then outstanding or the number required to be reserved hereunder
to effectuate the conversion of shares of Class B Common Stock into Class A Common Stock) by the affirmative vote of the holders of shares
of stock of this corporation representing a majority of the votes represented by all outstanding shares of Common Stock entitled to vote,
irrespective of the provisions of Section 242(b)(2) of the General Corporation Law; provided, that, for the
avoidance of doubt, the number of authorized shares of Class B Common Stock shall not be increased or decreased without the affirmative
vote of the holders of a majority of the outstanding shares of Class B Common Stock, voting as a separate class.
7.
Liquidation and Change of Control Rights.
(a) Liquidation.
In the event of a liquidation, dissolution or winding up of the corporation, subject to the rights of any Preferred Stock that may
then be outstanding, the remaining assets of the corporation legally available for distribution to stockholders shall be distributed
on an equal priority, pro rata basis per share to the holders of Common Stock, unless different treatment of the shares of each such
class is approved by the affirmative vote of the holders of a majority of the outstanding shares of Class A Common Stock, Class B
Common Stock and Class C Common Stock, each voting separately as a class; provided, however, that for the avoidance of doubt,
consideration to be paid or received by a holder of Common Stock in connection with any liquidation, dissolution or winding up
pursuant to any bona fide employment, consulting, severance or similar services arrangement shall not be deemed to be
“distribution to stockholders.”
(b)
Change of Control. In the event of a Change of Control Transaction, shares of Common Stock shall be treated equally, identically
and shall share ratably, on a per share basis, in any consideration into which such shares are converted or any consideration paid or
otherwise distributed to holders of Common Stock, unless different treatment of the shares of each such class is approved by the affirmative
vote of the holders of a majority of the outstanding shares of Class A Common Stock, Class B Common Stock and Class C Common Stock, each
voting separately as a class; provided, however, that for the avoidance of doubt, consideration to be paid or received by a holder of
Common Stock in connection with any liquidation, dissolution or winding up pursuant to any bona fide employment, consulting, severance
or similar services arrangement shall not be deemed to be a “payment” or “distribution.” In the event that the
holders of shares of Class A Common Stock, Class B Common Stock or Class C Common Stock are granted rights to elect to receive one of
two or more alternative forms of consideration in connection with a Change of Control Transaction, the foregoing sentence shall be deemed
satisfied if holders of shares of Class A Common Stock, the holders of Class B Common Stock and the holders of shares of Class C Common
Stock are granted identical election rights.
8.
Conversion of the Class B Common Stock.
(a)
Optional Conversion. At the option of the holder thereof, each share of Class B Common Stock shall be convertible,
at any time or from time to time, into one fully paid and nonassessable share of Class A Common Stock as provided herein. Each holder
of Class B Common Stock who elects to convert the same into shares of Class A Common Stock shall surrender the certificate or
certificates therefor, as applicable, duly endorsed, at the office of the corporation or any transfer agent for the Class B Common
Stock, and shall give written notice to the corporation at such office that such holder elects to convert the same and shall state therein
the number of shares of Class B Common Stock being converted. Such notice may specify a future event or time upon which such conversion
shall become effective. Thereupon, the corporation shall promptly issue and deliver at such office to such holder, or to the nominee or
nominees of such holder, a certificate or certificates, as applicable, for the number of shares of Class A Common Stock to which
such holder is entitled upon such conversion (or if such shares are uncertificated, register such shares in book-entry form). Such conversion
shall be deemed to have been made immediately prior to the close of business on the date of such surrender of the certificate or certificates,
as applicable, representing the shares of Class B Common Stock to be converted, and the person entitled to receive the shares of
Class A Common Stock issuable upon such conversion shall be treated for all purposes as the record holder of such shares of Class A
Common Stock on such date; provided that if a conversion election under this Section 8(a) of Article V is conditioned upon the occurrence
of any future event or time, the holder making such election who is entitled to receive Class A Common Stock upon conversion of their
Class B Common Stock shall not be deemed to have converted such shares of Class B Common Stock until immediately prior to the
occurrence of such event or time.
(b) Automatic
Conversion Upon Transfer. Each share of Class B Common Stock shall automatically be converted into one fully paid and
nonassessable share of Class A Common Stock upon a Transfer of such share of Class B Common Stock, other than a Permitted
Transfer. Such conversion shall occur automatically without the need for any further action by the holders of such shares and
whether or not the certificates, as applicable, representing such shares are surrendered to the corporation or its transfer agent;
provided, however, that the corporation shall not be obligated to issue certificates evidencing the shares of Class A Common
Stock issuable upon such conversion (or register such shares of Class A Common Stock in book-entry form) unless the certificates
evidencing such shares of Class B Common Stock are either delivered to the corporation or its transfer agent as provided below,
or the holder notifies the corporation or its transfer agent that such certificates have been lost, stolen or destroyed and executes
an agreement satisfactory to the corporation to indemnify the corporation from any loss incurred by it in connection with such
certificates. Upon the occurrence of such automatic conversion of the Class B Common Stock, the holders of Class B Common
Stock so converted shall surrender the certificates, as applicable, representing such shares at the office of the corporation or any
transfer agent for the Class A Common Stock. Thereupon, there shall be issued and delivered to such holder promptly at such
office and in its name as shown on such surrendered certificate or certificates, as applicable, a certificate or certificates (or if
such shares are uncertificated, registration of such shares in book-entry form) for the number of shares of Class A Common
Stock into which the shares of Class B Common Stock surrendered were convertible on the date on which such automatic conversion
occurred.
(c)
Automatic Conversion Upon Death. Each share of Class B Common Stock held of record by a natural person shall automatically,
without any further action, convert into one fully paid and nonassessable share of Class A Common Stock upon the death of such stockholder.
(d)
Automatic Conversion on the Final Conversion Date. On the Final Conversion Date (as defined below), each one (1) issued
share of Class B Common Stock shall automatically, without any further action, convert into one (1) share of Class A Common
Stock. Following the Final Conversion Date, the corporation may no longer issue any additional shares of Class B Common Stock.
(e) Policies
and Procedures. The Board, or a committee thereof, may, from time to time, establish such policies and procedures, not in
violation of applicable law or this Amended and Restated Certificate of Incorporation or the Bylaws, relating to the conversion of
shares of the Class B Common Stock into shares of Class A Common Stock as it may deem necessary or advisable. If the Board, or a
committee thereof, has reason to believe that a Transfer that is not a Permitted Transfer has occurred, the Board, or a committee
thereof, may request that the purported transferor furnish affidavits or other evidence to the corporation as it reasonably deems
necessary to determine whether a Transfer that is not a Permitted Transfer has occurred, and if such transferor does not within
thirty (30) days after the date of such request furnish sufficient (as determined by the Board or a committee thereof) evidence to
the corporation (in the manner provided in the request) to enable the corporation to determine that no such Transfer that is not a
Permitted Transfer has occurred, any such shares of Class B Common Stock, to the extent not previously converted, shall be
automatically converted into shares of Class A Common Stock and such conversion shall thereupon be registered on the books and
records of the corporation. In connection with any action of the stockholders of the corporation taken at a meeting, the stock
ledger of the corporation shall be presumptive evidence as to who are the stockholders entitled to vote in person or by proxy at any
meeting of stockholders and the classes of shares held by each such stockholder and the number of shares of each class held by such
stockholder.
9.
No Reissuance of Class B Common Stock. No share or shares of Class B Common Stock acquired by the corporation by reason
of redemption, purchase, conversion or otherwise shall be reissued, and all such shares shall be cancelled, retired and eliminated from
the shares that the corporation shall be authorized to issue.
10.
Definitions. For purposes of this Article V, the following definitions shall apply:
(a)
“Change of Control Transaction” means:
(i)
the closing of the sale, transfer or other disposition of all or substantially all of (1) the assets of the corporation or (2)
the assets of one or more direct or indirect subsidiaries of the corporation constituting all or substantially all of the assets of the
corporation (determined on a consolidated basis with all of the corporation’s direct and indirect subsidiaries), provided that any
sale, transfer or other disposition of assets exclusively between or among the corporation and any direct or indirect subsidiary or subsidiaries
of the corporation shall not be deemed a “Change of Control Transaction”; or
(ii)
the merger, consolidation, business combination or other similar transaction of the corporation with or into any other entity.
(b)
“Disability” means, with respect to the Founder, permanent and total disability such that the Founder is unable
to engage in any substantial gainful activity by reason of any medically determinable mental impairment which can be expected to result
in death or which has lasted or can be expected to last for a continuous period of not less than 12 months as determined by a licensed
medical practitioner.
(c)
“Family Member” shall mean with respect to any Qualified Stockholder who is a natural person, the spouse, parents,
grandparents, lineal descendants, siblings and lineal descendants of siblings (in each case whether by blood relation or adoption) of
such Qualified Stockholder.
(d) “Final
Conversion Date” means 5:00 p.m. in New York City, New York on the earliest to occur of (i) the first date on which the
outstanding shares of Class B Common Stock held by the Founder and his Permitted Transferees represent less than seven percent (7%)
of the aggregate number of shares of the then outstanding Class A Common Stock and Class B Common Stock on an as-converted basis,
(ii) the date specified by the holders of a majority of the outstanding shares of Class B Common Stock or (iii) date of the
Founder’s death or Disability.
(e)
“Founder” means Anthony Casalena.
(f) “Initial
Public Event” means the effectiveness of a registration statement under the Securities Act of 1933, as amended (the
“Securities Act”) that registers shares of the corporation’s Class A Common Stock in a ‘direct
listing’, where the Class A Common Stock and Class B Common Stock are each a “covered security” as described in
Section 18(b) of the Securities Act.
(g)
“Permitted Entity” shall mean, any corporation, partnership, limited liability company, foundation (including
a private foundation), donor-advised fund, or supporting organization within the meaning of Section 509(a)(3) of the Internal Revenue
Code of 1986, as amended, in which a Qualified Stockholder directly, or indirectly through one or more Permitted Transferees, either (i)
owns shares, partnership interests or membership interests, as applicable, with sufficient voting power in the corporation, partnership,
limited liability company, foundation (including a private foundation), donor-advised fund, or supporting organization, as the case may
be, or (ii) otherwise has legally enforceable rights, in each case such that the Qualified Stockholder retains exclusive Voting Control
with respect to all shares of Class B Common Stock held of record by such corporation, partnership, limited liability company, foundation
(including a private foundation), donor-advised fund, or supporting organization, as the case may be.
(h)
“Permitted Transfer” shall mean, and be restricted to, any Transfer of a share of Class B Common Stock, as set
forth below, in each case so long as such Qualified Stockholder retains sufficient Voting Control, as the case may be, or otherwise has
legally enforceable rights, such that the Qualified Stockholder retains exclusive Voting Control with respect to all shares of Class B
Common Stock held of record by the applicable transferee:
(i)
by a Qualified Stockholder to the trustee of a Permitted Trust of such Qualified Stockholder;
(ii) by
a Permitted Trust of a Qualified Stockholder, to such Qualified Stockholder or the trustee of any other Permitted Trust of such Qualified
Stockholder;
(iii)
by a Qualified Stockholder to a Family Member of such Qualified Stockholder;
(iv)
by a Family Member of a Qualified Stockholder, to such Qualified Stockholder;
(v)
by a Qualified Stockholder to any Permitted Entity of such Qualified Stockholder; or
(vi)
by a Permitted Entity of a Qualified Stockholder, to such Qualified Stockholder or any other Permitted Entity of such Qualified
Stockholder.
(i)
“Permitted Transferee” shall mean a transferee of shares of Class B Common Stock received in a Transfer that
constitutes a Permitted Transfer.
(j) “Permitted
Trust” shall mean a bona fide trust for the benefit of a Qualified Stockholder or Family Members of the Qualified
Stockholder, if such Transfer does not involve any payment of cash, securities, property or other consideration (other than an
interest in such trust) to the Qualified Stockholder, or a trust under the terms of which such Qualified Stockholder has retained a
“qualified interest” within the meaning of §2702(b)(1) of the Internal Revenue Code and/or a reversionary interest,
in each case so long as the Qualified Stockholder has exclusive Voting Control with respect to the shares of Class B Common Stock
held by such trust.
(k)
“Qualified Stockholder” shall mean (i) the registered holder of a share of Class B Common Stock immediately
prior to the Initial Public Event; (ii) the initial registered holder of any shares of Class B Common Stock that are originally issued
by the corporation; and (iii) a Permitted Transferee.
(l)
“Transfer” of a share of Class B Common Stock shall mean any direct or direct sale, assignment, transfer,
conveyance, hypothecation or other transfer or disposition of such share or any legal or beneficial interest in such share, whether or
not for value and whether voluntary or involuntary or by operation of law, including, without limitation, a transfer of a share of Class B
Common Stock to a broker or other nominee (regardless of whether there is a corresponding change in beneficial ownership), or the transfer
of, or entering into a binding agreement with respect to, Voting Control over such share by proxy or otherwise, such that the previous
holders of such voting power no longer retain exclusive Voting Control with respect to the shares of Class B Common Stock held by
such holder; provided, however, that the following shall not be considered a “Transfer” within the meaning of this Article
V:
(i) the
granting of a revocable proxy to officers or directors of the corporation at the request of the Board in connection with actions to be
taken at an annual or special meeting of stockholders;
(ii) entering
into a voting trust, agreement or arrangement (with or without granting a proxy) solely with stockholders who are holders of Class B
Common Stock that (A) is disclosed either in a Schedule 13D or Schedule 13G filed with the Securities and Exchange Commission or in writing
to the Secretary of the corporation, (B) either has a term not exceeding one (1) year or is terminable by the holder of the shares subject
thereto at any time and (C) does not involve any payment of cash, securities, property or other consideration to the holder of the shares
subject thereto other than the mutual promise to vote shares in a designated manner;
(iii) the
pledge of shares of Class B Common Stock by a stockholder that creates a mere security interest in such shares pursuant to a bona
fide loan or indebtedness transaction for so long as such stockholder continues to exercise Voting Control over such pledged shares;
provided, however, that a foreclosure on such shares or other similar action by the pledgee shall constitute a “Transfer”
unless such foreclosure or similar action qualifies as a “Permitted Transfer”;
(iv) entering
into, or reaching an agreement, arrangement or understanding regarding, a support, voting, tender or similar agreement or arrangement
(with or without granting a proxy) in connection with a Change of Control Transaction, liquidation or dissolution or winding up of the
corporation approved by the Board; or
(v) entering
into a trading plan pursuant to Rule 10b5-1 under the Securities Exchange Act of 1934, as amended, with a broker or other nominee; provided,
however, that a sale of such shares of Class B Common Stock pursuant to such plan shall constitute a “Transfer” at the time
of such sale.
A “Transfer”
shall also be deemed to have occurred with respect to a share of Class B Common Stock beneficially held by (i) an entity that is
a Permitted Entity, if there occurs any act or circumstance that causes such entity to no longer be a Permitted Entity or (ii) an entity
that is a Qualified Stockholder, if there occurs a Transfer on a cumulative basis, from and after November 9, 2017, of a majority of the
voting power of the voting securities of such entity or any direct or indirect Parent of such entity, other than a Transfer to parties
that were, as of November 9, 2017, holders of voting securities of any such entity or Parent of such entity. “Parent”
of an entity shall mean any entity that directly or indirectly owns or controls a majority of the voting power of the voting securities
of such entity.
(m)
“Voting Control” shall mean, with respect to a share of Class B Common Stock, the power (whether exclusive or
shared) to vote or direct the voting of such share by proxy, voting agreement or otherwise.
Article
VI
1. Rights of Preferred Stock. The Board is hereby empowered, without any action or vote by the stockholders (except as may
otherwise be provided herein or by the terms of any class or series of Preferred Stock then outstanding), to authorize by resolution or
resolutions from time to time the issuance of one or more classes or series of Preferred Stock and to fix the designations, powers (including
voting powers), preferences and relative, participating, optional or other rights, if any, and the qualifications, limitations or restrictions
thereof, if any, with respect to each such class or series of Preferred Stock and the number of shares constituting each such class or
series, and to increase or decrease the number of shares of any such class or series to the extent permitted by the General Corporation
Law. The powers, preferences and relative, participating, optional and other rights of, and the qualifications, limitations or restrictions
thereof, of each series of Preferred Stock, if any, may differ from those of any and all other classes or series at any time outstanding.
2. Authorized
Shares. Except as required by applicable law, the number of authorized shares of each class of Preferred Stock may be increased or
decreased (but not below the number of shares thereof then outstanding) by the affirmative vote of the holders of shares of stock of
this corporation representing a majority of the votes represented by all outstanding shares of Common Stock entitled to vote, irrespective
of the provisions of Section 242(b)(2) of the General Corporation Law.
Article
VII
1.
Board Power. The business and affairs of the corporation shall be managed by or under the direction of the Board.
2. Board Size. Subject to the rights of holders of any series of Preferred Stock, the number of directors that shall constitute
the Board shall be fixed in accordance with the Bylaws.
3. Removal.
Except as otherwise required by applicable law and subject to the rights, if any, of holders of any series of Preferred Stock, any director
or the entire Board may be removed from office at any time, with or without cause, by the affirmative vote of the holders of at least
a majority of the voting power of the issued and outstanding capital stock of the corporation entitled to vote in the election of directors,
voting together as a single class.
4. Vacancies.
Vacancies on the Board resulting from death, resignation, removal or otherwise and newly created directorships resulting from any increase
in the number of directors may be filled by a majority of the directors then in office (although less than a quorum), by the sole remaining
director or as otherwise provided in the Bylaws. Each director so elected shall be elected to hold office until such director’s
term expires and a successor is duly elected and qualified or until such director’s death, resignation or removal.
5. Written Ballot. Elections of directors need not be by written ballot unless otherwise provided in the Bylaws.
6. No
Cumulative Voting. No stockholder will be permitted to cumulate votes at any election of directors.
Article
VIII
1. Annual
Meetings. An annual meeting of stockholders for the election of directors and for the transaction of such other business as may properly
come before the meeting shall be held at such place, on such date, and at such time as the Board shall determine.
2. Special
Meetings. Subject to the rights of holders of any series of Preferred Stock, special meetings of stockholders for any purpose or
purposes may be called at any time only by a majority of the Board, the chairperson of the Board or the Chief Executive Officer of the
corporation, and may not be called by any other person or persons. Business transacted at any special meeting of stockholders shall
be limited to the purpose or purposes stated in the notice of meeting.
3. Stockholder
Action by Written Consent. Any action required or permitted to be taken by the stockholders of the corporation must be effected at
a duly called annual or special meeting of stockholders of the corporation, and the ability of the stockholders to consent in writing
to the taking of any action is hereby specifically denied.
Article
IX
A director of this corporation
shall not be personally liable to this corporation or any of its stockholders for monetary damages for breach of fiduciary duty as a director;
provided, however, that to the extent required by the provisions of Section 102(b)(7) of the General Corporation Law or any successor
statute, or any other laws of the State of Delaware, this provision shall not eliminate or limit the liability of a director (i) for any
breach of the director’s duty of loyalty to this corporation or its stockholders, (ii) for acts or omissions not in good faith or
that involve intentional misconduct or a knowing violation of law, (iii) under Section 174 of the General Corporation Law, or (iv) for
any transaction from which the director derived any improper personal benefit. If the General Corporation Law is amended after approval
by the stockholders of this Article IX to authorize corporate action further eliminating or limiting the personal liability of directors,
then the liability of a director of this corporation shall be eliminated or limited to the fullest extent permitted by the General Corporation
Law as so amended.
Any repeal or modification
of the foregoing provisions of this Article IX by the stockholders of this corporation shall not adversely affect any right or protection
of a director of this corporation existing at the time of, or increase the liability of any director of this corporation with respect
to any acts or omissions of such director occurring prior to, such repeal or modification.
Article
X
1. Board of Directors. The Board is expressly empowered to adopt, amend or repeal the Bylaws, subject to any restrictions that
may be set forth in this Amended and Restated Certificate of Incorporation.
2.
Stockholders. The stockholders may not adopt, amend, alter or repeal the Bylaws, or adopt any provision inconsistent therewith,
unless such action is approved, in addition to any other vote required by this Amended and Restated Certificate of Incorporation, by the
affirmative vote of the holders of at least two-thirds in voting power of the outstanding shares of capital stock of the corporation entitled
to vote thereon.
3.
Amendments. Notwithstanding any other provisions of this Amended and Restated Certificate of Incorporation or the Bylaws,
or the fact that a lesser percentage may be specified by law, the affirmative vote of the holders of at least two-thirds in voting power
of the outstanding shares of capital stock of the corporation entitled to vote thereon shall be required to amend or repeal, or to adopt
any provision inconsistent with, this Article X.
Article
XI
To the fullest extent permitted
by applicable law, this corporation shall provide indemnification of (and advancement of expenses to) directors, officers and agents of
this corporation (and any other persons to which General Corporation Law permits this corporation to provide indemnification) through
provisions in the Bylaws, agreements with such agents or other persons, vote of stockholders or disinterested directors or otherwise,
in excess of the indemnification and advancement otherwise permitted by Section 145 of the General Corporation Law, subject only to limits
created by applicable General Corporation Law (statutory or non-statutory), with respect to actions for breach of duty to this corporation,
its stockholders, and others.
Any amendment, repeal or modification
of the foregoing provisions of this Article XI shall not adversely affect any right or protection of a director, officer, agent, or other
person existing at the time of, or increase the liability of any director of this corporation with respect to any acts or omissions of
such director, officer or agent occurring prior to, such amendment, repeal or modification.
Article
XII
Unless the corporation consents in writing to
the selection of an alternative forum (an “Alternative Forum Consent”), the Court of Chancery of the State of
Delaware shall be the sole and exclusive forum for (i) any derivative action or proceeding brought on behalf of the corporation,
(ii) any action asserting a claim of breach of a duty (including any fiduciary duty) owed by any current or former director,
officer, stockholder, employee or agent of the corporation to the corporation or the corporation’s stockholders, (iii) any
action asserting a claim against the corporation or any current or former director, officer, stockholder, employee or agent of the
corporation arising out of or relating to any provision of the General Corporation Law or this Amended and Restated Certificate of
Incorporation or the Bylaws, or (iv) any action asserting a claim against the corporation or any current or former director,
officer, stockholder, employee or agent of the corporation governed by the internal affairs doctrine of the State of Delaware;
provided, however, that, in the event that the Court of Chancery of the State of Delaware lacks subject matter jurisdiction
over any such action or proceeding, the sole and exclusive forum for such action or proceeding shall be another state or
federal court located within the State of Delaware, in each such case, unless the Court of Chancery (or such other state or federal
court located within the State of Delaware, as applicable) has dismissed a prior action by the same plaintiff asserting the same
claims because such court lacked personal jurisdiction over an indispensable party named as a defendant therein. Unless the
corporation gives an Alternative Forum Consent, the federal district courts of the United States of America shall, to the fullest
extent permitted by law, be the sole and exclusive forum for the resolution of any complaint asserting a cause of action arising
under the Securities Act or the rules and regulations thereunder. Failure to enforce the foregoing provisions would cause the
corporation irreparable harm and the corporation shall be entitled to equitable relief, including injunctive relief and specific
performance, to enforce the foregoing provisions. Any person or entity purchasing, otherwise acquiring or holding any interest in
shares of capital stock of the corporation shall be deemed to have notice of and consented to the provisions of this Article XII.
The existence of any prior Alternative Forum Consent shall not act as a waiver of the corporation’s ongoing consent right as
set forth above in this Article XII with respect to any current or future actions or claims.
Article
XIII
Except as otherwise provided
in this Amended and Restated Certificate of Incorporation, the corporation reserves the right to amend, alter, change or repeal any provision
contained in this Amended and Restated Certificate of Incorporation, in the manner now or hereafter prescribed by statute, and all rights
conferred upon stockholders herein are granted subject to this reservation.
* * *
THIRD: The foregoing
amendment and restatement was approved by the holders of the requisite number of shares of said corporation in accordance with Section
228 of the General Corporation Law.
FOURTH: That said Amended
and Restated Certificate of Incorporation, which restates and integrates and further amends the provisions of this corporation’s
Certificate of Incorporation, has been duly adopted in accordance with Sections 242 and 245 of the General Corporation Law.
In
Witness Whereof, this Amended and Restated Certificate of Incorporation has been executed by a duly authorized officer of this
corporation on the date first set forth above.
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By:
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Anthony Casalena, Chief Executive Officer
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Signature Page to Amended and Restated Certificate of Incorporation
Exhibit 3.3
BY-LAWS
OF
SQUARESPACE,
INC.
A
Delaware Corporation
As
Adopted October 29, 2007
SQUARESPACE,
INC.
(a
Delaware corporation)
BY-LAWS
As
Adopted October 29, 2007
Article I
STOCKHOLDERS
Section 1.01
Annual Meetings. Unless directors are elected by written consent in lieu of an annual meeting, as permitted by Section
211 of the Delaware General Corporation Law, an annual meeting of stockholders shall be held for the election of directors at
such date and time as the Board of Directors shall each year fix. The meeting may be held either at a place, within or without
the State of Delaware, or by means of remote communication as the Board of Directors in its sole discretion may determine. Any
other proper business may be transacted at the annual meeting.
Section 1.02
Special Meetings. Special meetings of stockholders for any purpose or purposes may be called at any time by the Board
of Directors, the Chairperson of the Board of Directors, the Chief Executive Officer, the President, the holders of shares of
the Corporation that are entitled to cast not less than ten percent (10%) of the total number of votes entitled to be cast by
all stockholders at such meeting, or by a majority of the members of the Board of Directors. Special meetings may not be called
by any other person or persons. The special meeting may be held either at a place, within or without the State of Delaware, or
by means of remote communication as the Board of Directors in its sole discretion may determine.
Section 1.03
Notice of Meetings. Notice of all meetings of stockholders shall be given in writing or by electronic transmission
in the manner provided by law (including, without limitation, as set forth in Section 7.1(b) of these Bylaws) stating the date,
time and place, if any, of the meeting and, in the case of a special meeting, the purpose or purposes for which the meeting is
called. Unless otherwise required by applicable law or the Certificate of Incorporation of the Corporation, such notice shall
be given not less than ten (10) nor more than sixty (60) days before the date of the meeting to each stockholder of record entitled
to vote at such meeting.
Section 1.04
Adjournments. The chair of any meeting of stockholders shall determine the order of business and the procedure at the
meeting, including such regulation of the manner of voting and the conduct of discussion as seems to him or her to be in order.
The chair shall have the power to adjourn the meeting to another time, date and place (if any). Any meeting of stockholders may
adjourn from time to time, and notice need not be given of any such adjourned meeting if the time, date and place (if any) thereof
are announced at the meeting at which the adjournment is taken; provided, however, that if the adjournment is for more than thirty
(30) days, or if after the adjournment a new record date is fixed for the adjourned meeting, then a notice of the adjourned meeting
shall be given to each stockholder of record entitled to vote at the meeting. At the adjourned meeting the Corporation may transact
any business that might have been transacted at the original meeting.
Section 1.05
Quorum. At each meeting of stockholders the holders of a majority of the shares of stock entitled to vote at the meeting,
present in person or represented by proxy, shall constitute a quorum for the transaction of business, except if otherwise required
by applicable law. If a quorum shall fail to attend any meeting, the chairperson of the meeting or the holders of a majority of
the shares entitled to vote who are present, in person or by proxy, at the meeting may adjourn the meeting. Shares of the Corporation’s
stock belonging to the Corporation (or to another corporation, if a majority of the shares entitled to vote in the election of
directors of such other corporation are held, directly or indirectly, by the Corporation), shall neither be entitled to vote nor
be counted for quorum purposes; provided, however, that the foregoing shall not limit the right of the Corporation or any other
corporation to vote any shares of the Corporation’s stock held by it in a fiduciary capacity and to count such shares for
purposes of determining a quorum.
Section 1.06
Organization. Meetings of stockholders shall be presided over by such person as the Board of Directors may designate,
or, in the absence of such a person, the Chairperson of the Board of Directors, or, in the absence of such person, the President
of the Corporation, or, in the absence of such person, such person as may be chosen by the holders of a majority of the shares
entitled to vote who are present, in person or by proxy, at the meeting. Such person shall be chairperson of the meeting and,
subject to Section 1.11 hereof, shall determine the order of business and the procedure at the meeting, including such regulation
of the manner of voting and the conduct of discussion as seems to him or her to be in order. The Secretary of the Corporation
shall act as secretary of the meeting, but in such person’s absence the chairperson of the meeting may appoint any person
to act as secretary of the meeting.
Section 1.07
Voting; Proxies. Unless otherwise provided by law or the Certificate of Incorporation, and subject to the provisions
of Section 1.8 of these Bylaws, each stockholder shall be entitled to one (1) vote for each share of stock held by such stockholder.
Each stockholder entitled to vote at a meeting of stockholders, or to take corporate action by written consent without a meeting,
may authorize another person or persons to act for such stockholder by proxy. Such a proxy may be prepared, transmitted and delivered
in any manner permitted by applicable law. Voting at meetings of stockholders need not be by written ballot unless such is demanded
at the meeting before voting begins by a stockholder or stockholders holding shares representing at least one percent (1%) of
the votes entitled to vote at such meeting, or by such stockholder’s or stockholders’ proxy; provided, however, that
an election of directors shall be by written ballot if demand is so made by any stockholder at the meeting before voting begins.
If a vote is to be taken by written ballot, then each such ballot shall state the name of the stockholder or proxy voting and
such other information as the chairperson of the meeting deems appropriate and, if authorized by the Board of Directors, the ballot
may be submitted by electronic transmission in the manner provided by law. Directors shall be elected by a plurality of the votes
of the shares present in person or represented by proxy at the meeting and entitled to vote on the election of directors. Unless
otherwise provided by applicable law, the Certificate of Incorporation or these Bylaws, every matter other than the election of
directors shall be decided by the affirmative vote of the holders of a majority of the shares of stock entitled to vote thereon
that are present in person or represented by proxy at the meeting and are voted for or against the matter.
Section 1.08
Fixing Date for Determination of Stockholders of Record. In order that the Corporation may determine the stockholders
entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, or to take corporate action by written
consent without a meeting, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or
entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful
action, the Board of Directors may fix, in advance, a record date, which shall not precede the date upon which the resolution
fixing the record date is adopted by the Board of Directors and which shall not be more than sixty (60) nor less than ten (10)
days before the date of such meeting, nor more than sixty (60) days prior to any other action. If no record date is fixed by the
Board of Directors, then the record date shall be as provided by applicable law. A determination of stockholders of record entitled
to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the
Board of Directors may fix a new record date for the adjourned meeting.
Section 1.09
List of Stockholders Entitled to Vote. A complete list of stockholders entitled to vote at any meeting of stockholders,
arranged in alphabetical order and showing the address of each stockholder and the number of shares registered in the name of
each stockholder, shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary
business hours, for a period of at least ten (10) days prior to the meeting, either on a reasonably accessible electronic network
as permitted by law (provided that the information required to gain access to the list is provided with the notice of the meeting)
or during ordinary business hours at the principal place of business of the Corporation. If the meeting is held at a place, the
list shall also be produced and kept at the time and place of the meeting during the whole time thereof and may be inspected by
any stockholder who is present at the meeting. If the meeting is held solely by means of remote communication, then the list shall
be open to the examination of any stockholder during the whole time of the meeting on a reasonably accessible electronic network,
and the information required to access the list shall be provided with the notice of the meeting.
Section 1.10
Action by Written Consent of Stockholders.
(a) Procedure. Unless otherwise provided by the Certificate of Incorporation, any action required or permitted to be taken
at any annual or special meeting of the stockholders may be taken without a meeting, without prior notice and without a vote,
if a consent or consents in writing, setting forth the action so taken, shall be signed in the manner permitted by law by the
holders of outstanding stock having not less than the number of votes that would be necessary to authorize or take such action
at a meeting at which all shares entitled to vote thereon were present and voted. Written stockholder consents shall bear the
date of signature of each stockholder who signs the consent in the manner permitted by law and shall be delivered to the Corporation
as provided in subsection (b) below. No written consent shall be effective to take the action set forth therein unless, within
sixty (60) days of the earliest dated consent delivered to the Corporation in the manner provided above, written consents signed
by a sufficient number of stockholders to take the action set forth therein are delivered to the Corporation in the manner provided
above.
(b) A facsimile or other electronic transmission consenting to an action to be taken and transmitted by a stockholder or proxyholder,
or a person or persons authorized to act for a stockholder or proxyholder, shall be deemed to be written, signed and dated for
the purposes of this section, provided that any such facsimile or other electronic transmission sets forth or is delivered with
information from which the Corporation can determine (i) that the facsimile or other electronic transmission was transmitted by
the stockholder or proxyholder or by a person or persons authorized to act for the stockholder or proxyholder and (ii) the date
on which such stockholder or proxyholder or authorized person or persons transmitted such facsimile or other electronic transmission.
The date on which such facsimile or other electronic transmission is transmitted shall be deemed to be the date on which such
consent was signed. No consent given by facsimile or other electronic transmission shall be deemed to have been delivered until
such consent is reproduced in paper form and until such paper form shall be delivered to the Corporation by delivery to its registered
office in the State of Delaware, its principal place of business or an officer or agent of the Corporation having custody of the
book in which proceedings of meetings of stockholders are recorded. Delivery made to a Corporation’s registered office shall
be made by hand or by certified or registered mail, return receipt requested. Notwithstanding the foregoing limitations on delivery,
consents given by facsimile or other electronic transmission may be otherwise delivered to the principal place of business of
the Corporation or to an officer or agent of the Corporation having custody of the book in which proceedings of meetings of stockholders
are recorded if, to the extent and in the manner provided by resolution of the Board of Directors of the Corporation.
(c) Notice of Consent. Prompt notice of the taking of corporate action by stockholders without a meeting by less than unanimous
written consent of the stockholders shall be given to those stockholders who have not consented thereto in writing and, who, if
the action had been taken at a meeting, would have been entitled to notice of the meeting, if the record date for such meeting
had been the date that written consents signed by a sufficient number of holders to take the action were delivered to the Corporation
as required by law. In the case of a Certificate of Action (as defined below), if the Delaware General Corporation Law so requires,
such notice shall be given prior to filing of the certificate in question. If the action which is consented to requires the filing
of a certificate under the Delaware General Corporation Law (the “Certificate of Action”), then if the
Delaware General Corporation Law so requires, the certificate so filed shall state that written stockholder consent has been given
in accordance with Section 228 of the Delaware General Corporation Law and that written notice of the taking of corporate action
by stockholders without a meeting as described herein has been given as provided in such section.
Section 1.11
Inspectors of Elections.
(a) Applicability. Unless otherwise provided in the Corporation’s Certificate of Incorporation or required by the Delaware
General Corporation Law, the following provisions of this Section 1.11 shall apply only if and when the Corporation has a class
of voting stock that is: (i) listed on a national securities exchange; (ii) authorized for quotation on an automated interdealer
quotation system of a registered national securities association; or (iii) held of record by more than two thousand (2,000) stockholders.
In all other cases, observance of the provisions of this Section 1.11 shall be optional, and at the discretion of the Board of
Directors of the Corporation.
(b) Appointment. The Corporation shall, in advance of any meeting of stockholders, appoint one or more inspectors of election
to act at the meeting and make a written report thereof. The Corporation may designate one or more persons as alternate inspectors
to replace any inspector who fails to act. If no inspector or alternate is able to act at a meeting of stockholders, the person
presiding at the meeting shall appoint one or more inspectors to act at the meeting.
(c) Inspector’s Oath. Each inspector of election, before entering upon the discharge of his duties, shall take and sign
an oath faithfully to execute the duties of inspector with strict impartiality and according to the best of such inspector’s
ability.
(d) Duties of Inspectors. At a meeting of stockholders, the inspectors of election shall (i) ascertain the number of shares
outstanding and the voting power of each share, (ii) determine the shares represented at a meeting and the validity of proxies
and ballots, (iii) count all votes and ballots, (iv) determine and retain for a reasonable period of time a record of the disposition
of any challenges made to any determination by the inspectors, and (v) certify their determination of the number of shares represented
at the meeting, and their count of all votes and ballots. The inspectors may appoint or retain other persons or entities to assist
the inspectors in the performance of the duties of the inspectors.
(e) Opening and Closing of Polls. The date and time of the opening and the closing of the polls for each matter upon which
the stockholders will vote at a meeting shall be announced by the inspectors at the meeting. No ballot, proxies or votes, nor
any revocations thereof or changes thereto, shall be accepted by the inspectors after the closing of the polls unless the Court
of Chancery upon application by a stockholder shall determine otherwise.
(f) Determinations. In determining the validity and counting of proxies and ballots, the inspectors shall be limited to an
examination of the proxies, any envelopes submitted with those proxies, any information provided in connection with proxies in
accordance with Section 212(c)(2) of the Delaware General Corporation Law, ballots and the regular books and records of the Corporation,
except that the inspectors may consider other reliable information for the limited purpose of reconciling proxies and ballots
submitted by or on behalf of banks, brokers, their nominees or similar persons which represent more votes than the holder of a
proxy is authorized by the record owner to cast or more votes than the stockholder holds of record. If the inspectors consider
other reliable information for the limited purpose permitted herein, the inspectors at the time they make their certification
of their determinations pursuant to this Section 1.11 shall specify the precise information considered by them, including the
person or persons from whom they obtained the information, when the information was obtained, the means by which the information
was obtained and the basis for the inspectors’ belief that such information is accurate and reliable.
Article II
BOARD OF DIRECTORS
Section 2.01
Number; Qualifications. The Board of Directors shall consist of one or more members. The initial number of directors
shall be one (1), and thereafter shall be fixed from time to time by resolution of the Board of Directors. No decrease
in the authorized number of directors constituting the Board of Directors shall shorten the term of any incumbent director. Directors
need not be stockholders of the Corporation.
Section 2.02
Election; Resignation; Removal; Vacancies. The Board of Directors shall initially consist of the person or persons
elected by the incorporator or named in the Corporation’s initial Certificate of Incorporation. Each director shall hold
office until the next annual meeting of stockholders and until such director’s successor is elected and qualified, or until
such director’s earlier death, resignation or removal. Any director may resign at any time upon written notice to the Corporation.
Subject to the rights of any holders of Preferred Stock then outstanding: (i) any director or the entire Board of Directors may
be removed, with or without cause, by the holders of a majority of the shares then entitled to vote at an election of directors
and (ii) any vacancy occurring in the Board of Directors for any cause, and any newly created directorship resulting from any
increase in the authorized number of directors to be elected by all stockholders having the right to vote as a single class, may
be filled by the stockholders, by a majority of the directors then in office, although less than a quorum, or by a sole remaining
director.
Section 2.03
Regular Meetings. Regular meetings of the Board of Directors may be held at such places, within or without the State
of Delaware, and at such times as the Board of Directors may from time to time determine. Notice of regular meetings need not
be given if the date, times and places thereof are fixed by resolution of the Board of Directors.
Section 2.04
Special Meetings. Special meetings of the Board of Directors may be called by any member of the Board of Directors,
the President or the CEO and may be held at any time, date or place, within or without the State of Delaware, as the person or
persons calling the meeting shall fix. Notice of the time, date and place of such meeting shall be given in writing or by electronic
transmission (including electronic mail), by the person or persons calling the meeting to all directors at least four (4) days
before the meeting if the notice is mailed, or at least twenty-four (24) hours before the meeting if such notice is given by hand
delivery, facsimile, electronic mail or other means of electronic transmission. Unless otherwise indicated in the notice, any
and all business may be transacted at a special meeting.
Section 2.05
Remote Meetings Permitted. Members of the Board of Directors, or any committee of the Board, may participate in a meeting
of the Board of Directors or such committee by means of conference telephone or other communications equipment by means of which
all persons participating in the meeting can hear each other, and participation in a meeting pursuant to conference telephone
or other communications equipment shall constitute presence in person at such meeting.
Section 2.06
Quorum; Vote Required for Action. At all meetings of the Board of Directors a majority of the total number of authorized
directors shall constitute a quorum for the transaction of business. Except as otherwise provided herein or in the Certificate
of Incorporation, or required by law, the vote of a majority of the directors present at a meeting at which a quorum is present
shall be the act of the Board of Directors.
Section 2.07
Organization. Meetings of the Board of Directors shall be presided over by the Chairperson of the Board of Directors,
or in such person’s absence by the President, or in such person’s absence by a chairperson chosen at the meeting.
The Secretary shall act as secretary of the meeting, but in such person’s absence the chairperson of the meeting may appoint
any person to act as secretary of the meeting.
Section 2.08
Written Action by Directors. Any action required or permitted to be taken at any meeting of the Board of Directors,
or of any committee thereof, may be taken without a meeting if all members of the Board of Directors or such committee, as the
case may be, consent thereto in writing or by electronic transmission, and the writing or writings or electronic transmission
or transmissions are filed with the minutes of proceedings of the Board of Directors or committee, respectively. Such filing shall
be in paper form if the minutes are maintained in paper form and shall be in electronic form if the minutes are maintained in
electronic form.
Section 2.09
Powers. The Board of Directors may, except as otherwise required by law or the Certificate of Incorporation, exercise
all such powers and do all such acts and things as may be exercised or done by the Corporation.
Section 2.10
Compensation of Directors. Directors, as such, may receive, pursuant to a resolution of the Board of Directors, fees
and other compensation for their services as directors, including without limitation their services as members of committees of
the Board of Directors.
Article III
COMMITTEES
Section 3.01
Committees. The Board of Directors may designate one or more committees, each committee to consist of one or more of
the directors of the Corporation. The Board of Directors may designate one or more directors as alternate members of any committee,
who may replace any absent or disqualified member at any meeting of the committee. In the absence or disqualification of a member
of the committee, the member or members thereof present at any meeting of such committee who are not disqualified from voting,
whether or not such member or members constitute a quorum, may unanimously appoint another member of the Board of Directors to
act at the meeting in place of any such absent or disqualified member. Any such committee, to the extent provided in a resolution
of the Board of Directors, shall have and may exercise all the powers and authority of the Board of Directors in the management
of the business and affairs of the Corporation and may authorize the seal of the Corporation to be affixed to all papers that
may require it; but no such committee shall have the power or authority in reference to the following matters: (i) approving,
adopting, or recommending to the stockholders any action or matter expressly required by the Delaware General Corporation Law
to be submitted to stockholders for approval or (ii) adopting, amending or repealing any bylaw of the Corporation.
Section 3.02
Committee Rules. Unless the Board of Directors otherwise provides, each committee designated by the Board of Directors
may make, alter and repeal rules for the conduct of its business. In the absence of such rules each committee shall conduct its
business in the same manner as the Board of Directors conducts its business pursuant to Article II of these Bylaws.
Article IV
OFFICERS
Section 4.01
Generally. The officers of the Corporation shall consist of a Chief Executive Officer and/or a President, one or more
Vice Presidents, a Secretary, a Treasurer and such other officers, including a Chairperson of the Board of Directors and/or Chief
Financial Officer, as may from time to time be appointed by the Board of Directors. All officers shall be elected by the Board
of Directors; provided, however, that the Board of Directors may empower the Chief Executive Officer of the Corporation to appoint
officers other than the Chairperson of the Board, the Chief Executive Officer, the President, the Chief Financial Officer or the
Treasurer. Each officer shall hold office until such person’s successor is elected and qualified or until such person’s
earlier resignation or removal. Any number of offices may be held by the same person. Any officer may resign at any time upon
written notice to the Corporation. Any vacancy occurring in any office of the Corporation by death, resignation, removal or otherwise
may be filled by the Board of Directors.
Section 4.02
Chief Executive Officer. Subject to the control of the Board of Directors and such supervisory powers, if any, as may
be given by the Board of Directors, the powers and duties of the Chief Executive Officer of the Corporation are:
(a) To act as the general manager and, subject to the control of the Board of Directors, to have general supervision, direction and
control of the business and affairs of the Corporation;
(b) To preside at all meetings of the stockholders;
(c) To call meetings of the stockholders to be held at such times and, subject to the limitations prescribed by law or by these Bylaws,
at such places as he or she shall deem proper; and
(d) To affix the signature of the Corporation to all deeds, conveyances, mortgages, guarantees, leases, obligations, bonds, certificates
and other papers and instruments in writing which have been authorized by the Board of Directors or which, in the judgment of
the Chief Executive Officer, should be executed on behalf of the Corporation; to sign certificates for shares of stock of the
Corporation; and, subject to the direction of the Board of Directors, to have general charge of the property of the Corporation
and to supervise and control all officers, agents and employees of the Corporation.
The
President shall be the Chief Executive Officer of the Corporation unless the Board of Directors shall designate another officer
to be the Chief Executive Officer. If there is no President, and the Board of Directors has not designated any other officer to
be the Chief Executive Officer, then the Chairperson of the Board of Directors shall be the Chief Executive Officer.
Section 4.03
Chairperson of the Board. The Chairperson of the Board of Directors shall have the power to preside at all meetings
of the Board of Directors and shall have such other powers and duties as provided in these Bylaws and as the Board of Directors
may from time to time prescribe.
Section 4.04
President. The President shall be the Chief Executive Officer of the Corporation unless the Board of Directors shall
have designated another officer as the Chief Executive Officer of the Corporation. Subject to the provisions of these Bylaws and
to the direction of the Board of Directors, and subject to the supervisory powers of the Chief Executive Officer (if the Chief
Executive Officer is an officer other than the President), and subject to such supervisory powers and authority as may be given
by the Board of Directors to the Chairperson of the Board of Directors, and/or to any other officer, the President shall have
the responsibility for the general management the control of the business and affairs of the Corporation and the general supervision
and direction of all of the officers, employees and agents of the Corporation (other than the Chief Executive Officer, if the
Chief Executive Officer is an officer other than the President) and shall perform all duties and have all powers that are commonly
incident to the office of President or that are delegated to the President by the Board of Directors.
Section 4.05
Vice President. Each Vice President shall have all such powers and duties as are commonly incident to the office of
Vice President, or that are delegated to him or her by the Board of Directors or the Chief Executive Officer. A Vice President
may be designated by the Board of Directors to perform the duties and exercise the powers of the Chief Executive Officer in the
event of the Chief Executive Officer’s absence or disability.
Section 4.06
Chief Financial Officer. The Chief Financial Officer shall be the Treasurer of the Corporation unless the Board of
Directors shall have designated another officer as the Treasurer of the Corporation. Subject to the direction of the Board of
Directors and the Chief Executive Officer, the Chief Financial Officer shall perform all duties and have all powers that are commonly
incident to the office of Chief Financial Officer.
Section 4.07
Treasurer. The Treasurer shall have custody of all moneys and securities of the Corporation. The Treasurer shall make
such disbursements of the funds of the Corporation as are authorized and shall render from time to time an account of all such
transactions. The Treasurer shall also perform such other duties and have such other powers as are commonly incident to the office
of Treasurer, or as the Board of Directors or the Chief Executive Officer may from time to time prescribe.
Section 4.08
Secretary. The Secretary shall issue or cause to be issued all authorized notices for, and shall keep, or cause to
be kept, minutes of all meetings of the stockholders and the Board of Directors. The Secretary shall have charge of the corporate
minute books and similar records and shall perform such other duties and have such other powers as are commonly incident to the
office of Secretary, or as the Board of Directors or the Chief Executive Officer may from time to time prescribe.
Section 4.09
Delegation of Authority. The Board of Directors may from time to time delegate the powers or duties of any officer
to any other officers or agents, notwithstanding any provision hereof.
Section
4.10: Removal. Any officer of the Corporation shall serve at the pleasure of the Board of Directors and may be removed
at any time, with or without cause, by the Board of Directors. Such removal shall be without prejudice to the contractual rights
of such officer, if any, with the Corporation.
Article V
STOCK
Section 5.01
Certificates. Every holder of stock shall be entitled to have a certificate signed by or in the name of the Corporation
by the Chairperson or Vice-Chairperson of the Board of Directors, or the President or a Vice President, and by the Treasurer or
an Assistant Treasurer, or the Secretary or an Assistant Secretary, of the Corporation, certifying the number of shares owned
by such stockholder in the Corporation. Any or all of the signatures on the certificate may be a facsimile.
Section 5.02
Lost, Stolen or Destroyed Stock Certificates; Issuance of New Certificates. The Corporation may issue a new certificate
of stock in the place of any certificate previously issued by it, alleged to have been lost, stolen or destroyed, and the Corporation
may require the owner of the lost, stolen or destroyed certificate, or such owner’s legal representative, to agree to indemnify
the Corporation and/or to give the Corporation a bond sufficient to indemnify it, against any claim that may be made against it
on account of the alleged loss, theft or destruction of any such certificate or the issuance of such new certificate.
Section 5.03
Other Regulations. The issue, transfer, conversion and registration of stock certificates shall be governed by such
other regulations as the Board of Directors may establish.
Article VI
ESTABLISHMENT OF SUBSIDIARIES AND BRANCHES
Section 6.01
Without limiting the other powers of the Board of Directors, the Board of Directors shall have the authority, by resolution
of the Board of Directors, to invest in, establish and otherwise participate in subsidiary corporations or other entities, branch
offices and registered representative offices both in the United States and in other countries and territories anywhere in the
world.
Article VII
INDEMNIFICATION
Section 7.01
Indemnification of Officers and Directors. Each person who was or is made a party to, or is threatened to be made a
party to, or is involved in any action, suit or proceeding, whether civil, criminal, administrative or investigative (the “Proceeding”),
by reason of the fact that such person (or a person of whom such person is the legal representative), is or was a director or
officer of the Corporation or a Reincorporated Predecessor (as defined below) or is or was serving at the request of the Corporation
or a Reincorporated Predecessor (as defined below) as a director or officer of another corporation, or of a partnership, joint
venture, trust or other enterprise, including service with respect to employee benefit plans, shall be indemnified and held harmless
by the Corporation to the fullest extent permitted by the Delaware General Corporation Law, against all expenses, liability and
loss (including attorneys’ fees, judgments, fines, ERISA excise taxes and penalties and amounts paid or to be paid in settlement)
reasonably incurred or suffered by such person in connection therewith, provided such person acted in good faith and in a manner
which the person reasonably believed to be in or not opposed to the best interests of the Corporation, and, with respect to any
criminal action or Proceeding, had no reasonable cause to believe the person’s conduct was unlawful. Such indemnification
shall continue as to a person who has ceased to be a director or officer and shall inure to the benefit of such person’s
heirs, executors and administrators. Notwithstanding the foregoing, the Corporation shall indemnify any such person seeking indemnity
in connection with a Proceeding (or part thereof) initiated by such person only if such Proceeding (or part thereof) was authorized
by the Board of Directors of the Corporation. As used herein, the term the “Reincorporated Predecessor”
means a corporation that is merged with and into the Corporation in a statutory merger where (a) the Corporation is the surviving
corporation of such merger; (b) the primary purpose of such merger is to change the corporate domicile of the Reincorporated Predecessor
to Delaware.
Section 7.02
Advance of Expenses. The Corporation shall pay all expenses (including attorneys’ fees) incurred by such a director
or officer in defending any such Proceeding as they are incurred in advance of its final disposition; provided, however, that
if the Delaware General Corporation Law then so requires, the payment of such expenses incurred by such a director or officer
in advance of the final disposition of such Proceeding shall be made only upon delivery to the Corporation of an undertaking,
by or on behalf of such director or officer, to repay all amounts so advanced if it should be determined ultimately that such
director or officer is not entitled to be indemnified under this Article VI or otherwise; and provided, further, that the Corporation
shall not be required to advance any expenses to a person against whom the Corporation directly brings a claim, in a Proceeding,
alleging that such person has breached such person’s duty of loyalty to the Corporation, committed an act or omission not
in good faith or that involves intentional misconduct or a knowing violation of law, or derived an improper personal benefit from
a transaction.
Section 7.03
Non-Exclusivity of Rights. The rights conferred on any person in this Article VI shall not be exclusive of any other
right that such person may have or hereafter acquire under any statute, provision of the Certificate of Incorporation, Bylaw,
agreement, vote or consent of stockholders or disinterested directors, or otherwise. Additionally, nothing in this Article VI
shall limit the ability of the Corporation, in its discretion, to indemnify or advance expenses to persons whom the Corporation
is not obligated to indemnify or advance expenses pursuant to this Article VI.
Section 7.04
Indemnification Contracts. The Board of Directors is authorized to cause the Corporation to enter into indemnification
contracts with any director, officer, employee or agent of the Corporation, or any person serving at the request of the Corporation
as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, including
employee benefit plans, providing indemnification rights to such person. Such rights may be greater than those provided in this
Article VI.
Section 7.05
Effect of Amendment. Any amendment, repeal or modification of any provision of this Article VI shall be prospective
only, and shall not adversely affect any right or protection conferred on a person pursuant to this Article VI and existing at
the time of such amendment, repeal or modification.
Article VIII
NOTICES
Section 8.01
Notice.
(a) Except as otherwise specifically provided in these Bylaws (including, without limitation, Section 7.1(b) below) or required by
law, all notices required to be given pursuant to these Bylaws shall be in writing and may in every instance be effectively given
by hand delivery (including use of a delivery service), by depositing such notice in the mail, postage prepaid, or by sending
such notice by overnight express courier or facsimile. Any such notice shall be addressed to the person to whom notice is to be
given at such person’s address as it appears on the records of the Corporation. The notice shall be deemed given (i) in
the case of hand delivery, when received by the person to whom notice is to be given or by any person accepting such notice on
behalf of such person, (ii) in the case of delivery by mail, upon deposit in the mail, (iii) in the case of delivery by overnight
express courier, when dispatched, and (iv) in the case of delivery via facsimile, when dispatched.
(b) Without limiting the manner by which notice otherwise may be given effectively to stockholders, any notice to stockholders given
by the Corporation under any provision of the Delaware General Corporation Law, the Certificate of Incorporation, or these Bylaws
shall be effective if given by a form of electronic transmission consented to by the stockholder to whom the notice is given.
Any such consent shall be revocable by the stockholder by written notice to the Corporation. Any such consent shall be deemed
revoked if (i) the Corporation is unable to deliver by electronic transmission two consecutive notices given by the Corporation
in accordance with such consent and (ii) such inability becomes known to the Secretary or an Assistant Secretary of the Corporation
or to the transfer agent, or other person responsible for the giving of notice; provided, however, the inadvertent failure to
treat such inability as a revocation shall not invalidate any meeting or other action. Notice given pursuant to this Section 7.1(b)
shall be deemed given: (i) if by facsimile telecommunication, when directed to a number at which the stockholder has consented
to receive notice; (ii) if by electronic mail, when directed to an electronic mail address at which the stockholder has consented
to receive notice; (iii) if by a posting on an electronic network together with separate notice to the stockholder of such specific
posting, upon the later of (A) such posting and (B) the giving of such separate notice; and (iv) if by any other form of electronic
transmission, when directed to the stockholder.
(c) An affidavit of the Secretary or an Assistant Secretary or of the transfer agent or other agent of the Corporation that the notice
has been given in writing or by a form of electronic transmission shall, in the absence of fraud, be prima facie evidence of the
facts stated therein.
Section 8.02
Waiver of Notice. Whenever notice is required to be given under any provision of these Bylaws, a written waiver of
notice, signed by the person entitled to notice, or waiver by electronic transmission by such person, whether before or after
the time stated therein, shall be deemed equivalent to notice. Attendance of a person at a meeting shall constitute a waiver of
notice of such meeting, except when the person attends a meeting for the express purpose of objecting at the beginning of the
meeting to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be
transacted at, nor the purpose of, any regular or special meeting of the stockholders, directors or members of a committee of
directors need be specified in any waiver of notice.
Article IX
INTERESTED DIRECTORS
Section 9.01
Interested Directors; Quorum. No contract or transaction between the Corporation and one or more of its directors or
officers, or between the Corporation and any other corporation, partnership, association or other organization in which one or
more of its directors or officers are directors or officers, or have a financial interest, shall be void or voidable solely for
this reason, or solely because the director or officer is present at or participates in the meeting of the Board of Directors
or committee thereof that authorizes the contract or transaction, or solely because his, her or their votes are counted for such
purpose, if: (i) the material facts as to his, her or their relationship or interest and as to the contract or transaction are
disclosed or are known to the Board of Directors or the committee, and the Board of Directors or committee in good faith authorizes
the contract or transaction by the affirmative votes of a majority of the disinterested directors, even though the disinterested
directors be less than a quorum; (ii) the material facts as to his, her or their relationship or interest and as to the contract
or transaction are disclosed or are known to the stockholders entitled to vote thereon, and the contract or transaction is specifically
approved in good faith by vote of the stockholders; or (iii) the contract or transaction is fair as to the Corporation as of the
time it is authorized, approved or ratified by the Board of Directors, a committee thereof, or the stockholders. Interested directors
may be counted in determining the presence of a quorum at a meeting of the Board of Directors or of a committee which authorizes
the contract or transaction.
Article X
MISCELLANEOUS
Section
10.1: Fiscal Year. The fiscal year of the Corporation shall be determined by resolution of the Board of Directors.
Section
10.2: Seal. The Board of Directors may provide for a corporate seal, which shall have the name of the Corporation inscribed
thereon and shall otherwise be in such form as may be approved from time to time by the Board of Directors.
Section
10.3: Form of Records. Any records maintained by the Corporation in the regular course of its business, including its
stock ledger, books of account and minute books, may be kept on or by means of, or be in the form of, diskettes, or any other
information storage device or method, provided that the records so kept can be converted into clearly legible paper form within
a reasonable time. The Corporation shall so convert any records so kept upon the request of any person entitled to inspect such
records pursuant to any provision of the Delaware General Corporation Law.
Section
10.4: Reliance Upon Books and Records. A member of the Board of Directors, or a member of any committee designated by
the Board of Directors shall, in the performance of such person’s duties, be fully protected in relying in good faith upon
records of the Corporation and upon such information, opinions, reports or statements presented to the Corporation by any of the
Corporation’s officers or employees, or committees of the Board of Directors, or by any other person as to matters the member
reasonably believes are within such other person’s professional or expert competence and who has been selected with reasonable
care by or on behalf of the Corporation.
Section
10.5: Certificate of Incorporation Governs. In the event of any conflict between the provisions of the Corporation’s
Certificate of Incorporation and Bylaws, the provisions of the Certificate of Incorporation shall govern.
Section
10.6: Severability. If any provision of these Bylaws shall be held to be invalid, illegal, unenforceable or in conflict
with the provisions of the Corporation’s Certificate of Incorporation, then such provision shall nonetheless be enforced
to the maximum extent possible consistent with such holding and the remaining provisions of these Bylaws (including without limitation,
all portions of any section of these Bylaws containing any such provision held to be invalid, illegal, unenforceable or in conflict
with the Certificate of Incorporation, that are not themselves invalid, illegal, unenforceable or in conflict with the Certificate
of Incorporation) shall remain in full force and effect.
Article XI
AMENDMENT
Section
11.1: Amendments. Stockholders of the Corporation holding a majority of the Corporation’s outstanding voting stock
shall have the power to adopt, amend or repeal Bylaws. To the extent provided in the Corporation’s Certificate of Incorporation,
the Board of Directors of the Corporation shall also have the power to adopt, amend or repeal Bylaws of the Corporation, except
insofar as Bylaws adopted by the stockholders shall otherwise provide.
Exhibit 3.4
AMENDED AND RESTATED BYLAWS
OF
SQUARESPACE, INC.
A Delaware Corporation
TABLE OF CONTENTS
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Page
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ARTICLE I
OFFICES
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Section 1.
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Registered Office
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1
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Section 2.
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Other Offices
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1
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ARTICLE II
MEETINGS OF STOCKHOLDERS
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Section 1.
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Place of Meetings
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1
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Section 2.
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Annual Meetings
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1
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Section 3.
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Special Meetings.
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1
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Section 4.
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Notice
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2
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Section 5.
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Adjournments and Postponements
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2
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Section 6.
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Quorum
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2
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Section 7.
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Voting
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2
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Section 8.
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Proxies
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3
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Section 9.
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List of Stockholders Entitled to Vote
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3
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Section 10.
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Record Date
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4
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Section 11.
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Stock Ledger
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4
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Section 12.
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Conduct of Meetings
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5
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Section 13.
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Inspectors of Election
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5
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Section 14.
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Nature of Business at Meetings of Stockholders
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5
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Section 15.
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Nomination of Directors
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7
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ARTICLE III
DIRECTORS
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Section 1.
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Number and Election of Directors
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9
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Section 2.
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Vacancies
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9
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Section 3.
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Duties and Powers
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9
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Section 4.
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Meetings
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9
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Section 5.
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Organization
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9
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Section 6.
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Resignations and Removals of Directors
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9
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Section 7.
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Quorum
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10
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Section 8.
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Actions of the Board by Written Consent
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10
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Section 9.
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Meetings by Means of Conference Telephone
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10
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Section 10.
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Committees
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10
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Section 11.
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Subcommittees
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11
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Section 12.
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Compensation
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11
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Section 13.
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Interested Directors
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11
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ARTICLE IV
OFFICERS
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Section 1.
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General
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12
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Section 2.
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Election
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12
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Section 3.
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Voting Securities Owned by the Corporation
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12
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Section 4.
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Chairperson of the Board of Directors
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12
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Section 5.
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President
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12
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Section 6.
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Vice Presidents
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12
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Section 7.
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Secretary
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13
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Section 8.
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Treasurer
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13
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Section 9.
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Assistant Secretaries
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13
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Section 10.
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Assistant Treasurers
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13
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Section 11.
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Other Officers
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13
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ARTICLE V
STOCK
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Section 1.
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Shares of Stock
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14
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Section 2.
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Signatures
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14
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Section 3.
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Lost Certificates
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14
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Section 4.
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Transfers
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14
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Section 5.
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Dividend Record Date
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14
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Section 6.
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Record Owners
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14
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Section 7.
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Transfer and Registry Agents
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14
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ARTICLE VI
NOTICES
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Section 1.
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Notices
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15
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Section 2.
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Waivers of Notice
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15
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ARTICLE VII
GENERAL PROVISIONS
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Section 1.
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Dividends
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15
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Section 2.
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Disbursements
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15
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Section 3.
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Fiscal Year
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15
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Section 4.
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Corporate Seal
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15
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ARTICLE VIII
INDEMNIFICATION
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Section 1.
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Indemnification of Officers and Directors
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16
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Section 2.
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Advance of Expenses
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16
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Section 3.
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Non-Exclusivity of Rights
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16
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Section 4.
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Indemnification Contracts
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16
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Section 5.
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Insurance
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16
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Section 6.
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Effect of Amendment
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16
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ARTICLE IX
AMENDMENTS
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Section 1.
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Amendments
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17
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Section 2.
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Entire Board of Directors
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17
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AMENDED AND RESTATED BYLAWS
OF
SQUARESPACE, INC.
(hereinafter called the “Corporation”)
ARTICLE
I
OFFICES
Section 1.
Registered Office. The registered office of the Corporation shall be 3500 South DuPont Highway, County of Kent, Dover, DE
USA 19901.
Section 2.
Other Offices. The Corporation may also have offices at such other places, both within and without the State of Delaware,
as the Board of Directors may from time to time determine.
ARTICLE
II
MEETINGS OF STOCKHOLDERS
Section 1.
Place of Meetings. Meetings of the stockholders for the election of directors or for any other purpose shall be held at
such time and place, either within or without the State of Delaware, as shall be designated from time to time by the Board of Directors.
The Board of Directors may, in its sole discretion, determine that a meeting of the stockholders shall not be held at any place, but may
instead be held solely by means of remote communication in the manner authorized by Section 211 of the General Corporation Law of the
State of Delaware (the “DGCL”).
Section 2.
Annual Meetings. The Annual Meeting of Stockholders for the election of directors shall be held on such date and at such
time as shall be designated from time to time by the Board of Directors. Any other proper business may be transacted at the Annual Meeting
of Stockholders.
Section 3.
Special Meetings. Unless otherwise required by law or by the certificate of incorporation of the Corporation, as amended
and restated from time to time (the “Certificate of Incorporation”), Special Meetings of Stockholders, for any purpose or
purposes, may only be called by (i) a majority of the Board of Directors, (ii) the Chairperson of the Board of Directors or (iii) the
President, and may not be called by any other person or persons. Such request shall state the purpose or purposes of the proposed meeting.
At a Special Meeting of Stockholders, only such business shall be conducted as shall be specified in the notice of meeting (or any supplement
thereto).
Section 4.
Notice. Whenever stockholders are required or permitted to take any action at a meeting, a notice of the meeting, in the
form of a writing or electronic transmission, shall be given which shall state the place, if any, date and hour of the meeting, the means
of remote communications, if any, by which stockholders and proxy holders may be deemed to be present in person and vote at such meeting,
the record date for determining the stockholders entitled to vote at such meeting, if such date is different from the record date for
determining stockholders entitled to notice of such meeting and, in the case of a Special Meeting, the purpose or purposes for which
the meeting is called. Unless otherwise required by law, notice of any meeting shall be given not less than ten (10) nor more than sixty
(60) days before the date of the meeting to each stockholder entitled to vote at such meeting as of the record date for determining stockholders
entitled to notice of such meeting.
Section 5.
Adjournments and Postponements. Any meeting of the stockholders may be adjourned or postponed from time to time by the chairperson
of such meeting or by the Board of Directors, without the need for approval thereof by stockholders to reconvene or convene, respectively
at the same or some other place. Notice need not be given of any such adjourned or postponed meeting if the time and place, if any, thereof,
and the means of remote communications, if any, by which stockholders and proxy holders may be deemed to be present in person and vote
at such adjourned or postponed meeting are announced at the meeting at which the adjournment is taken or, with respect to a postponed
meeting, are publicly announced. At the adjourned or postponed meeting, the Corporation may transact any business which might have been
transacted at the original meeting. If the adjournment or postponement is for more than thirty (30) days, notice of the adjourned or postponed
meeting in accordance with the requirements of Section 4 hereof shall be given to each stockholder of record entitled to vote at the meeting.
If, after the adjournment or postponement, a new record date for stockholders entitled to vote is fixed for
the adjourned or postponed meeting, the Board of Directors shall fix a new record date for notice of such adjourned or postponed meeting
in accordance with Section 11 hereof, and shall give notice of the adjourned or postponed meeting to each stockholder of record entitled
to vote at such adjourned or postponed meeting as of the record date fixed for notice of such adjourned or postponed meeting.
Section 6.
Quorum. Unless otherwise required by the DGCL or other applicable law or the Certificate of Incorporation, the holders of
a majority of the voting power of the Corporation’s capital stock issued and outstanding and entitled to vote thereat, present in
person or represented by proxy, shall constitute a quorum at all meetings of the stockholders for the transaction of business. A quorum,
once established, shall not be broken by the withdrawal of enough votes to leave less than a quorum. If, however, such quorum shall not
be present or represented at any meeting of the stockholders, the stockholders entitled to vote thereat, present in person or represented
by proxy, shall have power to adjourn the meeting from time to time, in the manner provided in Section 5 hereof, until a quorum shall
be present or represented.
Section 7. Voting.
Unless otherwise required by law, the Certificate of Incorporation or these Bylaws, or permitted by the rules and regulations of the
New York Stock Exchange, any question brought before any meeting of the stockholders, other than the election of directors, shall be
decided by the vote of the holders of a majority of the voting power of the Corporation’s capital stock present at the meeting
in person or represented by proxy and entitled to vote on such question, voting as a single class. Unless otherwise provided in the
Certificate of Incorporation, and subject to Section 11 of this Article II, each stockholder represented at a meeting of the
stockholders shall be entitled to cast one (1) vote for each share of the capital stock entitled to vote thereat held by such
stockholder. Such votes may be cast in person or by proxy as provided in Section 8 of this Article II. The Board of Directors, in
its discretion, or the chairperson of a meeting of the stockholders, in his or her discretion, may require that any votes cast at
such meeting shall be cast by written ballot.
Section 8.
Proxies. Each stockholder entitled to vote at a meeting of the stockholders may authorize another person or persons to act
for such stockholder as proxy, but no such proxy shall be voted upon after three years from its date, unless such proxy provides for a
longer period. Without limiting the manner in which a stockholder may authorize another person or persons to act for such stockholder
as proxy, the following shall constitute a valid means by which a stockholder may grant such authority:
(a)
A stockholder may execute a document, which includes handwritten, typed, printed or similar instruments and electronic transmissions,
authorizing another person or persons to act for such stockholder as proxy. Execution may be accomplished in the manner permitted by the
DGCL, including by electronic signature, by the stockholder or such stockholder’s authorized officer, director, employee or agent.
(b)
A stockholder may authorize another person or persons to act for such stockholder as proxy by transmitting or authorizing the transmission
of an electronic transmission to the person who will be the holder of the proxy or to a proxy solicitation firm, proxy support service
organization or like agent duly authorized by the person who will be the holder of the proxy to receive such transmission, provided that
any such transmission must either set forth or be submitted with information from which it can be determined that the transmission was
authorized by the stockholder. If it is determined that such transmissions are valid, the inspectors or, if there are no inspectors, such
other persons making that determination shall specify the information on which they relied.
(c)
Any copy or other reliable reproduction of the document (including any electronic transmission) authorizing another person or persons
to act as proxy for a stockholder may be substituted or used in lieu of the original document for any and all purposes for which the original
document could be used; provided, however, that such copy or other reproduction shall be a complete reproduction of the entire original
document.
Section 9. List
of Stockholders Entitled to Vote. The Corporation shall prepare, at least ten (10) days before every meeting of the
stockholders, a complete list of the stockholders entitled to vote at the meeting; provided, however, if the record date for
determining the stockholders entitled to vote is less than ten (10) days before the meeting date, the list shall reflect the
stockholders entitled to vote as of the tenth (10th) day before the meeting date. Such list shall be arranged in alphabetical order,
and show the address of each stockholder and the number of shares registered in the name of each stockholder; provided, that
the Corporation shall not be required to include electronic mail addresses or other electronic contact information on such list.
Such list shall be open to the examination of any stockholder for any purpose germane to the meeting for a period of at least ten
(10) days prior to the meeting (i) on a reasonably accessible electronic network, provided that the information required to gain
access to such list is provided with the notice of the meeting, or (ii) during ordinary business hours, at the principal place of
business of the Corporation. In the event that the Corporation determines to make the list available on an electronic network, the
Corporation may take reasonable steps to ensure that such information is available only to stockholders of the Corporation. If the
meeting is to be held at a place, then a list of stockholders entitled to vote at the meeting shall be produced and kept at the time
and place of the meeting during the whole time thereof and may be examined by any stockholder who is present. If the meeting is to
be held solely by means of remote communication, then the list shall also be open to the examination of any stockholder during the
whole time of the meeting on a reasonably accessible electronic network, and the information required to access such list shall be
provided with the notice of the meeting.
Section 10.
Record Date. In order that the Corporation may determine the stockholders entitled to notice of any meeting of the stockholders
or any adjournment thereof, the Board of Directors may fix a record date, which record date shall not precede the date upon which the
resolution fixing the record date is adopted by the Board of Directors, and which record date shall not be more than sixty (60) nor less
than ten (10) days before the date of such meeting. If the Board of Directors so fixes a date, such date shall also be the record date
for determining the stockholders entitled to vote at such meeting unless the Board of Directors determines, at the time it fixes such
record date, that a later date on or before the date of the meeting shall be the date for making such determination. If no record date
is fixed by the Board of Directors, the record date for determining stockholders entitled to notice of and to vote at a meeting of the
stockholders shall be at the close of business on the day next preceding the day on which notice is given, or, if notice is waived, at
the close of business on the day next preceding the day on which the meeting is held. A determination of stockholders of record entitled
to notice of or to vote at a meeting of the stockholders shall apply to any adjournment of the meeting; provided, however, that the Board
of Directors may fix a new record date for determination of stockholders entitled to vote at the adjourned meeting, and in such case shall
also fix, as the record date for stockholders entitled to notice of such adjourned meeting, the same or an earlier date as that fixed
for determination of stockholders entitled to vote at the adjourned meeting in accordance with the foregoing provisions of this Section
10.
Section 11.
Stock Ledger. The stock ledger of the Corporation shall be the only evidence as to who are the stockholders entitled to
examine the list of stockholders required by Section 11 of this Article II or the books and records of the Corporation, or to vote in
person or by proxy at any meeting of stockholders. As used herein, the stock ledger of the Corporation shall refer to one (1) or more
records administered by or on behalf of the Corporation in which the names of all of the Corporation’s stockholders of record, the
address and number of shares registered in the name of each such stockholder, and all issuances and transfer of stock of the Corporation
are recorded in accordance with Section 224 of the DGCL.
Section 12. Conduct
of Meetings. The Board of Directors of the Corporation may adopt by resolution such rules and regulations for the conduct of any
meeting of the stockholders as it shall deem appropriate. Meetings of stockholders shall be presided over by the Chairperson of the
Board of Directors, if there shall be one, or in his or her absence, or there shall not be a Chairperson of the Board of Directors
or in his or her absence, the President. The Board of Directors shall have the authority to appoint a temporary chairperson to serve
at any meeting of the stockholders if the Chairperson of the Board of Directors or the President is unable to do so for any reason.
Except to the extent inconsistent with any rules and regulations adopted by the Board of Directors, the chairperson of any meeting
of the stockholders shall have the right and authority to prescribe such rules, regulations and procedures and to do all such acts
as, in the judgment of such chairperson, are appropriate for the proper conduct of the meeting. Such rules, regulations or
procedures, whether adopted by the Board of Directors or prescribed by the chairperson of the meeting, may include, without
limitation, the following: (i) the establishment of an agenda or order of business for the meeting; (ii) the determination of when
the polls shall open and close for any given matter to be voted on at the meeting; (iii) rules and procedures for maintaining order
at the meeting and the safety of those present; (iv) limitations on attendance at or participation in the meeting to stockholders of
record of the Corporation, their duly authorized and constituted proxies or such other persons as the chairperson of the meeting
shall determine; (v) restrictions on entry to the meeting after the time fixed for the commencement thereof; and (vi) limitations on
the time allotted to questions or comments by stockholders.
Section 13.
Inspectors of Election. In advance of any meeting of the stockholders, the Board of Directors, by resolution, the Chairperson
of the Board of Directors or the President shall appoint one or more inspectors to act at the meeting and make a written report thereof.
One or more other persons may be designated as alternate inspectors to replace any inspector who fails to act. If no inspector or alternate
is able to act at a meeting of the stockholders, the chairperson of the meeting shall appoint one or more inspectors to act at the meeting.
Unless otherwise required by applicable law, inspectors may be officers, employees or agents of the Corporation. Each inspector, before
entering upon the discharge of the duties of inspector, shall take and sign an oath faithfully to execute the duties of inspector with
strict impartiality and according to the best of such inspector’s ability. The inspector shall have the duties prescribed by law
and shall take charge of the polls and, when the vote is completed, shall execute and deliver to the Corporation a certificate of the
result of the vote taken and of such other facts as may be required by applicable law.
Section 14.
Nature of Business at Meetings of Stockholders. Only such business (other than nominations for election to the Board of
Directors, which must comply with the provisions of Section 15 of this Article II) may be transacted at an Annual Meeting of Stockholders
as is either (a) specified in the notice of meeting (or any supplement thereto) given by or at the direction of the Board of Directors
(or any duly authorized committee thereof), (b) otherwise properly brought before the Annual Meeting by or at the direction of the Board
of Directors (or any duly authorized committee thereof), or (c) otherwise properly brought before the Annual Meeting by any stockholder
of the Corporation (i) who is a stockholder of record on the date of the giving of the notice provided for in this Section 14 of this
Article II and on the record date for the determination of stockholders entitled to notice of and to vote at such Annual Meeting and (ii)
who complies with the notice procedures set forth in this Section 14 of this Article II.
(a)
In addition to any other applicable requirements, for business to be properly brought before an Annual Meeting by a stockholder,
such stockholder must have given timely notice thereof in proper written form to the Secretary of the Corporation.
(b)
To be timely, a stockholder’s notice to the Secretary must be delivered to or be mailed and received at the principal executive
offices of the Corporation not less than one hundred twenty (120) days nor more than one hundred fifty (150) days prior to the anniversary
date of the immediately preceding Annual Meeting of Stockholders; provided, however, that in the event that the Annual Meeting
is called for a date that is not within twenty-five (25) days before or after such anniversary date, notice by the stockholder in order
to be timely must be so received not later than the close of business on the tenth (10th) day following the day on which such notice of
the date of the Annual Meeting was mailed or such public disclosure of the date of the Annual Meeting was made, whichever first occurs.
In no event shall the adjournment or postponement of an Annual Meeting, or the public announcement of such an adjournment or postponement,
commence a new time period (or extend any time period) for the giving of a stockholder’s notice as described above.
(c) To
be in proper written form, a stockholder’s notice to the Secretary must set forth the following information: (a) as to each
matter such stockholder proposes to bring before the Annual Meeting, a brief description of the business desired to be brought
before the Annual Meeting and the proposed text of any proposal regarding such business (including the text of any resolutions
proposed for consideration and, if such business includes a proposal to amend these bylaws, the text of the proposed amendment), and
the reasons for conducting such business at the Annual Meeting, and (b) as to the stockholder giving notice and the beneficial
owner, if any, on whose behalf the proposal is being made, (i) the name and address of such person, (ii) (A) the class or series and
number of all shares of stock of the Corporation which are owned beneficially or of record by such person and any affiliates or
associates of such person, (B) the name of each nominee holder of shares of all stock of the Corporation owned beneficially but not
of record by such person or any affiliates or associates of such person, and the number of such shares of stock of the Corporation
held by each such nominee holder, (C) whether and the extent to which any derivative instrument, swap, option, warrant, short
interest, hedge or profit interest or other transaction has been entered into by or on behalf of such person, or any affiliates or
associates of such person, with respect to stock of the Corporation and (D) whether and the extent to which any other transaction,
agreement, arrangement or understanding (including any short position or any borrowing or lending of shares of stock of the
Corporation) has been made by or on behalf of such person, or any affiliates or associates of such person, the effect or intent of
any of the foregoing being to mitigate loss to, or to manage risk or benefit of stock price changes for, such person, or any
affiliates or associates of such person, or to increase or decrease the voting power or pecuniary or economic interest of such
person, or any affiliates or associates of such person, with respect to stock of the Corporation; (iii) a description of all
agreements, arrangements, or understandings (whether written or oral) between or among such person, or any affiliates or associates
of such person, and any other person or persons (including their names) in connection with or relating to (A) the Corporation or (B)
the proposal, including any material interest in, or anticipated benefit from the proposal to such person, or any affiliates or
associates of such person, (iv) a representation that the stockholder giving notice intends to appear in person or by proxy at the
Annual Meeting to bring such business before the meeting; and (v) any other information relating to such person that would be
required to be disclosed in a proxy statement or other filing required to be made in connection with the solicitation of proxies by
such person with respect to the proposed business to be brought by such person before the Annual Meeting pursuant to Section 14 of
the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the rules and regulations promulgated
thereunder.
(d)
A stockholder providing notice of business proposed to be brought before an Annual Meeting shall further update and supplement
such notice, if necessary, so that the information provided or required to be provided in such notice pursuant to this Section 14 of this
Article II shall be true and correct as of the record date for determining the stockholders entitled to receive notice of the Annual Meeting
and such update and supplement shall be delivered to or be mailed and received by the Secretary at the principal executive offices of
the Corporation not later than five (5) business days after the record date for determining the stockholders entitled to receive notice
of the Annual Meeting.
(e)
No business shall be conducted at the Annual Meeting of Stockholders except business brought before the Annual Meeting in accordance
with the procedures set forth in this Section 14 of this Article II; provided, however, that, once business has been properly
brought before the Annual Meeting in accordance with such procedures, nothing in this Section 14 of this Article II shall be deemed to
preclude discussion by any stockholder of any such business. If the chairperson of an Annual Meeting determines that business was not
properly brought before the Annual Meeting in accordance with the foregoing procedures, the chairperson shall declare to the meeting that
the business was not properly brought before the meeting and such business shall not be transacted.
(f)
Nothing contained in this Section 14 of this Article II shall be deemed to affect any rights of stockholders to request inclusion
of proposals in the Corporation’s proxy statement pursuant to Rule 14a-8 under the Exchange Act (or any successor provision of law).
Section 15.
Nomination of Directors. Only persons who are nominated in accordance with the following procedures shall be eligible for
election as directors of the Corporation, except as may be otherwise provided in the Certificate of Incorporation with respect to the
right of holders of preferred stock of the Corporation to nominate and elect a specified number of directors in certain circumstances.
Nominations of persons for election to the Board of Directors may be made at any Annual Meeting of Stockholders, or at any Special Meeting
of Stockholders called for the purpose of electing directors, (a) by or at the direction of the Board of Directors (or any duly authorized
committee thereof) or (b) by any stockholder of the Corporation (i) who is a stockholder of record on the date of the giving of the notice
provided for in this Section 15 of this Article II and on the record date for the determination of stockholders entitled to notice of
and to vote at such Annual Meeting or Special Meeting and (ii) who complies with the notice procedures set forth in this Section 15 of
this Article II.
(a)
In addition to any other applicable requirements, for a nomination to be made by a stockholder, such stockholder must have given
timely notice thereof in proper written form to the Secretary of the Corporation.
(b)
To be timely, a stockholder’s notice to the Secretary must be delivered to or be mailed and received at the principal executive
offices of the Corporation (a) in the case of an Annual Meeting, not less than one hundred twenty (120) days nor more than one hundred
fifty (150) days prior to the anniversary date of the immediately preceding Annual Meeting of Stockholders; provided, however,
that in the event that the Annual Meeting is called for a date that is not within twenty-five (25) days before or after such anniversary
date, notice by the stockholder in order to be timely must be so received not later than the close of business on the tenth (10th) day
following the day on which such notice of the date of the Annual Meeting was mailed or such public disclosure of the date of the Annual
Meeting was made, whichever first occurs; and (b) in the case of a Special Meeting of Stockholders called for the purpose of electing
directors, not later than the close of business on the tenth (10th) day following the day on which notice of the date of the Special Meeting
was mailed or public disclosure of the date of the Special Meeting was made, whichever first occurs. In no event shall the adjournment
or postponement of an Annual Meeting or a Special Meeting called for the purpose of electing directors, or the public announcement of
such an adjournment or postponement, commence a new time period (or extend any time period) for the giving of a stockholder’s notice
as described above.
(c) To
be in proper written form, a stockholder’s notice to the Secretary must set forth the following information: (a) as to each
person whom the stockholder proposes to nominate for election as a director (i) the name, age, business address and residence
address of such person, (ii) the principal occupation or employment of such person, (iii) (A) the class or series and number of all
shares of stock of the Corporation which are owned beneficially or of record by such person and any affiliates or associates of such
person, (B) the name of each nominee holder of shares of all stock of the Corporation owned beneficially but not of record by such
person or any affiliates or associates of such person, and the number of such shares of stock of the Corporation held by each such
nominee holder, (C) whether and the extent to which any derivative instrument, swap, option, warrant, short interest, hedge or
profit interest or other transaction has been entered into by or on behalf of such person, or any affiliates or associates of such
person, with respect to stock of the Corporation and (D) whether and the extent to which any other transaction, agreement,
arrangement or understanding (including any short position or any borrowing or lending of shares of stock of the Corporation) has
been made by or on behalf of such person, or any affiliates or associates of such person, the effect or intent of any of the
foregoing being to mitigate loss to, or to manage risk or benefit of stock price changes for, such person, or any affiliates or
associates of such person, or to increase or decrease the voting power or pecuniary or economic interest of such person, or any
affiliates or associates of such person, with respect to stock of the Corporation, (iv) such person’s written representation
and agreement that such person (A) is not and will not become a party to any agreement, arrangement or understanding with, and has
not given any commitment or assurance to, any person or entity as to how such person, if elected as a director of the Corporation,
will act or vote on any issue or question, (B) is not and will not become a party to any agreement, arrangement or understanding
with any person or entity other than the Corporation with respect to any direct or indirect compensation, reimbursement or
indemnification in connection with service or action as a director of the Corporation that has not been disclosed to the Corporation
in such representation and agreement and (C) in such person’s individual capacity, would be in compliance, if elected as a
director of the Corporation, and will comply with, all applicable publicly disclosed confidentiality, corporate governance, conflict
of interest, Regulation FD, code of conduct and ethics, and stock ownership and trading policies and guidelines of the Corporation
and (v) any other information relating to such person that would be required to be disclosed in a proxy statement or other filings
required to be made in connection with solicitations of proxies for election of directors pursuant to Section 14 of the Exchange
Act, and the rules and regulations promulgated thereunder; and (b) as to the stockholder giving the notice, and the beneficial
owner, if any, on whose behalf the nomination is being made, (i) the name and record address of the stockholder giving the notice
and the name and principal place of business of such beneficial owner; (ii)
(A) the class or series and number of all shares of stock of the Corporation which are owned beneficially or of record by such
person and any affiliates or associates of such person, (B) the name of each nominee holder of shares of the Corporation owned
beneficially but not of record by such person or any affiliates or associates of such person, and the number of shares of stock of
the Corporation held by each such nominee holder, (C) whether and the extent to which any derivative instrument, swap, option,
warrant, short interest, hedge or profit interest or other transaction has been entered into by or on behalf of such person, or any
affiliates or associates of such person, with respect to stock of the Corporation and (D) whether and the extent to which any other
transaction, agreement, arrangement or understanding (including any short position or any borrowing or lending of shares of stock of
the Corporation) has been made by or on behalf of such person, or any affiliates or associates of such person, the effect or intent
of any of the foregoing being to mitigate loss to, or to manage risk or benefit of stock price changes for, such person, or any
affiliates or associates of such person, or to increase or decrease the voting power or pecuniary or economic interest of such
person, or any affiliates or associates of such person, with respect to stock of the Corporation; (iii) a description of (A) all
agreements, arrangements, or understandings (whether written or oral) between such person, or any affiliates or associates of such
person, and any proposed nominee, or any affiliates or associates of such proposed nominee, (B) all agreements, arrangements, or
understandings (whether written or oral) between such person, or any affiliates or associates of such person, and any other person
or persons (including their names) pursuant to which the nomination(s) are being made by such person, or otherwise relating to the
Corporation or their ownership of capital stock of the Corporation, and (C) any material interest of such person, or any affiliates
or associates of such person, in such nomination, including any anticipated benefit therefrom to such person, or any affiliates or
associates of such person; (iv) a representation that the stockholder giving notice intends to appear in person or by proxy at the
Annual Meeting or Special Meeting to nominate the persons named in its notice; and (v) any other information relating to such person
that would be required to be disclosed in a proxy statement or other filings required to be made in connection with the solicitation
of proxies for election of directors pursuant to Section 14 of the Exchange Act and the rules and regulations promulgated
thereunder. Such notice must be accompanied by a written consent of each proposed nominee to being named as a nominee and to serve
as a director if elected.
(d) A
stockholder providing notice of any nomination proposed to be made at an Annual Meeting or Special Meeting shall further update and
supplement such notice, if necessary, so that the information provided or required to be provided in such notice pursuant to this
Section 15 of this Article II shall be true and correct as of the record date for determining the stockholders entitled to
receive notice of the Annual Meeting or Special Meeting, and such update and supplement shall be delivered to or be mailed and
received by the Secretary at the principal executive offices of the Corporation not later than five (5) business days after the
record date for determining the stockholders entitled to receive notice of such Annual Meeting or Special Meeting.
(e)
No person shall be eligible for election as a director of the Corporation unless nominated in accordance with the procedures set
forth in this Section 15 of this Article II. If the chairman of the meeting determines that a nomination was not made in accordance with
the foregoing procedures, the chairman shall declare to the meeting that the nomination was defective and such defective nomination shall
be disregarded.
ARTICLE
III
DIRECTORS
Section 1.
Number and Election of Directors. The Board of Directors shall consist of not less than one nor more than twelve members,
each of whom shall be a natural person, the exact number of which shall be fixed by the Board of Directors. Except as provided in Section
2 of this Article III, directors shall be elected by a plurality of the votes cast at each Annual Meeting of Stockholders and each director
so elected shall hold office until the next Annual Meeting of Stockholders and until such director’s successor is duly elected and
qualified, or until such director’s earlier death, resignation or removal. Directors need not be stockholders.
Section 2.
Vacancies. Unless otherwise required by law or the Certificate of Incorporation, vacancies on the Board of Directors or
any committee thereof resulting from the death, resignation or removal of a director, or from an increase in the number of directors constituting
the Board of Directors or such committee or otherwise, may be filled only by a majority of the directors then in office, though less than
a quorum, or by a sole remaining director. The directors so chosen shall, in the case of the Board of Directors, hold office until the
next annual election and until their successors are duly elected and qualified, or until their earlier death, resignation or removal and,
in the case of any committee of the Board of Directors, shall hold office until their successors are duly appointed by the Board of Directors
or until their earlier death, resignation or removal.
Section 3.
Duties and Powers. The business and affairs of the Corporation shall be managed by or under the direction of the Board of
Directors which may exercise all such powers of the Corporation except as may be otherwise provided in the DGCL, the Certificate of Incorporation,
these Bylaws or required by the rules and regulations of the New York Stock Exchange.
Section 4. Meetings.
The Board of Directors and any committee thereof may hold meetings, both regular and special, either within or without the State of
Delaware. Regular meetings of the Board of Directors or any committee thereof may be held without notice at such time and at such
place as may from time to time be determined by the Board of Directors or such committee, respectively. Special meetings of the
Board of Directors may be called by the Chairperson of the Board of Directors, if there be one, or the President. Notice of any
special meeting stating the place, date and hour of the meeting shall be given to each director (or, in the case of a committee, to
each member of such committee) not less than twenty-four hours before the date of the meeting, by telephone, or in the form of a
writing or electronic transmission, or on such shorter notice as the person or persons calling such meeting may deem necessary or
appropriate in the circumstances.
Section 5.
Organization. At each meeting of the Board of Directors or any committee thereof, the Chairperson of the Board of Directors
or the chairperson of such committee, as the case may be, or, in his or her absence or if there be none, a director chosen by a majority
of the directors present, shall act as chairperson of such meeting. Except as provided below, the Secretary of the Corporation shall act
as secretary at each meeting of the Board of Directors and of each committee thereof. In case the Secretary shall be absent from any meeting
of the Board of Directors or of any committee thereof, an Assistant Secretary shall perform the duties of secretary at such meeting; and
in the absence from any such meeting of the Secretary and all the Assistant Secretaries, the chairperson of the meeting may appoint any
person to act as secretary of the meeting. Notwithstanding the foregoing, the members of each committee of the Board of Directors may
appoint any person to act as secretary of any meeting of such committee and the Secretary or any Assistant Secretary of the Corporation
may, but need not if such committee so elects, serve in such capacity.
Section 6.
Resignations and Removals of Directors. Any director of the Corporation may resign from the Board of Directors or any committee
thereof at any time, by giving notice in writing or by electronic transmission to the Chairperson of the Board of Directors, if there
be one, the President or the Secretary of the Corporation and, in the case of a committee, to the chairperson of such committee, if there
be one. Such resignation shall take effect when delivered or, if such resignation specifies a later effective time or an effective time,
determined upon the happening of an event or events, in which case, such resignation takes effect upon such effective time. Unless otherwise
specified in such resignation, the acceptance of such resignation shall not be necessary to make it effective. A resignation which is
conditioned upon the director failing to receive a specified vote for reelection as a director may provide that it is irrevocable. Except
as otherwise required by applicable law and subject to the rights, if any, of the holders of shares of preferred stock then outstanding,
any director or the entire Board of Directors may be removed from office at any time, with or without cause, by the affirmative vote of
the holders of at least a majority in voting power of the issued and outstanding capital stock of the Corporation entitled to vote in
the election of directors. Any director serving on a committee of the Board of Directors may be removed from such committee at any time
by the Board of Directors.
Section 7.
Quorum. Except as otherwise required by law, or the Certificate of Incorporation or the rules and regulations of the New
York Stock Exchange, at all meetings of the Board of Directors or any committee thereof, a majority of the entire Board of Directors or
a majority of the directors constituting such committee, as the case may be, shall constitute a quorum for the transaction of business
and the vote of a majority of the directors or committee members, as applicable, present at any meeting at which there is a quorum shall
be the act of the Board of Directors or such committee, as applicable. If a quorum shall not be present at any meeting of the Board of
Directors or any committee thereof, the directors present thereat may adjourn the meeting from time to time, without notice other than
announcement at the meeting of the time and place of the adjourned meeting, until a quorum shall be present.
Section 8.
Actions of the Board by Written Consent. Unless otherwise provided in the Certificate of Incorporation or these Bylaws,
any action required or permitted to be taken at any meeting of the Board of Directors or of any committee thereof may be taken without
a meeting, if all the members of the Board of Directors or such committee, as the case may be, consent thereto in writing or by electronic
transmission. Any person, whether or not then a director, may provide, through instruction to an agent or otherwise, that a consent to
action will be effective at a future time (including a time determined upon the happening of an event) no later than sixty (60) days after
such instruction is given or such provision is made and such consent shall be deemed to have been given at such effective time so long
as such person is then a director and did not revoke the consent prior to such time. Any such consent shall be revocable prior to its
becoming effective. After an action is taken, the consent or consents relating thereto shall be filed with the minutes of the proceedings
of the Board of Directors, or the committee thereof, in the same paper or electronic form as the minutes are maintained.
Section 9.
Meetings by Means of Conference Telephone. Unless otherwise provided in the Certificate of Incorporation or these Bylaws,
members of the Board of Directors of the Corporation, or any committee thereof, may participate in a meeting of the Board of Directors
or such committee by means of a conference telephone or other communications equipment by means of which all persons participating in
the meeting can hear each other, and participation in a meeting pursuant to this Section 9 shall constitute presence in person at such
meeting.
Section 10. Committees.
The Board of Directors may designate one or more committees, each committee to consist of one or more of the directors of the
Corporation. Each member of a committee must meet the requirements for membership, if any, imposed by applicable law and the rules
and regulations of the New York Stock Exchange. The Board of Directors may designate one or more directors as alternate members of
any committee, who may replace any absent or disqualified member at any meeting of any such committee. Subject to the rules and
regulations of the New York Stock Exchange, in the absence or disqualification of a member of a committee, and in the absence of a
designation by the Board of Directors of an alternate member to replace the absent or disqualified member, the member or members
thereof present at any meeting and not disqualified from voting, whether or not such member or members constitute a quorum, may
unanimously appoint another qualified member of the Board of Directors to act at the meeting in the place of any absent or
disqualified member. Any such committee, to the extent permitted by law and provided in the resolution establishing such committee,
shall have and may exercise all the powers and authority of the Board of Directors in the management of the business and affairs of
the Corporation, and may authorize the seal of the Corporation to be affixed to all papers which may require it; provided, however,
that no such committee shall have the power or authority to (i) approve, adopt, or recommend to the stockholders any action or
matter (other than the election or removal of directors) expressly required by the DGCL to be submitted to stockholders for
approval, or (ii) adopt, amend, or repeal any of these Bylaws. Each committee shall keep regular minutes and report to the Board of
Directors when required. Notwithstanding anything to the contrary contained in this Article III, the resolution of the Board of
Directors establishing any committee of the Board of Directors and/or the charter of any such committee may establish requirements
or procedures relating to the governance and/or operation of such committee that are different from, or in addition to, those set
forth in these Bylaws and, to the extent that there is any inconsistency between these Bylaws and any such resolution or charter,
the terms of such resolution or charter shall be controlling.
Section 11.
Subcommittees. Unless otherwise provided in the Certificate of Incorporation, these Bylaws, or the resolution of the Board
of Directors designating a committee, such committee may create one or more subcommittees, each subcommittee to consist of one or more
members of the committee, and delegate to a subcommittee any or all of the powers and authority of the committee. Except for references
to committees and members of committees in Section 10 of this Article III, every reference in these Bylaws to a committee of the Board
of Directors or a member of a committee shall be deemed to include a reference to a subcommittee or member of a subcommittee.
Section 12.
Compensation. The directors may be paid their expenses, if any, of attendance at each meeting of the Board of Directors
and may be paid a fixed sum for attendance at each meeting of the Board of Directors or a stated salary for service as director, payable
in cash or securities. No such payment shall preclude any director from serving the Corporation in any other capacity and receiving compensation
therefor. Members of special or standing committees may be allowed like compensation for service as committee members.
Section 13.
Interested Directors. No contract or transaction between the Corporation and one or more of its directors or officers, or
between the Corporation and any other corporation, partnership, association or other organization in which one or more of its directors
or officers are directors or officers or have a financial interest, shall be void or voidable solely for this reason, or solely because
the director or officer is present at or participates in the meeting of the Board of Directors or committee thereof which authorizes the
contract or transaction, or solely because any such director’s or officer’s vote is counted for such purpose if: (i) the material
facts as to the director’s or officer’s relationship or interest and as to the contract or transaction are disclosed or are
known to the Board of Directors or the committee, and the Board of Directors or committee in good faith authorizes the contract or transaction
by the affirmative votes of a majority of the disinterested directors, even though the disinterested directors be less than a quorum;
or (ii) the material facts as to the director’s or officer’s relationship or interest and as to the contract or transaction
are disclosed or are known to the stockholders entitled to vote thereon, and the contract or transaction is specifically approved in good
faith by vote of the stockholders; or (iii) the contract or transaction is fair as to the Corporation as of the time it is authorized,
approved or ratified by the Board of Directors, a committee thereof or the stockholders. Common or interested directors may be counted
in determining the presence of a quorum at a meeting of the Board of Directors or of a committee which authorizes such contract or transaction.
ARTICLE
IV
OFFICERS
Section 1. General.
The officers of the Corporation shall be chosen by the Board of Directors and shall be a President, a Secretary and a Treasurer. The
Board of Directors, in its discretion, also may choose a Chairperson of the Board of Directors (who must be a director) and one or
more Vice Presidents, Assistant Secretaries, Assistant Treasurers and other officers. Any number of offices may be held by the same
person, unless otherwise prohibited by law, the Certificate of Incorporation or these Bylaws. The officers of the Corporation need
not be stockholders of the Corporation nor, except in the case of the Chairperson of the Board of Directors, need such officers be
directors of the Corporation.
Section 2.
Election. The Board of Directors, at its first meeting held after each Annual Meeting of Stockholders, shall elect the officers
of the Corporation who shall hold their offices for such terms and shall exercise such powers and perform such duties as shall be determined
from time to time by the Board of Directors; and each officer of the Corporation shall hold office until such officer’s successor
is elected and qualified, or until such officer’s earlier death, resignation or removal. Any officer elected by the Board of Directors
may be removed at any time by the Board of Directors. Any vacancy occurring in any office of the Corporation shall be filled by the Board
of Directors. The salaries of all officers of the Corporation shall be fixed by the Board of Directors.
Section 3.
Voting Securities Owned by the Corporation. Powers of attorney, proxies, waivers of notice of meeting, consents and other
instruments relating to securities owned by the Corporation may be executed in the name of and on behalf of the Corporation by the President
or any Vice President or any other officer authorized to do so by the Board of Directors and any such officer may, in the name of and
on behalf of the Corporation, take all such action as any such officer may deem advisable to vote in person or by proxy at any meeting
of security holders of any corporation or other entity in which the Corporation may own securities and at any such meeting shall possess
and may exercise any and all rights and power incident to the ownership of such securities and which, as the owner thereof, the Corporation
might have exercised and possessed if present. The Board of Directors may, by resolution, from time to time confer like powers upon any
other person or persons.
Section 4.
Chairperson of the Board of Directors. The Chairperson of the Board of Directors, if there be one, shall preside at all
meetings of the stockholders and of the Board of Directors. The Chairperson of the Board of Directors shall also perform such other duties
and may exercise such other powers as may from time to time be assigned by these Bylaws or by the Board of Directors.
Section 5.
President. The President shall, subject to the oversight and control of the Board of Directors and, if there be one, the
Chairperson of the Board of Directors, have general supervision of the business of the Corporation and shall see that all orders and resolutions
of the Board of Directors are carried into effect. In the absence or disability of the Chairperson of the Board of Directors, or if there
be none, the President shall preside at all meetings of the stockholders and, if the President is also a director, the Board of Directors.
The President shall also perform such other duties and may exercise such other powers as may from time to time be assigned to such officer
by these Bylaws or by the Board of Directors.
Section 6. Vice
Presidents. At the request of the President or in the President’s absence or in the event of the President’s
inability or refusal to act (and if there be no Chairperson of the Board of Directors), the Vice President, or the Vice Presidents
if there are more than one (in the order designated by the Board of Directors), shall perform the duties of the President, and when
so acting, shall have all the powers of and be subject to all the restrictions upon the President. Each Vice President shall perform
such other duties and have such other powers as the Board of Directors from time to time may prescribe. If there be no Chairperson
of the Board of Directors and no Vice President, the Board of Directors shall designate the officer of the Corporation who, in the
absence of the President or in the event of the inability or refusal of the President to act, shall perform the duties of the
President, and when so acting, shall have all the powers of and be subject to all the restrictions upon the President.
Section 7.
Secretary. The Secretary shall attend all meetings of the Board of Directors and all meetings of the stockholders and record
all the proceedings thereat in a book or books to be kept for that purpose; the Secretary shall also perform like duties for committees
of the Board of Directors when required. The Secretary shall give, or cause to be given, notice of all meetings of the stockholders and
special meetings of the Board of Directors, and shall perform such other duties as may be prescribed by the Board of Directors, the Chairperson
of the Board of Directors or the President, under whose supervision the Secretary shall be. If the Secretary shall be unable or shall
refuse to cause to be given notice of all meetings of the stockholders and special meetings of the Board of Directors, and if there be
no Assistant Secretary, then either the Board of Directors or the President may choose another officer to cause such notice to be given.
The Secretary shall have custody of the seal of the Corporation and the Secretary or any Assistant Secretary, if there be one, shall have
authority to affix the same to any instrument requiring it and when so affixed, it may be attested by the signature of the Secretary or
by the signature of any such Assistant Secretary. The Board of Directors may give general authority to any other officer to affix the
seal of the Corporation and to attest to the affixing by such officer’s signature. The Secretary shall see that all books, reports,
statements, certificates and other documents and records required by law to be kept or filed are properly kept or filed, as the case may
be.
Section 8.
Treasurer. The Treasurer shall have the custody of the Corporation’s funds and securities and shall keep full and
accurate accounts of receipts and disbursements in books belonging to the Corporation and shall deposit all moneys and other valuable
effects in the name and to the credit of the Corporation in such depositories as may be designated by the Board of Directors. The Treasurer
shall disburse the funds of the Corporation as may be ordered by the Board of Directors or the President taking proper vouchers for such
disbursements, and shall render to the President and the Board of Directors, at its regular meetings, or when the Board of Directors so
requires, an account of all transactions as Treasurer and of the financial condition of the Corporation.
Section 9.
Assistant Secretaries. Assistant Secretaries, if there be any, shall perform such duties and have such powers as from time
to time may be assigned to them by the Board of Directors, the President, any Vice President, if there be one, or the Secretary, and in
the absence of the Secretary or in the event of the Secretary’s inability or refusal to act, shall perform the duties of the Secretary,
and when so acting, shall have all the powers of and be subject to all the restrictions upon the Secretary.
Section 10.
Assistant Treasurers. Assistant Treasurers, if there be any, shall perform such duties and have such powers as from time
to time may be assigned to them by the Board of Directors, the President, any Vice President, if there be one, or the Treasurer, and
in the absence of the Treasurer or in the event of the Treasurer’s inability or refusal to act, shall perform the duties of the
Treasurer, and when so acting, shall have all the powers of and be subject to all the restrictions upon the Treasurer.
Section 11.
Other Officers. Such other officers as the Board of Directors may choose shall perform such duties and have such powers
as from time to time may be assigned to them by the Board of Directors. The Board of Directors may delegate to any other officer of the
Corporation the power to choose such other officers and to prescribe their respective duties and powers.
ARTICLE
V
STOCK
Section 1.
Shares of Stock. The shares of capital stock of the Corporation shall be represented by a certificate, unless and until
the Board of Directors of the Corporation adopts a resolution permitting shares to be uncertificated. Every holder of capital stock of
the Corporation theretofore represented by certificates shall be entitled to have a certificate for shares of capital stock of the Corporation
signed by, or in the name of, the Corporation by any two (2) authorized officers of the Corporation, certifying the number of shares owned
by such stockholder in the Corporation. The Corporation shall not have power to issue a certificate in bearer form.
Section 2.
Signatures. Any or all of the signatures on a certificate may be a facsimile. In case any officer, transfer agent or registrar
who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent or
registrar before such certificate is issued, it may be issued by the Corporation with the same effect as if such person were such officer,
transfer agent or registrar at the date of issue.
Section 3.
Lost Certificates. The Board of Directors may direct a new certificate or uncertificated shares to be issued in place of
any certificate theretofore issued by the Corporation alleged to have been lost, stolen or destroyed, upon the making of an affidavit
of that fact by the person claiming the certificate of stock to be lost, stolen or destroyed. When authorizing such issuance of a new
certificate or uncertificated shares, the Board of Directors may, in its discretion and as a condition precedent to the issuance thereof,
require the owner of such lost, stolen or destroyed certificate, or such owner’s legal representative, to advertise the same in
such manner as the Board of Directors shall require and/or to give the Corporation a bond in such sum as it may direct as indemnity against
any claim that may be made against the Corporation on account of the alleged loss, theft or destruction of such certificate or the issuance
of such new certificate or uncertificated shares.
Section 4. Transfers.
Stock of the Corporation shall be transferable in the manner prescribed by applicable law and in these Bylaws. Transfers of stock
shall be made on the books of the Corporation, and in the case of certificated shares of stock, only by the person named in the
certificate or by such person’s attorney lawfully constituted in writing and upon the surrender of the certificate therefor,
properly endorsed for transfer and payment of all necessary transfer taxes; or, in the case of uncertificated shares of stock, upon
receipt of proper transfer instructions from the registered holder of the shares or by such person’s attorney lawfully
constituted in writing, and upon payment of all necessary transfer taxes and compliance with appropriate procedures for transferring
shares in uncertificated form; provided, however, that such surrender and endorsement, compliance or payment of taxes shall not be
required in any case in which the officers of the Corporation shall determine to waive such requirement. With respect to
certificated shares of stock, every certificate exchanged, returned or surrendered to the Corporation shall be marked
“Cancelled,” with the date of cancellation, by the Secretary or Assistant Secretary of the Corporation or the transfer
agent thereof. No transfer of stock shall be valid as against the Corporation for any purpose until it shall have been entered in
the stock records of the Corporation by an entry showing from and to whom transferred.
Section 5.
Dividend Record Date. In order that the Corporation may determine the stockholders entitled to receive payment of any dividend
or other distribution or allotment of any rights or the stockholders entitled to exercise any rights in respect of any change, conversion
or exchange of stock, or for the purpose of any other lawful action, the Board of Directors may fix a record date, which record date shall
not precede the date upon which the resolution fixing the record date is adopted, and which record date shall be not more than sixty (60)
days prior to such action. If no record date is fixed, the record date for determining stockholders for any such purpose shall be at the
close of business on the day on which the Board of Directors adopts the resolution relating thereto.
Section 6.
Record Owners. The Corporation shall be entitled to recognize the exclusive right of a person registered on its books as
the owner of shares to receive dividends, and to vote as such owner, and to hold liable for calls and assessments a person registered
on its books as the owner of shares, and shall not be bound to recognize any equitable or other claim to or interest in such share or
shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise required by
law.
Section 7.
Transfer and Registry Agents. The Corporation may from time to time maintain one or more transfer offices or agencies and
registry offices or agencies at such place or places as may be determined from time to time by the Board of Directors.
ARTICLE
VI
NOTICES
Section 1. Notices.
Whenever written notice is required by law, the Certificate of Incorporation or these Bylaws, to be given to any director, member of
a committee or stockholder, such notice may be given in writing directed to such director’s, committee member’s or
stockholder’s mailing address (or by electronic transmission directed to such director’s, committee member’s or
stockholder’ electronic mail address, as applicable) as it appears on the records of the Corporation and shall be given: (a)
if mailed, when the notice is deposited in the United States mail, postage prepaid, (b) if delivered by courier service, the earlier
of when the notice is received or left at such director’s, committee member’s or stockholder’s address or (c) if
given by electronic mail, when directed to such director’s, committee member’s or stockholder’s electronic mail
address unless such director, committee member or stockholder has notified the corporation in writing or by electronic transmission
of an objection to receiving notice by electronic mail or such notice is prohibited under applicable law, the Certificate of
Incorporation or these Bylaws. Without limiting the manner by which notice otherwise may be given effectively to stockholders, but
subject to Section 232(e) of the DGCL, any notice to stockholders given by the Corporation under applicable law, the Certificate of
Incorporation or these Bylaws shall be effective if given by a form of electronic transmission consented to by the stockholder to
whom the notice is given. Any such consent shall be revocable by the stockholder by written notice or electronic transmission to the
Corporation. Notice given by electronic transmission, as described above, shall be deemed given: (i) if by a posting on an
electronic network, together with separate notice to the stockholder of such specific posting, upon the later of (A) such posting
and (B) the giving of such separate notice; and (ii) if by any other form of electronic transmission, when directed to the
stockholder. Notwithstanding the foregoing, a notice may not be given by an electronic transmission from and after the time that (i)
the Corporation is unable to deliver by such electronic transmission two consecutive notices given by the Corporation and (ii) such
inability becomes known to the Secretary or an Assistant Secretary of the Corporation or to the transfer agent, or other person
responsible for the giving of notice, provided, however, the inadvertent failure to discover such inability shall not
invalidate any meeting or other action.
Section 2.
Waivers of Notice. Whenever any notice is required, by applicable law, the Certificate of Incorporation or these Bylaws,
to be given to any director, member of a committee or stockholder, a waiver thereof in writing, signed by the person or persons entitled
to notice, or a waiver by electronic transmission by the person or persons entitled to notice, whether before or after the time stated
therein, shall be deemed equivalent thereto. Attendance of a person at a meeting, present in person or represented by proxy, shall constitute
a waiver of notice of such meeting, except where the person attends the meeting for the express purpose of objecting at the beginning
of the meeting to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted
at, nor the purpose of, any Annual or Special Meeting of Stockholders or any regular or special meeting of the directors or members of
a committee of directors need be specified in any written waiver of notice or any waiver by electronic transmission unless so required
by law, the Certificate of Incorporation or these Bylaws.
ARTICLE
VII
GENERAL PROVISIONS
Section 1. Dividends.
Dividends upon the capital stock of the Corporation, subject to the requirements of the DGCL and the provisions of the Certificate
of Incorporation, if any, may be declared by the Board of Directors at any regular or special meeting of the Board of Directors (or
any action by written consent in lieu thereof in accordance with Section 8 of Article III hereof), and may be paid in cash, in
property, or in shares of the Corporation’s capital stock. Before payment of any dividend, there may be set aside out of any
funds of the Corporation available for dividends such sum or sums as the Board of Directors from time to time, in its absolute
discretion, deems proper as a reserve or reserves to meet contingencies, or for purchasing any of the shares of capital stock,
warrants, rights, options, bonds, debentures, notes, scrip or other securities or evidences of indebtedness of the Corporation, or
for equalizing dividends, or for repairing or maintaining any property of the Corporation, or for any proper purpose, and the Board
of Directors may modify or abolish any such reserve.
Section 2.
Disbursements. All checks or demands for money and notes of the Corporation shall be signed by such officer or officers
or such other person or persons as the Board of Directors may from time to time designate.
Section 3.
Fiscal Year. The fiscal year of the Corporation shall be fixed by resolution of the Board of Directors.
Section 4.
Corporate Seal. The corporate seal shall have inscribed thereon the name of the Corporation, the year of its organization
and the words “Corporate Seal, Delaware”. The seal may be used by causing it or a facsimile thereof to be impressed or affixed
or reproduced or otherwise.
ARTICLE
VIII
INDEMNIFICATION
Section 1.
Indemnification of Officers and Directors. Each person who was or is made a party to, or is threatened to be made a party
to, or is involved in any action, suit or proceeding, whether civil, criminal, administrative or investigative (each, a “Proceeding”),
by reason of the fact that such person (or a person of whom such person is the legal representative), is or was a director or officer
of the Corporation or is or was serving at the request of the Corporation as a director or officer of another corporation, or of a partnership,
joint venture, trust or other enterprise, including service with respect to employee benefit plans, shall be indemnified and held harmless
by the Corporation to the fullest extent permitted by the DGCL, against all expenses, liability and loss (including attorneys’ fees,
judgments, fines, ERISA excise taxes and penalties and amounts paid or to be paid in settlement) reasonably incurred or suffered by such
person in connection therewith, provided such person acted in good faith and in a manner which the person reasonably believed to be in
or not opposed to the best interests of the Corporation, and, with respect to any criminal action or Proceeding, had no reasonable cause
to believe the person’s conduct was unlawful. Such indemnification shall continue as to a person who has ceased to be a director
or officer and shall inure to the benefit of such person’s heirs, executors and administrators. Notwithstanding the foregoing, the
Corporation shall indemnify any such person seeking indemnity in connection with a Proceeding (or part thereof) initiated by such person
only if such Proceeding (or part thereof) was authorized by the Board of Directors of the Corporation.
Section 2. Advance
of Expenses. The Corporation shall pay all expenses (including attorneys’ fees) incurred by such a director or officer in
defending any such Proceeding as they are incurred in advance of its final disposition; provided, however, that if the DGCL then so
requires, the payment of such expenses incurred by such a director or officer in advance of the final disposition of such Proceeding
shall be made only upon delivery to the Corporation of an undertaking, by or on behalf of such director or officer, to repay all
amounts so advanced if it should be determined ultimately that such director or officer is not entitled to be indemnified under this
Article VIII or otherwise; and provided, further, that the Corporation shall not be required to advance any expenses to a person
against whom the Corporation directly brings a claim, in a Proceeding, alleging that such person has breached such person’s
duty of loyalty to the Corporation, committed an act or omission not in good faith or that involves intentional misconduct or a
knowing violation of law, or derived an improper personal benefit from a transaction.
Section 3.
Non-Exclusivity of Rights. The rights conferred on any person in this Article VIII shall not be exclusive of any other right
that such person may have or hereafter acquire under any statute, provision of the Certificate of Incorporation, these Bylaws, agreement,
vote or consent of disinterested directors, or otherwise, it being the policy of the Corporation that indemnification of the persons specified
in Section 1 of this Article VIII shall be made to the fullest extent permitted by law. Additionally, nothing in this Article VIII shall
limit the ability of the Corporation, in its discretion, to indemnify or advance expenses to persons whom the Corporation is not obligated
to indemnify or advance expenses pursuant to this Article VIII.
Section 4.
Indemnification Contracts. The Board of Directors is authorized to cause the Corporation to enter into indemnification contracts
with any director, officer, employee or agent of the Corporation, or any person serving at the request of the Corporation as a director,
officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, including employee benefit plans,
providing indemnification rights to such person. Such rights may be greater than those provided in this Article VIII.
Section 5.
Insurance. The Corporation may purchase and maintain insurance on behalf of any person who is or was a director or officer
of the Corporation, or is or was a director or officer of the Corporation serving at the request of the Corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or other enterprise against any liability asserted against
such person and incurred by such person in any such capacity, or arising out of such person’s status as such, whether or not the
Corporation would have the power or the obligation to indemnify such person against such liability under the provisions of this Article
VIII.
Section 6.
Effect of Amendment. Any amendment, repeal or modification of any provision of this Article VIII shall be prospective only,
and shall not adversely affect any right or protection conferred on a person pursuant to this Article VIII and existing at the time of
such amendment, repeal or modification.
ARTICLE
IX
AMENDMENTS
Section 1. Amendments.
These Bylaws may be altered, amended or repealed, in whole or in part, or new Bylaws may be adopted by the stockholders or by the Board
of Directors; provided, however, that notice of such alteration, amendment, repeal or adoption of new Bylaws be contained in the notice
of a meeting of the stockholders or Board of Directors, as the case may be, called for the purpose of acting upon any proposed alteration,
amendment, repeal or adoption of new Bylaws. All such alterations, amendments, repeals or adoptions of new Bylaws must be approved by
either the holders of two-thirds of the voting power of the Corporation’s outstanding capital stock entitled to vote thereon or
by a majority of the entire Board of Directors then in office. Any amendment to these Bylaws adopted by stockholders which specifies
the votes that shall be necessary for the election of directors shall not be further amended or repealed by the Board of Directors.
Section 2. Entire Board of
Directors. As used in this Article X and in these Bylaws generally, the term “entire Board of Directors” means the total
number of directors which the Corporation would have if there were no vacancies.
Exhibit 4.1
|
.ZQ|CERT#|COY|CLS|RGSTRY|ACCT#|TRANSTYPE|RUN#|TRANS#
Exhibit 4.1 CLASS A COMMON STOCK PO BOX 505006, Louisville, KY 40233-5006 MR A SAMPLE DESIGNATION (IF ANY) ADD 1 ADD 2 ADD 3 ADD
4 CLASS A COMMON STOCK Certificate Number ZQ00000000 THIS CERTIFIES THAT is the owner of SQUARESPACE, INC. INCORPORATED UNDER THE
LAWS OF THE STATE OF DELAWARE ** Mr. Alexander David Sample **** Mr. Alexander David Sample **** Mr. Alexander David Sample ****
Mr. Alexander David Sample **** Mr. Alexander David Sample MR. SAMPLE & MRS. SAMPLE & MR. SAMPLE & MRS. SAMPLE **** Mr.
Alexander David Sample **** Mr. Alexander David Sample **** Mr. Alexander David Sample **** Mr. Alexander David Sample **** Mr. Alexander
David Sample **** Mr. Alexander David Sample **** Mr. Alexander David Sample **** Mr. Alexander David Sample **** Mr. Alexander David
Sample **** Mr. Alexander David Sample **** Mr. Alexander David Sample **** Mr. Alexander David Sample **** Mr. Alexander David Sample
**** Mr. Alexander David Sample **** Mr. Alexander David Sample **** Mr. Alexander David Sample **** Mr. Alexander David Sample ****
Mr. Alexander David Sample **** Mr. Alexander David Sample **** Mr. Alexander David Sample **** Mr. Alexander David Sample **** Mr.
Alexander David Sample **** Mr. Alexander David Sample **** Mr. Sample **** Mr. Sample **000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares***
***ZERO HUNDRED THOUSAND 00000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****00
0000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000
ZERO HUNDRED AND ZERO*** 00**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****00000
0**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000
**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000*
*Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**
Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**S
Shares * * 000000 * * * * * * * * * * * * * * * * * * * * * 000000 * * * * * * * * * * * * * * * * * * * * * 000000 * * * * * * *
* * * * * * * * * * * * * * 000000 * * * * * * * * * * * * * * * * * * * * * 000000 * * * * * * * * * * * * * * SEE REVERSE FOR CERTAIN
DEFINITIONS CUSIP XXXXXX XX X THIS CERTIFICATE IS TRANSFERABLE IN CITIES DESIGNATED BY THE TRANSFER AGENT, AVAILABLE ONLINE AT www.computershare.com
FULLY-PAID AND NON-ASSESSABLE SHARES OF CLASS A COMMON STOCK OF CUSIP/IDENTIFIER Holder ID Insurance Value Number of Shares DTC Certificate
Numbers 1234567890/1234567890 1234567890/1234567890 1234567890/1234567890 1234567890/1234567890 1234567890/1234567890 1234567890/1234567890
Total Transaction Witness the facsimile seal of the Company and the facsimile signatures of its duly authorized officers. XXXXXX
XX X XXXXXXXXXX 1,000,000.00 123456 12345678 123456789012345 Num/No. Denom. DD-MMM-YYYY 1 2 3 4 5 6 President COUNTERSIGNED AND REGISTERED:
COMPUTERSHARE TRUST COMPANY, N.A. TRANSFER AGENT AND REGISTRAR, 1 2 3 4 5 6 Total 1 2 3 4 5 6 7 Secretary By AUTHORIZED SIGNATURE
|
Exhibit 10.1
VOTING AND SUPPORT AGREEMENT
THIS VOTING AND SUPPORT AGREEMENT
(as hereafter amended or supplemented, this “Agreement”) is dated as of [●], 2021 and effective as of
the Initial Public Event (as defined below) (the “Effective Date”), by and among SQUARESPACE, INC., a Delaware
corporation (the “Company”), and the other individuals and entities from time to time party hereto (individually
referred to herein as a “Party” and are collectively referred to herein as the “Parties”).
RECITALS
WHEREAS, the Company,
General Atlantic (as defined below), the Founder (as defined below), entities affiliated with the Founder and certain other parties are
parties to that certain Stockholders Agreement, dated March 15, 2021 (as amended, the “Prior Agreement”).
WHEREAS, in connection
with the Company’s proposed Initial Public Event, the undersigned desire to enter into this Agreement for the purpose of providing
for certain rights and obligations of the Company, General Atlantic, the Founder and entities affiliated with the Founder upon and after
the consummation of the Initial Public Event as contemplated by the Prior Agreement.
NOW, THEREFORE, in consideration
of the mutual covenants and agreements contained in this Agreement, and for other good and valuable consideration the receipt and sufficiency
of which are hereby acknowledged, the Parties hereby agree as follows:
1. Definitions. In addition to the definitions of capitalized terms specified elsewhere in this Agreement, the following
capitalized terms as used in this Agreement shall have the meanings set forth below:
1.1
“1934 Act”
means the Securities Exchange Act of 1934, as amended.
1.2
“Act”
means the Securities Act of 1933, as amended.
1.3
“Affiliate”
means, with respect to any Person, any other Person (other than the Company) directly or indirectly controlling or controlled by or under
direct or indirect common control, or advised by common investment management, with such Person. For the purposes of this definition,
“control,” when used with respect to any Person, means (a) the ownership, directly or indirectly, of more than fifty percent
(50%) of the voting securities of such Person or (b) the power to otherwise direct the management and policies of such Person whether
by contract or otherwise.
1.4
“Board”
means the Company’s Board of Directors.
1.5
“Certificate”
means the Company’s Amended and Restated Certificate of Incorporation, as may be amended from time to time.
1.6
“Change of Control Transaction”
means (i) the closing of the sale, transfer or other disposition of all or substantially
all of (1) the assets of the corporation or (2) the assets of one or more direct or indirect subsidiaries
of the corporation constituting all or substantially all of the assets of the corporation (determined on a consolidated basis with all
of the corporation’s direct and indirect subsidiaries), provided that any sale, transfer or other disposition of assets exclusively
between or among the corporation and any direct or indirect subsidiary or subsidiaries of the corporation shall not be deemed a “Change
of Control Transaction” and (ii) the merger, consolidation, business combination or other similar transaction of the corporation
with or into any other entity, provided, that any such merger, consolidation,
business combination or other similar transaction in which the shares of capital stock of the corporation immediately prior to such merger,
consolidation, business combination or other similar transaction continue to represent a majority of the voting power of the surviving
entity (or, if the surviving entity is a wholly owned subsidiary, its parent) immediately after such merger, consolidation,
business combination or other similar transaction (provided that, for the purpose of this Section 1.6, all stock, options, warrants,
purchase rights or other securities exercisable for or convertible into Common Stock outstanding immediately prior to such merger, consolidation,
business combination or other similar transaction shall be deemed to be outstanding immediately prior to such merger, consolidation,
business combination or other similar transaction and, if applicable, converted or exchanged in such merger, consolidation, business
combination or other similar transaction on the same terms as the actual outstanding shares of capital stock are converted or exchanged)
shall not be deemed a “Change of Control Transaction.”
1.7
“Common Stock”
means, collectively, the Class A Common Stock of the Company (the “Class A Common Stock”),
the Class B Common Stock of the Company (the “Class B Common Stock”) and the
Class C Common Stock of the Company.
1.8
“Founder”
means Anthony Casalena.
1.9
“Founder Voting Persons”
means the Founder (as defined below) and each of the Founder’s Permitted Transferees (as defined in the Certificate) over whom the
Founder has Voting Control (as defined in the Certificate).
1.10
“General Atlantic”
means General Atlantic (SQRS) LP (formerly known as General Atlantic (Square) LP), General Atlantic (SQRS II), L.P. and their respective
related parties.
1.11
“Initial Offering”
means the Company’s first sale of its Class A Common Stock in a firm commitment underwritten public offering pursuant to a registration
statement on Form S-1 under the Act after which the Class A Common Stock will be listed on a Qualified Exchange.
1.12
“Initial Public Event”
means the earliest of (i) the closing of the Initial Offering or (ii) the effectiveness of a registration statement under the Act that
registers shares of the Company’s Class A Common Stock in a ‘direct listing’, in each case (i) or (ii) where the Class A
Common Stock and Class B Common Stock are each a “covered security” as described in Section 18(b) of the Act.
1.13 “Person”
means an individual, partnership, corporation, business trust, joint stock company, trust, unincorporated association, joint venture,
limited liability company or any other entity of whatever nature.
1.14 “Qualified
Exchange” shall mean the New York Stock Exchange LLC, the Nasdaq Stock Market LLC, or any
other national securities exchange registered pursuant to Section 6 of the 1934 Act.
1.15
“Register,”
“registered,” and “registration”
refer to a registration effected by preparing and filing a registration statement or similar document in compliance with the Act, and
the declaration or ordering of effectiveness of such registration statement or document.
1.16
“SEC”
shall mean the Securities and Exchange Commission.
2.
Post-IPO Board Rights.
2.1
In connection with an Initial Public Event, General Atlantic shall have the
right to nominate one (1) director (the “Post-IPO GA Nominee”).
Subject to the Board’s fiduciary obligations to the Company and its stockholders, the Company shall, to the fullest extent permitted
by law, include in the slate of nominees recommended by the Board at any meeting of stockholders called for the purpose of electing directors
(occurring before, and excluding, the Company’s third annual meeting following the Initial Public Event (the “Third
Annual Meeting”)) the Post-IPO GA Nominee, and use its commercially reasonable best efforts
to cause the election of such designee to the Board, including nominating the Post-IPO GA Nominee to be elected as a director, recommending
such individual’s election and soliciting proxies or consents in favor thereof. The Company, the Founder and General Atlantic shall
take and cause the Company and the Board to take all corporate action as shall be necessary to implement the provisions of this Section
2.1 to the extent applicable.
2.2
The Founder and each Founder Voting Person party to this Agreement hereby
agree on behalf of themselves and all Founder Voting Persons, to hold all of such Common Stock subject to, and to vote such Common Stock
at a regular or special meeting of stockholders called for the purpose of the election or removal of directors on the Board, or by written
consent for the purpose of the election or removal of directors on the Board (in each case, occurring before, and excluding, the Third
Annual Meeting), in favor of the appointment of the Post-IPO GA Nominee to the Board. The Founder and each Founder Voting Person party
to this Agreement (each, a “Filing Party”)
agrees to provide such information to the Company and each other Filing Party regarding such Filing Party, its transactions in securities
of the Company, its ownership of securities of the Company and any other information that is reasonably necessary to permit the Company
and each other Filing Party to timely and accurately make all filings and submissions to the SEC that are required to be made by the
Company and such other Filing Parties (such information “Filing Information”).
Without limiting the foregoing, each Filing Party agrees (A) to provide to the Company and each other Filing Party, promptly following
the end of each calendar year (and in no event more than 20 days thereafter) such Filing Information with respect to such Filing Party
as is necessary to permit each other Filing Party to timely and accurately file a Schedule 13G with the SEC, (B) to provide to the Company
and each other Filing Party, promptly following any transaction that would require any Filing Party to file a Schedule 13D with the SEC
(and in no event more than 1 business day following such transaction),
such Filing Information about such Filing Party as is necessary to permit each other Filing Party to timely and accurately file a Schedule
13D with the SEC and (C) to work together in good faith with respect to all submissions and filings with the SEC that are required to
contain Filing Information of a Filing Party and to enter into such other agreements as the Filing Parties may deem to be necessary or
desirable to ensure that each Filing Party has such information about the other Filing Parties as is necessary to ensure that each Filing
Party may timely and accurately make all filings and submissions with the SEC that are required of such Filing Party.
2.3
So long as the Post-IPO GA Nominee is a member of the Board pursuant to Section
2.1 above, then the Post-IPO GA Nominee shall be entitled in his or her discretion to be a member of any Board committee, subject to the
requirements of the national stock exchange on which the securities of the Company are listed in connection with an Initial Public Event
and the rules and regulations of the SEC (including, without limitation, the relevant independence standards of such national stock exchange
or the rules and regulations of the SEC).
2.4
So long as the Post-IPO GA Nominee is entitled to be a member of the Board
pursuant to Section 2.1 above, then General Atlantic may, by written notice to the Company at any time prior to December 31 of the year
preceding the next meeting of the Company’s stockholders at which the Post-IPO GA Nominee is to be elected, designate a replacement
or successor to the Post-IPO GA Nominee, in which case the provisions of Section 2.1 shall apply to such replacement or successor. In
addition, nothing in this Agreement shall prohibit the Post-IPO GA Nominee from being removed for cause; provided, that in the
event of such removal for cause or upon any other removal or resignation of the Post-IPO GA Nominee, General Atlantic may, by written
notice to the Company, designate a replacement Post-IPO GA Nominee (who may not be the person removed for cause, if applicable). In such
event, (1) if the Post-IPO GA Nominee is entitled to be a member of the Board pursuant to Section 2.1 above, then the provisions of Section
2.1 shall apply to such replacement Post-IPO GA Nominee and (2) the Company shall use its commercially reasonable best efforts to cause
the Board to fill the vacancy created by such removal with the replacement Post-IPO GA Nominee designated by General Atlantic pursuant
to Section 223 of the General Corporation Law of the State of Delaware as promptly as practicable prior to the next meeting of the Company’s
stockholders at which the Post-IPO GA Nominee is to be elected.
2.5
This Section 2 shall terminate and have no further force or effect upon the
earliest to occur of (1) such time that General Atlantic elects, in its sole discretion, to terminate its rights hereunder, (2) such time
that General Atlantic ceases to own at least 9,772,914 shares of Common Stock (as adjusted for any stock splits, stock dividends, combinations,
subdivisions, recapitalizations or the like) (the “GA Post-IPO Share Threshold”),
(3) immediately prior to the Third Annual Meeting (the “Post-IPO Expiration Time”)
or (4) immediately prior to the consummation of a Change of Control Transaction. Notwithstanding the foregoing, all obligations of the
Filing Parties with respect to Filing Information set forth in Section 2.1 shall survive any such termination to the extent applicable.
3.
Post-Expiration Obligations.
3.1
If Section 2 has expired pursuant to Section 2.5(3), then upon written notice by General Atlantic
to the Company at any time prior to December 31 of the year preceding the next meeting of the Company’s stockholders at which the
Post-IPO GA Nominee would have been elected but for such expiration, and subject to the Board’s fiduciary obligations to the Company
and its stockholders, the Company shall, to the fullest extent permitted by law, include in the slate of nominees recommended by the
Board at any meeting of stockholders called for the purpose of electing directors one (1) director nominated by General Atlantic (the
“Post-Expiration GA Nominee”), and use its commercially reasonable best efforts
to cause the election of such designee to the Board, including nominating the Post-Expiration GA Nominee to be elected as a director,
recommending such individual’s election and soliciting proxies or consents in favor thereof.
3.2
Subject to the terms hereof, if after the Post-IPO Expiration Time, the Post-Expiration
GA Nominee is entitled to be nominated for election to the Board pursuant to Section 3.1 and is not elected to serve on the Board, then
the Company shall invite the Post-Expiration GA Nominee to attend all meetings of its Board (and any committee thereof) in a nonvoting
observer capacity and, in this respect, shall give the Post-Expiration GA Nominee copies of all notices, minutes, consents and other materials
that it provides to its directors subject to the Post-Expiration GA Nominee signing a customary non-disclosure and board observer agreement.
The Company shall promptly reimburse the Post-Expiration GA Nominee for all reasonable out-of-pocket expenses incurred in attending meetings
of the Board or any committee thereof.
3.3
This Section 3 shall terminate and have no further force or effect upon the
earliest to occur of (1) such time that General Atlantic elects, in its sole discretion, to terminate its rights hereunder, (2) such time
that General Atlantic ceases to own at least the GA Post-IPO Share Threshold, or (3) immediately prior to the consummation of a
Change of Control Transaction. For the avoidance of doubt, the holders of the Common Stock (in their capacities
as such) shall have no obligations pursuant to Section 3.1 (including, without limitation, any obligation to vote in favor of the Post-Expiration
GA Nominee).
4.
Miscellaneous.
4.1
Specific Performance and Injunctive Relief. Each
Party hereto acknowledges and agrees that in the event of any breach of Sections 2 and 3, the non-breaching Party or Parties may be irreparably
harmed and may not be made whole by monetary damages, and therefore each Party hereby waives the defense in any action for specific performance
or injunctive relief that a remedy at law would be adequate, and such Party shall not offer in any such action or proceeding the claim
or defense that such remedy as law exists. Each Party hereto further agrees that all other Parties, in addition to any other remedy to
which they may be entitled at law or in equity, shall be entitled to compel specific performance of this Agreement and to obtain injunctive
relief in any action instituted in a court of proper jurisdiction. Each Party hereto agrees that in any action for specific performance
or injunctive relief the nonbreaching Party shall not be required to provide any bond or other security in connection with any such decree,
order or injunction or in connection with any related action or proceeding.
4.2
Entire Agreement; Amendments and Waivers. This
Agreement constitutes, as of the Effective Date, the entire agreement and understanding of the Parties in respect of the subject matter
contained in this Agreement, and there are no restrictions, promises, representations, warranties, covenants
or undertakings with respect to the subject matter of this Agreement other than those expressly set forth or referred to in this Agreement.
This Agreement, as of the Effective Date, supersedes all prior agreements and understandings between the Parties with respect to the
subject matter of this Agreement. Any term of this Agreement may be amended and the observance of any term of this Agreement may be waived
(either generally or in a particular instance and either retroactively or prospectively) only with the written consent of (a) the Company,
(b) General Atlantic and (c) prior to the Post-IPO Expiration Time, the Founder.
4.3
Notices. All notices and other communications given
or made pursuant hereto shall be in writing and shall be deemed effectively given: (a) upon personal delivery to the party to be notified;
(b) when sent by confirmed electronic mail or facsimile if sent during normal business hours of the recipient; if not, then on the next
business day; (c) three (3) days after having been sent by registered or certified mail (or applicable international equivalent), return
receipt requested, postage prepaid; or (d) one (1) business day (as such term is applicable in New York, New York) after deposit with
an internationally recognized overnight courier, specifying next business day (as such term is applicable in New York, New York) delivery,
with written verification of receipt. All communications shall be sent to the respective parties at the addresses set forth on the signature
pages attached hereto (or at such other addresses as shall be specified by notice given in accordance with this Section 4.3).
4.4
Applicable Law. This Agreement shall be governed
by and construed in accordance with the laws of the State of Delaware, without regard to the principles of conflicts of law of such state.
4.5
Severability. The invalidity, illegality or unenforceability
of one or more of the provisions of this Agreement in any jurisdiction shall not affect the validity, legality or enforceability of the
remainder of this Agreement in such jurisdiction or the validity, legality or enforceability of this Agreement, including any such provision,
in any other jurisdiction, it being intended that all rights and obligations of the Parties under this Agreement shall be enforceable
to the fullest extent permitted by law.
4.6
Successors and Assigns. The provisions of this
Agreement shall be binding upon and inure to the benefit of the Parties and their respective heirs, successors and permitted assigns.
Except an assignment by a Party to a subsidiary, parent, partner, member, limited partner, retired partner, retired member, Affiliate
or stockholder of, or venture capital or private equity fund advised by or under common investment management with, a Party, neither this
Agreement, nor any of the covenants and agreements herein or rights, interests or obligations hereunder may be assigned or delegated by
any Party hereto without the prior written consent of the other Party or Parties hereto.
4.7
Defaults. A default by any Party in such party’s compliance with any of the terms
or conditions of this Agreement or performance of any of the obligations of such party under this Agreement shall not constitute or excuse
a default by any other party.
4.8
Recapitalization, Exchanges, Etc. The
provisions of this Agreement shall apply, to the full extent set forth in this Agreement, to any and all shares of capital stock of the
Company which may be issued in respect of, in exchange for, or in substitution of the shares, by reason
of a stock dividend, recapitalization, reclassification or the like.
4.9
Expenses. If any action at law or in equity is
necessary to enforce or interpret the terms of this Agreement, the prevailing party shall be entitled to reasonable attorneys’ fees,
costs and necessary disbursements in addition to any other relief to which such party may be entitled.
4.10
Counterparts. This Agreement may be executed in
two or more counterparts, each of which shall be deemed an original, but all of which shall constitute one and the same Agreement. Signatures
may be exchanged by telecopy, with original signatures to follow. Each Party agrees that it will be bound by its own telecopied signature
and that it accepts the telecopied signatures of the other parties to this Agreement.
4.11 No Third Party Beneficiaries. This Agreement shall
be binding and inure solely to the benefit of each Party, and nothing in this Agreement, expressly or implied, is intended to or shall
confer upon any other Person any right, benefit or remedy of any nature whatsoever under or by reason of this Agreement.
4.12
Captions. The captions, headings and arrangements
used in this Agreement are for convenience only and do not in any way limit or amplify the terms and provisions hereof.
4.13
Further Instruments and Actions. The Parties agree
to execute such further instruments and to take such further action as may reasonably be necessary to carry out the intent of this Agreement.
IN WITNESS WHEREOF,
the undersigned has executed this Agreement as of the date written below.
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THE COMPANY:
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SQUARESPACE, INC.
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By:
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Name:
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Title:
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Signature Page to Squarespace,
Inc.
Voting and Support Agreement
IN WITNESS WHEREOF,
the undersigned has executed this Agreement as of the date written below.
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GENERAL ATLANTIC (SQRS) LP
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By:
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General Atlantic (SPV) GP, LLC, its general Partner
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By:
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General Atlantic LLC, its Sole Member
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By:
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Name:
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Title:
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Date:
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GENERAL ATLANTIC (SQRS II), L.P.
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By:
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General Atlantic (SPV) GP, LLC, its general Partner
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By:
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General Atlantic LLC, its Sole Member
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By:
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Name:
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Signature Page to Squarespace,
Inc.
Voting and Support Agreement
IN WITNESS WHEREOF,
the undersigned has executed this Agreement as of the date written below.
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ANTHONY CASALENA
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By:
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Date:
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ANTHONY CASALENA REVOCABLE
TRUST
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By:
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Name:
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Anthony Casalena
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Title:
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Trustee
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Date:
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ANTHONY CASALENA 2019 FAMILY TRUST
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By:
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Name:
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Anthony Casalena
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Title:
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Trustee
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Signature Page to Squarespace,
Inc.
Voting and Support Agreement
Exhibit 10.2
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT
(as hereafter amended or supplemented, this “Agreement”) is dated as of [●], 2021, by and among SQUARESPACE,
INC., a Delaware corporation (the “Company”), the holders of Class A Common Stock of the Company (the “Class
A Common Stock”) party hereto (each of which is referred to herein as a “Class A Common Holder”
and collectively as the “Class A Common Holders”), the holders of Class B Common Stock of the Company (the “Class
B Common Stock”) party hereto (each of which is referred to herein as a “Class B Common Holder”
and collectively as the “Class B Common Holders”) and the other parties hereto. Each of the Class A Common Holders
and the Class B Common Holders is referred to herein as a “Common Holder” and collectively as the “Common
Holders”. The Class A Common Stock and the Class B Common Stock is collectively referred to herein as the “Common
Stock”. The Company, the Common Holders and the other parties hereto are individually referred to herein as a “Party”
and are collectively referred to herein as the “Parties”.
RECITALS
WHEREAS, the Company,
the Common Holders and certain other parties (the “Existing Stockholders”) are parties to that certain Amended
and Restated Stockholders Agreement, dated as of March 15, 2021 (the “Prior Agreement”); and
WHEREAS, the Existing
Stockholders and the Company hereby agree that, effective as of the Initial Public Event (the “Effective Date”),
the Prior Agreement be amended and restated in its entirety in accordance with the provisions set forth herein and that, from and after
such date, this Agreement shall govern the rights of the Parties with respect to the provisions covered hereby.
NOW, THEREFORE, in
consideration of the mutual covenants and agreements contained in this Agreement, and for other good and valuable consideration the receipt
and sufficiency of which are hereby acknowledged, the Parties hereby agree as follows:
1. Definitions. In addition to the definitions of capitalized terms specified elsewhere in this Agreement, the following
capitalized terms as used in this Agreement shall have the meanings set forth below:
1.1 “1934
Act” means the Securities Exchange Act of 1934, as amended.
1.2 “Accel”
means Accel Growth Fund L.P. and its related parties.
1.3 “Act”
means the Securities Act of 1933, as amended.
1.4 “Affiliate”
means, with respect to any Person, any other Person (other than the Company) directly or indirectly controlling or controlled by or under
direct or indirect common control, or advised by common investment management, with such Person. For the purposes of this definition,
“control,” when used with respect to any Person, means (a) the ownership, directly or indirectly, of more than fifty percent
(50%) of the voting securities of such Person or (b) the power to otherwise direct the management and policies of such Person whether by contract or otherwise.
1.5 “Board”
means the Company’s Board of Directors.
1.6 “Equity
Securities” shall mean any securities now or hereafter owned or held by a Common Holder
(or a transferee in accordance with Section 3.6 herein) having voting rights in the election of the Board, or any securities evidencing
an ownership interest in the Company, or any securities convertible into or exercisable for any shares of the foregoing.
1.7 “Founder”
means Anthony Casalena.
1.8 “Form
S-3”
means such form under the Act as in effect on the date hereof or any registration form under the Act subsequently adopted by the SEC
that permits inclusion or incorporation of substantial information by reference to other documents filed by the Company with the SEC.
1.9 “Free
Writing Prospectus”
means a free-writing prospectus, as defined in Rule 405.
1.10 “General Atlantic”
means General Atlantic (Square) LP, General Atlantic (SQRS II), L.P. and their respective related parties.
1.11 “Holder”
means any person or entity owning Registrable Securities
(as such term is defined below) or any assignee thereof in accordance with Section 2.10 hereof for so long as such person or entity holds
outstanding Registrable Securities.
1.12 “Index”
means Index Ventures Growth I (Jersey), L.P. and its related parties.
1.13 “Initial
Offering”
means the Company’s first sale of its Class A Common Stock in a firm commitment underwritten public offering pursuant to a registration
statement on Form S-1 under the Act after which the Class A Common Stock will be listed on a Qualified Exchange.
1.14 “Initial
Public Event” means the earliest of (i) the closing of the Initial Offering or (ii) the effectiveness
of a registration statement under the Act that registers shares of the Company’s Class A Common Stock in a ‘direct listing’
(the “Direct Listing Effectiveness”), in each case (i) or (ii) where the
Class A Common Stock and Class B Common Stock are each a “covered security” as described in Section 18(b) of the
Act.
1.15 “Investor”
means General Atlantic, Accel and Index.
1.16 “Investor
Directors” means (i) any director nominated
by General Atlantic pursuant to the Voting and Support Agreement, dated as of [●], 2021 and (ii) Andrew Braccia.
1.17 “Major Holder”
shall mean any Holder that held at least Seven Million Two Hundred Thousand (7,200,000) Registrable Securities (as adjusted for any stock
splits, stock dividends, combinations, subdivisions, recapitalizations and the like).
1.18 “Person”
means an individual, partnership, corporation, business
trust, joint stock company, trust, unincorporated association, joint venture, limited liability company or any other entity of whatever
nature.
1.19 “Qualified
Exchange” shall mean the New York Stock Exchange LLC, the Nasdaq Stock Market LLC, or (if
approved by the Requisite Investors) any other national securities exchange registered pursuant to Section 6 of the 1934 Act.
1.20 “Register,”
“registered,” and “registration”
refer to a registration effected by preparing and filing a registration statement or similar
document in compliance with the Act, and the declaration or ordering of effectiveness of such registration statement or document.
1.21 “Registrable
Securities”
means (i) the Common Stock held by the entities or individuals listed on Exhibit A and (ii) any Common Stock issued as (or issuable
upon the conversion or exercise of any warrant, right or other security that is issued as) a dividend or other distribution with respect
to, or in exchange for, or in replacement of, the shares referenced in (i), excluding in all cases, however, any Registrable Securities
sold by a person in a transaction in which his, her or its rights under Section 2 are not assigned.
1.22 “Requisite
Investors”
shall mean the holders of sixty percent (60%) of the Common Stock held
by Investors, which must include General Atlantic for so long as it is a Major Holder.
1.23 “Rule
144”
shall mean Rule 144 under the Act.
1.24 “Rule
405”
shall mean Rule 405 under the Act.
1.25
“SEC”
shall mean the Securities and Exchange Commission.
2. Registration
Rights.
2.1 Request
for Registration.
(a) Subject
to the conditions of this Section 2.1, if the Company shall receive at any time after either (i) ninety (90) days after any Direct Listing
Effectiveness or (ii) one hundred eighty (180) days after any Initial Offering, a written request from a Major Holder as of immediately
prior to an Initial Public Event (for purposes of this Section 2.1, the “Initiating Holders”) that the Company
file a registration statement under the Act covering the registration of Registrable Securities with an anticipated aggregate offering
price (net of underwriting discounts and commissions) of at least $20,000,000, then the Company shall, within thirty (30) days of the
receipt thereof, give written notice of such request to all Holders, and subject to the limitations of this Section 2.1, use all commercially
reasonable efforts to effect, as soon as practicable, the registration under the Act of all Registrable Securities that the Holders request
to be registered in a written request received by the Company within twenty (20) days of the mailing of the Company’s notice pursuant
to this Section 2.1(a).
(b) If
the Initiating Holders intend to distribute the Registrable Securities covered by their request by means of an underwriting, they shall
so advise the Company as a part of their request made pursuant to this Section 2.1 and the Company shall include such information in
the written notice referred to in Section 2.1(a). In such event the right of any Holder to include its Registrable Securities in such
registration shall be conditioned upon such Holder’s participation in such underwriting and the inclusion of such Holder’s
Registrable Securities in the underwriting (unless otherwise mutually agreed by a majority in interest of the Initiating Holders and
such Holder) to the extent provided herein. All Holders proposing to distribute their securities through such underwriting shall enter
into an underwriting agreement in customary form with the underwriter or underwriters selected for such underwriting by a majority in
interest of the Initiating Holders (which underwriter or underwriters shall be reasonably acceptable to the Company). Notwithstanding
any other provision of this Section 2.1, if the underwriter advises the Company that marketing factors require a limitation on the number
of securities underwritten (including Registrable Securities), then the Company shall so advise all Holders of Registrable Securities
that would otherwise be underwritten pursuant hereto; provided, however, in no event shall any Registrable Securities held
by a Holder that is an Investor (and that such Investor has requested to be registered) be excluded from such underwriting unless all
other securities are first excluded. In the event the underwriters determine that less than all of the Registrable Securities of the
Holders that are Investors requested to be registered can be included in such offering in accordance with the foregoing, then the Registrable
Securities of such Holders that are included in such offering shall be apportioned pro rata among such Holders based on the number of
Registrable Securities held by each such Holder. Any Registrable Securities excluded or withdrawn from such underwriting shall be withdrawn
from the registration.
(c) Notwithstanding
the foregoing, the Company shall not be required to effect a registration pursuant to this Section 2.1:
(i) in
any particular jurisdiction in which the Company would be required to execute a general consent to service of process in effecting such
registration, unless the Company is already subject to service in such jurisdiction and except as may be required under the Act; or
(ii) after
the Company has effected two (2) registrations pursuant to this Section 2.1 with respect to General Atlantic, or one (1) registration
pursuant to this Section 2.1 with respect to each of Index and Accel, and such registrations have been declared or ordered effective;
or
(iii) during
the period starting with the date sixty (60) days prior to the Company’s good faith estimate of the date of the filing of and ending
on a date one hundred eighty (180) days following the effective date of a Company-initiated registration subject to Section 2.2 below,
provided that the Company is actively employing in good faith all commercially reasonable efforts to cause such registration statement
to become effective; or
(iv) if the Initiating Holders propose to dispose of Registrable Securities that may be registered
on Form S-3 pursuant to Section 2.3 hereof; or
(v) if the Company shall furnish to Holders requesting a registration statement pursuant to this Section
2.1 a certificate signed by the Company’s Chief Executive Officer or Chairman of the Board stating that in the good faith judgment
of the Board, it would be seriously detrimental to the Company and its stockholders for such registration statement to be effected at
such time, in which event the Company shall have the right to defer such filing for a period of not more than ninety (90) days after receipt
of the request of the Initiating Holders, provided that such right shall be exercised by the Company not more than once in any
twelve (12)-month period and provided further that the Company shall not register any securities for the account of itself or any
other stockholder during such ninety (90) day period (other than a registration relating solely to the sale of securities of participants
in a Company stock plan, a registration relating to a corporate reorganization or transaction under Rule 145 of the Act, a registration
on any form that does not include substantially the same information as would be required to be included in a registration statement covering
the sale of the Registrable Securities, or a registration in which the only Common Stock being registered is Common Stock issuable upon
conversion of debt securities that are also being registered).
2.2 Company
Registration.
(a) If
(but without any obligation to do so) the Company proposes to register (including, for this purpose, a registration effected by the Company
for stockholders other than the Holders) any of its stock or other securities under the Act in connection with the public offering of
such securities (other than (i) a registration relating to a demand made pursuant to Section 2.1, (ii) an Initial Public Event that is
not an Initial Offering or (iii) a registration relating solely to the sale of securities of participants in a Company stock plan,
a registration relating to a corporate reorganization or transaction under Rule 145 of the Act, (iv) a registration on any form that
does not include substantially the same information as would be required to be included in a registration statement covering the sale
of the Registrable Securities, or (v) a registration in which the only Common Stock being registered is Common Stock issuable upon conversion
of debt securities that are also being registered), the Company shall, at such time, promptly give each Holder written notice of such
registration. Upon the written request of each Holder given within ten (10) days after mailing of such notice by the Company in accordance
with Section 3.3, the Company shall, subject to the provisions of Section 2.2(c), use all commercially reasonable efforts to cause to
be registered under the Act all of the Registrable Securities that each such Holder requests to be registered. For the avoidance of doubt,
the decision to participate in an offering pursuant to this Section 2.2 shall not count as a “registration”
under Section 2.1 hereof.
(b) Right
to Terminate Registration. The Company shall have the right to terminate or withdraw any registration initiated by it under this
Section 2.2 prior to the effectiveness of such registration whether or not any Holder has elected to include securities in such registration.
The expenses of such withdrawn registration shall be borne by the Company in accordance with Section 2.6 hereof.
(c) Underwriting
Requirements. In connection with any offering involving an underwriting of shares of the Company’s capital stock, the
Company shall not be required under this Section 2.2 to include any of the Holders’ securities in such underwriting unless
they accept the terms of the underwriting as agreed upon between the Company and the underwriters selected by the Company (or by
other persons entitled to select the underwriters) and enter into an underwriting agreement in customary form with such
underwriters, and then only in such quantity as the underwriters determine in their sole discretion will not jeopardize the success
of the offering by the Company. If the total amount of securities, including Registrable Securities, requested by stockholders to be
included in such offering exceeds the amount of securities sold other than by the Company that the underwriters determine in their
sole discretion is compatible with the success of the offering, then the Company shall be required to include in the offering only
that number of such securities, including Registrable Securities, that the underwriters determine in their sole discretion will not
jeopardize the success of the offering. In no event shall any Registrable Securities be excluded from such offering unless all other
stockholders’ securities have been first excluded. In the event that the underwriters determine that less than all of the
Registrable Securities requested to be registered can be included in such offering, then the Registrable Securities that are
included in such offering shall be apportioned pro rata among the selling Holders based on the number of Registrable Securities held
by all selling Holders or in such other proportions as shall mutually be agreed to by all such selling Holders. Notwithstanding the
foregoing, in no event shall (i) the amount of securities of the selling Holders included in the offering be reduced below
twenty-five percent (25%) of the total amount of securities included in such offering or (ii) any securities held by a Common Holder
be included in such offering if any Registrable Securities held by any Holder that is an Investor (and that such Investor has
requested to be registered) are excluded from such offering. For purposes of the preceding sentence concerning apportionment, for
any selling stockholder that is a Holder of Registrable Securities and that is a venture capital fund, partnership or corporation,
the entities under, or advised by, common investment management, partners, retired partners and stockholders of such Holder, or the
estates and family members of any such partners and retired partners and any trusts for the benefit of any of the foregoing persons
shall be deemed to be a single “selling Holder,” and any pro rata reduction with respect to such
“selling Holder” shall be based upon the aggregate amount of Registrable Securities owned by all such
related entities and individuals.
2.3 Form
S-3 Registration. In case the Company shall receive from a Major Holder as of immediately prior to the Initial Public
Event or other Holders who are Investors holding at least twenty percent (20%) of the Registrable Securities then outstanding and held
by the Holders who are Investors (for purposes of this Section 2.3, the “Initiating Holders”) a written request
or requests that the Company effect a registration on Form S-3 and any related qualification or compliance with respect to all or a part
of the Registrable Securities owned by such Holder or Holders, the Company shall:
(a) promptly
give written notice of the proposed registration, and any related qualification or compliance, to all other Holders; and
(b) use
all commercially reasonable efforts to effect, as soon as practicable, such registration and all such qualifications and compliances
as may be so requested and as would permit or facilitate the sale and distribution of all or such portion of such Holders’
Registrable Securities as are specified in such request, together with all or such portion of the Registrable Securities of any
other Holders joining in such request as are specified in a written request given within fifteen (15) days after receipt of such
written notice from the Company, which may include that such registration statement constitute a shelf offering on a delayed or
continuous basis in accordance with Rule 415 under the Act, provided, in which case the provisions of Section 2.3(c) hereto shall be
applicable, however, that the Company shall not be obligated to effect any such registration, qualification or compliance, pursuant
to this Section 2.3:
(i) if
Form S-3 is not available for such offering by the Holders;
(ii) if
the Holders, together with the holders of any other securities of the Company entitled to inclusion in such registration, propose to
sell Registrable Securities and such other securities (if any) at an aggregate price to the public (net of any underwriters’ discounts
or commissions) of less than $5,000,000;
(iii) if
the Company shall furnish to all Holders requesting a registration statement pursuant to this Section 2.3 a certificate signed by the
Company’s Chief Executive Officer or Chairman of the Board stating that in the good faith judgment of the Board, it would be seriously
detrimental to the Company and its stockholders for such registration statement to be effected at such time, in which event the Company
shall have the right to defer such filing for a period of not more than ninety (90) days after receipt of the request of the Initiating
Holders, provided that such right shall be exercised by the Company not more than once in any twelve (12)-month period and provided
further that the Company shall not register any securities for the account of itself or any other stockholder during such ninety
(90) day period (other than a registration relating solely to the sale of securities of participants in a Company stock plan,
a registration relating to a corporate reorganization or transaction under Rule 145 of the Act, a registration on any form that does
not include substantially the same information as would be required to be included in a registration statement covering the sale of the
Registrable Securities, or a registration in which the only Common Stock being registered is Common Stock issuable upon conversion of
debt securities that are also being registered);
(iv) if
the Company has, within the twelve (12) month period preceding the date of such request, already effected two (2) registrations on Form
S-3 for the Holders pursuant to this Section 2.3;
(v) in
any particular jurisdiction in which the Company would be required to qualify to do business or to execute a general consent to service
of process in effecting such registration, qualification or compliance;
(vi) if
the Company, within thirty (30) days of receipt of the request of such Initiating Holders, gives notice of its bona fide intention to
effect the filing of a registration statement on Form S-3 with the SEC within ninety (90) days of receipt of such request (other than
a registration effected solely to qualify an employee benefit plan or to effect a business combination pursuant to Rule 145), provided
that the Company is actively employing in good faith all commercially reasonable efforts to cause such registration statement to
become effective (it being understood that the Company shall have the obligations to the Holders, including any Take-Down Initiating
Holders, set forth in Section 2.3(c) with respect to any such registration statement); or
(vii) during the period starting with the date thirty (30) days prior to the Company’s good faith
estimate of the date of the filing of and ending on a date ninety (90) days following the effective date of a Company-initiated registration
subject to Section 2.2 above, provided that the Company is actively employing in good faith all commercially reasonable efforts
to cause such registration statement to become effective.
(c) Following
the effectiveness of the Form S-3, a Major Holder as of immediately prior to the Initial Public Event or Holders who are Investors holding
at least twenty percent (20%) of the Registrable Securities included in a Form S-3 shelf registration statement (collectively, a “Take-Down
Initiating Holder”) may at any time and from time to time initiate an offering or sale of all or part of the Registrable
Securities (a “Shelf Take-Down”), subject to the limitations set forth in this Agreement, by delivering notice
of such initiation to the Company as set forth herein. If the Take-Down Initiating Holders intend to effect the Shelf-Take Down by means
of an underwriting, then, in such event, the Company shall file as soon as practicable and in any event not later than ten (10) business
days after the date of such request and, after such filing, use its reasonable best efforts to effect an amendment or supplement to the
Form S-3 for such purpose. The Take-Down Initiating Holders shall indicate to the Company in their notice to the Company pursuant to
this Section 2.3(c) whether they intend for such underwritten Shelf Take-Down to involve a customary “road show”
(including an “electronic road show”) or other substantial marketing effort by the underwriters. In the event
of any underwritten Shelf Take-Down, the underwriter or underwriters shall be designated by Holders of a majority of the Registrable
Securities held by all Holders participating in such underwriting, which underwriter or underwriters shall be reasonably acceptable to
the Company. If the Take-Down Initiating Holders desire to effect a Shelf Take-Down that does not constitute a Shelf Take-Down requiring
substantial marketing effort by the underwriters, the Take-Down Initiating Holders shall so indicate in a written request delivered to
the Company no later than two (2) business days prior to the expected date of such Shelf Take-Down, which request shall include (i) the
total number of Registrable Securities expected to be offered and sold in such Shelf Take-Down, (ii) the expected plan of distribution
of such Shelf Take-Down and (iii) the action or actions required (including the timing thereof) in connection with such Shelf Take-Down
(including the delivery of one or more stock certificates representing shares of Registrable Securities to be sold in such underwritten
Shelf Take-Down), and, subject to the limitations set forth in this Agreement, the Company shall file as soon as practicable and in any
event not later than five (5) business days after the date of such request and use reasonable best efforts thereafter to effect an amendment
or supplement to its registration statement for such purpose. Subject to the limitations set forth in this Agreement, the Company shall
effect such unlimited number of Shelf Take-Downs as may be requested by a Major Holder as of immediately prior to the Initial Public
Event or Holders who are Investors holding at least twenty percent (20%) of the Registrable Securities included in a Form S-3 shelf registration
statement; provided, that the Company shall not be obligated to effect any underwritten Shelf Take-Down unless the requesting
Holders, together with the holders of any other securities of the Company entitled to inclusion in such underwritten Shelf Take-Down,
propose to sell Registrable Securities and such other securities (if any) at an aggregate price to the public (net of any underwriters’
discounts or commissions) of less than $5,000,000. The provisions of Section 2.1(b) shall be applicable to any offering effected pursuant
to this Section 2.3(c) (with the substitution of Section 2.3 for references to Section 2.1).
(d) Subject to the foregoing, the Company shall file a registration statement covering the Registrable
Securities and other securities so requested to be registered as soon as practicable after receipt of the request or requests of the
Initiating Holders. Registrations effected pursuant to this Section 2.3 shall not be counted as requests for registration effected pursuant
to Section 2.1, except as may be required under the Act.
2.4 Obligations
of the Company. Whenever required under this Section 2 to effect the registration of any Registrable Securities, the Company
shall, as expeditiously as reasonably possible:
(a) prepare
and (as soon thereafter as practicable and in any event not later than thirty (30) days after the end of the applicable period specified
in Section 2.1(a) and 2.3(b) within which requests for registration may be given to the Company) file with the SEC a registration statement
with respect to such Registrable Securities and use all commercially reasonable efforts to cause such registration statement to become
effective as promptly as practicable thereafter, and keep such registration statement effective for one hundred eighty (180) days or,
if earlier, until the distribution contemplated in the registration statement has been completed; provided, however, that
in the case of any registration of Registrable Securities on Form S-3 which are intended to be offered on a continuous or delayed basis,
such 180-day period shall be extended, if necessary, to keep the registration statement continuously effective, supplemented and amended
to the extent necessary to ensure that it is available for sales of such Registrable Securities, and to ensure that it conforms with
the requirements of this Agreement, the Act and the policies, rules and regulations of the SEC as announced from time to time, until
the earlier of when (i) the Holders have sold all such Registrable Securities and (ii) the Holders may sell all of such Registrable Securities
without any limitation as to volume or manner of sale requirements pursuant to Rule 144 promulgated under the Act as determined by counsel
to the Company pursuant to written opinion letter to such effect, addressed and acceptable to the Company’s transfer agent;
(b) prepare
and file with the SEC such amendments and supplements to such registration statement and the prospectus used in connection with such
registration statement as may be necessary to comply with the provisions of the Act with respect to the disposition of all securities
covered by such registration statement;
(c) furnish
to the Holders such number of copies of a prospectus, including a preliminary prospectus and any Free Writing Prospectus, in conformity
with the requirements of the Act, and such other documents as they may reasonably request in order to facilitate the disposition of Registrable
Securities owned by them;
(d) use
all commercially reasonable efforts to register and qualify the securities covered by such registration statement under such other securities
or Blue Sky laws of such jurisdictions as shall be reasonably requested by the Holders, provided that the Company shall not be
required in connection therewith or as a condition thereto to qualify to do business or to file a general consent to service of process
in any such states or jurisdictions;
(e) in the event of any underwritten public offering, enter into and perform its obligations under
an underwriting agreement, in usual and customary form, with the managing underwriter of such offering;
(f) notify
each Holder of Registrable Securities covered by such registration statement at any time when a prospectus or Free Writing Prospectus
(to the extent prepared by or on behalf of the Company) relating thereto is required to be delivered under the Act of the happening of
any event as a result of which the prospectus included in such registration statement, as then in effect, includes an untrue statement
of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein not misleading
in the light of the circumstances then existing, and, at the request of any such Holder, the Company will, as soon as reasonably practicable,
file and furnish to all such Holders a supplement or amendment to such prospectus or Free Writing Prospectus (to the extent prepared
by or on behalf of the Company) so that, as thereafter delivered to the purchasers of such Registrable Securities, such prospectus will
not contain an untrue statement of a material fact or omit to state any fact necessary to make the statements therein not misleading
in light of the circumstances under which they were made;
(g) use
commercially reasonable efforts to cause all such Registrable Securities registered pursuant to this Section 2 to be listed on a national
exchange or trading system and on each securities exchange and trading system on which similar securities issued by the Company are then
listed;
(h) provide a transfer agent and registrar for all Registrable Securities registered pursuant hereunder
and a CUSIP number for all such Registrable Securities, in each case not later than the effective date of such registration;
(i) take
all reasonable actions to ensure that any prospectus or Free Writing Prospectus utilized in connection with any registration effected
pursuant to Section 2.1, 2.2 or 2.3 hereunder complies in all material respects with the Act, is filed in accordance with the Act to
the extent required thereby, is retained in accordance with the Act to the extent required thereby and, when taken together with the
related prospectus, will not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements
therein, in light of the circumstances under which they were made, not misleading;
(j) use
its commercially reasonable efforts to provide, at the request of any Holder participating in such registration, on the date such securities
are delivered to the underwriters for sale pursuant to such registration or, if such securities are not being sold through underwriters,
on the date the registration statement with respect to such securities becomes effective, a legal opinion of the Company’s outside
counsel, dated the effective date of such registration statement (and, if such registration includes an underwritten public offering,
dated the date of the closing under the underwriting agreement), with respect to the registration statement, each amendment and supplement
thereto, the prospectus included therein (including the preliminary prospectus) and such other documents relating thereto in customary
form and covering such matters of the type customarily covered by legal opinions of such nature;
(k) to the extent the Company is a well-known seasoned issuer (as defined in Rule 405) (a “WKSI”)
at the time any request for registration is submitted to the Company in accordance with Section 2.3, (i) if so requested, file an automatic
shelf registration statement (as defined in Rule 405) (an “Automatic Shelf Registration Statement”) to effect
such registration, and (ii) remain a WKSI (and not become an ineligible issuer (as defined in Rule 405)) during the period during which
such Automatic Shelf Registration Statement is required to remain effective in accordance with this Agreement;
(l) if
at any time when the Company is required to re-evaluate its WKSI status for purposes of an Automatic Shelf Registration Statement used
to effect a request for registration in accordance with Section 2.3 (i) the Company determines that it is not a WKSI, (ii) the registration
statement is required to be kept effective in accordance with this Agreement and (iii) the registration rights of the applicable Holders
have not terminated, promptly amend the registration statement onto a form the Company is then eligible to use or file a new registration
statement on such form, and keep such registration statement effective in accordance with the requirements otherwise applicable under
this Agreement; and
(m) if
(i) a registration made pursuant to a shelf registration statement is required to be kept effective in accordance with this Agreement
after the third anniversary of the initial effective date of the shelf registration statement and (ii) the registration rights of the
applicable Holders have not terminated, file a new registration statement with respect to any unsold Registrable Securities subject to
the original request for registration prior to the end of the three (3) year period after the initial effective date of the shelf registration
statement, and keep such registration statement effective in accordance with the requirements otherwise applicable under this Agreement.
Notwithstanding the provisions
of this Section 2, the Company shall be entitled to suspend, for a reasonable period of time, not to exceed ninety (90) days in any one
(1) year period, the filing, effectiveness or use of, or trading under, any registration statement if the Company shall determine that
any such sale of any securities pursuant to such registration statement would in the good faith judgment of the Board:
(i) materially
impede, delay or interfere with any material pending or proposed financing, acquisition, corporate reorganization or other similar transaction
involving the Company for which the Board has authorized negotiations;
(ii) materially
adversely impair the consummation of any pending or proposed material offering or sale of any class of securities by the Company; or
(iii) require disclosure of material nonpublic information that, if disclosed at such time, would be
materially harmful to the interests of the Company and its stockholders; provided, however, that during any such period
all executive officers and directors of the Company are also prohibited from selling securities of the Company (or any security of any
of the Company’s subsidiaries or Affiliates).
In the event of the
suspension of effectiveness of any registration statement pursuant to this Section 2.4, the applicable time period during which such
registration statement is to remain effective shall be extended by that number of days equal to the number of days the effectiveness
of such registration statement was suspended. For the avoidance of doubt, any suspension pursuant to this Section 2.4 shall not be
in addition to the possible suspensions articulated in Sections 2.1 and 2.3 hereof.
2.5 Information
from Holder. It shall be a condition precedent to the obligations of the Company to take any action pursuant to this Section
2 with respect to the Registrable Securities of any selling Holder that such Holder shall furnish to the Company such information regarding
itself, the Registrable Securities held by it, and the intended method of disposition of such securities as shall be reasonably required
to effect the registration of such Holder’s Registrable Securities.
2.6 Withdrawal
Rights; Expenses of Registration. A Holder may withdraw all or any part of its Registrable Securities from any registration
(including a registration effected pursuant to Section 2.1) by giving written notice to the Company of its request to withdraw at any
time. All expenses other than underwriting discounts and commissions incurred in connection with registrations, filings or qualifications
pursuant to Sections 2.1, 2.2 and 2.3, including (without limitation) all registration, filing and qualification fees, printers’
and accounting fees, fees and disbursements of counsel for the Company and the reasonable fees and disbursements of one counsel for the
selling Holders, which shall be chosen by the Holders of a majority of the Registrable Securities to be registered, shall be borne by
the Company.
Notwithstanding the foregoing,
the Company shall not be required to pay for any expenses of any registration proceeding begun pursuant to Section 2.1 or Section 2.3
if the registration request is subsequently withdrawn at the request of the Holders of a majority of the Registrable Securities to be
registered (in which case all participating Holders shall bear such expenses pro rata based upon the number of Registrable Securities
that were to be included in the withdrawn registration), unless the Holders of a majority of the Registrable Securities agree to forfeit
their right to one registration pursuant to Section 2.1 or 2.3, as the case may be, and provided, however, that if at the
time of such withdrawal, the Holders have learned of a material adverse change in the condition, business or prospects of the Company
from that known to the Holders at the time of their request and have withdrawn the request with reasonable promptness following disclosure
by the Company of such material adverse change, then the Holders shall not be required to pay any of such expenses and shall retain their
rights pursuant to Sections 2.1 and 2.3.
2.7 Delay
of Registration. No Holder shall have any right to obtain or seek an injunction restraining or otherwise delaying any
such registration as the result of any controversy that might arise with respect to the interpretation or implementation of this Section
2.
2.8 Indemnification.
In the event any Registrable Securities are included in a registration statement under this Section 2:
(a) To
the extent permitted by law, the Company will indemnify and hold harmless each Holder, the partners, officers, directors and
stockholders of each Holder, legal counsel and accountants for each Holder, any underwriter (as defined in the Act) for such Holder
and each person, if any, who controls such Holder or underwriter within the meaning of the Act or the 1934 Act, against any losses,
claims, damages or liabilities (joint or several) to which they may become subject under the Act, the 1934 Act, any state securities
laws or any rule or regulation promulgated under the Act, insofar as such losses, claims, damages, or liabilities (or actions in
respect thereof) arise out of or are based upon any of the following statements, omissions or violations (collectively a
“Violation”): (i) any untrue statement or alleged untrue statement of a material fact contained in such
registration statement (including any preliminary prospectus, final prospectus or Free Writing Prospectus contained therein or any
amendments or supplements thereto) or any issuer information (as defined in Rule 433 of the Act) filed or required to be filed
pursuant to Rule 433(d) under the Act or any other document incident to such registration prepared by or on behalf of the Company or
used or referred to by the Company; (ii) the omission or alleged omission to state in such registration statement a material fact
required to be stated therein, or necessary to make the statements therein not misleading; or (iii) any violation or alleged
violation by the Company of the Act, the 1934 Act, any state securities laws or any rule or regulation promulgated under the Act,
the 1934 Act or any state securities laws, and the Company will reimburse each such Holder, underwriter, controlling person or other
aforementioned person for any legal or other expenses reasonably incurred by them in connection with investigating or defending any
such loss, claim, damage, liability or action as such expenses are incurred; provided, however, that the indemnity
agreement contained in this Section 2.8(a) shall not apply to amounts paid in settlement of any such loss, claim, damage, liability
or action if such settlement is effected without the consent of the Company (which consent shall not be unreasonably withheld), nor
shall the Company be liable in any such case for any such loss, claim, damage, liability or action to the extent that it arises out
of or is based upon a Violation that occurs in reliance upon and in conformity with written information furnished expressly for use
in connection with such registration by any such Holder, underwriter, controlling person or other aforementioned person.
(b) To
the extent permitted by law, each selling Holder, severally and not jointly, will indemnify and hold harmless the Company, each of its
directors, each of its officers who has signed the registration statement, each person, if any, who controls the Company within the meaning
of the Act, legal counsel and accountants for the Company, any underwriter, any other Holder selling securities in such registration
statement and any controlling person of any such underwriter or other Holder, against any losses, claims, damages or liabilities (joint
or several) to which any of the foregoing persons may become subject, under the Act, the 1934 Act, any state securities laws or any rule
or regulation promulgated under the Act, the 1934 Act or any state securities laws, insofar as such losses, claims, damages or liabilities
(or actions in respect thereto) arise out of or are based upon any Violation, in each case to the extent (and only to the extent) that
such Violation occurs in reliance upon and in conformity with written information furnished by such Holder expressly for use in connection
with such registration; and each such Holder will reimburse any person intended to be indemnified pursuant to this Section 2.8(b) for
any legal or other expenses reasonably incurred by such person in connection with investigating or defending any such loss, claim, damage,
liability or action as such expenses are incurred; provided, however, that the indemnity agreement contained in this Section
2.8(b) shall not apply to amounts paid in settlement of any such loss, claim, damage, liability or action if such settlement is effected
without the consent of the Holder (which consent shall not be unreasonably withheld), and provided that in no event shall any
indemnity under this Section 2.8(b) exceed the net proceeds (after giving effect to underwriting discounts and commissions) from the
offering received by such Holder.
(c) Promptly after receipt by an indemnified party under this Section 2.8 of notice of the commencement
of any action (including any governmental action), such indemnified party will, if a claim in respect thereof is to be made against any
indemnifying party under this Section 2.8, deliver to the indemnifying party a written notice of the commencement thereof and the indemnifying
party shall have the right to participate in and, to the extent the indemnifying party so desires, jointly with any other indemnifying
party similarly noticed, to assume the defense thereof with counsel mutually satisfactory to the parties; provided, however,
that an indemnified party (together with all other indemnified parties that may be represented without conflict by one counsel) shall
have the right to retain one separate counsel, with the fees and expenses to be paid by the indemnifying party, if representation of
such indemnified party by the counsel retained by the indemnifying party would be inappropriate due to actual or potential differing
interests between such indemnified party and any other party represented by such counsel in such proceeding. The failure to deliver written
notice to the indemnifying party within a reasonable time of the commencement of any such action, if prejudicial to its ability to defend
such action, shall relieve such indemnifying party of liability to the indemnified party under this Section 2.8 to the extent of such
prejudice, but the omission to so deliver written notice to the indemnifying party will not relieve it of any liability that it may have
to any indemnified party otherwise than under this Section 2.8.
(d) If
the indemnification provided for in this Section 2.8 is held by a court of competent jurisdiction to be unavailable to an indemnified
party with respect to any loss, liability, claim, damage or expense referred to herein, then the indemnifying party, in lieu of indemnifying
such indemnified party hereunder, shall contribute to the amount paid or payable by such indemnified party as a result of such loss,
liability, claim, damage or expense in such proportion as is appropriate to reflect the relative fault of the indemnifying party on the
one hand and the indemnified party on the other hand in connection with the statements or omissions that resulted in such loss, liability,
claim, damage or expense, as well as any other relevant equitable considerations; provided, however, that (i) no contribution
by any Holder, when combined with any amounts paid by such Holder pursuant to Section 2.8(b), shall exceed the net proceeds (after giving
effect to underwriting discounts and commissions) from the offering received by such Holder and (ii) no person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Act) will be entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation; and provided further that in no event shall a Holder’s liability pursuant to this Section 2.8(d), when
combined with the amounts paid or payable by such Holder pursuant to Section 2.8(b), exceed the proceeds from the offering received by
such Holder. The relative fault of the indemnifying party and the indemnified party shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by the indemnifying party or by the indemnified party and the parties’ relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or omission.
(e) Notwithstanding
the foregoing, to the extent that the provisions on indemnification and contribution contained in the underwriting agreement entered
into in connection with the underwritten public offering are in conflict with the foregoing provisions, the provisions in the underwriting
agreement shall control.
(f)
The obligations of the Company and Holders under this Section 2.8 shall survive the completion
of any offering of Registrable Securities in a registration statement under this Section 2.8 and otherwise.
2.9
Reports Under the 1934 Act. With a view to making available to the Holders the
benefits of Rule 144 and any other rule or regulation of the SEC that may at any time permit a Holder to sell securities of the Company
to the public without registration or pursuant to a registration on Form S-3, the Company agrees to:
(a)
make and keep public information available, as those terms are understood and defined in Rule 144,
at all times after the Initial Public Event;
(b)
use commercially reasonable efforts to file with the SEC in a timely manner all reports and other
documents required of the Company under the Act and the 1934 Act; and
(c)
furnish to any Holder, so long as the Holder owns any Registrable Securities, forthwith upon request
(i) a written statement by the Company that it has complied with the reporting requirements of Rule 144 (at any time after ninety (90)
days after the effective date of the first registration statement filed by the Company), the Act and the 1934 Act (at any time after it
has become subject to such reporting requirements), or that it qualifies as a registrant whose securities may be resold pursuant to Form
S-3 (at any time after it so qualifies), (ii) a copy of the most recent annual or quarterly report of the Company and such other reports
and documents so filed by the Company, and (iii) such other information as may be reasonably requested to avail any Holder of any rule
or regulation of the SEC that permits the selling of any such securities without registration or pursuant to such form.
2.10
Assignment of Registration Rights. The rights to cause the Company to register
Registrable Securities pursuant to this Section 2 may be assigned (but only with all related obligations) by a Holder to a transferee
or assignee of such securities that (a) is a subsidiary, parent, partner, member, limited partner, retired partner, retired member, Affiliate
or stockholder of, or venture capital or private equity fund advised by or under common investment management with, a Holder, (b) is a
Holder’s family member or trust for the benefit of an individual Holder or (c) after such assignment or transfer, holds at least
five percent (5%) of the shares of Registrable Securities held by such Holder on the date hereof (as adjusted for any stock splits, stock
dividends, combinations, subdivisions, recapitalizations or the like), provided: (x) the Company is, within a reasonable time after
such transfer, furnished with written notice of the name and address of such transferee or assignee and the securities with respect to
which such registration rights are being assigned; (y) such transferee or assignee agrees in writing to be bound by and subject to the
terms and conditions of this Agreement, including, without limitation, the provisions of Section 2.12 below; and (z) such assignment shall
be effective only if immediately following such transfer the further disposition of such securities by the transferee or assignee is restricted
under the Act. The stock ownership of a Holder, together with its subsidiaries, parents, Affiliates or stockholders of, or venture capital
or private equity fund under, or advised by, common investment management with a Holder, shall be aggregated for purposes of this Section
2.10.
2.11
Limitations on Subsequent Registration Rights. From and after the Effective
Date, the Company shall not, without the prior written consent of the Requisite Investors and the Parties holding a majority of the outstanding
Class B Common Stock, enter into any agreement with any holder or prospective holder of any securities of the Company that would allow
such holder or prospective holder (a) to include any of such securities in any registration filed under Section 2.1, Section 2.2 or Section
2.3 hereof, unless under the terms of such agreement, such holder or prospective holder may include such securities in any such registration
only to the extent that the inclusion of such securities will not reduce the amount of the Registrable Securities of the Holders that
are included or (b) to demand registration of their securities.
2.12
Termination of Registration Rights. This Agreement
shall terminate as to a Holder (a) after five (5) years following the Initial Public Event or (b) such earlier time after the Initial
Public Event at which such Holder (together with any Affiliate of the Holder with whom such Holder must aggregate its sales under Rule
144) holds two percent (2%) or less of the Company’s outstanding Common Stock and all shares held by such Holder can be sold in
any three (3) month period without registration in compliance with Rule 144.
3.
Miscellaneous.
3.1
Legend. Unless the Company shall otherwise agree in writing, each Common
Holder agrees that the legend in substantially the following form shall be placed on the certificates representing any shares owned by
it:
“THE SECURITIES REPRESENTED HEREBY
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR UNDER THE SECURITIES LAWS
OF CERTAIN STATES. THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT
AS PERMITTED UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. THE ISSUER
OF THESE SECURITIES MAY REQUIRE AN OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY PROPOSED
TRANSFER OR RESALE IS IN COMPLIANCE WITH THE SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAWS.”
3.2
Entire Agreement; Amendments and Waivers. This
Agreement constitutes, as of the Effective Date, the entire agreement and understanding of the Parties in respect of the subject matter
contained in this Agreement, and there are no restrictions, promises, representations, warranties, covenants or undertakings with respect
to the subject matter of this Agreement other than those expressly set forth or referred to in this Agreement. This Agreement supersedes,
as of the Effective Date, all prior agreements and understandings between the Parties with respect to the subject matter of this Agreement.
Any term of this Agreement may be amended and the observance of any term of this Agreement may be waived (either generally or in a particular
instance and either retroactively or prospectively) only with the written consent of (a) the Company, (b) the Requisite Investors and
(c) the Founder; provided, that no such amendment shall be effective as to a particular Common Holder if such amendment would
adversely affect such Holder without similarly and proportionately adversely affecting all Holders similarly situated, unless such Holder
has given its prior written consent.
3.3
Notices. All notices and other communications given
or made pursuant hereto shall be in writing and shall be deemed effectively given: (a) upon personal delivery to the party to be notified;
(b) when sent by confirmed electronic mail or facsimile if sent during normal business hours of the recipient; if not, then on the next
business day; (c) three (3) days after having been sent by registered or certified mail (or applicable international equivalent), return
receipt requested, postage prepaid; or (d) one (1) business day (as such term is applicable in New York, New York) after deposit with
an internationally recognized overnight courier, specifying next business day (as such term is applicable in New York, New York) delivery,
with written verification of receipt. All communications shall be sent to the respective parties at the addresses set forth on Exhibit
B (or at such other addresses as shall be specified by notice given in accordance with this Section 3.3).
3.4
Applicable Law. This Agreement shall be governed
by and construed in accordance with the laws of the State of Delaware, without regard to the principles of conflicts of law of such state.
3.5
Severability. The invalidity, illegality or unenforceability
of one or more of the provisions of this Agreement in any jurisdiction shall not affect the validity, legality or enforceability of the
remainder of this Agreement in such jurisdiction or the validity, legality or enforceability of this Agreement, including any such provision,
in any other jurisdiction, it being intended that all rights and obligations of the Parties under this Agreement shall be enforceable
to the fullest extent permitted by law.
3.6
Successors and Assigns. Subject to Section 2.10,
the provisions of this Agreement shall be binding upon and inure to the benefit of the Parties and their respective heirs, successors
and permitted assigns.
3.7
Defaults. A default by any Party in such party’s
compliance with any of the terms or conditions of this Agreement or performance of any of the obligations of such party under this Agreement
shall not constitute or excuse a default by any other party.
3.8
Recapitalization, Exchanges, Etc. The
provisions of this Agreement shall apply, to the full extent set forth in this Agreement, to any and all shares of capital stock of the
Company which may be issued in respect of, in exchange for, or in substitution of the shares, by reason of a stock dividend, recapitalization,
reclassification or the like and such shares shall be endorsed with the legend set forth in Section 3.1.
3.9 Expenses.
If any action at law or in equity is necessary to enforce or interpret the terms of this Agreement, the prevailing party shall be entitled
to reasonable attorneys’ fees, costs and necessary disbursements in addition to any other relief to which such party may be entitled.
3.10 Aggregation
of Stock. All shares of Registrable Securities held or acquired by affiliated
entities (including entities under, or advised by, common investment management) or persons shall be aggregated together for the purpose
of determining the availability of any rights under this Agreement.
3.11 Counterparts.
This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which shall constitute
one and the same Agreement. Signatures may be exchanged by telecopy, with original signatures to follow. Each Party agrees that it will
be bound by its own telecopied signature and that it accepts the telecopied signatures of the other parties to this Agreement.
3.12 No
Third Party Beneficiaries. This Agreement shall be binding and inure solely to the benefit
of each Party, and nothing in this Agreement, expressly or implied, is intended to or shall confer upon any other Person any right, benefit
or remedy of any nature whatsoever under or by reason of this Agreement, except for the parties set forth in Section 2.8.
3.13
Captions. The captions, headings and arrangements used in this Agreement are
for convenience only and do not in any way limit or amplify the terms and provisions hereof.
3.14 Further
Instruments and Actions. The Parties agree to execute such further instruments and to take such further action as may
reasonably be necessary to carry out the intent of this Agreement.
3.15 Amendment
of Prior Agreement. As of the Effective Date, the Prior Agreement shall hereby be amended and superseded in its entirety
and restated herein. Such amendment and restatement is effective upon the execution of this Agreement by the Company and the parties
required for an amendment pursuant to Section 9.3 of the Prior Agreement. Upon such execution, all provisions of, rights granted and
covenants made in the Prior Agreement are hereby waived, released and superseded in their entirety by the provisions hereof and shall
have no further force or effect
3.16 Indemnification
Matters. The Company hereby acknowledges that one or more of the Investor Directors may
have certain rights to indemnification, advancement of expenses and/or insurance provided by one or more of the Investors and
certain of their Affiliates (collectively, the “Fund Indemnitors”). The
Company hereby agrees (a) that it is the indemnitor of first resort (i.e., its obligations to any such Investor Directors are
primary and any obligation of the Fund Indemnitors to advance expenses or to provide indemnification for the same expenses or
liabilities incurred by such Investor Directors are secondary), (b) that it shall be required to advance the full amount of expenses
incurred by such Investor Directors and shall be liable for the full amount of all expenses, judgments, penalties, fines and amounts
paid in settlement by or on behalf of any such Investor Directors to the extent legally permitted and as required by the Certificate
of Incorporation or Bylaws of the Company (or any agreement between the Company and such Investor Directors), without regard to any
rights such Investor Directors may have against the Fund Indemnitors, and (c) that it irrevocably waives, relinquishes and releases
the Fund Indemnitors from any and all claims against the Fund Indemnitors for contribution, subrogation or any other recovery of any
kind in respect thereof. The Company further agrees that no advancement or payment by the Fund Indemnitors on behalf of any such
Investor Director with respect to any claim for which such Investor Director has sought indemnification from the Company shall
affect the foregoing and the Fund Indemnitors shall have a right of contribution and/or be subrogated to the extent of such
advancement or payment to all of the rights of recovery of such Investor Director against the Company.
IN WITNESS WHEREOF,
the undersigned has executed this Agreement as of the date written below.
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THE COMPANY:
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SQUARESPACE, INC.
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By:
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Name:
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Title:
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Date:
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IN WITNESS WHEREOF,
the undersigned has executed this Agreement as of the date written below.
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GENERAL ATLANTIC (SQRS) LP
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By:
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General Atlantic (SPV) GP, LLC, its general Partner
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By:
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General Atlantic LLC, its Sole Member
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By:
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Name:
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Title:
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Date:
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GENERAL ATLANTIC (SQRS II), L.P.
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By:
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General Atlantic (SPV) GP, LLC, its general Partner
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By:
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General Atlantic LLC, its Sole Member
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By:
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Name:
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Title:
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Date:
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IN WITNESS WHEREOF,
the undersigned has executed this Agreement as of the date written below.
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INDEX VENTURES GROWTH I (JERSEY), L.P.
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By:
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its Managing General Partner: Index Venture Growth Associates I Limited
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By:
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Name:
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Title:
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Date:
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INDEX VENTURES GROWTH I PARALLEL ENTREPRENEUR FUND (JERSEY), L.P.
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By:
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its Managing General Partner: Index Venture Growth Associates I Limited
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By:
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Name:
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Title:
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Date:
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YUCCA (JERSEY) SLP
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By:
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Intertrust Employee Benefit Services Limited as Authorized Signatory of Yucca (Jersey) SLP in its capacity as administrator of the Index Co-Investment Scheme
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By:
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Name:
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Title:
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Date:
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IN WITNESS WHEREOF, the undersigned
has executed this Agreement as of the date written below.
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ACCEL GROWTH FUND L.P.
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By:
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Accel Growth Fund Associates L.L.C. its General Partner
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By:
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Name:
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Title:
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Date:
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ACCEL GROWTH STRATEGIC PARTNERS FUND L.P.
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By:
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Accel Growth Fund Associates L.L.C. its General Partner
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By:
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Name:
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Title:
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Date:
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ACCEL GROWTH FUND INVESTORS 2010 L.L.C.
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By:
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Name:
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Title:
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Date:
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ACCEL LEADERS 3 L.P.
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By:
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Name:
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Title:
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Date:
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ACCEL LEADERS 3 ENTREPRENEURS L.P.
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By:
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Name:
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Title:
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Date:
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ACCEL LEADERS 3 INVESTORS (2020) L.L.C.
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By:
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Name:
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Title:
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Date:
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IN WITNESS WHEREOF,
the undersigned has executed this Agreement as of the date written below.
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ANTHONY CASALENA
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By:
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Date:
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ANTHONY CASALENA REVOCABLE TRUST
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By
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Name:
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Anthony Casalena
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Title:
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Trustee
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Date:
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ANTHONY CASALENA 2019 FAMILY TRUST
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By:
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Name:
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Anthony Casalena
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Title:
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Trustee
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Date:
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Exhibit 10.3
SQUARESPACE, INC.
INDEMNITY AGREEMENT
THIS INDEMNITY AGREEMENT
(the “Agreement”) is made and entered into as of [●] between Squarespace, Inc., a Delaware corporation (the “Company”),
and [●] (“Indemnitee”).
RECITALS
A. Highly
competent persons have become more reluctant to serve corporations as directors or officers or in other capacities unless they are provided
with adequate protection through insurance or adequate indemnification against inordinate risks of claims and actions against them arising
out of their service to and activities on behalf of the corporation;
B. Although
furnishing of insurance to protect persons serving a corporation and its subsidiaries from certain liabilities has been a customary and
widespread practice among United States-based corporations and other business enterprises, the Company believes that, given current market
conditions and trends, such insurance may be available to it in the future only at higher premiums and with more exclusions. At the same
time, directors, officers, and other persons in service to corporations or business enterprises are being increasingly subjected to expensive
and time-consuming litigation relating to, among other things, matters that traditionally would have been brought only against the Company
or business enterprise itself. The Bylaws and Certificate of Incorporation of the Company permit indemnification of the officers, directors
and certain other persons of the Company. Indemnitee may also be entitled to indemnification pursuant to the General Corporation Law of
the State of Delaware (“DGCL”). The Bylaws, Certificate of Incorporation, and the DGCL expressly provide that their respective
indemnification provisions are not exclusive, and contemplate that contracts may be entered into between the Company and members of the
Board, officers, and other persons with respect to indemnification;
C. The
uncertainties relating to such liability insurance and to indemnification have increased the difficulty of attracting and retaining such
persons;
D. The
Board has determined that the increased difficulty in attracting and retaining such persons is detrimental to the best interests of the
Company’s stockholders, and that the Company should act to assure such persons that there will be increased certainty of protection
in the future;
E. It
is reasonable, prudent, and necessary for the Company to contractually obligate itself to indemnify, and to advance expenses on behalf
of, such persons to the fullest extent permitted by applicable law so that they will serve or continue to serve the Company free from
undue concern that they will not be so indemnified;
F. This
Agreement is a supplement to and in furtherance of the Company’s Bylaws and Certificate of Incorporation and any resolutions adopted
pursuant to such indemnification, and will not be deemed a substitute therefor, nor to diminish or abrogate any rights of Indemnitee;
G. Indemnitee
does not regard the protection available under the Company’s Bylaws and Certificate of Incorporation and insurance as adequate in
the present circumstances, and may not be willing to serve as an officer or director without adequate protection, and the Company desires
Indemnitee to serve in such capacity. Indemnitee is willing to serve, continue to serve, and to take on additional service for or on behalf
of the Company on the condition that he or she be so indemnified; and
H. Indemnitee
may have certain rights to indemnification and insurance provided by other entities or organizations which Indemnitee and such other entities
and organizations intend to be secondary to the primary obligation of the Company to indemnify Indemnitee as provided in this Agreement,
with the Company’s acknowledgement and agreement to the foregoing being a material condition to Indemnitee’s willingness to
serve as an officer or director.
I. This
Agreement supersedes and replaces in its entirety any previous indemnification agreement entered into between the Company and the Indemnitee.
NOW, THEREFORE, in
consideration of Indemnitee’s agreement to serve as an officer or a director from and after the date first written above, the parties
agree as follows:
1.
Indemnity of Indemnitee. The Company agrees to hold harmless and indemnify Indemnitee to the fullest extent permitted by
law, as such may be amended from time to time in accordance with the terms of this Agreement. In furtherance of this indemnification,
and without limiting the generality of such indemnification:
(a)
Proceedings Other Than Proceedings by or in the Right of the Company. Indemnitee will be entitled to the rights of indemnification
provided in this Section 1(a) if, by reason of his or her Corporate Status, the Indemnitee is, or is threatened to be made, a party to
or participant in any Proceeding other than a Proceeding by or in the right of the Company. Pursuant to this Section 1(a), Indemnitee
will be indemnified against all Expenses, judgments, penalties, fines, and amounts paid in settlement actually and reasonably incurred
by him or her, or on his or her behalf, in connection with such Proceeding or any claim, issue, or matter. This indemnification is provided
if the Indemnitee acted in good faith and in a manner the Indemnitee reasonably believed to be in, or not opposed to, the best interests
of the Company, and with respect to any criminal Proceeding, had no reasonable cause to believe the Indemnitee’s conduct was unlawful.
(b)
Proceedings by or in the Right of the Company. Indemnitee will be entitled to the rights of indemnification provided in this
Section 1(b) if, by reason of his or her Corporate Status, the Indemnitee is, or is threatened to be made, a party to or participant in
any Proceeding brought by or in the right of the Company. Pursuant to this Section 1(b), Indemnitee will be indemnified against all Expenses
actually and reasonably incurred by the Indemnitee, or on the Indemnitee’s behalf, in connection with such Proceeding if the Indemnitee
acted in good faith and in a manner the Indemnitee reasonably believed to be in, or not opposed to, the best interests of the Company.
Indemnification will not be provided against such Expenses if made in respect of any claim, issue, or matter in such Proceeding as to
which Indemnitee will have been adjudged to be liable to the Company unless and to the extent that the Court of Chancery of the State
of Delaware will determine that such indemnification may be made.
(c)
Indemnification for Expenses of a Party Who is Wholly or Partly Successful. Notwithstanding any other provision of this Agreement,
to the extent that Indemnitee is, by reason of his or her Corporate Status, a party to and is successful, on the merits or otherwise,
in any Proceeding, he or she will be indemnified to the maximum extent permitted by law against all Expenses actually and reasonably incurred
by him or her or on his or her behalf in connection therewith. If Indemnitee is not wholly successful in such Proceeding but is successful,
on the merits or otherwise, as to one or more but less than all claims, issues or matters in such Proceeding, the Company will indemnify
Indemnitee against all Expenses actually and reasonably incurred by him or her or on his or her behalf in connection with each successfully
resolved claim, issue, or matter. For purposes of this Section, the termination of any claim, issue or matter in such a Proceeding by
dismissal, with or without prejudice, will be deemed to be a successful result as to such claim, issue, or matter.
2.
Additional Indemnity. In addition to, and without regard to any limitations on, the indemnification provided for in Section
1, the Company agrees to indemnify and hold Indemnitee harmless against all Expenses, judgments, penalties, fines, and amounts paid in
settlement actually and reasonably incurred by him or her or on his or her behalf if, by reason of his or her Corporate Status, he or
she is, or is threatened to be made, a party to or participant in any Proceeding (including a Proceeding by or in the right of the Company),
including, without limitation, any and all liability arising out of the negligence or active or passive wrongdoing of Indemnitee. The
only limitation that will exist on the Company’s obligations pursuant to this Agreement will be that the Company will not be obligated
to make any payment to Indemnitee that is finally determined (under the procedures, and subject to the presumptions, in Sections 6 and
7) to be unlawful.
3.
Contribution.
(a) Whether or not the indemnification provided in Sections 1 and 2 is available, in respect of any threatened, pending, or completed
action, suit, or proceeding in which the Company is jointly liable with Indemnitee (or would be if joined in such action, suit, or proceeding),
the Company will pay, in the first instance, the entire amount of any judgment or settlement of such action, suit, or proceeding without
requiring Indemnitee to contribute to such payment, and the Company waives and relinquishes any right of contribution it may have against
Indemnitee. The Company will not enter into any settlement of any action, suit, or proceeding in which the Company is jointly liable with
Indemnitee (or would be if joined in such action, suit, or proceeding) unless such settlement provides for a full and final release of
all claims asserted against Indemnitee. The Company will not settle any action or claim in a manner that would impose any penalty or admission
of guilt or liability on Indemnitee without Indemnitee’s written consent.
(b) Without
diminishing or impairing the obligations of the Company in the preceding subparagraph, if Indemnitee elects or is required to pay
all or any portion of any judgment or settlement in any threatened, pending, or completed action, suit, or proceeding in which the
Company is jointly liable with Indemnitee (or would be if joined in such action, suit, or proceeding), the Company will contribute
to the amount of Expenses, judgments, fines, and amounts paid in settlement actually and reasonably incurred and paid or payable by
Indemnitee in proportion to the relative benefits received by the Company and all officers, directors, or employees of the Company,
other than Indemnitee, who are jointly liable with Indemnitee (or would be if joined in such action, suit, or proceeding), on the
one hand, and Indemnitee, on the other hand, from the transaction from which such action, suit or proceeding arose. To the extent
necessary to conform to law, the proportion determined on the basis of relative benefit may be further adjusted by reference to the
relative fault of the Company and all officers, directors, or employees of the Company other than Indemnitee who are jointly liable
with Indemnitee (or would be if joined in such action, suit or proceeding), on the one hand, and Indemnitee, on the other hand, in
connection with the events that resulted in such expenses, judgments, fines, or settlement amounts, as well as any other equitable
considerations which the applicable law may require to be considered. The relative fault of the Company and all officers, directors,
or employees of the Company, other than Indemnitee, who are jointly liable with Indemnitee (or would be if joined in such action,
suit or proceeding), on the one hand, and Indemnitee, on the other hand, will be determined by reference to, among other things, the
degree to which their actions were motivated by intent to gain personal profit or advantage, the degree to which their liability is
primary or secondary, and the degree to which their respective conduct is active or passive.
(c)
The Company agrees to fully indemnify and hold Indemnitee harmless from any claims of contribution which may be brought by
the Company’s officers, directors, or employees, other than Indemnitee, who may be jointly liable with Indemnitee.
(d)
To the fullest extent permissible under applicable law, if the indemnification provided for in this Agreement is unavailable
to Indemnitee for any reason whatsoever, the Company, in lieu of indemnifying Indemnitee, will contribute to the amount incurred by Indemnitee,
whether for judgments, fines, penalties, excise taxes, amounts paid or to be paid in settlement or for Expenses, in connection with any
claim relating to an indemnifiable event under this Agreement, in such proportion as is deemed fair and reasonable in light of all of
the circumstances of such Proceeding to reflect: (i) the relative benefits received by the Company and Indemnitee as a result of the events
and transactions giving cause to such Proceeding; and (ii) the relative fault of the Company (and its directors, officers, employees,
and agents) and Indemnitee in connection with such events and transactions.
4.
Indemnification for Expenses of a Witness. Notwithstanding any other provision of this Agreement, to the extent that Indemnitee
is, by reason of his or her Corporate Status, a witness, or is made (or asked) to respond to discovery requests, in any Proceeding to
which Indemnitee is not a party, he or she will be indemnified against all Expenses actually and reasonably incurred by him or her or
on his or her behalf in connection therewith.
5.
Advancement of Expenses. Notwithstanding any other provision of this Agreement, the Company will advance all Expenses incurred
by or on behalf of Indemnitee in connection with any Proceeding by reason of Indemnitee’s Corporate Status within 30 days after
the receipt by the Company of a statement from Indemnitee requesting such advance or advances, whether prior to or after final disposition
of such Proceeding. Such statement will reasonably evidence the Expenses incurred by Indemnitee and will include or be preceded or accompanied
by a written undertaking by or on behalf of Indemnitee to repay any Expenses advanced if it is ultimately determined that Indemnitee is
not entitled to be indemnified against such Expenses. Any advances and undertakings to repay pursuant to this Section 5 will be unsecured
and interest free.
6.
Procedures and Presumptions for Determination of Entitlement to Indemnification. It is the intent of this Agreement to
secure for Indemnitee rights of indemnity that are as favorable as may be permitted under the DGCL and public policy of the State of
Delaware. Accordingly, the parties agree that the following procedures and presumptions will apply in the event of any question as to
whether Indemnitee is entitled to indemnification under this Agreement:
(a)
To obtain indemnification under this Agreement, Indemnitee will submit to the Company a written request with such documentation
and information as is reasonably available to Indemnitee and is reasonably necessary to determine whether and to what extent Indemnitee
is entitled to indemnification. The Secretary of the Company will, promptly on receipt of such a request for indemnification, advise the
Board in writing that Indemnitee has requested indemnification. Notwithstanding the foregoing, any failure of Indemnitee to provide such
request to the Company, or to provide such a request in a timely fashion, will not relieve the Company of any liability that it may have
to Indemnitee unless, and to the extent that, such failure actually and materially prejudices the interests of the Company.
(b) On written request by Indemnitee for indemnification pursuant to the first sentence of Section 6(a), Indemnitee’s entitlement
to indemnification will be determined in the specific case:
(1) by
one of the following four methods, which will be at the election of the Board, unless a Change in Control has occurred:
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(i)
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by a majority vote of the Disinterested Directors, even though less than a quorum;
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(ii)
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by a committee of Disinterested Directors designated by a majority vote of the Disinterested Directors,
even though less than a quorum;
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(iii)
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if there are no Disinterested Directors or if the Disinterested Directors so direct, by Independent Counsel
in a written opinion to the Board, a copy of which will be delivered to the Indemnitee; or
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(iv)
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if so directed by the Board, by the stockholders of the Company; or
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(2) if
a Change in Control has occurred, by Independent Counsel in a written opinion to the Board, a copy of which will be delivered to the Indemnitee
(c) If
the determination of entitlement to indemnification is to be made by Independent Counsel pursuant to Section 6(b), the Independent
Counsel will be selected as provided in this Section 6(c). The Independent Counsel will be selected by the Board and the Board will
notify the Indemnitee by written notice. Within 10 days after such notice has been given, Indemnitee may deliver the Company a
written objection to such selection. But, that objection may only be asserted on the ground that the Independent Counsel does not
meet the requirements of “Independent Counsel” as defined in Section 13, and the objection will include
with particularity the factual basis of such assertion. Absent a proper and timely objection, the person so selected will act as
Independent Counsel. If a written objection is made and substantiated, the Independent Counsel selected may not serve as Independent
Counsel unless and until such objection is withdrawn or a court has determined that such objection is without merit. If no
Independent Counsel has been selected and not objected to within 20 days after submission by Indemnitee of a written request for
indemnification pursuant to Section 6(a), either the Company or Indemnitee may petition the Court of Chancery of the State of
Delaware or other court of competent jurisdiction for resolution of any objection made by the Indemnitee to the Company’s
selection of Independent Counsel or for the appointment of a person selected by the court or by such other person as the court
designates to serve as Independent Counsel. The person with respect to whom all objections are so resolved or the person so
appointed will act as Independent Counsel under Section 6(b). The Company will pay any and all reasonable fees and expenses of
Independent Counsel incurred by such Independent Counsel in connection with acting pursuant to Section 6(b), and the Company will
pay all reasonable fees and expenses incident to the procedures of this Section 6(c), regardless of the manner in which such
Independent Counsel was selected or appointed. In no event will Indemnitee be liable for fees and expenses incurred by such
Independent Counsel.
(d) In making a determination with respect to entitlement to indemnification under this Agreement, the person or persons or entity
making such determination will presume that Indemnitee is entitled to indemnification under this Agreement. Anyone seeking to overcome
this presumption will have the burden of proof and the burden of persuasion by clear and convincing evidence. Neither the failure of the
Company (including by its Board or Independent Counsel) to have made a determination prior to the commencement of any action pursuant
to this Agreement that indemnification is proper in the circumstances because Indemnitee has met the applicable standard of conduct, nor
an actual determination by the Company (including by its Board or Independent Counsel) that Indemnitee has not met such applicable standard
of conduct, will be a defense to the action or create a presumption that Indemnitee has not met the applicable standard of conduct.
(e) Indemnitee will be deemed to have acted in good faith if Indemnitee’s action is based on the records or books of account
of the Enterprise, including financial statements, or on information supplied to Indemnitee by the officers of the Enterprise in the course
of their duties, or on the advice of legal counsel for the Enterprise or on information or records given or reports made to the Enterprise
by an independent certified public accountant or by an appraiser or other expert selected with reasonable care by the Enterprise. In addition,
the knowledge and actions, or failure to act, of any director, officer, agent, or employee of the Enterprise will not be imputed to Indemnitee
for purposes of determining the right to indemnification under this Agreement. Whether or not the foregoing provisions of this Section
6(e) are satisfied, it will in any event be presumed that Indemnitee has at all times acted in good faith and in a manner he or she reasonably
believed to be in, or not opposed to, the best interests of the Company. Anyone seeking to overcome this presumption will have the burden
of proof and the burden of persuasion by clear and convincing evidence.
(f) If the person, persons, or entity empowered or selected under Section 6 to determine whether Indemnitee is entitled to indemnification
has not made a determination within 60 days after receipt by the Company of the request, the requisite determination of entitlement to
indemnification will be deemed to have been made, and Indemnitee will be entitled to such indemnification absent (i) a misstatement by
Indemnitee of a material fact or an omission of a material fact necessary to make Indemnitee’s statement not materially misleading
in connection with the request for indemnification, or (ii) a prohibition of such indemnification under applicable law. Such 60-day period
may be extended for a reasonable time, not to exceed an additional 30 days, if the person, persons, or entity making such determination
with respect to entitlement to indemnification in good faith requires such additional time to obtain or evaluate documentation or information
relating thereto. The provisions of this Section 6(f) will not apply if the determination of entitlement to indemnification is to be
made by the stockholders pursuant to Section 6(b) and if (A) within 15 days after receipt by the Company of the request for such determination,
the Board or the Disinterested Directors, if appropriate, resolve to submit such determination to the stockholders for their consideration
at an annual meeting to be held within 75 days after such receipt, and such determination is made at that annual meeting, or (B) a special
meeting of stockholders is called within 15 days after such receipt for the purpose of making such determination, such meeting is held
for such purpose within 60 days after having been so called and such determination is made at that special meeting.
(g) Indemnitee will cooperate with the person, persons, or entity making such determination with respect to Indemnitee’s
entitlement to indemnification, including providing such person, persons, or entity on reasonable advance request any documentation or
information which is not privileged or otherwise protected from disclosure and which is reasonably available to Indemnitee and reasonably
necessary to such determination. Any Independent Counsel, member of the Board, or stockholder of the Company will act reasonably and in
good faith in making a determination regarding the Indemnitee’s entitlement to indemnification under this Agreement. Any costs or
expenses (including attorneys. fees and disbursements) incurred by Indemnitee in so cooperating with the person, persons, or entity making
such determination will be borne by the Company (irrespective of the determination as to Indemnitee’s entitlement to indemnification),
and the Company indemnifies and agrees to hold Indemnitee harmless therefrom.
(h) The Company acknowledges that a settlement or other disposition short of final judgment may be successful if it permits a party
to avoid expense, delay, distraction, disruption, and uncertainty. In the event that any action, claim, or proceeding to which Indemnitee
is a party is resolved in any manner other than by adverse judgment against Indemnitee (including, without limitation, settlement of such
action, claim or proceeding with or without payment of money or other consideration) it will be presumed that Indemnitee has been successful
on the merits or otherwise in such action, suit, or proceeding. Anyone seeking to overcome this presumption will have the burden of proof
and the burden of persuasion by clear and convincing evidence.
(i) The termination of any Proceeding or of any claim, issue, or matter in any Proceeding, by judgment, order, settlement or conviction,
or on a plea of nolo contendere or its equivalent, will not (except as otherwise expressly provided in this Agreement) of itself adversely
affect the right of Indemnitee to indemnification or create a presumption that Indemnitee did not act in good faith and in a manner which
he or she reasonably believed to be in, or not opposed to, the best interests of the Company or, with respect to any criminal Proceeding,
that Indemnitee had reasonable cause to believe that his or her conduct was unlawful.
7.
Remedies of Indemnitee.
(a) In
the event that (i) a determination is made pursuant to Section 6 that Indemnitee is not entitled to indemnification under this Agreement,
(ii) advancement of Expenses is not timely made pursuant to Section 5, (iii) subject to the limitations set forth herein, no determination
of entitlement to indemnification is made pursuant to Section 6(b) within 90 days after receipt by the Company of the request for indemnification,
(iv) payment of indemnification is not made pursuant to this Agreement within 10 days after receipt by the Company of a written request
for such payment, or (v) payment of indemnification is not made within 10 days after a determination has been made that Indemnitee is
entitled to indemnification or such determination is deemed to have been made pursuant to Section 6, Indemnitee will be entitled to an
adjudication in an appropriate court of the State of Delaware, or in any other court of competent jurisdiction, of Indemnitee’s
entitlement to such indemnification. Indemnitee will commence such proceeding seeking an adjudication within one year following the date
on which Indemnitee first has the right to commence such proceeding pursuant to this Section 7(a). The Company will not oppose Indemnitee’s
right to seek any such adjudication.
(b) In the event that a determination has been made pursuant to Section 6(b) that Indemnitee is not entitled to indemnification,
any judicial proceeding commenced pursuant to this Section 7 will be conducted in all respects as a de novo trial on the merits, and Indemnitee
will not be prejudiced by reason of the adverse determination under Section 6(b).
(c) If a determination has been made pursuant to Section 6(b) that Indemnitee is entitled to indemnification, the Company will
be bound by such determination in any judicial proceeding commenced pursuant to this Section 7, absent (i) a misstatement by Indemnitee
of a material fact or an omission of a material fact necessary to make Indemnitee’s misstatement not materially misleading in connection
with the application for indemnification, or (ii) a prohibition of such indemnification under applicable law.
(d) In the event that Indemnitee, pursuant to this Section 7, seeks a judicial adjudication of his or her rights under, or to recover
damages for breach of, this Agreement, or to recover under any directors. and officers. liability insurance policies maintained by the
Company, the Company will pay on his or her behalf, in advance, any and all expenses (of the types described in the definition of Expenses)
actually and reasonably incurred by him or her in such judicial adjudication, regardless of whether Indemnitee ultimately is determined
to be entitled to such indemnification, advancement of expenses, or insurance recovery.
(e) The Company will be precluded from asserting in any judicial proceeding commenced pursuant to this Section 7 that the procedures
and presumptions of this Agreement are not valid, binding, and enforceable, and will stipulate in any such court that the Company is bound
by all the provisions of this Agreement. The Company will indemnify Indemnitee against any and all Expenses and, if requested by Indemnitee,
will (within 10 days after receipt by the Company of a written request therefore) advance, to the extent not prohibited by law, such expenses
to Indemnitee, which are incurred by Indemnitee in connection with any action brought by Indemnitee for indemnification or advance of
Expenses from the Company under this Agreement or under any directors. and officers. liability insurance policies maintained by the Company,
regardless of whether Indemnitee ultimately is determined to be entitled to such indemnification, advancement of Expenses, or insurance
recovery, as the case may be.
(f) Notwithstanding anything in this Agreement to the contrary, no determination as to entitlement to indemnification under this
Agreement will be required to be made prior to the final disposition of the Proceeding.
8. Non-Exclusivity; Survival of Rights; Insurance; Primacy of Indemnification; Subrogation.
(a) The rights of indemnification as provided by this Agreement will not be deemed exclusive of any other rights to which Indemnitee
may at any time be entitled under applicable law, the Certificate of Incorporation, the Bylaws, any agreement, a vote of stockholders,
a resolution of Board, or otherwise. No amendment, alteration, or repeal of this Agreement or of any provision of this Agreement will
limit or restrict any right of Indemnitee under this Agreement in respect of any action taken or omitted by such Indemnitee in his or
her Corporate Status prior to such amendment, alteration, or repeal. To the extent that a change in the DGCL, whether by statute or judicial
decision, permits greater indemnification than would be afforded currently under the Certificate of Incorporation, Bylaws, and this Agreement,
it is the intent of the parties of this Agreement that Indemnitee will enjoy all greater benefits so afforded by such change. No right
or remedy in this Agreement conferred is intended to be exclusive of any other right or remedy, and every other right and remedy will
be cumulative and in addition to every other right and remedy given under this Agreement or now or hereafter existing at law or in equity
or otherwise. The assertion or employment of any right or remedy under this Agreement, or otherwise, will not prevent the concurrent assertion
or employment of any other right or remedy.
(b) To the extent that the Company maintains an insurance policy or policies providing liability insurance for directors, officers,
employees, or agents, or fiduciaries of the Company or of any other corporation, partnership, joint venture, trust, employee benefit plan,
or other enterprise that such person serves at the request of the Company, the Company will procure such insurance policy or policies
under which the Indemnitee will be covered in accordance with its or their terms to the maximum extent of the coverage available for any
director, officer, employee, agent, or fiduciary under such policy or policies. If, at the time of the receipt of a notice of a claim
pursuant to the terms of this Agreement, the Company has director and officer liability insurance in effect, the Company will give prompt
notice of the commencement of such proceeding to the insurers in accordance with the procedures in the respective policies. The Company
will thereafter take all necessary or desirable action to cause such insurers to pay, on behalf of the Indemnitee, all amounts payable
as a result of such proceeding in accordance with the terms of such policies.
(c) The
Company acknowledges that Indemnitee has or may have in the future certain rights to indemnification, advancement of expenses, or
insurance provided by other entities or organizations (collectively, the “Secondary Indemnitors”). The Company
agrees that (i) it is the indemnitor of first resort (i.e., its obligations to Indemnitee are primary and any obligation of the
Secondary Indemnitors to advance expenses or to provide indemnification for the same expenses or liabilities incurred by Indemnitee
are secondary), (ii) it will be required to advance the full amount of expenses incurred by Indemnitee and will be liable for the
full amount of all Expenses, judgments, penalties, fines, and amounts paid in settlement to the extent legally permitted and as
required by the terms of this Agreement, the Company’s Certificate of Incorporation or Bylaws (or any other agreement between
the Company and Indemnitee), without regard to any rights Indemnitee may have against the Secondary Indemnitors, and (iii) it
irrevocably waives, relinquishes, and releases the Secondary Indemnitors from any and all claims against the Secondary Indemnitors
for contribution, subrogation, or any other recovery of any kind in respect thereof. The Company further agrees that no advancement
or payment by the Secondary Indemnitors on behalf of Indemnitee with respect to any claim for which Indemnitee has sought
indemnification from the Company will affect the foregoing and the Secondary Indemnitors will have a right of contribution and be
subrogated to the extent of such advancement or payment to all of the rights of recovery of Indemnitee against the Company. The
Company and Indemnitee agree that the Secondary Indemnitors are express third party beneficiaries of the terms of this Section
8(c).
(d)
Except as provided in Section 8(c), in the event of any payment under this Agreement, the Company will be subrogated to the
extent of such payment to all of the rights of recovery of Indemnitee (other than against the Secondary Indemnitors), who will execute
all papers required and take all action necessary to secure such rights, including execution of such documents as are necessary to enable
the Company to bring suit to enforce such rights.
(e)
Except as provided in Section 8(c), the Company will not be liable under this Agreement to make any payment of amounts otherwise
indemnifiable under this Agreement if and to the extent that Indemnitee has otherwise actually received such payment under any insurance
policy, contract, agreement, or otherwise.
(f)
Except as provided in Section 8(c), the Company’s obligation to indemnify or advance Expenses under this Agreement to
Indemnitee who is or was serving at the request of the Company as a director, officer, employee, or agent of any other corporation, partnership,
joint venture, trust, employee benefit plan, or other enterprise will be reduced by any amount Indemnitee has actually received as indemnification
or advancement of expenses from such other corporation, partnership, joint venture, trust, employee benefit plan, or other enterprise.
9.
Exceptions to Right of Indemnification. Notwithstanding any provision in this Agreement, the Company will not be obligated
under this Agreement to make any indemnity in connection with any claim made against Indemnitee:
(a)
for which payment has actually been made to or on behalf of Indemnitee under any insurance policy or other indemnity provision,
except with respect to any excess beyond the amount paid under any insurance policy or other indemnity provision, provided that
the foregoing will not affect the rights of Indemnitee or the Secondary Indemnitors in Section 8(c);
(b)
for an accounting of profits made from the purchase and sale (or sale and purchase) by Indemnitee of securities of the Company
within the meaning of Section 16(b) of the Exchange Act, or similar provisions of state statutory law or common law;
(c) in
connection with any Proceeding (or any part of any Proceeding) initiated by Indemnitee, including any Proceeding (or any part of any
Proceeding) initiated by Indemnitee against the Company or its directors, officers, employees, or other indemnitees, unless (i) the
Board authorized the Proceeding (or any part of any Proceeding) prior to its initiation, or (ii) the Company provides the
indemnification, in its sole discretion, pursuant to the powers vested in the Company under applicable law;
(d)
with respect to remuneration paid to Indemnitee if it is determined by final judgment or other final adjudication that such
remuneration was in violation of law (and, in this respect, both the Company and Indemnitee have been advised that the Securities and
Exchange Commission believes that indemnification for liabilities arising under the federal securities laws is against public policy and
is, therefore, unenforceable and that claims for indemnification should be submitted to appropriate courts for adjudication, as indicated
in the last paragraph of this Section 9);
(e)
a final judgment or other final adjudication is made that Indemnitee’s conduct was in bad faith, knowingly fraudulent
or deliberately dishonest or constituted willful misconduct (but only to the extent of such specific determination);
(f)
in connection with any claim for reimbursement or any recovery policy of the Company by Indemnitee of any bonus or other incentive-based
or equity-based compensation or of any profits realized by Indemnitee from the sale of securities of the Company, as required in each
case under the Exchange Act (including any such reimbursements that arise from an accounting restatement of the Company pursuant to Section
304 of the Sarbanes-Oxley Act or Section 954 of the Dodd-Frank Act, or the payment to the Company of profits arising from the purchase
and sale by Indemnitee of securities in violation of Section 306 of the Sarbanes-Oxley Act), if Indemnitee is held liable therefor (including
pursuant to any settlement); or
(g)
on account of conduct that is established by a final judgment as constituting a breach of Indemnitee’s duty of loyalty
to the Company or resulting in any personal profit or advantage to which Indemnitee is not legally entitled.
For purposes of this Section
9, a final judgment or other adjudication may be reached in either the underlying proceeding or action in connection with which indemnification
is sought or a separate proceeding or action to establish rights and liabilities under this Agreement.
Any provision herein to the
contrary notwithstanding, the Company will not be obligated pursuant to the terms of this Agreement to indemnify Indemnitee or otherwise
act in violation of any undertaking appearing in and required by the rules and regulations promulgated under the Securities Act, or in
any registration statement filed with the SEC under the Securities Act. Indemnitee acknowledges that paragraph (h) of Item 512 of Regulation
S-K promulgated under the Securities Act currently generally requires the Company to undertake, in connection with any registration statement
filed under the Securities Act, to submit the issue of the enforceability of Indemnitee’s rights under this Agreement in connection
with any liability under the Securities Act on public policy grounds to a court of appropriate jurisdiction and to be governed by any
final adjudication of such issue. Indemnitee specifically agrees that any such undertaking will supersede the provisions of this Agreement
and to be bound by any such undertaking.
10. Duration
of Agreement. All agreements and obligations of the Company contained herein will continue during the period Indemnitee is an
officer or director of the Company (or is or was serving at the request of the Company as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise) and will continue thereafter so long as Indemnitee will
be subject to any Proceeding (or any proceeding commenced under Section 7) by reason of his or her Corporate Status, whether or not
he or she is acting or serving in any such capacity at the time any liability or expense is incurred for which indemnification can
be provided under this Agreement. This Agreement will be binding on and inure to the benefit of and be enforceable by the parties of
this Agreement and their respective successors (including any direct or indirect successor by purchase, merger, consolidation, or
otherwise to all or substantially all of the business or assets of the Company), assigns, spouses, heirs, executors, and personal
and legal representatives.
11.
Security. To the extent requested by Indemnitee and approved by the Board, the Company may at any time and from time to
time provide security to Indemnitee for the Company’s obligations under this Agreement through an irrevocable bank line of credit,
funded trust, or other collateral. Any such security, once provided to Indemnitee, may not be revoked or released without the prior written
consent of the Indemnitee.
12.
Enforcement.
(a)
The Company expressly confirms and agrees that it has entered into this Agreement and assumes the obligations imposed on it
to induce Indemnitee to serve as an officer or director of the Company, and the Company acknowledges that Indemnitee is relying on this
Agreement in serving as an officer or director of the Company.
(b)
Other than as provided in this Agreement, this Agreement constitutes the entire agreement between the parties with respect
to this subject matter and supersedes all prior agreements and understandings, oral, written and implied, between the parties with respect
to this subject matter.
13.
Definitions. For purposes of this Agreement:
(a)
“Beneficial Owner” has the meaning given to such term in Rule 13d-3 under the Exchange Act; provided
that Beneficial Owner will exclude any Person otherwise becoming a Beneficial Owner by reason of the stockholders of the Company approving
a merger of the Company with another entity.
(b)
“Board” means the Board of Directors of the Company.
(c)
“Change in Control” means the earliest to occur after the date of this Agreement of any of the following
events:
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(i)
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Acquisition of Stock by Third Party. Any Person is or becomes the Beneficial Owner (as defined
above), directly or indirectly, of securities of the Company representing twenty five percent (25%) or more of the combined voting power
of the Company’s then outstanding securities (excluding any changes in the voting power solely resulting from any conversion of
Class B Common Stock into Class A Common Stock);
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(ii)
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Change in Board. During any period of two (2) consecutive years (not including any period prior
to the execution of this Agreement), individuals who at the beginning of such period constitute the Board, and any new director (other
than a director designated by a person who has entered into an agreement with the Company to effect a transaction described in clause
(i), (iii) or (iv) of this definition of Change in Control) whose election by the Board or nomination for election by the Company’s
stockholders was approved by a vote of at least two-thirds of the directors then still in office who either were directors at the beginning
of the period or whose election or nomination for election was previously so approved, cease for any reason to constitute a majority of
the members of the Board;
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(iii)
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Corporate Transactions. The effective date of a merger or consolidation of the Company with any
other entity, other than a merger or consolidation which would result in the voting securities of the Company outstanding immediately
prior to such merger or consolidation continuing to represent (either by remaining outstanding or by being converted into voting securities
of the surviving entity) more than 51% of the combined voting power of the voting securities of the surviving entity outstanding immediately
after such merger or consolidation and with the power to elect a majority of the Board or other governing body of such surviving entity;
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(iv)
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Liquidation. The approval by the stockholders of the Company of a complete liquidation of the Company
or an agreement for the sale or disposition by the Company of all or substantially all of the Company’s assets; and
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(v)
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Other Events. There occurs any other event of a nature that would be required to be reported in
response to Item 6(e) of Schedule 14A of Regulation 14A (or a response to any similar item on any similar schedule or form) promulgated
under the Exchange Act, whether or not the Company is then subject to such reporting requirement.
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(d)
“Corporate Status” describes the status of a person who is or was a director, officer, employee, agent or fiduciary
of the Company or of any other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise that such person
is or was serving at the express written request of the Company.
(e)
“Disinterested Director” means a non-executive director of the Company who is not and was not a party to the Proceeding
in respect of which indemnification is sought by Indemnitee.
(f)
“Dodd-Frank Act” means the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010.
(g)
“Enterprise” means the Company and any other corporation, partnership, joint venture, trust, employee benefit
plan or other enterprise that Indemnitee is or was serving at the express written request of the Company as a director, officer, employee,
agent or fiduciary.
(h)
“Exchange Act” means the Securities Exchange Act of 1934, as amended.
(i)
“Expenses” includes all documented and reasonable attorneys. fees, retainers, court costs, transcript costs,
fees of experts, witness fees, travel expenses, duplicating costs, printing and binding costs, telephone charges, postage, delivery service
fees, and all other disbursements or expenses of the types customarily incurred in connection with prosecuting, defending, preparing to
prosecute or defend, investigating, participating, or being or preparing to be a witness in a Proceeding, or responding to, or objecting
to, a request to provide discovery in any Proceeding. Expenses also will include Expenses incurred in connection with any appeal resulting
from any Proceeding and any federal, state, local, or foreign taxes imposed on the Indemnitee as a result of the actual or deemed receipt
of any payments under this Agreement, including without limitation the premium, security for, and other costs relating to any cost bond,
supersede as bond, or other appeal bond or its equivalent. Expenses will not include amounts paid in settlement by Indemnitee or the amount
of judgments or fines against Indemnitee.
(j)
“Independent Counsel” means a law firm, or a member of a law firm, that is experienced in matters of corporation
law and neither presently is, nor in the past five years has been, retained to represent: (i) the Company or Indemnitee in any matter
material to either such party (other than with respect to matters concerning Indemnitee under this Agreement, or of other indemnitees
under similar indemnification agreements), or (ii) any other party to the Proceeding giving rise to a claim for indemnification under
this Agreement. Notwithstanding the foregoing, the term “Independent Counsel” will not include any person who, under the applicable
standards of professional conduct then prevailing, would have a conflict of interest in representing either the Company or Indemnitee
in an action to determine Indemnitee’s rights under this Agreement. The Company agrees to pay the reasonable fees of the Independent
Counsel referred to above and to fully indemnify such counsel against any and all Expenses, claims, liabilities and damages arising out
of or relating to this Agreement or its engagement pursuant hereto.
(k)
“Person” for purposes of the definition of Beneficial Owner and Change in Control set forth above, will
have the meaning as set forth in Sections 13(d) and 14(d) of the Exchange Act; provided that Person will exclude (i) the Company,
(ii) any trustee or other fiduciary holding securities under an employee benefit plan of the Company, and (iii) any corporation owned,
directly or indirectly, by the stockholders of the Company in substantially the same proportions as their ownership of stock of the Company.
(l) “Proceeding”
includes any threatened, pending or completed action, suit, arbitration, alternate dispute resolution mechanism, investigation,
inquiry, administrative hearing or any other actual, threatened or completed proceeding, whether brought by or in the right of the
Company or otherwise and whether civil, criminal, administrative or investigative, in which Indemnitee was, is or will be involved
as a party or otherwise, by reason of the fact that Indemnitee is or was an officer or director of the Company, by reason of any
action taken by him or her or of any inaction on his or her part while acting as an officer or director of the Company, or by reason
of the fact that he or she is or was serving at the request of the Company as a director, officer, employee, agent or fiduciary of
another corporation, partnership, joint venture, trust or other Enterprise; in each case whether or not he or she is acting or
serving in any such capacity at the time any liability or expense is incurred for which indemnification can be provided under this
Agreement; including one pending on or before the date of this Agreement, but excluding one initiated by an Indemnitee pursuant to
Section 7 of this Agreement to enforce his or her rights under this Agreement.
(m)
“Sarbanes-Oxley Act” will mean the Sarbanes-Oxley Act of 2002, as amended.
(n)
“SEC” will mean the Securities and Exchange Commission.
(o)
“Securities Act” will mean the Securities Act of 1933, as amended.
14.
Severability. The invalidity or unenforceability of any provision hereof will in no way affect the validity or enforceability
of any other provision. Without limiting the generality of the foregoing, this Agreement is intended to confer upon Indemnitee indemnification
rights to the fullest extent permitted by applicable laws. In the event any provision hereof conflicts with any applicable law, such provision
will be deemed modified, consistent with the aforementioned intent, to the extent necessary to resolve such conflict.
15.
Modification and Waiver. No supplement, modification, termination or amendment of this Agreement will be binding unless
executed in writing by both of the parties hereto. No waiver of any of the provisions of this Agreement will be deemed or will constitute
a waiver of any other provisions hereof (whether or not similar) nor will such waiver constitute a continuing waiver.
16.
Notice By Indemnitee. Indemnitee agrees promptly to notify the Company in writing upon being served with or otherwise receiving
any summons, citation, subpoena, complaint, indictment, information or other document relating to any Proceeding or matter which may be
subject to indemnification covered under this Agreement. The failure to so notify the Company will not relieve the Company of any obligation
which it may have to Indemnitee under this Agreement or otherwise unless and only to the extent that such failure or delay materially
prejudices the Company.
17.
Notices. All notices and other communications given or made pursuant to this Agreement will be in writing and will be deemed
effectively given: (a) upon personal delivery to the party to be notified, (b) when sent by confirmed electronic mail or facsimile if
sent during normal business hours of the recipient, and if not so confirmed, then on the next business day, (c) 5 days after having been
sent by registered or certified mail, return receipt requested, postage prepaid, or (d) one (1) day after deposit with a nationally recognized
overnight courier, specifying next day delivery, with written verification of receipt. All communications will be sent:
(a)
To Indemnitee at the address on the books and records of the Company.
(b)
To the Company at:
Squarespace, Inc.
225 Varick Street, 12th Floor
New York, New York 10014
Attention: General Counsel
or to such other address as may have been furnished
to Indemnitee by the Company or to the Company by Indemnitee, as the case may be.
18.
Counterparts. This Agreement may be executed in two or more counterparts, each of which will be deemed an original, but
all of which together will constitute one and the same Agreement. This Agreement may also be executed and delivered by facsimile signature,
electronic mail (including .pdf or any electronic signature complying with the U.S. Federal ESIGN Act of 2000, e.g., www.docusign.com)
or other transmission method and in two or more counterparts, each of which will be deemed an original, but all of which together will
constitute one and the same instrument and be deemed to have been duly and validly delivered and be valid and effective for all purposes.
19.
Headings. The headings of the paragraphs of this Agreement are inserted for convenience only and will not be deemed to constitute
part of this Agreement or to affect the construction thereof.
20.
Governing Law and Consent to Jurisdiction. This Agreement and the legal relations among the parties will be governed by,
and construed and enforced in accordance with, the laws of the State of Delaware, without regard to its conflict of laws rules. The Company
and Indemnitee hereby irrevocably and unconditionally (i) agree that any action or proceeding arising out of or in connection with this
Agreement will be brought only in the Chancery Court of the State of Delaware (the “Delaware Court”), and not in any
other state or federal court in the United States of America or any court in any other country, (ii) consent to submit to the exclusive
jurisdiction of the Delaware Court for purposes of any action or proceeding arising out of or in connection with this Agreement, (iii)
appoint, to the extent such party is not otherwise subject to service of process in the State of Delaware, irrevocably Incorporating Services,
Ltd. as its agent in the State of Delaware for acceptance of legal process in connection with any such action or proceeding against such
party with the same legal force and validity as if served upon such party personally within the State of Delaware, (iv) waive any objection
to the laying of venue of any such action or proceeding in the Delaware Court, and (v) waive, and agree not to plead or to make, any claim
that any such action or proceeding brought in the Delaware Court has been brought in an improper or inconvenient forum.
[Signature page follows.]
IN WITNESS WHEREOF,
the parties hereto have entered into this Agreement effective as of the date first above written.
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SQUARESPACE, INC.
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By:
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Name:
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Title:
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INDEMNITEE
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Signature of Indemnitee
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Print or Type Name of Indemnitee
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[Signature page to Squarespace,
Inc. Indemnity Agreement]
Exhibit 10.4
Squarespace,
Inc.
2021
Equity Incentive Plan
Adopted
by the Board of Directors: March 25, 2021
Approved by the Stockholders: April __, 2021
(a)
Successor to and Continuation of Prior Plan. The Plan is not intended to be the successor to and continuation of the Company’s
2017 Equity Incentive Plan (the “Prior Plan”). From and after 12:01 a.m. Eastern time on the Effective Date,
no additional awards will be granted under the Prior Plan. All Awards granted on or after 12:01 a.m. Eastern Time on the Effective Date
will be granted under this Plan. All stock awards granted under the Prior Plan will remain subject to the terms of the Prior Plan.
(b)
Eligible Award Recipients. Employees, Directors and Consultants are eligible to receive Awards.
(c)
Available Awards. The Plan provides for the grant of the following types of Awards: (i) Incentive Stock Options, (ii) Nonstatutory
Stock Options, (iii) Stock Appreciation Rights, (iv) Restricted Stock Awards, (v) Restricted Stock Unit Awards, (vi) Performance Stock
Awards, (vii) Performance Cash Awards, and (viii) Other Stock Awards.
(d)
Purpose. The Plan, through the grant of Awards, is intended to help the Company secure and retain the services of eligible
award recipients, provide incentives for such persons to exert maximum efforts for the success of the Company and any Affiliate, and provide
a means by which the eligible recipients may benefit from increases in value of the Common Stock.
(a)
Administration by Board. The Board will administer the Plan. The Board may delegate administration of the Plan to a Committee
or Committees, as provided in Section 2(c).
(b)
Powers of Board. The Board will have the power, subject to, and within the limitations of, the express provisions of the Plan:
(i)
To determine: (A) who will be granted Awards; (B) when and how each Award will be granted; (C) what type of Award will be granted;
(D) the provisions of each Award (which need not be identical), including when a person will be permitted to exercise or otherwise receive
cash or Common Stock under the Award; (E) the number of shares of Common Stock subject to, or the cash value of, an Award; and (F) the
Fair Market Value applicable to a Stock Award.
(ii) To
construe and interpret the Plan and Awards granted under it, and to establish, amend and revoke rules and regulations for
administration of the Plan and Awards. The Board, in the exercise of these powers, may correct any defect, omission or inconsistency
in the Plan or in any Award Agreement, in a manner and to the extent it will deem necessary or expedient to make the Plan or Award
fully effective.
(iii)
To settle all controversies regarding the Plan and Awards granted under it.
(iv)
To accelerate, in whole or in part, the time at which an Award may be exercised or vest (or the time at which cash or shares
of Common Stock may be issued in settlement thereof).
(v)
To suspend or terminate the Plan at any time. Except as otherwise provided in the Plan or an Award Agreement, suspension or
termination of the Plan will not materially impair a Participant’s rights under the Participant’s then-outstanding Awards
without the Participant’s written consent, except as provided in subsection (viii) below.
(vi)
To amend the Plan in any respect the Board deems necessary or advisable, including, without limitation, by adopting amendments
relating to Incentive Stock Options and certain nonqualified deferred compensation under Section 409A of the Code and/or bringing the
Plan or Awards granted under the Plan into compliance with the requirements for Incentive Stock Options or ensuring that they are exempt
from, or compliant with, the requirements for nonqualified deferred compensation under Section 409A of the Code, subject to the limitations,
if any, of applicable law. If required by applicable law or listing requirements, and except as provided in Section 9(a) relating to Capitalization
Adjustments, the Company will seek stockholder approval of any amendment of the Plan that (A) materially increases the number of shares
of Common Stock available for issuance under the Plan, (B) materially expands the class of individuals eligible to receive Awards under
the Plan, (C) materially increases the benefits accruing to Participants under the Plan, (D) materially reduces the price at which shares
of Common Stock may be issued or purchased under the Plan, (E) materially extends the term of the Plan, or (F) expands the types of Awards
available for issuance under the Plan. Except as otherwise provided in the Plan or an Award Agreement, no amendment of the Plan will materially
impair a Participant’s rights under an outstanding Award without the Participant’s written consent.
(vii)
To submit any amendment to the Plan for stockholder approval, including, but not limited to, amendments to the Plan intended
to satisfy the requirements of Section 422 of the Code regarding “incentive stock options.”
(viii) To
approve forms of Award Agreements for use under the Plan and to amend the terms of any one or more Awards, including, but not
limited to, amendments to provide terms more favorable to the Participant than previously provided in the Award Agreement, subject
to any specified limits in the Plan that are not subject to Board discretion; provided, however, that a Participant’s
rights under any Award will not be impaired by any such amendment unless (A) the Company requests the consent of the affected
Participant, and (B) such Participant consents in writing. Notwithstanding the foregoing, (1) a Participant’s rights will not
be deemed to have been impaired by any such amendment if the Board, in its sole discretion, determines that the amendment, taken as
a whole, does not materially impair the Participant’s rights, and (2) subject to the limitations of applicable law, if any,
the Board may amend the terms of any one or more Awards without the affected Participant’s consent (A) to maintain the
qualified status of the Award as an Incentive Stock Option under Section 422 of the Code; (B) to change the terms of an Incentive
Stock Option, if such change results in impairment of the Award solely because it impairs the qualified status of the Award as an
Incentive Stock Option under Section 422 of the Code; (C) to clarify the manner of exemption from, or to bring the Award into
compliance with, Section 409A of the Code; or (D) to comply with other applicable laws or listing requirements.
(ix)
Generally, to exercise such powers and to perform such acts as the Board deems necessary or expedient to promote the best interests
of the Company and that are not in conflict with the provisions of the Plan or Awards.
(x)
To adopt such procedures and sub-plans as are necessary or appropriate to permit participation in the Plan by Employees, Directors
or Consultants who are foreign nationals or employed outside the United States (provided that Board approval will not be necessary for
immaterial modifications to the Plan or any Award Agreement that are required for compliance with the laws of the relevant foreign jurisdiction).
(c)
Delegation to Committee.
(i)
General. The Board may delegate some or all of the administration of the Plan to a Committee or Committees. If administration
of the Plan is delegated to a Committee, the Committee will have, in connection with the administration of the Plan, the powers theretofore
possessed by the Board that have been delegated to the Committee, including the power to delegate to a subcommittee of the Committee any
of the administrative powers the Committee is authorized to exercise (and references in this Plan to the Board will thereafter be construed
as being to the Committee or subcommittee, as applicable). Any delegation of administrative powers will be reflected in resolutions, not
inconsistent with the provisions of the Plan, adopted from time to time by the Board or Committee (as applicable). The Committee may,
at any time, abolish the subcommittee and/or revest in the Committee any powers delegated to the subcommittee. The Board may retain the
authority to concurrently administer the Plan with the Committee and may, at any time, revest in the Board some or all of the powers previously
delegated.
(ii)
Rule 16b-3 Compliance. The Committee may consist solely of two or more Non-Employee Directors, in accordance with Rule 16b-3.
(d)
Delegation to an Officer. The Board may delegate to one (1) or more Officers the authority to do one or both of the following:
(i) designate Employees who are not Officers to be recipients of Stock Awards and, to the extent permitted by applicable law, the terms
of such Stock Awards, and (ii) determine the number of shares of Common Stock to be subject to such Stock Awards granted to such Employees;
provided, however, that the Board resolutions regarding such delegation will specify the total number of shares of Common Stock
that may be subject to the Stock Awards granted by such Officer, provide that such Officer may not grant a Stock Award to himself or herself
and otherwise contain such terms and conditions as are required by applicable law. Any such Stock Awards will be granted on the form of
Stock Award Agreement most recently approved for use by the Board, unless otherwise provided in the resolutions approving the delegation
authority. The Board may not delegate authority to an Officer who is acting solely in the capacity of an Officer (and not also as a Director)
to determine the Fair Market Value pursuant to Section 15(x)(iii) below.
(e)
Effect of Board’s Decision. All determinations, interpretations and constructions made by the Board will not be subject
to review by any person and will be final, binding and conclusive on all persons.
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3.
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Shares Subject to the Plan.
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(a)
Share Reserve. Subject to Section 9(a) relating to Capitalization Adjustments, the aggregate number of shares of Common Stock
that may be issued pursuant to Stock Awards shall be equal to 19,250,000 shares, as increased on January 1 of each fiscal year of the Company
beginning on January 1, 2022 by a number of shares of Common Stock equal to 5% of the aggregate number of shares of Capital Stock outstanding
on December 31 of the immediately preceding calendar year (the “Share Reserve”).
Notwithstanding the foregoing,
(i) the Board may act prior to January 1 of a given year to provide that there will be no increase in the Share Reserve for such year
or that the increase in the Share Reserve for such year will be a lesser number of shares of Common Stock than would otherwise occur pursuant
to the preceding sentence and (ii) shares of Common Stock may be issued in connection with a merger or acquisition as permitted by applicable
stock exchange rules, and such issuance will not reduce the number of shares available for issuance under the Plan.
(b)
Reversion of Shares to the Share Reserve. If a Stock Award or any portion thereof (i) expires or otherwise terminates without
all of the shares covered by such Stock Award having been issued or (ii) is settled in cash (i.e., the Participant receives cash
rather than stock), such expiration, termination or settlement will not reduce (or otherwise offset) the number of shares of Common Stock
that may be available for issuance under the Plan. If any shares of Common Stock issued pursuant to a Stock Award are forfeited back to
or repurchased or reacquired by the Company because of the failure to meet a contingency or condition required to vest such shares in
the Participant, then the shares that are forfeited, repurchased or reacquired will revert to and again become available for issuance
under the Plan. Any shares reacquired by the Company in satisfaction of tax withholding obligations on a Stock Award or as consideration
for the exercise or purchase price of a Stock Award will again become available for issuance under the Plan.
(c)
Incentive Stock Option Limit. Subject to the Share Reserve and Section 9(a) relating to Capitalization Adjustments, the aggregate
maximum number of shares of Common Stock that may be issued pursuant to the exercise of Incentive Stock Options will be 19,250,000 shares of
Common Stock.
(d)
Limitation on Grants to Non-Employee Directors. The maximum number of shares of Common Stock
subject to Stock Awards granted under the Plan or otherwise during a single calendar year to any Non-Employee Director for service on
the Board, taken together with any cash fees paid by the Company to such Non-Employee Director during such calendar year for service on
the Board, will not exceed $1,500,000 in total value (calculating the value of any such Stock Awards based on the grant date fair value
of such Stock Awards for financial reporting purposes).
(e)
Source of Shares. The stock issuable under the Plan will be shares of authorized but
unissued or reacquired Common Stock, including shares repurchased by the Company on the open market or otherwise.
(a)
Eligibility for Specific Stock Awards. Incentive Stock Options may be granted only to employees of the Company or a “parent
corporation” or “subsidiary corporation” thereof (as such terms are defined in Sections 424(e) and 424(f) of the Code).
Stock Awards other than Incentive Stock Options may be granted to Employees, Directors and Consultants; provided, however, that
Stock Awards may not be granted to Employees, Directors and Consultants who are providing Continuous Service only to any “parent”
of the Company, as such term is defined in Rule 405 of the Securities Act, unless (i) the stock underlying such Stock Awards is treated
as “service recipient stock” under Section 409A of the Code (for example, because the Stock Awards are granted pursuant to
a corporate transaction such as a spin off transaction), (ii) the Company, in consultation with its legal counsel, has determined that
such Stock Awards are otherwise exempt from Section 409A of the Code, or (iii) the Company, in consultation with its legal counsel, has
determined that such Stock Awards comply with the distribution requirements of Section 409A of the Code.
(b)
Ten Percent Stockholders. A Ten Percent Stockholder will not be granted an Incentive Stock Option unless the exercise price
of such Option is at least 110% of the Fair Market Value on the date of grant and the Option is not exercisable after the expiration of
five years from the date of grant.
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5.
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Provisions Relating to Options and Stock Appreciation Rights.
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Each Option or SAR will be
in such form and will contain such terms and conditions as the Board deems appropriate. All Options will be separately designated Incentive
Stock Options or Nonstatutory Stock Options at the time of grant, and, if certificates are issued, a separate certificate or certificates
will be issued for shares of Common Stock purchased on exercise of each type of Option. If an Option is not specifically designated as
an Incentive Stock Option, or if an Option is designated as an Incentive Stock Option but some portion or all of the Option fails to qualify
as an Incentive Stock Option under the applicable rules, then the Option (or portion thereof) will be a Nonstatutory Stock Option. The
provisions of separate Options or SARs need not be identical; provided, however, that each Award Agreement will conform to (through
incorporation of provisions hereof by reference in the applicable Award Agreement or otherwise) the substance of each of the following
provisions:
(a)
Term. Subject to the provisions of Section 4(b) regarding Ten Percent Stockholders, no Option or SAR will be exercisable after
the expiration of ten (10) years from the date of its grant or such shorter period specified in the Award Agreement.
(b) Exercise
Price. Subject to the provisions of Section 4(b) regarding Ten Percent Stockholders, the exercise or strike price of each Option
or SAR will be not less than 100% of the Fair Market Value of the Common Stock subject to the Option or SAR on the date the Award is
granted. Notwithstanding the foregoing, an Option or SAR may be granted with an exercise or strike price lower than 100% of the Fair
Market Value of the Common Stock subject to the Award if such Award is granted pursuant to an assumption of or substitution for
another option or stock appreciation right pursuant to a Corporate Transaction and in a manner consistent with the provisions of
Section 409A of the Code and, if applicable, Section 424(a) of the Code. Each SAR will be denominated in shares of Common Stock
equivalents.
(c)
Purchase Price for Options. The purchase price of Common Stock acquired pursuant to the exercise of an Option may be paid,
to the extent permitted by applicable law and as determined by the Board in its sole discretion, by any combination of the methods of
payment set forth below. The Board will have the authority to grant Options that do not permit all of the following methods of payment
(or otherwise restrict the ability to use certain methods) and to grant Options that require the consent of the Company to use a particular
method of payment. The permitted methods of payment are as follows:
(i)
by cash, check, bank draft or money order payable to the Company;
(ii)
pursuant to a program developed under Regulation T as promulgated by the Federal Reserve Board that, prior to the issuance
of the stock subject to the Option, results in either the receipt of cash (or check) by the Company or the receipt of irrevocable instructions
to pay the aggregate exercise price to the Company from the sales proceeds;
(iii)
by delivery to the Company (either by actual delivery or attestation) of shares of Common Stock;
(iv)
if an Option is a Nonstatutory Stock Option, by a “net exercise” arrangement pursuant to which the Company will
reduce the number of shares of Common Stock issuable upon exercise by the largest whole number of shares with a Fair Market Value that
does not exceed the aggregate exercise price; provided, however, that the Company will accept a cash or other payment from the
Participant to the extent of any remaining balance of the aggregate exercise price not satisfied by such reduction in the number of whole
shares to be issued. Shares of Common Stock will no longer be subject to an Option and will not be exercisable thereafter to the extent
that (A) shares issuable upon exercise are used to pay the exercise price pursuant to the “net exercise,” (B) shares are delivered
to the Participant as a result of such exercise, or (C) shares are withheld to satisfy tax withholding obligations; or
(v)
in any other form of legal consideration that may be acceptable to the Board and specified in the applicable Award Agreement.
(d) Exercise
and Payment of a SAR. To exercise any outstanding SAR, the Participant must provide written notice of exercise to the Company in
compliance with the provisions of the Stock Appreciation Right Agreement evidencing such SAR. The appreciation distribution payable
on the exercise of a SAR will be not greater than an amount equal to the excess of (A) the aggregate Fair Market Value (on the date
of the exercise of the SAR) of a number of shares of Common Stock equal to the number of Common Stock equivalents in which the
Participant is vested under such SAR, and with respect to which the Participant is exercising the SAR on such date, over (B) the
aggregate strike price of the number of Common Stock equivalents with respect to which the Participant is exercising the SAR on such
date. The appreciation distribution may be paid in Common Stock, in cash, in any combination of the two or in any other form of
consideration, as determined by the Board and contained in the Award Agreement evidencing such SAR.
(e)
Transferability of Options and SARs. The Board may, in its sole discretion, impose such limitations on the transferability
of Options and SARs as the Board will determine. In the absence of such a determination by the Board to the contrary, an Option or SAR
will not be transferable except by will or by the laws of descent and distribution, and will be exercisable during the lifetime of the
Participant only by the Participant. The Board may permit transfer of the Option or SAR in a manner that is not prohibited by applicable
tax and securities laws. Except as explicitly provided herein, neither an Option nor a SAR may be transferred for consideration.
(f)
Vesting Generally. The total number of shares of Common Stock subject to an Option or SAR may vest and become exercisable in
periodic installments that may or may not be equal. The Option or SAR may be subject to such other terms and conditions on the time or
times when it may or may not be exercised (which may be based on the satisfaction of Performance Goals or other criteria) as the Board
may deem appropriate. The vesting provisions of individual Options or SARs may vary. The provisions of this Section 5(f) are subject to
any Option or SAR provisions governing the minimum number of shares of Common Stock as to which an Option or SAR may be exercised.
(g)
Termination of Continuous Service. Except as otherwise provided in the applicable Award Agreement or other written agreement
between the Participant and the Company, if a Participant’s Continuous Service terminates (other than upon the Participant’s
death or Disability), the Participant may exercise an Option or SAR (to the extent that the Participant was entitled to exercise such
Award as of the date of termination of Continuous Service) within the period of time ending on the earlier of (i) the date that is 90
days following the termination of the Participant’s Continuous Service (or such longer or shorter period specified in the applicable
Award Agreement), and (ii) the expiration of the term of the Option or SAR as set forth in the Award Agreement. If, after termination
of Continuous Service, the Participant does not exercise his or her Option or SAR (as applicable) within the applicable time frame, the
Option or SAR will terminate.
(h)
Disability of Participant. Except as otherwise provided in the applicable Award Agreement or other agreement between the Participant
and the Company, if a Participant’s Continuous Service terminates as a result of the Participant’s Disability, the Participant
may exercise his or her Option or SAR (to the extent that the Participant was entitled to exercise such Option or SAR as of the date of
termination of Continuous Service), but only within such period of time ending on the earlier of (i) the date 12 months following such
termination of Continuous Service (or such longer or shorter period specified in the Award Agreement), and (ii) the expiration of the
term of the Option or SAR as set forth in the Award Agreement. If, after termination of Continuous Service, the Participant does not exercise
his or her Option or SAR within the applicable time frame, the Option or SAR (as applicable) will terminate.
(i) Death
of Participant. Except as otherwise provided in the applicable Award Agreement or other agreement between the Participant and
the Company, if (i) a Participant’s Continuous Service terminates as a result of the Participant’s death, or (ii) the
Participant dies within the period (if any) specified in the Award Agreement for exercisability after the termination of the
Participant’s Continuous Service for a reason other than death, then the Option or SAR may be exercised (to the extent the
Participant was entitled to exercise such Option or SAR as of the date of death) by the Participant’s estate or by a person
who acquired the right to exercise the Option or SAR by bequest or inheritance, but only within the period ending on the earlier of
(i) the date 12 months following the date of death (or such longer or shorter period specified in the Award Agreement), and (ii) the
expiration of the term of such Option or SAR as set forth in the Award Agreement. If, after the Participant’s death, the
Option or SAR is not exercised within the applicable time frame, the Option or SAR (as applicable) will terminate.
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6.
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Provisions of Stock Awards other than Options and SARS.
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(a)
Restricted Stock Awards. Each Restricted Stock Award Agreement will be in such form and will contain such terms and conditions
as the Board will deem appropriate. To the extent consistent with the Company’s bylaws, at the Board’s election, shares of
Common Stock may be (x) held in book entry form subject to the Company’s instructions until any restrictions relating to the Restricted
Stock Award lapse; or (y) evidenced by a certificate, which certificate will be held in such form and manner as determined by the Board.
The terms and conditions of Restricted Stock Award Agreements may change from time to time, and the terms and conditions of separate Restricted
Stock Award Agreements need not be identical. Each Restricted Stock Award Agreement will conform to (through incorporation of the provisions
hereof by reference in the agreement or otherwise) the substance of each of the following provisions:
(i)
Consideration. A Restricted Stock Award may be awarded in consideration for (A) cash, check, bank draft or money order payable
to the Company, (B) past or future services to the Company or an Affiliate, or (C) any other form of legal consideration that may be acceptable
to the Board, in its sole discretion, and permissible under applicable law.
(ii)
Vesting. Shares of Common Stock awarded under the Restricted Stock Award Agreement may be subject to forfeiture to the Company
in accordance with a vesting schedule to be determined by the Board.
(iii)
Termination of Participant’s Continuous Service. If a Participant’s Continuous Service terminates, the Company
may receive through a forfeiture condition or a repurchase right any or all of the shares of Common Stock held by the Participant that
have not vested as of the date of termination of Continuous Service under the terms of the Restricted Stock Award Agreement.
(iv)
Transferability. Rights to acquire shares of Common Stock under the Restricted Stock Award Agreement will be transferable by
the Participant only upon such terms and conditions as are set forth in the Restricted Stock Award Agreement, as the Board will determine
in its sole discretion, so long as Common Stock awarded under the Restricted Stock Award Agreement remains subject to the terms of the
Restricted Stock Award Agreement.
(v) Dividends.
A Restricted Stock Award Agreement may provide that any dividends paid on Restricted Stock will be subject to the same vesting and
forfeiture restrictions as apply to the shares subject to the Restricted Stock Award to which they relate (including any time-based
or performance-based vesting requirements).
(b)
Restricted Stock Unit Awards. Each Restricted Stock Unit Award Agreement will be in such form and will contain such terms and
conditions as the Board will deem appropriate. The terms and conditions of Restricted Stock Unit Award Agreements may change from time
to time, and the terms and conditions of separate Restricted Stock Unit Award Agreements need not be identical. Each Restricted Stock
Unit Award Agreement will conform to (through incorporation of the provisions hereof by reference in the Agreement or otherwise) the substance
of each of the following provisions:
(i)
Consideration. At the time of grant of a Restricted Stock Unit Award, the Board will determine the consideration, if any, to
be paid by the Participant upon delivery of each share of Common Stock subject to the Restricted Stock Unit Award. The consideration to
be paid (if any) by the Participant for each share of Common Stock subject to a Restricted Stock Unit Award may be paid in any form of
legal consideration that may be acceptable to the Board, in its sole discretion, and permissible under applicable law.
(ii)
Vesting. At the time of the grant of a Restricted Stock Unit Award, the Board may impose such restrictions on or conditions
to the vesting of the Restricted Stock Unit Award as it, in its sole discretion, deems appropriate.
(iii)
Payment. A Restricted Stock Unit Award may be settled by the delivery of shares of Common Stock, their cash equivalent, any
combination thereof or in any other form of consideration, as determined by the Board and contained in the Restricted Stock Unit Award
Agreement.
(iv)
Additional Restrictions. At the time of the grant of a Restricted Stock Unit Award, the Board, as it deems appropriate, may
impose such restrictions or conditions that delay the delivery of the shares of Common Stock (or their cash equivalent) subject to a Restricted
Stock Unit Award to a time after the vesting of such Restricted Stock Unit Award.
(v)
Dividend Equivalents. Dividend equivalents may be credited in respect of shares of Common Stock covered by a Restricted Stock
Unit Award, as determined by the Board and contained in the Restricted Stock Unit Award Agreement. At the sole discretion of the Board,
such dividend equivalents may be converted into additional shares of Common Stock covered by the Restricted Stock Unit Award in such manner
as determined by the Board. Unless otherwise set forth in a Restricted Stock Unit Award Agreement, any additional shares covered by the
Restricted Stock Unit Award credited by reason of such dividend equivalents will be subject to the same vesting and forfeiture restrictions
as apply to the underlying Restricted Stock Unit Award Agreement to which they relate (including any time-based or performance-based vesting
requirements).
(vi)
Termination of Participant’s Continuous Service. Except as otherwise provided in the applicable Restricted Stock Unit
Award Agreement or other written agreement between a Participant and the Company, such portion of the Restricted Stock Unit Award that
has not vested will be forfeited upon the Participant’s termination of Continuous Service.
(c)
Performance Awards.
(i)
Performance Stock Awards. A Performance Stock Award is a Stock Award that is payable (including that may be granted, may vest
or may be exercised) contingent upon the attainment during a Performance Period of certain Performance Goals. A Performance Stock Award
may, but need not, require the Participant’s completion of a specified period of Continuous Service. The length of any Performance
Period, the Performance Goals to be achieved during the Performance Period, and the measure of whether and to what degree such Performance
Goals have been attained will be conclusively determined by the Board, in its sole discretion. In addition, to the extent permitted by
applicable law and the applicable Award Agreement, the Board may determine that cash may be used in payment of Performance Stock Awards.
(ii)
Performance Cash Awards. A Performance Cash Award is a cash award that is payable contingent upon the attainment during a Performance
Period of certain Performance Goals. A Performance Cash Award may, but need not, require the Participant’s completion of a specified
period of Continuous Service. The length of any Performance Period, the Performance Goals to be achieved during the Performance Period,
and the measure of whether and to what degree such Performance Goals have been attained will be conclusively determined by the Board in
its sole discretion. The Board may specify the form of payment of Performance Cash Awards, which may be cash or other property, or may
provide for a Participant to have the option for his or her Performance Cash Award, or such portion thereof as the Board may specify,
to be paid in whole or in part in cash or other property.
(iii)
Board Discretion. The Board retains the discretion to reduce or eliminate the compensation or economic benefit due upon attainment
of Performance Goals and to define the manner of calculating the Performance Criteria it selects to use for a Performance Period. Partial
achievement of the specified criteria may result in the payment or vesting corresponding to the degree of achievement as specified in
the Stock Award Agreement or the written terms of a Performance Cash Award.
(d)
Other Stock Awards. Other forms of Stock Awards valued in whole or in part by reference to, or otherwise based on, Common Stock,
including the appreciation in value thereof (e.g., options or stock rights with an exercise price or strike price less than 100% of the
Fair Market Value of the Common Stock at the time of grant) may be granted either alone or in addition to Stock Awards provided for under
Section 5 and the preceding provisions of this Section 6. Subject to the provisions of the Plan, the Board will have sole and complete
authority to determine the persons to whom and the time or times at which such Other Stock Awards will be granted, the number of shares
of Common Stock (or the cash equivalent thereof) to be granted pursuant to such Other Stock Awards and all other terms and conditions
of such Other Stock Awards.
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7.
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Covenants of the Company.
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(a)
Availability of Shares. The Company will keep available at all times the number of shares of Common Stock reasonably required
to satisfy then-outstanding Stock Awards.
(b) Securities
Law Compliance. The Company will seek to obtain from each regulatory commission or agency, as necessary, such authority as may
be required to grant Stock Awards and to issue and sell shares of Common Stock upon exercise or vesting of the Stock Awards; provided,
however, that this undertaking will not require the Company to register under the Securities Act or other securities or
applicable laws, the Plan, any Stock Award or any Common Stock issued or issuable pursuant to any such Stock Award. If, after
reasonable efforts and at a reasonable cost, the Company is unable to obtain from any such regulatory commission or agency the
authority that counsel for the Company deems necessary or advisable for the lawful issuance and sale of Common Stock under the Plan,
the Company will be relieved from any liability for failure to issue and sell Common Stock upon exercise or vesting of such Stock
Awards unless and until such authority is obtained. A Participant will not be eligible for the grant of an Award or the subsequent
issuance of cash or Common Stock pursuant to the Award if such grant or issuance would be in violation of any applicable law.
(c)
No Obligation to Notify or Minimize Taxes. The Company will have no duty or obligation to any Participant to advise such holder
as to the tax treatment or time or manner of exercising such Stock Award. Furthermore, the Company will have no duty or obligation to
warn or otherwise advise such holder of a pending termination or expiration of an Award or a possible period in which the Award may not
be exercised. The Company has no duty or obligation to minimize the tax consequences of an Award to the holder of such Award.
(a)
Use of Proceeds from Sales of Common Stock. Proceeds from the sale of shares of Common Stock pursuant to Stock Awards will
constitute general funds of the Company.
(b)
Corporate Action Constituting Grant of Awards. Corporate action constituting a grant by the Company of an Award to any Participant
will be deemed completed as of the date of such corporate action, unless otherwise determined by the Board, regardless of when the instrument,
certificate, or letter evidencing the Award is communicated to, or actually received or accepted by, the Participant. In the event that
the corporate records (e.g., Board consents, resolutions or minutes) documenting the corporate action approving the grant contain terms
(e.g., exercise price, vesting schedule or number of shares) that are inconsistent with those in the Award Agreement or related grant
documents as a result of a clerical error in the papering of the Award Agreement or related grant documents, the corporate records will
control and the Participant will have no legally binding right to the incorrect term in the Award Agreement or related grant documents.
(c)
Stockholder Rights. No Participant will be deemed to be the holder of, or to have any of the rights of a holder with respect
to, any shares of Common Stock subject to an Award unless and until (i) such Participant has satisfied all requirements for exercise of,
or the issuance of shares of Common Stock under, the Award pursuant to its terms, and (ii) the issuance of the Common Stock subject to
such Award has been entered into the books and records of the Company.
(d) No
Employment or Other Service Rights. Nothing in the Plan, any Award Agreement or any other instrument executed thereunder or in
connection with any Award granted pursuant thereto will confer upon any Participant any right to continue to serve the Company or an
Affiliate in the capacity in effect at the time the Award was granted or will affect the right of the Company or an Affiliate to
terminate (i) the employment of an Employee with or without notice and with or without cause, (ii) the service of a Consultant
pursuant to the terms of such Consultant’s agreement with the Company or an Affiliate, or (iii) the service of a Director
pursuant to the bylaws of the Company or an Affiliate, and any applicable provisions of the corporate law of the state or foreign
jurisdiction in which the Company or the Affiliate is domiciled or incorporated, as the case may be.
(e)
Change in Time Commitment. In the event a Participant’s regular level of time commitment in the performance of his or
her services for the Company and any Affiliates is reduced (for example, and without limitation, if the Participant is an Employee of
the Company and the Employee has a change in status from a full-time Employee to a part-time Employee or takes an extended leave of absence)
after the date of grant of any Award to the Participant, the Board has the right in its sole discretion to (x) make a corresponding reduction
in the number of shares or cash amount subject to any portion of such Award that is scheduled to vest or become payable after the date
of such change in time commitment, and (y) in lieu of or in combination with such a reduction, extend the vesting or payment schedule
applicable to such Award. In the event of any such reduction, the Participant will have no right with respect to any portion of the Award
that is so reduced or extended.
(f)
Incentive Stock Option Limitations. To the extent that the aggregate Fair Market Value (determined at the time of grant) of
Common Stock with respect to which Incentive Stock Options are exercisable for the first time by any Optionholder during any calendar
year (under all plans of the Company and any Affiliates) exceeds $100,000 (or such other limit established in the Code) or otherwise does
not comply with the rules governing Incentive Stock Options, the Options or portions thereof that exceed such limit (according to the
order in which they were granted) or otherwise do not comply with such rules will be treated as Nonstatutory Stock Options, notwithstanding
any contrary provision of the applicable Option Agreement(s).
(g)
Investment Assurances. The Company may require a Participant, as a condition of exercising or acquiring Common Stock under
any Award, (i) to give written assurances satisfactory to the Company as to the Participant’s knowledge and experience in financial
and business matters and/or to employ a purchaser representative reasonably satisfactory to the Company who is knowledgeable and experienced
in financial and business matters and that such Participant is capable of evaluating, alone or together with the purchaser representative,
the merits and risks of exercising the Award; and (ii) to give written assurances satisfactory to the Company stating that the Participant
is acquiring Common Stock subject to the Award for the Participant’s own account and not with any present intention of selling or
otherwise distributing the Common Stock. The foregoing requirements, and any assurances given pursuant to such requirements, will be inoperative
if (A) the issuance of the shares upon the exercise or acquisition of Common Stock under the Stock Award has been registered under a then
currently effective registration statement under the Securities Act, or (B) as to any particular requirement, a determination is made
by counsel for the Company that such requirement need not be met in the circumstances under the then applicable securities laws. The Company
may, upon advice of counsel to the Company, place legends on stock certificates issued under the Plan as such counsel deems necessary
or appropriate in order to comply with applicable securities laws, including, but not limited to, legends restricting the transfer of
the Common Stock.
(h)
Withholding Obligations. Unless prohibited by the terms of an Award Agreement, the Company may, in its sole discretion, satisfy
any federal, state or local tax withholding obligation relating to an Award by any of the following means or by a combination of such
means: (i) causing the Participant to tender a cash payment; (ii) withholding shares of Common Stock from the shares of Common Stock issued
or otherwise issuable to the Participant in connection with the Award; provided, that the number of shares of Common Stock which
may be so withheld or surrendered shall be limited to the number of shares of Common Stock which have a Fair Market Value on the date
of withholding in such amount that will not cause adverse accounting consequences for the Company and its Affiliates and is permitted
under applicable withholding rules promulgated by the Internal Revenue Service or another governmental entity; (iii) withholding cash
from an Award settled in cash; (iv) withholding payment from any amounts otherwise payable to the Participant; or (v) by such other method
as may be set forth in the Award Agreement.
(i)
Electronic Delivery. Any reference herein to a “written” agreement or document will include any agreement or document
delivered electronically, filed publicly at www.sec.gov (or any successor website thereto) or posted on the Company’s intranet
(or other shared electronic medium controlled and/or established by the Company or any of its designees to which the Participant has access).
(j)
Deferrals. To the extent permitted by applicable law, the Board, in its sole discretion, may determine that the delivery of
Common Stock or the payment of cash, upon the exercise, vesting or settlement of all or a portion of any Award may be deferred and may
establish programs and procedures for deferral elections to be made by Participants. Deferrals by Participants will be made in accordance
with Section 409A of the Code. Consistent with Section 409A of the Code, the Board may provide for distributions while a Participant is
still an employee or otherwise providing services to the Company. The Board is authorized to make deferrals of Awards and determine when,
and in what annual percentages, Participants may receive payments, including lump sum payments, following the Participant’s termination
of Continuous Service, and implement such other terms and conditions consistent with the provisions of the Plan and in accordance with
applicable law.
(k) Compliance
with Section 409A of the Code. Unless otherwise expressly provided for in an Award Agreement, the Plan and Award Agreements will
be interpreted to the greatest extent possible in a manner that makes the Plan and the Awards granted hereunder exempt from Section
409A of the Code, and, to the extent not so exempt, in compliance with Section 409A of the Code. If the Board determines that any
Award granted hereunder is not exempt from and is therefore subject to Section 409A of the Code, the Award Agreement evidencing such
Award will incorporate the terms and conditions necessary to avoid the consequences specified in Section 409A(a)(1) of the Code, and
to the extent an Award Agreement is silent on terms necessary for compliance, such terms are hereby incorporated by reference into
the Award Agreement. Notwithstanding anything to the contrary in the Plan (and unless the Award Agreement specifically provides
otherwise), if the shares of Common Stock are publicly traded, and if a Participant is holding an Award (or has any other
compensation or benefit under the Plan or otherwise) that constitutes “deferred compensation” under Section 409A of the
Code and is a “specified employee” for purposes of Section 409A of the Code, no distribution or payment of any amount
that is due because of a “separation from service” (as defined in Section 409A of the Code without regard to alternative
definitions thereunder), whether under the Plan or otherwise, will be issued or paid before the date that is six months following
the date of such Participant’s “separation from service” (as defined in Section 409A of the Code without regard to
alternative definitions thereunder) or, if earlier, the date of the Participant’s death, unless such distribution or payment
can be made in a manner that complies with Section 409A of the Code, and any amounts so deferred will be paid in a lump sum on the
day after such six month period elapses, with the balance paid thereafter on the original schedule.
(l)
Clawback/Recovery. All Awards granted under the Plan will be subject to recoupment in accordance with any clawback policy that
the Company is required to adopt pursuant to the listing standards of any national securities exchange or association on which the Company’s
securities are listed or as is otherwise required by the Dodd-Frank Wall Street Reform and Consumer Protection Act or other applicable
law, without regard to whether such policy is adopted before or after the grant of an Award. In addition, the Board may impose such other
clawback, recovery or recoupment provisions as the Board determines necessary or appropriate, including, but not limited to, a reacquisition
right in respect of previously acquired shares of Common Stock or other cash or property upon the occurrence of an event constituting
Cause. No recovery of compensation under such a clawback policy will be an event giving rise to a right to resign for “good reason”
or “constructive termination” (or similar term) under any agreement with the Company. For the avoidance of doubt, any such
clawback policy referenced in this Section 8(l) may have effect with respect to Awards granted prior to the date on which such policy
was adopted.
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9.
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Adjustments upon Changes in Common Stock; Other Corporate Events.
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(a)
Capitalization Adjustments. In the event of a Capitalization Adjustment, an equitable substitution or proportionate adjustment
shall be made, in each case as determined by the Board in its sole discretion, with respect to: (i) the class(es) and maximum number of
securities subject to the Plan pursuant to Section 3(a), (ii) the class(es) and maximum number of securities by which the share reserve
is to increase automatically each year pursuant to Section 3(a), (iii) the class(es) and maximum number of securities that may be issued
pursuant to the exercise of Incentive Stock Options pursuant to Section 3(c), (iv) the class(es) and maximum number of securities that
may be awarded to any Non-Employee Director pursuant to Section 3(d), (v) the class(es) and number of securities and price per share of
stock subject to outstanding Stock Awards and (vi) the performance goals or measures applicable to any Award. The Board will make such
adjustments, and its determination will be final, binding and conclusive.
(b) Dissolution.
Except as otherwise provided in the Stock Award Agreement, in the event of a Dissolution of the Company, all outstanding Stock
Awards (other than Stock Awards consisting of vested and outstanding shares of Common Stock not subject to a forfeiture condition or
the Company’s right of repurchase) will terminate immediately prior to the completion of such Dissolution, and the shares of
Common Stock subject to the Company’s repurchase rights or subject to a forfeiture condition may be repurchased or reacquired
by the Company notwithstanding the fact that the holder of such Stock Award is providing Continuous Service; provided,
however, that the Board may, in its sole discretion, cause some or all Stock Awards to become fully vested, exercisable and/or
no longer subject to repurchase or forfeiture (to the extent such Stock Awards have not previously expired or terminated) before the
Dissolution is completed but contingent on its completion.
(c)
Transaction. The following provisions shall apply to Stock Awards in the event of a Transaction unless otherwise provided in
the instrument evidencing the Stock Award or any other written agreement between the Company or any Affiliate and the Participant or unless
otherwise expressly provided by the Board at the time of grant of a Stock Award. In the event of a Transaction, notwithstanding any other
provision of the Plan, the Board may take one or more of the following actions with respect to Stock Awards, contingent upon the closing
or completion of the Transaction:
(i)
arrange for the surviving corporation or acquiring corporation (or the surviving or acquiring corporation’s parent company)
to assume or continue the Stock Award or to substitute a similar stock award for the Stock Award (including, but not limited to, an award
to acquire the same consideration paid to the stockholders of the Company pursuant to the Transaction);
(ii)
arrange for the assignment of any reacquisition or repurchase rights held by the Company in respect of Common Stock issued
pursuant to the Stock Award to the surviving corporation or acquiring corporation (or the surviving or acquiring corporation’s parent
company);
(iii)
accelerate the vesting, in whole or in part, of the Stock Award (and, if applicable, the time at which the Stock Award may
be exercised) to a date prior to the effective time of such Transaction as the Board shall determine (or, if the Board shall not determine
such a date, to the date that is five days prior to the effective date of the Transaction), with such Stock Award terminating if not exercised
(if applicable) at or prior to the effective time of the Transaction; provided, however, that the Board may require each Participant
to complete and deliver to the Company a notice of exercise before the effective date of a Transaction, which exercise is contingent upon
the effectiveness of such Transaction;
(iv)
arrange for the lapse, in whole or in part, of any reacquisition or repurchase rights held by the Company with respect to the
Stock Award;
(v)
cancel or arrange for the cancellation of the Stock Award, to the extent not vested or not exercised prior to the effective
time of the Transaction, in exchange for such cash consideration, if any, as the Board, in its sole discretion, may consider appropriate;
and
(vi)
make a payment, in such form as may be determined by the Board equal to the excess, if any, of (A) the value of the property
the Participant would have received upon the vesting, settlement or exercise of the Stock Award immediately prior to the effective time
of the Transaction, over (B) any exercise price payable by such holder in connection with such exercise. For clarity, this payment may
be zero ($0) if the value of the property is equal to or less than the exercise price. Payments under this provision may be delayed to
the same extent that payment of consideration to the holders of the Company’s Common Stock in connection with the Transaction is
delayed as a result of escrows, earn outs, holdbacks or any other contingencies.
The Board need not take the
same action or actions with respect to all Stock Awards or portions thereof or with respect to all Participants. The Board may take different
actions with respect to the vested and unvested portions of a Stock Award.
(d)
Change in Control. A Stock Award may be subject to additional acceleration of vesting and exercisability upon or after a Change
in Control as may be provided in the Stock Award Agreement for such Stock Award or as may be provided in any other written agreement between
the Company or any Affiliate and the Participant.
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10.
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Plan Term; Earlier Termination or Suspension of the Plan.
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The Board may suspend or terminate
the Plan at any time. No grants of Awards may be made hereunder after the tenth anniversary of the Effective Date and no grants of Incentive
Stock Options may be made hereunder after the tenth anniversary of the date the Plan is approved by the Board. No Awards may be granted
under the Plan while the Plan is suspended or after it is terminated.
The Plan will become effective
on the Effective Date.
The laws of the State of Delaware
will govern all questions concerning the construction, validity and interpretation of this Plan, without regard to that state’s
conflict of laws rules.
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13.
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Section 280G; Parachute Payments.
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(a)
Treatment of Payments. Notwithstanding anything in the Plan to the contrary, in the event that
any payment or benefit received or to be received by a Participant (whether pursuant to the terms of this Plan or any other plan, arrangement
or agreement) (all such payments and benefits, the “Total Payments”) would
fail to be deductible under Section 280G of the Code, or otherwise would be subject (in whole or part) to the excise tax imposed by Section
4999 of the Code (the “Excise Tax”) then the payments or benefits to be received
by the Participant that are subject to Section 280G of the Code shall be reduced to the extent necessary so that no portion of the Total
Payments is subject to the Excise Tax but only if the net amount of such Total Payments, as so reduced (and after subtracting the net
amount of federal, state and local income taxes on such reduced Total Payments), is greater than or equal to the net amount of such Total
Payments without such reduction (but after subtracting the net amount of federal, state and local income taxes on such Total Payments
and the amount of Excise Tax to which the Participant would be subject in respect of such unreduced Total Payments).
(b)
Ordering of Reduction. In the case of a reduction in the Total Payments pursuant to Section
13(a) of the Plan, the Total Payments will be reduced in the following order: (i) payments that are payable in cash that are valued at
full value under Treasury Regulation Section 1.280G-1, Q&A 24(a) will be reduced (if necessary, to zero), with amounts that are payable
last reduced first; (ii) payments and benefits due in respect of any equity valued at full value under Treasury Regulation Section 1.280G-1,
Q&A 24(a), with the highest values reduced first (as such values are determined under Treasury Regulation Section 1.280G-1,
Q&A 24) will next be reduced; (iii) payments that are payable in cash that are valued at less than full value under Treasury Regulation
Section 1.280G-1, Q&A 24, with amounts that are payable last reduced first, will next be reduced; (iv) payments and benefits due
in respect of any equity valued at less than full value under Treasury Regulation Section 1.280G-1, Q&A 24, with the highest values
reduced first (as such values are determined under Treasury Regulation Section 1.280G-1, Q&A 24) will next be reduced; and (v) all
other non-cash benefits not otherwise described in clauses (ii) or (iv) will be next reduced pro-rata.
(c)
Certain Determinations. For purposes of determining whether and the extent to which the Total
Payments will be subject to the Excise Tax: (i) no portion of the Total Payments the receipt or enjoyment of which a Participant shall
have waived at such time and in such manner as not to constitute a “payment” within the meaning of Section 280G(b) of the
Code will be taken into account; (ii) no portion of the Total Payments will be taken into account which, in the opinion of tax counsel
(“Tax Counsel”) and a nationally recognized accounting firm (the “Accounting
Firm”), in each case as selected by the Company prior to a Change in Control, does not constitute
a “parachute payment” within the meaning of Section 280G(b)(2) of the Code (including by reason of Section 280G(b)(4)(A) of
the Code) and, in calculating the Excise Tax, no portion of such Total Payments will be taken into account which, in the opinion of Tax
Counsel, constitutes reasonable compensation for services actually rendered, within the meaning of Section 280G(b)(4)(B) of the Code,
in excess of the “base amount” (as set forth in Section 280G(b)(3) of the Code) that is allocable to such reasonable compensation;
and (iii) the value of any non-cash benefit or any deferred payment or benefit included in the Total Payments will be determined by the
Accounting Firm in accordance with the principles of Sections 280G(d)(3) and (4) of the Code.
(d)
Additional Payments. If a Participant receives reduced payments and benefits by reason of this
Section 13 and it is established pursuant to a determination of a court of competent jurisdiction or pursuant to an Internal Revenue Service
proceeding, that the Participant could have received a greater amount without resulting in any Excise Tax, then the Company shall thereafter
pay the Participant the aggregate additional amount which could have been paid without resulting in any Excise Tax as soon as reasonably
practicable.
Unless otherwise provided
in a Participant’s Award Agreement, all notices, requests, demands, claims and other communications by the Participant with respect
to the Plan or any Award shall be in writing (including electronically) and shall be deemed given if delivered by certified or registered
mail (first class postage prepaid), guaranteed overnight delivery or email transmission, to the following address (or to such other addresses
which the Company shall designate in writing to the Participant from time to time):
Squarespace, Inc.
225 Varick Street, 12th Floor
New York, NY 10014
Attention: Legal Department
Email: legal@squarespace.com
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15.
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Definitions.
As used in the Plan, the following definitions will apply
to the capitalized terms indicated below:
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(a)
“Affiliate” means, at the time of determination, any “parent”
or “subsidiary” of the Company as such terms are defined in Rule 405 of the Securities Act. The Board will have the authority
to determine the time or times at which “parent” or “subsidiary” status is determined within the foregoing definition.
(b)
“Award” means a Stock Award or a Performance Cash Award.
(c)
“Award Agreement” means a written agreement between the Company and
a Participant evidencing the terms and conditions of an Award.
(d)
“Board” means the Board of Directors of the Company.
(e)
“Capital Stock” means each and every class of common stock of the Company,
regardless of the number of votes per share.
(f)
“Capitalization Adjustment” means any change that is made in, or other
events that occur with respect to, the Common Stock subject to the Plan or subject to any Stock Award after the Effective Date without
the receipt of consideration by the Company through merger, consolidation, reorganization, recapitalization, reincorporation, stock dividend,
dividend in property other than cash, large nonrecurring cash dividend, stock split, reverse stock split, liquidating dividend, combination
of shares, exchange of shares, change in corporate structure or any similar equity restructuring transaction, as that term is used in
Statement of Financial Accounting Standards Board Accounting Standards Codification Topic 718 (or any successor thereto). Notwithstanding
the foregoing, the conversion of any convertible securities of the Company will not be treated as a Capitalization Adjustment.
(g)
“Cause” shall have the meaning set forth in an individual agreement between
the Company and the Participant; provided if no such agreement or definition exists, “Cause” means, with respect to
a Participant, (i) the Participant’s unauthorized use or disclosure of the Company’s confidential information or trade secrets;
(ii) the Participant’s material breach of any agreement between Participant and the Company, including, without limitation, the
breach of any applicable non-competition or non-solicitation obligations; (iii) the Participant’s material failure to comply with
the Company’s written policies or rules; (iv) the Participant’s commission of, or plea of “guilty” or “no
contest” to, a felony or any crime involving fraud or moral turpitude under the laws of the United States, any State or other jurisdiction;
or (v) the Participant’s gross negligence or willful misconduct.
(h)
“Change in Control” means the occurrence, in a single transaction or
in a series of related transactions, of any one or more of the following events:
(i) any
Exchange Act Person becomes the Owner, directly or indirectly, of securities of the Company representing more than 50% of the
combined voting power of the Company’s then outstanding securities other than by virtue of a merger, consolidation or similar
transaction. Notwithstanding the foregoing, a Change in Control will not be deemed to occur (A) on account of the acquisition of
securities of the Company directly from the Company, (B) on account of the acquisition of securities of the Company by an investor,
any affiliate thereof or any other Exchange Act Person that acquires the Company’s securities in a transaction or series of
related transactions the primary purpose of which is to obtain financing for the Company through the issuance of equity securities,
(C) on account of the acquisition of securities of the Company by any individual who is, on the Effective Date, either an executive
officer or a Director (either, an “Investor”) and/or any entity in which an Investor has a direct or
indirect interest (whether in the form of voting rights or participation in profits or capital contributions) of more than 50%
(collectively, the “Entities”) or on account of the Entities continuing to hold shares that come to
represent more than 50% of the combined voting power of the Company’s then outstanding securities as a result of the
conversion of any class of the Company’s securities into another class of the Company’s securities having a different
number of votes per share pursuant to the conversion provisions set forth in the Company’s Amended and Restated Certificate of
Incorporation; or (D) solely because the level of Ownership held by any Exchange Act Person (the “Subject
Person”) exceeds the designated percentage threshold of the outstanding voting securities as a result of a repurchase
or other acquisition of voting securities by the Company reducing the number of shares outstanding, provided that if a Change in
Control would occur (but for the operation of this sentence) as a result of the acquisition of voting securities by the Company, and
after such share acquisition, the Subject Person becomes the Owner of any additional voting securities that, assuming the repurchase
or other acquisition had not occurred, increases the percentage of the then outstanding voting securities Owned by the Subject
Person over the designated percentage threshold, then a Change in Control will be deemed to occur;
(ii)
there is consummated a merger, consolidation or similar transaction involving (directly or indirectly) the Company and, immediately
after the consummation of such merger, consolidation or similar transaction, the stockholders of the Company immediately prior thereto
do not Own, directly or indirectly, either (A) outstanding voting securities representing more than 50% of the combined outstanding voting
power of the surviving Entity in such merger, consolidation or similar transaction or (B) more than 50% of the combined outstanding voting
power of the parent of the surviving Entity in such merger, consolidation or similar transaction, in each case in substantially the same
proportions as their Ownership of the outstanding voting securities of the Company immediately prior to such transaction; provided,
however, that a merger, consolidation or similar transaction will not constitute a Change in Control under this prong of the definition
if the outstanding voting securities representing more than 50% of the combined voting power of the surviving Entity or its parent are
owned by the Entities;
(iii)
there is consummated a sale, lease, exclusive license or other disposition of all or substantially all of the consolidated
assets of the Company and its Subsidiaries, other than a sale, lease, license or other disposition of all or substantially all of the
consolidated assets of the Company and its Subsidiaries to an Entity, more than 50% of the combined voting power of the voting securities
of which are Owned by stockholders of the Company in substantially the same proportions as their Ownership of the outstanding voting securities
of the Company immediately prior to such sale, lease, license or other disposition; provided, however, that a sale, lease, exclusive
license or other disposition of all or substantially all of the consolidated assets of the Company and its Subsidiaries will not constitute
a Change in Control under this prong of the definition if the outstanding voting securities representing more than 50% of the combined
voting power of the acquiring Entity or its parent are owned by the Entities;
(iv)
the stockholders of the Company approve or the Board approves a plan of complete dissolution or liquidation of the Company,
or a complete dissolution or liquidation of the Company will otherwise occur, except for a liquidation into a parent corporation; or
(v)
individuals who, on the date the Plan is adopted by the Board, are members of the Board (the “Incumbent Board”)
cease for any reason to constitute at least a majority of the members of the Board; provided, however, that if the appointment
or election (or nomination for election) of any new Board member was approved or recommended by a majority vote of the members of the
Incumbent Board then still in office, such new member will, for purposes of this Plan, be considered as a member of the Incumbent Board.
Notwithstanding the foregoing
definition or any other provision of the Plan, the term Change in Control will not include a sale of assets, merger or other transaction
effected exclusively for the purpose of changing the domicile of the Company and the definition of Change in Control (or any analogous
term) in an individual written agreement between the Company or any Affiliate and the Participant will supersede the foregoing definition
with respect to Awards subject to such agreement; provided, however, that if no definition of Change in Control or any analogous
term is set forth in such an individual written agreement, the foregoing definition will apply.
(i)
“Code” means the Internal Revenue Code of 1986, as amended, including
any applicable regulations and guidance thereunder.
(j)
“Committee” means a committee of one or more Directors to whom authority
has been delegated by the Board in accordance with Section 2(c).
(k)
“Common Stock” means, as of the Effective
Date, the Class A common stock of the Company, par value $0.0001 per share.
(l)
“Company” means Squarespace, Inc., a Delaware corporation.
(m)
“Consultant” means any individual other than an Employee or Director
who is engaged directly or indirectly by the Company or any of its Affiliates to render services to the Company..
(n)
“Continuous Service” means that the Participant’s service with
the Company or an Affiliate, whether as an Employee, Director or Consultant, is not interrupted or terminated. Any determination of an
interruption or termination of Continuous Service will be made by the Company in its sole discretion, in accordance with the Company’s
applicable policies.
(o)
“Corporate Transaction” means the consummation, in a single transaction
or in a series of related transactions, of any one or more of the following events:
(i)
a sale or other disposition of all or substantially all, as determined by the Board, in its sole discretion, of the consolidated
assets of the Company and its Subsidiaries;
(ii)
a sale or other disposition of more than 50% of the outstanding securities of the Company;
(iii)
a merger, consolidation or similar transaction following which the Company is not the surviving corporation; or
(iv)
a merger, consolidation or similar transaction following which the Company is the surviving corporation but the shares of Common
Stock outstanding immediately preceding the merger, consolidation or similar transaction are converted or exchanged by virtue of the merger,
consolidation or similar transaction into other property, whether in the form of securities, cash or otherwise.
(p)
“Director” means a member of the Board.
(q)
“Disability” shall have the meaning set forth in an individual agreement
between the Company and the Participant; provided if no such agreement or definition exists, “Disability” means, with
respect to a Participant, the inability of such Participant to engage in any substantial gainful activity by reason of any medically determinable
physical or mental impairment that can be expected to result in death or that has lasted or can be expected to last for a continuous period
of not less than 12 months, as provided in Sections 22(e)(3) and 409A(a)(2)(c)(i) of the Code, and will be determined by the Board on
the basis of such medical evidence as the Board deems warranted under the circumstances.
(r)
“Dissolution” means when the Company, after having executed a certificate
of dissolution with the State of Delaware (or other applicable state), has completely wound up its affairs. Conversion of the Company
into a Limited Liability Company (or any other pass-through entity) will not be considered a “Dissolution” for purposes of
the Plan.
(s)
“Effective Date” means the date immediately preceding the Registration
Date subject to prior stockholder approval in accordance with applicable state law, the Company’s bylaws and certificate of incorporation,
and applicable stock exchange rules.
(t)
“Employee” means any person employed by the Company or an Affiliate.
However, service solely as a Director, or payment of a fee for such services, will not cause a Director to be considered an “Employee”
for purposes of the Plan.
(u)
“Entity” means a corporation, partnership, limited liability company
or other entity.
(v)
“Exchange Act” means the Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated thereunder.
(w)
“Exchange Act Person” means any natural person, Entity or “group”
(within the meaning of Section 13(d) or 14(d) of the Exchange Act), except that “Exchange Act Person” will not include (i)
the Company or any Subsidiary of the Company, (ii) any employee benefit plan of the Company or any Subsidiary of the Company or any trustee
or other fiduciary holding securities under an employee benefit plan of the Company or any Subsidiary of the Company, (iii) an underwriter
temporarily holding securities pursuant to a registered public offering of such securities, (iv) an Entity Owned, directly or indirectly,
by the stockholders of the Company in substantially the same proportions as their Ownership of stock of the Company; or (v) any natural
person, Entity or “group” (within the meaning of Section 13(d) or 14(d) of the Exchange Act) that, as of the Effective
Date, is the Owner, directly or indirectly, of securities of the Company representing more than 50% of the combined voting power of the
Company’s then outstanding securities.
(x)
“Fair Market Value” means, as of any date, the value of the Common
Stock determined as follows:
(i)
If the Common Stock is listed on any established stock exchange or traded on any established market, the Fair Market Value
of a share of Common Stock will be, unless otherwise determined by the Board, the closing sales price for such stock as quoted on such
exchange or market (or the exchange or market with the greatest volume of trading in the Common Stock) on the date of determination.
(ii)
Unless otherwise provided by the Board, if there is no closing sales price for the Common Stock on the date of determination,
then the Fair Market Value will be the closing selling price on the last preceding date for which such quotation exists.
(iii)
In the absence of such markets for the Common Stock, the Fair Market Value will be determined by the Board in good faith and
in a manner that complies with Sections 409A and 422 of the Code.
(y)
“Incentive Stock Option” means an option granted pursuant to Section
5 of the Plan that is intended to be, and qualifies as, an “incentive stock option” within the meaning of Section 422 of the
Code.
(z)
“Non-Employee Director” means a Director who either (i) is not a current employee
or officer of the Company or an Affiliate, does not receive compensation, either directly or indirectly, from the Company or an Affiliate
for services rendered as a consultant or in any capacity other than as a Director (except for an amount as to which disclosure would not
be required under Item 404(a) of Regulation S-K promulgated pursuant to the Securities Act (“Regulation S-K”)),
does not possess an interest in any other transaction for which disclosure would be required under Item 404(a) of Regulation S-K, and
is not engaged in a business relationship for which disclosure would be required pursuant to Item 404(b) of Regulation S-K; or (ii) is
otherwise considered a “non-employee director” for purposes of Rule 16b-3.
(aa)
“Nonstatutory Stock Option” means any Option granted pursuant to Section
5 of the Plan that does not qualify as an Incentive Stock Option.
(bb)
“Officer” means a person who is an officer of the Company within the
meaning of Section 16 of the Exchange Act.
(cc)
“Option” means an Incentive Stock Option or a Nonstatutory Stock Option
to purchase shares of Common Stock granted pursuant to the Plan.
(dd)
“Option Agreement” means a written agreement between the Company and
an Optionholder evidencing the terms and conditions of an Option grant. Each Option Agreement will be subject to the terms and conditions
of the Plan.
(ee)
“Optionholder” means a person to whom an Option is granted pursuant
to the Plan or, if applicable, such other person who holds an outstanding Option.
(ff)
“Other Stock Award” means an award based in whole or in part by reference
to the Common Stock which is granted pursuant to the terms and conditions of Section 6(d).
(gg)
“Other Stock Award Agreement” means a written agreement between the
Company and a holder of an Other Stock Award evidencing the terms and conditions of an Other Stock Award grant. Each Other Stock Award
Agreement will be subject to the terms and conditions of the Plan.
(hh)
“Own,” “Owned,” “Owner,” “Ownership”
means a person or Entity will be deemed to “Own,” to have “Owned,” to be the
“Owner” of, or to have acquired “Ownership” of securities if such person or Entity, directly or indirectly, through
any contract, arrangement, understanding, relationship or otherwise, has or shares voting power, which includes the power to vote or to
direct the voting, with respect to such securities.
(ii)
“Participant” means a person to whom an Award is granted pursuant to
the Plan or, if applicable, such other person who holds an outstanding Stock Award.
(jj)
“Performance Cash Award” means an award of cash granted pursuant to
the terms and conditions of Section 6(c)(ii).
(kk)
“Performance Criteria” means one or more criteria that the Board will
select for purposes of establishing the Performance Goals for a Performance Period. The Performance Criteria that will be used to establish
such Performance Goals may be based on any one of, or combination of, the following as determined by the Board: (1) earnings (including
earnings per share and net earnings); (2) earnings before interest, taxes and depreciation; (3) earnings before interest, taxes, depreciation
and amortization; (4) earnings before interest, taxes, depreciation, amortization and legal settlements; (5) earnings before interest,
taxes, depreciation, amortization, legal settlements and other income (expense); (6) earnings before interest, taxes, depreciation, amortization,
legal settlements, other income (expense) and stock-based compensation; (7) earnings before interest, taxes, depreciation, amortization,
legal settlements, other income (expense), stock-based compensation and changes in deferred revenue; (8) total stockholder return; (9)
return on equity or average stockholder’s equity; (10) return on assets, investment, or capital employed; (11) stock price; (12)
margin (including gross margin); (13) income (before or after taxes); (14) operating income; (15) operating income after taxes; (16)
pre-tax profit; (17) operating cash flow; (18) sales or revenue targets; (19) increases in revenue or product revenue; (20) expenses
and cost reduction goals; (21) improvement in or attainment of working capital levels; (22) economic value added (or an equivalent metric);
(23) market share; (24) cash flow; (25) cash flow per share; (26) share price performance; (27) debt reduction; (28) implementation or
completion of projects or processes; (29) stockholders’ equity; (30) capital expenditures; (31) debt levels; (32) operating profit
or net operating profit; (33) workforce diversity; (34) growth of net income or operating income; (35) billings; (36) bookings; (37)
employee retention; (38) user satisfaction; (39) the number of users, including unique users; (40) budget management; (41) partner satisfaction;
(42) entry into or completion of strategic partnerships or transactions (including in-licensing and out-licensing of intellectual
property); and (43) other measures of performance selected by the Board.
(ll)
“Performance Goals” means, for a Performance Period, one or more goals
established by the Board for the Performance Period based upon the Performance Criteria. Performance Goals may be based on a Company-wide
basis, with respect to one or more business units, divisions, Affiliates, or business segments, and in either absolute terms or relative
to the performance of one or more comparable companies or the performance of one or more relevant indices. The Board will make adjustments
in the method of calculating the attainment of Performance Goals for a Performance Period as it determines to be necessary or appropriate
in its sole discretion, including without limitation: (1) to exclude restructuring and/or other nonrecurring charges; (2) to exclude exchange
rate effects; (3) to exclude the effects of changes to generally accepted accounting principles; (4) to exclude the effects of any statutory
adjustments to corporate tax rates; (5) to exclude the effects of any items that are unusual in nature or occur infrequently as determined
under generally accepted accounting principles; (6) to exclude the dilutive effects of acquisitions or joint ventures; (7) to assume that
any business divested by the Company achieved performance objectives at targeted levels during the balance of a Performance Period following
such divestiture; (8) to exclude the effect of any change in the outstanding shares of common stock of the Company by reason of any stock
dividend or split, stock repurchase, reorganization, recapitalization, merger, consolidation, spin-off, combination or exchange of shares
or other similar corporate change, or any distributions to common stockholders other than regular cash dividends; (9) to exclude the effects
of stock based compensation and the award of bonuses under the Company’s bonus plans; (10) to exclude costs incurred in connection
with potential acquisitions or divestitures that are required to be expensed under generally accepted accounting principles; (11) to exclude
the goodwill and intangible asset impairment charges that are required to be recorded under generally accepted accounting principles;
and (12) to exclude the effect of any other unusual, non-recurring gain or loss or other extraordinary item. In addition, the Board retains
the discretion to reduce or eliminate the compensation or economic benefit due upon attainment of Performance Goals and to define the
manner of calculating the Performance Criteria it selects to use for such Performance Period. Partial achievement of the specified criteria
may result in the payment or vesting corresponding to the degree of achievement as specified in the Stock Award Agreement or the written
terms of a Performance Cash Award.
(mm)
“Performance Period” means the period of time selected by the Board
over which the attainment of one or more Performance Goals will be measured for the purpose of determining a Participant’s right
to and the payment of a Stock Award or a Performance Cash Award. Performance Periods may be of varying and overlapping duration, at the
sole discretion of the Board.
(nn)
“Performance Stock Award” means a Stock Award granted under the terms
and conditions of Section 6(c)(i).
(oo)
“Plan” means this Squarespace, Inc. 2021 Equity Incentive Plan.
(pp)
“Registration Date” means the date upon which the registration statement on
Form S-1 that is filed by the Company is declared effective by the U.S. Securities and Exchange Commission.
(qq)
“Restricted Stock Award” means an award of shares of Common Stock
which is granted pursuant to the terms and conditions of Section 6(a).
(rr) “Restricted
Stock Award Agreement” means a written agreement between the Company and a holder of
a Restricted Stock Award evidencing the terms and conditions of a Restricted Stock Award grant. Each Restricted Stock Award Agreement
will be subject to the terms and conditions of the Plan.
(ss) “Restricted Stock Unit Award” means a right to receive shares of Common
Stock which is granted pursuant to the terms and conditions of Section 6(b).
(tt)
“Restricted Stock Unit Award Agreement” means a written agreement between
the Company and a holder of a Restricted Stock Unit Award evidencing the terms and conditions of a Restricted Stock Unit Award grant.
Each Restricted Stock Unit Award Agreement will be subject to the terms and conditions of the Plan.
(uu)
“Rule 16b-3” means Rule 16b-3 promulgated under the Exchange Act or any successor
to Rule 16b-3, as in effect from time to time.
(vv)
“Securities Act” means the Securities Act of 1933, as amended.
(ww)
“Stock Appreciation Right” or “SAR”
means a right to receive the appreciation on Common Stock that is granted pursuant to the terms and
conditions of Section 5.
(xx) “Stock
Appreciation Right Agreement” means a written agreement between the Company and a holder
of a Stock Appreciation Right evidencing the terms and conditions of a Stock Appreciation Right grant. Each Stock Appreciation Right
Agreement will be subject to the terms and conditions of the Plan.
(yy) “Stock Award” means any right to receive Common Stock granted under
the Plan, including an Incentive Stock Option, a Nonstatutory Stock Option, a Restricted Stock Award, a Restricted Stock Unit Award, a
Stock Appreciation Right, a Performance Stock Award or any Other Stock Award.
(zz) “Stock
Award Agreement” means a written agreement between the Company and a Participant evidencing
the terms and conditions of a Stock Award grant. Each Stock Award Agreement will be subject to the terms and conditions of the Plan.
(aaa)
“Subsidiary” means, with respect to the Company, (i) any corporation
of which more than 50% of the outstanding capital stock having ordinary voting power to elect a majority of the board of directors of
such corporation (irrespective of whether, at the time, stock of any other class or classes of such corporation will have or might have
voting power by reason of the happening of any contingency) is at the time, directly or indirectly, Owned by the Company, and (ii) any
partnership, limited liability company or other entity in which the Company has a direct or indirect interest (whether in the form of
voting or participation in profits or capital contribution) of more than 50%.
(bbb)
“Ten Percent Stockholder” means a person who Owns (or is deemed to
Own pursuant to Section 424(d) of the Code) stock possessing more than 10% of the total combined voting power of all classes of stock
of the Company or any Affiliate.
(ccc)
“Transaction” means a Corporate Transaction or a Change in Control.
Exhibit 10.5
Squarespace, Inc.
Restricted Stock Unit Grant
Notice
(2021 Equity Incentive Plan)
Squarespace, Inc. (the “Company”),
pursuant to its 2021 Equity Incentive Plan (the “Plan”),
hereby awards to Participant a Restricted Stock Unit Award for the number of shares of the Company’s Common Stock (“Restricted
Stock Units”) set forth below (the “Award”).
The Award is subject to all of the terms and conditions as set forth in this notice of grant (this “Restricted
Stock Unit Grant Notice”), and in the Plan and the Restricted Stock Unit Award Agreement (the “Award
Agreement”), both of which are attached hereto and incorporated herein in their entirety. Capitalized terms
not explicitly defined herein shall have the meanings set forth in the Plan or the Award Agreement. In the event of any conflict
between the terms in this Restricted Stock Unit Grant Notice or the Award Agreement and the Plan, the terms of the Plan shall control.
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Participant:
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Date of Grant:
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Vesting Commencement Date:
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Number of Restricted Stock Units:
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Vesting Schedule:
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[ ]
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Issuance Schedule:
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Subject to any Capitalization
Adjustment, one share of Common Stock (or its cash equivalent, at the discretion of the Company) will be issued for each Restricted
Stock Unit that vests at the time set forth in Section 6 of the Award Agreement.
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Additional Terms/Acknowledgements: Participant
acknowledges receipt of, and understands and agrees to, this Restricted Stock Unit Grant Notice, the Award Agreement and the Plan.
Participant further acknowledges that as of the Date of Grant, this Restricted Stock Unit Grant Notice, the Award Agreement and
the Plan set forth the entire understanding between Participant and the Company regarding the acquisition of the Common Stock pursuant
to the Award specified above and supersede all prior oral and written agreements on the terms of this Award, with the exception,
if applicable, of (i) the written employment agreement, offer letter or other written agreement entered into between the Company
and Participant specifying the terms that should govern this specific Award and (ii) any compensation recovery policy that is adopted
by the Company or is otherwise required by applicable law.
By accepting this Award, Participant acknowledges
having received and read the Restricted Stock Unit Grant Notice, the Award Agreement and the Plan and agrees to all of the terms
and conditions set forth in these documents. Participant consents to receive the Plan and other related documents by electronic
delivery and to participate in the Plan through an on-line or electronic system maintained by the Company or a third-party designated
by the Company.
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Squarespace, Inc.
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Participant
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By:
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Signature
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Signature
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Attachments:
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Award Agreement and 2021 Equity Incentive Plan
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Attachment I
Squarespace, Inc.
2021 Equity Incentive Plan
Restricted Stock Unit Award Agreement
Pursuant to the Restricted
Stock Unit Grant Notice (the “Grant Notice”)
and this Restricted Stock Unit Award Agreement (the “Agreement”),
Squarespace, Inc. (the “Company”) has
awarded you (“Participant”) a Restricted
Stock Unit Award (the “Award”) pursuant
to the Company’s 2021 Equity Incentive Plan (as amended from time to time, the “Plan”)
for the number of Restricted Stock Units indicated in the Grant Notice. Capitalized terms not explicitly defined in this Agreement
or the Grant Notice shall have the same meanings given to them in the Plan. The terms of your Award, in addition to those set forth
in the Grant Notice, are as follows.
1.
Grant of the Award. This Award represents the right to be issued on a
future date one (1) share of Common Stock for each Restricted Stock Unit that vests on the applicable vesting date(s) (subject
to any adjustment under Section 3 below) as indicated in the Grant Notice. As of the Date of Grant, the Company will credit to
a bookkeeping account maintained by the Company for your benefit (the “Account”)
the number of shares of Common Stock subject to the Award. Notwithstanding the foregoing, the Company reserves the right to issue
you the cash equivalent of Common Stock, in part or in full satisfaction of the delivery of Common Stock in connection with the
vesting of the Restricted Stock Units, and, to the extent applicable, references in this Agreement and the Grant Notice to Common
Stock issuable in connection with your Restricted Stock Units will include the potential issuance of its cash equivalent pursuant
to such right. This Award was granted in consideration of your services to the Company.
2.
Vesting. Subject to the limitations contained herein, your Award will
vest, if at all, in accordance with the vesting schedule provided in the Grant Notice. Vesting will cease upon the termination
of your Continuous Service and the Restricted Stock Units credited to the Account that were not vested on the date of such termination
will be forfeited at no cost to the Company and you will have no further right, title or interest in or to such Award or the shares
of Common Stock to be issued in respect of such portion of the Award.
3.
Number of Shares. The number of Restricted Stock Units subject to your
Award may be adjusted from time to time for Capitalization Adjustments, as provided in the Plan. Any additional Restricted Stock
Units, shares, cash or other property that becomes subject to the Award pursuant to this Section 3, if any, shall be subject, in
a manner determined by the Board, to the same forfeiture restrictions, restrictions on transferability, and time and manner of
delivery as applicable to the other Restricted Stock Units and shares covered by your Award. Notwithstanding the provisions of
this Section 3, no fractional shares or rights for fractional shares of Common Stock shall be created pursuant to this Section
3. Any fraction of a share will be rounded down to the nearest whole share.
4.
Securities Law Compliance. You may not be issued any Common Stock under
your Award unless the shares of Common Stock underlying the Restricted Stock Units are either (i) then registered under the Securities
Act, or (ii) the Company has determined that such issuance would be exempt from the registration requirements of the Securities
Act. Your Award must also comply with other applicable laws and regulations governing the Award, and you shall not receive such
Common Stock if the Company determines that such receipt would not be in material compliance with such laws and regulations.
5.
Transfer Restrictions. Prior to the time that shares of Common Stock have
been delivered to you, you may not transfer, pledge, sell or otherwise dispose of this Award or the shares issuable in respect
of your Award. For example, you may not use shares that may be issued in respect of your Restricted Stock Units as security for
a loan. The restrictions on transfer set forth herein will lapse upon delivery to you of shares in respect of your vested Restricted
Stock Units. Notwithstanding the foregoing, your Award is transferable by will and by the laws of descent and distribution. At
your death, vesting of your Award will cease and your executor or administrator of your estate shall be entitled to receive, on
behalf of your estate, any Common Stock or other consideration that vested but was not issued before your death.
6.
Date of Issuance.
(a)
The issuance of shares in respect of the Restricted Stock Units is intended to comply with Treasury Regulation Section
1.409A-1(b)(4) and will be construed and administered in such a manner. Subject to the satisfaction of the Withholding Obligation
set forth in Section 11 of this Agreement, in the event one or more Restricted Stock Units vests, the Company shall issue to you
one (1) share of Common Stock for each Restricted Stock Unit that vests on the applicable vesting date(s) (subject to any adjustment
under Section 3 above, and subject to any different provisions in the Grant Notice). Each issuance date determined by this paragraph
is referred to as an “Original
Issuance Date”.
(b)
If the Original Issuance Date falls on a date that is not a business day, delivery shall instead occur on the next following
business day. In addition, if:
(i)
the Original Issuance Date does not occur (1) during an “open window period” applicable to you, as determined
by the Company in accordance with the Company’s then-effective policy on trading in Company securities, or (2) on a date
when you are otherwise permitted to sell shares of Common Stock on an established stock exchange or stock market (including but
not limited to under a previously established written trading plan that meets the requirements of Rule 10b5-1 under the Exchange
Act and was entered into in compliance with the Company’s policies (a “10b5-1
Arrangement”)), and
(ii)
either (1) a Withholding Obligation does not apply, or (2) the Company decides, prior to the Original Issuance Date,
(A) not to satisfy the Withholding Obligation by withholding shares of Common Stock from the shares otherwise due, on the Original
Issuance Date, to you under this Award, and (B) not to permit you to enter into a “same day sale” commitment with a
broker-dealer pursuant to Section 11 of this Agreement (including but not limited to a commitment under a 10b5-1 Arrangement) and
(C) not to permit you to pay your Withholding Obligation in cash,
then the shares
that would otherwise be issued to you on the Original Issuance Date will not be delivered on such Original Issuance Date and will
instead be delivered on the first business day when you are not prohibited from selling shares of the Company’s Common Stock
in the open public market, but in no event later than December 31 of the calendar year in which the Original Issuance Date occurs
(that is, the last day of your taxable year in which the Original Issuance Date occurs), or, if and only if permitted in
a manner that complies with Treasury Regulation Section 1.409A-1(b)(4), no later than the date that is the 15th day of the third
calendar month of the applicable year following the year in which the shares of Common Stock under this Award are no longer subject
to a “substantial risk of forfeiture” within the meaning of Treasury Regulation Section 1.409A-1(d).
(c)
The form of delivery (e.g., a stock certificate or electronic entry evidencing such shares) shall be determined
by the Company.
7.
Dividends. You shall receive no benefit or adjustment to your Award with
respect to any cash dividend, stock dividend or other distribution that does not result from a Capitalization Adjustment; provided,
however, that this sentence will not apply with respect to any shares of Common Stock that are delivered to you in connection with
your Award after such shares have been delivered to you.
8.
Restrictive Legends. The shares of Common Stock issued in respect of your
Award shall be endorsed with appropriate legends as determined by the Company.
9.
Execution of Documents. You hereby acknowledge and agree that the manner
selected by the Company by which you indicate your consent to your Grant Notice is also deemed to be your execution of your Grant
Notice and of this Agreement. You further agree that such manner of indicating consent may be relied upon as your signature for
establishing your execution of any documents to be executed in the future in connection with your Award.
10.
Award Not a Service Contract.
(a)
Nothing in this Agreement (including, but not limited to, the vesting of your Award or the issuance of the shares in
respect of your Award), the Plan or any covenant of good faith and fair dealing that may be found implicit in this Agreement or
the Plan shall: (i) confer upon you any right to continue in the employ or service of, or affiliation with, the Company or an Affiliate;
(ii) constitute any promise or commitment by the Company or an Affiliate regarding the fact or nature of future positions, future
work assignments, future compensation or any other term or condition of employment or affiliation; (iii) confer any right or benefit
under this Agreement or the Plan unless such right or benefit has specifically accrued under the terms of this Agreement or Plan;
or (iv) deprive the Company of the right to terminate you at will and without regard to any future vesting opportunity that you
may have.
(b)
By accepting this Award, you acknowledge and agree that the right to continue vesting in the Award pursuant to the vesting
schedule provided in the Grant Notice may not be earned unless (in addition to any other conditions described in the Grant Notice
and this Agreement) you continue as an employee, director or consultant at the will of the Company and affiliate, as applicable
(not through the act of being hired, being granted this Award or any other award or benefit) and that the Company has the right
to reorganize, sell, spin-out or otherwise restructure one or more of its businesses or Affiliates at any time or from time to
time, as it deems appropriate (a “reorganization”).
You acknowledge and agree that such a reorganization could result in the termination of your Continuous Service, or the termination
of Affiliate status of your employer and the loss of benefits available to you under this Agreement, including but not limited
to, the termination of the right to continue vesting in the Award. You further acknowledge and agree that this Agreement, the Plan,
the transactions contemplated hereunder and the vesting schedule set forth herein or any covenant of good faith and fair dealing
that may be found implicit in any of them do not constitute an express or implied promise of continued engagement as an employee
or consultant for the term of this Agreement, for any period, or at all, and shall not interfere in any way with the Company’s
right to terminate your Continuous Service at any time, with or without your cause or notice, or to conduct a reorganization.
11.
Withholding Obligation.
(a)
The Company may, in its sole discretion, satisfy any federal, state, local or foreign tax withholding obligation relating
to this Award by any of the following means or by a combination of such means (the “Withholding Obligation”):
(i) causing you to tender a cash payment; (ii) withholding shares of Common Stock from the shares of Common Stock issued or otherwise
issuable to you in connection with the Award; provided, that the number of shares of Common Stock which may be so withheld or surrendered
shall be limited to the number of shares of Common Stock which have a Fair Market Value on the date of withholding in such amount
that will not cause adverse accounting consequences for the Company and its Affiliates and is permitted under applicable withholding
rules promulgated by the Internal Revenue Service or another governmental entity; (iii) withholding cash from an Award settled
in cash; (iv) withholding payment from any amounts otherwise payable to you; and/or (v) permitting or requiring you to enter into
a “same day sale” commitment, if applicable, with a broker-dealer that is a member of the Financial Industry Regulatory
Authority (a “FINRA Dealer”),
pursuant to this authorization and without further consent, whereby you irrevocably elect to sell a portion of the shares to be
delivered in connection with your Restricted Stock Units to satisfy the Withholding Obligation and whereby the FINRA Dealer irrevocably
commits to forward the proceeds necessary to satisfy the Withholding Obligation directly to the Company and/or its Affiliates.
Unless the Withholding Obligation is satisfied, the Company shall have no obligation to deliver to you any Common Stock or any
other consideration pursuant to this Award.
(b)
In the event the Withholding Obligation arises prior to the delivery to you of Common Stock or it is determined after
the delivery of Common Stock to you that the amount of the Withholding Obligation was greater than the amount withheld by the Company,
you agree to indemnify and hold the Company harmless from any failure by the Company to withhold the proper amount.
12.
Tax Consequences. The Company has no duty or obligation to minimize the
tax consequences to you of this Award and shall not be liable to you for any adverse tax consequences to you arising in connection
with this Award. You are hereby advised to consult with your own personal tax, financial and/or legal advisors regarding the tax
consequences of this Award and by signing the Grant Notice, you have agreed that you have done so or knowingly and voluntarily
declined to do so. You understand that you (and not the Company) shall be responsible for your own tax liability that may arise
as a result of this investment or the transactions contemplated by this Agreement.
13.
Unsecured Obligation. Your Award is unfunded, and as a holder of a vested
Award, you shall be considered an unsecured creditor of the Company with respect to the Company’s obligation, if any, to
issue shares or other property pursuant to this Agreement. You shall not have voting or any other rights as a stockholder of the
Company with respect to the shares to be issued pursuant to this Agreement until such shares are issued to you pursuant to Section
6 of this Agreement. Upon such issuance, you will obtain full voting and other rights as a stockholder of the Company. Nothing
contained in this Agreement, and no action taken pursuant to its provisions, shall create or be construed to create a trust of
any kind or a fiduciary relationship between you and the Company or any other person.
14.
Notice. All notices, requests, demands,
claims and other communications with respect to this Award shall be in writing (including electronically) and shall be deemed given
if delivered by certified or registered mail (first class postage prepaid), guaranteed overnight delivery or email transmission,
to the following address (or to such other addresses which the Company shall designate in writing to you from time to time):
Squarespace,
Inc.
225 Varick
Street, 12th Floor
New York,
NY 10014
Attention:
Legal Department
Email: legal@squarespace.com
15.
Headings. The headings of the Sections in this Agreement are inserted
for convenience only and shall not be deemed to constitute a part of this Agreement or to affect the meaning of this Agreement.
16.
Miscellaneous.
(a)
The rights and obligations of the Company under your Award shall be transferable by the Company to any one or more persons
or entities, and all covenants and agreements hereunder shall inure to the benefit of, and be enforceable by, the Company’s
successors and assigns.
(b)
You agree upon request to execute any further documents or instruments necessary or desirable in the sole determination
of the Company to carry out the purposes or intent of your Award.
(c)
You acknowledge and agree that you have reviewed your Award in its entirety, have had an opportunity to obtain the advice
of counsel prior to executing and accepting your Award and fully understand all provisions of your Award.
(d)
This Agreement shall be subject to all applicable laws, rules, and regulations, and to such approvals by any governmental
agencies or national securities exchanges as may be required.
(e)
All obligations of the Company under the Plan and this Agreement shall be binding on any successor to the Company, whether
the existence of such successor is the result of a direct or indirect purchase, merger, consolidation, or otherwise, of all or
substantially all of the business and/or assets of the Company.
17.
Governing Plan Document. Your Award is subject to all the provisions of
the Plan, the provisions of which are hereby made a part of your Award, and is further subject to all interpretations, amendments,
rules and regulations which may from time to time be promulgated and adopted pursuant to the Plan. Your Award (and any compensation
paid or shares issued under your Award) is subject to recoupment in accordance with The Dodd–Frank Wall Street Reform and
Consumer Protection Act and any implementing regulations thereunder, any clawback policy adopted by the Company and any compensation
recovery policy otherwise required by applicable law, in each case whether implemented before, on or after the Date of Grant. No
recovery of compensation under such a clawback policy will be an event giving rise to a right to voluntarily terminate employment
upon a resignation for “good reason,” or for a “constructive termination” or any similar term under any
plan of or agreement with the Company.
18.
Effect on Other Employee Benefit Plans. The value of the Award subject
to this Agreement shall not be included as compensation, earnings, salaries, or other similar terms used when calculating benefits
under any employee benefit plan (other than the Plan) sponsored by the Company or any Affiliate except as such plan otherwise expressly
provides. The Company expressly reserves its rights to amend, modify, or terminate any or all of the employee benefit plans of
the Company or any Affiliate.
19.
Severability. If all or any part of this Agreement or the Plan is declared
by any court or governmental authority to be unlawful or invalid, such unlawfulness or invalidity shall not invalidate any portion
of this Agreement or the Plan not declared to be unlawful or invalid. Any Section of this Agreement (or part of such a Section)
so declared to be unlawful or invalid shall, if possible, be construed in a manner which will give effect to the terms of such
Section or part of a Section to the fullest extent possible while remaining lawful and valid.
20.
Other Documents. You hereby acknowledge receipt of and the right to receive
a document providing the information required by Rule 428(b)(1) promulgated under the Securities Act. In addition, you acknowledge
receipt of the Company’s policy permitting certain individuals to sell shares only during certain “window” periods
and the Company’s insider trading policy, in effect from time to time.
21.
Amendment. This Agreement may not be modified, amended or terminated except
by an instrument in writing, signed by you and by a duly authorized representative of the Company. Notwithstanding the foregoing,
this Agreement may be amended solely by the Board by a writing which specifically states that it is amending this Agreement, so
long as a copy of such amendment is delivered to you, and provided that, except as otherwise expressly provided in the Plan, no
such amendment materially adversely affecting your rights hereunder may be made without your written consent. Without limiting
the foregoing, the Board reserves the right to change, by written notice to you, the provisions of this Agreement in any way it
may deem necessary or advisable to carry out the purpose of the Award as a result of any change in applicable laws or regulations
or any future law, regulation, ruling, or judicial decision, provided that any such change shall be applicable only to rights relating
to that portion of the Award which is then subject to restrictions as provided herein.
22.
Compliance with Section 409A of the Code. This Award is intended to be
exempt from the application of Section 409A of the Code, including but not limited to by reason of complying with the “short-term
deferral” rule set forth in Treasury Regulation Section 1.409A- 1(b)(4) and any ambiguities herein shall be interpreted accordingly.
Notwithstanding the foregoing, if it is determined that the Award fails to satisfy the requirements of the short-term deferral
rule and is otherwise not exempt from, and determined to be deferred compensation subject to Section 409A of the Code, this Award
shall comply with Section 409A to the extent necessary to avoid adverse personal tax consequences and any ambiguities herein shall
be interpreted accordingly. If it is determined that the Award is deferred compensation subject to Section 409A and you are a “Specified
Employee” (within the meaning set forth in Section 409A(a)(2)(B)(i) of the Code) as of the date of
your “Separation from Service” (as defined in Section 409A), then the issuance of any shares that would otherwise be
made upon the date of your Separation from Service or within the first six (6) months thereafter will not be made on the originally
scheduled date(s) and will instead be issued in a lump sum on the date that is six (6) months and one day after the date of the
Separation from Service, with the balance of the shares issued thereafter in accordance with the original vesting and issuance
schedule set forth above, but if and only if such delay in the issuance of the shares is necessary to avoid the imposition of adverse
taxation on you in respect of the shares under Section 409A of the Code. Each installment of shares that vests is intended to constitute
a “separate payment” for purposes of Treasury Regulation Section 1.409A-2(b)(2).
* * * * *
This Restricted Stock
Unit Award Agreement shall be deemed to be signed by the Company and the Participant upon the signing by the Participant of the
Restricted Stock Unit Grant Notice to which it is attached.
ADDENDUM FOR NON-U.S. PARTICIPANTS
Terms and Conditions
This Addendum includes additional terms
and conditions that govern the grant of your Award if you work in one of the countries listed below. If you are a citizen or resident
of a country (or are considered as such for local law purposes) other than the one in which you are currently working, or if you
relocate to another country after receiving the grant of the Award, the Company will, in its discretion, determine the extent to
which the terms and conditions contained herein will be applicable to you.
Certain capitalized terms used but not
defined in this Addendum shall have the meanings given to such terms in the Plan and/or the Agreement to which this Addendum is
attached.
Ireland
On each vesting date, and on or before
the time you receive the shares of Common Stock in respect of your Award, and at any other time as reasonably requested by the
Company or its Affiliate in accordance with applicable Irish tax laws, you hereby authorize any required withholding from your
remuneration from the Company or its Affiliate for any sums required to satisfy the Irish income tax and social security and social
charge withholding obligations of the Company or any Affiliate that arise in connection with your Award. Further, the Company or
its Affiliates may, at their discretion, withhold from your Award that number of shares of Common Stock the fair market value of
which is equal to the amount of withholding due as determined under Irish tax law.
Poland
On each vesting date, and on or before
the time you receive the shares of Common Stock in respect of your Award, and at any other time as reasonably requested by the
Company or its Affiliate in accordance with applicable Polish laws, you hereby authorize any required withholding from your remuneration
from the Company or its Affiliate for any sums required to satisfy the Polish personal income tax and social security withholding
obligations of the Company or any Affiliate that arise in connection with your Award. Further, the Company or its Affiliates may,
at their discretion, withhold from your Award that number of shares of Common Stock the fair market value of which is equal to
the amount of withholding due as determined under Polish law.
Exhibit 10.6
SQUARESPACE, INC.
2021 EQUITY INCENTIVE PLAN
STOCK OPTION GRANT NOTICE
Squarespace, Inc. (the “Company”), pursuant
to its 2021 Equity Incentive Plan (the “Plan”), hereby grants to Optionholder an option to purchase the number
of shares of the Company’s Common Stock set forth below (the “Option”). This Option is subject to all
of the terms and conditions as set forth in this Stock Option Grant Notice, the Option Agreement, the Plan and the Notice of Exercise,
all of which are attached hereto and incorporated herein in their entirety. Capitalized terms not explicitly defined herein but defined
in the Plan or the Option Agreement will have the same definitions as in the Plan or the Option Agreement. If there is any conflict between
the terms in this Stock Option Grant Notice and the Plan, the terms of the Plan will control.
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Optionholder:
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Date of Grant:
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Vesting Commencement Date:
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Number of Shares of Common Stock Subject to Option:
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Exercise Price (per share):
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Total Exercise Price:
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Expiration Date:
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Type of Grant:
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¨
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Incentive Stock Option
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¨
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Nonstatutory Stock Option
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Vesting Schedule:
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Payment of Exercise Price:
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By one or a combination of the following items (described in the Option Agreement):
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By cash, check, bank draft or money order payable to the Company
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Pursuant to a Regulation T Program if the shares are publicly traded
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By delivery of already-owned shares if the shares are publicly traded
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¨
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If and only to the extent this Option is a Nonstatutory Stock Option[, and subject to the Company’s consent at the time of exercise], by a “net exercise” arrangement
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Additional Terms/Acknowledgements: Optionholder acknowledges
receipt of, and understands and agrees to, this Stock Option Grant Notice, the Option Agreement and the Plan. Optionholder acknowledges
and agrees that this Stock Option Grant Notice and the Option Agreement may not be modified, amended or revised except as provided in
the Plan. Optionholder further acknowledges that as of the Date of Grant, this Stock Option Grant Notice, the Option Agreement, and the
Plan set forth the entire understanding between Optionholder and the Company regarding this Option and supersede all prior oral and written
agreements, promises and/or representations on the terms of this Option, with the exception, if applicable, of (i) the written employment
agreement, offer letter or other written agreement entered into between the Company and Optionholder specifying the terms that should
govern this specific Option and (ii) any compensation recovery policy that is adopted by the Company or is otherwise required by applicable
law.
By accepting this Option, Optionholder acknowledges having received
and read the Stock Option Grant Notice, the Option Agreement and the Plan and agrees to all of the terms and conditions set forth in these
documents. Optionholder consents to receive Plan documents by electronic delivery and to participate in the Plan through an on-line or
electronic system maintained by the Company or a third-party designated by the Company.
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SQUARESPACE, INC.
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OPTIONHOLDER:
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By:
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Signature
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Signature
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Name:
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Name:
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Title:
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Date:
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Date:
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ATTACHMENTS: Option Agreement, Notice of Exercise and 2021 Equity
Incentive Plan
ATTACHMENT I
SQUARESPACE, INC.
2021 EQUITY INCENTIVE PLAN
OPTION AGREEMENT
(INCENTIVE STOCK OPTION OR NONSTATUTORY STOCK OPTION)
Pursuant to your Stock Option Grant Notice (“Grant
Notice”) and this Option Agreement, Squarespace, Inc. (the “Company”) has granted you an
Option under its 2021 Equity Incentive Plan (the “Plan”) to purchase the number of shares of the Company’s
Common Stock indicated in your Grant Notice at the exercise price indicated in your Grant Notice. The Option is granted to you effective
as of the date of grant set forth in the Grant Notice (the “Date of Grant”). If there is any conflict between
the terms in this Option Agreement and the Plan, the terms of the Plan will control. Capitalized terms not explicitly defined in this
Option Agreement or in the Grant Notice but defined in the Plan will have the same definitions as in the Plan.
The details of your Option, in addition to those
set forth in the Grant Notice and the Plan, are as follows:
1. VESTING.
Subject to the provisions contained herein, your Option will vest as provided in your Grant Notice. Unless otherwise provided by any
written employment or severance arrangement or other written agreement entered into between you and the Company, vesting will cease upon
the termination of your Continuous Service.
2. NUMBER
OF SHARES AND EXERCISE PRICE. The number of shares of Common Stock subject to your Option and your exercise price per share in your
Grant Notice will be adjusted for Capitalization Adjustments.
3. METHOD OF PAYMENT. You must pay the full amount of the exercise price for the shares you wish to exercise. You may pay the
exercise price in cash or by check, bank draft or money order payable to the Company or in any other manner permitted by your Grant
Notice, which may include one or more of the following:
(a)
Provided that at the time of exercise the Common Stock is publicly traded, pursuant to a program developed under Regulation
T as promulgated by the Federal Reserve Board that, prior to the issuance of Common Stock, results in either the receipt of cash (or check)
by the Company or the receipt of irrevocable instructions to pay the aggregate exercise price to the Company from the sales proceeds.
This manner of payment is also known as a “broker-assisted exercise,” “same day sale,” or “sell to cover”
and is a commitment with a broker-dealer that is a member of the Financial Industry Regulatory Authority (a “FINRA Dealer”),
pursuant to this authorization and without further consent, whereby you irrevocably elect to sell a portion of the shares to be delivered
in connection with the exercise of your Option to satisfy the exercise price and the withholding obligation and whereby the FINRA Dealer
irrevocably commits to forward the proceeds necessary to satisfy the exercise price and the withholding obligation directly to the Company
and/or its Affiliates.
(b)
Provided that at the time of exercise the Common Stock is publicly traded, by delivery to the Company (either by actual delivery
or attestation) of already-owned shares of Common Stock that are owned free and clear of any liens, claims, encumbrances or security interests,
and that are valued at Fair Market Value on the date of exercise. “Delivery” for these purposes, in the sole discretion of
the Company at the time you exercise your Option, will include delivery to the Company of your attestation of ownership of such shares
of Common Stock in a form approved by the Company. You may not exercise your Option by delivery to the Company of Common Stock if doing
so would violate the provisions of any law, regulation or agreement restricting the redemption of the Company’s stock.
(c)
If this Option is a Nonstatutory Stock Option, subject to the consent of the Company at the time of exercise, by a “net
exercise” arrangement pursuant to which the Company will reduce the number of shares of Common Stock issued upon exercise of your
Option by the largest whole number of shares with a Fair Market Value that does not exceed the aggregate exercise price. You must pay
any remaining balance of the aggregate exercise price not satisfied by the “net exercise” in cash or other permitted form
of payment. Shares of Common Stock will no longer be outstanding under your Option and will not be exercisable thereafter if those shares
(i) are used to pay the exercise price pursuant to the “net exercise,” (ii) are delivered to you as a result of
such exercise, and (iii) are withheld to satisfy your tax withholding obligations as set forth in Section 12 below.
4. WHOLE
SHARES. You may exercise your Option only for whole shares of Common Stock.
5. SECURITIES LAW COMPLIANCE. You may not exercise your Option unless the shares of Common Stock issuable upon exercise are either
(i) then registered under the Securities Act, or (ii) the Company has determined that such issuance would be exempt from the registration
requirements of the Securities Act. Your Option also must comply with all other applicable laws and regulations governing the Option,
and you may not exercise the Option if the Company determines that such exercise would not be in material compliance with such laws and
regulations (including any restrictions on exercise required for compliance with Treas. Reg. 1.401(k)-1(d)(3), if applicable).
6. TERM.
You may not exercise your Option before the Date of Grant or after the expiration of the Option’s term. The term of your Option
expires, subject to the provisions of Section 5(h) of the Plan, upon the earliest of the following:
(a)
immediately upon the termination of your Continuous Service for Cause;
(b)
three (3) months after the termination of your Continuous Service for any reason other than Cause, your Disability or
your death (except as otherwise provided in Section 6(d) below); provided, however, that if during any part of such three
(3) month period your Option is not exercisable solely because of the condition set forth in the section above regarding “Securities
Law Compliance,” your Option will not expire until the earlier of the Expiration Date or until it has been exercisable for an aggregate
period of three (3) months after the termination of your Continuous Service; provided, further, if during any part of such
three (3) month period, the sale of any Common Stock received upon exercise of your Option would violate the Company’s insider
trading policy, then your Option will not expire until the earlier of the Expiration Date or until it has been exercisable for an aggregate
period of three (3) months after the termination of your Continuous Service during which the sale of the Common Stock received upon
exercise of your Option would not be in violation of the Company’s insider trading policy;
(c) twelve
(12) months after the termination of your Continuous Service due to your Disability (except as otherwise provided in Section 6(d) below);
(d) twelve
(12) months after your death if you die either during your Continuous Service or within three (3) months after your Continuous Service
terminates for any reason other than Cause;
(e)
the Expiration Date indicated in your Grant Notice; or
(f)
the day before the tenth (10th) anniversary of the Date of Grant.
7. EXERCISE.
(a)
You may exercise the vested portion of your Option (and the unvested portion of your Option if your Grant Notice so permits)
during its term by delivering a Notice of Exercise (in a form designated by the Company) or completing such other documents and/or
procedures designated by the Company for exercise as the Company may then require.
(b)
By exercising your Option you agree that, as a condition to any exercise of your Option and in accordance with Section 12 below,
the Company may require you to enter into an arrangement providing for the payment by you to the Company of any tax withholding obligation
of the Company arising by reason of (i) the exercise of your Option, (ii) the lapse of any substantial risk of forfeiture to
which the shares of Common Stock are subject at the time of exercise, or (iii) the disposition of shares of Common Stock acquired
upon such exercise.
(c)
If your Option is an Incentive Stock Option, by exercising your Option you agree that you will notify the Company in writing
within fifteen (15) days after the date of any disposition of any of the shares of the Common Stock issued upon exercise of your Option
that occurs within two (2) years after the Date of Grant or within one (1) year after such shares of Common Stock are transferred
upon exercise of your Option.
8. TRANSFER
RESTRICTIONS. Except as otherwise permitted by the Board, your Option
is not transferable, except by will or by the laws of descent and distribution, and is exercisable during your life only by you.
9. RESTRICTIVE
LEGENDS. The shares of Common Stock issued in respect of your Option shall be endorsed with appropriate
legends as determined by the Company.
10. EXECUTION
OF DOCUMENTS. You hereby acknowledge and agree that the manner selected by the Company by which
you indicate your consent to your Grant Notice is also deemed to be your execution of your Grant Notice and of this Option Agreement.
You further agree that such manner of indicating consent may be relied upon as your signature for establishing your execution of any
documents to be executed in the future in connection with your Option.
11. OPTION
NOT A SERVICE CONTRACT. This Option Agreement is not an employment or service contract, and nothing in your Option will be deemed
to create in any way whatsoever any obligation on your part to continue in the employ of the Company or an Affiliate, or of the Company
or an Affiliate to continue your employment. In addition, nothing in your Option will obligate the Company or an Affiliate, their respective
stockholders, boards of directors, officers or employees to continue any relationship that you might have as a Director or Consultant
for the Company or an Affiliate.
12. WITHHOLDING
OBLIGATIONS.
(a)
At the time you exercise your Option, in whole or in part, and at any time thereafter as requested by the Company, the Company
may, in its sole discretion, satisfy any federal, state or local tax withholding obligation relating to this Option by any of the following
means or by a combination of such means: (i) causing you to tender a cash payment; (ii) withholding cash from an Option settled in cash;
(iii) withholding payment from any amounts otherwise payable to you; and/or (iv) permitting or requiring you to enter into a “same
day sale” commitment, if applicable, with a FINRA Dealer, pursuant to this authorization and without further consent, whereby you
irrevocably elect to sell a portion of the shares to be delivered in connection with the exercise of your Option to satisfy the withholding
obligation and whereby the FINRA Dealer irrevocably commits to forward the proceeds necessary to satisfy the withholding obligation directly
to the Company and/or its Affiliates.
(b) If
this Option is a Nonstatutory Stock Option, then upon your request and subject to approval by the Company, and compliance with any
applicable legal conditions or restrictions, the Company may withhold from fully vested shares of Common Stock otherwise issuable to
you upon the exercise of your Option; provided, that the number of whole shares of Common Stock which may be so withheld or
surrendered shall be limited to the number of shares of Common Stock which have a Fair Market Value on the date of withholding in
such amount that will not cause adverse accounting consequences for the Company and its Affiliates and is permitted under applicable
withholding rules promulgated by the Internal Revenue Service or another governmental entity.
(c)
You may not exercise your Option unless the tax withholding obligations of the Company and/or any Affiliate are satisfied.
Accordingly, you may not be able to exercise your Option when desired even though your Option is vested, and the Company will have no
obligation to issue a certificate for such shares of Common Stock or release such shares of Common Stock from any escrow provided for
herein, if applicable, unless such obligations are satisfied.
13. TAX
CONSEQUENCES. The Company has no duty or obligation to minimize the tax consequences to you of this Option and shall not be liable
to you for any adverse tax consequences to you arising in connection with this Option. You are hereby advised to consult with your own
personal tax, financial and/or legal advisors regarding the tax consequences of this Option and by signing the Grant Notice, you have
agreed that you have done so or knowingly and voluntarily declined to do so. You understand that you (and not the Company) shall be responsible
for your own tax liability that may arise as a result of this investment or the transactions contemplated by this Option Agreement. In
particular, you acknowledge that this Option is exempt from Section 409A of the Code only if the exercise price per share specified
in the Grant Notice is at least equal to the Fair Market Value per share of the Common Stock on the Date of Grant and there is no other
impermissible deferral of compensation associated with the Option.
14. VOTING
RIGHTS. You will not have voting or any other rights as a stockholder of the Company with respect to the shares to be issued pursuant
to this Option until such shares are issued to you. Upon such issuance, you will obtain full voting and other rights as a stockholder
of the Company. Nothing contained in this Option, and no action taken pursuant to its provisions, will create or be construed to create
a trust of any kind or a fiduciary relationship between you and the Company or any other person.
15. NOTICE.
All notices, requests, demands, claims and other communications with respect to this Option shall be in writing (including electronically)
and shall be deemed given if delivered by certified or registered mail (first class postage prepaid), guaranteed overnight delivery or
email transmission, to the following address (or to such other addresses which the Company shall designate in writing to you from time
to time):
Squarespace, Inc.
225 Varick Street, 12th Floor
New York, NY 10014
Attention: Legal Department
Email: legal@squarespace.com
16. HEADINGS.
The headings of the Sections in this Option Agreement are inserted for convenience only and shall not be deemed to constitute a part
of this Option Agreement or to affect the meaning of this Option Agreement.
17. MISCELLANEOUS.
(a)
The rights and obligations of the Company under your Option will be transferable to any one or more persons or entities, and
all covenants and agreements hereunder will inure to the benefit of, and be enforceable by the Company’s successors and assigns.
(b)
You agree upon request to execute any further documents or instruments necessary or desirable in the sole determination of
the Company to carry out the purposes or intent of your Option.
(c)
You acknowledge and agree that you have reviewed your Option in its entirety, have had an opportunity to obtain the advice
of counsel prior to executing and accepting your Option, and fully understand all provisions of your Option.
(d)
All obligations of the Company under the Plan and this Option Agreement will be binding on any successor to the Company, whether
the existence of such successor is the result of a direct or indirect purchase, merger, consolidation, or otherwise, of all or substantially
all of the business and/or assets of the Company.
(e)
This Option Agreement will be subject to all applicable laws, rules, and regulations, and to such approvals by any governmental
agencies or national securities exchanges as may be required.
18.
GOVERNING PLAN DOCUMENT. Your Option is subject to all the provisions of the Plan, the provisions of which are hereby made
a part of your Option, and is further subject to all interpretations, amendments, rules and regulations, which may from time to time
be promulgated and adopted pursuant to the Plan. If there is any conflict between the provisions of your Option and those of the Plan,
the provisions of the Plan will control. In addition, your Option (and any compensation paid or shares issued under your Option) is subject
to recoupment in accordance with The Dodd—Frank Wall Street Reform and Consumer Protection Act and any implementing regulations
thereunder, any clawback policy adopted by the Company and any compensation recovery policy otherwise required by applicable law.
19. EFFECT
ON OTHER EMPLOYEE BENEFIT PLANS. The value of the Option subject to this Option Agreement shall not be included as compensation,
earnings, salaries, or other similar terms used when calculating benefits under any employee benefit plan (other than the Plan) sponsored
by the Company or any Affiliate except as such plan otherwise expressly provides. The Company expressly reserves its rights to amend,
modify, or terminate any or all of the employee benefit plans of the Company or any Affiliate.
20. SEVERABILITY.
If all or any part of this Option Agreement or the Plan is declared by any court or governmental authority to be unlawful or invalid,
such unlawfulness or invalidity will not invalidate any portion of this Option Agreement or the Plan not declared to be unlawful or invalid.
Any Section of this Option Agreement (or part of such a Section) so declared to be unlawful or invalid shall, if possible, be construed
in a manner which will give effect to the terms of such Section or part of a Section to the fullest extent possible while remaining
lawful and valid.
21. OTHER
DOCUMENTS. You hereby acknowledge receipt of and the right to receive a document providing the information required by Rule 428(b)(1) promulgated
under the Securities Act. In addition, you acknowledge receipt of the Company’s policy permitting certain individuals to sell shares
only during certain “window” periods and the Company’s insider trading policy, in effect from time to time.
22. AMENDMENT.
This Option Agreement may not be modified, amended or terminated except by an instrument in writing, signed by you and by a duly
authorized representative of the Company. Notwithstanding the foregoing, this Option Agreement may be amended solely by the Board by
a writing which specifically states that it is amending this Option Agreement, so long as a copy of such amendment is delivered to
you, and provided that, except as otherwise expressly provided in the Plan, no such amendment materially adversely affecting your
rights hereunder may be made without your written consent. Without limiting the foregoing, the Board reserves the right to change,
by written notice to you, the provisions of this Option Agreement in any way it may deem necessary or advisable to carry out the
purpose of the Option as a result of any change in applicable laws or regulations or any future law, regulation, ruling, or
judicial decision, provided that any such change shall be applicable only to rights relating to that portion of the Option which is
then subject to restrictions as provided herein.
* * *
This Option Agreement will be deemed to be signed
by you upon the signing by you of the Stock Option Grant Notice to which it is attached.
ATTACHMENT II
NOTICE OF EXERCISE
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SQUARESPACE, INC.
225 Varick Street, 12th Floor
New York, NY 10014
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Date of Exercise:
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This constitutes notice to Squarespace, Inc.
(the “Company”) under my stock Option that I elect to purchase the below number of shares of Common Stock of
the Company (the “Shares”) for the price set forth below.
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Type of Option (check one):
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Incentive ¨
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Nonstatutory ¨
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Stock Option dated:
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Number of Shares as to which Option is exercised:
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Certificates to be issued in name of:
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Total exercise price:
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$
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$
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Cash payment delivered herewith:
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$
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$
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[Value of Shares delivered herewith(1):
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$
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$
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]
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[Value of Shares pursuant to net exercise(2):
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$
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$
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]
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[Regulation T Program (cashless exercise(3)):
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$
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$
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]
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(1)
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Shares must meet the public trading requirements set forth in the Option. Shares must be valued in accordance with the terms of the
Option being exercised, and must be owned free and clear of any liens, claims, encumbrances or security interests. Certificates must be
endorsed or accompanied by an executed assignment separate from the certificate.
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(2)
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The Option must be a Nonstatutory Stock Option, and the Company must have established net exercise procedures at the time of exercise,
in order to utilize this payment method.
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(3)
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Shares must meet the public trading requirements set forth in the Option.
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By this exercise, I agree (i) to provide
such additional documents as the Company may require pursuant to the terms of the Squarespace, Inc. 2021 Equity Incentive Plan, (ii) to
provide for the payment by me to the Company (in the manner designated by the Company) of the Company’s withholding obligation,
if any, relating to the exercise of this Option, and (iii) if this exercise relates to an Incentive Stock Option, to notify the Company
in writing within fifteen (15) days after the date of any disposition of any of the Shares issued upon exercise of this Option that occurs
within two (2) years after the date of grant of this Option or within one (1) year after such Shares are issued upon exercise
of this Option.
Exhibit 10.7
SQUARESPACE, INC.
2021 EMPLOYEE STOCK PURCHASE PLAN
ADOPTED BY THE BOARD OF DIRECTORS: MARCH 25, 2021
APPROVED BY THE STOCKHOLDERS: APRIL __, 2021
(a) The
Plan provides a means by which Eligible Employees of the Company and certain designated Related Corporations may be given an
opportunity to purchase shares of Common Stock. The Plan permits the Company to grant a series of Purchase Rights to Eligible
Employees under an Employee Stock Purchase Plan.
(b) The
Company, by means of the Plan, seeks to retain the services of such Employees, to secure and retain the services of new Employees and
to provide incentives for such persons to exert maximum efforts for the success of the Company and its Related Corporations.
(a) The
Board will administer the Plan unless and until the Board delegates administration of the Plan to a Committee or Committees, as provided
in Section 2(c).
(b) The
Board will have the power, subject to, and within the limitations of, the express provisions of the Plan:
(i) To
determine how and when Purchase Rights will be granted and the provisions of each Offering (which need not be identical).
(ii) To
designate from time to time which Related Corporations of the Company will be eligible to participate in the Plan.
(iii) To
construe and interpret the Plan and Purchase Rights, and to establish, amend and revoke rules and regulations for administration
of the Plan. The Board, in the exercise of this power, may correct any defect, omission or inconsistency in the Plan, in a manner and
to the extent it deems necessary or expedient to make the Plan fully effective.
(iv) To
settle all controversies regarding the Plan and Purchase Rights granted under the Plan.
(v) To
suspend or terminate the Plan at any time as provided in Section 12.
(vi) To
amend the Plan at any time as provided in Section 12.
(vii) Generally,
to exercise such powers and to perform such acts as it deems necessary or expedient to promote the best interests of the Company and its
Related Corporations and to carry out the intent that the Plan be treated as an Employee Stock Purchase Plan.
(viii) To
adopt such procedures and sub-plans as are necessary or appropriate to permit participation in the Plan by Employees who are foreign nationals
or employed outside the United States.
(c) The
Board may delegate some or all of the administration of the Plan to a Committee or Committees. If administration is delegated to a Committee,
the Committee will have, in connection with the administration of the Plan, the powers theretofore possessed by the Board that have been
delegated to the Committee, including the power to delegate to a subcommittee any of the administrative powers the Committee is authorized
to exercise (and references to the Board in this Plan and in any applicable Offering Document will thereafter be to the Committee or subcommittee),
subject, however, to such resolutions, not inconsistent with the provisions of the Plan, as may be adopted from time to time by the Board.
The Board may retain the authority to concurrently administer the Plan with the Committee and may, at any time, revest in the Board some
or all of the powers previously delegated. Whether or not the Board has delegated administration of the Plan to a Committee, the Board
will have the final power to determine all questions of policy and expediency that may arise in the administration of the Plan.
(d) All
determinations, interpretations and constructions made by the Board in good faith will not be subject to review by any person and will
be final, binding and conclusive on all persons.
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3.
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SHARES OF COMMON STOCK SUBJECT TO THE PLAN.
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(a) Subject
to the provisions of Section 11(a) relating to Capitalization Adjustments, the aggregate number of shares of Common Stock
that may be issued under the Plan shall be [______] shares of Common Stock, as increased on January 1 of each fiscal year of
the Company beginning on January 1, 2022 by a number of shares of Common Stock equal to the
lesser of (i) 1% of the aggregate number of shares of Capital Stock outstanding on December 31 of the immediately preceding calendar
year and (ii) 1,375,000 shares of Common Stock. Notwithstanding the foregoing, the Board may act prior to January 1 of a given year to
provide that there will be no January 1 increase in the share reserve for such calendar year or that the increase in the share
reserve for such calendar year will be a lesser number of shares of Common Stock than would otherwise occur pursuant to the
preceding sentence.
(b) If
any Purchase Right granted under the Plan terminates without having been exercised in full, the shares of Common Stock not purchased under
such Purchase Right will again become available for issuance under the Plan.
(c) The
stock issuable under the Plan will be shares of authorized but unissued or reacquired Common Stock, including shares repurchased by the
Company on the open market or otherwise.
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4.
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GRANT OF PURCHASE RIGHTS; OFFERING.
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(a) The
Board may from time to time grant or provide for the grant of Purchase Rights to Eligible Employees under an Offering (consisting of one
or more Purchase Periods) on an Offering Date or Offering Dates selected by the Board. Each Offering will be in such form and will contain
such terms and conditions as the Board will deem appropriate, and will comply with the requirement of Section 423(b)(5) of the
Code that all Employees granted Purchase Rights will have the same rights and privileges. The terms and conditions of an Offering shall
be incorporated by reference into the Plan and treated as part of the Plan. The provisions of separate Offerings need not be identical,
but each Offering will include (through incorporation of the provisions of this Plan by reference in the document comprising the Offering
or otherwise) the period during which the Offering will be effective, which period will not exceed 27 months beginning with the Offering
Date, and the substance of the provisions contained in Sections 5 through 8, inclusive.
(b) If
a Participant has more than one Purchase Right outstanding under the Plan, unless the Participant otherwise indicates in forms delivered
to the Company: (i) each form will apply to all of the Participant’s Purchase Rights under the Plan, and (ii) a Purchase
Right with a lower exercise price (or an earlier-granted Purchase Right, if different Purchase Rights have identical exercise prices)
will be exercised to the fullest possible extent before a Purchase Right with a higher exercise price (or a later-granted Purchase Right
if different Purchase Rights have identical exercise prices) will be exercised.
(c) The
Board will have the discretion to structure an Offering so that if the Fair Market Value of a share of Common Stock on the first Trading
Day of a new Purchase Period within that Offering is less than or equal to the Fair Market Value of a share of Common Stock on the Offering
Date for that Offering, then (i) that Offering will terminate immediately as of that first Trading Day, and (ii) the Participants
in such terminated Offering will be automatically enrolled in a new Offering beginning on the first Trading Day of such new Purchase Period.
(a) Purchase
Rights may be granted only to Employees of the Company or, as the Board may designate in accordance with Section 2(b), to Employees
of a Related Corporation. Except as provided in Section 5(b), an Employee will not be eligible to be granted Purchase Rights unless,
on the Offering Date, the Employee has been in the employ of the Company or the Related Corporation, as the case may be, for such continuous
period preceding such Offering Date as the Board may require, but in no event will the required period of continuous employment be equal
to or greater than two years. In addition, the Board may provide that no Employee will be eligible to be granted Purchase Rights under
the Plan unless, on the Offering Date, such Employee’s customary employment with the Company or the Related Corporation is more
than 20 hours per week and more than five months per calendar year or such other criteria as the Board may determine consistent with Section 423
of the Code.
(b) The
Board may provide that each person who, during the course of an Offering, first becomes an Eligible Employee will, on a date or dates
specified in the Offering which coincides with the day on which such person becomes an Eligible Employee or which occurs thereafter, receive
a Purchase Right under that Offering, which Purchase Right will thereafter be deemed to be a part of that Offering. Such Purchase Right
will have the same characteristics as any Purchase Rights originally granted under that Offering, as described herein, except that:
(i) the
date on which such Purchase Right is granted will be the “Offering Date” of such Purchase Right for all purposes, including
determination of the exercise price of such Purchase Right;
(ii) the
period of the Offering with respect to such Purchase Right will begin on its Offering Date and end coincident with the end of such Offering;
and
(iii) the
Board may provide that if such person first becomes an Eligible Employee within a specified period of time before the end of the Offering,
he or she will not receive any Purchase Right under that Offering.
(c) No
Employee will be eligible for the grant of any Purchase Rights if, immediately after any such Purchase Rights are granted, such Employee
owns stock possessing five percent or more of the total combined voting power or value of all classes of stock of the Company or of any
Related Corporation. For purposes of this Section 5(c), the rules of Section 424(d) of the Code will apply in determining
the stock ownership of any Employee, and stock which such Employee may purchase under all outstanding Purchase Rights and options will
be treated as stock owned by such Employee.
(d) As
specified by Section 423(b)(8) of the Code, an Eligible Employee may be granted Purchase Rights only if such Purchase Rights,
together with any other rights granted under all Employee Stock Purchase Plans of the Company and any Related Corporations, do not permit
such Eligible Employee’s rights to purchase stock of the Company or any Related Corporation to accrue at a rate which exceeds $25,000
of Fair Market Value of such stock (determined at the time such rights are granted, and which, with respect to the Plan, will be determined
as of their respective Offering Dates) for each calendar year in which such rights are outstanding at any time.
(e) Officers
of the Company and any designated Related Corporation, if they are otherwise Eligible Employees, will be eligible to participate in Offerings
under the Plan. Notwithstanding the foregoing, the Board may provide in an Offering that Employees who are highly compensated Employees
within the meaning of Section 423(b)(4)(D) of the Code will not be eligible to participate.
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6.
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PURCHASE RIGHTS; PURCHASE PRICE.
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(a) On
each Offering Date, each Eligible Employee, pursuant to an Offering made under the Plan, will be granted a Purchase Right to purchase
up to that number of shares of Common Stock purchasable either with a percentage or with a maximum dollar amount, as designated by the
Board, but in either case not exceeding 15% of such Employee’s earnings (as defined by the Board in each Offering) during the period
that begins on the Offering Date (or such later date as the Board determines for a particular Offering) and ends on the date stated in
the Offering, which date will be no later than the end of the Offering.
(b) The
Board will establish one or more Purchase Dates during an Offering on which Purchase Rights granted for that Offering will be exercised
and shares of Common Stock will be purchased in accordance with such Offering.
(c) In
connection with each Offering made under the Plan, the Board may specify (i) a maximum number of shares of Common Stock that may
be purchased by any Participant on any Purchase Date during such Offering, (ii) a maximum aggregate number of shares of Common Stock
that may be purchased by all Participants pursuant to such Offering and/or (iii) a maximum aggregate number of shares of Common Stock
that may be purchased by all Participants on any Purchase Date under the Offering. If the aggregate purchase of shares of Common Stock
issuable upon exercise of Purchase Rights granted under the Offering would exceed any such maximum aggregate number, then, in the absence
of any Board action otherwise, a pro rata (based on each Participant’s accumulated Contributions) allocation of the shares of Common
Stock available will be made in as nearly a uniform manner as will be practicable and equitable.
(d) The
purchase price of shares of Common Stock acquired pursuant to Purchase Rights will be determined by the Board with respect to each Offering
and will not be less than the lesser of:
(i) an
amount equal to 85% of the Fair Market Value of the shares of Common Stock on the Offering Date; or
(ii) an
amount equal to 85% of the Fair Market Value of the shares of Common Stock on the applicable Purchase Date.
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7.
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PARTICIPATION; WITHDRAWAL; TERMINATION.
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(a) An
Eligible Employee may elect to authorize payroll deductions as the means of making Contributions by completing and delivering to the Company,
within the time specified in the Offering, an enrollment form provided by the Company. The enrollment form will specify the amount of
Contributions not to exceed the maximum amount specified by the Board. Each Participant’s Contributions will be credited to a bookkeeping
account for such Participant under the Plan and will be deposited with the general funds of the Company except where applicable law requires
that Contributions be deposited with a third party. If permitted in the Offering, a Participant may begin such Contributions with the
first payroll occurring on or after the Offering Date (or, in the case of a payroll date that occurs after the end of the prior Offering
but before the Offering Date of the next new Offering, Contributions from such payroll will be included in the new Offering). If permitted
in the Offering, a Participant may thereafter reduce (including to zero) or increase the Participant’s Contributions. If specifically
provided in the Offering, in addition to making Contributions by payroll deductions, a Participant may make Contributions through the
payment by cash or check prior to a Purchase Date.
(b) During
an Offering, a Participant may cease making Contributions and withdraw from the Offering by delivering to the Company a withdrawal form
provided by the Company. The Company may impose a deadline before a Purchase Date for withdrawing. Upon such withdrawal, such Participant’s
Purchase Right in that Offering will immediately terminate and the Company will distribute to such Participant all of the Participant’s
accumulated but unused Contributions and such Participant’s Purchase Right in that Offering shall thereupon terminate. A Participant’s
withdrawal from that Offering will have no effect upon the Participant’s eligibility to participate in any other Offerings under
the Plan, but such Participant will be required to deliver a new enrollment form to participate in subsequent Offerings.
(c) Purchase
Rights granted pursuant to any Offering under the Plan will terminate immediately if the Participant either (i) is no longer an Employee
(subject to any post-employment participation period required by law) or (ii) is otherwise no longer eligible to participate. The
Company will distribute to such individual all of the individual’s accumulated but unused Contributions.
(d) During
a Participant’s lifetime, Purchase Rights will be exercisable only by such Participant. Purchase Rights are not transferable by
a Participant, except by will, by the laws of descent and distribution, or, if permitted by the Company, by a beneficiary designation
as described in Section 10.
(e) Unless
otherwise specified in the Offering, the Company will have no obligation to pay interest on Contributions.
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8.
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EXERCISE OF PURCHASE RIGHTS.
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(a) On
each Purchase Date, each Participant’s accumulated Contributions will be applied to the purchase of shares of Common Stock, up to
the maximum number of shares of Common Stock permitted by the Plan and the applicable Offering, at the purchase price specified in the
Offering. No fractional shares will be issued unless specifically provided for in the Offering.
(b) Unless
otherwise provided in the Offering, if any amount of accumulated Contributions remains in a Participant’s account after the purchase
of shares of Common Stock and such remaining amount is less than the amount required to purchase one share of Common Stock on the final
Purchase Date of an Offering, then such remaining amount will be held in such Participant’s account for the purchase of shares of
Common Stock under the next Offering under the Plan, unless such Participant withdraws from or is not eligible to participate in such
next Offering, in which case such amount will be distributed to such Participant after the final Purchase Date without interest. If the
amount of Contributions remaining in a Participant’s account after the purchase of shares of Common Stock is at least equal to the
amount required to purchase one (1) whole share of Common Stock on the final Purchase Date of an Offering, then such remaining amount
will be distributed in full to such Participant after the final Purchase Date of such Offering without interest.
(c) No
Purchase Rights may be exercised to any extent unless the shares of Common Stock to be issued upon such exercise under the Plan are covered
by an effective registration statement pursuant to the Securities Act and the Plan is in material compliance with all applicable federal,
state, foreign and other securities and other laws applicable to the Plan. If on a Purchase Date the shares of Common Stock are not so
registered or the Plan is not in such compliance, no Purchase Rights will be exercised on such Purchase Date, and the Purchase Date will
be delayed until the shares of Common Stock are subject to such an effective registration statement and the Plan is in material compliance,
except that the Purchase Date will in no event be more than six months from the Offering Date. If, on the Purchase Date, as delayed to
the maximum extent permissible, the shares of Common Stock are not registered and the Plan is not in material compliance with all applicable
laws, no Purchase Rights will be exercised and all accumulated but unused Contributions will be distributed to the Participants without
interest.
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9.
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COVENANTS OF THE COMPANY.
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The Company will seek to obtain from each federal,
state, foreign or other regulatory commission or agency having jurisdiction over the Plan such authority as may be required to grant Purchase
Rights and issue and sell shares of Common Stock thereunder. If, after commercially reasonable efforts, the Company is unable to obtain
the authority that counsel for the Company deems necessary for the grant of Purchase Rights or the lawful issuance and sale of Common
Stock under the Plan, and at a commercially reasonable cost, the Company will be relieved from any liability for failure to grant Purchase
Rights and/or to issue and sell Common Stock upon exercise of such Purchase Rights.
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10.
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DESIGNATION OF BENEFICIARY.
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(a) The
Company may, but is not obligated to, permit a Participant to submit a form designating a beneficiary who will receive any shares of Common
Stock and/or Contributions from the Participant’s account under the Plan if the Participant dies before such shares and/or Contributions
are delivered to the Participant. The Company may, but is not obligated to, permit the Participant to change such designation of beneficiary.
Any such designation and/or change must be on a form approved by the Company.
(b) If
a Participant dies, and in the absence of a valid beneficiary designation, the Company will deliver any shares of Common Stock and/or
Contributions to the executor or administrator of the estate of the Participant. If no executor or administrator has been appointed (to
the knowledge of the Company), the Company, in its sole discretion, may deliver such shares of Common Stock and/or Contributions to the
Participant’s spouse, dependents or relatives, or if no spouse, dependent or relative is known to the Company, then to such other
person as the Company may designate.
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11.
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ADJUSTMENTS UPON CHANGES IN COMMON STOCK; CORPORATE TRANSACTIONS.
|
(a) In
the event of a Capitalization Adjustment, an equitable substitution or proportionate adjustment shall be made, in each case as determined
by the Board in its sole discretion, with respect to: (i) the class(es) and maximum number of securities subject to the Plan pursuant
to Section 3(a), (ii) the class(es) and maximum number of securities by which the share reserve is to increase automatically
each year pursuant to Section 3(a), (iii) the class(es) and number of securities subject to, and the purchase price applicable
to outstanding Offerings and Purchase Rights, and (iv) the class(es) and number of securities that are the subject of the purchase
limits under each ongoing Offering. The Board will make such adjustments, and its determination will be final, binding and conclusive.
(b) In
the event of a Corporate Transaction, then: (i) any surviving corporation or acquiring corporation (or the surviving or acquiring
corporation’s parent company) may assume or continue outstanding Purchase Rights or may substitute similar rights (including a right
to acquire the same consideration paid to the stockholders in the Corporate Transaction) for outstanding Purchase Rights, or (ii) if
any surviving or acquiring corporation (or its parent company) does not assume or continue such Purchase Rights or does not substitute
similar rights for such Purchase Rights, then the Participants’ accumulated Contributions will be used to purchase shares of Common
Stock within ten business days prior to the Corporate Transaction under the outstanding Purchase Rights, and the Purchase Rights will
terminate immediately after such purchase.
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12.
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AMENDMENT, TERMINATION OR SUSPENSION OF THE PLAN.
|
(a) The
Board may amend the Plan at any time in any respect the Board deems necessary or advisable; provided that, stockholder approval
will be required for any amendment of the Plan for which stockholder approval is required by applicable law or listing requirements.
(b) The
Board may suspend or terminate the Plan at any time. No Purchase Rights may be granted under the Plan while the Plan is suspended or after
it is terminated.
(c) Any
benefits, privileges, entitlements and obligations under any outstanding Purchase Rights granted before an amendment, suspension or termination
of the Plan will not be materially impaired by any such amendment, suspension or termination except (i) with the consent of the person
to whom such Purchase Rights were granted, (ii) as necessary to comply with any laws, listing requirements, or governmental regulations
(including, without limitation, the provisions of Section 423 of the Code and the regulations and other interpretive guidance issued
thereunder relating to Employee Stock Purchase Plans), including, without limitation, any such regulations or other guidance that may
be issued or amended after the date the Plan is adopted by the Board, or (iii) as necessary to obtain or maintain favorable tax,
listing, or regulatory treatment.
Notwithstanding anything in the Plan or any Offering
Document to the contrary, the Board will be entitled to: (i) establish the exchange ratio applicable to amounts withheld in a currency
other than U.S. dollars; (ii) permit Contributions in excess of the amount designated by a Participant in order to adjust for mistakes
in the Company’s processing of properly completed Contribution elections; (iii) establish reasonable waiting and adjustment
periods and/or accounting and crediting procedures to ensure that amounts applied toward the purchase of Common Stock for each Participant
properly correspond with amounts withheld from the Participant’s Contributions; (iv) amend any outstanding Purchase Rights
or clarify any ambiguities regarding the terms of any Offering to enable the Purchase Rights to qualify under and/or comply with Section 423
of the Code; and (v) establish other limitations or procedures as the Board determines in its sole discretion advisable that are
consistent with the Plan. The actions of the Board pursuant to this paragraph will not be considered to alter or impair any Purchase Rights
granted under an Offering as they are part of the initial terms of each Offering and the Purchase Rights granted under each Offering.
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13.
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EFFECTIVE DATE OF PLAN.
|
The Plan will become effective immediately prior
to and contingent upon the Registration Date, and, unless terminated earlier pursuant to Section 12(b), shall have a term of ten
(10) years. No Purchase Rights will be exercised unless and until the Plan has been approved by the stockholders of the Company,
which approval must be within 12 months before or after the date the Plan is adopted (or if required under Section 12(a) above,
materially amended) by the Board.
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14.
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MISCELLANEOUS PROVISIONS.
|
(a) Proceeds
from the sale of shares of Common Stock pursuant to Purchase Rights will constitute general funds of the Company.
(b) A
Participant will not be deemed to be the holder of, or to have any of the rights of a holder with respect to, shares of Common Stock subject
to Purchase Rights unless and until the Participant’s shares of Common Stock acquired upon exercise of Purchase Rights are recorded
in the books of the Company.
(c) Each
Participant shall give the Company prompt written notice of any disposition or other transfer of any shares of Common Stock, acquired
pursuant to the exercise of an option granted under the Section 423 of the Code, if such disposition or transfer is made (i) within
two years after the applicable Offering Date or (ii) within one year after the Purchase Date. The Company may direct that any certificates
evidencing shares acquired pursuant to the Plan refer to such requirement.
(d) The
Plan and Offering do not constitute an employment contract. Nothing in the Plan or in the Offering will in any way alter the at will nature
of a Participant’s employment or be deemed to create in any way whatsoever any obligation on the part of any Participant to continue
in the employ of the Company or a Related Corporation, or on the part of the Company or a Related Corporation to continue the employment
of a Participant.
(e) The
laws of the State of Delaware will govern all questions concerning the construction, validity and interpretation of the Plan, without
regard to that state’s conflict of laws rules.
(f) Unless
otherwise provided in a Participant’s Award Agreement, all notices, requests, demands, claims and other communications by the Participant
with respect to the Plan or any Award shall be in writing (including electronically) and shall be deemed given if delivered by certified
or registered mail (first class postage prepaid), guaranteed overnight delivery or email transmission, to the following address (or to
such other addresses which the Company shall designate in writing to the Participant from time to time):
Squarespace, Inc.
225 Varick Street, 12th Floor
New York, NY 10014
Attention: Legal Department
Email: legal@squarespace.com
As used in the Plan, the following definitions
will apply to the capitalized terms indicated below:
(a) “Board”
means the Board of Directors of the Company.
(b) “Capitalization
Adjustment” means any change that is made in, or other events that occur with respect to, the Common Stock subject to the
Plan or subject to any Purchase Right after the date the Plan is adopted by the Board without the receipt of consideration by the Company
through merger, consolidation, reorganization, recapitalization, reincorporation, stock dividend, dividend in property other than cash,
large nonrecurring cash dividend, stock split, liquidating dividend, combination of shares, exchange of shares, change in corporate structure
or other similar equity restructuring transaction, as that term is used in Financial Accounting Standards Board Accounting Standards Codification
Topic 718 (or any successor thereto). Notwithstanding the foregoing, the conversion of any convertible securities of the Company will
not be treated as a Capitalization Adjustment.
(c) “Capital
Stock” means each and every class of common stock of the Company, regardless of the number of votes per share.
(d) “Code”
means the Internal Revenue Code of 1986, as amended, including any applicable regulations and guidance thereunder.
(e) “Committee”
means a committee of one or more members of the Board to whom authority has been delegated by the Board in accordance with Section 2(c).
(f) “Common
Stock” means, as of the Registration Date, the Class A common stock of the Company.
(g) “Company”
means Squarespace, Inc., a Delaware corporation.
(h) “Contributions”
means the payroll deductions and other additional payments specifically provided for in the Offering that a Participant contributes to
fund the exercise of a Purchase Right. A Participant may make additional payments into his or her account if specifically provided for
in the Offering, and then only if the Participant has not already had the maximum permitted amount withheld during the Offering through
payroll deductions.
(i) “Corporate
Transaction” means the consummation, in a single transaction or in a series of related transactions, of any one or more
of the following events:
(i) a
sale or other disposition of all or substantially all, as determined by the Board in its sole discretion, of the consolidated assets of
the Company and its Subsidiaries;
(ii) a
sale or other disposition of more than 50% of the outstanding securities of the Company;
(iii) a
merger, consolidation or similar transaction following which the Company is not the surviving corporation; or
(iv) a
merger, consolidation or similar transaction following which the Company is the surviving corporation but the shares of Common Stock outstanding
immediately preceding the merger, consolidation or similar transaction are converted or exchanged by virtue of the merger, consolidation
or similar transaction into other property, whether in the form of securities, cash or otherwise.
(j) “Director”
means a member of the Board.
(k) “Eligible
Employee” means an Employee who meets the requirements set forth in the document(s) governing the Offering for eligibility
to participate in the Offering; provided that such Employee also meets the requirements for eligibility to participate set forth
in the Plan.
(l) “Employee”
means any person, including an Officer or Director, who is “employed” for purposes of Section 423(b)(4) of the Code
by the Company or a Related Corporation. However, service solely as a Director, or payment of a fee for such services, will not cause
a Director to be considered an “Employee” for purposes of the Plan.
(m) “Employee
Stock Purchase Plan” means a plan that grants Purchase Rights intended to be options issued under an “employee stock
purchase plan,” as that term is defined in Section 423(b) of the Code.
(n) “Exchange
Act” means the Securities Exchange Act of 1934, as amended and the rules and regulations promulgated thereunder.
(o) “Fair
Market Value” means, as of any date, the value of the Common Stock determined as follows:
(i) If
the Common Stock is listed on any established stock exchange or traded on any established market, the Fair Market Value of a share of
Common Stock will be, unless otherwise determined by the Board, the closing sales price for such stock as quoted on such exchange or market
(or the exchange or market with the greatest volume of trading in the Common Stock) on the date of determination, as reported in a source
the Board deems reliable.
(ii) Unless
otherwise provided by the Board, if there is no closing sales price for the Common Stock on the date of determination, then the Fair Market
Value will be the closing selling price on the last preceding date for which such quotation exists.
(iii) In
the absence of such markets for the Common Stock, the Fair Market Value will be determined by the Board in good faith in compliance with
applicable laws and in a manner that complies with Section 409A of the Code.
(p) “Offering”
means the grant to Eligible Employees of Purchase Rights, with the exercise of those Purchase Rights automatically occurring at the end
of one or more Purchase Periods. The terms and conditions of an Offering will generally be set forth in the “Offering Document”
approved by the Board for that Offering.
(q) “Offering
Date” means a date selected by the Board for an Offering to commence.
(r) “Officer”
means a person who is an officer of the Company or a Related Corporation within the meaning of Section 16 of the Exchange Act.
(s) “Participant”
means an Eligible Employee who holds an outstanding Purchase Right.
(t) “Plan”
means this Squarespace, Inc. 2021 Employee Stock Purchase Plan.
(u) “Purchase
Date” means one or more dates during an Offering selected by the Board on which Purchase Rights will be exercised and on
which purchases of shares of Common Stock will be carried out in accordance with such Offering.
(v) “Purchase
Period” means a period of time specified within an Offering, generally beginning on the Offering Date or on the first Trading
Day following a Purchase Date, and ending on a Purchase Date. An Offering may consist of one or more Purchase Periods.
(w) “Purchase
Right” means an option to purchase shares of Common Stock granted pursuant to the Plan.
(x) “Registration
Date” means the date upon which the registration statement on Form S-1 that is filed by the Company is declared effective
by the U.S. Securities and Exchange Commission.
(y) “Related
Corporation” means any “parent corporation” or “subsidiary corporation” of the Company whether now
or subsequently established, as those terms are defined in Sections 424(e) and (f), respectively, of the Code.
(z) “Securities
Act” means the Securities Act of 1933, as amended.
(aa) “Subsidiary”
means, with respect to the Company, (i) any corporation of which more than fifty percent (50%) of the outstanding capital stock having
ordinary voting power to elect a majority of the board of directors of such corporation (irrespective of whether, at the time, stock of
any other class or classes of such corporation will have or might have voting power by reason of the happening of any contingency) is
at the time, directly or indirectly, Owned by the Company, and (ii) any partnership, limited liability company or other entity in
which the Company has a direct or indirect interest (whether in the form of voting or participation in profits or capital contribution)
of more than fifty percent (50%). For purposes of the foregoing clause (i), the Company will be deemed to “Own” or have
“Owned” such securities if the Company, directly or indirectly, through any contract, arrangement, understanding, relationship
or otherwise, has or shares voting power, which includes the power to vote or to direct the voting, with respect to such securities.
(bb) “Trading
Day” means any day on which the exchange(s) or market(s) on which shares of Common Stock are listed, including,
but not limited to, the NYSE, Nasdaq Global Select Market, the Nasdaq Global Market, the Nasdaq Capital Market or any successors thereto,
is open for trading.
Exhibit 10.8
Squarespace,
Inc.
2017
Equity Incentive Plan
Adopted
by the Board of Directors: November 17, 2017
Approved by the Stockholders: November 28, 2017
(a)
Successor to and Continuation of Prior Plan. The Plan is intended as the successor to and continuation of the Company's Amended
and Restated 2008 Equity Incentive Plan (the "Prior Plan"). From and after 12:01 a.m. Eastern time on the Effective
Date, no additional awards will be granted under the Prior Plan. All Awards granted on or after 12:01 a.m. Eastern Time on the Effective
Date will be granted under this Plan. All awards granted under the Prior Plan will remain subject to the terms of the Prior Plan.
(i)
Any shares of the Company's Class B Common Stock that would otherwise remain available for future grants under the Prior Plan
as of 12:01 a.m. Eastern Time on the Effective Date (the "Prior Plan's Available Reserve") will cease to be available
under the Prior Plan at such time. Instead, that number of shares of Common Stock equal to the Prior Plan's Available Reserve will be
added to the Share Reserve (as further described in Section 3(a) below) and will be immediately available for grants and issuance pursuant
to Stock Awards hereunder, up to the maximum number set forth in Section 3(a) below.
(ii)
In addition, from and after 12:01 a.m. Eastern time on the Effective Date, any shares of the Company's Class B Common Stock
subject, at such time, to outstanding stock awards granted under the Prior Plan that (i) expire or terminate for any reason prior to exercise
or settlement; (ii) are forfeited because of the failure to meet a contingency or condition required to vest such shares or otherwise
return to the Company; or (iii) are reacquired, withheld (or not issued) to satisfy a tax withholding obligation in connection with an
award or to satisfy the purchase price or exercise price of a stock award (such shares the "Returning Shares")
will immediately be added to the Share Reserve (as further described in Section 3(a) below) as and when such shares become Returning Shares,
up to the maximum number set forth in Section 3(a) below.
(b)
Eligible Award Recipients. Employees, Directors and Consultants are eligible to receive Awards.
(c)
Available Awards. The Plan provides for the grant of the following Awards: (i) Incentive Stock Options, (ii) Nonstatutory Stock
Options, (iii) Stock Appreciation Rights, (iv) Restricted Stock Awards, (v) Restricted Stock Unit Awards, (vi) Performance Stock Awards,
(vii) Performance Cash Awards, and (viii) Other Stock Awards.
(d) Purpose.
The Plan, through the grant of Awards, is intended to help the Company secure and retain the services of eligible award recipients, provide
incentives for such persons to exert maximum efforts for the success of the Company and any Affiliate, and provide a means by which the
eligible recipients may benefit from increases in value of the Common Stock.
(a)
Administration by Board. The Board will administer the Plan. The Board may delegate administration of the Plan to a Committee
or Committees, as provided in Section 2(c).
(b)
Powers of Board. The Board will have the power, subject to, and within the limitations of, the express provisions of the Plan:
(i)
To determine: (A) who will be granted Awards; (B) when and how each Award will be granted; (C) what type of Award will be granted;
(D) the provisions of each Award (which need not be identical), including when a person will be permitted to exercise or otherwise receive
cash or Common Stock under the Award; (E) the number of shares of Common Stock subject to, or the cash value of, an Award; and (F) the
Fair Market Value applicable to a Stock Award.
(ii)
To construe and interpret the Plan and Awards granted under it, and to establish, amend and revoke rules and regulations for
administration of the Plan and Awards. The Board, in the exercise of these powers, may correct any defect, omission or inconsistency in
the Plan or in any Award Agreement or in the written terms of a Performance Cash Award, in a manner and to the extent it will deem necessary
or expedient to make the Plan or Award fully effective.
(iii)
To settle all controversies regarding the Plan and Awards granted under it.
(iv)
To accelerate, in whole or in part, the time at which an Award may be exercised or vest (or the time at which cash or shares
of Common Stock may be issued in settlement thereof).
(v)
To suspend or terminate the Plan at any time. Except as otherwise provided in the Plan or an Award Agreement, suspension or
termination of the Plan will not materially impair a Participant's rights under the Participant's then-outstanding Award without the Participant's
written consent, except as provided in subsection (viii) below.
(vi) To
amend the Plan in any respect the Board deems necessary or advisable, including, without limitation, by adopting amendments relating
to Incentive Stock Options and certain nonqualified deferred compensation under Section 409A of the Code and/or bringing the Plan or
Awards granted under the Plan into compliance with the requirements for Incentive Stock Options or ensuring that they are exempt
from, or compliant with, the requirements for nonqualified deferred compensation under Section 409A of the Code, subject to the
limitations, if any, of applicable law. If required by applicable law or listing requirements, and except as provided in Section
9(a) relating to Capitalization Adjustments, the Company will seek stockholder approval of any amendment of the Plan that (A)
materially increases the number of shares of Common Stock available for issuance under the Plan, (B) materially expands the class of
individuals eligible to receive Awards under the Plan, (C) materially increases the benefits accruing to Participants under the
Plan, (D) materially reduces the price at which shares of Common Stock may be issued or purchased under the Plan, (E) materially
extends the term of the Plan, or (F) materially expands the types of Awards available for issuance under the Plan. Except as
otherwise provided in the Plan or an Award Agreement, no amendment of the Plan will materially impair a Participant's rights under
an outstanding Award without the Participant's written consent.
(vii)
To submit any amendment to the Plan for stockholder approval, including, but not limited to, amendments to the Plan intended
to satisfy the requirements of Section 422 of the Code regarding "incentive stock options."
(viii)
To approve forms of Award Agreements for use under the Plan and to amend the terms of any one or more Awards, including, but
not limited to, amendments to provide terms more favorable to the Participant than previously provided in the Award Agreement, subject
to any specified limits in the Plan that are not subject to Board discretion; provided, however, that a Participant's rights under
any Award will not be impaired by any such amendment unless (A) the Company requests the consent of the affected Participant, and (B)
such Participant consents in writing. Notwithstanding the foregoing, (1) a Participant's rights will not be deemed to have been impaired
by any such amendment if the Board, in its sole discretion, determines that the amendment, taken as a whole, does not materially impair
the Participant's rights, and (2) subject to the limitations of applicable law, if any, the Board may amend the terms of any one or more
Awards without the affected Participant's consent (A) to maintain the qualified status of the Award as an Incentive Stock Option under
Section 422 of the Code; (B) to change the terms of an Incentive Stock Option, if such change results in impairment of the Award solely
because it impairs the qualified status of the Award as an Incentive Stock Option under Section 422 of the Code; (C) to clarify the manner
of exemption from, or to bring the Award into compliance with, Section 409A of the Code; or (D) to comply with other applicable laws or
listing requirements.
(ix) Generally,
to exercise such powers and to perform such acts as the Board deems necessary or expedient to promote the best interests of the Company
and that are not in conflict with the provisions of the Plan or Awards.
(x) To
adopt such procedures and sub-plans as are necessary or appropriate to permit participation in the Plan by Employees, Directors or Consultants
who are foreign nationals or employed outside the United States (provided that Board approval will not be necessary for immaterial modifications
to the Plan or any Award Agreement that are required for compliance with the laws of the relevant foreign jurisdiction).
(xi)
To effect, with the consent of any adversely affected Participant, (A) the reduction of the exercise, purchase or strike price
of any outstanding Stock Award; (B) the cancellation of any outstanding Stock Award and the grant in substitution therefor of a new (1)
Option or SAR, (2) Restricted Stock Award, (3) Restricted Stock Unit Award, (4) Other Stock Award, (5) cash and/or (6) other valuable
consideration determined by the Board, in its sole discretion, with any such substituted award (x) covering the same or a different number
of shares of Common Stock as the cancelled Stock Award and (y) granted under the Plan or another equity or compensatory plan of the Company;
or (C) any other action that is treated as a repricing under generally accepted accounting principles.
(c)
Delegation to Committee.
(i)
General. The Board may delegate some or all of the administration of the Plan to a Committee or Committees. If administration
of the Plan is delegated to a Committee, the Committee will have, in connection with the administration of the Plan, the powers theretofore
possessed by the Board that have been delegated to the Committee, including the power to delegate to a subcommittee of the Committee any
of the administrative powers the Committee is authorized to exercise (and references in this Plan to the Board will thereafter be construed
as being to the Committee or subcommittee, as applicable). Any delegation of administrative powers will be reflected in resolutions, not
inconsistent with the provisions of the Plan, adopted from time to time by the Board or Committee (as applicable). The Board may retain
the authority to concurrently administer the Plan with the Committee and may, at any time, revest in the Board some or all of the powers
previously delegated.
(d)
Delegation to an Officer. The Board may delegate to one (1) or more Officers the authority to do one or both of the following
(i) designate Employees to be recipients of Options and SARs (and, to the extent permitted by applicable law, other Stock Awards) and,
to the extent permitted by applicable law, the terms of such Awards, and (ii) determine the number of shares of Common Stock to be subject
to such Stock Awards granted to such Employees; provided, however, that the Board resolutions regarding such delegation will specify
the total number of shares of Common Stock that may be subject to the Stock Awards granted by such Officer and that such Officer may not
grant a Stock Award to himself or herself. Any such Stock Awards will be granted on the form of Stock Award Agreement most recently approved
for use by the Committee or the Board, unless otherwise provided in the resolutions approving the delegation authority. The Board may
not delegate authority to an Officer who is acting solely in the capacity of an Officer (and not also as a Director) to determine the
Fair Market Value pursuant to Section 13(w)(iii) below.
(e)
Effect of Board's Decision. All determinations, interpretations and constructions made by the Board in good faith will not
be subject to review by any person and will be final, binding and conclusive on all persons.
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3.
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Shares Subject to the Plan.
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(a)
Share Reserve. Subject to Section 9(a) relating to Capitalization Adjustments, the aggregate number of shares of Common Stock
that may be issued pursuant to Stock Awards will not exceed 19,685,195 shares (the "Share Reserve"), which number
is the sum of (i) 5,002,434 new shares, plus (ii) the number of shares subject to the Prior Plan's Available Reserve, plus (iii)
the number of shares that are Returning Shares, as such shares become available from time to time.
(b) Reversion
of Shares to the Share Reserve. If a Stock Award or any portion thereof (i) expires or otherwise terminates without all of the
shares covered by such Stock Award having been issued or (ii) is settled in cash (i.e., the Participant receives cash rather
than stock), such expiration, termination or settlement will not reduce (or otherwise offset) the number of shares of Common Stock
that may be available for issuance under the Plan. If any shares of Common Stock issued pursuant to a Stock Award are forfeited back
to or repurchased by the Company because of the failure to meet a contingency or condition required to vest such shares in the
Participant, then the shares that are forfeited or repurchased will revert to and again become available for issuance under the
Plan. Any shares reacquired by the Company in satisfaction of tax withholding obligations on a Stock Award or as consideration for
the exercise or purchase price of a Stock Award will again become available for issuance under the Plan.
(c)
Incentive Stock Option Limit. Subject to the provisions of Section 9(a) relating to Capitalization Adjustments, the aggregate
maximum number of shares of Common Stock that may be issued pursuant to the exercise of Incentive Stock Options will be 40,000,000 shares
of Common Stock.
(d)
Source of Shares. The stock issuable under the Plan will be shares of authorized but unissued or reacquired Common Stock, including
shares repurchased by the Company on the open market or otherwise.
(a) Eligibility
for Specific Stock Awards. Incentive Stock Options may be granted only to employees of the Company or a "parent corporation"
or "subsidiary corporation" thereof (as such terms are defined in Sections 424(e) and 424(f) of the Code). Stock Awards other
than Incentive Stock Options may be granted to Employees, Directors and Consultants; provided, however, that Stock Awards may
not be granted to Employees, Directors and Consultants who are providing Continuous Service only to any "parent" of the Company,
as such term is defined in Rule 405 of the Securities Act, unless (i) the stock underlying such Stock Awards is treated as "service
recipient stock" under Section 409A of the Code (for example, because the Stock Awards are granted pursuant to a corporate transaction
such as a spin off transaction), (ii) the Company, in consultation with its legal counsel, has determined that such Stock Awards are
otherwise exempt from Section 409A of the Code, or (iii) the Company, in consultation with its legal counsel, has determined that such
Stock Awards comply with the distribution requirements of Section 409A of the Code.
(b)
Ten Percent Stockholders. A Ten Percent Stockholder will not be granted an Incentive Stock Option unless the exercise price
of such Option is at least 110% of the Fair Market Value on the date of grant and the Option is not exercisable after the expiration of
five years from the date of grant.
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5.
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Provisions Relating to Options and Stock Appreciation Rights.
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Each Option or SAR will be
in such form and will contain such terms and conditions as the Board deems appropriate. All Options will be separately designated Incentive
Stock Options or Nonstatutory Stock Options at the time of grant, and, if certificates are issued, a separate certificate or certificates
will be issued for shares of Common Stock purchased on exercise of each type of Option. If an Option is not specifically designated as
an Incentive Stock Option, or if an Option is designated as an Incentive Stock Option but some portion or all of the Option fails to qualify
as an Incentive Stock Option under the applicable rules, then the Option (or portion thereof) will be a Nonstatutory Stock Option. The
provisions of separate Options or SARs need not be identical; provided, however, that each Award Agreement will conform to (through
incorporation of provisions hereof by reference in the applicable Award Agreement or otherwise) the substance of each of the following
provisions:
(a)
Term. Subject to the provisions of Section 4(b) regarding Ten Percent Stockholders, no Option or SAR will be exercisable after
the expiration of ten years from the date of its grant or such shorter period specified in the Award Agreement.
(b)
Exercise Price. Subject to the provisions of Section 4(b) regarding Ten Percent Stockholders, the exercise or strike price
of each Option or SAR will be not less than 100% of the Fair Market Value of the Common Stock subject to the Option or SAR on the date
the Award is granted. Notwithstanding the foregoing, an Option or SAR may be granted with an exercise or strike price lower than 100%
of the Fair Market Value of the Common Stock subject to the Award if such Award is granted pursuant to an assumption of or substitution
for another option or stock appreciation right pursuant to a Corporate Transaction and in a manner consistent with the provisions of Section
409A of the Code and, if applicable, Section 424(a) of the Code. Each SAR will be denominated in shares of Common Stock equivalents.
(c)
Purchase Price for Options. The purchase price of Common Stock acquired pursuant to the exercise of an Option may be paid,
to the extent permitted by applicable law and as determined by the Board in its sole discretion, by any combination of the methods of
payment set forth below. The Board will have the authority to grant Options that do not permit all of the following methods of payment
(or otherwise restrict the ability to use certain methods) and to grant Options that require the consent of the Company to use a particular
method of payment. The permitted methods of payment are as follows:
(i)
by cash, check, bank draft or money order payable to the Company;
(ii)
pursuant to a program developed under Regulation T as promulgated by the Federal Reserve Board that, prior to the issuance
of the stock subject to the Option, results in either the receipt of cash (or check) by the Company or the receipt of irrevocable instructions
to pay the aggregate exercise price to the Company from the sales proceeds;
(iii)
by delivery to the Company (either by actual delivery or attestation) of shares of Common Stock;
(iv)
if an Option is a Nonstatutory Stock Option, by a "net exercise" arrangement pursuant to which the Company will reduce
the number of shares of Common Stock issuable upon exercise by the largest whole number of shares with a Fair Market Value that does not
exceed the aggregate exercise price; provided, however, that the Company will accept a cash or other payment from the Participant
to the extent of any remaining balance of the aggregate exercise price not satisfied by such reduction in the number of whole shares to
be issued. Shares of Common Stock will no longer be subject to an Option and will not be exercisable thereafter to the extent that (A)
shares issuable upon exercise are used to pay the exercise price pursuant to the "net exercise," (B) shares are delivered to
the Participant as a result of such exercise, and (C) shares are withheld to satisfy tax withholding obligations; or
(v)
in any other form of legal consideration that may be acceptable to the Board and specified in the applicable Award Agreement.
(d) Exercise
and Payment of a SAR. To exercise any outstanding SAR, the Participant must provide written notice of exercise to the Company in
compliance with the provisions of the Stock Appreciation Right Agreement evidencing such SAR. The appreciation distribution payable
on the exercise of a SAR will be not greater than an amount equal to the excess of (A) the aggregate Fair Market Value (on the date
of the exercise of the SAR) of a number of shares of Common Stock equal to the number of Common Stock equivalents in which the
Participant is vested under such SAR, and with respect to which the Participant is exercising the SAR on such date, over (B) the
aggregate strike price of the number of Common Stock equivalents with respect to which the Participant is exercising the SAR on such
date. The appreciation distribution may be paid in Common Stock, in cash, in any combination of the two or in any other form of
consideration, as determined by the Board and contained in the Award Agreement evidencing such SAR.
(e)
Transferability of Options and SARs. The Board may, in its sole discretion, impose such limitations on the transferability
of Options and SARs as the Board will determine. In the absence of such a determination by the Board to the contrary, the following restrictions
on the transferability of Options and SARs will apply:
(i)
Restrictions on Transfer. An Option or SAR will not be transferable except by will or by the laws of descent and distribution
(or pursuant to subsections (ii) and (iii) below), and will be exercisable during the lifetime of the Participant only by the Participant.
The Board may permit transfer of the Option or SAR in a manner that is not prohibited by applicable tax and securities laws. Except as
explicitly provided in Section 5(e)(iv) or elsewhere in the Plan, neither an Option nor a SAR may be transferred for consideration.
(ii)
Domestic Relations Orders. Subject to the approval of the Board or a duly authorized Officer, an Option or SAR may be transferred
pursuant to the terms of a domestic relations order, official marital settlement agreement or other divorce or separation instrument as
permitted by Treasury Regulations Section 1.421-1(b)(2). If an Option is an Incentive Stock Option, such Option may be deemed to be a
Nonstatutory Stock Option as a result of such transfer.
(iii)
Beneficiary Designation. Subject to the approval of the Board or a duly authorized Officer, a Participant may, by delivering
written notice to the Company, in a form approved by the Company (or the designated broker), designate a third party who, on the death
of the Participant, will thereafter be entitled to exercise the Option or SAR and receive the Common Stock or other consideration resulting
from such exercise. In the absence of such a designation, upon the death of the Participant, the executor or administrator of the Participant's
estate will be entitled to exercise the Option or SAR and receive the Common Stock or other consideration resulting from such exercise.
However, the Company may prohibit designation of a beneficiary at any time, including due to any conclusion by the Company that such designation
would be inconsistent with the provisions of applicable laws.
(iv)
Exempted Transfers. Notwithstanding anything to the contrary in this Plan or this Section 5(e), the transfer and assignment
restrictions set forth in this Section 5(e) shall not apply to any transfer or assignment of shares of Common Stock issued pursuant to,
or upon exercise of, a Stock Award that are no longer subject to forfeiture to the Company as a result of the vesting of such Stock Award,
if such transfer or assignment is an Exempt Transfer (as defined in the Stockholders Agreement).
(f)
Vesting Generally. The total number of shares of Common Stock subject to an Option or SAR may vest and become exercisable
in periodic installments that may or may not be equal. The Option or SAR may be subject to such other terms and conditions on the time
or times when it may or may not be exercised (which may be based on the satisfaction of Performance Goals or other criteria) as the Board
may deem appropriate. The vesting provisions of individual Options or SARs may vary. The provisions of this Section 5(f) are subject to
any Option or SAR provisions governing the minimum number of shares of Common Stock as to which an Option or SAR may be exercised.
(g)
Termination of Continuous Service. Except as otherwise provided in the applicable Award Agreement or other agreement between
the Participant and the Company, if a Participant's Continuous Service terminates (other than upon the Participant's death or Disability),
the Participant may exercise his or her Option or SAR (to the extent that the Participant was entitled to exercise such Award as of the
date of termination of Continuous Service) within the period of time ending on the earlier of (i) the date that is 90 days following the
termination of the Participant's Continuous Service (or such longer or shorter period specified in the applicable Award Agreement), and
(ii) the expiration of the term of the Option or SAR as set forth in the Award Agreement. If, after termination of Continuous Service,
the Participant does not exercise his or her Option or SAR (as applicable) within the applicable time frame, the Option or SAR will terminate.
(h)
Extension of Termination Date. If the exercise of an Option or SAR following the termination of the Participant's Continuous
Service (other than upon the Participant's death or Disability) would be prohibited at any time solely because the issuance of shares
of Common Stock would violate the registration requirements under the Securities Act, then the Option or SAR will terminate on the earlier
of (i) the expiration of a total period of time (that need not be consecutive) equal to the applicable post termination exercise period
after the termination of the Participant's Continuous Service during which the exercise of the Option or SAR would not be in violation
of such registration requirements, and (ii) the expiration of the term of the Option or SAR as set forth in the applicable Award Agreement.
In addition, unless otherwise provided in a Participant's Award Agreement, if the sale of any Common Stock received on exercise of an
Option or SAR following the termination of the Participant's Continuous Service would violate the Company's insider trading policy, then
the Option or SAR will terminate on the earlier of (i) the expiration of a period of months (that need not be consecutive) equal to the
applicable post-termination exercise period after the termination of the Participant's Continuous Service during which the sale of the
Common Stock received upon exercise of the Option or SAR would not be in violation of the Company's insider trading policy, or (ii) the
expiration of the term of the Option or SAR as set forth in the applicable Award Agreement.
(i) Disability
of Participant. Except as otherwise provided in the applicable Award Agreement or other agreement between the Participant and
the Company, if a Participant's Continuous Service terminates as a result of the Participant's Disability, the Participant may
exercise his or her Option or SAR (to the extent that the Participant was entitled to exercise such Option or SAR as of the date of
termination of Continuous Service), but only within such period of time ending on the earlier of (i) the date 12 months following
such termination of Continuous Service (or such longer or shorter period specified in the Award Agreement), and (ii) the expiration
of the term of the Option or SAR as set forth in the Award Agreement. If, after termination of Continuous Service, the Participant
does not exercise his or her Option or SAR within the applicable time frame, the Option or SAR (as applicable) will terminate.
(j)
Death of Participant. Except as otherwise provided in the applicable Award Agreement or other agreement between the Participant
and the Company, if (i) a Participant's Continuous Service terminates as a result of the Participant's death, or (ii) the Participant
dies within the period (if any) specified in the Award Agreement for exercisability after the termination of the Participant's Continuous
Service for a reason other than death, then the Option or SAR may be exercised (to the extent the Participant was entitled to exercise
such Option or SAR as of the date of death) by the Participant's estate, by a person who acquired the right to exercise the Option or
SAR by bequest or inheritance or by a person designated to exercise the Option or SAR upon the Participant's death, but only within the
period ending on the earlier of (i) the date 18 months following the date of death (or such longer or shorter period specified in the
Award Agreement), and (ii) the expiration of the term of such Option or SAR as set forth in the Award Agreement. If, after the Participant's
death, the Option or SAR is not exercised within the applicable time frame, the Option or SAR (as applicable) will terminate.
(k)
Non-Exempt Employees. If an Option or SAR is granted to an Employee who is a non-exempt employee for purposes of the Fair Labor
Standards Act of 1938, as amended, the Option or SAR will not be first exercisable for any shares of Common Stock until at least six months
following the date of grant of the Option or SAR (although the Award may vest prior to such date). Consistent with the provisions of the
Worker Economic Opportunity Act, (i) if such non-exempt Employee dies or suffers a Disability, (ii) upon a Corporate Transaction in which
such Option or SAR is not assumed, continued, or substituted, (iii) upon a Change in Control, or (iv) upon the Participant's retirement
(as such term may be defined in the Participant's Award Agreement in another agreement between the Participant and the Company, or, if
no such definition, in accordance with the Company's then current employment policies and guidelines), the vested portion of any Options
and SARs may be exercised earlier than six months following the date of grant. The foregoing provision is intended to operate so that
any income derived by a non-exempt employee in connection with the exercise or vesting of an Option or SAR will be exempt from his or
her regular rate of pay. To the extent permitted and/or required for compliance with the Worker Economic Opportunity Act to ensure that
any income derived by a non-exempt employee in connection with the exercise, vesting or issuance of any shares under any other Stock Award
will be exempt from the employee's regular rate of pay, the provisions of this Section 5(l) will apply to all Stock Awards and are hereby
incorporated by reference into such Stock Award Agreements.
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6.
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Provisions of Stock Awards other than Options and SARS.
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(a) Restricted
Stock Awards. Each Restricted Stock Award Agreement will be in such form and will contain such terms and conditions as the Board
will deem appropriate. To the extent consistent with the Company's bylaws, at the Board's election, shares of Common Stock may be
(x) held in book entry form subject to the Company's instructions until any restrictions relating to the Restricted Stock Award
lapse; or (y) evidenced by a certificate, which certificate will be held in such form and manner as determined by the Board. The
terms and conditions of Restricted Stock Award Agreements may change from time to time, and the terms and conditions of separate
Restricted Stock Award Agreements need not be identical. Each Restricted Stock Award Agreement will conform to (through
incorporation of the provisions hereof by reference in the agreement or otherwise) the substance of each of the following
provisions:
(i)
Consideration. A Restricted Stock Award may be awarded in consideration for (A) cash, check, bank draft or money order payable
to the Company, (B) past or future services to the Company or an Affiliate, or (C) any other form of legal consideration that may be acceptable
to the Board, in its sole discretion, and permissible under applicable law.
(ii)
Vesting. Shares of Common Stock awarded under the Restricted Stock Award Agreement may be subject to forfeiture to the Company
in accordance with a vesting schedule to be determined by the Board.
(iii)
Termination of Participant's Continuous Service. If a Participant's Continuous Service terminates, the Company may receive
through a forfeiture condition or a repurchase right any or all of the shares of Common Stock held by the Participant that have not vested
as of the date of termination of Continuous Service under the terms of the Restricted Stock Award Agreement.
(iv)
Transferability. Rights to acquire shares of Common Stock under the Restricted Stock Award Agreement will be transferable by
the Participant only upon such terms and conditions as are set forth in the Restricted Stock Award Agreement, as the Board will determine
in its sole discretion, so long as Common Stock awarded under the Restricted Stock Award Agreement remains subject to the terms of the
Restricted Stock Award Agreement.
(v)
Dividends. A Restricted Stock Award Agreement may provide that any dividends paid on Restricted Stock will be subject to the
same vesting and forfeiture restrictions as apply to the shares subject to the Restricted Stock Award to which they relate.
(b)
Restricted Stock Unit Awards. Each Restricted Stock Unit Award Agreement will be in such form and will contain such terms and
conditions as the Board will deem appropriate. The terms and conditions of Restricted Stock Unit Award Agreements may change from time
to time, and the terms and conditions of separate Restricted Stock Unit Award Agreements need not be identical. Each Restricted Stock
Unit Award Agreement will conform to (through incorporation of the provisions hereof by reference in the Agreement or otherwise) the substance
of each of the following provisions:
(i)
Consideration. At the time of grant of a Restricted Stock Unit Award, the Board will determine the consideration, if any, to
be paid by the Participant upon delivery of each share of Common Stock subject to the Restricted Stock Unit Award. The consideration to
be paid (if any) by the Participant for each share of Common Stock subject to a Restricted Stock Unit Award may be paid in any form of
legal consideration that may be acceptable to the Board, in its sole discretion, and permissible under applicable law.
(ii)
Vesting. At the time of the grant of a Restricted Stock Unit Award, the Board may impose such restrictions on or conditions
to the vesting of the Restricted Stock Unit Award as it, in its sole discretion, deems appropriate.
(iii)
Payment. A Restricted Stock Unit Award may be settled by the delivery of shares of Common Stock, their cash equivalent, any
combination thereof or in any other form of consideration, as determined by the Board and contained in the Restricted Stock Unit Award
Agreement.
(iv)
Additional Restrictions. At the time of the grant of a Restricted Stock Unit Award, the Board, as it deems appropriate, may
impose such restrictions or conditions that delay the delivery of the shares of Common Stock (or their cash equivalent) subject to a Restricted
Stock Unit Award to a time after the vesting of such Restricted Stock Unit Award.
(v)
Dividend Equivalents. Dividend equivalents may be credited in respect of shares of Common Stock covered by a Restricted Stock
Unit Award, as determined by the Board and contained in the Restricted Stock Unit Award Agreement. At the sole discretion of the Board,
such dividend equivalents may be converted into additional shares of Common Stock covered by the Restricted Stock Unit Award in such manner
as determined by the Board. Any additional shares covered by the Restricted Stock Unit Award credited by reason of such dividend equivalents
will be subject to all of the same terms and conditions of the underlying Restricted Stock Unit Award Agreement to which they relate.
(vi)
Termination of Participant's Continuous Service. Except as otherwise provided in the applicable Restricted Stock Unit Award
Agreement, such portion of the Restricted Stock Unit Award that has not vested will be forfeited upon the Participant's termination of
Continuous Service.
(c)
Performance Awards.
(i)
Performance Stock Awards. A Performance Stock Award is a Stock Award (covering a number of shares not in excess of that set
forth in Section 3(d) above) that is payable (including that may be granted, may vest or may be exercised) contingent upon the attainment
during a Performance Period of certain Performance Goals. A Performance Stock Award may, but need not, require the Participant's completion
of a specified period of Continuous Service. The length of any Performance Period, the Performance Goals to be achieved during the Performance
Period, and the measure of whether and to what degree such Performance Goals have been attained will be conclusively determined by the
Committee or the Board, in its sole discretion. In addition, to the extent permitted by applicable law and the applicable Award Agreement,
the Board (or Committee, as the case may be) may determine that cash may be used in payment of Performance Stock Awards.
(ii) Performance
Cash Awards. A Performance Cash Award is a cash award (for a dollar value not in excess of that set forth in Section 3(d) above)
that is payable contingent upon the attainment during a Performance Period of certain Performance Goals. A Performance Cash Award
may also require the completion of a specified period of Continuous Service. At the time of grant of a Performance Cash Award, the
length of any Performance Period, the Performance Goals to be achieved during the Performance Period, and the measure of whether and
to what degree such Performance Goals have been attained will be conclusively determined by the Committee or the Board in its sole
discretion. The Board (or Committee, as the case may be) may specify the form of payment of Performance Cash Awards, which may be
cash or other property, or may provide for a Participant to have the option for his or her Performance Cash Award, or such portion
thereof as the Board (or Committee, as the case may be) may specify, to be paid in whole or in part in cash or other property.
(iii)
Board Discretion. The Board (or Committee, as the case may be) retains the discretion to reduce or eliminate the compensation
or economic benefit due upon attainment of Performance Goals and to define the manner of calculating the Performance Criteria it selects
to use for a Performance Period. Partial achievement of the specified criteria may result in the payment or vesting corresponding to the
degree of achievement as specified in the Stock Award Agreement or the written terms of a Performance Cash Award.
(d)
Other Stock Awards. Other forms of Stock Awards valued in whole or in part by reference to, or otherwise based on, Common Stock,
including the appreciation in value thereof (e.g., options or stock rights with an exercise price or strike price less than 100% of the
Fair Market Value of the Common Stock at the time of grant) may be granted either alone or in addition to Stock Awards provided for under
Section 5 and the preceding provisions of this Section 6. Subject to the provisions of the Plan, the Board will have sole and complete
authority to determine the persons to whom and the time or times at which such Other Stock Awards will be granted, the number of shares
of Common Stock (or the cash equivalent thereof) to be granted pursuant to such Other Stock Awards and all other terms and conditions
of such Other Stock Awards.
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7.
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Covenants of the Company.
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(a)
Availability of Shares. The Company will keep available at all times the number of shares of Common Stock reasonably required
to satisfy then-outstanding Awards.
(b)
Securities Law Compliance. The Company will seek to obtain from each regulatory commission or agency, as necessary, such authority
as may be required to grant Stock Awards and to issue and sell shares of Common Stock upon exercise or vesting of the Stock Awards; provided,
however, that this undertaking will not require the Company to register under the Securities Act or other securities or applicable
laws, the Plan, any Stock Award or any Common Stock issued or issuable pursuant to any such Stock Award. If, after reasonable efforts
and at a reasonable cost, the Company is unable to obtain from any such regulatory commission or agency the authority that counsel for
the Company deems necessary or advisable for the lawful issuance and sale of Common Stock under the Plan, the Company will be relieved
from any liability for failure to issue and sell Common Stock upon exercise or vesting of such Stock Awards unless and until such authority
is obtained. A Participant will not be eligible for the grant of an Award or the subsequent issuance of cash or Common Stock pursuant
to the Award if such grant or issuance would be in violation of any applicable law.
(c)
No Obligation to Notify or Minimize Taxes. The Company will have no duty or obligation to any Participant to advise such holder
as to the tax treatment or time or manner of exercising such Stock Award. Furthermore, the Company will have no duty or obligation to
warn or otherwise advise such holder of a pending termination or expiration of an Award or a possible period in which the Award may not
be exercised. The Company has no duty or obligation to minimize the tax consequences of an Award to the holder of such Award.
(a)
Use of Proceeds from Sales of Common Stock. Proceeds from the sale of shares of Common Stock pursuant to Awards will constitute
general funds of the Company.
(b)
Corporate Action Constituting Grant of Awards. Corporate action constituting a grant by the Company of an Award to any Participant
will be deemed completed as of the date of such corporate action, unless otherwise determined by the Board, regardless of when the instrument,
certificate, or letter evidencing the Award is communicated to, or actually received or accepted by, the Participant. In the event that
the corporate records (e.g., Board consents, resolutions or minutes) documenting the corporate action constituting the grant contain terms
(e.g., exercise price, vesting schedule or number of shares) that are inconsistent with those in the Award Agreement or related grant
documents as a result of a clerical error in the papering of the Award Agreement or related grant documents, the corporate records will
control and the Participant will have no legally binding right to the incorrect term in the Award Agreement or related grant documents.
(c)
Stockholder Rights. No Participant will be deemed to be the holder of, or to have any of the rights of a holder with respect
to, any shares of Common Stock subject to an Award unless and until (i) such Participant has satisfied all requirements for exercise of,
or the issuance of shares of Common Stock under, the Award pursuant to its terms, and (ii) the issuance of the Common Stock subject to
such Award has been entered into the books and records of the Company.
(d)
No Employment or Other Service Rights. Nothing in the Plan, any Award Agreement or any other instrument executed thereunder
or in connection with any Award granted pursuant thereto will confer upon any Participant any right to continue to serve the Company or
an Affiliate in the capacity in effect at the time the Award was granted or will affect the right of the Company or an Affiliate to terminate
(i) the employment of an Employee with or without notice and with or without cause, (ii) the service of a Consultant pursuant to the terms
of such Consultant's agreement with the Company or an Affiliate, or (iii) the service of a Director pursuant to the bylaws of the Company
or an Affiliate, and any applicable provisions of the corporate law of the state or foreign jurisdiction in which the Company or the Affiliate
is domiciled or incorporated, as the case may be.
(e)
Change in Time Commitment. In the event a Participant's regular level of time commitment in the performance of his or her services
for the Company and any Affiliates is reduced (for example, and without limitation, if the Participant is an Employee of the Company and
the Employee has a change in status from a full-time Employee to a part-time Employee or takes an extended leave of absence) after the
date of grant of any Award to the Participant, the Board has the right in its sole discretion to (x) make a corresponding reduction in
the number of shares or cash amount subject to any portion of such Award that is scheduled to vest or become payable after the date of
such change in time commitment, and (y) in lieu of or in combination with such a reduction, extend the vesting or payment schedule applicable
to such Award. In the event of any such reduction, the Participant will have no right with respect to any portion of the Award that is
so reduced or extended.
(f)
Incentive Stock Option Limitations. To the extent that the aggregate Fair Market Value (determined at the time of grant) of
Common Stock with respect to which Incentive Stock Options are exercisable for the first time by any Optionholder during any calendar
year (under all plans of the Company and any Affiliates) exceeds $100,000 (or such other limit established in the Code) or otherwise does
not comply with the rules governing Incentive Stock Options, the Options or portions thereof that exceed such limit (according to the
order in which they were granted) or otherwise do not comply with such rules will be treated as Nonstatutory Stock Options, notwithstanding
any contrary provision of the applicable Option Agreement(s).
(g)
Investment Assurances. The Company may require a Participant, as a condition of exercising or acquiring Common Stock under
any Award, (i) to give written assurances satisfactory to the Company as to the Participant's knowledge and experience in financial and
business matters and/or to employ a purchaser representative reasonably satisfactory to the Company who is knowledgeable and experienced
in financial and business matters and that such Participant is capable of evaluating, alone or together with the purchaser representative,
the merits and risks of exercising the Award; and (ii) to give written assurances satisfactory to the Company stating that the Participant
is acquiring Common Stock subject to the Award for the Participant's own account and not with any present intention of selling or otherwise
distributing the Common Stock. The foregoing requirements, and any assurances given pursuant to such requirements, will be inoperative
if (A) the issuance of the shares upon the exercise or acquisition of Common Stock under the Award has been registered under a then currently
effective registration statement under the Securities Act, or (B) as to any particular requirement, a determination is made by counsel
for the Company that such requirement need not be met in the circumstances under the then applicable securities laws. The Company may,
upon advice of counsel to the Company, place legends on stock certificates issued under the Plan as such counsel deems necessary or appropriate
in order to comply with applicable securities laws, including, but not limited to, legends restricting the transfer of the Common Stock.
(h)
Withholding Obligations. Unless prohibited by the terms of an Award Agreement, the Company may, in its sole discretion, satisfy
any federal, state or local tax withholding obligation relating to an Award by any of the following means or by a combination of such
means: (i) causing the Participant to tender a cash payment; (ii) withholding shares of Common Stock from the shares of Common Stock issued
or otherwise issuable to the Participant in connection with the Award; provided, however, that no shares of Common Stock are withheld
with a value exceeding the maximum amount of tax required to be withheld by law (or such lesser amount as may be necessary to avoid classification
of the Stock Award as a liability for financial accounting purposes); (iii) withholding cash from an Award settled in cash; (iv) withholding
payment from any amounts otherwise payable to the Participant; or (v) by such other method as may be set forth in the Award Agreement.
(i)
Electronic Delivery. Any reference herein to a "written" agreement or document will include any agreement or document
delivered electronically, filed publicly at www.sec.gov (or any successor website thereto) or posted on the Company's intranet
(or other shared electronic medium controlled and/or established by the Company to which the Participant has access).
(j) Deferrals. To
the extent permitted by applicable law, the Board, in its sole discretion, may determine that the delivery of Common Stock or the
payment of cash, upon the exercise, vesting or settlement of all or a portion of any Award may be deferred and may establish
programs and procedures for deferral elections to be made by Participants. Deferrals by Participants will be made in accordance with
Section 409A of the Code. Consistent with Section 409A of the Code, the Board may provide for distributions while a Participant is
still an employee or otherwise providing services to the Company. The Board is authorized to make deferrals of Awards and determine
when, and in what annual percentages, Participants may receive payments, including lump sum payments, following the Participant's
termination of Continuous Service, and implement such other terms and conditions consistent with the provisions of the Plan and in
accordance with applicable law.
(k)
Compliance with Section 409A of the Code. Unless otherwise expressly provided for in an Award Agreement, the Plan and Award
Agreements will be interpreted to the greatest extent possible in a manner that makes the Plan and the Awards granted hereunder exempt
from Section 409A of the Code, and, to the extent not so exempt, in compliance with Section 409A of the Code. If the Board determines
that any Award granted hereunder is not exempt from and is therefore subject to Section 409A of the Code, the Award Agreement evidencing
such Award will incorporate the terms and conditions necessary to avoid the consequences specified in Section 409A(a)(1) of the Code,
and to the extent an Award Agreement is silent on terms necessary for compliance, such terms are hereby incorporated by reference into
the Award Agreement. Notwithstanding anything to the contrary in this Plan (and unless the Award Agreement specifically provides otherwise),
if the shares of Common Stock are publicly traded, and if a Participant holding an Award that constitutes "deferred compensation"
under Section 409A of the Code is a "specified employee" for purposes of Section 409A of the Code, no distribution or payment
of any amount that is due because of a "separation from service" (as defined in Section 409A of the Code without regard to alternative
definitions thereunder) will be issued or paid before the date that is six months following the date of such Participant's "separation
from service" (as defined in Section 409A of the Code without regard to alternative definitions thereunder) or, if earlier, the date
of the Participant's death, unless such distribution or payment can be made in a manner that complies with Section 409A of the Code, and
any amounts so deferred will be paid in a lump sum on the day after such six month period elapses, with the balance paid thereafter on
the original schedule.
(l)
Clawback/Recovery. All Awards granted under the Plan will be subject to recoupment in accordance with any clawback policy that
the Company is required to adopt pursuant to the listing standards of any national securities exchange or association on which the Company's
securities are listed or as is otherwise required by the Dodd-Frank Wall Street Reform and Consumer Protection Act or other applicable
law. In addition, the Board may impose such other clawback, recovery or recoupment provisions in an Award Agreement as the Board determines
necessary or appropriate, including but not limited to a reacquisition right in respect of previously acquired shares of Common Stock
or other cash or property upon the occurrence of an event constituting Cause. No recovery of compensation under such a clawback policy
will be an event giving rise to a right to resign for "good reason" or "constructive termination" (or similar term)
under any agreement with the Company.
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9.
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Adjustments upon Changes in Common Stock; Other Corporate Events.
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(a)
Capitalization Adjustments. In the event of a Capitalization Adjustment, the Board will appropriately and proportionately
adjust: (i) the class(es) and maximum number of securities subject to the Plan pursuant to Section 3(a), (ii) the class(es) and maximum
number of securities by which the share reserve is to increase automatically each year pursuant to Section 3(a), (iii) the class(es) and
maximum number of securities that may be issued pursuant to the exercise of Incentive Stock Options pursuant to Section 3(c), (iv) the
class(es) and maximum number of securities that may be awarded to any person pursuant to Sections 3(d), and (v) the class(es) and number
of securities and price per share of stock subject to outstanding Stock Awards. The Board will make such adjustments, and its determination
will be final, binding and conclusive.
(b)
Dissolution. Except as otherwise provided in the Stock Award Agreement, in the event of a Dissolution of the Company, all outstanding
Stock Awards (other than Stock Awards consisting of vested and outstanding shares of Common Stock not subject to a forfeiture condition
or the Company's right of repurchase) will terminate immediately prior to the completion of such Dissolution, and the shares of Common
Stock subject to the Company's repurchase rights or subject to a forfeiture condition may be repurchased or reacquired by the Company
notwithstanding the fact that the holder of such Stock Award is providing Continuous Service; provided, however, that the Board
may, in its sole discretion, cause some or all Stock Awards to become fully vested, exercisable and/or no longer subject to repurchase
or forfeiture (to the extent such Stock Awards have not previously expired or terminated) before the Dissolution is completed but contingent
on its completion.
(c)
Transaction. The following provisions shall apply to Stock Awards in the event of a Transaction unless otherwise provided in
the instrument evidencing the Stock Award or any other written agreement between the Company or any Affiliate and the Participant or unless
otherwise expressly provided by the Board at the time of grant of a Stock Award. In the event of a Transaction, then, notwithstanding
any other provision of the Plan, the Board shall take one or more of the following actions with respect to Stock Awards, contingent upon
the closing or completion of the Transaction:
(i)
arrange for the surviving corporation or acquiring corporation (or the surviving or acquiring corporation's parent company)
to assume or continue the Stock Award or to substitute a similar stock award for the Stock Award (including, but not limited to, an award
to acquire the same consideration paid to the stockholders of the Company pursuant to the Transaction);
(ii)
arrange for the assignment of any reacquisition or repurchase rights held by the Company in respect of Common Stock issued
pursuant to the Stock Award to the surviving corporation or acquiring corporation (or the surviving or acquiring corporation's parent
company);
(iii)
accelerate the vesting, in whole or in part, of the Stock Award (and, if applicable, the time at which the Stock Award may
be exercised) to a date prior to the effective time of such Transaction as the Board shall determine (or, if the Board shall not determine
such a date, to the date that is five days prior to the effective date of the Transaction), with such Stock Award terminating if not exercised
(if applicable) at or prior to the effective time of the Transaction;
(iv)
arrange for the lapse, in whole or in part, of any reacquisition or repurchase rights held by the Company with respect to
the Stock Award;
(v)
cancel or arrange for the cancellation of the Stock Award, to the extent not vested or not exercised prior to the effective
time of the Transaction, in exchange for such cash consideration, if any, as the Board, in its sole discretion, may consider appropriate;
and
(vi)
make a payment, in such form as may be determined by the Board equal to the excess, if any, of (A) the value of the property
the Participant would have received upon the exercise of the Stock Award immediately prior to the effective time of the Transaction, over
(B) any exercise price payable by such holder in connection with such exercise. For clarity, this payment may be zero ($0) if the value
of the property is equal to or less than the exercise price. Payments under this provision may be delayed to the same extent that payment
of consideration to the holders of Common Stock in connection with the Transaction is delayed as a result of escrows, earn outs, holdbacks
or other contingencies.
The Board need not take the
same action or actions with respect to all Stock Awards or portions thereof or with respect to all Participants. The Board may take different
actions with respect to the vested and unvested portions of a Stock Award.
(d)
Change in Control. A Stock Award may be subject to additional acceleration of vesting and exercisability upon or after a Change
in Control as may be provided in the Stock Award Agreement for such Stock Award or as may be provided in any other written agreement between
the Company or any Affiliate and the Participant.
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10.
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Plan Term; Earlier Termination or Suspension of the Plan.
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The Board may suspend or terminate
the Plan at any time. No Incentive Stock Options may be granted after the tenth anniversary of the Effective Date. No Awards may be granted
under the Plan while the Plan is suspended or after it is terminated.
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11.
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Existence of the Plan; Timing of First Grant or Exercise.
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The Plan will come into existence
on the Effective Date. In addition, no Stock Award will be exercised (or, in the case of a Restricted Stock Award, Restricted Stock Unit
Award, Performance Stock Award, or Other Stock Award, no Stock Award will be granted) and no Performance Cash Award will be settled unless
and until the Plan has been approved by the stockholders of the Company, which approval will be within 12 months after the date the Plan
is adopted by the Board.
The law of the State of Delaware
will govern all questions concerning the construction, validity and interpretation of this Plan, without regard to that state's conflict
of laws rules.
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13.
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Definitions.
As used in the Plan, the following definitions
will apply to the capitalized terms indicated below:
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(a)
"Affiliate" means, at the time of determination, any "parent"
or "subsidiary" of the Company as such terms are defined in Rule 405 of the Securities Act. The Board will have the authority
to determine the time or times at which "parent" or "subsidiary" status is determined within the foregoing definition.
(b)
"Award" means a Stock Award or a Performance Cash Award.
(c) "Award
Agreement" means a written agreement between the Company and a Participant evidencing
the terms and conditions of an Award.
(d)
"Board" means the Board of Directors of the Company.
(e)
"Capital Stock" means each and every class of common stock of the Company,
regardless of the number of votes per share.
(f)
"Capitalization Adjustment" means any change that is made in, or other
events that occur with respect to, the Common Stock subject to the Plan or subject to any Stock Award after the Effective Date without
the receipt of consideration by the Company through merger, consolidation, reorganization, recapitalization, reincorporation, stock dividend,
dividend in property other than cash, large nonrecurring cash dividend, stock split, reverse stock split, liquidating dividend, combination
of shares, exchange of shares, change in corporate structure or any similar equity restructuring transaction, as that term is used in
Statement of Financial Accounting Standards Board Accounting Standards Codification Topic 718 (or any successor thereto). Notwithstanding
the foregoing, the conversion of any convertible securities of the Company will not be treated as a Capitalization Adjustment.
(g)
"Change in Control" means the occurrence, in a single transaction or
in a series of related transactions, of any one or more of the following events:
(i) any
Exchange Act Person becomes the Owner, directly or indirectly, of securities of the Company representing more than 50% of the
combined voting power of the Company's then outstanding securities other than by virtue of a merger, consolidation or similar
transaction. Notwithstanding the foregoing, a Change in Control will not be deemed to occur (A) on account of the acquisition of
securities of the Company directly from the Company, (B) on account of the acquisition of securities of the Company by an investor,
any affiliate thereof or any other Exchange Act Person that acquires the Company's securities in a transaction or series of related
transactions the primary purpose of which is to obtain financing for the Company through the issuance of equity securities, (C) on
account of the acquisition of securities of the Company by any individual who is, on the Effective Date, either an executive officer
or a Director (either, an "Investor") and/or any entity in which an Investor has a direct or indirect
interest (whether in the form of voting rights or participation in profits or capital contributions) of more than 50% (collectively,
the "Entities") or on account of the Entities continuing to hold shares that come to represent more than 50%
of the combined voting power of the Company's then outstanding securities as a result of the conversion of any class of the
Company's securities into another class of the Company's securities having a different number of votes per share pursuant to the
conversion provisions set forth in the Company's Amended and Restated Certificate of Incorporation; or (D) solely because the level
of Ownership held by any Exchange Act Person (the "Subject Person") exceeds the designated percentage
threshold of the outstanding voting securities as a result of a repurchase or other acquisition of voting securities by the Company
reducing the number of shares outstanding, provided that if a Change in Control would occur (but for the operation of this sentence)
as a result of the acquisition of voting securities by the Company, and after such share acquisition, the Subject Person becomes the
Owner of any additional voting securities that, assuming the repurchase or other acquisition had not occurred, increases the
percentage of the then outstanding voting securities Owned by the Subject Person over the designated percentage threshold, then a
Change in Control will be deemed to occur;
(ii) there
is consummated a merger, consolidation or similar transaction involving (directly or indirectly) the Company and, immediately after the
consummation of such merger, consolidation or similar transaction, the stockholders of the Company immediately prior thereto do not Own,
directly or indirectly, either (A) outstanding voting securities representing more than 50% of the combined outstanding voting power
of the surviving Entity in such merger, consolidation or similar transaction or (B) more than 50% of the combined outstanding voting
power of the parent of the surviving Entity in such merger, consolidation or similar transaction, in each case in substantially the same
proportions as their Ownership of the outstanding voting securities of the Company immediately prior to such transaction; provided,
however, that a merger, consolidation or similar transaction will not constitute a Change in Control under this prong of the definition
if the outstanding voting securities representing more than 50% of the combined voting power of the surviving Entity or its parent are
owned by the Entities;
(iii)
there is consummated a sale, lease, exclusive license or other disposition of all or substantially all of the consolidated
assets of the Company and its Subsidiaries, other than a sale, lease, license or other disposition of all or substantially all of the
consolidated assets of the Company and its Subsidiaries to an Entity, more than 50% of the combined voting power of the voting securities
of which are Owned by stockholders of the Company in substantially the same proportions as their Ownership of the outstanding voting securities
of the Company immediately prior to such sale, lease, license or other disposition; provided, however, that a sale, lease, exclusive
license or other disposition of all or substantially all of the consolidated assets of the Company and its Subsidiaries will not constitute
a Change in Control under this prong of the definition if the outstanding voting securities representing more than 50% of the combined
voting power of the acquiring Entity or its parent are owned by the Entities;
(iv)
the stockholders of the Company approve or the Board approves a plan of complete dissolution or liquidation of the Company,
or a complete dissolution or liquidation of the Company will otherwise occur, except for a liquidation into a parent corporation; or
(v)
individuals who, on the date the Plan is adopted by the Board, are members of the Board (the "Incumbent Board")
cease for any reason to constitute at least a majority of the members of the Board; provided, however, that if the appointment
or election (or nomination for election) of any new Board member was approved or recommended by a majority vote of the members of the
Incumbent Board then still in office, such new member will, for purposes of this Plan, be considered as a member of the Incumbent Board.
Notwithstanding the
foregoing definition or any other provision of the Plan, the term Change in Control will not include a sale of assets, merger or
other transaction effected exclusively for the purpose of changing the domicile of the Company and the definition of Change in
Control (or any analogous term) in an individual written agreement between the Company or any Affiliate and the Participant will
supersede the foregoing definition with respect to Awards subject to such agreement; provided, however, that if no definition
of Change in Control or any analogous term is set forth in such an individual written agreement, the foregoing definition will
apply.
(h)
"Code" means the Internal Revenue Code of 1986, as amended, including
any applicable regulations and guidance thereunder.
(i) "Committee"
means a committee of one or more Directors to whom authority has been delegated by the Board in accordance
with Section 2(c).
(j)
"Common Stock" means, as of the Effective Date, the Class A Common Stock
of the Company, par value $0.0001 per share.
(k)
"Company" means Squarespace, Inc., a Delaware corporation.
(l) "Consultant"
means any person, including an advisor, who is (i) engaged by the Company or an Affiliate to render
consulting or advisory services and is compensated for such services, or (ii) serving as a member of the board of directors of an Affiliate
and is compensated for such services. However, service solely as a Director, or payment of a fee for such service, will not cause a Director
to be considered a "Consultant" for purposes of the Plan. Notwithstanding the foregoing, a person is treated as a Consultant
under this Plan only if a Form S-8 Registration Statement under the Securities Act is available to register either the offer or the sale
of the Company's securities to such person.
(m) "Continuous
Service" means that the Participant's service with the Company or an Affiliate, whether
as an Employee, Director or Consultant, is not interrupted or terminated. A change in the capacity in which the Participant renders service
to the Company or an Affiliate as an Employee, Consultant or Director or a change in the entity for which the Participant renders such
service, provided that there is no interruption or termination of the Participant's service with the Company or an Affiliate, will not
terminate a Participant's Continuous Service; provided, however, that if the Entity for which a Participant is rendering services
ceases to qualify as an Affiliate, as determined by the Board, in its sole discretion, such Participant's Continuous Service will be
considered to have terminated on the date such Entity ceases to qualify as an Affiliate. To the extent permitted by law, the Board or
the chief executive officer of the Company, in that party's sole discretion, may determine whether Continuous Service will be considered
interrupted in the case of (i) any leave of absence approved by the Board or chief executive officer, including sick leave, military
leave or any other personal leave, or (ii) transfers between the Company, an Affiliate, or their successors. Notwithstanding the foregoing,
a leave of absence will be treated as Continuous Service for purposes of vesting in an Award only to such extent as may be provided in
the Company's leave of absence policy, in the written terms of any leave of absence agreement or policy applicable to the Participant,
or as otherwise required by law.
(n)
"Corporate Transaction" means the consummation, in a single transaction
or in a series of related transactions, of any one or more of the following events:
(i) a
sale or other disposition of all or substantially all, as determined by the Board, in its sole discretion, of the consolidated assets
of the Company and its Subsidiaries;
(ii)
a sale or other disposition of more than 50% of the outstanding securities of the Company;
(iii)
a merger, consolidation or similar transaction following which the Company is not the surviving corporation; or
(iv) a
merger, consolidation or similar transaction following which the Company is the surviving corporation but the shares of Common Stock
outstanding immediately preceding the merger, consolidation or similar transaction are converted or exchanged by virtue of the merger,
consolidation or similar transaction into other property, whether in the form of securities, cash or otherwise.
(o)
"Director" means a member of the Board.
(p)
"Disability" means, with respect to a Participant, the inability of such
Participant to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can
be expected to result in death or that has lasted or can be expected to last for a continuous period of not less than 12 months, as provided
in Sections 22(e)(3) and 409A(a)(2)(c)(i) of the Code, and will be determined by the Board on the basis of such medical evidence as the
Board deems warranted under the circumstances.
(q)
"Dissolution" means when the Company, after having executed a certificate
of dissolution with the State of Delaware (or other applicable state), has completely wound up its affairs. Conversion of the Company
into a Limited Liability Company (or any other pass-through entity) will not be considered a "Dissolution" for purposes of the
Plan.
(r)
"Effective Date" means the effective date of this Plan, which is the
earlier of (i) the date that this Plan is first approved by the Company's stockholders and (ii) the date this Plan is adopted by the Board.
(s)
"Employee" means any person employed by the Company or an Affiliate.
However, service solely as a Director, or payment of a fee for such services, will not cause a Director to be considered an "Employee"
for purposes of the Plan.
(t)
"Entity" means a corporation, partnership, limited liability company
or other entity.
(u)
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated thereunder.
(v)
"Exchange Act Person" means any natural person, Entity or "group"
(within the meaning of Section 13(d) or 14(d) of the Exchange Act), except that "Exchange Act Person" will not include (i)
the Company or any Subsidiary of the Company, (ii) any employee benefit plan of the Company or any Subsidiary of the Company or any trustee
or other fiduciary holding securities under an employee benefit plan of the Company or any Subsidiary of the Company, (iii) an underwriter
temporarily holding securities pursuant to a registered public offering of such securities, (iv) an Entity Owned, directly or indirectly,
by the stockholders of the Company in substantially the same proportions as their Ownership of stock of the Company; or (v) any natural
person, Entity or "group" (within the meaning of Section 13(d) or 14(d) of the Exchange Act) that, as of the Effective Date,
is the Owner, directly or indirectly, of securities of the Company representing more than 50% of the combined voting power of the Company's
then outstanding securities.
(w)
"Fair Market Value" means, as of any date, the value of the Common Stock
determined as follows:
(i)
If the Common Stock is listed on any established stock exchange or traded on any established market, the Fair Market Value
of a share of Common Stock will be, unless otherwise determined by the Board, the closing sales price for such stock as quoted on such
exchange or market (or the exchange or market with the greatest volume of trading in the Common Stock) on the date of determination, as
reported in a source the Board deems reliable.
(ii)
Unless otherwise provided by the Board, if there is no closing sales price for the Common Stock on the date of determination,
then the Fair Market Value will be the closing selling price on the last preceding date for which such quotation exists.
(iii)
In the absence of such markets for the Common Stock, the Fair Market Value will be determined by the Board in good faith and
in a manner that complies with Sections 409A and 422 of the Code.
(x)
"Incentive Stock Option" means an option granted pursuant to Section
5 of the Plan that is intended to be, and qualifies as, an "incentive stock option" within the meaning of Section 422 of the
Code.
(y)
"Nonstatutory Stock Option" means any Option granted pursuant to Section
5 of the Plan that does not qualify as an Incentive Stock Option.
(z)
"Officer" means a person who is an officer of the Company within the
meaning of Section 16 of the Exchange Act.
(aa)
"Option" means an Incentive Stock Option or a Nonstatutory Stock Option
to purchase shares of Common Stock granted pursuant to the Plan.
(bb)
"Option Agreement" means a written agreement between the Company and
an Optionholder evidencing the terms and conditions of an Option grant. Each Option Agreement will be subject to the terms and conditions
of the Plan.
(cc)
"Optionholder" means a person to whom an Option is granted pursuant to
the Plan or, if applicable, such other person who holds an outstanding Option.
(dd)
"Other Stock Award" means an award based in whole or in part by reference
to the Common Stock which is granted pursuant to the terms and conditions of Section 6(d).
(ee)
"Other Stock Award Agreement" means a written agreement between the
Company and a holder of an Other Stock Award evidencing the terms and conditions of an Other Stock Award grant. Each Other Stock Award
Agreement will be subject to the terms and conditions of the Plan.
(ff)
"Own," "Owned," "Owner," "Ownership"
means a person or Entity will be deemed to "Own," to have "Owned," to be the "Owner"
of, or to have acquired "Ownership" of securities if such person or Entity, directly or indirectly, through any contract, arrangement,
understanding, relationship or otherwise, has or shares voting power, which includes the power to vote or to direct the voting, with respect
to such securities.
(gg)
"Participant" means a person to whom an Award is granted pursuant to
the Plan or, if applicable, such other person who holds an outstanding Stock Award.
(hh)
"Performance Cash Award" means an award of cash granted pursuant to the
terms and conditions of Section 6(c)(ii).
(ii)
"Performance Criteria" means the one or more criteria that the Board
or Committee (as applicable) will select for purposes of establishing the Performance Goals for a Performance Period. The Performance
Criteria that will be used to establish such Performance Goals may be based on any one of, or combination of, the following as determined
by the Board: (i) earnings (including earnings per share and net earnings); (ii) earnings before interest, taxes and depreciation; (iii)
earnings before interest, taxes, depreciation and amortization; (iv) earnings before interest, taxes, depreciation, amortization and legal
settlements; (v) earnings before interest, taxes, depreciation, amortization, legal settlements and other income (expense); (vi) earnings
before interest, taxes, depreciation, amortization, legal settlements, other income (expense) and stock-based compensation; (vii) earnings
before interest, taxes, depreciation, amortization, legal settlements, other income (expense), stock-based compensation and changes in
deferred revenue; (viii) total stockholder return; (ix) return on equity or average stockholder's equity; (x) return on assets, investment,
or capital employed; (xi) stock price; (xii) margin (including gross margin); (xiii) income (before or after taxes); (xiv) operating income;
(xv) operating income after taxes; (xvi) pre-tax profit; (xvii) operating cash flow; (xviii) sales or revenue targets; (xix) increases
in revenue or product revenue; (xx) expenses and cost reduction goals; (xxi) improvement in or attainment of working capital levels; (xxii)
economic value added (or an equivalent metric); (xxiii) market share; (xxiv) cash flow; (xxv) cash flow per share; (xxvi) share price
performance; (xxvii) debt reduction; (xxviii) implementation or completion of projects or processes; (xxix) stockholders' equity; (xxx)
capital expenditures; (xxxi) debt levels; (xxxii) operating profit or net operating profit; (xxxiii) workforce diversity; (xxxiv) growth
of net income or operating income; (xxxv) billings; (xxxvi) bookings; (xxxvii) employee retention; (xxxviii) user satisfaction; (xxxix)
the number of users, including unique users; (xl) budget management; (xli) partner satisfaction; (xlii) entry into or completion of strategic
partnerships or transactions (including in-licensing and out-licensing of intellectual property); and (xliii) other measures of performance
selected by the Board or Committee.
(jj)
"Performance Goals" means, for a Performance Period, the one or more
goals established by the Board or Committee (as applicable) for the Performance Period based upon the Performance Criteria. Performance
Goals may be based on a Company-wide basis, with respect to one or more business units, divisions, Affiliates, or business segments,
and in either absolute terms or relative to the performance of one or more comparable companies or the performance of one or more relevant
indices. Unless specified otherwise by the Board (i) in the Award Agreement at the time the Award is granted or (ii) in such other document
setting forth the Performance Goals at the time the Performance Goals are established, the Board will appropriately make adjustments
in the method of calculating the attainment of Performance Goals for a Performance Period as follows: (1) to exclude restructuring and/or
other nonrecurring charges; (2) to exclude exchange rate effects; (3) to exclude the effects of changes to generally accepted accounting
principles; (4) to exclude the effects of any statutory adjustments to corporate tax rates; (5) to exclude the effects of any items that
are unusual in nature or occur infrequently as determined under generally accepted accounting principles; (6) to exclude the dilutive
effects of acquisitions or joint ventures; (7) to assume that any business divested by the Company achieved performance objectives at
targeted levels during the balance of a Performance Period following such divestiture; (8) to exclude the effect of any change in the
outstanding shares of common stock of the Company by reason of any stock dividend or split, stock repurchase, reorganization, recapitalization,
merger, consolidation, spin-off, combination or exchange of shares or other similar corporate change, or any distributions to common
stockholders other than regular cash dividends; (9) to exclude the effects of stock based compensation and the award of bonuses under
the Company's bonus plans; (10) to exclude costs incurred in connection with potential acquisitions or divestitures that are required
to be expensed under generally accepted accounting principles; (11) to exclude the goodwill and intangible asset impairment charges that
are required to be recorded under generally accepted accounting principles; and (12) to exclude the effect of any other unusual, non-recurring
gain or loss or other extraordinary item. In addition, the Board or Committee (as applicable) retains the discretion to reduce or eliminate
the compensation or economic benefit due upon attainment of Performance Goals and to define the manner of calculating the Performance
Criteria it selects to use for such Performance Period. Partial achievement of the specified criteria may result in the payment or vesting
corresponding to the degree of achievement as specified in the Stock Award Agreement or the written terms of a Performance Cash Award.
(kk)
"Performance Period" means the period of time selected by the Board or
Committee (as applicable) over which the attainment of one or more Performance Goals will be measured for the purpose of determining a
Participant's right to and the payment of a Stock Award or a Performance Cash Award. Performance Periods may be of varying and overlapping
duration, at the sole discretion of the Board or Committee.
(ll)
"Performance Stock Award" means a Stock Award granted under the terms
and conditions of Section 6(c)(i).
(mm)
"Plan" means this Squarespace, Inc. 2017 Equity Incentive Plan.
(nn)
"Restricted Stock Award" means an award of shares of Common Stock which
is granted pursuant to the terms and conditions of Section 6(a).
(oo) "Restricted
Stock Award Agreement" means a written agreement between the Company and a holder of a
Restricted Stock Award evidencing the terms and conditions of a Restricted Stock Award grant. Each Restricted Stock Award Agreement will
be subject to the terms and conditions of the Plan.
(pp)
"Restricted Stock Unit Award" means a right to receive shares of Common
Stock which is granted pursuant to the terms and conditions of Section 6(b).
(qq)
"Restricted Stock Unit Award Agreement" means a written agreement between
the Company and a holder of a Restricted Stock Unit Award evidencing the terms and conditions of a Restricted Stock Unit Award grant.
Each Restricted Stock Unit Award Agreement will be subject to the terms and conditions of the Plan.
(rr)
"Securities Act" means the Securities Act of 1933, as amended.
(ss)
"Stock Appreciation Right" or "SAR" means
a right to receive the appreciation on Common Stock that is granted pursuant to the terms and conditions of Section 5.
(tt) "Stock
Appreciation Right Agreement" means a written agreement between the Company and a holder
of a Stock Appreciation Right evidencing the terms and conditions of a Stock Appreciation Right grant. Each Stock Appreciation Right
Agreement will be subject to the terms and conditions of the Plan.
(uu)
"Stock Award" means any right to receive Common Stock granted under the
Plan, including an Incentive Stock Option, a Nonstatutory Stock Option, a Restricted Stock Award, a Restricted Stock Unit Award, a Stock
Appreciation Right, a Performance Stock Award or any Other Stock Award.
(vv)
"Stock Award Agreement" means a written agreement between the Company
and a Participant evidencing the terms and conditions of a Stock Award grant. Each Stock Award Agreement will be subject to the terms
and conditions of the Plan.
(ww)
"Stockholders Agreement" means that certain Amended and Restated Stockholders
Agreement, by and among the Company and the other parties thereto, dated as of November 9, 2017, as may be amended or restated from time
to time.
(xx)
"Subsidiary" means, with respect to the Company, (i) any corporation
of which more than 50% of the outstanding capital stock having ordinary voting power to elect a majority of the board of directors of
such corporation (irrespective of whether, at the time, stock of any other class or classes of such corporation will have or might have
voting power by reason of the happening of any contingency) is at the time, directly or indirectly, Owned by the Company, and (ii) any
partnership, limited liability company or other entity in which the Company has a direct or indirect interest (whether in the form of
voting or participation in profits or capital contribution) of more than 50%.
(yy)
"Ten Percent Stockholder" means a person who Owns (or is deemed to Own
pursuant to Section 424(d) of the Code) stock possessing more than 10% of the total combined voting power of all classes of stock of the
Company or any Affiliate.
(zz)
"Transaction" means a Corporate Transaction or a Change in Control.
Exhibit 10.9
Squarespace, Inc.
Restricted
Stock Unit Grant Notice
(2017 Equity Incentive Plan)
Squarespace, Inc. (the “Company”),
pursuant to its 2017 Equity Incentive Plan (the “Plan”),
hereby awards to Participant a Restricted Stock Unit Award for the number of shares of the Company’s Common Stock (“Restricted
Stock Units”) set forth below (the “Award”).
The Award is subject to all of the terms and conditions as set forth in this notice of grant (this “Restricted
Stock Unit Grant Notice”), and in the Plan and the Restricted Stock Unit Award Agreement (the “Award
Agreement”), both of which are attached hereto and incorporated herein in their entirety. Capitalized terms not explicitly
defined herein shall have the meanings set forth in the Plan or the Award Agreement. In the event of any conflict between the terms in
this Restricted Stock Unit Grant Notice or the Award Agreement and the Plan, the terms of the Plan shall control.
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Participant:
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Date of Grant:
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Vesting Commencement Date:
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Number of Restricted Stock Units:
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Vesting Schedule:
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Issuance Schedule:
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Subject to any Capitalization Adjustment, one
share of Common Stock (or its cash equivalent, at the discretion of the Company) will be issued for each Restricted Stock Unit that vests
at the time set forth in Section 6 of the Award Agreement.
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Additional Terms/Acknowledgements: Participant
acknowledges receipt of, and understands and agrees to, this Restricted Stock Unit Grant Notice, the Award Agreement and the Plan. Participant
further acknowledges that as of the Date of Grant, this Restricted Stock Unit Grant Notice, the Award Agreement (including Appendix A
thereto, which Participant must separately sign) and the Plan set forth the entire understanding between Participant and the Company regarding
the acquisition of the Common Stock pursuant to the Award specified above and supersede all prior oral and written agreements on the terms
of this Award, with the exception, if applicable, of (i) restricted stock unit awards or options previously granted and delivered to Participant,
(ii) the written employment agreement, offer letter or other written agreement entered into between the Company and Participant specifying
the terms that should govern this specific Award, and (iii) any compensation recovery policy that is adopted by the Company or is otherwise
required by applicable law.
By accepting this Award, Participant acknowledges
having received and read the Restricted Stock Unit Grant Notice, the Award Agreement and the Plan and agrees to all of the terms and conditions
set forth in these documents. Participant consents to receive Plan documents by electronic delivery and to participate in the Plan through
an on-line or electronic system established and maintained by the Company or another third party designated by the Company.
[SIGNATURE PAGE FOLLOWS]
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Squarespace, Inc.
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Participant
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By:
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Signature
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Signature
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Title:
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Date:
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Attachments: Award
Agreement and 2017 Equity Incentive Plan
Attachment I
Squarespace, Inc.
2017 Equity Incentive Plan
Restricted Stock Unit Award Agreement
Pursuant to the Restricted
Stock Unit Grant Notice (the “Grant Notice”)
and this Restricted Stock Unit Award Agreement (the “Agreement”),
Squarespace, Inc. (the “Company”) has awarded
you (“Participant”) a Restricted Stock Unit
Award (the “Award”) pursuant to the Company’s
2017 Equity Incentive Plan (the “Plan”) for
the number of Restricted Stock Units/shares indicated in the Grant Notice. Capitalized terms not explicitly defined in this Agreement
or the Grant Notice shall have the same meanings given to them in the Plan. The terms of your Award, in addition to those set forth in
the Grant Notice, are as follows.
1.
Grant of the Award. This Award represents the right to be issued on a future
date one (1) share of Common Stock for each Restricted Stock Unit that vests on the applicable vesting date(s) (subject to any adjustment
under Section 3 below) as indicated in the Grant Notice. As of the Date of Grant, the Company will credit to a bookkeeping account maintained
by the Company for your benefit (the “Account”)
the number of Restricted Stock Units/shares of Common Stock subject to the Award. Notwithstanding the foregoing, the Company reserves
the right to issue you the cash equivalent of Common Stock, in part or in full satisfaction of the delivery of Common Stock in connection
with the vesting of the Restricted Stock Units, and, to the extent applicable, references in this Agreement and the Grant Notice to Common
Stock issuable in connection with your Restricted Stock Units will include the potential issuance of its cash equivalent pursuant to such
right. This Award was granted in consideration of your services to the Company.
2.
Vesting. Subject to the limitations contained herein, your Award will vest, if
at all, in accordance with the vesting schedule provided in the Grant Notice. Vesting will cease upon the termination of your Continuous
Service and the Restricted Stock Units credited to the Account that were not vested on the date of such termination will be forfeited
at no cost to the Company and you will have no further right, title or interest in or to such Award or the shares of Common Stock to be
issued in respect of such portion of the Award.
3.
Number of Shares. The number of Restricted Stock Units subject to your Award
may be adjusted from time to time for Capitalization Adjustments, as provided in the Plan. Any additional Restricted Stock Units, shares,
cash or other property that becomes subject to the Award pursuant to this Section 3, if any, shall be subject, in a manner determined
by the Board, to the same forfeiture restrictions, restrictions on transferability, and time and manner of delivery as applicable to the
other Restricted Stock Units and shares covered by your Award. Notwithstanding the provisions of this Section 3, no fractional shares
or rights for fractional shares of Common Stock shall be created pursuant to this Section 3. Any fraction of a share will be rounded down
to the nearest whole share.
4. Securities
Law Compliance; Appendix. You may not be issued any Common Stock under your Award unless the shares of Common
Stock underlying the Restricted Stock Units are either (i) then registered under the Securities Act, or (ii) the Company has
determined that such issuance would be exempt from the registration requirements of the Securities Act. Your Award must also comply
with other applicable laws and regulations governing the Award, and you shall not receive such Common Stock if the Company
determines that such receipt would not be in material compliance with such laws and regulations. The terms and conditions of this
Award are subject to Appendix A to this Award Agreement, and you are required to separately sign such Appendix A and to abide by its
terms.
5.
Transfer Restrictions. Prior to the time that shares of Common Stock have been
delivered to you, you may not transfer, pledge, sell or otherwise dispose of this Award or the shares issuable in respect of your Award,
except as expressly provided in this Section 5. For example, you may not use shares that may be issued in respect of your Restricted Stock
Units as security for a loan. The restrictions on transfer set forth herein will lapse upon delivery to you of shares in respect of your
vested Restricted Stock Units.
(a)
Death. Your Award is transferable by will and by the laws of descent and distribution. At your death, vesting of your Award
will cease and your executor or administrator of your estate shall be entitled to receive, on behalf of your estate, any Common Stock
or other consideration that vested but was not issued before your death.
(b)
Domestic Relations Orders. Upon receiving written permission from the Board or its duly authorized designee, and provided that
you and the designated transferee enter into transfer and other agreements required by the Company, you may transfer your right to receive
the distribution of Common Stock or other consideration hereunder, pursuant to a domestic relations order, marital settlement agreement
or other divorce or separation instrument as permitted by applicable law that contains the information required by the Company to effectuate
the transfer. You are encouraged to discuss the proposed terms of any division of this Award with the Company General Counsel prior to
finalizing the domestic relations order or marital settlement agreement to verify that you may make such transfer, and if so, to help
ensure the required information is contained within the domestic relations order or marital settlement agreement.
6.
Date of Issuance.
(a)
The issuance of shares in respect of the Restricted Stock Units is intended to comply with Treasury Regulations Section 1.409A-1(b)(4)
and will be construed and administered in such a manner. Subject to the satisfaction of the Withholding Obligation set forth in Section
11 of this Agreement, in the event one or more Restricted Stock Units vests, the Company shall issue to you one (1) share of Common Stock
for each Restricted Stock Unit that vests on the applicable vesting date(s) (subject to any adjustment under Section 3 above, and subject
to any different provisions in the Grant Notice). Each issuance date determined by this paragraph is referred to as an “Original
Issuance Date”.
(b)
If the Original Issuance Date falls on a date that is not a business day, delivery shall instead occur on the next following
business day. In addition, if:
(i)
the Original Issuance Date does not occur (1) during an “open window period” applicable to you, as determined by
the Company in accordance with the Company’s then-effective policy on trading in Company securities, or (2) on a date when you are
otherwise permitted to sell shares of Common Stock on an established stock exchange or stock market (including but not limited to under
a previously established written trading plan that meets the requirements of Rule 10b5-1 under the Exchange Act and was entered into in
compliance with the Company’s policies (a “10b5-1
Arrangement”)), and
(ii) either
(1) a Withholding Obligation does not apply, or (2) the Company decides, prior to the Original Issuance Date, (A) not to satisfy the
Withholding Obligation by withholding shares of Common Stock from the shares otherwise due, on the Original Issuance Date, to you
under this Award, and (B) not to permit you to enter into a “same day sale” commitment with a broker-dealer pursuant to
Section 11 of this Agreement (including but not limited to a commitment under a 10b5-1 Arrangement) and (C) not to permit you to pay
your Withholding Obligation in cash,
then the shares that
would otherwise be issued to you on the Original Issuance Date will not be delivered on such Original Issuance Date and will instead be
delivered on the first business day when you are not prohibited from selling shares of the Company’s Common Stock in the open public
market, but in no event later than December 31 of the calendar year in which the Original Issuance Date occurs (that is, the last day
of your taxable year in which the Original Issuance Date occurs), or, if and only if permitted in a manner that complies with Treasury
Regulations Section 1.409A-1(b)(4), no later than the date that is the 15th day of the third calendar month of the applicable year following
the year in which the shares of Common Stock under this Award are no longer subject to a “substantial risk of forfeiture”
within the meaning of Treasury Regulations Section 1.409A-1(d).
(c)
The form of delivery (e.g., a stock certificate or electronic entry evidencing such shares) shall be determined by the
Company.
7.
Dividends. You shall receive no benefit or adjustment to your Award with respect
to any cash dividend, stock dividend or other distribution that does not result from a Capitalization Adjustment; provided, however, that
this sentence will not apply with respect to any shares of Common Stock that are delivered to you in connection with your Award after
such shares have been delivered to you.
8.
Restrictive Legends. The shares of Common Stock issued in respect of your Award
shall be endorsed with appropriate legends as determined by the Company.
9.
Execution of Documents. You hereby acknowledge and agree that the manner selected
by the Company by which you indicate your consent to your Grant Notice is also deemed to be your execution of your Grant Notice and of
this Agreement. You further agree that such manner of indicating consent may be relied upon as your signature for establishing your execution
of any documents to be executed in the future in connection with your Award.
10.
Award Not a Service Contract.
(a)
Nothing in this Agreement (including, but not limited to, the vesting of your Award or the issuance of the shares in respect
of your Award), the Plan or any covenant of good faith and fair dealing that may be found implicit in this Agreement or the Plan shall:
(i) confer upon you any right to continue in the employ or service of, or affiliation with, the Company or an Affiliate; (ii) constitute
any promise or commitment by the Company or an Affiliate regarding the fact or nature of future positions, future work assignments, future
compensation or any other term or condition of employment or affiliation; (iii) confer any right or benefit under this Agreement or the
Plan unless such right or benefit has specifically accrued under the terms of this Agreement or Plan; or (iv) deprive the Company of the
right to terminate you at will and without regard to any future vesting opportunity that you may have.
(b) By
accepting this Award, you acknowledge and agree that the right to continue vesting in the Award pursuant to the vesting schedule
provided in the Grant Notice may not be earned unless (in addition to any other conditions described in the Grant Notice and this
Agreement) you continue as an employee, director or consultant at the will of the Company and affiliate, as applicable (not through
the act of being hired, being granted this Award or any other award or benefit) and that the Company has the right to reorganize,
sell, spin-out or otherwise restructure one or more of its businesses or Affiliates at any time or from time to time, as it deems
appropriate (a “reorganization”).
You acknowledge and agree that such a reorganization could result in the termination of your Continuous Service, or the termination
of Affiliate status of your employer and the loss of benefits available to you under this Agreement, including but not limited to,
the termination of the right to continue vesting in the Award. You further acknowledge and agree that this Agreement, the Plan, the
transactions contemplated hereunder and the vesting schedule set forth herein or any covenant of good faith and fair dealing that
may be found implicit in any of them do not constitute an express or implied promise of continued engagement as an employee or
consultant for the term of this Agreement, for any period, or at all, and shall not interfere in any way with the Company’s
right to terminate your Continuous Service at any time, with or without your cause or notice, or to conduct a
reorganization.
11.
Withholding Obligation.
(a)
On each vesting date, and on or before the time you receive a distribution of the shares of Common Stock in respect of your
Restricted Stock Units, and at any other time as reasonably requested by the Company in accordance with applicable tax laws, you hereby
authorize any required withholding from the Common Stock issuable to you and/or otherwise agree to make adequate provision, including
in cash, for any sums required to satisfy the federal, state, local and foreign tax withholding obligations of the Company or any Affiliate
that arise in connection with your Award (the “Withholding
Obligation”).
(b)
By accepting this Award, you acknowledge and agree that the Company or any Affiliate may, in its sole discretion, satisfy all
or any portion of the Withholding Obligation relating to your Restricted Stock Units by any of the following means or by a combination
of such means: (i) causing you to pay any portion of the Withholding Obligation in cash; (ii) withholding from any compensation otherwise
payable to you by the Company; (iii) withholding shares of Common Stock from the shares of Common Stock issued or otherwise issuable to
you in connection with the Award with a Fair Market Value (measured as of the date shares of Common Stock are issued pursuant to Section
6) equal to the amount of such Withholding Obligation; provided, however, that the number of such shares of Common Stock so withheld will
not exceed the amount necessary to satisfy the Withholding Obligation using the maximum statutory withholding rates for federal, state,
local and foreign tax purposes, including payroll taxes, that are applicable to supplemental taxable income; and provided, further,
that to the extent necessary to qualify for an exemption from application of Section 16(b) of the Exchange Act, if applicable, such share
withholding procedure will be subject to the express prior approval of the Board or the Company’s Compensation Committee; and/or
(iv) permitting or requiring you to enter into a “same day sale” commitment, if applicable, with a broker-dealer that is a
member of the Financial Industry Regulatory Authority (a “FINRA
Dealer”), pursuant to this authorization and without further consent, whereby you irrevocably elect to sell
a portion of the shares to be delivered in connection with your Restricted Stock Units to satisfy the Withholding Obligation and whereby
the FINRA Dealer irrevocably commits to forward the proceeds necessary to satisfy the Withholding Obligation directly to the Company and/or
its Affiliates. Unless the Withholding Obligation is satisfied, the Company shall have no obligation to deliver to you any Common Stock
or any other consideration pursuant to this Award.
(c)
In the event the Withholding Obligation arises prior to the delivery to you of Common Stock or it is determined after the
delivery of Common Stock to you that the amount of the Withholding Obligation was greater than the amount withheld by the Company, you
agree to indemnify and hold the Company harmless from any failure by the Company to withhold the proper amount.
12.
Tax Consequences. The Company has no duty or obligation to minimize the tax consequences
to you of this Award and shall not be liable to you for any adverse tax consequences to you arising in connection with this Award. You
are hereby advised to consult with your own personal tax, financial and/or legal advisors regarding the tax consequences of this Award
and by signing the Grant Notice, you have agreed that you have done so or knowingly and voluntarily declined to do so. You understand
that you (and not the Company) shall be responsible for your own tax liability that may arise as a result of this investment or the transactions
contemplated by this Agreement.
13.
Unsecured Obligation. Your Award is unfunded, and as a holder of a vested Award,
you shall be considered an unsecured creditor of the Company with respect to the Company’s obligation, if any, to issue shares or
other property pursuant to this Agreement. You shall not have voting or any other rights as a stockholder of the Company with respect
to the shares to be issued pursuant to this Agreement until such shares are issued to you pursuant to Section 6 of this Agreement. Upon
such issuance, you will obtain full voting and other rights as a stockholder of the Company. Nothing contained in this Agreement, and
no action taken pursuant to its provisions, shall create or be construed to create a trust of any kind or a fiduciary relationship between
you and the Company or any other person.
14.
Notices. Any notice or request required or permitted hereunder shall be given
in writing (including electronically) and will be deemed effectively given upon receipt or, in the case of notices delivered by mail by
the Company to you, five (5) days after deposit in the United States mail, postage prepaid, addressed to you at the last address you provided
to the Company. The Company may, in its sole discretion, decide to deliver any documents related to participation in the Plan and this
Award by electronic means or to request your consent to participate in the Plan by electronic means. By accepting this Award, you consent
to receive such documents by electronic delivery and to participate in the Plan through an on-line or electronic system established and
maintained by the Company or another third party designated by the Company.
15.
Headings. The headings of the Sections in this Agreement are inserted for convenience
only and shall not be deemed to constitute a part of this Agreement or to affect the meaning of this Agreement.
16.
Miscellaneous.
(a)
The rights and obligations of the Company under your Award shall be transferable by the Company to any one or more persons
or entities, and all covenants and agreements hereunder shall inure to the benefit of, and be enforceable by, the Company’s successors
and assigns.
(b)
You agree upon request to execute any further documents or instruments necessary or desirable in the sole determination of
the Company to carry out the purposes or intent of your Award.
(c)
You acknowledge and agree that you have reviewed your Award in its entirety, have had an opportunity to obtain the advice of
counsel prior to executing and accepting your Award and fully understand all provisions of your Award.
(d)
This Agreement shall be subject to all applicable laws, rules, and regulations, and to such approvals by any governmental
agencies or national securities exchanges as may be required.
(e)
All obligations of the Company under the Plan and this Agreement shall be binding on any successor to the Company, whether
the existence of such successor is the result of a direct or indirect purchase, merger, consolidation, or otherwise, of all or substantially
all of the business and/or assets of the Company.
17.
Governing Plan Document. Your Award is subject to all the provisions of the Plan,
the provisions of which are hereby made a part of your Award, and is further subject to all interpretations, amendments, rules and regulations
which may from time to time be promulgated and adopted pursuant to the Plan. Your Award (and any compensation paid or shares issued under
your Award) is subject to recoupment in accordance with The Dodd–Frank Wall Street Reform and Consumer Protection Act and any implementing
regulations thereunder, any clawback policy adopted by the Company and any compensation recovery policy otherwise required by applicable
law. No recovery of compensation under such a clawback policy will be an event giving rise to a right to voluntarily terminate employment
upon a resignation for “good reason,” or for a “constructive termination” or any similar term under any plan of
or agreement with the Company.
18.
Effect on Other Employee Benefit Plans. The value of the Award subject to this
Agreement shall not be included as compensation, earnings, salaries, or other similar terms used when calculating benefits under any employee
benefit plan (other than the Plan) sponsored by the Company or any Affiliate except as such plan otherwise expressly provides. The Company
expressly reserves its rights to amend, modify, or terminate any or all of the employee benefit plans of the Company or any Affiliate.
19.
Severability. If all or any part of this Agreement or the Plan is declared by
any court or governmental authority to be unlawful or invalid, such unlawfulness or invalidity shall not invalidate any portion of this
Agreement or the Plan not declared to be unlawful or invalid. Any Section of this Agreement (or part of such a Section) so declared to
be unlawful or invalid shall, if possible, be construed in a manner which will give effect to the terms of such Section or part of a Section
to the fullest extent possible while remaining lawful and valid.
20.
Other Documents. You hereby acknowledge receipt or the right to receive a document
providing the information required by Rule 428(b)(1) promulgated under the Securities Act. In addition, you acknowledge receipt of the
Company’s policy permitting certain individuals to sell shares only during certain “window” periods and the Company’s
insider trading policy, in effect from time to time.
21. Amendment.
This Agreement may not be modified, amended or terminated except by an instrument in writing, signed by you and by a duly authorized
representative of the Company. Notwithstanding the foregoing, this Agreement may be amended solely by the Board by a writing which
specifically states that it is amending this Agreement, so long as a copy of such amendment is delivered to you, and provided that,
except as otherwise expressly provided in the Plan, no such amendment materially adversely affecting your rights hereunder may be
made without your written consent. Without limiting the foregoing, the Board reserves the right to change, by written notice to you,
the provisions of this Agreement in any way it may deem necessary or advisable to carry out the purpose of the Award as a result of
any change in applicable laws or regulations or any future law, regulation, ruling, or judicial decision, provided that any such
change shall be applicable only to rights relating to that portion of the Award which is then subject to restrictions as provided
herein.
22.
Compliance with Section 409A of the Code. This Award is intended to be exempt
from the application of Section 409A of the Code, including but not limited to by reason of complying with the “short-term deferral”
rule set forth in Treasury Regulation Section 1.409A- 1(b)(4) and any ambiguities herein shall be interpreted accordingly. Notwithstanding
the foregoing, if it is determined that the Award fails to satisfy the requirements of the short-term deferral rule and is otherwise not
exempt from, and determined to be deferred compensation subject to Section 409A of the Code, this Award shall comply with Section 409A
to the extent necessary to avoid adverse personal tax consequences and any ambiguities herein shall be interpreted accordingly. If it
is determined that the Award is deferred compensation subject to Section 409A and you are a “Specified
Employee” (within the meaning set forth in Section 409A(a)(2)(B)(i) of the Code) as of the date of your “Separation
from Service” (as defined in Section 409A), then the issuance of any shares that would otherwise be made upon the date of your Separation
from Service or within the first six (6) months thereafter will not be made on the originally scheduled date(s) and will instead be issued
in a lump sum on the date that is six (6) months and one day after the date of the Separation from Service, with the balance of the shares
issued thereafter in accordance with the original vesting and issuance schedule set forth above, but if and only if such delay in the
issuance of the shares is necessary to avoid the imposition of adverse taxation on you in respect of the shares under Section 409A of
the Code. Each installment of shares that vests is intended to constitute a “separate payment” for purposes of Treasury Regulation
Section 1.409A-2(b)(2).
* * * * *
This Restricted Stock Unit
Award Agreement shall be deemed to be signed by the Company and the Participant upon the signing by the Participant of the Restricted
Stock Unit Grant Notice to which it is attached.
ADDENDUM FOR NON-U.S. PARTICIPANTS
Terms and Conditions
This Addendum includes additional terms and conditions
that govern the grant of your Award if you work in one of the countries listed below. If you are a citizen or resident of a country (or
are considered as such for local law purposes) other than the one in which you are currently working, or if you relocate to another country
after receiving the grant of the Award, the Company will, in its discretion, determine the extent to which the terms and conditions contained
herein will be applicable to you.
Certain capitalized terms used but not defined in
this Addendum shall have the meanings given to such terms in the Plan and/or the Agreement to which this Addendum is attached.
Ireland
On each vesting date, and on or before the time you
receive the shares of Common Stock in respect of your Award, and at any other time as reasonably requested by the Company or its Affiliate
in accordance with applicable Irish tax laws, you hereby authorize any required withholding from your remuneration from the Company or
its Affiliate for any sums required to satisfy the Irish income tax and social security and social charge withholding obligations of the
Company or any Affiliate that arise in connection with your Award. Further, the Company or its Affiliates may, at their discretion, withhold
from your Award that number of shares of Common Stock the fair market value of which is equal to the amount of withholding due as determined
under the Irish tax law.
Exhibit 10.10
SQUARESPACE,
INC.
SUMMARY
OF STOCK GRANT
(NON-PLAN,
FOR SERVICES)
The Transferee is acquiring shares of the Common Stock of Squarespace,
Inc. on the following terms:
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Name of Transferee:
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Anthony Casalena
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Total Number of Transferred Shares:
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4,460,858
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Date of Transfer:
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August 22, 2017
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Vesting Schedule:
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The Forfeiture Condition shall lapse with respect to all of the Transferred Shares on the earlier to occur of the following on or prior to the Outside Date: (1) a Liquidation Event (other than a liquidation, dissolution or winding up of the Company) and (2) an IPO. The Forfeiture Condition may lapse on an accelerated basis in accordance with Section 2(b) of the Stock Grant Agreement. For the avoidance of doubt, if neither an IPO nor a Liquidation Event has occurred on or prior to the Outside Date, then all of the Restricted Shares shall be forfeited for no consideration.
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By signing below, the Transferee and the Company
agree that the acquisition of the Transferred Shares is governed by the terms and conditions of the Stock Grant Agreement, which is attached
to, and made a part of, this Summary of Stock Grant. The Transferee agrees to accept by email all documents relating to the Company or
this grant and all other documents that the Company is required to deliver to its security holders (including, without limitation, disclosures
that may be required by the Securities and Exchange Commission). The Transferee also agrees that the Company may deliver these documents
by posting them on a website maintained by the Company or by a third party under contract with the Company. If the Company posts these
documents on a website, it shall notify the Transferee by email of their availability. The Transferee acknowledges that he or she may
incur costs in connection with electronic delivery, including the cost of accessing the internet and printing fees, and that an interruption
of internet access may interfere with his or her ability to access the documents. This consent shall remain in effect until the Transferee
gives the Company written notice that it should deliver paper documents.
SQUARESPACE,
INC.
STOCK
GRANT AGREEMENT
(NON-PLAN,
FOR SERVICES)
SECTION 1. ACQUISITION OF SHARES.
(a)
Transfer. On the terms and conditions set forth in the Summary of Stock Grant and this Agreement, the Company agrees to transfer
to the Transferee the number of Shares set forth in the Summary of Stock Grant. The transfer shall occur at the offices of the Company
on the date of transfer set forth in the Summary of Stock Grant or at such other place and time as the parties may agree.
(b) Consideration. The Transferee and the Company agree that the Transferred Shares are being issued to the Transferee as consideration
for a portion of the services performed by the Transferee for the Company. The value of such portion is agreed to be not less than 100%
of the Fair Market Value of the Transferred Shares.
(c)
Rights as a Stockholder. Subject to the terms and conditions of this Agreement, the Transferee will have all of the rights of a
stockholder of the Company with respect to the Transferred Shares from and after the Date of Transfer until such time as the Transferred
Shares are forfeited in accordance with Section 2 of this Agreement, the Transferee disposes of the Transferred Shares or the Company
and/or its assignee(s) exercise(s) the Right of First Refusal.
(d)
Stockholders Agreement. Shares acquired under this Agreement are subject to the terms and conditions and limitations of the Stockholders
Agreement, to which the Transferee is a party as a “Common Holder.”
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(e)
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Defined Terms. Capitalized terms are defined in Section 9 of this
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Agreement.
SECTION 2. FORFEITURE CONDITION.
(a) Scope of Forfeiture Condition.
All Transferred Shares initially shall be Restricted Shares and shall be subject to forfeiture to the Company. The Transferee shall not
transfer, assign, encumber or otherwise dispose of any Restricted Shares without the Company’s written consent, except as provided
in the following sentence. Subject to the terms and conditions of the Stockholders Agreement, the Transferee may transfer Restricted Shares
to one or more members of the Transferee’s Immediate Family or to a trust established by the Transferee for the benefit of the Transferee
and/or one or more members of the Transferee’s Immediate Family, provided in either case that the Transferee agrees in writing on
a form prescribed by the Company to be bound by all provisions of this Agreement and the Stockholders Agreement. If the Transferee transfers
any Restricted Shares, then this Agreement and the Stockholders Agreement shall apply to the Subsequent Transferee to the same extent
as to the Transferee.
(b)
Vesting. The Forfeiture Condition shall lapse and the Restricted Shares shall become vested in accordance with the vesting
schedule set forth in the Summary of Stock Grant. Notwithstanding the foregoing, the Forfeiture Condition shall immediately lapse with
respect to all then-remaining Restricted Shares under the following circumstances: (1) Transferee’s death or Disability, (2) the
Company’s termination of the Transferee’s Service for reasons other than Cause or (3) termination of the Transferee’s
Service due to resignation by the Transferee for Good Reason. For purposes of clarity, the Forfeiture Condition shall not lapse under
the following circumstances: (i) the Transferee voluntarily terminates Transferee’s Service other than for Good Reason or (ii) the
Company terminates Transferee’s Service for Cause. For the avoidance of doubt, if neither an IPO nor a Liquidation Event has occurred
on or prior to the Outside Date, then all of the Restricted Shares shall be forfeited for no consideration, provided however, that the
holders of a majority of the Preferred Shares (excluding Preferred Shares held by the Transferee) may, in their sole discretion extend
(but not shorten) the Outside Date.
(c)
Execution of Forfeiture. In the event that the Transferee’s Service terminates, the certificate(s) representing any
remaining Restricted Shares (i.e., any Restricted Shares for which the Forfeiture Condition have not lapsed per paragraph (b) above or
the vesting schedule in the Summary of Stock Grant) shall be delivered to the Company for cancellation. The Company shall make no payment
for Restricted Shares that are forfeited.
(d)
Additional or Exchanged Securities and Property. In the event of a merger or consolidation of the Company, a sale of all or substantially
all of the Company’s stock or assets, any other corporate reorganization, the declaration of a stock dividend, the declaration of
an extraordinary dividend payable in a form other than stock, a spin-off, a stock split, an adjustment in conversion ratio, a recapitalization
or a similar transaction affecting the Company’s outstanding securities, any securities or other property (including cash or cash
equivalents) that are by reason of such transaction exchanged for, or distributed with respect to, any Restricted Shares or into which
such Restricted Shares thereby become convertible shall immediately be subject to the Forfeiture Condition. Proportionate adjustments
to reflect the exchange or distribution of such securities or property shall be made to the number and/or class of the Restricted Shares.
(e)
Termination of Rights as Stockholder. If Restricted Shares are forfeited in accordance with this Section 2, then the person who
is to forfeit such Restricted Shares shall no longer have any rights as a holder of such Restricted Shares. Such Restricted Shares shall
be deemed to have been forfeited in accordance with the applicable provisions hereof, whether or not the certificate(s) therefor have
been delivered as required by this Agreement.
(f) Escrow.
Upon issuance, the certificates for Restricted Shares shall be deposited in escrow with the Company to be held in accordance with
the provisions of this Agreement. Any new, substituted or additional securities or other property described in Subsection (d) above
shall immediately be delivered to the Company to be held in escrow, but only to the extent the Transferred Shares are at the time
Restricted Shares. All regular cash dividends on Restricted Shares (or other securities at the time held in escrow) shall be paid
directly to the Transferee and shall not be held in escrow. Restricted Shares, together with any other assets or securities held in
escrow hereunder, shall be (i) surrendered to the Company for forfeiture and cancellation in the event that the Forfeiture Condition
or Right of First Refusal applies or (ii) released to the Transferee upon the Transferee’s request to the extent the
Transferred Shares are no longer Restricted Shares. In any event, all Transferred Shares that have vested (and any other vested
assets and securities attributable thereto) shall be released within 60 days after the earlier of (i) the termination of the
Transferee’s Service or (ii) the lapse of the Right of First Refusal.
SECTION 3. OTHER RESTRICTIONS ON TRANSFER.
(a)
Stockholders Agreement. The Transferred Shares are subject to the transfer restrictions in Section 3 of the Stockholders Agreement
in addition to, and not in limitation of, the provisions of this Agreement.
(b)
Transferee Representations. In connection with the issuance and acquisition of Shares under this Agreement, the Transferee hereby
represents and warrants to the Company as follows:
(i)
The Transferee has received a copy of this Agreement and the Stockholders Agreement, has read and understands the terms of this Agreement
and the Stockholders Agreement, and agrees to be bound by their terms and conditions. The Transferee acknowledges that there may be adverse
tax consequences upon acquisition of the Transferred Shares or disposition of the Transferred Shares, and that the Transferee should consult
a tax advisor prior to such acquisition or disposition.
(ii)
The Transferee is acquiring the Transferred Shares for the Transferee’s own account for investment purposes only and not with a
view to, or for sale in connection with, a distribution of the Transferred Shares within the meaning of the Securities Act. The Transferee
has no present intention of selling or otherwise disposing of all or any portion of the Transferred Shares and no one other than the Transferee
has any beneficial ownership of any of the Transferred Shares.
(iii)
The Transferee has received and has had access to such information as he or she considers necessary or appropriate for deciding whether
to invest in the Transferred Shares, and the Transferee has had an opportunity to ask questions and receive answers from the Company regarding
the terms and conditions of the issuance of the Transferred Shares.
(iv)
The Transferee is fully aware of (A) the highly speculative nature of the investment in the Transferred Shares; (B) the financial
hazards involved; (C) the lack of liquidity of the Transferred Shares and the restrictions on transferability of the Transferred
Shares (e.g., that the Transferee may not be able to sell or dispose of the Transferred Shares or use them as collateral for loans);
(D) the qualifications and backgrounds of the management of the Company; and (E) the tax consequences of investment in the
Transferred Shares. The Transferee is capable of evaluating the merits and risks of this investment, has the ability to protect his
or her own interests in this transaction and is financially capable of bearing a total loss of this investment.
(v)
At no time was the Transferee presented with or solicited by any publicly issued or circulated newspaper, mail, radio, television or other
form of general advertising or solicitation in connection with the offer, issuance and acquisition of the Transferred Shares.
(vi)
The Transferee understands and acknowledges that the Transferred Shares have not been registered with the SEC under the Securities Act
and that, notwithstanding any other provision of this Agreement to the contrary, the exercise of any rights to acquire any Transferred
Shares is expressly conditioned upon compliance with the Securities Act and all applicable state securities laws. The Transferee agrees
to cooperate with the Company to ensure compliance with such laws.
(vii)
The Transferee understands that he or she may not transfer any Transferred Shares unless such Transferred Shares are registered under
the Securities Act or qualified under applicable state securities laws or unless, in the opinion of counsel to the Company, exemptions
from such registration and qualification requirements are available. The Transferee understands that only the Company may file a registration
statement with the SEC with respect to the Company’s Common Stock and that the Company is under no obligation to do so with respect
to the Transferred Shares. The Transferee has also been advised that exemptions from registration and qualification my not be available
or may not permit the Transferee to transfer all or any of the Transferred Shares in the amounts or at the times proposed by the Transferee.
(viii) The
Transferee has been advised that SEC Rule 144 promulgated under the Securities Act, which permits certain limited sales of
unregistered securities, is not presently available with respect to the Transferred Shares and, in any event, requires that the
Shares be held for a minimum of one (1) year after they have been purchased and paid for (within the meaning of Rule 144). The
Transferee understands that Rule 144 may indefinitely restrict transfer of the Transferred Shares so long as the Transferee remains
an “affiliate” of the Company or if “current public information” about the Company (as defined in Rule 144)
is not publicly available.
(c) Securities
Law Restrictions. Regardless of whether the offer and sale of Shares under this Agreement have been registered under the
Securities Act or have been registered or qualified under the securities laws of any State or other relevant jurisdiction, the
Company at its discretion may impose restrictions upon the sale, pledge or other transfer of the Transferred Shares (including the
placement of appropriate legends on the stock certificates (or electronic equivalent) or the imposition of stop-transfer
instructions) and may refuse (or may be required to refuse) to transfer Shares acquired hereunder (or Shares proposed to be
transferred in a subsequent transfer) if, in the judgment of the Company, such
restrictions, legends or refusal are necessary or appropriate to achieve compliance with the Securities Act or other relevant
securities or other laws, including without limitation under Regulation S of the Securities Act or pursuant to another available
exemption from registration.
(d) Market Stand-Off.
Transferee has agreed to the Market Stand-Off contained in Section 7.12 of the Stockholders Agreement.
(e) Rights of
the Company. The Company shall not be required to (i) transfer on its books any Transferred Shares that have been sold or
transferred in contravention of this Agreement or the Stockholders Agreement or (ii) treat as the owner of Transferred Shares, or
otherwise to accord voting, dividend or liquidation rights to, any Subsequent Transferee to whom Transferred Shares have been
transferred in contravention of this Agreement.
SECTION 4. SUCCESSORS AND ASSIGNS.
Except as otherwise expressly
provided to the contrary, the provisions of this Agreement shall inure to the benefit of, and be binding upon, the Company and its successors
and assigns and be binding upon the Transferee and the Transferee’s legal representatives, heirs, legatees, distributees, assigns
and transferees by operation of law, whether or not any such person has become a party to this Agreement or has agreed in writing to join
herein and to be bound by the terms, conditions and restrictions hereof.
SECTION 5. NO RETENTION RIGHTS.
Nothing in this Agreement shall
confer upon the Transferee any right to continue providing services to the Company for any period of specific duration or interfere with
or otherwise restrict in any way the rights of the Company (or any Parent or Subsidiary employing or retaining the Transferee) or of the
Transferee, which rights are hereby expressly reserved by each, to terminate his or her Service at any time and for any reason, with or
without Cause.
SECTION 6. WITHHOLDING; TAX ELECTION.
(a) At the time the
Transferred Shares are transferred, or at any time thereafter as requested by the Company, Transferee hereby authorizes withholding
from payroll and any other amounts payable to Transferee, and otherwise agrees to make adequate provision for any sums required to
satisfy the federal, state, local and foreign tax withholding obligations of the Company which arise in connection with the issuance
or vesting of the Transferred Shares (including the filing of a Code Section 83(b) election as provided in Section 6(b), below) (the
“Withholding Taxes”). The Company may, in its sole discretion, satisfy all or any portion of the Withholding
Taxes obligation relating to the issuance or vesting of the Transferred Shares (or the filing of a Code Section 83(b) election) by
any of the following means or by a combination of such means: (i) withholding from any amounts otherwise payable to Transferee by
the Company; (ii) causing or arranging for Transferee to tender a cash payment; or (iii) withholding shares from the shares of
Common Stock issued or otherwise issuable to Transferee with a Fair Market Value equal to the amount of such Withholding Taxes;
provided, however, that the number of such shares withheld may not exceed the amount necessary to satisfy the Company’s
required tax withholding obligations using the maximum statutory withholding rates for federal, state, local and foreign tax
purposes, including payroll taxes, that are applicable to supplemental taxable income.
(b) The acquisition of the Transferred
Shares may result in adverse tax consequences that may be avoided or mitigated by filing an election under Code Section 83(b). Such election
may be filed only within 30 days after the date of transfer set forth in the Summary of Stock Grant. The form for making the Code Section
83(b) election is attached to this Agreement as an Exhibit. The Transferee should consult with his or her tax advisor to determine
the tax consequences of acquiring the Transferred Shares and the advantages and disadvantages of filing the Code Section 83(b) election.
The Transferee acknowledges that it is his or her sole responsibility, and not the Company’s, to file a timely election under Code
Section 83(b), even if the Transferee requests the Company or its representatives to make this filing on his or her behalf.
(c) Unless the tax withholding
obligations of the Company are satisfied, the Company will have no obligation to issue a certificate for such Transferred Shares or release
such Transferred Shares from any escrow provided for in this Agreement.
SECTION 7. LEGENDS.
All certificates evidencing Transferred Shares shall bear the
following legends:
“THE SHARES REPRESENTED HEREBY HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”) OR ANY SECURITIES LAWS OF ANY U.S. STATE, AND
MAY NOT BE OFFERED FOR SALE, SOLD, REOFFERED, PLEDGED, HYPOTHECATED, ASSIGNED, ENCUMBERED OR OTHERWISE TRANSFERRED OR DISPOSED OF WITHOUT
AN EFFECTIVE REGISTRATION THEREOF UNDER SUCH ACT OR AN OPINION OF COUNSEL, SATISFACTORY TO THE COMPANY AND ITS COUNSEL, THAT SUCH REGISTRATION
IS NOT REQUIRED. IN THE ABSENCE OF REGISTRATION OR THE AVAILABILITY (CONFIRMED BY OPINION OF COUNSEL) OF AN ALTERNATIVE EXEMPTION FROM
REGISTRATION UNDER THE ACT (INCLUDING WITHOUT LIMITATION IN ACCORDANCE WITH REGULATION S UNDER THE ACT), THESE SHARES MAY NOT BE OFFERED
FOR SALE, SOLD, REOFFERED, PLEDGED, HYPOTHECATED, ASSIGNED, ENCUMBERED OR OTHERWISE TRANSFERRED OR DISPOSED OF. HEDGING TRANSACTIONS INVOLVING
THESE SHARES MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE ACT.”
“THE SHARES EVIDENCED HEREBY ARE
SUBJECT TO AN AMENDED AND RESTATED STOCKHOLDERS AGREEMENT (A COPY OF WHICH MAY BE OBTAINED UPON WRITTEN REQUEST FROM THE ISSUER),
AND BY ACCEPTING ANY INTEREST IN SUCH SHARES THE PERSON ACCEPTING SUCH INTEREST SHALL BE DEEMED TO AGREE TO AND SHALL BECOME BOUND
BY ALL THE PROVISIONS OF SAID STOCKHOLDERS AGREEMENT.”
“THE SHARES REPRESENTED
BY THIS CERTIFICATE ARE SUBJECT TO A 180 DAY MARKET STANDOFF RESTRICTION AS SET FORTH IN A CERTAIN AGREEMENT BETWEEN THE ISSUER AND THE
ORIGINAL HOLDER OF THESE SHARES, A COPY OF WHICH AY BE OBTAINED AT THE PRINCIPAL OFFICE OF THE ISSUER. AS A RESULT OF SUCH AGREEMENT,
THESE SHARES MAY NOT BE TRADED PRIOR TO 180 DAYS AFTER THE EFFECTIVE DATE OF THE INITIAL PUBLIC OFFERING OF THE COMMON STOCK OF THE ISSUER
HEREOF. SUCH RESTRICTION IS BINDING ON TRANSFEREES OF THESE SHARES.”
If required by the authorities of any State in
connection with the issuance of the Transferred Shares, the legend or legends required by such State authorities shall also be endorsed
on all such certificates.
SECTION 8. MISCELLANEOUS PROVISIONS.
(a)
Choice of Law. This Agreement shall be governed by, and construed in accordance with, the laws of the State of Delaware, as such
laws are applied to contracts entered into and performed in such State.
(b)
Notice. All notices and other communications given or made pursuant hereto shall be in writing and shall be deemed effectively
given: (i) upon personal delivery to the party to be notified; (ii) when sent by confirmed electronic mail or facsimile if sent during
normal business hours of the recipient; if not, then on the next business day; (iii) three (3) days after having been sent by registered
or certified mail (or applicable international equivalent), return receipt requested, postage prepaid; or (iv) one (1) business day (as
such term is applicable in New York, New York) after deposit with an internationally recognized overnight courier, specifying next business
day (as such term is applicable in New York, New York) delivery, with written verification of receipt. The occurrence of the events set
forth in clauses (i) through (iv) of the preceding sentence shall constitute “Delivery” of notice. Notice shall be
addressed to the Company at its principal executive office and to the Transferee at the address that he or she most recently provided
to the Company in accordance with this Subsection (b).
(c)
Entire Agreement. The Summary of Stock Grant, this Agreement and the Stockholders Agreement constitute the entire contract between
the parties hereto with regard to the subject matter hereof. They supersede any other agreements, representations or understandings (whether
oral or written and whether express or implied) that relate to the subject matter hereof.
SECTION 9. DEFINITIONS.
(a) “Agreement”
shall mean this Stock Grant Agreement.
(b)
“Board of Directors” shall mean the Board of Directors of the Company, as constituted from time to time or,
if a Committee has been appointed, such Committee.
(c) “Cause”
shall mean (1) the employee’s unauthorized use or disclosure of the Company’s confidential information or trade secrets,
which use or disclosure causes material harm to the Company; (2) the employee’s material breach of any agreement between such
employee and the Company, including, without limitation, the breach of any applicable non-competition or non-solicitation
obligations; (3) the employee’s material failure to comply with the Company’s written policies or rules which failure
causes material harm to the Company; (4) the employee’s commission of, or plea of “guilty” or “no
contest” to, a felony or any crime involving fraud or moral turpitude under the laws of the United States, any State or other
jurisdiction; or (5) the employee’s gross negligence or willful misconduct, which causes material harm to the Company. In
order for the termination of the Transferee’s Service to constitute a termination for “Cause” pursuant to clause
(2) of the preceding sentence, the Company must first provide Transferee with written notice of the acts or omissions constituting
the grounds for “Cause” within 90 days of the initial existence of such grounds for “Cause” and allow
Transferee 30 days in which to cure such condition, and only if such condition has not been cured after the conclusion of such
30-day period shall Cause be deemed to have occurred.
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(d)
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“Code” means the Internal Revenue Code of 1986, as amended.
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(e)
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“Committee” means a committee of the Board of Directors.
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(f)
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“Common Stock” means the Common Stock of the Company.
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(g)
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“Company” shall mean Squarespace, Inc., a Delaware corporation.
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(h)
“Consultant” means a person, excluding Employees and Outside Directors, who performs bona fide services for the Company,
a Parent or a Subsidiary as a consultant or advisor and who qualifies as a consultant or advisor under Rule 701(c)(1) of the Securities
Act or under Instruction A.1.(a)(1) of Form S-8 under the Securities Act.
(i)
“Disability” means the Transferee is unable to engage in any substantial gainful activity by reason of any medically
determinable physical or mental impairment which can be expected to result in death or which has lasted, or can be expected to last, for
a continuous period of not less than one year.
(j)
“Employee” means any individual who is a common-law employee of the Company, a Parent or a Subsidiary.
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(k)
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“Exchange Act” means the Securities Exchange Act of 1934.
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(l)
“Fair Market Value” means the fair market value of a Share, as determined by the Board of Directors in good faith.
Such determination shall be conclusive and binding on all Persons.
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(m)
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“Forfeiture Condition” shall mean the forfeiture condition described in
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Section 2.
(n) “Good Reason”
shall mean that one or more of the following are undertaken by the Company (or successor to the Company, if applicable) without Transferee’s
express written consent: (1) a material reduction in Transferee’s base compensation (unless pursuant to a salary reduction program
applicable generally to the Company’s similarly situated employees); (2) a material diminution of Transferee’s title, duties,
authority or responsibilities; and (3) a material change in the geographic location at which the Transferee provides services to the Company
(excluding regular travel in the ordinary course of business). In order for Transferee’s resignation to constitute a resignation
for “Good Reason,” Transferee must first provide the Company with written notice of the acts or omissions constituting the
grounds for “Good Reason” within 90 days of the initial existence of such grounds for “Good Reason” and allow
the Company 30 days in which to cure such condition, and only if such condition has not been cured after the conclusion of such 30-day
period shall Good Reason be deemed to have occurred.
(o)
“Immediate Family” shall mean any child, stepchild, grandchild, parent, step parent, grandparent, spouse, sibling,
mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, sister-in-law and adoptive relationships including any trust
in which Immediate Family and the Transferee own more than 50% of the voting power, a trust in which such persons have a beneficial interest
greater than 50% or a foundation in which such persons control the management of more than 50% of the assets of the foundation.
(p)
“IPO” means the first sale of Common Stock to the general public pursuant to a registration statement filed
with and declared effective by the SEC under the Securities Act (other than a registration statement relating solely to the issuance of
Common Stock pursuant to a business combination or an employee incentive or benefit plan).
(q)
“Liquidation Event” means a Liquidation Event as defined in the Company’s Certificate of Incorporation
as in effect on the date hereof (and without giving effect to any waiver thereof) or the sale, exchange, assignment or other transfer,
in each case for value, of at least fifty percent (50%) of the Preferred Shares held by stockholders other than Transferee and his Immediate
Family in one or more transactions after the date hereof; excluding (i) transfers by any stockholder to any other individual, corporation,
partnership, trust, limited liability company, association or other entity (each, a “Person”) who, directly or indirectly,
controls, is controlled by, or is under common control with such stockholder, including without limitation any general partner, managing
member, officer or director of such stockholder or any investment fund now or hereafter existing that is controlled by one or more general
partners or managing members of, or shares the same management company with, such stockholder, (ii) transfers by any stockholder to any
equity holder or limited partner of such stockholder, or (iii) transfers by any stockholder to any member of such stockholder’s
Immediate Family.
(r)
“Outside Date” means the date that is three years and six months following the Date of Grant as set forth in the Summary
of Stock Grant, as may be extended pursuant to Section 2(b).
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(s)
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“Outside Director” means a member of the Board of Directors who is not an
Employee.
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(t)
“Parent” means any corporation (other than the Company) in an unbroken chain of corporations ending with the Company,
if each of the corporations other than the Company owns stock possessing 50% or more of the total combined voting power of all classes
of stock in one of the other corporations in such chain.
(u)
“Preferred Shares” means issued and outstanding shares of the Company’s Series A-1 Preferred Stock, par value
$0.0001 per share, the Company’s Series A-2 Preferred Stock, par value $0.0001 per share, the Company’s Series B Preferred
Stock, par value $0.0001 per share and any other series of the Company’s Preferred Stock in existence from time to time.
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(v)
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“Restricted Share” shall mean a Transferred Share that is subject to the Forfeiture Condition.
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(w)
“Right of First Refusal” shall mean the Company’s right of first refusal set forth in Section 4 of the Stockholders
Agreement.
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(x)
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“SEC” means the Securities and Exchange Commission.
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(y)
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“Securities Act” means the Securities Act of 1933, as amended.
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(z)
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“Service” shall mean service as an Employee, Outside Director or Consultant.
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(aa)
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“Share” means one share of Common Stock.
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(bb)
“Stockholders Agreement” means that certain Amended and Restated Stockholders Agreement dated as of April 15, 2014
by and among the Company and its stockholders, as it may be amended from time to time.
(cc)
“Subsequent Transferee” shall mean any Person to whom the Transferee has directly or indirectly transferred any Transferred
Shares.
(dd)
“Subsidiary” means any corporation (other than the Company) in an unbroken chain of corporations beginning with
the Company, if each of the corporations other than the last corporation in the unbroken chain owns stock possessing 50% or more of the
total combined voting power of all classes of stock in one of the other corporations in such chain.
(ee)
“Summary of Stock Grant” shall mean the document so entitled to which this Agreement is attached.
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(ff)
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“Transferee” shall mean the individual named in the Summary of Stock Grant.
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(gg)
“Transferred Shares” shall mean the Shares acquired by the Transferee pursuant to this Agreement.
Exhibit 10.11
SQUARESPACE,
INC.
AMENDMENT
TO
STOCK
GRANT
AGREEMENT
(NON-PLAN,
FOR
SERVICES)
This Amendment (the “Amendment”)
is entered into as of August 24, 2020 by and between Squarespace, Inc., (the “Company”) and Anthony Casalena
(the “Transferee”) to amend the Stock Grant Agreement by and between the Company and the Transferee dated as
of August 22, 2017 (the “Stock Grant Agreement”). Capitalized terms used in this Amendment but not defined herein
shall have the meaning given thereto in the Stock Grant Agreement. In consideration of the mutual agreements hereinafter set forth, the
parties agree as follows:
Section 9(r) of the Stock Grant Agreement is hereby deleted
in its entirety and replaced with the following:
(r) “Outside Date”
means the date that is four years following the Date of Grant as set forth in the Summary of Stock Grant, as may be extended pursuant
to Section 2(b).
The terms and provisions of the Stock Grant Agreement
shall remain in full force and legal effect, except those which are explicitly changed by this Amendment. To the extent that there is
a conflict between the terms and provisions of the Stock Grant Agreement and this Amendment, the terms and provisions of this Amendment
shall govern for purposes of the subject matter of this Amendment only.
This Amendment, the Summary of Stock Grant, the
Stock Grant Agreement and the Stockholders Agreement constitute the entire contract between the parties hereto with regard to the subject
matter hereof. They supersede any other agreements, representations or understandings (whether oral or written and whether express or
implied) that relate to the subject matter hereof.
Exhibit 10.12
EXECUTIVE EMPLOYMENT AGREEMENT
This Executive Employment
Agreement (the “Agreement”), made between Squarespace, Inc. (the “Company”) and [_______] (the “Executive”)
(collectively, the “Parties”), is dated as of [________].
Whereas,
the Company desires for Executive to provide services to the Company, and wishes to provide Executive with certain compensation and benefits
in return for such employment services; and
Whereas,
Executive wishes to be employed by the Company and to provide personal services to the Company in return for certain compensation and
benefits;
Now,
Therefore, in consideration of the mutual promises and covenants contained herein and for other good and valuable consideration,
the receipt and sufficiency of which is hereby acknowledged, the Parties hereto agree as follows:
1.
Employment by the Company.
1.1
Position. Executive shall serve as the Company’s [TITLE]. Executive’s employment with the Company shall begin on [DATE],
or as otherwise agreed to by Executive and the Company.
1.2 Duties
and Location. Executive shall perform such duties as are required by the Company’s [Chief Executive Officer], to whom Executive
will report. Executive’s primary office location shall be the Company’s office located in New York, New York. The Company
reserves the right to reasonably require Executive to perform Executive’s duties at places other than Executive’s primary
office location from time to time, and to require reasonable business travel. The Company may modify Executive’s job title and
duties as it deems necessary and appropriate in light of the Company’s needs and interests from time to time.
1.3 Policies
and Procedures. The employment relationship between the Parties shall be governed by the general employment policies and practices of
the Company, except that when the terms of this Agreement differ from or are in conflict with the Company’s general employment
policies or practices, this Agreement shall control.
2.
Compensation.
2.1 Base
Wage. For services to be rendered hereunder, Executive shall receive a base salary at the rate of $[________] per year (the “Base
Salary”), subject to standard payroll deductions and withholdings and payable in accordance with the Company’s regular payroll
schedule. The Base Salary shall be subject to periodic review by the Company.
2.2 Signing
Bonus. The Company is offering Executive a one-time sign on bonus of $[________]. This will be paid to Executive upon commencement of
employment with the Company in Executive’s first month's pay and will be subject to standard tax and deductions. If, within one
year of Executive’s start date, Executive voluntarily terminates employment with the Company for any reason or is terminated by
the Company for Cause, Executive shall return to the Company, within thirty (30) days of the termination date, the full amount of the
sign on bonus.
3.
Standard Company Benefits. Executive shall be entitled to participate in all employee benefit
programs for which Executive is eligible under the terms and conditions of the benefit plans that may be in effect from time to time
and provided by the Company to its employees. The Company reserves the right to cancel or change the benefit plans or programs it offers
to its employees at any time.
4.
Equity Awards. Subject to the approval of the Company’s Board of Directors, Executive
will be granted an equity award amounting to a value of approximately $[________] at the time of the grant. The particular units and
terms and conditions of the award will be provided at the time of the grant and will depend on the fair value of the Company’s
common stock at the date of the grant and the applicable equity incentive plan and grant agreement. Executive shall be considered for
future grants of equity awards in the discretion of the Company’s Board of Directors (or a Committee thereof), pursuant to its
regular compensation review process for the Company’s executives.
5.
Termination of Employment; Severance.
5.1 At-Will Employment. Executive’s employment relationship is at-will. Either Executive or the Company may terminate the employment
relationship at any time, with or without Cause or advance notice. In the event Executive’s employment is terminated for any reason,
and unless otherwise permitted by the Company, Executive shall resign from all positions and terminate any relationships as an employee,
advisor, officer or director with the Company and any of its affiliates, each effective on the date of termination. Executive’s
employment with the Company remains subject to Executive’s legal authorization to work in the United States and to Executive’s
successful completion of pre-employment requirements.
5.2 Termination Without Cause; Resignation for Good Reason. In the event Executive’s employment with the Company is terminated by the
Company without Cause, or Executive resigns for Good Reason, then provided such termination constitutes a “separation from service”
(as defined under Treasury Regulation Section 1.409A-1(h), without regard to any alternative definition thereunder, a “Separation
from Service”) (such termination, a “Qualifying Termination”), and provided that Executive remains in compliance with
the terms of this Agreement, the Company shall provide Executive with the following Severance Benefits:
(a)
The Company shall pay Executive, as severance, continued payment of six (6) months of Executive’s base salary at the rate in effect
as of the date of Executive’s employment termination, disregarding any salary decrease that constituted Good Reason, subject to
standard payroll deductions and withholdings (the “Severance”). The Severance will be paid on the Company’s regular
payroll schedule, beginning on the first regularly-scheduled payroll date following the full effectiveness of a separation agreement (subject
to Section 7 below).
(b) Provided that Executive timely elects continued healthcare coverage pursuant to the Consolidated Omnibus Budget Reconciliation Act of
1985, as amended (“COBRA”), the Company shall pay Executive’s COBRA premiums to continue Executive’s coverage
(“COBRA Premiums”) through the period (the “COBRA Premium Period”) starting on Executive’s Separation from
Service and ending on the earliest to occur of: (i) six (6) months following Executive’s Separation from Service; (ii) the date
Executive becomes eligible for group health insurance coverage through a new employer; or (iii) the date Executive ceases to be eligible
for COBRA continuation coverage for any reason. In the event Executive becomes covered under another employer's group health plan or otherwise
ceases to be eligible for COBRA during the COBRA Premium Period, Executive must immediately notify the Company of such event. Notwithstanding
the foregoing, if the Company determines, in its sole discretion, that it cannot pay the COBRA Premiums without a substantial risk of
violating applicable law, the Company instead shall pay to Executive, on the first day of each calendar month, a fully taxable cash payment
equal to the applicable COBRA premiums for that month, subject to applicable tax withholdings, for the remainder of the COBRA Premium
Period, which Executive may, but is not obligated to, use toward the cost of COBRA premiums.
(c)
In the event that Executive’s Qualifying Termination occurs during the period beginning three (3) months prior to, and ending twelve
(12) months following, a Change in Control, then Executive’s then-unvested equity awards shall be deemed immediately vested (and,
if relevant, exercisable) as of the date of such Qualifying Termination.
5.3 Termination for Cause; Resignation Without Good Reason; Death or Disability. If Executive resigns without Good Reason, or the Company
terminates Executive’s employment for Cause, or Executive’s employment is terminated as a result of Executive’s death
or Disability, then (a) vesting of any equity awards shall cease as of the date of such termination, (b) all payments of compensation
by the Company to Executive hereunder will terminate immediately (except as to amounts already earned), and (c) Executive will not be
entitled to any Severance Benefits.
6.
Conditions to Receipt of Severance Benefits. The receipt of the Severance Benefits will be subject
to Executive signing the Company’s standard form of separation agreement and not revoking the release of claims contained therein.
No Severance Benefits will be paid or provided until the separation agreement becomes effective.
7.
Section 409A. The payments and benefits under this Agreement are intended to qualify for exemptions
from the application of Section 409A of the Internal Revenue Code and the regulations and guidance promulgated thereunder (“Section
409A”), and this Agreement will be construed to the greatest extent possible as consistent with those provisions, and to the extent
not so exempt, this Agreement (and any definitions hereunder) will be construed in a manner that complies with Section 409A to the extent
necessary to avoid adverse taxation under Section 409A. Notwithstanding anything to the contrary herein, to the extent required to comply
with Section 409A, a termination of employment shall not be deemed to have occurred for purposes of any provision of this Agreement providing
for the payment of amounts or benefits upon or following a termination of employment unless such termination is also a Separation from
Service. Executive's right to receive any installment payments will be treated as a right to receive a series of separate payments and,
accordingly, each installment payment shall at all times be considered a separate and distinct payment. Notwithstanding any provision
to the contrary in this Agreement, if Executive is deemed by the Company at the time of Executive's Separation from Service to be a “specified
employee” for purposes of Section 409A, and if any of the payments upon Separation from Service set forth herein and/or under any
other agreement with the Company are deemed to be “deferred compensation,” then, to the extent delayed commencement of any
portion of such payments is required in order to avoid a prohibited distribution under Section 409A and the related adverse taxation under
Section 409A, such payments shall not be provided to Executive prior to the earliest of (i) the expiration of the six-month period measured
from the date of Separation from Service, (ii) the date of Executive's death or (iii) such earlier date as permitted under Section 409A
without the imposition of adverse taxation. With respect to payments to be made upon execution of an effective release, if the release
revocation period spans two calendar years, payments will be made in the second of the two calendar years to the extent necessary to avoid
adverse taxation under Section 409A. With respect to reimbursements or in-kind benefits provided to Executive hereunder (or otherwise)
that are not exempt from Section 409A, the following rules shall apply: (i) the amount of expenses eligible for reimbursement, or in-kind
benefits provided, during any one of Executive's taxable years shall not affect the expenses eligible for reimbursement, or in-kind benefit
to be provided in any other taxable year, (ii) in the case of any reimbursements of eligible expenses, reimbursement shall be made on
or before the last day of Executive's taxable year following the taxable year in which the expense was incurred and (iii) the right to
reimbursement or in-kind benefits shall not be subject to liquidation or exchange for another benefit.
8.
Definitions.
8.1 Cause. For purposes of this Agreement, “Cause” shall mean (a) Executive’s unauthorized use or disclosure of the
Company’s confidential information or trade secrets, which use or disclosure causes material harm to the Company; (b)
Executive’s material breach of any agreement between Executive and the Company, including, without limitation, the breach of
any applicable non-competition or non-solicitation obligations; (c) Executive’s material failure to comply with the
Company’s written policies or rules, which failure causes material harm to the Company; (d) Executive’s commission of,
or plea of “guilty” or “no contest” to, a felony or any crime involving fraud or moral turpitude under the
laws of the United States, any State or other jurisdiction; or (e) Executive’s gross negligence or willful misconduct, in
either case which causes material harm to the Company. In order for the termination of Executive’s employment to constitute a
termination for “Cause” pursuant to clause (b), the Company must first provide Executive with written notice of the acts
or omissions constituting the grounds for “Cause” within 90 days of the initial existence of such grounds for
”Cause” and allow Executive 30 days in which to cure such condition, and only if such condition has not been cured after
the conclusion of such 30-day period shall Cause be deemed to have occurred.
8.2 Good Reason. For purposes of this Agreement, “Good Reason” shall mean the occurrence of one of the following without
Executive’s express written consent: (a) any reduction of Executive’s base salary by more than 10% (other than a general reduction
in Executive’s Base Salary that affects all comparable employees of the Company); or (b) a material reduction in Executive’s
duties (including responsibilities and/or authorities), provided, however, that such a change (including a change in title) shall
not be deemed a “material reduction” in and of itself unless Executive’s new duties are materially reduced from the
prior duties; (c) a change in the geographic location at which Executive must perform services to a facility or location of fifty (50)
miles or more from Executive’s then current office location. Good Reason shall not exist unless Executive has provided written
notice to the Company’s Board of Directors of the purported grounds for the Good Reason within 90 days of its initial
existence and the Company has been provided at least 30 days to remedy the condition, and only if such condition has not been cured after
the conclusion of such 30-day period.
8.3 Disability. For purposes of this Agreement, “Disability” shall mean Executive’s inability to perform the essential functions
of Executive’s position, even with reasonable accommodation, as a result of a determinable physical or mental impairment that has
or could reasonably be expected to last for at least ninety (90) consecutive days or for at least one hundred and twenty (120) non-consecutive
days in any one-year period.
8.4 Change in Control. For purposes of this Agreement, “Change in Control” shall have the definition set forth in the Company’s
2017 Equity Incentive Plan.
9.
Proprietary Information Obligations. As a condition of employment, Executive shall execute and
abide by the Company’s standard form of Employee Invention Assignment and Confidentiality Agreement (the “Confidentiality
Agreement”), attached hereto as Exhibit A.
10.
Outside Activities During Employment. During Executive’s employment with the Company, Executive
will devote Executive’s best efforts and substantially all of Executive’s business time and attention to the business of the
Company, except for approved vacation periods and reasonable periods of illness or other incapacities permitted by the Company’s
general employment policies. During the term of Executive’s employment with the Company, Executive will not undertake or engage
in any other employment, activity, occupation, or business enterprise, that is either directly or indirectly competitive to the Company
or that materially interferes with the performance of Executive’s duties hereunder. Executive agrees not to acquire, assume or participate
in, directly or indirectly, any position, investment or interest known to be adverse or antagonistic to the Company, its business or prospects,
financial or otherwise.
11.
Dispute Resolution. To ensure the timely and economical resolution of disputes that may arise
in connection with Executive’s employment with the Company, Executive and the Company agree that any and all disputes, claims,
or causes of action arising from or relating to the enforcement, breach, performance, negotiation, execution, or interpretation of this
Agreement, the Confidentiality Agreement, Executive’s employment, or the termination of Executive’s employment, including
but not limited to statutory claims, will be resolved to the fullest extent permitted by law by final, binding and confidential arbitration,
by a single arbitrator, in the New York, New York area, or as otherwise agreed by the Company and Executive, conducted by JAMS, Inc.
(“JAMS”) under the then-applicable JAMS rules (available at the following web address: https://www.jamsadr.com/rules-employment,
and which will be provided to Executive on request). Nothing in this Dispute Resolution section, however, restricts Executive’s
right to pursue claims in court for any alleged sexual harassment or any alleged unlawful discriminatory practices related to sexual
harassment. By agreeing to this arbitration procedure, both Executive and the Company waive the right to resolve any such dispute through
a trial by jury or judge or administrative proceeding. Executive will have the right to be represented by legal counsel at any arbitration
proceeding. In addition, all claims, disputes, or causes of action under this section, whether by Executive or the Company, must be brought
in an individual capacity, and shall not be brought as a plaintiff (or claimant) or class member in any purported class or representative
proceeding, nor joined or consolidated with the claims of any other person or entity. The arbitrator may not consolidate the claims of
more than one person or entity, and may not preside over any form of representative or class proceeding. To the extent that the preceding
sentences regarding class claims or proceedings are found to violate applicable law or are otherwise found unenforceable, any claim(s)
alleged or brought on behalf of a class shall proceed in a court of law rather than by arbitration. The arbitrator shall: (a) have the
authority to compel adequate discovery for the resolution of the dispute and to award such relief as would otherwise be permitted by
law; and (b) issue a written arbitration decision, to include the arbitrator’s essential findings and conclusions and a statement
of the award. The arbitrator shall be authorized to award any or all remedies that Executive or the Company would be entitled to seek
in a court of law. You and the Company shall equally share all JAMS’ arbitration fees. Nothing in this Agreement is intended to
prevent either Executive or the Company from obtaining injunctive relief in court to prevent irreparable harm pending the conclusion
of any such arbitration. Any awards or orders in such arbitrations may be entered and enforced as judgments in the federal and state
courts of any competent jurisdiction.
12.
General Provisions.
12.1 No Breach of Prior Agreement. Executive represents that Executive’s performance of all the terms of this Agreement and Executive’s
duties as an employee of the Company will not breach any invention assignment, proprietary information, confidentiality or similar agreement
with any former employer or other party. Executive represents that Executive will not bring with Executive to the Company or use in the
performance of Executive’s duties for the Company any documents or materials or intangibles of a former employer or third party
that are not generally available to the public or have not been legally transferred to the Company.
12.2 Notices. Any notices provided must be in writing and will be deemed effective upon the earlier of personal delivery (including personal
delivery by fax) or the next day after sending by overnight carrier, to the Company at its primary office location and to Executive at
the address as listed on the Company payroll.
12.3 Severability. Whenever possible, each provision of this Agreement will be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable
law or rule in any jurisdiction, such invalidity, illegality or unenforceability will not affect any other provision or any other jurisdiction,
but this Agreement will be reformed, construed and enforced in such jurisdiction to the extent possible in keeping with the intent of
the parties.
12.4 Waiver. Any waiver of any breach of any provisions of this Agreement must be in writing to be effective, and it shall not thereby be deemed
to have waived any preceding or succeeding breach of the same or any other provision of this Agreement.
12.5 Complete Agreement. This Agreement, together with the Confidentiality Agreement, constitutes the entire agreement between Executive and
the Company with regard to this subject matter and is the complete, final, and exclusive embodiment of the Parties’ agreement with
regard to this subject matter. This Agreement is entered into without reliance on any promise or representation, written or oral, other
than those expressly contained herein, and it supersedes any other such promises, warranties or representations. It is entered into without
reliance on any promise or representation other than those expressly contained herein, and it cannot be modified or amended except in
a writing signed by a duly authorized officer of the Company.
12.6 Counterparts. This Agreement may be executed in separate counterparts, any one of which need not contain signatures of more than one party,
but all of which taken together will constitute one and the same Agreement.
12.7 Headings. The headings of the paragraphs hereof are inserted for convenience only and shall not be deemed to constitute a part hereof
nor to affect the meaning thereof.
12.8 Successors and Assigns. This Agreement is intended to bind and inure to the benefit of and be enforceable by Executive and the Company,
and their respective successors, assigns, heirs, executors and administrators, except that Executive may not assign any of Executive’s
duties hereunder and Executive may not assign any of Executive’s rights hereunder without the written consent of the Company.
12.9 Tax Withholding and Indemnification. All payments and awards contemplated or made pursuant to this Agreement will be subject to withholdings
of applicable taxes in compliance with all relevant laws and regulations of all appropriate government authorities. Executive acknowledges
and agrees that the Company has neither made any assurances nor any guarantees concerning the tax treatment of any payments or awards
contemplated by or made pursuant to this Agreement. Executive has had the opportunity to retain a tax and financial advisor and fully
understands the tax and economic consequences of all payments and awards made pursuant to the Agreement.
12.10 Choice
of Law. All questions concerning the construction, validity and interpretation of this Agreement will be governed by the laws of the
State of New York, without regard to its conflict of laws provisions.
[Signature Page Follows]
In Witness
Whereof, the Parties have executed this Agreement on the day and year first written above.
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Company:
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Squarespace, Inc.
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By:
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Name:
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Title:
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I have read and understood this Agreement and
hereby acknowledge, accept and agree to the terms as set forth above and further acknowledge that no other commitments were made to me
as part of my employment offer except as specifically set forth herein. I acknowledge that I have received and read or have had the opportunity
to read the arbitration provision included in this Agreement. I understand that the arbitration provision requires that disputes that
involve matters subject to the provision to be submitted to arbitration pursuant to the arbitration provision rather than to a judge and
jury in court.
Enclosure:
Exhibit A - Employee Invention Assignment and Confidentiality
Agreement
Exhibit A
Employee Invention Assignment
and Confidentiality Agreement
Exhibit 10.13
Squarespace, Inc. Employee
Invention Assignment and
Confidentiality Agreement
In consideration of, and as a condition of my
employment with Squarespace, Inc., a Delaware corporation, and its subsidiaries, parents, affiliates, successors and assigns (together,
the “Company”), I hereby represent to, and agree with the Company as follows:
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1.
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Purpose of Agreement — I understand that the Company
is engaged in a continuous program of research, development, production and marketing in connection with its business and that it is critical
for the Company to preserve and protect its “Proprietary Information” (as defined in Section 6 below), its rights in “Inventions”
(as defined in Section 2 below) and in all related intellectual property rights. Accordingly, I am entering into this Employee Invention
Assignment and Confidentiality Agreement (this “Agreement”) as a condition of my employment with the Company, whether or not
I am expected to create inventions of value for the Company. I acknowledge and agree that the terms and conditions of this Agreement are
effective retroactively to the date on which I first began providing services or developing intellectual property for the Company (which
shall be deemed to include any relationship of service to the Company that I may have had prior to actually becoming an employee) without
any consideration other than employment with the Company.
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2.
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Disclosure of Inventions — I will promptly disclose
in confidence to the Company all inventions, improvements, designs, original works of authorship, formulas, algorithms, processes, compositions
of matter, computer software programs, databases, mask works and trade secrets that I make or conceive or first reduce to practice or
create, either alone or jointly with others, during the period of my employment, whether or not in the course of my employment, and whether
or not patentable, copyrightable or protectable as trade secrets (the “Inventions”).
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3.
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Work MADE for Hire; Assignment of Inventions — I
acknowledge and agree that any copyrightable works prepared by me at any time within the scope of my employment are “works made
for hire” under the Copyright Act and that the Company will be considered the author and owner of such copyrightable works. I agree
that all Inventions that (i) are developed using equipment, supplies, facilities or trade secrets of the Company at any time during my
employment, (ii) result from work performed by me for the Company, or (iii) relate to the Company’s business or current or anticipated
research and development (the “Assigned Inventions”), will be the sole and exclusive property of the Company and are hereby
irrevocably assigned by me to the Company to the maximum extent permitted by applicable law. I have attached to this Agreement in Exhibit
A a list describing all existing Inventions, if any, that are owned by me or in which I have an interest and that were made or acquired
by me prior to my date of first employment by the Company, that (a) may relate to the Company’s business or actual or demonstrably
anticipated research or development, and (b) that are not to be assigned to the Company (“Excluded Inventions”). If no such
list is attached, I represent and agree that it is because I have no Excluded Inventions.
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4.
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Assignment of Other Rights — In addition to the foregoing
assignment of Assigned Inventions to the Company, I hereby irrevocably transfer and assign to the Company: (i) all worldwide patents,
patent applications, copyrights, mask works, trade secrets and other intellectual property rights, including but not limited to rights
in databases, in any Assigned Inventions, along with any registrations of or applications to register such rights; and (ii) any and all
“Moral Rights” (as defined below) that I may have in or with respect to any Assigned Inventions. I also hereby forever waive
and agree never to assert any and all Moral Rights I may have in or with respect to any Assigned Inventions, even after termination of
my work on behalf of the Company. “Moral Rights” mean any rights to claim authorship of or credit on any Assigned Inventions,
to object to or prevent the modification or destruction of any Assigned Inventions, or to withdraw from circulation or control the publication
or distribution of any Assigned Inventions, and any similar right, existing under judicial or statutory law of any country or subdivision
thereof in the world, or under any treaty, regardless of whether or not such right is denominated or generally referred to as a “moral
right.”
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5.
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Assistance — I agree to assist the Company in every
proper way to obtain for the Company and enforce patents, copyrights, mask work rights, trade secret rights and other legal protections
for the Company’s Assigned Inventions in any and all countries. I will execute any documents that the Company may reasonably request
for use in obtaining or enforcing such patents, copyrights, mask work rights, trade secrets and other legal protections. My obligations
under this paragraph will continue beyond the termination of my employment with the Company, provided that the Company will compensate
me at a reasonable rate after such termination for time or expenses actually spent by me at the Company’s request on such assistance.
I appoint the Secretary of the Company as my attorney-in-fact to execute documents on my behalf for this purpose, which such appointment
is coupled with an interest.
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6.
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Proprietary Information — I understand that my employment
by the Company creates a relationship of confidence and trust with respect to any information of a confidential or secret nature that
may be disclosed to me by the Company or a third party that relates to the business of the Company or to the business of any parent, subsidiary,
affiliate, customer or supplier of the Company or any other party with whom the Company agrees to hold information of such party in confidence
(the “Proprietary Information”). Such Proprietary Information includes, but is not limited to, Assigned Inventions, trade
secrets, marketing plans, product plans, technical information, business strategies, financial information, forecasts, personnel information,
customer lists and data, and domain names.
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7.
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Confidentiality — At all times, both during my employment
and after its termination, I will keep and hold all such Proprietary Information in strict confidence and trust. I will not use or disclose
any Proprietary Information without the prior written consent of the Company, except as may be necessary to perform my duties as an employee
of the Company for the benefit of the Company. Upon termination of my employment with the Company, I will promptly deliver to the Company
all documents and materials of any nature pertaining to my work with the Company and, upon Company request, will execute a document confirming
my agreement to honor my responsibilities contained in this Agreement. I will not take with me or retain any documents or materials or
copies thereof containing any Proprietary Information. Nothing in this Section 7 or otherwise in this Agreement shall limit or restrict
in any way my immunity from liability for disclosing the Company’s trade secrets as specifically permitted by 18 U.S. Code Section
1833, the pertinent provisions of which are attached hereto as Exhibit B.
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8.
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PHYSICAL PROPERTY — All documents, supplies, equipment
and other physical property furnished to me by the Company or produced by me or others in connection with my employment will be and remain
the sole property of the Company. I will return to the Company all such items when requested by the Company, excepting only my personal
copies of records relating to my employment or compensation and any personal property I bring with me to the Company and designate as
such. Even if the Company does not so request, I will upon termination of my employment return to the Company all Company property, and
I will not take with me or retain any such items.
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9.
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No Breach of Prior Agreement; THIRD PARTY MATERIALS;
EXCLUDED INVENTIONS — I represent that my performance of all the terms of this Agreement and my duties as an employee
of the Company will not breach any invention assignment, proprietary information, confidentiality or similar agreement with any
former employer or other party. I represent that I will not bring with me to the Company or use in the performance of my duties for
the Company any documents or materials or intangibles of a former employer or third party that are not generally available to the
public or have not been legally transferred to the Company (collectively, “Third Party Materials”). I acknowledge and
agree that if I use any Third Party Materials or Excluded Inventions in the scope of my employment, or if I include any Third Party
Materials or Excluded Inventions in any product or service of the Company (each, a “License Event”), I will immediately
so notify the Company in writing. Unless the Company and I agree otherwise in writing as to particular Third Party Materials or
Excluded Inventions, I hereby grant to the Company, whether or not I give Company notice as required above, a non-exclusive,
perpetual, transferable, fully-paid and royalty-free, irrevocable and worldwide license, with rights to sublicense through multiple
levels of sublicensees, to reproduce, make derivative works of, distribute, publicly perform, and publicly display in any form or
medium, whether now known or later developed, make, have made, use, sell, import, offer for sale, and exercise any and all present
or future rights in, Third Party Materials and Excluded Inventions, provided that the foregoing license shall only apply in
connection with a License Event. To the extent that any third parties have any rights in or to any Excluded Inventions or Third Party
Materials, I hereby represent and warrant that such third party or parties have validly and irrevocably granted to me the right to grant
the license stated above.
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10.
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Efforts; Duty Not to Compete — I understand that
my employment with the Company requires my undivided attention and effort during normal business hours. While I am employed by the Company,
I will not, without the Company’s express prior written consent, provide services to, or assist in any manner, any business or third
party if such services or assistance would potentially conflict with the Company’s business interests.
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11.
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Notification — I hereby authorize the Company to
notify third parties, including, without limitation, customers and actual or potential employers, of the terms of this Agreement and my
responsibilities hereunder.
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12.
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Non-Solicitation of Employees/Consultants — During
my employment with the Company and for a period of one (1) year thereafter, I will not directly or indirectly, whether on behalf of myself
or any other person or entity, solicit any employees or consultants of the Company to terminate or alter their employment or consulting
relationship with the Company.
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13.
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Non-Solicitation of Suppliers/Customers — During
my employment with the Company and for a period of one (1) year thereafter, I will not directly or indirectly, whether on behalf of myself
or any other person or entity, solicit any customers, suppliers, or vendors of the Company to terminate, reduce, or alter their relationship
with the Company.
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14.
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COVENENT NOT TO COMPETE — I acknowledge that during
my employment I will have access to and knowledge of Proprietary Information. To protect the Company’s Proprietary Information,
I agree that during my employment with the Company and for a period of one (1) year after my last day of employment with the Company,
I will not directly or indirectly, anywhere in the world, engage in (whether as an employee, consultant, proprietor, partner, director
or otherwise), or have any ownership interest in, or participate in the financing, operation, management or control of, any person, firm,
corporation or business that engages in a “Restricted Business” (as defined below). It is agreed that ownership of (i) no
more than one percent (1%) of the outstanding voting stock of a publicly traded corporation, or (ii) any stock I presently own shall not
constitute a violation of this provision. “Restricted Business” shall mean any line of business that the Company engaged
in, or prepared to engage in, during the one-year period prior to my last day of employment with the Company, with which I worked directly
or indirectly during my employment by the Company or about which I acquired Proprietary Information during my employment by the Company.
I acknowledge that the Company conducts its business globally, and I agree that the temporal and geographic limitations contained herein
are necessary to secure protection of the Company’s Proprietary Information.
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15.
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REASONABLENESS OF RESTRICTIONS — In the event that a court finds this Agreement, or any of
its restrictions, to be overbroad, ambiguous, unenforceable, or invalid, I and the Company agree that the court will read the Agreement
as a whole and interpret the restriction(s) at issue to be enforceable and valid to the maximum extent allowed by law. If the court declines
to enforce this Agreement in the manner provided in the first sentence of this Section 15, the Company and I agree that this Agreement
will be automatically modified to provide the Company with the maximum protection of its business interests allowed by law and I agree
to be bound by this Agreement as modified. In the event the Company enforces this Agreement through a court order, I agree that the restrictions
in Sections 12, 13 and 14 will remain in effect for a period of twelve (12) months from the effective date of the order enforcing the
Agreement.
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16.
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Name & Likeness Rights — I hereby authorize the
Company to use, reuse, and to grant others the right to use and reuse, my name, photograph, likeness (including caricature), voice, and
biographical information, and any reproduction or simulation thereof, in any form of media or technology now known or hereafter developed
(including, but not limited to, film, video and digital or other electronic media), both during and after my employment,
for any purposes related to the Company’s business, such as marketing, advertising, credits, and presentations.
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17.
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LEGAL AND EQUITABLE REMEDIES — I agree that it may
be impossible to assess the damages caused by my violation of this Agreement or any of its terms. I agree that any threatened or actual
violation of this Agreement or any of its terms will constitute immediate and irreparable injury to the Company, and the Company will
have the right to enforce this Agreement and any of its provisions by injunction, specific performance or other equitable relief, without
bond and without prejudice to any other rights and remedies that the Company may have for a breach or threatened breach of this Agreement.
I agree that if the Company is successful in whole or in part in any legal or equitable action under this Agreement (including, but not
limited to, a court partially or fully granting any application, motion, or petition by the Company for injunctive relief, including,
but not limited to, a temporary restraining order, preliminary injunction, or permanent injunction), whether against or commenced by me,
the Company will be entitled to recover from me all costs, fees or expenses it incurred at any time during the course of the dispute,
including, but not limited to, reasonable attorney’s fees.
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18.
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Governing
Law; Severability — This Agreement will be governed by and construed in accordance
with the laws of the State of New York, without giving effect to its laws pertaining to conflict
of laws. If any provision of this Agreement is determined by any court or arbitrator of competent
jurisdiction to be invalid, illegal or unenforceable in any respect, such provision will
be enforced to the maximum extent possible given the intent of the parties hereto. If such
clause or provision cannot be so enforced, such provision shall be stricken from this Agreement
and the remainder of this Agreement shall be enforced as if such invalid, illegal or unenforceable
clause or provision had (to the extent not enforceable) never been contained in this Agreement.
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19.
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Counterparts — This Agreement may be executed in
any number of counterparts, each of which when so executed and delivered will be deemed an original, and all of which together shall constitute
one and the same agreement.
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20.
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Entire Agreement — This Agreement and the documents
referred to herein constitute the entire agreement and understanding of the parties with respect to the subject matter of this Agreement,
and supersede all prior understandings and agreements, whether oral or written, between or among the parties hereto with respect to the
specific subject matter hereof.
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21.
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Amendment and Waivers — This Agreement may be amended
only by a written agreement executed by each of the parties hereto. No amendment of or waiver of, or modification of any obligation under
this Agreement will be enforceable unless set forth in a writing signed by the party against which enforcement is sought. Any amendment
effected in accordance with this section will be binding upon all parties hereto and each of their respective successors and assigns.
No delay or failure to require performance of any provision of this Agreement shall constitute a waiver of that provision as to that or
any other instance. No waiver granted under this Agreement as to any one provision herein shall constitute a subsequent waiver of such
provision or of any other provision herein, nor shall it constitute the waiver of any performance other than the actual performance specifically
waived.
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22.
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Successors and Assigns; Assignment — Except as otherwise
provided in this Agreement, this Agreement, and the rights and obligations of the parties hereunder, will be binding upon and inure to
the benefit of their respective successors, assigns, heirs, executors, administrators and legal representatives. The Company may assign
any of its rights and obligations under this Agreement. No other party to this Agreement may assign, whether voluntarily or by operation
of law, any of its rights and obligations under this Agreement, except with the prior written consent of the Company.
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23.
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Further Assurances — The parties agree to execute
such further documents and instruments and to take such further actions as may be reasonably necessary to carry out the purposes and intent
of this Agreement.
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24.
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“At-Will” Employment — I understand that
this Agreement does not constitute a contract of employment or obligate the Company to employ me for any stated period of time. I understand
that I am an “at-will” employee of the Company and that my employment can be terminated at any time, with or without notice
and with or without cause, for any reason or for no reason, by either the Company or myself. I acknowledge that any statements or representations
to the contrary are ineffective, unless put into a writing signed by the Company. I further acknowledge that my participation in any equity
or benefit program is not to be construed as any assurance of continuing employment for any particular period of time. This Agreement
shall be effective as of the first day of my employment by the Company.
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25.
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ADVICE OF COUNSEL — I ACKNOWLEDGE THAT, IN EXECUTING THIS AGREEMENT, I HAVE HAD THE OPPORTUNITY
TO SEEK THE ADVICE OF INDEPENDENT LEGAL COUNSEL, AND I HAVE READ AND UNDERSTOOD ALL OF THE TERMS AND PROVISIONS OF THIS AGREEMENT. THIS
AGREEMENT WILL NOT BE CONSTRUED AGAINST ANY PARTY BY REASON OF THE DRAFTING OR PREPARATION OF THIS AGREEMENT.
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COMPANY:
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SQUARESPACE, INC.
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By:
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Name:
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Title:
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ACCEPTED AND AGREED:
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Name:
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Date:
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Exhibit A
LIST OF EXCLUDED INVENTIONS:
List of Excluded Inventions (if any):
Exhibit B
DEFEND TRADE SECRETS ACT, 18 U.S. CODE §
1833 NOTICE:
18 U.S. Code Section 1833 provides as follows:
Immunity From Liability For Confidential Disclosure Of A Trade Secret
To The Government Or In A Court Filing. An individual shall not be held criminally or civilly liable under any Federal or State trade
secret law for the disclosure of a trade secret that (A) is made, (i) in confidence to a Federal, State, or local government official,
either directly or indirectly, or to an attorney; and (ii) solely for the purpose of reporting or investigating a suspected violation
of law; or (B) is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal.
Use of Trade Secret Information in Anti-Retaliation Lawsuit.
An individual who files a lawsuit for retaliation by an employer for reporting a suspected violation of law may disclose the trade secret
to the attorney of the individual and use the trade secret information in the court proceeding, if the individual (A) files any document
containing the trade secret under seal; and (B) does not disclose the trade secret, except pursuant to court order.
Exhibit 10.14
EXECUTIVE EMPLOYMENT AGREEMENT
This Executive Employment
Agreement (this "Agreement"), made between Squarespace, Inc., a Delaware corporation (the "Company")
and Anthony Casalena ("Executive") (collectively, the "Parties"), is dated as of April 15, 2021.
Whereas,
Executive currently serves as the Founder and Chief Executive Officer of the Company; and
Whereas,
the Parties desire to enter into this Agreement, pursuant to which Executive will continue to serve as the Founder and Chief Executive
Officer of the Company, effective as of the date upon which the registration statement on Form S-1 that is filed by the Company is
declared effective by the United States Securities and Exchange Commission (the "Effective Date").
Now,
Therefore, in consideration of the mutual promises and covenants contained herein and for other good and valuable consideration,
the receipt and sufficiency of which is hereby acknowledged, the Parties hereto agree as follows:
1. Employment
by the Company.
1.1 Position.
Executive shall continue to serve as the Founder and Chief Executive Officer of the Company as of the Effective Date.
1.2 Duties
and Location. Executive shall perform such duties, consistent with his position as the Founder and Chief Executive Officer
of the Company, as are required by the Board of Directors of the Company (the "Board"). Executive shall report directly
to the Board. Executive's primary office location shall be the Company's office located in New York, New York, subject to any remote working
policies of the Company applicable to Executive and any applicable business travel.
1.3 Policies
and Procedures. The employment relationship between the Parties shall be governed by the general employment policies, procedures
and practices of the Company, except that when the terms of this Agreement differ from or are in conflict with the Company's general employment
policies or practices, this Agreement shall control.
2. Base
Salary. Effective as of the Effective Date, Executive shall receive a base salary of $1 per year (the "Base Salary").
The Base Salary shall be subject to periodic review by the Compensation Committee of the Board, although it is not presently intended
that the Base Salary will be modified prior to the fifth anniversary of the Effective Date.
3. Company
Benefits. Executive shall continue to be entitled to participate in all employee benefit plans and programs of the Company for which
Executive is eligible that may be in effect from time to time. The Company reserves the right to cancel or change any of these benefit
plans or programs at any time. In addition to the standard employee benefit plans and programs, Executive shall be eligible during Executive's
employment with the Company to receive such Company-paid security services as the Company and Executive mutually agree are necessary or
advisable for the safety and protection of Executive and his family members.
4. At-Will
Employment. Executive's employment relationship is at-will. Either Executive or the Company may terminate the employment relationship
at any time, with or without cause or advance notice, except that Executive shall provide the Board with at least 180 days of advance
written notice prior to any voluntary termination of his employment.
5. Proprietary
Information Obligations. As a condition of his continued employment with the Company, Executive shall execute and abide by the Company's
Employee Invention Assignment and Confidentiality Agreement (the "Confidentiality Agreement"), attached hereto as Exhibit A.
6. Outside
Activities During Employment.
6.1 During
Executive's employment with the Company, Executive will devote Executive's best efforts and substantially all of Executive's business
time and attention to the business of the Company; provided that Executive may (a) engage in private investment activities on behalf
of himself and his family, (b) serve as a director or advisor of non-profit organizations, (c) perform and participate in charitable,
civic, educational, professional, community, industry affairs and other related activities, and (d) subject to prior written Board
approval, serve as a member of the board of directors (including any committees thereof) of up to two (2) for-profit companies (collectively,
the "Outside Activities").
6.2 Notwithstanding
the foregoing, during the term of Executive's employment with the Company, Executive will not (a) undertake or engage in any activity,
including any Outside Activity, that is either directly or indirectly competitive to the Company or that unreasonably interferes with
the performance of Executive’s duties and responsibilities to the Company; or (b) acquire, assume or participate in, directly
or indirectly, any position, investment or interest known to be adverse or antagonistic to the Company, its business or prospects, financial
or otherwise.
7. Dispute
Resolution. Executive and the Company agree that any and all legal disputes, claims, or causes of action arising from or relating
to: (i) Executive's employment with the Company, Executive's performance of services for the Company, or the termination of Executive's
employment with the Company or (ii) the enforcement, breach, performance, construction, execution, or interpretation of this Agreement,
the Confidentiality Agreement, including but not limited to statutory claims, will be resolved exclusively, to the fullest extent permitted
by law, through final, binding and confidential arbitration before a single arbitrator, in the New York, New York area, or as otherwise
agreed by the Company and Executive, conducted by JAMS, Inc. ("JAMS") under the then-applicable JAMS rules (available
at: https://www.jamsadr.com/rules-employment). By agreeing to submit to mandatory and binding arbitration, both Executive and the Company
waive the right to resolve any such dispute through a trial by jury or judge or administrative proceeding. Executive will have the right
to be represented by legal counsel at any arbitration proceeding. The arbitrator shall: (a) have the authority to compel adequate
discovery for the resolution of the dispute and to award such relief as would otherwise be permitted by law; and (b) issue a written
arbitration decision, to include the arbitrator's essential findings and conclusions and a statement of the award, which shall be final,
conclusive and binding on all parties. The arbitrator shall be authorized to award any or all remedies that Executive or the Company would
be entitled to seek in a court of law. The Company shall pay for the fees and expenses of the arbitrator and all other expenses of the
arbitration that would not normally be incurred if the action were brought in a court of law, but each party shall bear its own other
costs and attorney's fees. Nothing in this Agreement is intended to prevent either Executive or the Company from obtaining injunctive
relief in court to prevent irreparable harm pending the conclusion of any such arbitration. Any awards or orders in such arbitrations
may be entered and enforced as judgments in the federal and state courts of any competent jurisdiction. Executive and the Company further
agree that each party will maintain the confidential nature of the arbitration proceeding and the award, including but not limited to
the hearing, except as may be necessary to prepare for or conduct the arbitration hearing on the merits, or except as may be necessary
in connection with a court application for a preliminary remedy, a judicial challenge to an award or its enforcement, or unless otherwise
required by law or judicial decision.
8. General
Provisions.
8.1 Notices.
Any notices provided must be in writing and will be deemed effective upon the earlier of personal delivery (including personal delivery
by email) or the next day after sending by overnight carrier, to the Company at its primary office location and to Executive at the address
as listed on the Company payroll.
8.2 Severability.
Whenever possible, each provision of this Agreement will be interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in
any jurisdiction, such invalidity, illegality or unenforceability will not affect any other provision or any other jurisdiction, but this
Agreement will be reformed, construed and enforced in such jurisdiction to the extent possible in keeping with the intent of the parties.
8.3 Waiver.
Any waiver of any breach of any provisions of this Agreement must be in writing to be effective, and it shall not thereby be deemed to
have waived any preceding or succeeding breach of the same or any other provision of this Agreement.
8.4 Complete
Agreement. This Agreement, together with the Confidentiality Agreement, constitutes the entire agreement between Executive
and the Company with regard to this subject matter and is the complete, final, and exclusive embodiment of the Parties' agreement with
regard to this subject matter. This Agreement is entered into without reliance on any promise or representation, written or oral, other
than those expressly contained herein, and it supersedes any other such promises, warranties or representations. It is entered into without
reliance on any promise or representation other than those expressly contained herein, and it cannot be modified or amended except in
a writing signed by a duly authorized officer of the Company or member of the Board and Executive.
8.5 Counterparts.
This Agreement may be executed in separate counterparts, any one of which need not contain signatures of more than one party, but all
of which taken together will constitute one and the same Agreement.
8.6 Headings.
The headings of the paragraphs hereof are inserted for convenience only and shall not be deemed to constitute a part hereof nor to affect
the meaning thereof.
8.7 Successors
and Assigns. This Agreement is intended to bind and inure to the benefit of and be enforceable by Executive and the Company,
and their respective successors, assigns, heirs, executors and administrators, except that Executive may not assign any of Executive's
duties hereunder and Executive may not assign any of Executive's rights hereunder without the written consent of the Company.
8.8 Tax
Withholding and Indemnification. All payments and awards contemplated or made pursuant to this Agreement will be subject to
withholdings of applicable taxes in compliance with all relevant laws and regulations of all appropriate government authorities. Executive
acknowledges and agrees that the Company has neither made any assurances nor any guarantees concerning the tax treatment of any payments
or awards contemplated by or made pursuant to this Agreement.
8.9 Choice
of Law. All questions concerning the construction, validity and interpretation of this Agreement will be governed by the laws
of the State of New York, without regard to its conflict of laws provisions.
[Signature Page Follows]
In
Witness Whereof, the Parties have executed this Agreement on the day and year first written above.
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Company:
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Squarespace, Inc.
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By:
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/s/ Jonathan Klein
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Jonathan Klein
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Squarespace Inc. Board of Directors
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I have read and understood this Agreement and
hereby acknowledge, accept and agree to the terms as set forth above. I further acknowledge that (i) no other commitments were made
to me as part of my employment offer except as specifically set forth herein; (ii) I have received and read the mandatory arbitration
provision included in the Dispute Resolution section of this Agreement; (iii) I understand that, by signing this Agreement, each
party hereby waives, to the fullest extent permissible by applicable law, any right it may have to a trial by jury; and (iv) I understand
that all disputes, proceedings or claims relating in any way to, arising out of or concerning this Agreement or the transactions contemplated
by this Agreement must be submitted to mandatory arbitration rather than to a judge and/or jury in a court of law.
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/s/ Anthony Casalena
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Name: Anthony Casalena
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Exhibit 10.15
Squarespace, Inc.
Performance
Restricted Stock Unit Grant Notice
(2017 Equity Incentive Plan)
Squarespace, Inc.
(the “Company”), pursuant to its 2017 Equity Incentive Plan (the “Plan”), hereby
awards to Participant a Performance Restricted Stock Unit Award for the number of shares of the Company’s Common Stock (“PRSUs”)
set forth below (the “Award”). The Award is subject to all of the terms and conditions as set forth in this
notice of grant (this “Performance Restricted Stock Unit Grant Notice”), and in the Plan and the Performance
Restricted Stock Unit Award Agreement (the “Award Agreement”), both of which are attached hereto and incorporated
herein in their entirety. Capitalized terms not explicitly defined herein shall have the meanings set forth in the Plan or the Award Agreement.
In the event of any conflict between the terms in this Performance Restricted Stock Unit Grant Notice or the Award Agreement and the Plan,
the terms of the Plan shall control.
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Participant:
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Anthony Casalena
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Date of Grant:
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April 15, 2021
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Total Number of PRSUs Granted:
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2,750,000
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Vesting Criteria:
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The PRSUs will vest (if at all) based upon
the achievement of the applicable service-based and performance-based conditions set forth in the Award Agreement (including Exhibit A
attached thereto). The actual number of PRSUs that vest, if any, may be lower than the Total Number of PRSUs Granted set forth above
depending on the extent to which the applicable vesting criteria are satisfied.
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Issuance Schedule:
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Subject to any Capitalization Adjustment,
one share of Common Stock (or its cash equivalent, at the discretion of the Company) will be issued for each Restricted Stock Unit that
vests at the time set forth in Section 6 of the Award Agreement.
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Additional Terms/Acknowledgements:
Participant acknowledges receipt of, and understands and agrees to, this Performance Restricted Stock Unit Grant Notice, the
Award Agreement and the Plan. Participant further acknowledges that as of the Date of Grant, this Performance Restricted Stock Unit Grant
Notice, the Award Agreement and the Plan set forth the entire understanding between Participant and the Company regarding the acquisition
of the Common Stock pursuant to the Award specified above and supersede all prior oral and written agreements on the terms of the Award,
with the exception of any compensation recovery policy that is adopted by the Company or is otherwise required by applicable law.
By accepting the Award, Participant acknowledges
having received and read this Performance Restricted Stock Unit Grant Notice, the Award Agreement and the Plan and agrees to all of the
terms and conditions set forth in these documents. Participant consents to receive the Plan and other related documents by electronic
delivery and to participate in the Plan through an on-line or electronic system maintained by the Company or a third-party designated
by the Company.
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Squarespace, Inc.
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Participant
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By:
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/s/ Jonathan Klein
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/s/ Anthony Casalena
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Signature
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Signature
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Title:
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Squarespace, Inc. Board of Directors
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Date:
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April 15, 2021
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Date:
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April 15, 2021
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Attachments:
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Award Agreement and Vesting Exhibit
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Attachment
I
Squarespace, Inc.
2017
Equity Incentive Plan
Performance Restricted Stock Unit Award Agreement
Pursuant
to the Performance Restricted Stock Unit Grant Notice (the “Grant Notice”) and this Performance Restricted
Stock Unit Award Agreement and Exhibit A hereto (the “Agreement”), Squarespace, Inc. (the “Company”)
has awarded you (“Participant”) a Performance Restricted Stock Unit Award (the “Award”)
pursuant to the Company’s 2017 Equity Incentive Plan (as amended from time to time, the “Plan”) for the
total number of PRSUs indicated in the Grant Notice. Capitalized terms not explicitly defined in this Agreement or the Grant Notice shall
have the same meanings given to them in the Plan. The terms of your Award, in addition to those set forth in the Grant Notice, are as
follows.
1. Grant
of the Award. This Award represents the right to be issued on a future date one (1) share of Common Stock for each
PRSU that vests on the applicable vesting date(s) (subject to any adjustment under Section 3 below) as indicated in the Grant
Notice. As of the Date of Grant, the Company will credit to a bookkeeping account maintained by the Company for your benefit (the “Account”)
the number of shares of Common Stock subject to the Award. Notwithstanding the foregoing, the Company reserves the right to issue you
the cash equivalent of Common Stock, in part or in full satisfaction of the delivery of Common Stock in connection with the vesting of
the Restricted Stock Units, and, to the extent applicable, references in this Agreement and the Grant Notice to Common Stock issuable
in connection with your Restricted Stock Units will include the potential issuance of its cash equivalent pursuant to such right. This
Award was granted in consideration of your services to the Company.
2. Vesting.
Subject to the limitations contained herein, your Award will vest, if at all, in accordance with the vesting schedule set forth on Exhibit A
hereto.
3. Number
of Shares. The number of PRSUs subject to your Award may be adjusted from time to time for Capitalization Adjustments,
as provided in the Plan. Any additional PRSUs, shares, cash or other property that becomes subject to the Award pursuant to this Section 3,
if any, shall be subject, in a manner determined by the Board, to the same forfeiture restrictions, restrictions on transferability, and
time and manner of delivery as applicable to the other PRSUs and shares covered by your Award. Notwithstanding the provisions of this
Section 3, no fractional shares or rights for fractional shares of Common Stock shall be created pursuant to this Section 3.
Any fraction of a share will be rounded down to the nearest whole share.
4. Securities
Law Compliance. You may not be issued any Common Stock under the Award unless the shares of Common Stock underlying
the PRSUs are either (i) then registered under the Securities Act, or (ii) the Company has determined that such issuance would
be exempt from the registration requirements of the Securities Act. Your Award must also comply with other applicable laws and regulations
governing the Award, and you shall not receive such Common Stock if the Company determines that such receipt would not be in material
compliance with such laws and regulations.
5. Transfer
Restrictions. Prior to the time that shares of Common Stock have been delivered to you, you may not transfer, pledge,
sell or otherwise dispose of this Award or the shares issuable in respect of your Award. For example, you may not use shares that may
be issued in respect of your PRSUs as security for a loan. The restrictions on transfer set forth herein will lapse upon delivery to you
of shares in respect of your vested PRSUs. Notwithstanding the foregoing, your Award is transferable by will and by the laws of descent
and distribution.
6. Date
of Issuance. Any shares of Common Stock in respect of the PRSUs that become vested in accordance with this Agreement
and Exhibit A hereto will be delivered to you on or as soon as practicable after the date on which such shares become vested,
but in no event later than March 15 of the year following the year in which such vesting occurs. The form of delivery (e.g.,
a stock certificate or electronic entry evidencing such shares) shall be determined by the Company.
7. Dividends.
You shall receive no benefit or adjustment to the PRSUs with respect to any cash dividend, stock dividend or other distribution that does
not result from a Capitalization Adjustment; provided, however, that this sentence will not apply with respect to any shares of Common
Stock that are issued to you following vesting of the PRSUs in accordance with Section 6.
8. Execution
of Documents. You hereby acknowledge and agree that the manner selected by the Company by which you indicate your consent
to your Grant Notice is also deemed to be your execution of your Grant Notice and of this Agreement. You further agree that such manner
of indicating consent may be relied upon as your signature for establishing your execution of any documents to be executed in the future
in connection with your Award.
9. Award
Not a Service Contract.
(a) Nothing
in this Agreement (including, but not limited to, the vesting of your Award or the issuance of the shares in respect of your Award), the
Plan or any covenant of good faith and fair dealing that may be found implicit in this Agreement or the Plan shall: (i) confer upon
you any right to continue in the employ or service of, or affiliation with, the Company or an Affiliate; (ii) constitute any promise
or commitment by the Company or an Affiliate regarding the fact or nature of future positions, future work assignments, future compensation
or any other term or condition of employment or affiliation; (iii) confer any right or benefit under this Agreement or the Plan unless
such right or benefit has specifically accrued under the terms of this Agreement or Plan; or (iv) deprive the Company of the right
to terminate you at will and without regard to any future vesting opportunity that you may have.
(b) By
accepting this Award, you acknowledge and agree that you continue as an employee, director or consultant at the will of the Company and
its Affiliates, as applicable (not through the act of being hired, being granted this Award or any other award or benefit) and that the
Company has the right to reorganize, sell, spin-out or otherwise restructure one or more of its businesses or Affiliates at any time or
from time to time, as it deems appropriate (a “reorganization”). You acknowledge and agree that such a reorganization
could result in the termination of your Continuous Service, or the termination of Affiliate status of your employer and the loss of benefits
available to you under this Agreement, including but not limited to, the termination of the right to continue vesting in the Award. You
further acknowledge and agree that this Agreement, the Plan, the transactions contemplated hereunder and the vesting schedule set forth
herein or any covenant of good faith and fair dealing that may be found implicit in any of them do not constitute an express or implied
promise of continued engagement as an employee or consultant for the term of this Agreement, for any period, or at all, and shall not
interfere in any way with the Company’s right to terminate your Continuous Service at any time, with or without your cause or notice,
or to conduct a reorganization.
10. Withholding
Obligation.
(a) The
Company may, in its sole discretion, satisfy any federal, state, local or foreign tax withholding obligation relating to this Award by
any of the following means or by a combination of such means (the “Withholding Obligation”): (i) causing
you to tender a cash payment; (ii) withholding shares of Common Stock from the shares of Common Stock issued or otherwise issuable
to you in connection with the Award; provided, that the number of shares of Common Stock which may be so withheld or surrendered shall
be limited to the number of shares of Common Stock which have a Fair Market Value on the date of withholding in such amount that will
not cause adverse accounting consequences for the Company and its Affiliates and is permitted under applicable withholding rules promulgated
by the Internal Revenue Service or another governmental entity; (iii) withholding cash from an Award settled in cash; (iv) withholding
payment from any amounts otherwise payable to you; and/or (v) permitting or requiring you to enter into a “same day sale”
commitment, if applicable, with a broker-dealer that is a member of the Financial Industry Regulatory Authority (a “FINRA
Dealer”), pursuant to this authorization and without further consent, whereby you irrevocably elect to sell a portion of
the shares to be delivered in connection with your Restricted Stock Units to satisfy the Withholding Obligation and whereby the FINRA
Dealer irrevocably commits to forward the proceeds necessary to satisfy the Withholding Obligation directly to the Company and/or its
Affiliates. Unless the Withholding Obligation is satisfied, the Company shall have no obligation to deliver to you any Common Stock or
any other consideration pursuant to this Award.
(b) In
the event it is determined after the delivery of Common Stock to you that the amount of the Withholding Obligation was greater than the
amount withheld by the Company, you agree to indemnify and hold the Company harmless from any failure by the Company to withhold the proper
amount.
11. Tax
Consequences. The Company has no duty or obligation to minimize the tax consequences to you of this Award and shall
not be liable to you for any adverse tax consequences to you arising in connection with this Award. You are hereby advised to consult
with your own personal tax, financial and/or legal advisors regarding the tax consequences of this Award and by signing the Grant Notice,
you have agreed that you have done so or knowingly and voluntarily declined to do so. You understand that you (and not the Company) shall
be responsible for your own tax liability that may arise as a result of this investment or the transactions contemplated by this Agreement.
12. Unsecured
Obligation. Your Award is unfunded and you shall be considered an unsecured creditor of the Company with respect to
the Company’s obligation, if any, to issue shares or other property pursuant to this Agreement. You shall not have voting or any
other rights as a stockholder of the Company with respect to the shares to be issued pursuant to this Agreement until such shares are
issued to you pursuant to Section 6 of this Agreement. Upon such issuance, you will obtain all applicable rights as a stockholder
of the Company with respect to such shares. Nothing contained in this Agreement, and no action taken pursuant to its provisions, shall
create or be construed to create a trust of any kind or a fiduciary relationship between you and the Company or any other person.
13. Notice.
All notices, requests, demands, claims and other communications with respect to this Award shall be in writing (including electronically)
and shall be deemed given if delivered by certified or registered mail (first class postage prepaid), guaranteed overnight delivery or
email transmission, to the following address (or to such other addresses which the Company shall designate in writing to you from time
to time):
Squarespace, Inc.
225 Varick Street, 12th Floor
New York, NY 10014
Attention: Legal Department
Email: legal@squarespace.com
14. Headings.
The headings of the Sections in this Agreement are inserted for convenience only and shall not be deemed to constitute a part of this
Agreement or to affect the meaning of this Agreement.
15. Miscellaneous.
(a) The
rights and obligations of the Company under your Award shall be transferable by the Company to any one or more persons or entities, and
all covenants and agreements hereunder shall inure to the benefit of, and be enforceable by, the Company’s successors and assigns.
(b) You
agree upon request to execute any further documents or instruments necessary or desirable in the sole determination of the Company to
carry out the purposes or intent of your Award.
(c) You
acknowledge and agree that you have reviewed your Award in its entirety, have had an opportunity to obtain the advice of counsel prior
to executing and accepting your Award and fully understand all provisions of your Award.
(d) This
Agreement shall be subject to all applicable laws, rules, and regulations, and to such approvals by any governmental agencies or national
securities exchanges as may be required.
(e) All
obligations of the Company under the Plan and this Agreement shall be binding on any successor to the Company, whether the existence of
such successor is the result of a direct or indirect purchase, merger, consolidation, or otherwise, of all or substantially all of the
business and/or assets of the Company.
16. Governing
Plan Document. Your Award is subject to all the provisions of the Plan, the provisions of which are hereby made a part
of your Award, and is further subject to all interpretations, amendments, rules and regulations which may from time to time be promulgated
and adopted pursuant to the Plan. Your Award (and any compensation paid or shares issued under your Award) is subject to recoupment in
accordance with The Dodd–Frank Wall Street Reform and Consumer Protection Act and any implementing regulations thereunder, any clawback
policy adopted by the Company and any compensation recovery policy otherwise required by applicable law, in each case whether implemented
before, on or after the Date of Grant. No recovery of compensation under such a clawback policy will be an event giving rise to a right
to voluntarily terminate employment upon a resignation for “good reason,” or for a “constructive termination”
or any similar term under any plan of or agreement with the Company.
17. Effect
on Other Employee Benefit Plans. The value of the Award subject to this Agreement shall not be included as compensation,
earnings, salaries, or other similar terms used when calculating benefits under any employee benefit plan (other than the Plan) sponsored
by the Company or any Affiliate except as such plan otherwise expressly provides. The Company expressly reserves its rights to amend,
modify, or terminate any or all of the employee benefit plans of the Company or any Affiliate.
18. Severability.
If all or any part of this Agreement or the Plan is declared by any court or governmental authority to be unlawful or invalid, such unlawfulness
or invalidity shall not invalidate any portion of this Agreement or the Plan not declared to be unlawful or invalid. Any Section of
this Agreement (or part of such a Section) so declared to be unlawful or invalid shall, if possible, be construed in a manner which will
give effect to the terms of such Section or part of a Section to the fullest extent possible while remaining lawful and valid.
19. Other
Documents. You hereby acknowledge receipt of and the right to receive a document providing the information required
by Rule 428(b)(1) promulgated under the Securities Act. In addition, you acknowledge receipt of the Company’s policy permitting
certain individuals to sell shares only during certain “window” periods and the Company’s insider trading policy, in
effect from time to time.
20. Amendment.
This Agreement may not be modified, amended or terminated except by an instrument in writing, signed by you and by a duly authorized representative
of the Company. Notwithstanding the foregoing, this Agreement may be amended solely by the Board by a writing which specifically states
that it is amending this Agreement, so long as a copy of such amendment is delivered to you, and provided that, except as otherwise expressly
provided in the Plan, no such amendment materially adversely affecting your rights hereunder may be made without your written consent.
Without limiting the foregoing, the Board reserves the right to change, by written notice to you, the provisions of this Agreement in
any way it may deem necessary or advisable to carry out the purpose of the Award as a result of any change in applicable laws or regulations
or any future law, regulation, ruling, or judicial decision, provided that any such change shall be applicable only to rights relating
to that portion of the Award which is then subject to restrictions as provided herein.
21. Compliance
with Section 409A of the Code. This Award is intended to be exempt from the application of Section 409A of
the Code, including but not limited to by reason of complying with the “short-term deferral” rule set forth in Treasury
Regulation Section 1.409A- 1(b)(4) and any ambiguities herein shall be interpreted accordingly. If it is determined that the
Award or any other compensation or benefit you receive is deferred compensation subject to Section 409A and you are a “Specified
Employee” (within the meaning set forth in Section 409A(a)(2)(B)(i) of the Code) as of the date of your “Separation
from Service” (as defined in Section 409A), then, to the extent necessary to avoid accelerated taxation or any tax penalties,
the issuance of any shares or the payment of any such compensation or benefit that would otherwise be made upon the date of your Separation
from Service or within the first six (6) months thereafter will not be made on the originally scheduled date(s) and will instead
be issued in a lump sum on the date that is six (6) months and one day after the date of the Separation from Service. Each installment
of shares that vests is intended to constitute a “separate payment” for purposes of Treasury Regulation Section 1.409A-2(b)(2).
* * * * *
This Performance Restricted
Stock Unit Award Agreement shall be deemed to be signed by the Company and the Participant upon the signing by the Participant of the
Performance Restricted Stock Unit Grant Notice to which it is attached.
EXHIBIT A
VESTING CRITERIA
1. Defined
Terms. Capitalized terms not explicitly defined in this Exhibit A shall have the meanings set forth in the
Plan, the Grant Notice or the Award Agreement, as applicable.
2. Performance
Criteria.
(a) The
PRSUs will become eligible to vest subject to the achievement of the applicable Common Stock Price Targets set forth in the
following table during the period (i) beginning on the date immediately preceding the date upon which the registration
statement on Form S-1 filed by the Company is declared effective by the U.S. Securities and Exchange Commission and
(ii) ending on the fifth (5th) anniversary of the Date of Grant (the “Performance Period”).
Each PRSU that becomes eligible to vest in accordance with this Section 2 is referred to as a “Performance-Vested
PRSU”.
Common Stock Price
Target
|
Number of PRSUs That Are
Performance-Vested
PRSUs
|
|
$105.00
|
275,000
|
|
$140.00
|
550,000
|
|
$175.00
|
825,000
|
|
$210.00
|
1,100,000
|
|
$245.00
|
1,375,000
|
|
$280.00
|
1,650,000
|
|
$315.00
|
1,925,000
|
|
$350.00
|
2,200,000
|
|
$385.00
|
2,475,000
|
|
$420.00
|
2,750,000
|
(b) For
purposes of this Section 2, a Common Stock Price Target will be deemed to be achieved on the date that the average closing price
of a share of Common Stock as quoted on the New York Stock Exchange (or such other exchange on which the Common Stock is listed if not
listed on the New York Stock Exchange) during the trading days contained within any consecutive 30 calendar day period prior to the end
of the Performance Period (the “Average Closing Price”) equals or exceeds the applicable Common Stock Price Target.
(c) If
the Average Closing Price does not equal or exceed $105.00 at any time prior to the end of the Performance Period, then none of the PRSUs
will become eligible to vest and the PRSUs will be forfeited in their entirety as of the end of the Performance Period without any payment
or other consideration to Participant in respect thereof.
(d) Except
as otherwise set forth in this Exhibit A, the PRSUs will only become eligible to vest if the applicable Common Stock Price
Target has been achieved and no linear interpolation will be applied for achievement of Common Stock Price Targets between the amounts
listed in the table above.
3. Service
Criteria; Vested PRSUs.
(a) On
each of the first four anniversaries of the Date of Grant (each, a “Service Vesting Date”), subject to Participant’s
continued employment by the Company, except as otherwise provided in Section 4 or 5 hereof, Participant will satisfy the service-based
vesting condition with respect to twenty-five percent (25%) of the PRSUs subject to this Award. The PRSUs that become vested as of each Service
Vesting Date are referred to as “Service-Vested PRSUs”. PRSUs that are both Performance-Vested PRSUs and Service Vested
PRSUs are referred to as “Vested PRSUs”.
(b) Any
PRSUs that are not Performance-Vested PRSUs as of the last Service Vesting Date will become Vested PRSUs on the date prior to the end
of the Performance Period that the applicable Common Stock Price Target is achieved, subject to Participant’s continued employment
by the Company on the date the Common Stock Price Target is achieved. Any PRSUs that are not Performance-Vested PRSUs prior to the expiration
of the Performance Period will immediately be forfeited as of the date immediately following the expiration of the Performance Period
without any payment or other consideration to Participant in respect thereof.
4. Termination
of Employment.
(a) If
Participant’s employment is terminated while any PRSUs are outstanding by the Company for Cause, then all PRSUs (whether Performance-Vested
PRSUs or Service-Vested PRSUs) that are then outstanding will immediately be forfeited without any payment or other consideration to Participant
in respect thereof.
(b) If
Participant’s employment is terminated while any PRSUs are outstanding by Participant without Good Reason, then all PRSUs that are
then not Vested PRSUs will be immediately forfeited without any payment or other consideration to Participant in respect therefor.
(c) If
Participant’s employment terminates while any PRSUs are outstanding as a result of Participant’s death or Disability, then
(i) all outstanding Performance-Vested PRSUs will immediately become Vested PRSUs and (ii) all other outstanding PRSUs that
are not Performance-Vested PRSUs will immediately be forfeited without any payment or other consideration to Participant in respect thereof.
(d) If
Participant’s employment is terminated while any PRSUs are outstanding either by the Company without Cause or by Participant with
Good Reason, then (i) any then-outstanding Performance-Vested PRSUs will immediately become Vested PRSUs and (ii) all other
outstanding PRSUs that are not Performance-Vested PRSUs will immediately be forfeited without any payment or other consideration to Participant
in respect thereof.
(e) For
purposes of this Exhibit A, the following terms have the respective meanings set forth below:
(i) “Cause”
means (a) Participant’s unauthorized use or disclosure of the Company's confidential information or trade secrets, which use
or disclosure causes material harm to the Company; (b) Participant’s material breach of any written agreement between Participant
and the Company, including, without limitation, the material breach of any applicable non-competition or non-solicitation obligations;
(c) Participant’s failure to comply with the Company's material written policies or rules, which failure causes material harm
to the Company; (d) Participant’s conviction of, or plea of "guilty" or "no contest" to, a felony or any
crime involving fraud, dishonesty, misappropriation or moral turpitude under the laws of the United States, any State or other jurisdiction;
(e) Participant’s willful and continued failure to substantially perform Participant’s material duties to the Company;
or (f) Participant’s gross negligence or willful misconduct, in either case which causes material harm to the Company. In order
for the termination of Participant’s employment to constitute a termination for "Cause" pursuant to clause (b) and/or
clause (e), the Company must first provide Participant with written notice of the acts or omissions constituting the grounds for "Cause"
and allow Participant 30 days in which to cure such condition, and only if such condition has not been cured after the conclusion of such
30-day period shall Cause be deemed to have occurred.
(ii) “Disability”
means Participant’s inability to perform the essential functions of Participant’s position, even with reasonable accommodation,
as a result of a determinable physical or mental impairment that has or could reasonably be expected to result in death or to last for
at least 90 consecutive days or for at least 120 non-consecutive days in any one-year period.
(iii) “Good
Reason” means the occurrence of one of the following without Participant’s express written consent: (a) a material
reduction in Participant’s duties (including responsibilities and/or authorities), provided, however, that such a change (including
a change in title) shall not be deemed a "material reduction" in and of itself unless Participant’s new duties are materially
reduced from the prior duties; or (b) a change in the geographic location at which Participant must perform services to a facility
or location of 35 miles or more from Participant’s then current office location. Good Reason shall not exist unless Participant
(i) provides written notice to the Board of the purported grounds for the Good Reason within 90 days of its initial existence,
(ii) the Company fails to materially cure the condition within 30 days following the date of the Company's receipt of such written
notice and (iii) Participant terminates employment with 10 days after the expiration of the cure period.
5. Change
in Control.
(a) If
a Change in Control occurs while any PRSUs are outstanding, then the per-share value of a share of Common Stock as of the consummation
of such Change in Control, as set forth in the applicable transaction document or as otherwise determined by the Board in good faith if
not set forth therein (as applicable, the “Per Share Price”) shall be used to determine the achievement of the Common
Stock Price Targets; provided, that, linear interpolation will be applied if the Per Share Price is between the Common Stock Price targets
listed in Section 2(a).
(b) Any
PRSUs that were Performance-Vested PRSUs immediately prior to the Change in Control, and any PRSUs that become Performance-Vested PRSUs
as a result of the Change in Control, shall remain subject to the service vesting criteria set forth in Section 3; provided, that,
any such Performance-Vested PRSUs shall become Vested PRSUs on or after the consummation of a Change in Control either (i) due to
Participant’s death or Disability, (ii) by the Company without Cause or (iii) by Participant for Good Reason. Upon a Change
in Control, all PRSUs that have not become Performance-Vested PRSUs will immediately be forfeited without any payment or other consideration
to Participant in respect thereof.
[End of Exhibit A]
Exhibit 10.16
Execution Version
AMENDED AND
RESTATED CREDIT AGREEMENT
dated as of December 11, 2020
among
SQUARESPACE, INC.,
as the Borrower,
The Several Lenders
from Time to Time Parties Hereto,
JPMORGAN CHASE BANK, N.A.,
as the Administrative Agent, the Collateral Agent, the Letter of Credit Issuer and a Lender,
JPMORGAN CHASE BANK, N.A.,
SILICON VALLEY
BANK,
CITIZENS
BANK, N.A. and
FIFTH THIRD
BANK, NATIONAL ASSOCIATION,
as Joint
Lead Arrangers and Bookrunners,
SILICON VALLEY
BANK and
CITIZENS
BANK, N.A.,
as Co-Syndication Agents
and
ROYAL BANK
OF CANADA and
CAPITAL ONE,
NATIONAL ASSOCIATION,
as Co-Documentation
Agents
TABLE OF
CONTENTS
|
|
|
|
Page
|
|
|
|
|
|
|
Section 1.
|
Definitions
|
|
1
|
|
|
|
|
|
|
1.1
|
Defined Terms
|
|
1
|
|
1.2
|
Other Interpretive Provisions
|
|
60
|
|
1.3
|
Accounting Terms
|
|
60
|
|
1.4
|
Rounding
|
|
61
|
|
1.5
|
References to Agreements Laws, Etc.
|
|
61
|
|
1.6
|
Exchange Rates
|
|
61
|
|
1.7
|
Interest Rates; LIBOR Notification
|
|
61
|
|
1.8
|
Times of Day
|
|
62
|
|
1.9
|
Timing of Payment or Performance
|
|
62
|
|
1.10
|
Certifications
|
|
62
|
|
1.11
|
Compliance with Certain Sections
|
|
62
|
|
1.12
|
Pro Forma and Other Calculations
|
|
62
|
|
1.13
|
Divisions
|
|
64
|
|
|
|
|
|
|
|
|
|
|
|
Section 2.
|
Amount and Terms of Credit
|
|
65
|
|
|
|
|
|
|
2.1
|
Commitments
|
|
65
|
|
2.2
|
Minimum Amount of Each Borrowing; Maximum Number of Borrowings
|
|
65
|
|
2.3
|
Notice of Borrowing
|
|
65
|
|
2.4
|
Disbursement of Funds
|
|
66
|
|
2.5
|
Repayment of Loans; Evidence of Debt
|
|
67
|
|
2.6
|
Conversions and Continuations
|
|
68
|
|
2.7
|
Pro Rata Borrowings
|
|
69
|
|
2.8
|
Interest
|
|
69
|
|
2.9
|
Interest Periods
|
|
69
|
|
2.10
|
Increased Costs, Illegality, Alternate Rate of Interest, Etc.
|
|
70
|
|
2.11
|
Compensation
|
|
72
|
|
2.12
|
Change of Lending Office
|
|
72
|
|
2.13
|
Notice of Certain Costs
|
|
72
|
|
2.14
|
Incremental Facilities
|
|
73
|
|
2.15
|
Permitted Debt Exchanges
|
|
77
|
|
2.16
|
Defaulting Lenders
|
|
78
|
|
|
|
|
|
|
Section 3.
|
Letters of Credit
|
|
79
|
|
|
|
|
|
|
3.1
|
Letters of Credit
|
|
79
|
|
3.2
|
Letter of Credit Requests
|
|
81
|
|
3.3
|
Letter of Credit Participations
|
|
82
|
|
3.4
|
Agreement to Repay Letter of Credit Drawings
|
|
83
|
|
3.5
|
Increased Costs
|
|
85
|
|
3.6
|
New or Successor Letter of Credit Issuer
|
|
85
|
|
3.7
|
Role of Letter of Credit Issuer
|
|
86
|
|
3.8
|
Cash Collateral
|
|
87
|
|
3.9
|
Applicability of ISP and UCP
|
|
87
|
|
3.10
|
Conflict with Issuer Documents
|
|
87
|
|
3.11
|
Letters of Credit Issued for Restricted Subsidiaries
|
|
88
|
|
3.12
|
Provisions Related to Extended Revolving Credit Commitments
|
|
88
|
|
Section 4.
|
Fees
|
|
88
|
|
|
|
|
|
|
4.1
|
Fees
|
|
88
|
|
4.2
|
Voluntary Reduction of Revolving Credit Commitments
|
|
89
|
|
4.3
|
Mandatory Termination of Commitments
|
|
89
|
|
|
|
|
|
|
Section 5.
|
Payments
|
|
90
|
|
|
|
|
|
|
5.1
|
Voluntary Prepayments
|
|
90
|
|
5.2
|
Mandatory Prepayments
|
|
92
|
|
5.3
|
Method and Place of Payment
|
|
92
|
|
5.4
|
Net Payments
|
|
92
|
|
5.5
|
Computations of Interest and Fees
|
|
95
|
|
5.6
|
Limit on Rate of Interest
|
|
95
|
|
|
|
|
|
|
Section 6.
|
Conditions Precedent to Initial Borrowing
|
|
96
|
|
|
|
|
|
|
6.1
|
Credit Documents
|
|
96
|
|
6.2
|
Collateral
|
|
96
|
|
6.3
|
Legal Opinions
|
|
96
|
|
6.4
|
Closing Certificates
|
|
96
|
|
6.5
|
Authorization of Proceedings of the Borrower and the other Credit Parties; Corporate Documents
|
|
96
|
|
6.6
|
Fees
|
|
96
|
|
6.7
|
Solvency Certificate
|
|
96
|
|
6.8
|
Patriot Act
|
|
97
|
|
6.9
|
Financial Statements
|
|
97
|
|
6.10
|
No Default; Representations and Warranties
|
|
97
|
|
6.11
|
Notice of Term Loan Borrowing
|
|
97
|
|
6.12
|
Officer’s Certificate
|
|
97
|
|
6.13
|
Existing Credit Facilities
|
|
97
|
|
|
|
|
|
|
Section 7.
|
Conditions Precedent to All Credit Events
|
|
97
|
|
|
|
|
|
|
7.1
|
No Default; Representations and Warranties
|
|
97
|
|
7.2
|
Notice of Borrowing; Letter of Credit Request
|
|
97
|
|
|
|
|
|
|
Section 8.
|
Representations and Warranties
|
|
98
|
|
|
|
|
|
|
8.1
|
Corporate Status
|
|
98
|
|
8.2
|
Corporate Power and Authority
|
|
98
|
|
8.3
|
No Violation
|
|
98
|
|
8.4
|
Litigation
|
|
99
|
|
8.5
|
Margin Regulations
|
|
99
|
|
8.6
|
Governmental Approvals
|
|
99
|
|
8.7
|
Investment Company Act
|
|
99
|
|
8.8
|
True and Complete Disclosure
|
|
99
|
|
8.9
|
Financial Condition; Financial Statements
|
|
99
|
|
8.10
|
Compliance with Laws; No Default
|
|
100
|
|
8.11
|
Tax Matters
|
|
100
|
|
8.12
|
Compliance with ERISA
|
|
100
|
|
8.13
|
Subsidiaries
|
|
100
|
|
8.14
|
Intellectual Property
|
|
100
|
|
8.15
|
Environmental Laws
|
|
100
|
|
8.16
|
Properties
|
|
101
|
|
8.17
|
Solvency
|
|
101
|
|
8.18
|
Patriot Act
|
|
101
|
|
8.19
|
OFAC and FCPA
|
|
101
|
|
|
|
|
|
|
Section 9.
|
Affirmative Covenants
|
|
102
|
|
|
|
|
|
|
9.1
|
Information Covenants
|
|
102
|
|
9.2
|
Books, Records, and Inspections
|
|
104
|
|
9.3
|
Maintenance of Insurance
|
|
105
|
|
9.4
|
Payment of Taxes
|
|
105
|
|
9.5
|
Preservation of Existence; Consolidated Corporate Franchises
|
|
105
|
|
9.6
|
Compliance with Statutes, Regulations, Etc.
|
|
106
|
|
9.7
|
ERISA
|
|
106
|
|
9.8
|
Maintenance of Properties
|
|
106
|
|
9.9
|
Transactions with Affiliates
|
|
106
|
|
9.10
|
End of Fiscal Years
|
|
107
|
|
9.11
|
Additional Guarantors and Grantors
|
|
107
|
|
9.12
|
Pledge of Additional Stock and Evidence of Indebtedness
|
|
107
|
|
9.13
|
Use of Proceeds
|
|
108
|
|
9.14
|
Further Assurances
|
|
108
|
|
9.15
|
Lines of Business
|
|
109
|
|
|
|
|
|
|
Section 10.
|
Negative Covenants
|
|
109
|
|
|
|
|
|
|
10.1
|
Limitation on Indebtedness
|
|
109
|
|
10.2
|
Limitation on Liens
|
|
114
|
|
10.3
|
Limitation on Fundamental Changes
|
|
114
|
|
10.4
|
Limitation on Sale of Assets
|
|
116
|
|
10.5
|
Limitation on Restricted Payments
|
|
117
|
|
10.6
|
Limitation on Subsidiary Distributions
|
|
123
|
|
10.7
|
Consolidated Total Debt to Consolidated EBITDA Ratio
|
|
125
|
|
|
|
|
|
|
Section 11.
|
Events of Default
|
|
125
|
|
|
|
|
|
|
11.1
|
Payments
|
|
125
|
|
11.2
|
Representations, Etc.
|
|
125
|
|
11.3
|
Covenants
|
|
125
|
|
11.4
|
Default Under Other Agreements
|
|
126
|
|
11.5
|
Bankruptcy, Etc.
|
|
126
|
|
11.6
|
ERISA
|
|
127
|
|
11.7
|
Credit Documents; Guarantee
|
|
127
|
|
11.8
|
Pledge Agreement
|
|
127
|
|
11.9
|
Security Agreement
|
|
127
|
|
11.10
|
Judgments
|
|
127
|
|
11.11
|
Change of Control
|
|
127
|
|
11.12
|
Remedies Upon Event of Default
|
|
127
|
|
11.13
|
Application of Proceeds
|
|
128
|
|
11.14
|
Equity Cure
|
|
128
|
|
|
|
|
|
|
Section 12.
|
The Agents
|
|
129
|
|
|
|
|
|
|
12.1
|
Appointment
|
|
129
|
|
12.2
|
Delegation of Duties
|
|
129
|
|
12.3
|
Exculpatory Provisions
|
|
130
|
|
12.4
|
Reliance by Agents
|
|
130
|
|
12.5
|
Notice of Default
|
|
130
|
|
12.6
|
Non-Reliance on Administrative Agent, Collateral Agent, and Other Lenders
|
|
131
|
|
12.7
|
Indemnification
|
|
131
|
|
12.8
|
Agents in Their Individual Capacities
|
|
132
|
|
12.9
|
Successor Agents
|
|
132
|
|
12.10
|
Withholding Tax
|
|
133
|
|
12.11
|
Agents Under Security Documents and Guarantee
|
|
133
|
|
12.12
|
Right to Realize on Collateral and Enforce Guarantee
|
|
134
|
|
12.13
|
[Reserved]
|
|
134
|
|
12.14
|
The Administrative Agent May File Proofs of Claim
|
|
134
|
|
12.15
|
ERISA Representation of the Lenders
|
|
135
|
|
|
|
|
|
|
Section 13.
|
Miscellaneous
|
|
136
|
|
|
|
|
|
|
13.1
|
Amendments, Waivers, and Releases
|
|
136
|
|
13.2
|
Notices
|
|
139
|
|
13.3
|
No Waiver; Cumulative Remedies
|
|
139
|
|
13.4
|
Survival of Representations and Warranties
|
|
139
|
|
13.5
|
Payment of Expenses; Limitation of Liability; Indemnification
|
|
140
|
|
13.6
|
Successors and Assigns; Participations and Assignments
|
|
141
|
|
13.7
|
Replacements of Lenders Under Certain Circumstances
|
|
144
|
|
13.8
|
Adjustments; Set-off
|
|
145
|
|
13.9
|
Counterparts
|
|
146
|
|
13.10
|
Severability
|
|
146
|
|
13.11
|
Integration
|
|
146
|
|
13.12
|
GOVERNING LAW
|
|
146
|
|
13.13
|
Submission to Jurisdiction; Waivers
|
|
147
|
|
13.14
|
Acknowledgments
|
|
147
|
|
13.15
|
WAIVERS OF JURY TRIAL
|
|
148
|
|
13.16
|
Confidentiality
|
|
148
|
|
13.17
|
Direct Website Communications
|
|
149
|
|
13.18
|
USA PATRIOT Act
|
|
149
|
|
13.19
|
[Reserved]
|
|
150
|
|
13.20
|
Payments Set Aside
|
|
150
|
|
13.21
|
No Fiduciary Duty
|
|
150
|
|
13.22
|
[Reserved]
|
|
150
|
|
13.23
|
Acknowledgement Regarding Any Supported QFCs
|
|
150
|
|
|
|
|
|
|
Section 14.
|
Acknowledgement and Consent to Bail-In of Affected Financial Institutions
|
|
151
|
|
SCHEDULES
|
|
|
|
|
|
Schedule 1.1(a)
|
Mortgaged Properties
|
|
Schedule 1.1(b)
|
Commitments of Lenders and Letter of Credit Issuers
|
|
Schedule 1.1(c)
|
Existing Letters of Credit
|
|
Schedule 8.13
|
Subsidiaries
|
|
Schedule 10.1
|
Restatement Effective Date Indebtedness
|
|
Schedule 10.2
|
Restatement Effective Date Liens
|
|
Schedule 10.5
|
Restatement Effective Date Investments
|
|
Schedule 13.2
|
Notice Addresses
|
|
|
|
|
EXHIBITS
|
|
|
|
|
|
Exhibit A
|
Form of Joinder Agreement
|
|
Exhibit B
|
Form of Guarantee
|
|
Exhibit C
|
Form of Perfection Certificate
|
|
Exhibit D
|
Form of Pledge Agreement
|
|
Exhibit E
|
Form of Security Agreement
|
|
Exhibit F
|
Form of Letter of Credit Request
|
|
Exhibit G
|
Form of Credit Party Closing Certificate
|
|
Exhibit H
|
Form of Assignment and Acceptance
|
|
Exhibit I-1
|
Form of Promissory Note (Initial Term A Loans)
|
|
Exhibit I-2
|
Form of Promissory Note (Revolving Credit Loans)
|
|
Exhibit J-1
|
Form of Non-Bank Tax Certificate (For Non-U.S. Lenders That Are Not Partnerships For U.S. Federal Income Tax Purposes)
|
|
Exhibit J-2
|
Form of Non-Bank Tax Certificate (For Non-U.S. Lenders That Are Partnerships For U.S. Federal Income Tax Purposes)
|
|
Exhibit J-3
|
Form of Non-Bank Tax Certificate (For Non-U.S. Participants That Are Not Partnerships For U.S. Federal Income Tax Purposes)
|
|
Exhibit J-4
|
Form of Non-Bank Tax Certificate (For Foreign Participants That Are Partnerships For U.S. Federal Income Tax Purposes)
|
|
Exhibit K
|
Form of Conversion/Continuation Notice
|
|
Exhibit L
|
Form of Compliance Certificate
|
AMENDED
AND RESTATED CREDIT AGREEMENT
AMENDED
AND RESTATED CREDIT AGREEMENT, dated as of December 11, 2020, among SQUARESPACE, INC., a Delaware corporation (the “Borrower”),
the lending institutions from time to time parties hereto (each a “Lender” and, collectively, the “Lenders”),
and JPMORGAN CHASE BANK, N.A., as the Administrative Agent, the Collateral Agent
and a Letter of Credit Issuer (such terms and each other capitalized term used but not defined in this preamble having the meaning
provided in Section 1).
WHEREAS,
the Borrower is party to the Credit Agreement, dated as of December 12, 2019 (as in effect immediately prior to the effectiveness
of this Agreement, the “Original Credit Agreement”) with the Administrative Agent, the Collateral Agent and
the financial institutions party thereto as Lenders and as Letter of Credit Issuers;
WHEREAS,
pursuant to the Restatement Agreement (as defined below), certain Lenders agreed to, among other things (i) provide Additional
Term A Loans, (ii) extend the Initial Term A Loan Maturity Date to the date that is five years from the Restatement Effective Date,
(iii) amend the Applicable Margin applicable to Revolving Credit Loans and Initial Term A Loans and (iv) make other amendments
as set forth herein;
WHEREAS,
the proceeds of the Additional Term A Loans will be used, together with cash on hand of the Borrower, to finance the Restatement
Date Distribution and Restatement Date Transaction Expenses; and
WHEREAS,
the requisite parties to the Restatement Agreement have agreed to amend and restate the Original Credit Agreement in the form hereof
on the terms and subject to the conditions set forth in the Restatement Agreement.
NOW, THEREFORE,
the Original Credit Agreement shall be amended and restated on the Restatement Effective Date as follows:
1.1
Defined Terms. As used herein, the following terms shall have the meanings specified in this Section 1.1
unless the context otherwise requires (it being understood that defined terms in this Agreement shall include in the singular number
the plural and in the plural the singular):
“ABR”
shall mean for any day, a rate per annum equal to the greatest of (a) the Prime Rate in effect on such day, (b) the NYFRB Rate
in effect on such day plus ½ of 1% and (c) the Adjusted LIBOR Rate for a one month Interest Period on such day (or if such
day is not a Business Day, the immediately following Business Day) plus 1%; provided that for the purpose of this definition,
the Adjusted LIBOR Rate for any day shall be based on the LIBOR Screen Rate (or if the LIBOR Screen Rate is not available for such
one month Interest Period, the Interpolated Rate) at approximately 11:00 a.m. London time on such day. Any change in the ABR due
to a change in the Prime Rate, the NYFRB Rate or the Adjusted LIBOR Rate shall be effective from and including the effective date
of such change in the Prime Rate, the NYFRB Rate or the Adjusted LIBOR Rate, respectively. If the ABR is being used as an alternate
rate of interest pursuant to Section 2.10 (for the avoidance of doubt, only until the
Benchmark Replacement has been determined pursuant
to Section 2.10(b)), then the ABR shall be the greater of clauses (a) and (b) above and shall be determined without
reference to clause (c) above. For the avoidance of doubt, if the ABR as determined pursuant to the foregoing would be less than
1.00%, such rate shall be deemed to be 1.00% for purposes of this Agreement.
“ABR
Loan” shall mean each Loan bearing interest based on the ABR.
“Acquired
EBITDA” shall mean, with respect to any Acquired Entity or Business or any Converted Restricted Subsidiary (any of the
foregoing, a “Pro Forma Entity”) for any period, the amount for such period of Consolidated EBITDA of such Pro
Forma Entity, all as determined on a consolidated basis for such Pro Forma Entity in accordance with GAAP.
“Acquired
Entity or Business” shall have the meaning provided in the definition of “Consolidated EBITDA.”
“Acquired
Indebtedness” shall mean, with respect to any specified Person, (i) Indebtedness of any other Person existing at the
time such other Person is merged, consolidated, or amalgamated with or into or became a Restricted Subsidiary of such specified
Person, including Indebtedness incurred in connection with, or in contemplation of, such other Person merging, consolidating, or
amalgamating with or into or becoming a Restricted Subsidiary of such specified Person, and (ii) Indebtedness secured by a Lien
encumbering any asset acquired by such specified Person.
“Additional
Term A Lender” shall mean each Lender party to the Restatement Agreement in its capacity as an Additional Term A Lender.
“Additional
Term A Loan” shall mean an Initial Term A Loan made by the Additional Term A Lenders pursuant to the Restatement Agreement.
“Additional
Term A Commitment” shall mean, in the case of each Additional Term A Lender, the amount set forth opposite such Additional
Term A Lender’s name on Schedule I to the Restatement Agreement as such Additional Term A Lender’s “Additional
Term A Commitment.” The aggregate amount of the Additional Term A Commitments as of the Restatement Effective Date is $200,000,000.
“Adjusted
LIBOR Rate” shall mean, with respect to any Borrowing of LIBOR Loans for any Interest Period, an interest rate per annum
(rounded upwards, if necessary, to the next 1/16 of 1%) equal to (a) the LIBOR Rate for such Interest Period multiplied by (b)
the Statutory Reserve Rate.
“Adjusted
Total Revolving Credit Commitment” shall mean at any time the Total Revolving Credit Commitment less the aggregate Revolving
Credit Commitments of all Defaulting Lenders.
“Adjusted
Total Term Loan Commitment” shall mean at any time the Total Term Loan Commitment less the Term Loan Commitments of all
Defaulting Lenders.
“Administrative
Agent” shall mean JPMorgan Chase Bank, N.A., as the administrative agent for the Lenders under this Agreement and the
other Credit Documents, or any successor administrative agent pursuant to Section 12.9.
“Administrative
Agent’s Office” shall mean the Administrative Agent’s address and, as appropriate, account as set forth on
Schedule 13.2 or such other address or account as the Administrative Agent may from time to time notify the Borrower and
the Lenders.
“Administrative
Questionnaire” shall have the meaning provided in Section 13.6(b)(ii)(D).
“Affected
Financial Institution” shall mean (a) any EEA Financial Institution or (b) any UK Financial Institution.
“Affiliate”
shall mean, with respect to any Person, any other Person directly or indirectly controlling, controlled by, or under direct or
indirect common control with such Person. A Person shall be deemed to control another Person if such Person possesses, directly
or indirectly, the power to direct or cause the direction of the management and policies of such other Person, whether through
the ownership of voting securities, by contract or otherwise.
“Agent
Parties” shall have the meaning provided in Section 13.17(b).
“Agents”
shall mean the Administrative Agent, the Collateral Agent, each Joint Lead Arranger and Bookrunner, the Co-Syndication Agents and
the Co-Documentation Agents.
“Agreement”
shall mean this Amended and Restated Credit Agreement, as the same may be amended, restated, amended and restated, extended, supplemented
or otherwise modified from time to time.
“Applicable
Margin” shall mean a percentage per annum equal to:
(a) from
the Restatement Effective Date until delivery of financial statements and a related Compliance Certificate for the fiscal quarter
commencing on or after the Closing Date ending December 31, 2020 pursuant to Section 9.1, (1) for LIBOR Loans that
are Revolving Credit Loans or Initial Term A Loans, 2.00 %, (2) for ABR Loans that are Revolving Credit Loans or Initial Term A
Loans, 1.00%, and (3) for Letter of Credit Fees, 2.00 % per annum; and
(b) thereafter,
in connection with Initial Term A Loans, Revolving Credit Loans and Letter of Credit Fees, the percentages per annum set forth
in the table below, based upon the Consolidated Total Debt to Consolidated EBITDA Ratio as set forth in the most recent Compliance
Certificate received by the Administrative Agent pursuant to Section 9.1:
|
Status
|
|
Letter of
Credit Fees
|
|
|
ABR Rate for Revolving
Credit Loans and Initial
Term A Loans
|
|
|
Adjusted LIBOR Rate for
Revolving Credit Loans
and Initial Term A Loans
|
|
|
Level I Status
|
|
|
2.25
|
%
|
|
|
1.25
|
%
|
|
|
2.25
|
%
|
|
Level II Status
|
|
|
2.00
|
%
|
|
|
1.00
|
%
|
|
|
2.00
|
%
|
|
Level III Status
|
|
|
1.75
|
%
|
|
|
0.75
|
%
|
|
|
1.75
|
%
|
|
Level IV Status
|
|
|
1.50
|
%
|
|
|
0.50
|
%
|
|
|
1.50
|
%
|
|
Level V Status
|
|
|
1.25
|
%
|
|
|
0.25
|
%
|
|
|
1.25
|
%
|
Any
increase or decrease in the Applicable Margin for Revolving Credit Loans or Initial Term A Loans resulting from a change in the
Consolidated Total Debt to Consolidated EBITDA Ratio shall become effective as of the first Business Day immediately following
the date a Compliance Certificate is delivered pursuant to Section 9.1(d).
Notwithstanding
the foregoing, (a) the Applicable Margin in respect of any Class of Extended Revolving Credit Commitments or any Extended Term
Loans or Revolving Credit Loans made pursuant to any Extended Revolving Credit Commitments shall be the applicable percentages
per annum set forth in the relevant Extension Amendment and (b) the Applicable Margin in respect of any Class of Replacement Term
Loans shall be the applicable percentages per annum set forth in the relevant agreement.
Notwithstanding
anything to the contrary contained above in this definition or elsewhere in this Agreement, if it is subsequently determined that
the Consolidated Total Debt to Consolidated EBITDA Ratio set forth in any Compliance Certificate delivered to the Administrative
Agent is inaccurate at any time and the result thereof is that the Lenders received interest or fees for any period based on an
Applicable Margin that is less than that which would have been applicable had the Consolidated Total Debt to Consolidated EBITDA
Ratio been accurately determined, then, for all purposes of this Agreement, the Applicable Margin for any day occurring within
the period covered by such Compliance Certificate shall retroactively be deemed to be the relevant percentage as based upon the
accurately determined Consolidated Total Debt to Consolidated EBITDA Ratio for such period, and any shortfall in the interest or
fees theretofore paid by the Borrower for the relevant period as a result of the miscalculation of the Consolidated Total Debt
to Consolidated EBITDA Ratio shall be deemed to be (and shall be) due and payable, at the time the interest or fees for such period
were required to be paid; provided that notwithstanding the foregoing, so long as an Event of Default described in Section
11.5 has not occurred with respect to the Borrower, such shortfall shall be due and payable within five Business Days following
the written demand thereof by the Administrative Agent and no Default or Event of Default shall be deemed to have occurred as a
result of such non-payment until the expiration of such five Business Day period. In addition, in the case of Initial Term A Loans,
at the option of the Required Initial Term A Loan Lenders, and in the case of Revolving Credit Loans and Letter of Credit Fees,
at the option of the Required Revolving Credit Lenders, at any time during which the Borrower shall have failed to deliver any
of the Section 9.1 Financials by the applicable date required under Section 9.1, then the Consolidated Total Debt
to Consolidated EBITDA Ratio shall be deemed to be Level I Status, in each case, for the purposes of determining the Applicable
Margin (but only for so long as such failure continues, after which such ratio and Status shall be determined based on the then
existing Consolidated Total Debt to Consolidated EBITDA Ratio). It is acknowledged and agreed that, except as expressly set forth
in the proviso to the first sentence of this paragraph, nothing in this definition will limit the rights of the Administrative
Agent and the Lenders under the Credit Documents, including Article VII herein.
“Approved
Foreign Bank” shall have the meaning provided in the definition of “Cash Equivalent.”
“Approved
Fund” shall mean any Fund that is administered or managed by (i) a Lender, (ii) an Affiliate of a Lender, or (iii) an
entity or an Affiliate of an entity that administers, advises or manages a Lender.
“ASC”
shall mean the Financial Accounting Standards Codification Topic.
“Asset
Sale” shall mean:
(i) the sale, conveyance,
transfer, or other disposition, whether in a single transaction or a series of related transactions, of property or assets (including
by way of a Sale Leaseback) (each a “disposition”) of the Borrower or any Restricted Subsidiary, or
(ii) the issuance or sale
of Equity Interests of any Restricted Subsidiary (other than preferred stock of Restricted Subsidiaries issued in compliance with
Section 10.1), whether in a single transaction or a series of related transactions, in each case, other than:
(a) any
disposition of Cash Equivalents or Investment Grade Securities or obsolete, worn out or surplus property or property (including
leasehold property interests) that is no longer economically practical in its business or commercially desirable to maintain or
no longer used or useful equipment in the ordinary course of business or any disposition of inventory, immaterial assets, or goods
(or other assets) in the ordinary course of business;
(b) the
disposition of all or substantially all of the assets of the Borrower in a manner permitted pursuant to Section 10.3;
(c) the
incurrence of Liens that are permitted to be incurred pursuant to Section 10.2 or the making of any Restricted Payment or
Permitted Investment that is permitted to be made, and is made, pursuant to Section 10.5;
(d) any
disposition of assets or issuance or sale of Equity Interests of any Restricted Subsidiary in any transaction or series of transactions
with an aggregate Fair Market Value of less than the greater of (a) $9,750,000 and (b) 6.50% of TTM Consolidated EBITDA at the
time of such disposition;
(e) any
disposition of property or assets or issuance of securities by (1) a Restricted Subsidiary to the Borrower or (2) by the Borrower
or a Restricted Subsidiary to another Restricted Subsidiary;
(f) to
the extent allowable under Section 1031 of the Code, or any comparable or successor provision, any exchange of like property (excluding
any boot thereon) for use in a Similar Business;
(g) any
issuance, sale or pledge of Equity Interests in, or Indebtedness, or other securities of, an Unrestricted Subsidiary;
(h) foreclosures,
condemnation, casualty or any similar action on assets (including dispositions in connection therewith);
(i) sales
of accounts receivable, or participations therein, and related assets in connection with any Receivables Facility;
(j) any
financing transaction with respect to property built or acquired by the Borrower or any Restricted Subsidiary after the Closing
Date, including Sale Leasebacks and asset securitizations permitted by this Agreement;
(k) (1)
any surrender or waiver of contractual rights or the settlement, release, or surrender of contractual rights or other litigation
claims, (2) the termination or collapse of cost sharing agreements with the Borrower or any Subsidiary and the settlement of any
crossing payments in connection therewith, or (3) the settlement, discount, write off, forgiveness, or cancellation of any Indebtedness
owing by any present or former employees, directors, officers, managers, consultants or independent contractors of the Borrower
(or any direct or indirect parent company of the Borrower) or any Subsidiary or any of their successors or assigns;
(l) the
disposition or discount of inventory, accounts receivable, or notes receivable in the ordinary course of business or the conversion
of accounts receivable to notes receivable;
(m) the
licensing, cross-licensing or sub-licensing of Intellectual Property or other general intangibles (whether pursuant to franchise
agreements or otherwise) in the ordinary course of business;
(n) the
unwinding of any Hedging Obligations or obligations in respect of Cash Management Services;
(o) sales,
transfers, and other dispositions of Investments in joint ventures to the extent required by, or made pursuant to, customary buy/sell
arrangements between the joint venture parties set forth in joint venture arrangements and similar binding arrangements;
(p) the
expiration, lapse or abandonment of Intellectual Property rights in the ordinary course of business, which in the reasonable business
judgment of the Borrower is not material to the conduct of the business of the Borrower and its Restricted Subsidiaries taken as
a whole;
(q) the
issuance of directors’ qualifying shares and shares issued to foreign nationals as required by applicable law;
(r) dispositions
of property to the extent that (1) such property is exchanged for credit against the purchase price of similar replacement property
that is promptly purchased or (2) the proceeds of such disposition are promptly applied to the purchase price of such replacement
property (which replacement property is actually promptly purchased);
(s) leases,
assignments, subleases, licenses, or sublicenses, in each case in the ordinary course of business and which do not materially interfere
with the business of the Borrower and its Restricted Subsidiaries, taken as a whole; and
(t) any
undertaking or consummation of any IPO Reorganization Transactions or any transaction related thereto or contemplated thereby.
“Asset
Sale Prepayment Event” shall mean any Asset Sale subject to the Reinvestment Period allowed in Section 10.4; provided,
further, that with respect to any Asset Sale Prepayment Event, the Borrower shall not be obligated to make any prepayment
otherwise required by Section 5.2 unless and until the aggregate amount of Net Cash Proceeds from all such Asset Sale Prepayment
Events, after giving effect to the reinvestment rights set forth herein, exceeds $13,000,000 (the “Prepayment Trigger”)
in any fiscal year of the Borrower, but then from all such Net Cash Proceeds (excluding amounts below the Prepayment Trigger).
“Assignment
and Acceptance” shall mean (i) an assignment and acceptance substantially in the form of Exhibit H, or such other
form as may be approved by the Administrative Agent and (ii) in the case of any assignment of Term Loans in connection with a Permitted
Debt Exchange conducted in accordance with Section 2.15, such form of assignment (if any) as may be agreed by the Administrative
Agent and the Borrower in accordance with Section 2.15(a).
“Assignment
Taxes” shall have the meaning provided in the definition of “Other Taxes.”
“Auction
Agent” shall mean (i) the Administrative Agent or (ii) any other financial institution or advisor employed by the Borrower
or any Subsidiary (whether or not an Affiliate of the Administrative Agent) to act as an arranger in connection with any Permitted
Debt Exchange pursuant to Section 2.15 or Dutch auction pursuant to Section 13.6(h); provided that the Borrower
shall not designate the Administrative Agent as the Auction Agent without the written consent of the Administrative Agent (it being
understood that the Administrative Agent shall be under no obligation to agree to act as the Auction Agent); provided, further,
that neither the Borrower nor any of its Subsidiaries may act as the Auction Agent.
“Authorized
Officer” shall mean, with respect to any Person, any individual holding the position of chairman of the board (if an
officer), the Chief Executive Officer, the President, the Chief Financial Officer, the Treasurer, the Controller, the Vice President-Finance,
a Senior Vice President, a Director, a Manager, the Secretary, the Assistant Secretary or any other senior officer or agent with
express authority to act on behalf of such Person designated as such by the board of directors or other managing authority of such
Person.
“Auto-Extension
Letter of Credit” shall have the meaning provided in Section 3.2(d).
“Available
Amount” shall have the meaning provided in Section 10.5(a)(4)(ii)
“Available
Commitment” shall mean an amount equal to the excess, if any, of (i) the amount of the Total Revolving Credit Commitment
over (ii) the sum of the aggregate principal amount of (a) all Revolving Credit Loans then outstanding and (b) the aggregate Letters
of Credit Outstanding at such time.
“Available
Tenor” shall mean, as of any date of determination and with respect to the then-current Benchmark, as applicable, any
tenor for such Benchmark or payment period for interest calculated with reference to such Benchmark, as applicable, that is or
may be used for determining the length of an Interest Period pursuant to this Agreement as of such date and not including, for
the avoidance of doubt, any tenor for such Benchmark that is then-removed from the definition of “Interest Period”
pursuant to clause (f) of Section 2.10.
“Bail-In
Action” shall mean the exercise of any Write-Down and Conversion Powers by the applicable Resolution Authority in respect
of any liability of an Affected Financial Institution.
“Bail-In
Legislation” shall mean (a) with respect to any EEA Member Country implementing Article 55 of Directive 2014/59/EU of
the European Parliament and of the Council of the European Union, the implementing law, regulation rule or requirement for such
EEA Member Country from time to time which is described in the EU Bail-In Legislation Schedule and (b) with respect to the United
Kingdom, Part I of the United Kingdom Banking Act 2009 (as amended from time to time) and any other law, regulation or rule applicable
in the United Kingdom relating to the resolution of unsound or failing banks, investment firms or other financial institutions
or their affiliates (other than through liquidation, administration or other insolvency proceedings).
“Bankruptcy
Code” shall have the meaning provided in Section 11.5.
“Benchmark”
shall mean, initially, the LIBOR Rate; provided that if a Benchmark Transition Event, a Term SOFR Transition Event or an
Early Opt-in Election, as applicable, and its related Benchmark Replacement Date have occurred with respect to LIBOR Rate or the
then-current Benchmark, then “Benchmark” means the applicable Benchmark Replacement to the extent that such Benchmark
Replacement has replaced such prior benchmark rate pursuant to clause (b) or clause (c) of Section 2.10.
“Benchmark
Replacement” shall mean, for any Available Tenor, the first alternative set forth in the order below that can be determined
by the Administrative Agent for the applicable Benchmark Replacement Date:
(1) the
sum of: (a) Term SOFR and (b) the related Benchmark Replacement Adjustment;
(2) the
sum of: (a) Daily Simple SOFR and (b) the related Benchmark Replacement Adjustment;
(3) the
sum of: (a) the alternate benchmark rate that has been selected by the Administrative Agent and the Borrower as the replacement
for the then-current Benchmark for the applicable Corresponding Tenor giving due consideration to (i) any selection or recommendation
of a replacement benchmark rate or the mechanism for determining such a rate by the Relevant Governmental Body or (ii) any evolving
or then-prevailing market convention for determining a benchmark rate as a replacement for the then-current Benchmark for dollar-denominated
syndicated credit facilities at such time and (b) the related Benchmark Replacement Adjustment;
provided that,
in the case of clause (1), such Unadjusted Benchmark Replacement is displayed on a screen or other information service that publishes
such rate from time to time as selected by the Administrative Agent in its reasonable discretion; provided further that,
notwithstanding anything to the contrary in this Agreement or in any other Credit Document, upon the occurrence of a Term SOFR
Transition Event, and the delivery of a Term SOFR Notice, on the applicable Benchmark Replacement Date the “Benchmark Replacement”
shall revert to and shall be deemed to be the sum of (a) Term SOFR and (b) the related Benchmark Replacement Adjustment, as set
forth in clause (1) of this definition (subject to the first proviso above).
If
the Benchmark Replacement as determined pursuant to clause (1), (2) or (3) above would be less than the Floor, the Benchmark Replacement
will be deemed to be the Floor for the purposes of this Agreement and the other Credit Documents.
“Benchmark
Replacement Adjustment” shall mean, with respect to any replacement of the then-current Benchmark with an Unadjusted
Benchmark Replacement for any applicable Interest Period and Available Tenor for any setting of such Unadjusted Benchmark Replacement:
(1) for
purposes of clauses (1) and (2) of the definition of “Benchmark Replacement,” the first alternative set forth in the
order below that can be determined by the Administrative Agent:
(a) the
spread adjustment, or method for calculating or determining such spread adjustment, (which may be a positive or negative value
or zero) as of the Reference Time such Benchmark Replacement is first set for such Interest Period that has been selected or recommended
by the Relevant Governmental Body for the replacement of such Benchmark with the applicable Unadjusted Benchmark Replacement for
the applicable Corresponding Tenor;
(b) the
spread adjustment (which may be a positive or negative value or zero) as of the Reference Time such Benchmark Replacement is first
set for such Interest Period that would apply to the fallback rate for a derivative transaction referencing the ISDA Definitions
to be effective upon an index cessation event with respect to such Benchmark for the applicable Corresponding Tenor; and
(2) for
purposes of clause (3) of the definition of “Benchmark Replacement,” the spread adjustment, or method for calculating
or determining such spread adjustment, (which may be a positive or negative value or zero) that has been selected by the Administrative
Agent and the Borrower for the applicable Corresponding Tenor giving due consideration to (i) any selection or recommendation of
a spread adjustment, or method for calculating or determining such spread adjustment, for the replacement of such Benchmark with
the applicable Unadjusted Benchmark Replacement by the Relevant Governmental Body on the applicable Benchmark Replacement Date
or (ii) any evolving or then-prevailing market convention for determining a spread adjustment, or method for calculating or determining
such spread adjustment, for the replacement of such Benchmark with the applicable Unadjusted Benchmark Replacement for dollar-denominated
syndicated credit facilities;
provided
that, in the case of clause (1) above, such adjustment is displayed on a screen or other information service that publishes such
Benchmark Replacement Adjustment from time to time as selected by the Administrative Agent in its reasonable discretion.
“Benchmark
Replacement Conforming Changes” shall mean, with respect to any Benchmark Replacement, any technical, administrative
or operational changes (including changes to the definition of “Alternate Base Rate,” the definition of “Business
Day,” the definition of “Interest Period,” timing and frequency of determining rates and making payments of interest,
timing of borrowing requests or prepayment, conversion or continuation notices, length of lookback periods, the applicability of
breakage provisions, and other technical, administrative or operational matters) that the Administrative Agent decides may be appropriate
to reflect the adoption and implementation of such Benchmark Replacement and to permit the administration thereof by the Administrative
Agent in a manner substantially consistent with market practice (or, if the Administrative Agent decides that adoption of any portion
of such market practice is not administratively feasible or if the Administrative Agent determines that no market practice for
the administration of such Benchmark Replacement exists, in such other manner of administration as the Administrative Agent decides
is reasonably necessary in connection with the administration of this Agreement and the other Credit Documents).
“Benchmark
Replacement Date” shall mean the earliest to occur of the following events with respect to the then-current Benchmark:
(1) in
the case of clause (1) or (2) of the definition of “Benchmark Transition Event,” the later of (a) the date of the public
statement or publication of information referenced therein and (b) the date on which the administrator of such Benchmark (or the
published component used in the calculation thereof) permanently or indefinitely ceases to provide all Available Tenors of such
Benchmark (or such component thereof);
(2) in
the case of clause (3) of the definition of “Benchmark Transition Event,” the date of the public statement or publication
of information referenced therein; or
(3) in
the case of a Term SOFR Transition Event, the date that is thirty (30) days after the date a Term SOFR Notice is provided to the
Lenders and the Borrower pursuant to Section 2.10(c); or
(4) in
the case of an Early Opt-in Election, the sixth (6th) Business Day after the date notice of such Early Opt-in Election is provided
to the Lenders, so long as the Administrative Agent has not received, by 5:00 p.m. (New York City time) on the fifth (5th) Business
Day after the date notice of such Early Opt-in Election is provided to the Lenders, written notice of objection to such Early Opt-in
Election from Lenders comprising the Required Lenders.
For
the avoidance of doubt, (i) if the event giving rise to the Benchmark Replacement Date occurs on the same day as, but earlier than,
the Reference Time in respect of any determination, the Benchmark Replacement Date will be deemed to have occurred prior to the
Reference Time for such determination and (ii) the “Benchmark Replacement Date” will be deemed to have occurred in
the case of clause (1) or (2) with respect to any Benchmark upon the occurrence of the applicable event or events set forth therein
with respect to all then-current Available Tenors.
“Benchmark
Transition Event” shall mean the occurrence of one or more of the following events with respect to the then-current Benchmark:
(1) a
public statement or publication of information by or on behalf of the administrator of such Benchmark (or the published component
used in the calculation thereof) announcing that such administrator has ceased or will cease to provide all Available Tenors of
such Benchmark (or such component thereof), permanently or indefinitely, provided that, at the time of such statement or
publication, there is no successor administrator that will continue to provide any Available Tenor of such Benchmark (or such component
thereof);
(2) a
public statement or publication of information by the regulatory supervisor for the administrator of such Benchmark (or the published
component used in the calculation thereof), the Federal Reserve Board, the NYFRB, an insolvency official with jurisdiction over
the administrator for such Benchmark (or such component), a resolution authority with jurisdiction over the administrator for such
Benchmark (or such component) or a court or an entity with similar insolvency or resolution authority over the administrator for
such Benchmark (or such component), which states that the administrator of such Benchmark (or such component) has ceased or will
cease to provide all Available Tenors of such Benchmark (or such component thereof) permanently or indefinitely, provided
that, at the time of such statement or publication, there is no successor administrator that will continue to provide any Available
Tenor of such Benchmark (or such component thereof); or
(3) a
public statement or publication of information by the regulatory supervisor for the administrator of such Benchmark (or the published
component used in the calculation thereof) announcing that all Available Tenors of such Benchmark (or such component thereof) are
no longer representative.
For
the avoidance of doubt, a “Benchmark Transition Event” will be deemed to have occurred with respect to any Benchmark
if a public statement or publication of information set forth above has occurred with respect to each then-current Available Tenor
of such Benchmark (or the published component used in the calculation thereof.
“Benchmark
Unavailability Period” shall mean the period (if any) (x) beginning at the time that a Benchmark Replacement Date pursuant
to clauses (1) or (2) of that definition has occurred if, at such time, no Benchmark Replacement has replaced the then-current
Benchmark for all purposes hereunder and under any Credit Document in accordance with Section 2.10 and (y) ending at the
time that a Benchmark Replacement has replaced the then-current Benchmark for all purposes hereunder and under any Credit Document
in accordance with Section 2.10.
“Beneficial
Ownership Certification” shall mean a certification regarding beneficial ownership required by the Beneficial Ownership
Regulation, in form and substance substantially the same as the form of Certification Regarding Beneficial Owners of Legal Entity
Customers published jointly, in May 2018, by the Loan Syndications and Trading Association and Securities Industry and Financial
Markets Association.
“Beneficial
Ownership Regulation” shall mean 31 C.F.R. § 1010.230.
“Benefit
Plan” shall mean any of (a) an “employee benefit plan” (as defined in ERISA) that is subject to Title I of
ERISA, (b) a “plan” as defined in and subject to Section 4975 of the Code or (c) any Person whose assets include (for
purposes of ERISA Section 3(42) or otherwise for purposes of Title I of ERISA or Section 4975 of the Code) the assets of any such
“employee benefit plan” or “plan.”
“Benefited
Lender” shall have the meaning provided in Section 13.8(a).
“BHC
Act Affiliate” of a party shall mean an “affiliate” (as such term is defined under, and interpreted in accordance
with, 12 U.S.C. 1841(k)) of such party.
“Board”
shall mean the Board of Governors of the Federal Reserve System of the United States (or any successor).
“Borrower”
shall have the meaning provided in the preamble hereto.
“Borrower
Materials” shall have the meaning provided in Section 13.17(b).
“Borrowing”
shall mean Loans of the same Class and Type, made, converted, or continued on the same date and, in the case of LIBOR Loans, as
to which a single Interest Period is in effect.
“Business
Day” shall mean any day excluding Saturday, Sunday, and any other day on which banking institutions in New York City
are authorized by law or other governmental actions to close, and, if such day relates to any interest rate settings as to a LIBOR
Loan, any fundings, disbursements, settlements, and payments in respect of any such LIBOR Loan, or any other dealings in Dollars
to be carried out pursuant to this Agreement in respect of any such LIBOR Loan, such day shall be a day on which dealings in deposits
in Dollars are conducted by and between banks in the applicable London interbank market.
“Capital
Lease” shall mean, as applied to any Person, any lease of any property (whether real, personal, or mixed) by that Person
as lessee that, in conformity with GAAP, is, or is required to be, accounted for as a capital lease or finance lease on the balance
sheet of that Person; provided that all leases of any Person that are or would be characterized as operating leases in accordance
with GAAP immediately prior to December 15, 2019 (whether or not such operating leases were in effect on such date) shall continue
to be accounted for as operating leases (and not as Capital Leases) for purposes of this Agreement regardless of any change in
GAAP following the date that would otherwise require such leases to be recharacterized as Capital Leases.
“Capital
Stock” shall mean (i) in the case of a corporation, corporate stock, (ii) in the case of an association or business entity,
any and all shares, interests, participations, rights, or other equivalents (however designated) of corporate stock, (iii) in the
case of a partnership or limited liability company, partnership or membership interests (whether general or limited), and (iv)
any other interest or participation that confers on a Person the right to receive a share of the profits and losses of, or distributions
of assets of, the issuing Person (it being understood and agreed, for the avoidance of doubt, that “cash-settled phantom
appreciation programs” in connection with employee benefits that do not require a dividend or distribution shall not constitute
Capital Stock).
“Capitalized
Lease Obligation” shall mean, at the time any determination thereof is to be made, the amount of the liability in respect
of a Capital Lease that would at such time be required to be capitalized and reflected as a liability on a balance sheet (excluding
the footnotes thereto) prepared in accordance with GAAP; provided that all obligations of any Person that are or would be
characterized as operating lease obligations in accordance with GAAP immediately prior to December 15, 2019 (whether or not such
operating lease obligations were in effect on such date) shall continue to be accounted for as operating lease obligations (and
not as Capitalized Lease Obligations) for purposes of this Agreement regardless of any change in GAAP following the date that would
otherwise require such obligations to be recharacterized as Capitalized Lease Obligations.
“Capitalized
Software Expenditures” shall mean, for any period, the aggregate of all expenditures (whether paid in cash or accrued
as liabilities) by the Borrower and its Restricted Subsidiaries during such period in respect of purchased software or internally
developed software and software enhancements that, in conformity with GAAP, are or are required to be reflected as capitalized
costs on the consolidated balance sheet of the Borrower and its Restricted Subsidiaries.
“Cash
Collateralize” shall mean to pledge and deposit with or deliver to the Administrative Agent, for the benefit of one or
more of the Letter of Credit Issuer or the Lenders, as collateral for L/C Obligations or obligations of the Revolving Credit Lenders
to fund participations in respect of L/C Obligations, cash or deposit account balances or, if the Administrative Agent and the
Letter of Credit Issuer shall agree in their sole discretion, other credit support. “Cash Collateral” shall
have a meaning correlative to the foregoing and shall include the proceeds of such cash collateral and other credit support.
“Cash
Equivalents” shall mean:
(i) Dollars,
(ii) (a) Euro, Sterling,
Yen, Swiss Francs, Canadian Dollars, or any national currency of any Participating Member State in the European Union or (b) local
currencies held from time to time in the ordinary course of business,
(iii) securities issued
or directly and fully and unconditionally guaranteed or insured by the United States government or any country that is a member
state of the European Union or any agency or instrumentality thereof the securities of which are unconditionally guaranteed as
a full faith and credit obligation of such government with maturities of 24 months or less from the date of acquisition,
(iv) certificates of deposit,
time deposits, and eurodollar time deposits with maturities of one year or less from the date of acquisition, bankers’ acceptances
with maturities not exceeding one year, and overnight bank deposits, in each case with any commercial bank having capital and surplus
of not less than $100,000,000,
(v) repurchase obligations
for underlying securities of the types described in clauses (iii), (iv), and (ix) entered into with any financial
institution meeting the qualifications specified in clause (iv) above,
(vi) commercial paper
rated at least P-2 by Moody’s or at least A-2 by S&P and in each case maturing within 24 months after the date of creation
thereof,
(vii) marketable short-term
money market and similar securities having a rating of at least P-2 or A-2 from either Moody’s or S&P, respectively (or,
if at any time neither Moody’s nor S&P shall be rating such obligations, an equivalent rating from another nationally
recognized ratings agency) and in each case maturing within 24 months after the date of creation or acquisition thereof,
(viii) readily marketable
direct obligations issued by any state, commonwealth, or territory of the United States or any political subdivision or taxing
authority thereof having one of the two highest rating categories obtainable from either Moody’s or S&P with maturities
of 24 months or less from the date of acquisition,
(ix) Indebtedness or preferred
stock issued by Persons with a rating of “A” or higher from S&P or “A2” or higher from Moody’s
with maturities of 24 months or less from the date of acquisition,
(x) solely with respect
to any Foreign Subsidiary: (a) obligations of the national government of the country in which such Foreign Subsidiary maintains
its chief executive office and principal place of business provided such country is a member of the Organization for Economic
Cooperation and Development, in each case maturing within one year after the date of investment therein, (b) certificates of deposit
of, bankers acceptances of, or time deposits with, any commercial bank which is organized and existing under the laws of the country
in which such Foreign Subsidiary maintains its chief executive office and principal place of business provided such country
is a member of the Organization for Economic Cooperation and Development (any such bank being an “Approved Foreign Bank”),
and in each case with maturities of not more than 24 months from the date of acquisition, and (c) the equivalent of demand deposit
accounts which are maintained with an Approved Foreign Bank, in each case, customarily used by corporations for cash management
purposes in any jurisdiction outside the United States to the extent reasonably required in connection with any business conducted
by such Foreign Subsidiary organized in such jurisdiction,
(xi) in the case of investments
by any Foreign Subsidiary or investments made in a country outside the United States, Cash Equivalents shall also include investments
of the type and maturity described in clauses (i) through (ix) above of foreign obligors, which investments
have ratings, described in such clauses or equivalent ratings from comparable foreign rating agencies, and
(xii) investment funds
investing 90% of their assets in securities of the types described in clauses (i) through (ix) above.
Notwithstanding
the foregoing, Cash Equivalents shall include amounts denominated in currencies other than those set forth in clauses (i)
and (ii) above; provided that such amounts are converted into any currency listed in clauses (i) and (ii)
as promptly as practicable and in any event within ten Business Days following the receipt of such amounts.
For
the avoidance of doubt, any items identified as Cash Equivalents under this definition will be deemed to be Cash Equivalents for
all purposes under the Credit Documents regardless of the treatment of such items under GAAP.
“Cash
Management Agreement” shall mean any agreement or arrangement to provide Cash Management Services.
“Cash
Management Bank” shall mean (i) any Person that, at the time it enters into a Cash Management Agreement with the Borrower
or any Restricted Subsidiary, is an Agent or a Lender or an Affiliate of an Agent or a Lender or (ii) with respect to any Cash
Management Agreement with the Borrower or any Restricted Subsidiary entered into prior to the Closing Date, any Person that is
a Lender or an Affiliate of a Lender on the Closing Date.
“Cash
Management Services” shall mean any one or more of the following types of services or facilities: (i) commercial credit
cards, merchant card services, purchase or debit cards, including non-card e-payables services, employee credit card programs or
electronic funds transfer services, (ii) treasury management services (including controlled disbursement, overdraft automatic clearing
house fund transfer services, return items, and interstate depository network services), (iii) any other demand deposit or operating
account relationships or other cash management services, including pursuant to any Cash Management Agreements and (iv) other services
related, ancillary or complementary to the foregoing.
“Casualty
Event” shall mean, with respect to any property of any Person, any loss of or damage to, or any condemnation or other
taking by a Governmental Authority of, such property for which such Person or any of its Restricted Subsidiaries receives insurance
proceeds or proceeds of a condemnation award in respect of any equipment, fixed assets, or real property (including any improvements
thereon) to replace or repair such equipment, fixed assets, or real property; provided that with respect to any Casualty
Event, the Borrower shall not be obligated to make any prepayment otherwise required by Section 5.2 unless and until the
aggregate amount of Net Cash Proceeds from all such Casualty Events, after giving effect to the reinvestment rights set forth herein,
exceeds $13,000,000 (the “Casualty Prepayment Trigger”) in any fiscal year of the Borrower, but then from all
such Net Cash Proceeds (excluding amounts below the Casualty Prepayment Trigger).
“Casualty
Prepayment Trigger” shall have the meaning provided in the definition of “Casualty Event.”
“CFC”
shall mean a Subsidiary of the Borrower that is a “controlled foreign corporation” within the meaning of Section 957
of the Code.
“CFC
Holding Company” shall mean a Domestic Subsidiary of the Borrower substantially all of the assets of which consist of
equity or debt of one or more Foreign Subsidiaries that are CFCs.
“Change
in Law” shall mean (i) the adoption of any law, treaty, order, policy, rule, or regulation after the Closing Date, (ii)
any change in any law, treaty, order, policy, rule, or regulation or in the interpretation or application thereof by any Governmental
Authority after the Closing Date or (iii) compliance by any Lender with any guideline, request, directive, or order issued
or made after the Closing Date by any central bank or other Governmental or quasi-Governmental Authority (whether or not having
the force of law), including, for avoidance of doubt any such adoption, change or compliance in respect of (a) the Dodd-Frank Wall
Street Reform and Consumer Protection Act and all requests, rules, regulations, guidelines, or directives thereunder or issued
in connection therewith and (b) all requests, rules, guidelines, requirements, or directives promulgated by the Bank for International
Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority), or the United States or foreign
regulatory authorities pursuant to Basel III, in each case to the extent issued or becoming effective after the Closing Date shall
be deemed to have gone into effect after the Closing Date, regardless of the date of the enabling or underlying legislation or
agreements.
“Change
of Control” shall mean and be deemed to have occurred if (a) at any time prior to an IPO, the Permitted Holders shall
at any time not own, in the aggregate, directly or indirectly, beneficially and of record, at least 50% of the voting power of
the outstanding Voting Stock of the Borrower; or (b) at any time after an IPO, any Person, entity, or “group” (within
the meaning of Section 13(d) or 14(d) of the Securities Exchange Act of 1934, as amended), other than the Permitted Holders, shall
at any time have acquired direct or indirect beneficial ownership of a percentage of the voting power of the outstanding Voting
Stock of the Borrower or the IPO Entity that exceeds 40% thereof, unless, in the case of either clause (a) or (b) above, the Permitted
Holders have, at such time, the right or the ability by voting power, contract, or otherwise to elect or designate for election
at least a majority of the board of directors (or other similar governing body) of the Borrower or the IPO Entity. For the purpose
of this definition, at any time when a majority of the outstanding Voting Stock of the Borrower is directly or indirectly owned
by a Parent Entity or, if applicable, a Parent Entity acts as the manager, managing member or general partner of the Borrower,
references in this definition to the “Borrower” shall be deemed to refer to the ultimate Parent Entity that directly
or indirectly owns such Voting Stock or acts as (or, if applicable, is a Parent Entity that directly or indirectly owns a majority
of the outstanding Voting Stock of) such manager, managing member or general partner. For purposes of this definition, (i) “beneficial
ownership” shall be as defined in Rules 13(d)-3 and 13(d)-5 under the Securities Exchange Act, (ii) the phrase Person or
“group” is within the meaning of Section 13(d) or 14(d) of the Securities Exchange Act, but excluding any employee
benefit plan of such Person or “group” and its subsidiaries and any Person acting in its capacity as trustee, agent
or other fiduciary or administrator of any such plan, and (iii) a Person or group shall not be deemed to beneficially own Voting
Stock subject to a stock or asset purchase agreement, merger agreement, option agreement, warrant agreement or similar agreement
(or voting or option or similar agreement related thereto) until the consummation of the acquisition of such Voting Stock in connection
with the transactions contemplated by such agreement.
“Claims”
shall have the meaning provided in the definition of “Environmental Claims.”
“Class”
(i) when used in reference to any Loan or Borrowing, shall refer to whether such Loan, or the Loans comprising such Borrowing,
are Revolving Credit Loans, Incremental Revolving Credit Loans, Initial Term A Loans, Incremental Term Loans, Extended Term Loans
(of the same Extension Series), Replacement Term Loans, Extended Revolving Credit Loans (of the same Extension Series) and (ii)
when used in reference to any Commitment, refers to whether such Commitment is a Revolving Credit Commitment, an Incremental Revolving
Credit Commitment, an Extended Revolving Credit Commitment (of the same Extension Series), an Additional Term A Loan Commitment
or an Incremental Term Loan Commitment.
“Closing
Date” shall mean December 12, 2019.
“Closing
Date Term A Loans” shall mean all “Initial Term A Loans” outstanding under the Original Credit Agreement
immediately prior to the Restatement Effective Date.
“Co-Documentation
Agents” shall mean Royal Bank of Canada and Capital One, National Association.
“Co-Syndication
Agents” shall mean Silicon Valley Bank and Citizens Bank, N.A.
“Code”
shall mean the Internal Revenue Code of 1986, as amended from time to time.
“Collateral”
shall mean all property pledged or mortgaged or purported to be pledged or mortgaged pursuant to the Security Documents, excluding
in all events Excluded Property.
“Collateral
Agent” shall mean JPMorgan Chase Bank, N.A., as collateral agent under the Credit Documents, or any successor collateral
agent pursuant to Section 12.9.
“Commitments”
shall mean, with respect to each Lender (to the extent applicable), such Lender’s Revolving Credit Commitment, Incremental
Revolving Credit Commitment, Extended Revolving Credit Commitment, Additional Term A Loan Commitment and/or Incremental Term Loan
Commitment.
“Commodity
Exchange Act” shall mean the Commodity Exchange Act (7 U.S.C. § 1 et seq.), as amended from time to time, and
any successor statute.
“Communications”
shall have the meaning provided in Section 13.17.
“Compliance
Certificate” shall mean a certificate of a responsible financial or accounting officer of the Borrower delivered pursuant
to Section 9.1(d) for the applicable Test Period substantially in the form of Exhibit L.
“Confidential
Information” shall have the meaning provided in Section 13.16.
“Consolidated
Depreciation and Amortization Expense” shall mean with respect to any Person for any period, the total amount of depreciation
and amortization expense, including the amortization of deferred financing fees or costs, debt issuance costs, commissions, fees,
and expenses, capitalized expenditures (including Capitalized Software Expenditures), customer acquisition costs, the amortization
of original issue discount resulting from the issuance or incurrence of Indebtedness at less than par and incentive payments, conversion
costs, and contract acquisition costs of such Person and its Restricted Subsidiaries for such period on a consolidated basis and
otherwise determined in accordance with GAAP.
“Consolidated
EBITDA” shall mean, with respect to any Person and its Restricted Subsidiaries on a consolidated basis for any period,
the Consolidated Net Income of such Person and its Restricted Subsidiaries for such period:
(i) increased (without
duplication) by:
(a) provision
for Taxes based on income, revenue or profits or capital, including, without limitation, U.S. federal, state, non-U.S., franchise,
excise, value added, and similar Taxes and foreign withholding Taxes of such Person and its Restricted Subsidiaries paid or accrued
during such period, including any penalties and interest related to such Taxes or arising from any Tax examinations, in each case
to the extent the same were deducted (and not added back) in computing such Consolidated Net Income, plus
(b) Fixed
Charges of such Person and its Restricted Subsidiaries for such period (including (1) net losses on Hedging Obligations or other
derivative instruments entered into for the purpose of hedging interest rate risk and (2) costs of surety bonds in connection with
financing activities, in each case, to the extent included in Fixed Charges), together with items excluded from the definition
of “Consolidated Interest Expense” and any non-cash interest expense, in each case to the extent the same were deducted
(and not added back) in computing such Consolidated Net Income, plus
(c) Consolidated
Depreciation and Amortization Expense of such Person and its Restricted Subsidiaries for such period to the extent the same were
deducted (and not added back) in computing such Consolidated Net Income, plus
(d) any
expenses, fees, charges, or losses (other than depreciation or amortization expense) related to any Equity Offering (including
any IPO of the Borrower, an IPO Entity or any Parent Entity), Permitted Investment, Restricted Payments, acquisition, disposition,
recapitalization, or the incurrence of Indebtedness permitted to be incurred by this Agreement (including a refinancing thereof)
or the Original Credit Agreement (whether or not consummated and including any such transaction consummated prior to the Closing
Date), including (1) such fees, expenses, or charges related to the incurrence of the Loans hereunder and all Transaction Expenses
and Restatement Date Transaction Expenses, (2) such fees, expenses, or charges related to the Credit Documents and the Credit Facilities
or any other credit facilities or debt issuances, and (3) any amendment or other modification of the Loans hereunder, or other
Indebtedness, and, in each case, deducted (and not added back) in computing Consolidated Net Income, plus
(e) any
other non-cash charges, including any write offs, write downs, expenses, losses, any effects of adjustments resulting from the
application of purchase accounting, purchase price accounting (including any step-up in inventory and loss of profit on the acquired
inventory) or other items to the extent the same were deducted (and not added back) in computing Consolidated Net Income (provided
that if any such non-cash charges represent an accrual or reserve for potential cash items in any future period, the cash payment
in respect thereof in such future period shall be deducted from Consolidated EBITDA to such extent, and excluding amortization
of a prepaid cash item that was paid in a prior period), plus
(f) the
amount of any net income (loss) attributable to non-controlling interests in any non-Wholly-Owned Subsidiary deducted (and not
added back) in such period in calculating Consolidated Net Income, plus
(g) the
amount of any indemnities and expenses paid or accrued in such period to any of Accel Growth Fund Associates L.L.C., Accel Growth
Fund Investors 2010 L.L.C., General Atlantic LLC, Index Venture Growth Associates I Limited or Yucca (Jersey) SLP or any of their
respective Affiliates (other than any portfolio company of any of the foregoing), plus
(h) costs
of surety bonds incurred in such period in connection with financing activities, plus
(i) the
amount of reasonably identifiable and factually supportable “run-rate” cost savings, operating expense reductions and
synergies that are projected by the Borrower in good faith to result from actions either taken or expected to be taken within 24
months of the determination to take such action, net of the amount of actual benefits realized prior to or during such period from
such actions (which cost savings, operating expense reductions and synergies shall be calculated on a Pro Forma Basis as though
such cost savings, operating expense reductions or synergies had been realized on the first day of such period); provided
that the aggregate amount added to Consolidated Net Income pursuant to this clause (i), together with any Pro Forma Adjustments
made pursuant to the definition of “Pro Forma Adjustment” or Section 1.12(b), in any period of four consecutive
fiscal quarters shall not exceed 30% of Consolidated EBITDA for such period (determined after giving effect to all such amounts
added to Consolidated Net Income); provided that such cap shall not apply to (A) any amounts evidenced in a quality of earnings
report obtained for any transaction prepared by a nationally recognized accounting firm that is reasonably acceptable to the Administrative
Agent (it being agreed that any of the “Big Four” accounting firms is acceptable to the Administrative Agent) or (B)
any pro forma adjustments determined on a basis consistent with Article 11 of Regulation S-X promulgated under the Exchange Act
and as interpreted by the staff of the Securities and Exchange Commission (or any successor agency), plus
(j) the
amount of loss or discount on sale of receivables and related assets to the Receivables Subsidiary in connection with a Receivables
Facility, plus
(k) any
costs or expense incurred by the Borrower or a Restricted Subsidiary pursuant to any equity incentive plan, management equity plan
or stock option or phantom equity plan or any other management or employee benefit plan or agreement or any stock subscription
or shareholder agreement, to the extent that such cost or expenses are funded with cash proceeds contributed to the capital of
the Borrower or net cash proceeds of an issuance of Equity Interests of the Borrower (other than Disqualified Stock) solely to
the extent that such net cash proceeds are excluded from the calculation set forth in clause (ii) of Section 10.5(a)
and have not been relied on for purposes of any incurrence of Indebtedness pursuant to clause (l)(i) of Section 10.1,
plus
(l) the
amount of expenses relating to payments made to option, phantom equity or profits interest holders of such Person or any direct
or indirect parent company of such Person in connection with, or as a result of, any distribution being made to shareholders of
such Person or its direct or indirect parent companies, which payments are being made to compensate such option, phantom equity
or profits interest holders as though they were shareholders at the time of, and entitled to share in, such distribution, in each
case to the extent permitted under this Agreement and expenses relating to distributions made to equity holders of such Person
or its direct or indirect parent companies resulting from the application of Financial Accounting Standards Codification Topic
718— Compensation – Stock Compensation (formerly Financial Accounting Standards Board Statement No. 123 (Revised 2004)),
plus
(m) with
respect to any joint venture that is not a Restricted Subsidiary, an amount equal to the proportion of those items described in
clauses (a) and (c) above relating to such joint venture corresponding to the Borrower’s and the Restricted
Subsidiaries’ proportionate share of such joint venture’s Consolidated Net Income (determined as if such joint venture
were a Restricted Subsidiary), plus
(n) costs
associated with, or in anticipation of, or preparation for, compliance with the requirements of the Sarbanes-Oxley Act of 2002
and the rules and regulations promulgated in connection therewith and Public Company Costs, plus
(o)
any bonus or other similar payments made in connection with the Restatement Date Distribution in an aggregate amount not to exceed
$15,000,000, plus
(p) to
the extent not already included in Consolidated Net Income, (1) any expenses and charges that are reimbursed by indemnification
or other similar provisions in connection with any investment or any sale, conveyance, transfer, or other Asset Sale of assets
permitted hereunder and (2) to the extent covered by insurance and actually reimbursed, or, so long as the Borrower have made a
determination that there exists reasonable evidence that such amount will in fact be reimbursed by the insurer and only to the
extent that such amount is (A) not denied by the applicable carrier in writing within 180 days and (B) in fact reimbursed within
365 days of the date of the determination by the Borrower that there exists such evidence (with a deduction for any amount so added
back to the extent not so reimbursed within such 365 days), expenses with respect to liability or casualty events or business interruption,
plus
(q) [reserved],
plus
(r) expenses
consisting of internal software development costs that are expensed during the period but could have been capitalized under alternative
accounting policies in accordance with GAAP, plus
(s) to
the extent covered by insurance or indemnification and actually reimbursed, or, so long as the Borrower has made a determination
that there exists reasonable evidence that such amount will in fact be reimbursed by the insurer or indemnifying party and only
to the extent that such amount is (a) not denied by the applicable carrier or indemnifying party in writing within 180 days and
(b) in fact reimbursed within 365 days of the date of the determination by the Borrower that there exists such evidence (with a
deduction for any amount so added back to the extent not so reimbursed within 365 days), losses and expenses with respect to liability
or casualty events or business interruption shall be excluded;
(ii) decreased by (without
duplication):
(a) non-cash
gains increasing Consolidated Net Income of such Person and its Restricted Subsidiaries for such period, excluding any non-cash
gains which represent the reversal of any accrual of, or cash reserve for, anticipated cash charges that reduced Consolidated EBITDA
in any prior period other than non-cash gains relating to the application of Financial Accounting Standards Codification Topic
840— Leases (formerly Financial Accounting Standards Board Statement No. 13); provided that, to the extent
non-cash gains are deducted pursuant to this clause (ii)(a) for any previous period and not otherwise added back to Consolidated
EBITDA, Consolidated EBITDA shall be increased by the amount of any cash receipts (or any netting arrangements resulting in reduced
cash expenses) in respect of such non-cash gains received in subsequent periods to the extent not already included therein;
(iii) increased or decreased
by (without duplication):
(a) any
net gain or loss resulting in such period from currency gains or losses related to Indebtedness, intercompany balances, and other
balance sheet items, plus or minus, as the case may be, plus
(b) any
net gain or loss resulting in such period from Hedging Obligations, and the application of Financial Accounting Standards Codification
Topic 815—Derivatives and Hedging (ASC 815) (formerly Financing Accounting Standards Board Statement No. 133), and its related
pronouncements and interpretations, or the equivalent accounting standard under GAAP or an alternative basis of accounting applied
in lieu of GAAP; and
(iv) increased (to the
extent such difference is positive) or decreased (to the extent such difference is negative) by the difference of Deferred Revenue
of such Person and its Restricted Subsidiaries as of the last day of such period (the “Determination Date”)
and Deferred Revenue of such Person and its Restricted Subsidiaries as of the date that is twelve months prior to the Determination
Date.
For
the avoidance of doubt:
(i) to the extent included
in Consolidated Net Income, there shall be excluded in determining Consolidated EBITDA for any period any adjustments resulting
from the application of ASC 815 and its related pronouncements and interpretations, or the equivalent accounting standard under
GAAP or an alternative basis of accounting applied in lieu of GAAP,
(ii) there shall be included
in determining Consolidated EBITDA for any period, without duplication, (1) the Acquired EBITDA of any Person or business, or attributable
to any property or asset acquired by the Borrower or any Restricted Subsidiary during such period (but not the Acquired EBITDA
of any related Person or business or any Acquired EBITDA attributable to any assets or property, in each case to the extent not
so acquired) to the extent not subsequently sold, transferred, abandoned, or otherwise disposed by the Borrower or such Restricted
Subsidiary during such period (each such Person, business, property, or asset acquired and not subsequently so disposed of, an
“Acquired Entity or Business”) and the Acquired EBITDA of any Unrestricted Subsidiary that is converted into
a Restricted Subsidiary during such period (each, a “Converted Restricted Subsidiary”), based on the actual
Acquired EBITDA of such Acquired Entity or Business or Converted Restricted Subsidiary for such period (including the portion thereof
occurring prior to such acquisition or conversion) and (2) an adjustment in respect of each Acquired Entity or Business equal to
the amount of the Pro Forma Adjustment with respect to such Acquired Entity or Business for such period (including the portion
thereof occurring prior to such acquisition); and
(iii) to the extent included
in Consolidated Net Income, there shall be excluded in determining Consolidated EBITDA for any period the Disposed EBITDA of any
Person, property, business, or asset sold, transferred, abandoned, or otherwise disposed of, closed or classified as discontinued
operations by the Borrower or any Restricted Subsidiary during such period (each such Person, property, business, or asset so sold
or disposed of, a “Sold Entity or Business”), and the Disposed EBITDA of any Restricted Subsidiary that is converted
into an Unrestricted Subsidiary during such period (each, a “Converted Unrestricted Subsidiary”) based on the
actual Disposed EBITDA of such Sold Entity or Business or Converted Unrestricted Subsidiary for such period (including the portion
thereof occurring prior to such sale, transfer, or disposition or conversion); provided that for the avoidance of doubt,
notwithstanding any classification under GAAP of any Person or business in respect of which a definitive agreement for the disposition
thereof has been entered into as discontinued operations, the Disposed EBITDA of such Person or business shall not be excluded
pursuant to this paragraph until such disposition shall have been consummated.
Notwithstanding the
foregoing, Consolidated EBITDA (a) for the fiscal quarter ended December 31, 2019, shall be deemed to be $22,148,139, (b) for the
fiscal quarter ended March 31, 2020, shall be deemed to be $20,007,806, (c) for the fiscal quarter ended June 30, 2020, shall be
deemed to be $58,026,826 and (d) for the fiscal quarter ended September 30, 2020, shall be deemed to be $49,800,500, in each case,
subject to adjustment pursuant to clause (a)(i) of this definition and pursuant to the immediately preceding paragraph.
“Consolidated
Interest Expense” shall mean the sum of (1) cash interest expense (including that attributable to Capitalized Lease
Obligations), net of cash interest income of such Person and its Restricted Subsidiaries with respect to all outstanding Indebtedness
of such Person and its Restricted Subsidiaries, including all commissions, discounts and other fees and charges owed with respect
to letters of credit and bankers’ acceptance financing and net costs under hedging agreements, plus (2) non-cash interest
expense resulting solely from the net amortization of original issue discount and original issuance premium from the issuance or
incurrence of Indebtedness of such Person and its Restricted Subsidiaries (excluding any Indebtedness borrowed under the Original
Credit Agreement in connection with the Transactions, any Indebtedness borrowed under this Agreement in connection with the Restatement
Date Transactions and, in each case, and any permitted refinancing thereof) but excluding, for the avoidance of doubt, (a) amortization
of deferred financing costs, debt issuance costs, commissions, fees and expenses and any other amounts of non-cash interest other
than referred to in clause (2) above (including as a result of the effects of acquisition method accounting or pushdown
accounting), (b) non-cash interest expense attributable to the movement of the mark-to-market valuation of Indebtedness or
obligations under Hedging Obligations or other derivative instruments pursuant to FASB Accounting Standards Codification Topic
815—Derivatives and Hedging, (c) any one-time cash costs associated with breakage in respect of hedging agreements for
interest rates, (d) commissions, discounts, yield, make-whole premium and other fees and charges (including any interest expense)
incurred in connection with any Receivables Facility, (e) any “additional interest” owing pursuant to a registration
rights agreement with respect to any securities, (f) any payments with respect to make-whole premiums or other breakage costs
of any Indebtedness, including, without limitation, any Indebtedness issued in connection with the Transactions and the Restatement
Date Transactions, (g) penalties and interest relating to Taxes, (h) accretion or accrual of discounted liabilities not
constituting Indebtedness, (i) interest expense attributable to a direct or indirect parent entity resulting from push-down
accounting, (j) any expense resulting from the discounting of Indebtedness in connection with the application of recapitalization
or purchase accounting, and (k) any interest expense attributable to the exercise of appraisal rights and the settlement of
any claims or actions (whether actual, contingent or potential), with respect thereto and with respect to the Transactions and
the Restatement Date Transactions, any acquisition or Investment permitted hereunder, all as calculated on a consolidated basis.
For
purposes of this definition, interest on a Capitalized Lease Obligation shall be deemed to accrue at an interest rate reasonably
determined by such Person to be the rate of interest implicit in such Capitalized Lease Obligation in accordance with GAAP.
“Consolidated
Net Income” shall mean, with respect to any Person and its Restricted Subsidiaries on a consolidated basis for any period,
Net Income of such Person and its Restricted Subsidiaries for such period determined in accordance with GAAP; provided that,
without duplication,
(i) extraordinary, non-recurring
or unusual gains or losses (less all fees and expenses relating thereto) or expenses (including any unusual or non-recurring operating
expenses directly attributable to the implementation of cost savings initiatives and any accruals or reserves in respect of any
extraordinary, non-recurring or unusual items), severance, relocation costs, integration and facilities’ or bases’
opening costs and other business optimization expenses (including related to new product introductions and other strategic or cost
savings initiatives), restructuring charges, accruals or reserves (including restructuring and integration costs related to acquisitions
and adjustments to existing reserves), signing costs, retention or completion bonuses, other executive recruiting and retention
costs, transition costs, costs related to closure/consolidation of facilities or bases and curtailments or modifications to pension
and post retirement employee benefit plans (including any settlement of pension liabilities and charges resulting from changes
in estimates, valuations and judgments), shall be excluded,
(ii) the Net Income for
such period shall not include the cumulative effect of a change in accounting principles and changes as a result of the adoption
or modification of accounting policies during such period,
(iii) any gain (loss)
(less all fees and expenses relating thereto) on asset sales, disposals or abandonments (other than asset sales, disposals or abandonments
in the ordinary course of business) or discontinued operations (but if such operations are classified as discontinued due to the
fact that they are subject to an agreement to dispose of such operations, only when and to the extent such operations are actually
disposed of), shall be excluded,
(iv) any after-Tax effect
of gains or losses (less all fees and expenses relating thereto) attributable to asset dispositions or abandonments other than
in the ordinary course of business, as determined in good faith by the board of directors of the Borrower, shall be excluded,
(v) the Net Income for
such period of any Person that is not a Subsidiary, or is an Unrestricted Subsidiary, or that is accounted for by the equity method
of accounting, shall be excluded; provided that Consolidated Net Income of the Borrower shall be increased by the amount
of dividends or distributions or other payments that are actually paid in cash (or to the extent converted into cash or Cash Equivalents)
to the referent Person or a Restricted Subsidiary thereof in respect of such period,
(vi) [reserved],
(vii) effects of adjustments
(including the effects of such adjustments pushed down to the Borrower and its Restricted Subsidiaries) in any line item in such
Person’s consolidated financial statements required or permitted by Financial Accounting Standards Codification Topic 805
– Business Combinations and Topic 350 – Intangibles-Goodwill and Other (ASC 805 and ASC 350) (formerly Financial Accounting
Standards Board Statement Nos. 141 and 142, respectively) resulting from the application of purchase accounting, including in relation
to the Transactions, the Restatement Date Transactions and any acquisition that is consummated after the Closing Date or the amortization
or write-off of any amounts thereof, net of Taxes, shall be excluded,
(viii) (a) any after-Tax
effect of income (loss) from the early extinguishment of Indebtedness or Hedging Obligations or other derivative instruments (including
deferred financing costs written off and premiums paid), (b) any non-cash income (or loss) related to currency gains or losses
related to Indebtedness, intercompany balances, and other balance sheet items and to Hedging Obligations pursuant to ASC 815 (or
such successor provision), and (c) any non-cash expense, income, or loss attributable to the movement in mark to market valuation
of foreign currencies, Indebtedness, or derivative instruments pursuant to GAAP, shall be excluded,
(ix) any impairment charge,
asset write-off, or write-down pursuant to ASC 350 and Financial Accounting Standards Codification Topic 360 – Impairment
and Disposal of Long-Lived Assets (ASC 360) (formerly Financial Accounting Standards Board Statement Nos. 142 and 144, respectively)
and the amortization of intangibles arising pursuant to ASC 805 shall be excluded,
(x) (a) any non-cash compensation
expense recorded from or in connection with any share-based compensation arrangements, including grants of stock appreciation or
similar rights, incentive equity, phantom equity, stock options units, restricted stock, capital or profits interests or other
rights to employees, directors, officers, managers, consultants or independent contractors and (b) non-cash income (loss) attributable
to deferred compensation plans or trusts, shall be excluded,
(xi) any fees and expenses
incurred during such period, or any amortization thereof for such period, in connection with any acquisition, Investment, recapitalization,
Asset Sale, issuance, or repayment of Indebtedness, issuance of Equity Interests (including any IPO of the Borrower, an IPO Entity
or any Parent Entity), refinancing transaction or amendment or modification of any debt instrument (in each case, including any
such transaction consummated prior to the Closing Date and any such transaction undertaken but not completed) and any charges or
non-recurring merger costs incurred during such period as a result of any such transaction shall be excluded,
(xii) accruals and reserves
(including contingent liabilities) that are established or adjusted within twelve months after the Closing Date that are so required
to be established as a result of the Transactions or the Restatement Date Transactions, in each case, in accordance with GAAP,
or changes as a result of adoption or modification of accounting policies, shall be excluded, and
(xiii) any deferred Tax
expense associated with Tax deductions or net operating losses arising as a result of the Transactions or the Restatement Date
Transactions, or the release of any valuation allowance related to such items, shall be excluded.
“Consolidated
Total Assets” shall mean, as of any date of determination, the amount that would, in conformity with GAAP, be set forth
opposite the caption “total assets” (or any like caption) on the most recent consolidated balance sheet of the Borrower
and its Restricted Subsidiaries at such date.
“Consolidated
Total Debt” shall mean, as at any date of determination, an amount equal to the sum of the aggregate amount of all outstanding
Indebtedness of the Borrower and its Restricted Subsidiaries on a consolidated basis consisting of Indebtedness for borrowed money,
Capitalized Lease Obligations and debt obligations evidenced by promissory notes and similar instruments (and excluding, for the
avoidance of doubt, Hedging Obligations); provided that Consolidated Total Debt shall not include Letters of Credit, except
to the extent of Unpaid Drawings thereunder; provided, further, that the effects of pushdown accounting shall be excluded.
“Consolidated
Total Debt to Consolidated EBITDA Ratio” shall mean, as of any date of determination, the ratio of (i) Consolidated Total
Debt as of such date of determination, minus unrestricted cash and Cash Equivalents of the Borrower and its Restricted Subsidiaries
on a consolidated basis in an amount not to exceed $200,000,000 to (ii) Consolidated EBITDA of the Borrower and its Restricted
Subsidiaries on a consolidated basis for the Test Period then last ended, in each case with such pro forma adjustments to Consolidated
Total Debt and Consolidated EBITDA as are appropriate.
“Contingent
Obligations” shall mean, with respect to any Person, any obligation of such Person guaranteeing any leases, dividends,
or other payment obligations that do not constitute Indebtedness (“primary obligations”) of any other Person
(the “primary obligor”) in any manner, whether directly or indirectly, including, without limitation, any obligation
of such Person, whether or not contingent, (i) to purchase any such primary obligation or any property constituting direct or indirect
security therefor, (ii) to advance or supply funds (a) for the purchase or payment of any such primary obligation or (b) to maintain
working capital or equity capital of the primary obligor or otherwise to maintain the net worth or solvency of the primary obligor,
or (iii) to purchase property, securities, or services primarily for the purpose of assuring the owner of any such primary obligation
of the ability of the primary obligor to make payment of such primary obligation against loss in respect thereof.
“Contractual
Requirement” shall have the meaning provided in Section 8.3.
“Converted
Restricted Subsidiary” shall have the meaning provided in the definition of “Consolidated EBITDA.”
“Converted
Unrestricted Subsidiary” shall have the meaning provided in the definition of “Consolidated EBITDA.”
“Corresponding
Tenor” with respect to any Available Tenor shall mean, as applicable, either a tenor (including overnight) or an interest
payment period having approximately the same length (disregarding business day adjustment) as such Available Tenor.
“Covered
Entity” shall mean any of the following: (i) a “covered entity” as that term is defined in, and interpreted
in accordance with, 12 C.F.R. § 252.82(b); (ii) a “covered bank” as that term is defined in, and interpreted
in accordance with, 12 C.F.R. § 47.3(b); or (iii) a “covered FSI” as that term is defined in, and interpreted
in accordance with, 12 C.F.R.§ 382.2(b).
“Covered
Party” shall have the meaning provided in Section 13.23.
“Credit
Documents” shall mean this Agreement, the Restatement Agreement, each Joinder Agreement, the Guarantees, the Security
Documents, and any promissory notes issued by the Borrower pursuant hereto.
“Credit
Event” shall mean and include the making (but not the conversion or continuation) of a Loan and the issuance of a Letter
of Credit.
“Credit
Facilities” shall mean, collectively, each category of Commitments and each extension of credit hereunder.
“Credit
Facility” shall mean a category of Commitments and extensions of credit thereunder.
“Credit
Party” shall mean the Borrower and the other Guarantors.
“Cure
Amount” shall have the meaning provided in Section 11.14.
“Cure
Right” shall have the meaning provided in Section 11.14.
“Daily
Simple SOFR” shall mean, for any day, SOFR, with the conventions for this rate (which will include a lookback) being
established by the Administrative Agent in accordance with the conventions for this rate selected or recommended by the Relevant
Governmental Body for determining “Daily Simple SOFR” for business loans; provided, that if the Administrative
Agent decides that any such convention is not administratively feasible for the Administrative Agent, then the Administrative Agent
may establish another convention in its reasonable discretion.
“Debt
Incurrence Prepayment Event” shall mean any issuance or incurrence by the Borrower or any of the Restricted Subsidiaries
of any Indebtedness (excluding any Indebtedness permitted to be issued or incurred under Section 10.1).
“Declined
Proceeds” shall have the meaning provided in Section 5.2(f).
“Default”
shall mean any event, act, or condition that with notice or lapse of time, or both, would constitute an Event of Default.
“Default
Rate” shall have the meaning provided in Section 2.8(c).
“Default
Right” shall have the meaning assigned to that term in, and shall be interpreted in accordance with, 12 C.F.R. §§ 252.81,
47.2 or 382.1, as applicable.
“Defaulting
Lender” shall mean any Lender whose acts or failure to act, whether directly or indirectly, cause it to meet any part
of the definition of “Lender Default.”
“Deferred
Net Cash Proceeds” shall have the meaning provided such term in clause (d) of the definition of “Net Cash
Proceeds.”
“Deferred
Net Cash Proceeds Payment Date” shall have the meaning provided such term in clause (d) of the definition of “Net
Cash Proceeds.”
“Deferred
Revenue” shall mean, at any date, the amount of cash and Cash Equivalents received in advance of revenue recognition
that would, in conformity with GAAP, be set forth opposite the caption “deferred revenue” (or any like caption, including
current and non-current designations) on a consolidated balance sheet at such date; provided that such balance should be
determined excluding the effects of acquisition method accounting.
“Designated
Non-Cash Consideration” shall mean the Fair Market Value of non-cash consideration received by the Borrower or a Restricted
Subsidiary in connection with an Asset Sale that is so designated as Designated Non-Cash Consideration pursuant to a certificate
of an Authorized Officer of the Borrower, setting forth the basis of such valuation, executed by either a senior vice president
or the principal financial officer of the Borrower, less the amount of cash or Cash Equivalents received in connection with a subsequent
sale of or collection on or other disposition of such Designated Non-Cash Consideration. A particular item of Designated Non-Cash
Consideration will no longer be considered to be outstanding when and to the extent it has been paid, redeemed or otherwise retired
or sold or otherwise disposed of in compliance with Section 10.4.
“Designated
Preferred Stock” shall mean preferred stock of the Borrower or any direct or indirect parent company of the Borrower
(in each case other than Disqualified Stock) that is issued for cash (other than to a Restricted Subsidiary or an employee stock
ownership plan or trust established by the Borrower or any of its Subsidiaries) and is so designated as Designated Preferred Stock,
pursuant to an officer’s certificate executed by the principal financial officer of the Borrower or the parent company thereof,
as the case may be, on the issuance date thereof, the cash proceeds of which are excluded from the calculation set forth in clause
(ii) of Section 10.5(a).
“Disposed
EBITDA” shall mean, with respect to any Sold Entity or Business or any Converted Unrestricted Subsidiary for any period,
the amount for such period of Consolidated EBITDA of such Sold Entity or Business or Converted Unrestricted Subsidiary, all as
determined on a consolidated basis for such Sold Entity or Business or Converted Unrestricted Subsidiary, as the case may be.
“disposition”
shall have the meaning assigned such term in clause (i) of the definition of “Asset Sale.”
“Disqualified
Lenders” shall mean such Persons (i) that have been specified in writing to the Administrative Agent and the Joint Lead
Arrangers and Bookrunners prior to the Closing Date as being Disqualified Lenders, (ii) who are competitors of the Borrower and
its Subsidiaries that are separately identified in writing by the Borrower to the Administrative Agent from time to time, and (iii)
in the case of each of clauses (i) and (ii), any of their Affiliates (other than any such Affiliate that is affiliated
with a financial investor in such Person and that is not itself an operating company or otherwise an Affiliate of an operating
company so long as such Affiliate is a bona fide Fund) that are either (a) identified in writing by the Borrower to the Administrative
Agent by email to JPMDQ_contact@jpmorgan.com from time to time or (b) clearly identifiable solely on the basis of similarity of
such Affiliate’s name; provided that any additional designation permitted by the foregoing shall not become effective
until three (3) Business Days following delivery to the Administrative Agent by email and shall not apply retroactively to any
prior assignment or participation interest or to any trade to acquire such participation interest.
“Disqualified
Stock” shall mean, with respect to any Person, any Capital Stock of such Person which, by its terms, or by the terms
of any security into which it is convertible or for which it is puttable or exchangeable, or upon the happening of any event, matures
or is mandatorily redeemable (other than solely for Qualified Stock), other than as a result of a change of control, asset sale,
condemnation event or similar event, pursuant to a sinking fund obligation or otherwise, or is redeemable at the option of the
holder thereof (other than solely for Qualified Stock), other than as a result of a change of control, asset sale, condemnation
event or similar event, in whole or in part, in each case, prior to the date that is 91 days after the Latest Term Loan Maturity
Date hereunder; provided that if such Capital Stock is issued to any plan for the benefit of employees of the Borrower or
its Subsidiaries or by any such plan to such employees, such Capital Stock shall not constitute Disqualified Stock solely because
it may be required to be repurchased by the Borrower or its Subsidiaries in order to satisfy applicable statutory or regulatory
obligations or as a result of such employee’s termination, death, or disability.
“Distressed
Person” shall have the meaning provided in the definition of “Lender-Related Distress Event.”
“Dollars”
and “$” shall mean dollars in lawful currency of the United States.
“Domestic
Subsidiary” shall mean each Subsidiary of the Borrower that is organized under the laws of the United States, any state
thereof, or the District of Columbia.
“Early
Opt-in Election” shall mean, if the then-current Benchmark is LIBOR Rate, the occurrence of:
(1) a
notification by the Administrative Agent to (or the request by the Borrower to the Administrative Agent to notify) each of the
other parties hereto that at least five currently outstanding dollar-denominated syndicated credit facilities at such time contain
(as a result of amendment or as originally executed) a SOFR-based rate (including SOFR, a term SOFR or any other rate based upon
SOFR) as a benchmark rate (and such syndicated credit facilities are identified in such notice and are publicly available for review),
and
(2) the
joint election by the Administrative Agent and the Borrower to trigger a fallback from LIBOR Rate and the provision by the Administrative
Agent of written notice of such election to the Lenders.
“EEA
Financial Institution” shall mean (a) any credit institution or investment firm established in any EEA Member Country
which is subject to the supervision of an EEA Resolution Authority, (b) any entity established in an EEA Member Country which is
a parent of an institution described in clause (a) of this definition, or (c) any financial institution established in an
EEA Member Country which is a subsidiary of an institution described in clauses (a) or (b) of this definition and
is subject to consolidated supervision with its parent.
“EEA
Member Country” shall mean any of the member states of the European Union, Iceland, Liechtenstein, Norway and the United
Kingdom.
“EEA
Resolution Authority” shall mean any public administrative authority or any person entrusted with public administrative
authority of any EEA Member Country (including any delegee) having responsibility for the resolution of any EEA Financial Institution.
“Effective
Yield” shall mean, as to any Indebtedness, the effective yield on such Indebtedness in the reasonable determination of
the Administrative Agent in consultation with the Borrower and consistent with generally accepted financial practices, taking into
account the applicable interest rate margins, any interest rate floors (the effect of which floors shall be determined in a manner
set forth in the proviso below), or similar devices and all fees, including upfront or similar fees or original issue discount
(amortized over the shorter of (i) the remaining weighted average life to maturity of such Indebtedness and (ii) the four years
following the date of incurrence thereof) payable generally to Lenders or other institutions providing such Indebtedness, but excluding
any arrangement, structuring, ticking, or other similar fees payable in connection therewith that are not generally shared with
the relevant Lenders and, if applicable, consent fees for an amendment paid generally to consenting Lenders; provided that
with respect to any Indebtedness that includes a “LIBOR floor” or “ABR floor,” (a) to the extent that the
LIBOR Rate (with an Interest Period of three months) or ABR (without giving effect to any floors in such definitions), as applicable,
on the date that the Effective Yield is being calculated is less than such floor, the amount of such difference shall be deemed
added to the interest rate margin for such Indebtedness for the purpose of calculating the Effective Yield and (b) to the extent
that the LIBOR Rate (with an Interest Period of three months) or ABR (without giving effect to any floors in such definitions),
as applicable, on the date that the Effective Yield is being calculated is greater than such floor, then the floor shall be disregarded
in calculating the Effective Yield.
“Electronic
Signature” shall mean an electronic sound, symbol, or process attached to, or associated with, a contract or other record
and adopted by a Person with the intent to sign, authenticate or accept such contract or record.
“Environment”
shall mean ambient air, indoor air, surface water, groundwater, soil, land surface and subsurface strata and natural resources
such as flora, fauna, or wetlands.
“Environmental
Claims” shall mean any and all actions, suits, orders, decrees, demand letters, claims, notices of noncompliance or potential
responsibility or violation, or proceedings pursuant to any Environmental Law or any permit issued, or any approval given, under
any such Environmental Law (hereinafter, “Claims”), including, without limitation, (i) any and all Claims by
governmental or regulatory authorities for enforcement, cleanup, removal, response, remedial, or other actions or damages pursuant
to any Environmental Law and (ii) any and all Claims by any third party seeking damages, contribution, indemnification, cost recovery,
compensation, or injunctive relief relating to the presence Release or threatened Release of Hazardous Materials or arising from
alleged injury or threat of injury to health or safety (to the extent relating to human exposure to Hazardous Materials), or the
Environment.
“Environmental
Law” shall mean any applicable federal, state, foreign, or local statute, law, rule, regulation, ordinance, code, and
rule of common law now or hereafter in effect and in each case as amended, and any binding judicial or administrative interpretation
thereof, including any binding judicial or administrative order, consent decree, or judgment, relating to pollution or protection
of the Environment, or protection of human health or safety (to the extent relating to human exposure to Hazardous Materials) and
including those relating to the generation, storage, treatment, transport, Release, or threat of Release of Hazardous Materials.
“Equity
Interest” shall mean Capital Stock and all warrants, options, or other rights to acquire Capital Stock, but excluding
any debt security that is convertible into, or exchangeable for, Capital Stock.
“Equity
Offering” shall mean any public or private sale of common stock or preferred stock of the Borrower or any direct or indirect
parent company of the Borrower (excluding Disqualified Stock), other than: (i) public offerings with respect to the Borrower or
any of their direct or indirect parent company’s common stock registered on Form S-8, (ii) issuances to any Subsidiary of
the Borrower, (iii) any such public or private sale that constitutes an Excluded Contribution and (iv) any Cure Amount.
“ERISA”
shall mean the Employee Retirement Income Security Act of 1974, as amended from time to time, and the rules and regulations promulgated
thereunder.
“ERISA
Affiliate” shall mean any trade or business (whether or not incorporated) that, together with any Credit Party, is treated
as a single employer under Section 414 (b) or (c) of the Code (and Sections 414(m) and (o) of the Code for purposes of provisions
relating to Section 412 of the Code).
“ERISA
Event” shall mean (i) the failure of any Plan to comply with any provisions of ERISA and/or the Code (and applicable
regulations under either) or with the terms of such Plan; (ii) the existence with respect to any Plan of a non-exempt Prohibited
Transaction; (iii) any Reportable Event; (iv) the failure of any Credit Party or ERISA Affiliate to make by its due date a required
installment under Section 430(j) of the Code with respect to any Pension Plan or any failure by any Pension Plan to satisfy the
minimum funding standards (within the meaning of Section 412 of the Code or Section 302 of ERISA) applicable to such Pension Plan,
whether or not waived; (v) a determination that any Pension Plan is in “at risk” status (within the meaning of Section
430 of the Code or Section 303 of ERISA); (vi) the filing pursuant to Section 412(c) of the Code or Section 302(c) of ERISA of
an application for a waiver of the minimum funding standard with respect to any Pension Plan; (vii) the termination of, or the
appointment of a trustee to administer, any Pension Plan or the incurrence by any Credit Party or any of its ERISA Affiliates of
any liability under Title IV of ERISA with respect to the termination of any Pension Plan, including but not limited to the imposition
of any Lien in favor of the PBGC or any Pension Plan; (viii) the receipt by any Credit Party or any of its ERISA Affiliates from
the PBGC or a plan administrator of any notice to terminate any Pension Plan or to appoint a trustee to administer any Pension
Plan under Section 4042 of ERISA; (ix) the failure by any Credit Party or any of its ERISA Affiliates to make any required contribution
to a Multiemployer Plan; (x) the incurrence by any Credit Party or any of its ERISA Affiliates of any liability with respect to
the withdrawal or partial withdrawal from any Pension Plan (or a cessation of operations that is treated as such a withdrawal under
Section 4062(e) of ERISA) or Multiemployer Plan; (xi) the receipt by any Credit Party or any of its ERISA Affiliates of any notice
concerning the imposition of Withdrawal Liability or a determination that a Multiemployer Plan is, or is expected to be, Insolvent
or in Reorganization, in “endangered” or “critical” status (within the meaning of Section 432 of the Code
or Section 305 of ERISA), or terminated (within the meaning of Section 4041A of ERISA); or (xii) the failure by any Credit Party
or any of its ERISA Affiliates to pay when due (after expiration of any applicable grace period) any installment payment with respect
to Withdrawal Liability under Section 4201 of ERISA.
“EU
Bail-In Legislation Schedule” shall mean the EU Bail-In Legislation Schedule published by the Loan Market Association
(or any successor person), as in effect from time to time.
“Event
of Default” shall have the meaning provided in Section 11.
“Excluded
Contribution” shall mean net cash proceeds, the Fair Market Value of marketable securities, or the Fair Market Value
of Qualified Proceeds received by the Borrower from (i) contributions to its common equity capital, and (ii) the sale (other than
to a Subsidiary of the Borrower or to any management equity plan or stock option plan or any other management or employee benefit
plan or agreement of the Borrower) of Capital Stock (other than Disqualified Stock and Designated Preferred Stock) of the Borrower,
in each case designated as Excluded Contributions pursuant to an officer’s certificate executed by either a senior vice president
or the respective principal financial officer of the Borrower on the date such capital contributions are made or the date such
Equity Interests are sold, as the case may be, which are excluded from the calculation set forth in clause (ii) of Section
10.5(a); provided that (i) any non-cash assets shall qualify only if acquired by a parent of the Borrower in an arm’s-length
transaction within the six months prior to such contribution and (ii) no Cure Amount shall constitute an Excluded Contribution.
“Excluded
Property” shall have the meaning set forth in the Security Agreement.
“Excluded
Stock and Stock Equivalents” shall mean (i) any Capital Stock or Stock Equivalents with respect to which, in the reasonable
judgment of the Administrative Agent and the Borrower (as agreed to in writing), the cost or other consequences of pledging such
Capital Stock or Stock Equivalents in favor of the Secured Parties under the Security Documents shall be excessive in view of the
benefits to be obtained by the Lenders therefrom, (ii) solely in the case of any pledge of Capital Stock and Stock Equivalents
of any Foreign Subsidiary or any CFC Holding Company, any Voting Stock or Stock Equivalents of any class of such Foreign Subsidiary
or such CFC Holding Company in excess of 65% of the outstanding Voting Stock of such class, (iii) any Capital Stock or Stock
Equivalents of any direct or indirect Subsidiary of a Foreign Subsidiary that is a CFC or a CFC Holding Company, (iv) any Capital
Stock or Stock Equivalents to the extent the pledge thereof would violate any applicable law (including any legally effective requirement
to obtain the consent of any Governmental Authority unless such consent has been obtained), (v) in the case of (A) any
Capital Stock or Stock Equivalents of any Subsidiary acquired after the Closing Date to the extent such Capital Stock or Stock
Equivalents are subject to a Lien permitted by clause (ix) of the definition of “Permitted Liens” or (B) any
Capital Stock or Stock Equivalents of any Subsidiary that is not a Wholly-Owned Subsidiary of the Borrower and its Subsidiaries
at the time such Subsidiary becomes a Subsidiary, any Capital Stock or Stock Equivalents of each such Subsidiary described in clause
(A) or (B) to the extent (I) that a pledge thereof to secure the Obligations is prohibited by any applicable Contractual
Requirement (other than customary non-assignment provisions which are ineffective under the Uniform Commercial Code or other applicable
law and other than proceeds thereof the assignment of which is expressly deemed effective under the Uniform Commercial Code or
other applicable law notwithstanding such prohibition or restriction), (II) any Contractual Requirement prohibits such a pledge
without the consent of any other party; provided that this clause (II) shall not apply if (x) such other party is
a Credit Party or Wholly-Owned Subsidiary or (y) consent has been obtained to consummate such pledge (it being understood that
the foregoing shall not be deemed to obligate the Borrower or any Subsidiary to obtain any such consent) and for so long as such
Contractual Requirement or replacement or renewal thereof is in effect, or (III) a pledge thereof to secure the Obligations would
give any other party (other than a Credit Party or Wholly-Owned Subsidiary) to any contract, agreement, instrument, or indenture
governing such Capital Stock or Stock Equivalents the right to terminate its obligations thereunder (other than customary non-assignment
provisions which are ineffective under the Uniform Commercial Code or other applicable law and other than proceeds thereof the
assignment of which is expressly deemed effective under the Uniform Commercial Code or other applicable law notwithstanding such
prohibition or restriction), (vi) any Capital Stock or Stock Equivalents of any Subsidiary of the Borrower to the extent that
the pledge of such Capital Stock or Stock Equivalents would result in materially adverse Tax consequences to the Borrower or any
Subsidiary as reasonably determined by the Borrower in consultation with the Administrative Agent, (vii) any Capital Stock or Stock
Equivalents that are margin stock, and (viii) any Capital Stock and Stock Equivalents of any Subsidiary that is not a Material
Subsidiary (except to the extent a security interest therein can be perfected by filing of a UCC-1 financing statement) or is an
Unrestricted Subsidiary, a captive insurance Subsidiary, an SPV or any special purpose entity.
“Excluded
Subsidiary” shall mean (i) each Subsidiary, in each case, for so long as any such Subsidiary does not (on a consolidated
basis with its Restricted Subsidiaries) constitute a Material Subsidiary, (ii) each Subsidiary that is not a Wholly-Owned
Subsidiary on any date such Subsidiary becomes a Subsidiary (for so long as such Subsidiary remains a non-Wholly-Owned Restricted
Subsidiary), (iii) any CFC Holding Company, (iv) any Domestic Subsidiary that is a Subsidiary of a Foreign Subsidiary that is a
CFC, (v) any Foreign Subsidiary, (vi) each Subsidiary that is prohibited by any applicable Contractual Requirement not entered
into to circumvent the guarantee requirements thereunder or any applicable law from guaranteeing or granting Liens to secure the
Obligations at the time such Subsidiary becomes a Restricted Subsidiary and for so long as such restriction or any replacement
or renewal thereof is in effect or would require governmental (including regulatory) consent, approval, license or authorization
to guarantee or grant such Liens to secure the Obligations (unless such consent, approval, license or authorization has been received),
(vii) each Subsidiary with respect to which, as reasonably determined by the Borrower in consultation with the Administrative Agent,
the consequence of providing a Guarantee of the Obligations would adversely affect the ability of the Borrower and its Subsidiaries
to satisfy applicable law, (viii) any other Subsidiary with respect to which, (a) in the reasonable judgment of the Administrative
Agent and the Borrower, as agreed in writing, the cost or other consequences of providing a Guarantee of the Obligations shall
be excessive in view of the benefits to be obtained by the Lenders therefrom or (b) providing such a Guarantee would result in
material adverse Tax consequences as reasonably determined by the Borrower in consultation with the Administrative Agent, (ix) each
Unrestricted Subsidiary, (x) any Receivables Subsidiary, (xi) each other Subsidiary acquired pursuant to a Permitted Acquisition
or other Investment permitted hereunder and financed with assumed secured Indebtedness permitted hereunder, and each Restricted
Subsidiary acquired in such Permitted Acquisition or other Investment permitted hereunder that guarantees such Indebtedness, in
each case to the extent that, and for so long as, the documentation relating to such Indebtedness to which such Subsidiary is a
party prohibits such Subsidiary from guaranteeing the Obligations and such prohibition was not created in contemplation of such
Permitted Acquisition or other Investment permitted hereunder and (xii) each SPV or not-for-profit Subsidiary and captive insurance
company.
“Excluded
Swap Obligation” shall mean, with respect to any Credit Party, (a) any Swap Obligation if, and to the extent that, all
or a portion of the Obligations of such Credit Party of, or the grant by such Credit Party of a security interest to secure, such
Swap Obligation (or any Obligations thereof) is or becomes illegal or unlawful under the Commodity Exchange Act or any rule, regulation,
or order of the Commodity Futures Trading Commission (or the application or official interpretation of any thereof) or (b) any
other Swap Obligation designated as an “Excluded Swap Obligation” of such Guarantor as specified in any agreement between
the relevant Credit Parties and Hedge Bank applicable to such Swap Obligation. If a Swap Obligation arises under a Master Agreement
governing more than one swap, such exclusion shall apply only to the portion of such Swap Obligation that is attributable to swaps
for which such Obligation or security interest is or becomes illegal or unlawful.
“Excluded
Taxes” shall mean, with respect to the Administrative Agent, any Lender, or any other recipient of any payment to be
made by or on account of any obligation of any Credit Party hereunder or under any other Credit Document, (i) Taxes imposed on
or measured by its net income, net profits, or branch profits (however denominated, and including (for the avoidance of doubt)
any backup withholding in respect thereof under Section 3406 of the Code or any similar provision of state, local, or foreign law),
and franchise (and similar) Taxes imposed on it (in lieu of net income Taxes), in each case by a jurisdiction (including any political
subdivision thereof) as a result of such recipient being organized in, having its principal office in, or in the case of any Lender,
having its applicable lending office in, such jurisdiction, or as a result of any other present or former connection with such
jurisdiction (other than any such connection arising solely from this Agreement or any other Credit Documents or any transactions
contemplated thereunder), (ii) in the case of a Lender, any United States federal withholding Tax imposed on any payment by or
on account of any obligation of any Credit Party hereunder or under any other Credit Document pursuant to laws in force at the
time such Lender acquires an interest in any Credit Document (or designates a new lending office), other than in the case of a
Lender that is an assignee pursuant to a request by the Borrower under Section 13.7 (or that designates a new lending office
pursuant to a request by the Borrower), except to the extent that such Lender (or its assignor, if any) was entitled, immediately
prior to the designation of a new lending office (or assignment), to receive additional amounts from the Credit Parties with respect
to such withholding Tax pursuant to Section 5.4, (iii) any Taxes attributable to a recipient’s failure to comply with
Section 5.4(e), or (iv) any withholding Tax imposed under FATCA.
“Existing
Class” shall mean any Existing Term Loan Class and any Existing Revolving Credit Class.
“Existing
Credit Facilities” shall mean the credit facilities under that certain Loan and Security Agreement dated as of August
31, 2015 (as amended, restated, amended and restated, supplemented or otherwise modified prior to the Closing Date) between Silicon
Valley Bank and the Borrower.
“Existing
Letter of Credit” shall mean each Letter of Credit set forth on Schedule 1.1(c).
“Existing
Revolving Credit Class” shall have the meaning provided in Section 2.14(g)(ii).
“Existing
Revolving Credit Commitment” shall have the meaning provided in Section 2.14(g)(ii).
“Existing
Revolving Credit Loans” shall have the meaning provided in Section 2.14(g)(ii).
“Existing
Term Loan Class” shall have the meaning provided in Section 2.14(g)(i).
“Extended
Repayment Date” shall have the meaning provided in Section 2.5(c).
“Extended
Revolving Credit Commitments” shall have the meaning provided in Section 2.14(g)(ii).
“Extended
Revolving Credit Loans” shall have the meaning provided in Section 2.14(g)(ii).
“Extended
Revolving Loan Maturity Date” shall mean the date on which any tranche of Extended Revolving Credit Loans matures.
“Extended
Term Loan Repayment Amount” shall have the meaning provided in Section 2.5(c).
“Extended
Term Loans” shall have the meaning provided in Section 2.14(g)(i).
“Extending
Lender” shall have the meaning provided in Section 2.14(g)(iii).
“Extension
Amendment” shall have the meaning provided in Section 2.14(g)(iv).
“Extension
Date” shall have the meaning provided in Section 2.14(g)(v).
“Extension
Election” shall have the meaning provided in Section 2.14(g)(iii).
“Extension
Request” shall mean a Term Loan Extension Request.
“Extension
Series” shall mean all Extended Term Loans and Extended Revolving Credit Commitments that are established pursuant to
the same Extension Amendment (or any subsequent Extension Amendment to the extent such Extension Amendment expressly provides that
the Extended Term Loans or Extended Revolving Credit Commitments, as applicable, provided for therein are intended to be a part
of any previously established Extension Series) and that provide for the same interest margins, extension fees, and amortization
schedule.
“Fair
Market Value” shall mean with respect to any asset or group of assets on any date of determination, the value of the
consideration obtainable in a sale of such asset at such date of determination assuming a sale by a willing seller to a willing
purchaser dealing at arm’s length and arranged in an orderly manner over a reasonable period of time having regard to the
nature and characteristics of such asset, as determined in good faith by the Borrower.
“FATCA”
shall mean Sections 1471 through 1474 of the Code, as of the date of this Agreement (or any amended or successor version that is
substantively comparable and not materially more onerous to comply with), any current or future regulations or official interpretations
thereof, any agreements entered into pursuant to Section 1471(b)(1) of the Code as of the date of this Agreement (or any amended
or successor version described above), and any intergovernmental agreements (or related legislation or official administrative
rules or practices) implementing the foregoing.
“FCPA”
shall have the meaning provided in Section 8.19(b).
“Federal
Funds Effective Rate” shall mean, for any day, the rate calculated by the NYFRB based on such day’s federal funds
transactions by depositary institutions, as determined in such manner as shall be set forth on the Federal Reserve Bank of New
York’s Website from time to time, and published on the next succeeding Business Day by the NYFRB as the effective federal
funds rate; provided that if the Federal Funds Effective Rate as so determined would be less than zero, such rate shall
be deemed to be zero for the purposes of this Agreement.
“Federal
Reserve Bank of New York’s Website” shall mean the website of the NYFRB at http://www.newyorkfed.org, or any successor
source.
“Fees”
shall mean all amounts payable pursuant to, or referred to in, Section 4.1.
“Fixed
Charge Coverage Ratio” shall mean, as of any date of determination, the ratio of (i) Consolidated EBITDA of the Borrower
and its Restricted Subsidiaries on a consolidated basis for the Test Period then last ended to (ii) the Fixed Charges of the Borrower
and its Restricted Subsidiaries on a consolidated basis for such Test Period. In the event that Borrower or any Restricted Subsidiary
incurs, assumes, guarantees, redeems, retires, or extinguishes any Indebtedness or issues or redeems Disqualified Stock, preferred
stock (including any Designated Preferred Stock) or any Refunding Capital Stock subsequent to the commencement of the Test Period
but prior to or simultaneously with the date of determination, then the Fixed Charge Coverage Ratio shall be calculated giving
Pro Forma Effect to such incurrence, assumption, guarantee, redemption, retirement, or extinguishment of Indebtedness, or such
issuance or redemption of Disqualified Stock, preferred stock (including any Designated Preferred Stock) or any Refunding Capital
Stock (in each case, including a pro forma application of the net proceeds therefrom), as if the same had occurred at the beginning
of the Test Period.
“Fixed
Charges” shall mean, with respect to any Person and its Restricted Subsidiaries for any period, the sum of:
(i) Consolidated Interest
Expense of such Person and its Restricted Subsidiaries for such period,
(ii) all cash dividend
payments (excluding items eliminated in consolidation) on any series of preferred stock (including any Designated Preferred Stock)
or any Refunding Capital Stock of such Person made during such period, and
(iii) all cash dividend
payments (excluding items eliminated in consolidation) on any series of Disqualified Stock made during such period.
“Flood
Insurance Laws” shall mean, collectively, (i) the National Flood Insurance Act of 1968 as now or hereafter in effect
or any successor statute thereto, (ii) the Flood Disaster Protection Act of 1973 as now or hereafter in effect or any successor
statute thereto, (iii) the National Flood Insurance Reform Act of 1994 as now or hereafter in effect or any successor statute thereto,
(iv) the Flood Insurance Reform Act of 2004 as now or hereafter in effect or any successor statute thereto and (v) the Biggert-Waters
Flood Insurance Reform Act of 2012 as now or hereafter in effect or any successor statute thereto.
“Floor”
shall mean the benchmark rate floor, if any, provided in this Agreement initially (as of the execution of this Agreement, the modification,
amendment or renewal of this Agreement or otherwise) with respect to LIBOR Rate.
“Foreign
Benefit Arrangement” shall mean any employee benefit arrangement mandated by non-U.S. law that is maintained or contributed
to by any Credit Party or any of its Subsidiaries.
“Foreign
Plan” shall mean each employee benefit plan (within the meaning of Section 3(3) of ERISA, whether or not subject to ERISA)
that is not subject to U.S. law and is maintained or contributed to by any Credit Party or any of its Subsidiaries.
“Foreign
Plan Event” shall mean, with respect to any Foreign Plan or Foreign Benefit Arrangement, (i) the failure to make or,
if applicable, accrue in accordance with normal accounting practices, any employer or employee contributions required by applicable
law or by the terms of such Foreign Plan or Foreign Benefit Arrangement; (ii) the failure to register or loss of good standing
(if applicable) with applicable regulatory authorities of any such Foreign Plan or Foreign Benefit Arrangement required to be registered;
or (iii) the failure of any Foreign Plan or Foreign Benefit Arrangement to comply with any provisions of applicable law or regulations
or with the terms of such Foreign Plan or Foreign Benefit Arrangement.
“Foreign
Subsidiary” shall mean each Subsidiary of the Borrower that is not a Domestic Subsidiary.
“Fronting
Exposure” shall mean, at any time there is a Defaulting Lender, with respect to the Letter of Credit Issuer, such Defaulting
Lender’s Revolving Credit Commitment Percentage of the outstanding L/C Obligations other than L/C Obligations as to which
such Defaulting Lender’s participation obligation has been reallocated to other Lenders or Cash Collateralized in accordance
with the terms hereof.
“Fronting
Fee” shall have the meaning provided in Section 4.1(d).
“Fund”
shall mean any Person (other than a natural Person) that is engaged or advises funds or other investment vehicles that are engaged
in making, purchasing, holding, or investing in commercial loans and similar extensions of credit in the ordinary course.
“GAAP”
shall mean generally accepted accounting principles in the United States, as in effect from time to time; provided, however,
that if the Borrower notifies the Administrative Agent that the Borrower requests an amendment to any provision hereof to eliminate
the effect of any change occurring after the Closing Date in GAAP or in the application thereof on the operation of such provision,
regardless of whether any such notice is given before or after such change in GAAP or in the application thereof, then such provision
shall be interpreted on the basis of GAAP as in effect and applied immediately before such change shall have become effective until
such notice shall have been withdrawn or such provision amended in accordance herewith. Furthermore, at any time after the Closing
Date, the Borrower may elect to apply International Financial Reporting Standards (“IFRS”) accounting principles
in lieu of GAAP and, upon any such election, references herein to GAAP and GAAP concepts shall thereafter be construed to refer
to IFRS and corresponding IFRS concepts (except as otherwise provided in this Agreement); provided any such election, once
made, shall be irrevocable; provided, further, that any calculation or determination in this Agreement that requires
the application of GAAP for periods that include fiscal quarters ended prior to the Borrower’s election to apply IFRS shall
remain as previously calculated or determined in accordance with GAAP. The Borrower shall give written notice of any such election
made in accordance with this definition to the Administrative Agent. Notwithstanding any other provision contained herein, the
amount of any Indebtedness under GAAP with respect to Capitalized Lease Obligations shall be determined in accordance with the
definition of “Capitalized Lease Obligations.”
“Governmental
Authority” shall mean any nation, sovereign, or government, any state, province, territory, or other political subdivision
thereof, and any entity or authority exercising executive, legislative, judicial, taxing, regulatory, or administrative functions
of or pertaining to government, including a central bank or stock exchange (including any supranational bodies such as the European
Union or the European Central Bank).
“Granting
Lender” shall have the meaning provided in Section 13.6(g).
“Guarantee”
shall mean (i) the Guarantee made by the Borrower and each other Guarantor in favor of the Collateral Agent for the benefit of
the Secured Parties, substantially in the form of Exhibit (B) hereto and dated as of the Closing Date and (ii) any
other guarantee of the Obligations made by a Restricted Subsidiary in form and substance reasonably acceptable to the Administrative
Agent, in each case as the same may be amended, supplemented or otherwise modified from time to time.
“guarantee
obligations” shall mean, as to any Person, any obligation of such Person guaranteeing or intended to guarantee any Indebtedness
of any primary obligor in any manner, whether directly or indirectly, including any obligation of such Person, whether or not contingent,
(i) to purchase any such Indebtedness or any property constituting direct or indirect security therefor, (ii) to advance or supply
funds (a) for the purchase or payment of any such Indebtedness or (b) to maintain working capital or equity capital of the primary
obligor or otherwise to maintain the net worth or solvency of the primary obligor, (iii) to purchase property, securities, or services
primarily for the purpose of assuring the owner of any such Indebtedness of the ability of the primary obligor to make payment
of such Indebtedness, or (iv) otherwise to assure or hold harmless the owner of such Indebtedness against loss in respect thereof;
provided, however, that the term guarantee obligations shall not include endorsements of instruments for deposit
or collection in the ordinary course of business or customary and reasonable indemnity obligations or product warranties in effect
on the Closing Date or entered into in connection with any acquisition or disposition of assets permitted under this Agreement
(other than such obligations with respect to Indebtedness). The amount of any guarantee obligation shall be deemed to be an amount
equal to the stated or determinable amount of the Indebtedness in respect of which such guarantee obligation is made or, if not
stated or determinable, the maximum reasonably anticipated liability in respect thereof (assuming such Person is required to perform
thereunder) as determined by such Person in good faith.
“Guarantors”
shall mean (i) each Subsidiary of the Borrower that is party to the Guarantee on the Closing Date and (ii) each Subsidiary of the
Borrower that becomes a party to the Guarantee after the Closing Date pursuant to Section 9.11 or otherwise; provided
that in no event shall any Excluded Subsidiary be required to become a Guarantor (unless such Subsidiary is no longer an Excluded
Subsidiary).
“Hazardous
Materials” shall mean (i) any petroleum or petroleum products, radioactive materials, friable asbestos, polychlorinated
biphenyls, and radon gas; (ii) any chemicals, materials, or substances defined as or included in the definition of “hazardous
substances,” “hazardous waste,” “hazardous materials,” “extremely hazardous waste,” “restricted
hazardous waste,” “toxic substances,” “toxic pollutants,” “contaminants,” or “pollutants,”
or words of similar import, under any Environmental Law; and (iii) any other chemical, material, or substance, which is prohibited,
limited, or regulated due to its dangerous or deleterious properties or characteristics by, any Environmental Law.
“Hedge
Agreements” shall mean (i) any and all rate swap transactions, basis swaps, credit derivative transactions, forward rate
transactions, commodity swaps, commodity options, forward commodity contracts, equity or equity index swaps or options, bond or
bond price or bond index swaps or options or forward bond or forward bond price or forward bond index transactions, interest rate
options, forward foreign exchange transactions, cap transactions, floor transactions, collar transactions, currency swap transactions,
cross-currency rate swap transactions, currency options, spot contracts, or any other similar transactions or any combination of
any of the foregoing (including any options to enter into any of the foregoing), whether or not any such transaction is governed
by or subject to any master agreement, and (ii) any and all transactions of any kind, and the related confirmations, which are
subject to the terms and conditions of, or governed by, any form of master agreement published by the International Swaps and Derivatives
Association, Inc., any International Foreign Exchange Master Agreement, or any other master agreement (any such master agreement,
together with any related schedules, a “Master Agreement”), including any such obligations or liabilities under
any Master Agreement.
“Hedge
Bank” shall mean (i) any Person that, at the time it enters into a Hedge Agreement, is a Lender, an Agent or an Affiliate
of a Lender or an Agent and (ii) with respect to any Hedge Agreement with the Borrower or any Restricted Subsidiary entered into
prior to the Closing Date, any Person that is a Lender or an Agent or an Affiliate of a Lender or an Agent on the Closing Date.
“Hedging
Obligations” shall mean, with respect to any Person, the obligations of such Person under any Hedge Agreements.
“Historical
Financial Statements” shall mean (i) the audited consolidated balance sheets of the Borrower and its Subsidiaries as
at December 31, 2017, December 31, 2018 and December 31, 2019, and the related audited consolidated statements of income and cash
flow of the Borrower and its Subsidiaries for the years ended December 31, 2017, December 31, 2018 and December 31, 2019 and (ii)
the unaudited interim consolidated balance sheets of the Borrower and its Subsidiaries for the fiscal quarters ending March 31,
2020, June 30, 2020 and September 30, 2020 and the related unaudited consolidated statements of income and cash flow of the Borrower
and its Subsidiaries for fiscal quarters ending March 31, 2020, June 30, 2020 and September 30, 2020.
“IBA”
shall have the meaning assigned to such term in Section 1.7.
“ICC”
shall have the meaning provided in the definition of “UCP.”
“IFRS”
shall have the meaning given such term in the definition of “GAAP.”
“Impacted
Interest Period” shall have the meaning assigned to it in the definition of “LIBOR Rate.”
“Increase
Period” shall have the meaning provided in Section 10.7.
“Increased
Amount Date” shall mean, with respect to any Incremental Loan Commitments, the date on which such Incremental Loan Commitments
shall be effective.
“Incremental
Loan Commitments” shall have the meaning provided in Section 2.14(a).
“Incremental
Loans” shall have the meaning provided in Section 2.14(c).
“Incremental
Revolving Credit Commitments” shall have the meaning provided in Section 2.14(a).
“Incremental
Revolving Credit Loan” shall have the meaning provided in Section 2.14(b).
“Incremental
Revolving Loan Lender” shall have the meaning provided in Section 2.14(b).
“Incremental
Term Loan” shall have the meaning provided in Section 2.14(c).
“Incremental
Term Loan Commitments” shall have the meaning provided in Section 2.14(a).
“Incremental
Term Loan Lender” shall have the meaning provided in Section 2.14(c).
“incur”
shall have the meaning provided in Section 10.1.
“incurrence”
shall have the meaning provided in Section 10.1.
“Indebtedness”
shall mean, with respect to any Person, (i) any indebtedness (including principal and premium) of such Person, whether or not contingent
(a) in respect of borrowed money, (b) evidenced by bonds, notes, debentures, or similar instruments or letters of credit or
bankers’ acceptances (or, without double counting, reimbursement agreements in respect thereof), (c) representing the balance
deferred and unpaid of the purchase price of any property (including Capitalized Lease Obligations), or (d) representing any Hedging
Obligations, if and to the extent that any of the foregoing Indebtedness (other than letters of credit and Hedging Obligations)
would appear as a net liability upon a balance sheet (excluding the footnotes thereto) of such Person prepared in accordance with
GAAP; provided that Indebtedness of any direct or indirect parent company appearing upon the balance sheet of the Borrower
solely by reason of push down accounting under GAAP shall be excluded, (ii) to the extent not otherwise included, any obligation
by such Person to be liable for, or to pay, as obligor, guarantor or otherwise, on the obligations of the type referred to in clause
(i) of another Person (whether or not such items would appear upon the balance sheet of such obligor or guarantor), other than
by endorsement of negotiable instruments for collection in the ordinary course of business, and (iii) to the extent not otherwise
included, the obligations of the type referred to in clause (i) of another Person secured by a Lien on any asset owned by
such Person, whether or not such Indebtedness is assumed by such Person; provided that notwithstanding the foregoing, Indebtedness
shall be deemed not to include (1) Contingent Obligations incurred in the ordinary course of business, (2) obligations under or
in respect of Receivables Facilities, (3) prepaid or deferred revenue arising in the ordinary course of business, (4) purchase
price holdbacks arising in the ordinary course of business in respect of a portion of the purchase price of an asset to satisfy
warrants or other unperformed obligations of the seller of such asset, (5) any balance that constitutes a trade payable or similar
obligation to a trade creditor, accrued in the ordinary course of business, (6) any earn-out obligation until such obligation,
within 60 days of becoming due and payable, has not been paid and such obligation is reflected as a liability on the balance sheet
of such Person in accordance with GAAP, (7) any obligations attributable to the exercise of appraisal rights and the settlement
of any claims or actions (whether actual, contingent or potential) with respect thereto, (8) accrued expenses and royalties or
(9) asset retirement obligations and obligations in respect of workers’ compensation (including pensions and retiree medical
care) that are not overdue by more than 60 days. The amount of Indebtedness of any Person for purposes of clause (iii) above
shall (unless such Indebtedness has been assumed by such Person) be deemed to be equal to the lesser of (x) the aggregate unpaid
amount of such Indebtedness and (y) the Fair Market Value of the property encumbered thereby as determined by such Person in good
faith.
For
all purposes hereof, the Indebtedness of the Borrower and its Restricted Subsidiaries, shall exclude all intercompany Indebtedness
having a term not exceeding 365 days (inclusive of any roll-over or extensions of terms) and made in the ordinary course of business
consistent with past practice.
“Indemnified
Liabilities” shall have the meaning provided in Section 13.5(a).
“Indemnified
Person” shall have the meaning provided in Section 13.5(a).
“Indemnified
Taxes” shall mean all Taxes imposed on or with respect to any payment by or on account of any obligation of any Credit
Party hereunder or under any other Credit Document, other than Excluded Taxes or Other Taxes.
“Initial
Revolving Credit Commitments” shall mean the Revolving Credit Commitments in effect on the Closing Date.
“Initial
Term A Loan” shall mean, collectively, Closing Date Initial Term A Loans and Additional Term A Loans. The aggregate principal
amount of the Initial Term A Loans outstanding on the Restatement Effective Date, after giving effect to the funding of the Additional
Term A Loans, is $543,437,500.
“Initial
Term A Loan Lender” shall mean a Lender with an Additional Term A Loan Commitment or an outstanding Initial Term A Loan.
“Initial
Term A Loan Maturity Date” shall mean December 11, 2025 or, if such date is not a Business Day, the immediately following
Business Day.
“Insolvent”
shall mean, with respect to any Multiemployer Plan, the condition that such Multiemployer Plan is insolvent within the meaning
of Section 4245 of ERISA.
“Intellectual
Property” shall mean U.S. and foreign intellectual property, including all (i) (a) patents, inventions, processes, developments,
technology, and know-how; (b) copyrights and works of authorship in any media, including graphics, advertising materials, labels,
package designs, and photographs; (c) trademarks, service marks, trade names, brand names, corporate names, domain names, logos,
trade dress, and other source indicators, and the goodwill of any business symbolized thereby; and (d) trade secrets, confidential,
proprietary, or non-public information and (ii) all registrations, issuances, applications, renewals, extensions, substitutions,
continuations, continuations-in-part, divisions, re-issues, re-examinations, foreign counterparts, or similar legal protections
related to the foregoing.
“Interest
Period” shall mean, with respect to any Loan, the interest period applicable thereto, as determined pursuant to Section
2.9.
“Interpolated
Rate” shall mean, at any time, for any Interest Period, the rate per annum (rounded to the same number of decimal places
as the LIBOR Screen Rate) determined by the Administrative Agent (which determination shall be conclusive and binding absent manifest
error) to be equal to the rate that results from interpolating on a linear basis between: (a) the LIBOR Screen Rate for the longest
period for (which the LIBOR Screen Rate is available) that is shorter than the Impacted Interest Period; and (b) the LIBOR Screen
Rate for the shortest period (for which that LIBOR Screen Rate is available) that exceeds the Impacted Interest Period, in each
case, at such time.
“Investment”
shall mean, with respect to any Person, all investments by such Person in other Persons (including Affiliates) in the form of loans
(including guarantees), advances, or capital contributions (excluding accounts receivable, trade credit, advances to customers,
commission, travel, and similar advances to officers and employees, in each case made in the ordinary course of business), purchases
or other acquisitions for consideration of Indebtedness, Equity Interests, or other securities issued by any other Person and investments
that are required by GAAP to be classified on the balance sheet (excluding the footnotes) of the Borrower in the same manner as
the other investments included in this definition to the extent such transactions involve the transfer of cash or other property;
provided that Investments shall not include, in the case of the Borrower and its Restricted Subsidiaries, intercompany loans
(including guarantees), advances, or Indebtedness either (i) having a term not exceeding 364 days (inclusive of any roll-over or
extensions of terms) and made in the ordinary course of business or (ii) arising from cash management, Tax and/or accounting operations
and made in the ordinary course of business or consistent with past practice.
For
purposes of the definition of “Unrestricted Subsidiary” and Section 10.5,
(i) Investments shall
include the portion (proportionate to the Borrower’s equity interest in such Subsidiary) of the Fair Market Value of the
net assets of a Subsidiary of the Borrower at the time that such Subsidiary is designated an Unrestricted Subsidiary; provided
that upon a redesignation of such Subsidiary as a Restricted Subsidiary, the Borrower shall be deemed to continue to have a permanent
Investment in an Unrestricted Subsidiary in an amount (if positive) equal to (a) the Borrower’s Investment in such Subsidiary
at the time of such redesignation less (b) the portion (proportionate to the Borrower’s equity interest in such Subsidiary)
of the Fair Market Value of the net assets of such Subsidiary at the time of such redesignation; and
(ii) any property transferred
to or from an Unrestricted Subsidiary shall be valued at its Fair Market Value at the time of such transfer.
The
amount of any Investment outstanding at any time shall be the original cost of such Investment, reduced by any dividend, distribution,
interest payment, return of capital, repayment, or other amount received by the Borrower or a Restricted Subsidiary in respect
of such Investment (provided that, with respect to amounts received other than in the form of Cash Equivalents, such amount
shall be equal to the Fair Market Value of such consideration).
“Investment
Grade Rating” shall mean a rating equal to or higher than Baa3 (or the equivalent) by Moody’s and BBB- (or the
equivalent) by S&P, or an equivalent rating by any other nationally recognized statistical rating organization.
“Investment
Grade Securities” shall mean:
(i) securities issued
or directly and fully guaranteed or insured by the United States government or any agency or instrumentality thereof (other than
Cash Equivalents),
(ii) debt securities or
debt instruments with an Investment Grade Rating, but excluding any debt securities or instruments constituting loans or advances
among the Borrower and its Subsidiaries,
(iii) investments in any
fund that invest at least 90% in investments of the type described in clauses (i) and (ii) which fund may also hold
immaterial amounts of cash pending investment or distribution, and
(iv) corresponding instruments
in countries other than the United States customarily utilized for high-quality investments.
“ISDA
Definitions” shall mean the 2006 ISDA Definitions published by the International Swaps and Derivatives Association, Inc.
or any successor thereto, as amended or supplemented from time to time, or any successor definitional booklet for interest rate
derivatives published from time to time by the International Swaps and Derivatives Association, Inc. or such successor thereto.
“IPO”
shall mean (a) the initial underwritten public offering (other than a public offering pursuant to a registration statement on Form
S-8) of common Equity Interests in an IPO Entity, (b) any transaction or series of transactions that results in any common equity
interests of the IPO Entity being publicly traded on any United States national securities exchange or over the counter market,
or any analogous exchange or market in Canada, Ireland, the United Kingdom or any country of the European Union or (c) the acquisition,
purchase, merger or combination of an IPO Entity, by, or with, a publicly traded special acquisition company that (i) is an
entity organized or existing under the laws of the United States, any State thereof or the District of Columbia, (ii) prior
to the IPO, shall have engaged in no business or activities in any material respect other than activities related to becoming and
acting as a publicly traded special acquisition company and entry into the IPO and (iii) immediately prior to the IPO, shall
have no material assets other than cash and Cash Equivalents.
“IPO
Entity” shall mean, at any time at and after an IPO, the Borrower or a Parent Entity of the Borrower, as the case may
be, the Capital Stock in which were issued or otherwise sold pursuant to the IPO or, in the case of an IPO described in clause
(b) of the definition thereof, the publicly traded entity immediately following such IPO, so long as such entity is the
Borrower or a Parent Entity of the Borrower.
“IPO
Listco” shall mean a wholly owned subsidiary of the Borrower formed in contemplation of an IPO to become the IPO Entity.
The Borrower shall, promptly following its formation, notify the Administrative Agent of the formation of any IPO Listco.
“IPO
Reorganization Transactions” shall mean, collectively, the transactions taken in connection with and reasonably related
to consummating an IPO, including (a) formation and ownership of IPO Shell Companies, (b) entry into, and performance
of, (i) a reorganization agreement among any of the Borrower, its Subsidiaries, Parent Entities and/or IPO Shell Companies
implementing IPO Reorganization Transactions and other reorganization transactions in connection with an IPO so long as after giving
effect to such agreement and the transactions contemplated thereby, the security interests of the Secured Parties in the Collateral
and the Guarantees of the Obligations, taken as a whole, would not be materially impaired and (ii) customary underwriting
agreements in connection with an IPO and any future follow-on underwritten public offerings of common Equity Interests in the IPO
Entity, including the provision by IPO Entity and the Borrower of customary representations, warranties, covenants and indemnification
to the underwriters thereunder, (c) the merger of an IPO Subsidiary with one or more direct or indirect holders of Equity
Interests in the Borrower with such IPO Subsidiary surviving and holding Equity Interests in the Borrower and no other material
assets or the dividend or other distribution by the Borrower of Equity Interests of IPO Shell Companies or other transfer of ownership
to the holder of Equity Interests of the Borrower, (d) the amendment and/or restatement of organization documents of the Borrower
and any IPO Subsidiaries, (e) the issuance of Equity Interests of IPO Shell Companies to holders of Equity Interests of the Borrower
in connection with any IPO Reorganization Transactions, (f) the making of Restricted Payments to (or Investments in) an IPO Shell
Company or the Borrower or any Subsidiaries to permit the Borrower to make distributions or other transfers, directly or indirectly,
to IPO Listco, in each case solely for the purpose of paying, and solely in the amounts necessary for IPO Listco to pay, IPO-related
expenses and the making of such distributions by the Borrower, (g) the repurchase by IPO Listco of its Equity Interests from the
Borrower or any Subsidiary, (h) the entry into an exchange agreement, pursuant to which holders of Equity Interests in the Borrower
and certain non-economic/voting Equity Interests in IPO Listco will be permitted to exchange such interests for certain economic/voting
Equity Interests in IPO Listco, (i) any issuance, dividend or distribution of the Equity Interests of the IPO Shell Companies
or other disposition of ownership thereof to the IPO Shell Companies and/or the direct or indirect holders of Equity Interests
of the Borrower and (j) all other transactions reasonably incidental to, or necessary for the consummation of, the foregoing so
long as after giving effect to such agreement and the transactions contemplated thereby, the security interests of the Lenders
in the Collateral and the Guarantees of the Obligations, taken as a whole, would not be materially impaired.
“IPO
Shell Company” shall mean each of IPO Listco and IPO Subsidiary.
“IPO
Subsidiary” shall mean a wholly owned subsidiary of IPO Listco formed in contemplation of, and to facilitate, IPO Reorganization
Transactions and an IPO. The Borrower shall, promptly following its formation, notify the Administrative Agent of the formation
of an IPO Subsidiary.
“ISP”
shall mean, with respect to any Letter of Credit, the “International Standby Practices 1998” published by the Institute
of International Banking Law & Practice (or such later version thereof as may be in effect at the time of issuance).
“Issuer
Documents” shall mean with respect to any Letter of Credit, the Letter of Credit Request, and any other document, agreement,
and instrument entered into by the Letter of Credit Issuer and the Borrower (or any Restricted Subsidiary) or in favor of the Letter
of Credit Issuer and relating to such Letter of Credit.
“Joinder
Agreement” shall mean an agreement substantially in the form of Exhibit A, which may include additional provisions
to ensure fungibility of the Loans and to provide for mechanics for borrowings in currencies other than Dollars.
“Joint
Lead Arrangers and Bookrunners” shall mean JPMorgan Chase Bank, N.A., Silicon Valley Bank, Citizens Bank, N.A. and Fifth
Third Bank, National Association.
“Latest
Term Loan Maturity Date” shall mean, at any date of determination, the latest maturity or expiration date applicable
to any Term Loan hereunder at such time, including the latest maturity or expiration date of any Incremental Term Loan or any Extended
Term Loan, in each case as extended in accordance with this Agreement from time to time.
“L/C
Borrowing” shall mean an extension of credit resulting from a drawing under any Letter of Credit which has not been reimbursed
on the date when made or refinanced as a Borrowing. All L/C Borrowings shall be denominated in Dollars.
“L/C
Facility Maturity Date” shall mean the date that is three Business Days prior to the Revolving Credit Maturity Date;
provided that the L/C Facility Maturity Date may be extended beyond such date with the consent of the Letter of Credit Issuer.
“L/C
Obligations” shall mean, as at any date of determination, the aggregate amount available to be drawn under all outstanding
Letters of Credit plus the aggregate of all Unpaid Drawings, including all L/C Borrowings. For all purposes of this Agreement,
if on any date of determination a Letter of Credit has expired by its terms but any amount may still be drawn thereunder by reason
of the operation of Rule 3.14 of the International Standby Practices (ISP98), such Letter of Credit shall be deemed to be “outstanding”
in the amount so remaining available to be drawn. Unless otherwise specified herein, the amount of a Letter of Credit at any time
shall be deemed to be the stated amount of such Letter of Credit in effect at such time.
“L/C
Participant” shall have the meaning provided in Section 3.3(a).
“L/C
Participation” shall have the meaning provided in Section 3.3(a).
“LCT
Election” shall have the meaning provided in Section 1.12(b).
“LCT
Test Date” shall have the meaning provided in Section 1.12(b).
“Lender”
shall have the meaning provided in the preamble to this Agreement.
“Lender
Default” shall mean (i) the refusal or failure of any Lender to make available its portion of any incurrence of Loans
or Reimbursement Obligations, which refusal or failure is not cured within two Business Days after the date of such refusal or
failure, unless such Lender notifies the Administrative Agent and the Borrower in writing that such refusal or failure is the result
of such Lender’s good faith determination that one or more conditions precedent to funding (each of which conditions precedent,
together with any applicable default, shall be specifically identified in writing) has not been satisfied, (ii) the failure of
any Lender to pay over to the Administrative Agent, any Letter of Credit Issuer or any other Lender any other amount required to
be paid by it hereunder within two Business Days of the date when due, unless the subject of a good faith dispute, (iii) a Lender
has notified, in writing, the Borrower or the Administrative Agent in writing that it does not intend to comply with its funding
obligations under this Agreement or has made a public statement to that effect with respect to its funding obligations under this
Agreement or a Lender has publicly announced that it does not intend to comply with its funding obligations under other loan agreements,
credit agreements or similar facilities generally, (iv) a Lender has failed to confirm in a manner reasonably satisfactory to the
Administrative Agent and the Borrower that it will comply with its funding obligations under this Agreement (provided that
such Lender shall cease to be a Defaulting Lender pursuant to this clause (iv) upon the Administrative Agent’s receipt
of such written confirmation in form and substance reasonably satisfactory to the Administrative Agent) or (v) a Distressed Person
has admitted in writing that it is insolvent or such Distressed Person becomes subject to a Lender-Related Distress Event or (vi)
a Lender has become the subject of a Bail-In Action.
“Lender-Related
Distress Event” shall mean, with respect to any Lender or any other Person that directly or indirectly controls such
Lender (each, a “Distressed Person”), a voluntary or involuntary case with respect to such Distressed Person
under any debt relief law, or a custodian, conservator, receiver, or similar official is appointed for such Distressed Person or
any substantial part of such Distressed Person’s assets, or such Distressed Person, or any Person that directly or indirectly
controls such Distressed Person or is subject to a forced liquidation or such Distressed Person makes a general assignment for
the benefit of creditors or is otherwise adjudicated as, or determined by any Governmental Authority having regulatory authority
over such Distressed Person to be, insolvent or bankrupt; provided that a Lender-Related Distress Event shall not be deemed
to have occurred solely by virtue of the ownership or acquisition of any equity interests in any Lender or any Person that directly
or indirectly controls such Lender by a Governmental Authority or an instrumentality thereof so long as such ownership interest
does not result in or provide such Lender with immunity from the jurisdiction of courts within the United States or from the enforcement
of judgments or writs of attachments on its assets or permit such Lender (or such Governmental Authority) to reject, repudiate,
disavow or disaffirm any contracts or agreements made with such Lender.
“Lender-Related
Person” shall have the meaning assigned to it in Section 13.5.
“Letter
of Credit” shall mean each letter of credit issued pursuant to Section 3.1(a).
“Letter
of Credit Commitment” shall mean, initially (a) with respect to each Letter of Credit Issuer, the commitment of such
Letter of Credit Issuer to issue Letters of Credit up to the amount set forth opposite the name of such Letter of Credit Issuer
on Schedule 1.1(b) hereto, with such commitments totaling $15,000,000 in the aggregate, as the same may be reduced from
time to time pursuant to Section 3.1 and (b) after the addition of any other Letter of Credit Issuer as referenced in the
definition of “Letter of Credit Issuers,” the percentage agreed to between such additional Letter of Credit Issuer
and the Borrower (with the Letter of Credit Issuer Commitments of each pre-existing Letter of Credit Issuer as elected by the Borrower
in consultation with each such pre-existing Letter of Credit Issuer).
“Letter
of Credit Expiration Date” shall mean the day that is three Business Days prior to the scheduled Maturity Date then in
effect for the Revolving Credit Facility.
“Letter
of Credit Exposure” shall mean, with respect to any Lender, at any time, the sum of (i) the amount of the principal amount
of any Unpaid Drawings in respect of which such Lender has made (or is required to have made) payments to the Letter of Credit
Issuer pursuant to Section 3.4(a) at such time and (ii) such Lender’s Revolving Credit Commitment Percentage of the
Letters of Credit Outstanding at such time (excluding the portion thereof consisting of Unpaid Drawings in respect of which the
Lenders have made (or are required to have made) payments to the Letter of Credit Issuer pursuant to Section 3.4(a)).
“Letter
of Credit Fee” shall have the meaning provided in Section 4.1(b).
“Letter
of Credit Issuer” shall mean (i) JPMorgan Chase Bank, N.A., (ii) Silicon Valley Bank, (iii) any of their respective Affiliates
or branches and (iv) any other Revolving Credit Lender that becomes an Letter of Credit Issuer in accordance with Section 3.6,
in each case, in its capacity as an issuer of Letters of Credit hereunder, or any replacement or successor issuer of Letters of
Credit hereunder. In the event that there is more than one Letter of Credit Issuer at any time, references herein and in the other
Credit Documents to the Letter of Credit Issuer shall be deemed to refer to the Letter of Credit Issuer in respect of the applicable
Letter of Credit or to all Letter of Credit Issuers, as the context requires.
“Letter
of Credit Request” shall mean a notice executed and delivered by the Borrower pursuant to Section 3.2, and substantially
in the form of Exhibit F or another form which is acceptable to the relevant Letter of Credit Issuer in its reasonable discretion.
“Letters
of Credit Outstanding” shall mean, at any time the sum of, without duplication, (i) the aggregate Stated Amount of all
outstanding Letters of Credit and (ii) the aggregate amount of the principal amount of all Unpaid Drawings.
“Level
I Status” shall mean, on any date, the Consolidated Total Debt to Consolidated EBITDA Ratio is greater than or equal
to 3.50 to 1.00 as of such date.
“Level
II Status” shall mean, on any date, the Consolidated Total Debt to Consolidated EBITDA Ratio is less than 3.50 to 1.00
but greater than or equal to 3.00 to 1.00 as of such date.
“Level
III Status” shall mean, on any date, the Consolidated Total Debt to Consolidated EBITDA Ratio is less than 3.00 to 1.00
but greater than or equal to 2.50 to 1.00 as of such date.
“Level
IV Status” shall mean, on any date, the Consolidated Total Debt to Consolidated EBITDA Ratio is less than 2.50 to 1.00
but greater than or equal to 1.00 to 1.00 as of such date.
“Level
V Status” shall mean, on any date, the Consolidated Total Debt to Consolidated EBITDA Ratio is less than 1.00 to 1.00
as of such date.
“Liabilities”
shall mean any losses, claims (including intraparty claims), demands, damages or liabilities of any kind.
“LIBOR
Loan” shall mean any Loan bearing interest at a rate determined by reference to the Adjusted LIBOR Rate.
“LIBOR
Rate” shall mean, with respect to any Borrowing of LIBOR Loans for any Interest Period, the LIBOR Screen Rate at the
Reference Time; provided that if the LIBOR Screen Rate shall not be available at such time for such Interest Period (an
“Impacted Interest Period”) then the LIBOR Rate shall be the Interpolated Rate.
“LIBOR
Screen Rate” shall mean, for any day and time, with respect to any Borrowing of LIBOR Loans for any Interest Period,
the London interbank offered rate as administered by ICE Benchmark Administration (or any other Person that takes over the administration
of such rate for Dollars for a period equal in length to such Interest Period as displayed on such day and time on pages LIBOR01
or LIBOR02 of the Reuters screen that displays such rate (or, in the event such rate does not appear on a Reuters page or screen,
on any successor or substitute page on such screen that displays such rate, or on the appropriate page of such other information
service that publishes such rate from time to time as selected by the Administrative Agent in its reasonable discretion)); provided
that if the LIBOR Screen Rate as so determined would be less than zero, such rate shall be deemed to zero for the purposes of this
Agreement.
“Lien”
shall mean with respect to any asset, any mortgage, lien, pledge, hypothecation, charge, security interest, preference, priority,
or encumbrance of any kind in respect of such asset, whether or not filed, recorded or otherwise perfected under applicable law,
including any conditional sale or other title retention agreement, any lease in the nature thereof, any option or other agreement
to sell or give a security interest in and any filing of or agreement to give any financing statement under the Uniform Commercial
Code (or equivalent statutes) of any jurisdiction; provided that in no event shall an operating lease or a license, sub-license
or cross-license of Intellectual Property constitute or be deemed to constitute a Lien.
“Limited
Condition Transaction” shall mean any transaction by one or more of the Borrower and its Restricted Subsidiaries whose
consummation is not conditioned on the availability of, or on obtaining, third party financing.
“Loan”
shall mean any Revolving Loan, Term Loan, Extended Term Loan, Incremental Term Loan, or any other loan made by any Lender pursuant
to this Agreement.
“Master
Agreement” shall have the meaning provided in the definition of “Hedge Agreement.”
“Material
Adverse Effect” shall mean a material adverse effect on (i) the business, assets, operations, properties, or financial
condition of the Borrower and its Subsidiaries, taken as a whole, (ii) the ability of the Borrower and the other Credit Parties,
taken as a whole, to perform their payment obligations under this Agreement or any of the other Credit Documents or (iii) the rights
and remedies of the Administrative Agent and the Lenders under the Credit Documents.
“Material
Intellectual Property” shall mean Intellectual Property that is material to the business of the Borrower and its Subsidiaries
(taken as a whole).
“Material
Permitted Acquisition” shall mean any Permitted Acquisition in excess of $25,000,000.
“Material
Subsidiary” shall mean, at any date of determination, each Restricted Subsidiary (i) whose total assets at the last
day of the Test Period ending on the last day of the most recent fiscal period for which Section 9.1 Financials have been delivered
were equal to or greater than 5.0% of the Consolidated Total Assets of the Borrower and its Restricted Subsidiaries at such date
or (ii) whose revenues during such Test Period were equal to or greater than 5.0% of the consolidated revenues of the Borrower
and its Restricted Subsidiaries for such period, in each case determined in accordance with GAAP; provided that if, at any
time and from time to time after the Closing Date, Restricted Subsidiaries that are not Material Subsidiaries (other than Subsidiaries
that are Excluded Subsidiaries by virtue of any of clauses (ii) through (xii) of the definition of “Excluded
Subsidiary”) have, in the aggregate, (a) total assets at the last day of such Test Period equal to or greater than 10% of
the Consolidated Total Assets of the Borrower and its Restricted Subsidiaries at such date or (b) revenues during such Test Period
equal to or greater than 10% of the consolidated revenues of the Borrower and its Restricted Subsidiaries for such period, in each
case determined in accordance with GAAP, then the Borrower shall, on the date on which financial statements for such quarter are
delivered pursuant to this Agreement, designate in writing to the Administrative Agent one or more of such Restricted Subsidiaries
as Material Subsidiaries for each fiscal period until this proviso is no longer applicable.
“Maturity
Date” shall mean the Initial Term A Loan Maturity Date, the Revolving Credit Maturity Date, the maturity date of an Extended
Term Loan or the maturity date of an Extended Revolving Credit Loan, as applicable.
“Maximum
Incremental Facilities Amount” shall mean, at any date of determination, an aggregate principal amount equal to $200,000,000.
“Minimum
Borrowing Amount” shall mean (i) with respect to a Borrowing of LIBOR Loans, $500,000 (or, if less, the entire remaining
applicable Commitments at the time of such Borrowing), and (ii) with respect to a Borrowing of ABR Loans, $100,000 (or, if less,
the entire remaining applicable Commitments at the time of such Borrowing).
“Minimum
Collateral Amount” shall mean, at any time, (i) with respect to Cash Collateral consisting of cash or Cash Equivalents
or deposit account balances provided to reduce or eliminate Fronting Exposure during the existence of a Defaulting Lender, an amount
equal to 101% of the Fronting Exposure of the Letter of Credit Issuer with respect to Letters of Credit issued and outstanding
at such time and (ii) with respect to Cash Collateral consisting of cash or Cash Equivalents or deposit account balances provided
in accordance with the provisions of Section 3.8(a)(i), (a)(ii), or (a)(iii), an amount equal to 101% of the
outstanding amount of all L/C Obligations.
“Minimum
Tender Condition” shall have the meaning provided in Section 2.15(b).
“Moody’s”
shall mean Moody’s Investors Service, Inc. or any successor by merger or consolidation to its business.
“Mortgage”
shall mean a mortgage, deed of trust, deed to secure debt, trust deed, or other security document entered into by the owner of
a Mortgaged Property and the Collateral Agent for the benefit of the Secured Parties in respect of that Mortgaged Property to secure
the Obligations, in form and substance reasonably acceptable to the Collateral Agent, together with such terms and provisions as
may be required by local laws.
“Mortgaged
Property” shall mean, initially, each parcel of real property (including fixtures) and the improvements thereto owned
in fee by a Credit Party and identified on Schedule 1.1(a), and each other owned parcel of real property (including fixtures)
and improvements thereto with respect to which a Mortgage is granted pursuant to Section 9.14.
“Multiemployer
Plan” shall mean a multiemployer plan as defined in Section 4001(a)(3) of ERISA to which any Credit Party or ERISA Affiliate
makes or is obligated to make contributions, or during the five preceding calendar years, has made or been obligated to make contributions.
“Net
Cash Proceeds” shall mean, with respect to any Prepayment Event, (i) the gross cash proceeds (including payments from
time to time in respect of installment obligations, if applicable, but only as and when received and excluding any interest payments)
received by or on behalf of the Borrower or any of the Restricted Subsidiaries in respect of such Prepayment Event, as the case
may be, less (ii) the sum of:
(a) the
amount, if any, of all Taxes (including in connection with any repatriation of funds) paid or estimated to be payable by the Borrower
or any of the Restricted Subsidiaries in connection with such Prepayment Event,
(b) the
amount of any reasonable reserve established in accordance with GAAP against any liabilities (other than any Taxes deducted pursuant
to clause (a) above) (1) associated with the assets that are the subject of such Prepayment Event and (2) retained by the
Borrower or any of the Restricted Subsidiaries; provided that the amount of any subsequent reduction of such reserve (other
than in connection with a payment in respect of any such liability) shall be deemed to be Net Cash Proceeds of such a Prepayment
Event occurring on the date of such reduction,
(c) the
amount of any Indebtedness (other than the Loans) secured by a Lien on the assets that are the subject of such Prepayment Event
to the extent that the instrument creating or evidencing such Indebtedness requires that such Indebtedness be repaid upon consummation
of such Prepayment Event,
(d) in
the case of any Asset Sale Prepayment Event or Casualty Event or Permitted Sale Leaseback, the amount of any proceeds of such Prepayment
Event that the Borrower or any Restricted Subsidiary has reinvested (or intends to reinvest within the Reinvestment Period or has
entered into a binding commitment prior to the last day of the Reinvestment Period to reinvest) in the business of the Borrower
or any of the Restricted Subsidiaries; provided that any portion of such proceeds that has not been so reinvested within
such Reinvestment Period (with respect to such Prepayment Event, the “Deferred Net Cash Proceeds”) shall, unless
the Borrower or a Restricted Subsidiary has entered into a binding commitment prior to the last day of such Reinvestment Period
to reinvest such proceeds no later than 180 days following the last day of such Reinvestment Period, (1) be deemed to be Net Cash
Proceeds of an Asset Sale Prepayment Event, Casualty Event, or Permitted Sale Leaseback occurring on the last day of such Reinvestment
Period or, if later, 180 days after the date the Borrower or such Restricted Subsidiary has entered into such binding commitment,
as applicable (such last day or 180th day, as applicable, the “Deferred Net Cash Proceeds Payment Date”), and
(2) be applied to the repayment of Term Loans in accordance with Section 5.2(a)(i),
(e) in
the case of any Asset Sale Prepayment Event, Casualty Event, or Permitted Sale Leaseback by a non-Wholly-Owned Restricted Subsidiary,
the pro rata portion of the Net Cash Proceeds thereof (calculated without regard to this clause (e)) attributable to minority
interests and not available for distribution to or for the account of the Borrower or a Wholly-Owned Restricted Subsidiary as a
result thereof,
(f) in
the case of any Asset Sale Prepayment Event or Permitted Sale Leaseback, any funded escrow established pursuant to the documents
evidencing any such sale or disposition to secure any indemnification obligations or adjustments to the purchase price associated
with any such sale or disposition; provided that the amount of any subsequent reduction of such escrow (other than in connection
with a payment in respect of any such liability) shall be deemed to be Net Cash Proceeds of such a Prepayment Event occurring on
the date of such reduction solely to the extent that the Borrower and/or any Restricted Subsidiaries receives cash in an amount
equal to the amount of such reduction, and
(g) all
fees and out-of-pocket expenses paid by the Borrower or a Restricted Subsidiary in connection with any of the foregoing (for the
avoidance of doubt, including, attorney’s fees, investment banking fees, survey costs, title insurance premiums, and related
search and recording charges, transfer Taxes, deed or mortgage recording Taxes, underwriting discounts and commissions, other customary
expenses, and brokerage, consultant, accountant, and other customary fees),
in each
case only to the extent not already deducted in arriving at the amount referred to in clause (i) above.
“Net
Income” shall mean, with respect to any Person and its Restricted Subsidiaries on a consolidated basis for any period,
the net income (loss) of such Person and its Restricted Subsidiaries, determined in accordance with GAAP and before any reduction
in respect of preferred stock dividends.
“Non-Bank
Tax Certificate” shall have the meaning provided in Section 5.4(e)(ii)(B)(3).
“Non-Consenting
Lender” shall have the meaning provided in Section 13.7(b).
“Non-Defaulting
Lender” shall mean and include each Lender other than a Defaulting Lender.
“Non-Extension
Notice Date” shall have the meaning provided in Section 3.2(d).
“Non-U.S.
Lender” shall mean any Lender that is not a “United States person” as defined by Section 7701(a)(30) of the
Code.
“Notice
of Borrowing” shall have the meaning provided in Section 2.3(a).
“Notice
of Conversion or Continuation” shall have the meaning provided in Section 2.6(a).
“NYFRB”
shall mean the Federal Reserve Bank of New York.
“NYFRB
Rate” shall mean, for any day, the greater of (a) the Federal Funds Effective Rate in effect on such day and (b) the
Overnight Bank Funding Rate in effect on such day (or for any day that is not a Business Day, for the immediately following Business
Day); provided that if none of such rates are published for any day that is a Business Day, the term “NYFRB Rate”
shall mean the rate for a federal funds transaction quoted at 11:00 a.m. on such day received by the Administrative Agent from
a federal funds broker of recognized standing selected by it; provided, further, that if any of the aforesaid rates as so
determined be less than zero, such rate shall be deemed to be zero for purposes of this Agreement.
“NYFRB’s
Website” shall mean the website of the NYFRB at http://www.newyorkfed.org, or any successor source.
“Obligations”
shall mean all advances to, and debts, liabilities, obligations, covenants, and duties of, any Credit Party (and in the case of
a Secured Cash Management Agreement or Secured Hedge Agreement, any Restricted Subsidiary) arising under any Credit Document or
otherwise with respect to any Revolving Credit Commitment, Loan, or Letter of Credit or under any Secured Cash Management Agreement,
Secured Hedge Agreement (other than with respect to any Credit Party’s obligations that constitute Excluded Swap Obligations
solely with respect to such Credit Party), in each case, entered into with the Borrower or any of the Restricted Subsidiaries,
whether direct or indirect (including those acquired by assumption), absolute or contingent, due or to become due, now existing
or hereafter arising and including interest and fees that accrue after the commencement by or against any Credit Party or any Affiliate
thereof of any proceeding under any bankruptcy or insolvency law naming such Person as the debtor in such proceeding, regardless
of whether such interest and fees are allowed claims in such proceeding. Without limiting the generality of the foregoing, the
Obligations of the Credit Parties under the Credit Documents (and any of their Subsidiaries to the extent they have obligations
under the Credit Documents) include the obligation (including guarantee obligations) to pay principal, interest, charges, expenses,
fees, attorney costs, indemnities, and other amounts payable by any Credit Party under any Credit Document.
“OFAC”
shall have the meaning provided in Section 8.19(c).
“Original
Credit Agreement” shall have the meaning provided in the preamble to this Agreement.
“Original
Revolving Credit Commitments” shall mean all Revolving Credit Commitments, Existing Revolving Credit Commitments, and
Extended Revolving Credit Commitments, other than any Incremental Revolving Credit Commitments (and any Extended Revolving Credit
Commitments related thereto).
“Other
Taxes” shall mean all present or future stamp, registration, court or documentary Taxes or any other excise, property,
intangible, mortgage recording, filing or similar Taxes arising from any payment made hereunder or under any other Credit Document
or from the execution, delivery, performance, enforcement or registration of, or otherwise with respect to, this Agreement or any
other Credit Document; provided that such term shall not include (i) any Taxes that result from an assignment, grant of
a participation pursuant to Section 13.6(c) or transfer or assignment to or designation of a new lending office or other
office for receiving payments under any Credit Document (“Assignment Taxes”) to the extent such Assignment Taxes
are imposed as a result of a connection between the assignor/participating Lender and/or the assignee/Participant and the taxing
jurisdiction (other than a connection arising solely from any Credit Documents or any transactions contemplated thereunder), except
to the extent that any such action described in this proviso is requested or required by the Borrower or (ii) Excluded Taxes.
“Overnight
Bank Funding Rate” shall mean, for any day, the rate comprised of both overnight federal funds and overnight borrowings
of LIBOR Loans by U.S.-managed banking offices of depository institutions, as such composite rate shall be determined by the NYFRB
as set forth on the Federal Reserve Bank of New York’s Website from time to time, and published on the next succeeding Business
Day by the NYFRB as an overnight bank funding rate.
“Parent
Entity” shall mean any Person that is a direct or indirect parent company (which may be organized as, among other things,
a partnership), including any managing member, of the Borrower, as applicable.
“Participant”
shall have the meaning provided in Section 13.6(c)(i).
“Participant
Register” shall have the meaning provided in Section 13.6(c)(ii).
“Participating
Member State” shall mean any member state of the European Union that adopts or has adopted the Euro as its lawful currency
in accordance with legislation of the European Union relating to economic and monetary union.
“Patriot
Act” shall have the meaning provided in Section 13.18.
“PBGC”
shall mean the Pension Benefit Guaranty Corporation referred to and defined in ERISA and any successor entity performing similar
functions.
“Pension
Plan” shall mean any employee pension benefit plan (as defined in Section 3(2) of ERISA, but excluding any Multiemployer
Plan) in respect of which any Credit Party or any ERISA Affiliate is (or, if such plan were terminated, would under Section 4062
or Section 4069 of ERISA be deemed to be) an “employer” as defined in Section 3(5) of ERISA.
“Perfection
Exceptions” shall mean that, except as otherwise elected by the Borrower in its sole discretion, no Credit Party shall
be required, nor shall any Agent be authorized, to (i) enter into control agreements with respect to, or otherwise perfect any
security interest granted under the Security Documents by “control” (or similar arrangements) over, commodities accounts,
securities accounts, deposit accounts, futures accounts, other bank accounts, cash and cash equivalents and accounts related to
the clearing, payment processing and similar operations of the Borrower and its Subsidiaries, (ii) perfect the security interest
granted under the Security Documents in the following other than by the filing of a UCC financing statement: (1) letter-of-credit
rights (as defined in the UCC), (2) commercial tort claims (as defined in the UCC), (3) Fixtures (as defined in the UCC),
except to the extent that the same are Equipment (as defined in the UCC) or are related to real property covered or intended by
the Credit Documents to be covered by a Mortgage and (4) assigned agreements, (iii) send notices to account debtors or other contractual
third-parties unless an Event of Default has occurred and is continuing, (iv) enter into any security documents to be governed
by the law of any jurisdiction in which assets are located other than the laws of the United States, any state thereof, or the
District of Columbia, (v) deliver or provide (or take any actions with respect to obtaining) any leasehold mortgages, mortgages
(with respect to any real property other than Mortgaged Property), landlord waivers, estoppels or collateral access letters or
(vi) except as required by the Security Documents, enter into any source code escrow agreement or register any Intellectual Property.
“Permitted
Acquisition” shall have the meaning provided in clause (iii) of the definition of “Permitted Investments.”
“Permitted
Asset Swap” shall mean the concurrent purchase and sale or exchange of Related Business Assets or a combination of Related
Business Assets and cash or Cash Equivalents between the Borrower or a Restricted Subsidiary and another Person; provided
that any cash or Cash Equivalents received must be applied in accordance with Section 10.4.
“Permitted
Debt Exchange” shall have the meaning provided in Section 2.15(a).
“Permitted
Debt Exchange Notes” shall have the meaning provided in Section 2.15(a).
“Permitted
Debt Exchange Offer” shall have the meaning provided in Section 2.15(a).
“Permitted
Holders” shall mean each of Accel Growth Fund Associates L.L.C., Accel Growth Fund Investors 2010 L.L.C., General Atlantic
LLC, Index Venture Growth Associates I Limited, Yucca (Jersey) SLP, Anthony Casalena and, in each case, their respective Affiliates
(other than any portfolio company of any of the foregoing), management investment vehicles, and, with respect to any natural person
that is a Permitted Holder, estates, descendants, family members, spouses and former spouses and any trusts, limited liability
companies, corporations, partnerships or other entities for the benefit of, or controlled by, any such natural person that is a
Permitted Holder.
“Permitted
Investments” shall mean:
(i) any Investment in
the Borrower or any Restricted Subsidiary;
(ii) any Investment in
cash, Cash Equivalents, or Investment Grade Securities at the time such Investment is made;
(iii) any Investment by
the Borrower or any Restricted Subsidiary in a Person that is engaged in a Similar Business if as a result of such Investment (a
“Permitted Acquisition”), (1) such Person becomes a Restricted Subsidiary or (2) such Person, in one transaction
or a series of related transactions, is merged, consolidated, or amalgamated with or into, or transfers or conveys substantially
all of its assets to, or is liquidated into, the Borrower or a Restricted Subsidiary, and, in each case, any Investment held by
such Person so long as, in the case of any Investment held by such Person as of the date of such acquisition, merger, consolidation
or transfer, such Investment was not made by such Person in contemplation of such acquisition, merger, consolidation or transfer;
(iv) any Investment in
securities or other assets not constituting cash, Cash Equivalents, or Investment Grade Securities and received in connection with
an Asset Sale made pursuant to Section 10.4 or any other disposition of assets not constituting an Asset Sale;
(v) (a) any Investment
existing or contemplated on the Restatement Effective Date and, in each case, listed on Schedule 10.5 and (b) Investments
consisting of any modification, replacement, renewal, reinvestment, or extension of any such Investment; provided that the
amount of any such Investment is not increased from the amount of such Investment on the Closing Date except pursuant to the terms
of such Investment (including in respect of any unused commitment), plus any accrued but unpaid interest (including any
portion thereof which is payable in kind in accordance with the terms of such modified, extended, renewed, or replaced Investment)
and premium payable by the terms of such Indebtedness thereon and fees and expenses associated therewith as of the Closing Date;
(vi) any Investment acquired
by the Borrower or any Restricted Subsidiary (a) in exchange for any other Investment or accounts receivable held by the Borrower
or any such Restricted Subsidiary in connection with or as a result of a bankruptcy, workout, reorganization, or recapitalization
of the Borrower of such other Investment or accounts receivable or (b) as a result of a foreclosure by the Borrower or any Restricted
Subsidiary with respect to any secured Investment or other transfer of title with respect to any secured Investment in default;
(vii) Hedging Obligations
permitted under clause (j) of Section 10.1 and Cash Management Services;
(viii) [reserved];
(ix) Investments the payment
for which consists of Equity Interests of the Borrower or any direct or indirect parent company of the Borrower (exclusive of Disqualified
Stock); provided that such Equity Interests will not increase the amount available for Restricted Payments under clause
(ii) of Section 10.5(a);
(x) guarantees of Indebtedness
permitted under Section 10.1;
(xi) any transaction to
the extent it constitutes an Investment that is permitted and made in accordance with the provisions of Section 9.9 (except
transactions described in clauses (b) of such paragraph);
(xii) Investments consisting
of purchases and acquisitions of inventory, supplies, material, equipment, or other similar assets in the ordinary course of business;
(xiii) additional Investments
having an aggregate Fair Market Value, taken together with all other Investments made pursuant to this clause (xiii) that
are at that time outstanding (without giving effect to the sale of an Unrestricted Subsidiary to the extent the proceeds of such
sale do not consist of cash or marketable securities), not to exceed the greater of (a) $22,500,000 and (b) 15.0% of TTM Consolidated
EBITDA at the time of such Investment (with the Fair Market Value of each Investment being measured at the time made and without
giving effect to subsequent changes in value); provided, however, that if any Investment pursuant to this clause
(xiii) is made in any Person that is not a Restricted Subsidiary at the date of the making of such Investment and such Person
becomes a Restricted Subsidiary after such date, such Investment shall thereafter be deemed to have been made pursuant to clause
(i) above and shall cease to have been made pursuant to this clause (xiii) for so long as such Person continues to be
a Restricted Subsidiary;
(xiv) Investments relating
to any Receivables Subsidiary that, in the good faith determination of the board of directors of the Borrower, are necessary or
advisable to effect a Receivables Facility or any repurchases in connection therewith;
(xv) advances to, or guarantees
of Indebtedness of, employees not in excess of the greater of (a) $9,750,000 and (b) 6.50% of TTM Consolidated EBITDA at the time
of such Investment;
(xvi) (a) loans and advances
to officers, directors, managers, and employees for business-related travel expenses, moving expenses, and other similar expenses,
in each case incurred in the ordinary course of business or consistent with past practices or to fund such Person’s purchase
of Equity Interests of the Borrower or any direct or indirect parent company thereof and (b) promissory notes received from stockholders
of the Borrower, any direct or indirect parent company of the Borrower or any Subsidiary in connection with the exercise of stock
options in respect of the Equity Interests of the Borrower, any direct or indirect parent company of the Borrower and the Subsidiaries
and (c) advances of payroll payments to employees in the ordinary course of business;
(xvii) Investments consisting
of extensions of trade credit in the ordinary course of business;
(xviii) Investments in
the ordinary course of business consisting of Uniform Commercial Code Article 3 endorsements for collection or deposit and
Uniform Commercial Code Article 4 customary trade arrangements with customers consistent with past practices;
(xix) non-cash Investments
in connection with Tax planning and reorganization activities; provided that after giving effect to any such activities,
the security interests of the Lenders in the Collateral, taken as a whole, would not be materially impaired;
(xx) Investments made
in the ordinary course of business in connection with obtaining, maintaining or renewing client, franchisee and customer contracts
and loans or advances made to, and guarantees with respect to obligations of, franchisees, distributors, suppliers, licensors and
licensees in the ordinary course of business;
(xxi) the licensing and
contribution of Intellectual Property pursuant to joint development, joint venture or joint marketing arrangements with other Persons,
in the ordinary course of business;
(xxii) contributions to
a “rabbi” trust for the benefit of employees, directors, officers, managers, consultants, independent contractors or
other service providers or other grantor trust subject to claims of creditors in the case of a bankruptcy of the Borrower;
(xxiii) Investments by
an Unrestricted Subsidiary entered into prior to the day such Unrestricted Subsidiary is redesignated as a Restricted Subsidiary
pursuant to the definition of “Unrestricted Subsidiary;”
(xxiii) Borrower
and its Subsidiaries may undertake or consummate any IPO Reorganization Transaction and transactions relating thereto or contemplated
thereby;
(xxv) Investments
and other acquisitions to the extent that payment for such Investments is made with Capital Stock of the Borrower (or any Parent
Entity thereof or the IPO Entity); and
(xxvi) loans and advances
to any Parent Entity in lieu of, and not in excess of the amount of (after giving effect to any other loans, advances or Restricted
Payments in respect thereof), Restricted Payments to the extent permitted to be made to such Parent Entity; provided that any such
loan or advance shall reduce the amount of such applicable Restricted Payments thereafter permitted by a corresponding amount;
provided further that any conditions, if any, to the making of such Restricted Payment shall be satisfied.
“Permitted
Liens” shall mean, with respect to any Person:
(i) pledges or deposits
by such Person under workmen’s compensation laws, unemployment insurance laws, or similar legislation, or good faith deposits
in connection with bids, tenders, contracts (other than for the payment of Indebtedness), or leases to which such Person is a party,
or deposits to secure public or statutory obligations of such Person or deposits of cash or U.S. government bonds to secure surety
or appeal bonds to which such Person is a party, or deposits as security for the payment of rent or deposits made to secure obligations
arising from contractual or warranty refunds, in each case incurred in the ordinary course of business;
(ii) Liens imposed by
law, such as carriers’, warehousemen’s, landlords’, materialmen’s, repairmen’s, and mechanics’
or other like Liens, in each case for sums not yet overdue for a period of more than 60 days or being contested in good faith by
appropriate proceedings or other Liens arising out of judgments or awards against such Person with respect to which such Person
shall then be proceeding with an appeal or other proceedings for review if adequate reserves with respect thereto are maintained
on the books of such Person in accordance with GAAP;
(iii) Liens for Taxes,
assessments, or other governmental charges not yet overdue for a period of more than 60 days or which are being contested in good
faith by appropriate proceedings diligently conducted, if adequate reserves with respect thereto are maintained on the books of
such Person in accordance with GAAP, or for property Taxes on property the Borrower or one of its Subsidiaries has determined to
abandon if the sole recourse for such Tax, assessment, charge, levy, or claim is to such property;
(iv) Liens in favor of
issuers of performance, surety, bid, indemnity, warranty, release, appeal, or similar bonds or with respect to other regulatory
requirements or letters of credit or bankers’ acceptances issued, and completion guarantees provided for, in each case pursuant
to the request of and for the account of such Person in the ordinary course of its business;
(v) minor survey exceptions,
minor encumbrances, ground leases, easements, or reservations of, or rights of others for, licenses, rights-of-way, servitudes,
sewers, electric lines, drains, telegraph and telephone and cable television lines, gas and oil pipelines, and other similar purposes,
or zoning, building codes, or other restrictions (including, without limitation, minor defects or irregularities in title and similar
encumbrances) as to the use of real properties or Liens incidental, to the conduct of the business of such Person or to the ownership
of its properties which were not incurred in connection with Indebtedness and which do not in the aggregate materially adversely
affect the value of said properties or materially impair their use in the operation of the business of such Person;
(vi) Liens securing Indebtedness
permitted to be outstanding pursuant to clause (a), (d) or (y) of Section 10.1; provided that,
(a) in the case of clause (d) of Section 10.1, such Lien may not extend to any property or equipment (or assets affixed
or appurtenant thereto) other than the property or equipment being financed or refinanced under such clause (d) of Section
10.1, replacements of such property, equipment or assets, and additions and accessions and in the case of multiple financings
of equipment provided by any lender, other equipment financed by such lender and (b) in the case of clause (y) of Section
10.1, such Lien may not extend to any assets other than the assets owned by non-Credit Parties that are joint ventures;
(vii) subject to Section
9.14, other than with respect to Mortgaged Property, Liens existing on the Restatement Effective Date; provided that
any Lien securing Indebtedness or other obligations in excess of $1,000,000 shall be listed on Schedule 10.2 and, in each
case, any modifications, replacements, renewals, or extensions thereof;
(viii) Liens on property
or shares of stock of a Person at the time such Person becomes a Subsidiary; provided such Liens are not created or incurred
in connection with, or in contemplation of, such other Person becoming a Subsidiary; provided, further, however,
that such Liens may not extend to any other property owned by the Borrower or any Restricted Subsidiary (other than, with respect
to such Person, any replacements of such property or assets and additions and accessions thereto, after-acquired property subject
to a Lien securing Indebtedness and other obligations incurred prior to such time and which Indebtedness and other obligations
are permitted hereunder that require, pursuant to their terms at such time, a pledge of after-acquired property of such Person,
and the proceeds and the products thereof and customary security deposits in respect thereof and in the case of multiple financings
of equipment provided by any lender, other equipment financed by such lender, it being understood that such requirement shall not
be permitted to apply to any property to which such requirement would not have applied but for such acquisition);
(ix) Liens on property
at the time the Borrower or a Restricted Subsidiary acquired the property, including any acquisition by means of a merger or consolidation
with or into the Borrower or any Restricted Subsidiary or the designation of an Unrestricted Subsidiary as a Restricted Subsidiary;
provided that such Liens are not created or incurred in connection with, or in contemplation of, such acquisition, merger,
consolidation, or designation; provided, further, however, that such Liens may not extend to any other property
owned by the Borrower or any Restricted Subsidiary (other than, with respect to such property, any replacements of such property
or assets and additions and accessions thereto, after-acquired property subject to a Lien securing Indebtedness and other obligations
incurred prior to such time and which Indebtedness and other obligations are permitted hereunder that require, pursuant to their
terms at such time, a pledge of after-acquired property, and the proceeds and the products thereof and customary security deposits
in respect thereof and in the case of multiple financings of equipment provided by any lender, other equipment financed by such
lender, it being understood that such requirement shall not be permitted to apply to any property to which such requirement would
not have applied but for such acquisition);
(x) Liens on property
of any Restricted Subsidiary that is not a Credit Party, which Liens secure Indebtedness of such Restricted Subsidiary or another
Restricted Subsidiary that is not a Credit Party, in each case, to the extent permitted under Section 10.1;
(xi) Liens securing Hedging
Obligations and Cash Management Services so long as the related Indebtedness is, and is permitted hereunder to be, secured by a
Lien on the same property securing such Hedging Obligations and Cash Management Services;
(xii) Liens on specific
items of inventory or other goods and proceeds of any Person securing such Person’s obligations in respect of bankers’
acceptances issued or created for the account of such Person to facilitate the purchase, shipment, or storage of such inventory
or other goods;
(xiii) leases, subleases,
licenses, or sublicenses (including of Intellectual Property) granted to others in the ordinary course of business which do not
materially interfere with the ordinary conduct of the business of the Borrower or any Restricted Subsidiary and do not secure any
Indebtedness;
(xiv) Liens arising from
Uniform Commercial Code financing statement filings regarding operating leases or consignments entered into by the Borrower or
any Restricted Subsidiary in the ordinary course of business;
(xv) Liens in favor of
the Borrower or any other Guarantor;
(xvi) Liens on equipment
of the Borrower or any Restricted Subsidiary granted in the ordinary course of business to the Borrower’s or such Restricted
Subsidiary’s client at which such equipment is located;
(xvii) Liens on accounts
receivable and related assets incurred in connection with a Receivables Facility;
(xviii) Liens to secure
any refinancing, refunding, extension, renewal, or replacement (or successive refinancing, refunding, extensions, renewals, or
replacements) as a whole, or in part, of any Indebtedness secured by any Lien referred to in clauses (vi), (vii),
(viii), (ix), (x), and (xv) of this definition of Permitted Liens; provided that (a) such new
Lien shall be limited to all or part of the same property that secured the original Lien (plus improvements on such property),
and (b) the Indebtedness secured by such Lien at such time is not increased to any amount greater than the sum of (1) the outstanding
principal amount or, if greater, committed amount of the Indebtedness described under clauses (vi), (vii), (viii),
(ix), (x), and (xv) at the time the original Lien became a Permitted Lien under this Agreement, and (2) an
amount necessary to pay any fees and expenses, including premiums and accrued and unpaid interest, related to such refinancing,
refunding, extension, renewal, or replacement;
(xix) deposits made or
other security provided to secure liabilities to insurance carriers under insurance or self-insurance arrangements in the ordinary
course of business;
(xx) other Liens securing
obligations (including Capitalized Lease Obligations) which do not exceed the greater of (a) $52,500,000 and (b) 35.0% of
TTM Consolidated EBITDA at the time of the incurrence of such Lien;
(xxi) Liens securing judgments
for the payment of money not constituting an Event of Default under Section 11.5 or Section 11.10;
(xxii) Liens in favor
of customs and revenue authorities arising as a matter of law to secure payment of customs duties in connection with the importation
of goods in the ordinary course of business;
(xxiii) Liens (a) of a
collection bank arising under Section 4-210 of the Uniform Commercial Code or any comparable or successor provision on items in
the course of collection, (b) attaching to commodity trading accounts or other commodity brokerage accounts incurred in the ordinary
course of business, and (c) in favor of banking or other financial institutions or other electronic payment service providers arising
as a matter of law encumbering deposits (including the right of set-off) and which are within the general parameters customary
in the banking or finance industry;
(xxiv) Liens deemed to
exist in connection with Investments in repurchase agreements permitted under Section 10.1; provided that such Liens
do not extend to any assets other than those that are the subject of such repurchase agreement;
(xxv) Liens encumbering
reasonable customary initial deposits and margin deposits and similar Liens attaching to commodity trading accounts or other brokerage
accounts incurred in the ordinary course of business and not for speculative purposes;
(xxvi) Liens that are
contractual rights of set-off (a) relating to the establishment of depository relations with banks not given in connection with
the issuance or incurrence of Indebtedness, (b) relating to pooled deposit or sweep accounts of the Borrower or any of the Restricted
Subsidiaries to permit satisfaction of overdraft or similar obligations incurred in the ordinary course of business of the Borrower
and its Restricted Subsidiaries, or (c) relating to purchase orders and other agreements entered into by the Borrower or any of
the Restricted Subsidiaries in the ordinary course of business;
(xxvii) Liens (a) solely
on any cash earnest money deposits made by the Borrower or any of the Restricted Subsidiaries in connection with any letter of
intent or purchase agreement permitted under this Agreement or (b) consisting of an agreement to dispose of any property pursuant
to a disposition permitted hereunder;
(xxviii) rights reserved
or vested in any Person by the terms of any lease, license, franchise, grant, or permit held by the Borrower or any of the Restricted
Subsidiaries or by a statutory provision, to terminate any such lease, license, franchise, grant, or permit, or to require annual
or periodic payments as a condition to the continuance thereof;
(xxix) restrictive covenants
affecting the use to which real property may be put; provided that the covenants are complied with;
(xxx) security given to
a public utility or any municipality or Governmental Authority when required by such utility or authority in connection with the
operations of that Person in the ordinary course of business;
(xxxi) zoning by-laws
and other land use restrictions, including, without limitation, site plan agreements, development agreements, and contract zoning
agreements;
(xxxii) Liens arising
out of conditional sale, title retention, consignment, or similar arrangements for sale of goods entered into by the Borrower or
any Restricted Subsidiary in the ordinary course of business;
(xxxiii) Liens arising
under the Security Documents;
(xxxiv) Liens on goods
purchased in the ordinary course of business the purchase price of which is financed by a documentary letter of credit issued for
the account of the Borrower or any of its Subsidiaries;
(xxxv) (a) Liens on Equity
Interests in joint ventures; provided that any such Lien is in favor of a creditor of such joint venture and such creditor
is not an Affiliate of any partner to such joint venture and (b) purchase options, call, and similar rights of, and restrictions
for the benefit of, a third party with respect to Equity Interests held by the Borrower or any Restricted Subsidiary in joint ventures;
(xxxvi) Liens on cash
and Cash Equivalents that are earmarked to be used to satisfy or discharge Indebtedness; provided (a) such cash and/or Cash
Equivalents are deposited into an account from which payment is to be made, directly or indirectly, to the Person or Persons holding
the Indebtedness that is to be satisfied or discharged, (b) such Liens extend solely to the account in which such cash and/or Cash
Equivalents are deposited and are solely in favor of the Person or Persons holding the Indebtedness (or any agent or trustee for
such Person or Persons) that is to be satisfied or discharged, and (c) the satisfaction or discharge of such Indebtedness is expressly
permitted hereunder;
(xxxvii) with respect
to any Foreign Subsidiary, other Liens and privileges arising mandatorily by any Requirements of Law; and
(xxxviii) to the extent
pursuant to a Requirements of Law, Liens on cash or Permitted Investments securing Swap Obligations in the ordinary course of business.
For
purposes of this definition, the term “Indebtedness” shall be deemed to include interest on, and fees, expenses and
other obligations payable with respect to, such Indebtedness.
“Permitted
Other Indebtedness” shall mean unsecured subordinated or senior Indebtedness, in each case issued or incurred by the
Borrower (a) the terms of which do not provide for any scheduled repayment, mandatory repayment, or redemption or sinking fund
obligations prior to, at the time of incurrence, the Latest Term Loan Maturity Date (other than, in each case, customary offers
or obligations to repurchase or repay upon a change of control, excess cash flow sweep, asset sale, or casualty or condemnation
event, and customary acceleration rights after an event of default), (b) the covenants, events of default, guarantees and
other terms of which (excluding pricing, interest rate margins, rate floors, discounts, fees, premiums and prepayment or redemption
provisions (which shall not permit more than pro rata payment with the Term Loans)) taken as a whole, are not materially more restrictive
to the Borrower and its Restricted Subsidiaries than those herein (taken as a whole) (except for covenants or other provisions
applicable only to periods after the Latest Term Loan Maturity Date at the time of such refinancing) (it being understood that,
(1) to the extent that any financial maintenance covenant is added for the benefit of any such Indebtedness, no consent shall be
required by the Administrative Agent or any of the Lenders if such financial maintenance covenant is also added for the benefit
of any corresponding Loans remaining outstanding after the issuance or incurrence of such Indebtedness or (2) no consent shall
be required by the Administrative Agent or any of the Lenders if any covenants or other provisions are only applicable after the
Latest Term Loan Maturity Date at the time of such refinancing); provided that a certificate of an Authorized Officer of
the Borrower delivered to the Administrative Agent at least five Business Days (or such shorter period as the Administrative Agent
may reasonably agree) prior to the incurrence of such Indebtedness, together with a reasonably detailed description of the material
terms and conditions of such Indebtedness or drafts of the documentation relating thereto, stating that the Borrower has determined
in good faith that such terms and conditions satisfy the foregoing requirement shall be conclusive evidence that such terms and
conditions satisfy the foregoing requirement unless the Administrative Agent notifies the Borrower within two Business Days after
receipt of such certificate that it disagrees with such determination (including a reasonable description of the basis upon which
it disagrees), and (c) of which no Subsidiary of the Borrower (other than a Guarantor) is an obligor.
“Permitted
Other Provision” shall have the meaning provided in Section 2.14(g)(i).
“Permitted
Sale Leaseback” shall mean any Sale Leaseback consummated by the Borrower or any of the Restricted Subsidiaries after
the Closing Date; provided that any such Sale Leaseback not between the Borrower and a Restricted Subsidiary is consummated
for fair value as determined at the time of consummation in good faith by (i) the Borrower or such Restricted Subsidiary or (ii)
in the case of any Sale Leaseback (or series of related Sales Leasebacks) the aggregate proceeds of which exceed the greater of
(x) $26,250,000 and (y) 17.5% of TTM Consolidated EBITDA, the board of directors (or analogous governing body) of the Borrower
or such Restricted Subsidiary (which such determination may take into account any retained interest or other Investment of the
Borrower or such Restricted Subsidiary in connection with, and any other material economic terms of, such Sale Leaseback).
“Person”
shall mean any individual, partnership, joint venture, firm, corporation, limited liability company, association, trust, or other
enterprise or any Governmental Authority.
“Plan”
shall mean, other than any Multiemployer Plan, any employee benefit plan (as defined in Section 3(3) of ERISA), including any employee
welfare benefit plan (as defined in Section 3(1) of ERISA), any employee pension benefit plan (as defined in Section 3(2) of ERISA),
and any plan which is both an employee welfare benefit plan and an employee pension benefit plan, and in respect of which any Credit
Party or any ERISA Affiliate is (or, if such plan were terminated, would under Section 4062 or Section 4069 of ERISA be reasonably
likely to be deemed to be) an “employer” as defined in Section 3(5) of ERISA.
“Platform”
shall have the meaning provided in Section 13.17(a).
“Pledge
Agreement” shall mean the Pledge Agreement, entered into by the Credit Parties party thereto and the Collateral Agent
for the benefit of the Secured Parties, substantially in the form of Exhibit D and dated as of the Closing Date, as
the same may be amended, supplemented or otherwise modified from time to time.
“Post-Acquisition
Period” shall mean, with respect to any Permitted Acquisition, the period beginning on the date such Permitted Acquisition
is consummated and ending on the last day of the eighth full consecutive fiscal quarter immediately following the date on which
such Permitted Acquisition is consummated.
“Prepayment
Event” shall mean any Asset Sale Prepayment Event, Debt Incurrence Prepayment Event, Casualty Event, or any Permitted
Sale Leaseback.
“Prepayment
Trigger” shall have the meaning provided in the definition of “Asset Sale Prepayment Event.”
“primary
obligations” shall have the meaning provided in the definition of “Contingent Obligations.”
“primary
obligor” shall have the meaning provided in the definition of “Contingent Obligations.”
“Prime
Rate” shall mean the rate of interest last quoted by The Wall Street Journal as the “Prime Rate” in the U.S.
or, if The Wall Street Journal ceases to quote such rate, the highest per annum interest rate published by the Board in Federal
Reserve Statistical Release H.15 (519) (Selected Interest Rates) as the “bank prime loan” rate or, if such rate is
no longer quoted therein, any similar rate quoted therein (as determined by the Administrative Agent) or any similar release by
the Board (as determined by the Administrative Agent). Each change in the Prime Rate shall be effective from and including the
date such change is publicly announced or quoted as being effective.
“Pro
Forma Adjustment” shall mean, for any Test Period that includes all or any part of a fiscal quarter included in any Post-Acquisition
Period, with respect to the Acquired EBITDA of the applicable Acquired Entity or Business or Converted Restricted Subsidiary or
the Consolidated EBITDA of the Borrower and its Restricted Subsidiaries on a consolidated basis, the pro forma increase or decrease
in such Acquired EBITDA or such Consolidated EBITDA, as the case may be, projected by the Borrower in good faith as a result of
(i) actions taken during such Post-Acquisition Period for the purposes of realizing reasonably identifiable and factually supportable
cost savings or (ii) any additional costs incurred during such Post-Acquisition Period, in each case in connection with the combination
of the operations of such Acquired Entity or Business or Converted Restricted Subsidiary with the operations of the Borrower and
its Restricted Subsidiaries; provided that (a) at the election of the Borrower, such Pro Forma Adjustment shall not
be required to be determined for any Acquired Entity or Business or Converted Restricted Subsidiary to the extent the aggregate
consideration paid in connection with such acquisition was less than $13,000,000 and (b) so long as such actions are taken during
such Post-Acquisition Period or such costs are incurred during such Post-Acquisition Period, as applicable, it may be assumed,
for purposes of projecting such pro forma increase or decrease to such Acquired EBITDA or such Consolidated EBITDA, as the case
may be, that the applicable amount of such cost savings will be realizable during the entirety of such Test Period, or the applicable
amount of such additional costs, as applicable, will be incurred during the entirety of such Test Period; provided, further,
that any such pro forma increase or decrease to such Acquired EBITDA or such Consolidated EBITDA, as the case may be, shall be
without duplication for cost savings or additional costs already included in such Acquired EBITDA or such Consolidated EBITDA,
as the case may be, for such Test Period and, in the case of cost savings, shall be subject to the 30% cap set forth in clause
(i) of the definition of “Consolidated EBITDA”; provided that such cap shall not apply to (A) any amounts
evidenced in a quality of earnings report obtained for any transaction prepared by a nationally recognized accounting firm reasonably
acceptable to the Administrative Agent (it being agreed that any of the “Big Four” accounting firms is acceptable to
the Administrative Agent) or (B) any pro forma adjustments determined on a basis consistent with Article 11 of Regulation S-X promulgated
under the Exchange Act and as interpreted by the staff of the Securities and Exchange Commission (or any successor agency).
“Pro
Forma Basis,” “Pro Forma Compliance,” and “Pro Forma Effect” shall mean, with respect
to compliance with any test, financial ratio, or covenant hereunder, that (i) to the extent applicable, the Pro Forma Adjustment
shall have been made and (ii) all Specified Transactions and the following transactions in connection therewith shall be deemed
to have occurred as of the first day of the applicable period of measurement in such test or covenant: (a) income statement items
(whether positive or negative) attributable to the property or Person subject to such Specified Transaction, (1) in the case of
a sale, transfer, or other disposition of all or substantially all Capital Stock in any Subsidiary of the Borrower or any division,
product line, or facility used for operations of the Borrower or any of its Subsidiaries, shall be excluded, and (2) in the case
of a Permitted Acquisition or Investment described in the definition of “Specified Transaction,” shall be included,
(b) any retirement of Indebtedness, and (c) other than as set forth in the definition of “Maximum Incremental Facilities
Amount,” any incurrence or assumption of Indebtedness by the Borrower or any of the Restricted Subsidiaries in connection
therewith (it being agreed that if such Indebtedness has a floating or formula rate, such Indebtedness shall have an implied rate
of interest for the applicable period for purposes of this definition determined by utilizing the rate that is or would be in effect
with respect to such Indebtedness as at the relevant date of determination); provided that, without limiting the application
of the Pro Forma Adjustment pursuant to clause (a) above, the foregoing Pro Forma Adjustments may be applied to any such
test or covenant solely to the extent that such adjustments are consistent with the definition of “Consolidated EBITDA”
and give effect to operating expense reductions and synergies that are (x)(1) directly attributable to such transaction, (2) expected
to have a continuing impact on the Borrower or any of its Restricted Subsidiaries, and (3) factually supportable or (y) otherwise
consistent with the definition of “Pro Forma Adjustment.”
“Pro
Forma Entity” shall have the meaning provided in the definition of “Acquired EBITDA.”
“Proceeding”
shall mean any claim, litigation, investigation, action, suit, arbitration or administrative, judicial or regulatory action or
proceeding in any jurisdiction.
“Prohibited
Transaction” shall have the meaning assigned to such term in Section 406 of ERISA and Section 4975(c) of the Code.
“Projections”
shall have the meaning assigned to such term in Section 9.1(g).
“PTE”
shall mean a prohibited transaction class exemption issued by the U.S. Department of Labor, as any such exemption may be amended
from time to time.
“Public
Company Costs” shall mean costs relating to compliance with the provisions of the Securities Act of 1933, as amended,
and the Securities Exchange Act of 1934, as amended, as applicable to companies with equity or debt securities held by the public,
the rules of national securities exchange companies with listed equity or debt securities, directors’ or managers’
compensation, fees and expense reimbursement, costs relating to investor relations, shareholder meetings and reports to shareholders
or debtholders, directors’ and officers’ insurance and other executive costs, legal and other professional fees, and
listing fees.
“QFC”
shall have the meaning assigned to the term “qualified financial contract” in, and shall be interpreted in accordance
with, 12 U.S.C. 5390(c)(8)(D).
“QFC
Credit Support” shall have the meaning provided in Section 13.23.
“Qualified
Proceeds” shall mean assets that are used or useful in, or Capital Stock of any Person engaged in, a Similar Business.
“Qualified
Stock” of any Person shall mean Capital Stock of such Person other than Disqualified Stock of such Person.
“Real
Estate” shall have the meaning provided in Section 9.1(f).
“Receivables
Facility” shall mean any of one or more receivables financing facilities (and any guarantee of such financing facility),
as amended, supplemented, modified, extended, renewed, restated, or refunded from time to time, the obligations of which are non-recourse
(except for customary representations, warranties, covenants, and indemnities made in connection with such facilities) to the Borrower
and its Restricted Subsidiaries (other than a Receivables Subsidiary) pursuant to which the Borrower or any Restricted Subsidiary
sells, directly or indirectly, grants a security interest in or otherwise transfers its accounts receivable to either (i) a Person
that is not a Restricted Subsidiary or (ii) a Receivables Subsidiary that in turn funds such purchase by purporting to sell its
accounts receivable to a Person that is not a Restricted Subsidiary or by borrowing from such a Person or from another Receivables
Subsidiary that in turn funds itself by borrowing from such a Person.
“Receivables
Fee” shall mean distributions or payments made directly or by means of discounts with respect to any accounts receivable
or participation interest issued or sold in connection with, and other fees paid to a Person that is not a Restricted Subsidiary
in connection with, any Receivables Facility.
“Receivables
Subsidiary” shall mean any Subsidiary formed for the purpose of facilitating or entering into one or more Receivables
Facilities, and in each case engages only in activities reasonably related or incidental thereto or another Person formed for the
purposes of engaging in a Receivables Facility in which the Borrower or any Subsidiary makes an Investment and to which the Borrower
or any Subsidiary transfers accounts receivables and related assets.
“Reference
Time” with respect to any setting of the then-current Benchmark shall mean (1) if such Benchmark is LIBOR Rate, 11:00
a.m. (London time) on the day that is two London banking days preceding the date of such setting, and (2) if such Benchmark is
not LIBOR Rate, the time determined by the Administrative Agent in its reasonable discretion.
“refinance”
shall have the meaning provided in Section 10.1(m).
“Refinanced
Term Loans” shall have the meaning provided in Section 13.1.
“Refinancing
Indebtedness” shall have the meaning provided in Section 10.1(m).
“Refunding
Capital Stock” shall have the meaning provided in Section 10.5(b)(2).
“Register”
shall have the meaning provided in Section 13.6(b)(iv).
“Regulation
D” shall mean Regulation D of the Board as from time to time in effect and any successor to all or a portion thereof
establishing margin requirements.
“Regulation
T” shall mean Regulation T of the Board as from time to time in effect and any successor to all or a portion thereof
establishing margin requirements.
“Regulation
U” shall mean Regulation U of the Board as from time to time in effect and any successor to all or a portion thereof
establishing margin requirements.
“Regulation
X” shall mean Regulation X of the Board as from time to time in effect and any successor to all or a portion thereof
establishing margin requirements.
“Reimbursement
Date” shall have the meaning provided in Section 3.4(a).
“Reimbursement
Obligations” shall mean the Borrower’s obligations to reimburse Unpaid Drawings pursuant to Section 3.4(a).
“Reinvestment
Period” shall mean 365 days following the date of receipt of Net Cash Proceeds of an Asset Sale Prepayment Event, Casualty
Event, or Permitted Sale Leaseback.
“Rejection
Notice” shall have the meaning provided in Section 5.2(f).
“Related
Business Assets” shall mean assets (other than cash or Cash Equivalents) used or useful in a Similar Business; provided
that any assets received by the Borrower or the Restricted Subsidiaries in exchange for assets transferred by the Borrower or a
Restricted Subsidiary shall not be deemed to be Related Business Assets if they consist of securities of a Person, unless upon
receipt of the securities of such Person, such Person would become a Restricted Subsidiary.
“Related
Fund” shall mean, with respect to any Lender that is a Fund, any other Fund that is advised or managed by (a) such Lender,
(b) an Affiliate of such Lender or (c) an entity or an Affiliate of such entity that administers, advises or manages such Lender.
“Related
Parties” shall mean, with respect to any specified Person, such Person’s Affiliates and the directors, officers,
employees, agents, trustees, and advisors of such Person and any Person that possesses, directly or indirectly, the power to direct
or cause the direction of the management or policies of such Person, whether through the ability to exercise voting power, by contract
or otherwise.
“Release”
shall mean any release, spill, emission, discharge, disposal, escaping, leaking, pumping, pouring, dumping, emptying, injection,
or leaching into the Environment.
“Relevant
Governmental Body” shall mean the Federal Reserve Board and/or the NYFRB, or a committee officially endorsed or convened
by the Federal Reserve Board and/or the NYFRB or, in each case, any successor thereto.
“Removal
Effective Date” shall have the meaning provided in Section 12.9(b).
“Reorganization”
shall mean, with respect to any Multiemployer Plan, the condition that such plan is in reorganization within the meaning of Section
4241 of ERISA.
“Repayment
Amount” shall mean the Term Loan Repayment Amount or an Extended Term Loan Repayment Amount with respect to any Extension
Series, as applicable.
“Replacement
Term Loan Commitment” shall mean the commitments of the Lenders to make Replacement Term Loans.
“Replacement
Term Loans” shall have the meaning provided in Section 13.1.
“Reportable
Event” shall mean any “reportable event,” as defined in Section 4043(c) of ERISA or the regulations issued
thereunder, with respect to a Pension Plan (other than a Pension Plan maintained by an ERISA Affiliate that is considered an ERISA
Affiliate only pursuant to subsection (m) or (o) of Section 414 of the Code), other than those events as to which notice is waived
pursuant to PBGC Reg. § 4043.
“Required
Initial Term A Loan Lenders” shall mean, at any date, and on a Pro Forma Basis, Non-Defaulting Lenders having or holding
a majority of the aggregate outstanding principal amount of the Initial Term A Loans (excluding Initial Term A Loans held by Defaulting
Lenders) at such date.
“Required
Lenders” shall mean, at any date (i) Non-Defaulting Lenders having or holding a majority of the sum of (a) the Adjusted
Total Revolving Credit Commitment at such date, (b) the Adjusted Total Term Loan Commitment at such date, and (c) the outstanding
principal amount of the Term Loans (excluding Term Loans held by Defaulting Lenders) at such date or (ii) if the Total Revolving
Credit Commitment and the Total Term Loan Commitment have been terminated or for the purposes of acceleration pursuant to Section
11, Non-Defaulting Lenders having or holding a majority of the outstanding principal amount of the Loans and Letter of Credit
Exposure (excluding the Loans and Letter of Credit Exposure of Defaulting Lenders) in the aggregate at such date.
“Required
Revolving Credit Lenders” shall mean, at any date Non-Defaulting Lenders holding a majority of the Adjusted Total Revolving
Credit Commitment at such date (or, if the Total Revolving Credit Commitment has been terminated at such time, a majority of the
Revolving Credit Exposure (excluding Revolving Credit Exposure of Defaulting Lenders) at such time).
“Requirements
of Law” shall mean, as to any Person, the certificate of incorporation and by-laws or other organizational or governing
documents of such Person, and any law, treaty, rule, or regulation or determination of an arbitrator or a court or other Governmental
Authority, in each case applicable to or binding upon such Person or any of its property or assets or to which such Person or any
of its property or assets is subject.
“Resignation
Effective Date” shall have the meaning provided in Section 12.9(a).
“Resolution
Authority” shall mean an EEA Resolution Authority or, with respect to any UK Financial Institution, a UK Resolution Authority.
“Restatement
Agreement” shall mean the Restatement Agreement, dated as of December 11, 2020, by and among the Borrower, the Lenders
party thereto and the Administrative Agent.
“Restatement
Date Distribution” shall mean the one-time dividend or other distribution by the Borrower of up to $340,000,000 on account
of Equity Interests of the Borrower with a substantial portion of such dividend or distribution paid within thirty (30) days after
the Restatement Effective Date.
“Restatement
Date Transaction Expenses” shall mean any fees, costs, or expenses incurred or paid by the Borrower or any of its respective
Affiliates in connection with the Restatement Date Transactions, this Agreement, and the Restatement Agreement, and the transactions
contemplated hereby and thereby.
“Restatement
Date Transactions” shall mean, collectively, the transactions contemplated by this Agreement and the Restatement Agreement
(including the Borrowing of Additional Term A Loans), the Restatement Date Distribution and the consummation of any other transactions
in connection with the foregoing (including the payment of the fees and expenses incurred in connection with any of the foregoing
(including the Restatement Date Transaction Expenses)).
“Restatement
Effective Date” shall mean the date on which the conditions specified in Article III of the Restatement Agreement were
satisfied (or waived in accordance with Section 13.1 of this Agreement), which date was December 11, 2020.
“Restricted
Investment” shall mean an Investment other than a Permitted Investment.
“Restricted
Payment” shall have the meaning provided in Section 10.5(a).
“Restricted
Person” shall have the meaning provided in Section 13.16.
“Restricted
Subsidiary” shall mean any Subsidiary of the Borrower other than an Unrestricted Subsidiary.
“Retained
Declined Proceeds” shall have the meaning provided in Section 5.2(f).
“Retired
Capital Stock” shall have the meaning provided in Section 10.5(b)(2).
“Reuters”
shall mean, as applicable, Thomson Reuters Corp., Refinitiv, or any successor thereto.
“Revolving
Credit Commitment” shall mean, as to each Revolving Credit Lender, its obligation to make Revolving Credit Loans to the
Borrower pursuant to Section 2.1(b), in an aggregate principal amount at any one time outstanding not to exceed the amount
set forth opposite such Lender’s name on Schedule 1.1(b) under the heading “Revolving Credit Commitment”
or in the Assignment and Acceptance pursuant to which such Lender becomes a party hereto, as applicable, as such amount may be
adjusted from time to time in accordance with this Agreement (including Section 2.14). The aggregate Revolving Credit Commitments
of all Revolving Credit Lenders on the Restatement Effective Date is $25,000,000.
“Revolving
Credit Commitment Fee” shall have the meaning provided in Section 4.1(a).
“Revolving
Credit Commitment Fee Rate” shall mean a rate per annum set forth below opposite the Status in effect on such day:
|
Status
|
Revolving Credit
Commitment Fee Rate
|
|
Level I Status
|
0.25%
|
|
Level II Status
|
0.25%
|
|
Level III Status
|
0.25%
|
|
Level IV Status
|
0.20%
|
|
Level V Status
|
0.20%
|
Notwithstanding
the foregoing, the term Revolving Credit Commitment Fee Rate shall mean 0.20% during the period from and including the Closing
Date up to, but excluding the Trigger Date.
“Revolving
Credit Commitment Percentage” shall mean at any time, for each Lender, the percentage obtained by dividing (i) such Lender’s
Revolving Credit Commitment at such time by (ii) the amount of the Total Revolving Credit Commitment at such time; provided
that at any time when the Total Revolving Credit Commitment shall have been terminated, each Lender’s Revolving Credit Commitment
Percentage shall be the percentage obtained by dividing (a) such Lender’s Revolving Credit Exposure at such time by (b) the
Revolving Credit Exposure of all Lenders at such time.
“Revolving
Credit Exposure” shall mean, with respect to any Lender at any time, the sum of (i) the aggregate principal amount
of Revolving Credit Loans of such Lender then outstanding and (ii) such Lender’s Letter of Credit Exposure at such time.
“Revolving
Credit Facility” shall mean, at any time, the aggregate amount of the Revolving Credit Lenders’ Revolving Credit
Commitments at such time.
“Revolving
Credit Lender” shall mean, at any time, any Lender that has a Revolving Credit Commitment, Incremental Revolving Credit
Commitment or Extended Revolving Credit Commitment at such time.
“Revolving
Credit Loan” shall have the meaning provided in Section 2.1(b).
“Revolving
Credit Maturity Date” shall mean December 11, 2025, or, if such date is not a Business Day, the immediately following
Business Day.
“Revolving
Credit Termination Date” shall mean the date on which the Revolving Credit Commitments shall have terminated, no Revolving
Credit Loans shall be outstanding and the Letters of Credit Outstanding shall have been reduced to zero or Cash Collateralized.
“Revolving
Loan” shall mean, collectively or individually as the context may require, any (i) Revolving Credit Loan, (ii) Extended
Revolving Credit Loan and (iii) Incremental Revolving Credit Loan, in each case made pursuant to and in accordance with the terms
and conditions of this Agreement.
“S&P”
shall mean Standard & Poor’s Ratings Services or any successor by merger or consolidation to its business.
“Sale
Leaseback” shall mean any arrangement with any Person providing for the leasing by the Borrower or any Restricted Subsidiary
of any real or tangible personal property, which property has been or is to be sold or transferred by the Borrower or such Restricted
Subsidiary to such Person in contemplation of such leasing.
“Sanctions”
shall mean economic sanctions administered or enforced by the United States Government (including without limitation, sanctions
enforced by OFAC) the United Nations Security Council, the European Union or Her Majesty’s Treasury.
“SEC”
shall mean the Securities and Exchange Commission or any successor thereto.
“Section
2.14 Additional Amendment” shall have the meaning provided in Section 2.14(g)(iv).
“Section
9.1 Financials” shall mean the financial statements delivered, or required to be delivered, pursuant to Section 9.1(a)
or (b) together with the accompanying officer’s certificate delivered, or required to be delivered, pursuant to Section
9.1(d).
“Secured
Cash Management Agreement” shall mean any Cash Management Agreement that is entered into by and between the Borrower
or any of the Restricted Subsidiaries and any Cash Management Bank, which is specified in writing by the Borrower to the Administrative
Agent as constituting a Secured Cash Management Agreement hereunder.
“Secured
Cash Management Obligations” shall mean Obligations under Secured Cash Management Agreements.
“Secured
Hedge Agreement” shall mean any Hedge Agreement that is entered into by and between the Borrower or any Restricted Subsidiary
and any Hedge Bank, which is specified in writing by the Borrower to the Administrative Agent as constituting a “Secured
Hedge Agreement” hereunder. For purposes of the preceding sentence, a Borrower may deliver one notice designating all Hedge
Agreements entered into pursuant to a specified Master Agreement as “Secured Hedge Agreements.” Notwithstanding anything
to the contrary, a Hedge Agreement entered into by a Restricted Subsidiary shall remain a Secured Hedge Agreement notwithstanding
that such Restricted Subsidiary is subsequently designated an Unrestricted Subsidiary (but not any Hedge Agreement entered into
after the date of such designation), unless otherwise agreed between such Restricted Subsidiary and Hedge Bank.
“Secured
Hedge Obligations” shall mean Obligations under Secured Hedge Agreements.
“Secured
Parties” shall mean the Administrative Agent, the Collateral Agent, the Letter of Credit Issuer, each Lender, each Hedge
Bank that is party to any Secured Hedge Agreement with the Borrower or any Restricted Subsidiary, each Cash Management Bank that
is party to a Secured Cash Management Agreement with the Borrower or any Restricted Subsidiary and each sub-agent pursuant to Section
12 appointed by the Administrative Agent with respect to matters relating to the Credit Facilities or the Collateral Agent
with respect to matters relating to any Security Document.
“Security
Agreement” shall mean the Security Agreement entered into by the Borrower, the other grantors party thereto, and the
Collateral Agent for the benefit of the Secured Parties, substantially in the form of Exhibit E and dated as of the
Closing Date, as the same may be amended, supplemented or otherwise modified from time to time.
“Security
Documents” shall mean, collectively, the Pledge Agreement, the Security Agreement, the Mortgages, if executed, and each
other security agreement or other instrument or document executed and delivered pursuant to Sections 9.11, 9.12,
or 9.14 or pursuant to any other such Security Documents to secure the Obligations or to govern the lien priorities of the
holders of Liens on the Collateral.
“Similar
Business” shall mean any business conducted or proposed to be conducted by the Borrower and its Restricted Subsidiaries
on the Restatement Effective Date or any business that is similar, reasonably related, synergistic, incidental, or ancillary thereto.
“SOFR”
shall mean, with respect to any Business Day, a rate per annum equal to the secured overnight financing rate for such Business
Day published by the SOFR Administrator on the SOFR Administrator’s Website at approximately 8:00 a.m. (New York City time)
on the immediately succeeding Business Day.
“SOFR
Administrator” shall mean the NYFRB (or a successor administrator of the secured overnight financing rate).
“SOFR
Administrator’s Website” shall mean the NYFRB’s website, currently at http://www.newyorkfed.org, or any successor
source for the secured overnight financing rate identified as such by the SOFR Administrator from time to time.
“Sold
Entity or Business” shall have the meaning provided in the definition of “Consolidated EBITDA.”
“Solvent”
shall mean, after giving effect to the consummation of the Restatement Date Transactions, (i) the sum of the liabilities (including
contingent liabilities) of the Borrower and its Restricted Subsidiaries, on a consolidated basis, does not exceed the present fair
saleable value of the present assets of the Borrower and its Restricted Subsidiaries, on a consolidated basis; (ii) the fair
value of the property of the Borrower and its Restricted Subsidiaries, on a consolidated basis, is greater than the total amount
of liabilities (including contingent liabilities) of the Borrower and its Restricted Subsidiaries, on a consolidated basis; (iii) the
capital of the Borrower and its Restricted Subsidiaries, on a consolidated basis, is not unreasonably small in relation to their
business as contemplated on the Closing Date; and (iv) the Borrower and its Restricted Subsidiaries, on a consolidated basis,
have not incurred and do not intend to incur, or believe that they will incur, debts including current obligations beyond their
ability to pay such debts as they become due (whether at maturity or otherwise).
“Specified
Equity Repurchase” shall mean the repurchase by the Borrower of up to $360,000,000 of Equity Interests of the Borrower
within thirty (30) days following the Closing Date.
“Specified
Existing Revolving Credit Commitment” shall have the meaning provided in Section 2.14(g)(ii).
“Specified
Transaction” shall mean, with respect to any period, any Investment (including a Permitted Acquisition), any asset sale,
incurrence or repayment of Indebtedness, Restricted Payment, Subsidiary designation, Incremental Term Loan, Incremental Revolving
Credit Commitment, or other event or action that in each case by the terms of this Agreement requires Pro Forma Compliance with
a test or covenant hereunder or requires such test or covenant to be calculated on a Pro Forma Basis.
“Spot
Rate” for any currency shall mean the rate determined by the Administrative Agent to be the rate quoted by the Administrative
Agent as the spot rate for the purchase by the Administrative Agent of such currency with another currency through its principal
foreign exchange trading office at approximately 11:00 a.m. on the date two Business Days prior to the date as of which the foreign
exchange computation is made; provided that the Administrative Agent may obtain such spot rate from another financial institution
designated by the Administrative Agent if it does not have as of the date of determination a spot buying rate for any such currency.
“SPV”
shall have the meaning provided in Section 13.6(g).
“Stated
Amount” of any Letter of Credit shall mean the maximum amount from time to time available to be drawn thereunder, determined
without regard to whether any conditions to drawing could then be met; provided, however, that with respect to any
Letter of Credit that by its terms or the terms of any Issuer Document provides for one or more automatic increases in the stated
amount thereof, the Stated Amount shall be deemed to be the maximum stated amount of such Letter of Credit after giving effect
to all such increases, whether or not such maximum stated amount is in effect at such time.
“Status”
shall mean the existence of Level I Status, Level II Status, Level III Status, Level IV Status or Level V Status, as the case may
be, on such date. Changes in Status resulting from changes in the Consolidated Total Debt to Consolidated EBITDA Ratio shall become
effective as of the first day following each date that (i) Section 9.1 Financials for the fiscal quarter ending December 31, 2020
are delivered to the Administrative Agent under Section 9.1 and (ii) an officer’s certificate is delivered by the
Borrower to the Administrative Agent setting forth, with respect to such Section 9.1 Financials, the then-applicable Status, and
shall remain in effect until the next change to be effected pursuant to this definition; provided that each determination
of the Consolidated Total Debt to Consolidated EBITDA Ratio pursuant to this definition shall be made as of the end of the Test
Period ending at the end of the fiscal period covered by the relevant Section 9.1 Financials.
“Statutory
Reserve Rate” shall mean a fraction (expressed as a decimal), the numerator of which is the number one and the denominator
of which is the number one minus the aggregate of the maximum reserve percentage (including any marginal, special, emergency or
supplemental reserves) expressed as a decimal established by the Federal Reserve Board to which the Administrative Agent is subject
with respect to the Adjusted LIBOR Rate, for eurocurrency funding (currently referred to as “Eurocurrency liabilities”
in Regulation D). Such reserve percentage shall include those imposed pursuant to Regulation D. LIBOR Loans shall be deemed to
constitute eurocurrency funding and to be subject to such reserve requirements without benefit of or credit for proration, exemptions
or offsets that may be available from time to time to any Lender under Regulation D or any comparable regulation. The Statutory
Reserve Rate shall be adjusted automatically on and as of the effective date of any change in any reserve percentage.
“Step-Up”
shall have the meaning provided in Section 10.7.
“Stock
Equivalents” shall mean all securities convertible into or exchangeable for Capital Stock and all warrants, options,
or other rights to purchase or subscribe for any Capital Stock, whether or not presently convertible, exchangeable, or exercisable.
“Subject
Lien” shall have the meaning provided in Section 10.2.
“Subordinated
Indebtedness” shall mean Indebtedness of the Borrower or any other Guarantor that is by its terms subordinated in right
of payment to the obligations of the Borrower or such Guarantor, as applicable, under this Agreement or the Guarantee, as applicable.
“Subsidiary”
of any Person shall mean and include (i) any corporation more than 50% of whose Capital Stock of any class or classes having by
the terms thereof ordinary voting power to elect a majority of the directors of such corporation (irrespective of whether or not
at the time Capital Stock of any class or classes of such corporation shall have or might have voting power by reason of the happening
of any contingency) is at the time owned by such Person directly or indirectly through Subsidiaries, or (ii) any limited liability
company, partnership, association, joint venture, or other entity of which such Person directly or indirectly through Subsidiaries
has more than a 50% equity interest at the time. Unless otherwise expressly provided, all references herein to a Subsidiary shall
mean a Subsidiary of the Borrower.
“Successor
Borrower” shall have the meaning provided in Section 10.3(a).
“Supported
QFC” shall have the meaning provided in Section 13.23.
“Swap
Obligation” shall mean, with respect to any Credit Party, any obligation to pay or perform under any agreement, contract,
or transaction that constitutes a “swap” within the meaning of section 1(a)(47) of the Commodity Exchange Act.
“Taxes”
shall mean any and all present or future taxes, duties, levies, imposts, assessments, deductions, withholdings (including backup
withholding), fees, or other similar charges imposed by any Governmental Authority and any interest, fines, penalties, or additions
to tax with respect to the foregoing.
“Term
Loan Commitment” shall mean, with respect to each Lender, such Lender’s Additional Term A Loan Commitment and,
if applicable, Incremental Term Loan Commitment and Replacement Term Loan Commitment.
“Term
Loan Extension Request” shall have the meaning provided in Section 2.14 (g)(i).
“Term
Loan Repayment Amount” shall have the meaning provided in Section 2.5(b).
“Term
Loan Repayment Date” shall have the meaning provided in Section 2.5(b).
“Term
Loans” shall mean the Initial Term A Loans, any Incremental Term Loans, any Replacement Term Loans, and any Extended
Term Loans, collectively.
“Term
SOFR” shall mean, for the applicable Corresponding Tenor as of the applicable Reference Time, the forward-looking term
rate based on SOFR that has been selected or recommended by the Relevant Governmental Body.
“Term
SOFR Notice” shall mean a notification by the Administrative Agent to the Lenders and the Borrower of the occurrence
of a Term SOFR Transition Event.
“Term
SOFR Transition Event” shall mean the determination by the Administrative Agent that (a) Term SOFR has been recommended
for use by the Relevant Governmental Body, (b) the administration of Term SOFR is administratively feasible for the Administrative
Agent and (c) a Benchmark Transition Event or an Early Opt-in Election, as applicable, has previously occurred resulting in a Benchmark
Replacement in accordance with Section 2.10 that is not Term SOFR.
“Test
Period” shall mean, for any determination under this Agreement, the four consecutive fiscal quarters of the Borrower
then last ended and for which Section 9.1 Financials shall have been delivered (or were required to be delivered) to the Administrative
Agent (or, before the first delivery of Section 9.1 Financials, the most recent period of four consecutive fiscal quarters for
which financial statements are available).
“Title
Policy” shall have the meaning provided in Section 9.14(c).
“Total
Credit Exposure” shall mean, at any date, the sum, without duplication, of (i) the Total Revolving Credit Commitment
at such date (or, if the Total Revolving Credit Commitment shall have terminated on such date, the aggregate Revolving Credit Exposure
of all Lenders at such date), (ii) the Total Term Loan Commitment at such date, and (iii) without duplication of clause
(ii), the aggregate outstanding principal amount of all Term Loans at such date.
“Total
Revolving Credit Commitment” shall mean the sum of the Revolving Credit Commitments of all the Lenders.
“Total
Term Loan Commitment” shall mean the sum of the Additional Term A Loan Commitments and the Incremental Term Loan Commitments,
if applicable, of all the Lenders.
“Transaction
Expenses” shall mean any fees, costs, or expenses incurred or paid by the Borrower or any of its respective Affiliates
in connection with the Transactions, the Original Credit Agreement, and the other Credit Documents, and the transactions contemplated
hereby and thereby.
“Transactions”
shall mean, collectively, the transactions contemplated by the Original Credit Agreement, the Specified Equity Repurchase, the
repayment by the Borrower of all outstanding amounts under the Existing Credit Facilities and the release of all guarantees, Liens
and security interests related thereto and the consummation of any other transactions in connection with the foregoing (including
the payment of the fees and expenses incurred in connection with any of the foregoing (including the Transaction Expenses)).
“Transferee”
shall have the meaning provided in Section 13.6(e).
“TTM
Consolidated EBITDA” shall mean, as of any date of determination with respect to any Test Period, Consolidated EBITDA
of the Borrower and its Restricted Subsidiaries for such Test Period on a Pro Forma Basis.
“Trigger
Date” shall mean the day following the date on which Section 9.1 Financials are delivered to the Administrative Agent
for the fiscal quarter ending on December 31, 2019.
“Type”
shall mean (i) as to any Term Loan, its nature as an ABR Loan or a LIBOR Loan and (ii) as to any Revolving Loan, its nature as
an ABR Loan or a LIBOR Revolving Credit Loan.
“UCP”
shall mean, with respect to any Letter of Credit, the Uniform Customs and Practice for Documentary Credits, International Chamber
of Commerce (“ICC”) Publication No. 600 (or such later version thereof as may be in effect at the time of issuance).
“UK
Financial Institutions” shall mean any BRRD Undertaking (as such term is defined under the PRA Rulebook (as amended form
time to time) promulgated by the United Kingdom Prudential Regulation Authority) or any person falling within IFPRU 11.6 of the
FCA Handbook (as amended from time to time) promulgated by the United Kingdom Financial Conduct Authority, which includes certain
credit institutions and investment firms, and certain affiliates of such credit institutions or investment firms.
“UK
Resolution Authority” shall mean the Bank of England or any other public administrative authority having responsibility
for the resolution of any UK Financial Institution.
“Unadjusted
Benchmark Replacement” shall mean the applicable Benchmark Replacement excluding the related Benchmark Replacement Adjustment.
“Uniform
Commercial Code” shall mean the Uniform Commercial Code as from time to time in effect in the State of New York; provided,
however, that, in the event that, by reason of any provisions of law, any of the attachment, perfection or priority of the
Collateral Agent’s and the Secured Parties’ security interest in any Collateral is governed by the Uniform Commercial
Code as in effect in a jurisdiction other than the State of New York, the term “UCC” shall mean the Uniform Commercial
Code as in effect in such other jurisdiction for purposes
“Unpaid
Drawing” shall have the meaning provided in Section 3.4(a).
“Unrestricted
Subsidiary” shall mean (i) any Subsidiary of the Borrower which at the time of determination is an Unrestricted Subsidiary
(as designated by the board of directors of the Borrower, as provided below) and (ii) any Subsidiary of an Unrestricted Subsidiary.
The
board of directors of the Borrower may designate any Subsidiary of the Borrower (including any existing Subsidiary and any newly
acquired or newly formed Subsidiary) to be an Unrestricted Subsidiary unless such Subsidiary or any of its Subsidiaries owns any
Equity Interests or Indebtedness of, or owns or holds any Lien on, any property of, the Borrower or any Subsidiary of the Borrower
(other than any Subsidiary of the Subsidiary to be so designated or an Unrestricted Subsidiary); provided that:
(a) such
designation complies with Section 10.5;
(b) each
of (1) the Subsidiary to be so designated and (2) its Subsidiaries has not at the time of designation, and does not thereafter,
create, incur, issue, assume, guarantee, or otherwise become directly or indirectly liable with respect to any Indebtedness pursuant
to which the lender has recourse to any of the assets of the Borrower or any Restricted Subsidiary except for Indebtedness that
could otherwise be incurred by the Borrower or such Restricted Subsidiary hereunder and, if such Indebtedness is secured, the Liens
securing such Indebtedness are permitted to be incurred by the Borrower or such Restricted Subsidiary hereunder (provided
that any such Indebtedness shall be deemed incurred hereunder by the Borrower or such Restricted Subsidiary, as the case may be);
(c) each
of (1) the Subsidiary to be so designated and (2) its Subsidiaries does not at the time of designation own any Material
Intellectual Property; and
(d) immediately
after giving effect to such designation, no Event of Default shall have occurred and be continuing.
The
board of directors of the Borrower may designate any Unrestricted Subsidiary to be a Restricted Subsidiary; provided that,
immediately after giving effect to such designation, no Event of Default shall have occurred and be continuing.
Any
such designation by the board of directors of the Borrower shall be notified by the Borrower to the Administrative Agent by promptly
delivering to the Administrative Agent a copy of the Board resolution giving effect to such designation and a certificate of an
Authorized Officer of the Borrower certifying that such designation complied with the foregoing provisions.
“U.S.”
and “United States” shall mean the United States of America.
“U.S.
Lender” shall have the meaning provided in Section 5.4(e)(ii)(A).
“U.S.
Special Resolution Regimes” shall have the meaning provided in Section 13.23.
“Voting
Stock” shall mean, with respect to any Person as of any date, the Capital Stock of such Person that is at the time entitled
to vote in the election of the board of directors of such Person.
“Wholly-Owned
Restricted Subsidiary” of any Person shall mean a Restricted Subsidiary of such Person, 100% of the outstanding Capital
Stock or other ownership interests of which (other than directors’ qualifying shares) shall at the time be owned by such
Person or by one or more Wholly-Owned Subsidiaries of such Person.
“Wholly-Owned
Subsidiary” of any Person shall mean a Subsidiary of such Person, 100% of the outstanding Capital Stock or other ownership
interests of which (other than directors’ qualifying shares) shall at the time be owned by such Person or by one or more
Wholly-Owned Subsidiaries of such Person.
“Withdrawal
Liability” shall mean liability to a Multiemployer Plan as a result of a complete or partial withdrawal from such Multiemployer
Plan, as such terms are defined in Title IV of ERISA.
“Withholding
Agent” shall mean any Credit Party, the Administrative Agent and, in the case of any U.S. federal withholding Tax, any
other applicable withholding agent.
“Write-Down
and Conversion Powers” shall mean, (a) with respect to any EEA Resolution Authority, the write-down and conversion powers
of such EEA Resolution Authority from time to time under the Bail-In Legislation for the applicable EEA Member Country, which write-down
and conversion powers are described in the EU Bail-In Legislation Schedule, and (b) with respect to the United Kingdom, any powers
of the applicable Resolution Authority under the Bail-In Legislation to cancel, reduce, modify or change the form of a liability
of any UK Financial Institution or any contract or instrument under which that liability arises, to convert all or part of that
liability into shares, securities or obligations of that person or any other person, to provide that any such contract or instrument
is to have effect as if a right had been exercised under it or to suspend any obligation in respect of that liability or any of
the powers under that Bail-In Legislation that are related to or ancillary to any of those powers.
1.2 Other
Interpretive Provisions. With reference to this Agreement and each other Credit Document, unless otherwise specified herein
or in such other Credit Document:
(a) The
meanings of defined terms are equally applicable to the singular and plural forms of the defined terms.
(b) The words “herein,” “hereto,” “hereof,” and “hereunder” and words
of similar import when used in any Credit Document shall refer to such Credit Document as a whole and not to any particular provision
thereof.
(c) Section, Exhibit, and Schedule references are to the Credit Document in which such reference appears.
(d) The term “including” is by way of example and not limitation.
(e) The
term “documents” includes any and all instruments, documents, agreements, certificates, notices, reports, financial
statements and other writings, however evidenced, whether in physical or electronic form.
(f) In the computation of periods of time from a specified date to a later specified date, the word “from”
means “from and including”; the words “to” and “until” each mean “to but excluding”;
and the word “through” means “to and including.”
(g) Section
headings herein and in the other Credit Documents are included for convenience of reference only and shall not affect the interpretation
of this Agreement or any other Credit Document.
(h) The
words “asset” and “property” shall be construed to have the same meaning and effect and to refer to any
and all tangible and intangible assets and properties, including cash, securities, accounts and contract rights.
(i) All
references to “knowledge” or “awareness” of any Credit Party or any Restricted Subsidiary thereof means
the actual knowledge of an Authorized Officer of such Credit Party or such Restricted Subsidiary.
1.3 Accounting
Terms.
(a) Except as expressly provided herein, all accounting terms not specifically or completely defined herein shall be
construed in conformity with, and all financial data (including financial ratios and other financial calculations) required to
be submitted pursuant to this Agreement shall be prepared in conformity with, GAAP, applied in a consistent manner.
(b) Notwithstanding anything to the contrary herein, for purposes of determining compliance with any test or covenant
contained in this Agreement with respect to any period during which any Specified Transaction occurs, the Consolidated Total Debt
to Consolidated EBITDA Ratio shall be calculated with respect to such period and such Specified Transaction on a Pro Forma Basis.
(c) Where reference is made to “the Borrower and its Restricted Subsidiaries on a consolidated basis” or
similar language, such consolidation shall not include any Subsidiaries of the Borrower other than Restricted Subsidiaries.
1.4
Rounding. Any financial ratios required to be maintained by the Borrower pursuant to this Agreement (or required
to be satisfied in order for a specific action to be permitted under this Agreement) shall be calculated by dividing the appropriate
component by the other component, carrying the result to one place more than the number of places by which such ratio is expressed
herein and rounding the result up or down to the nearest number.
1.5 References to Agreements Laws, Etc. Unless otherwise expressly provided herein, (a) references to organizational
documents, agreements (including the Credit Documents), and other Contractual Requirements shall be deemed to include all subsequent
amendments, restatements, amendment, and restatements, extensions, supplements, modifications, replacements, refinancings, renewals,
or increases, but only to the extent that such amendments, restatements, amendment, and restatements, extensions, supplements,
modifications, replacements, refinancings, renewals, or increases are permitted by any Credit Document; and (b) references to any
Requirement of Law shall include all statutory and regulatory provisions consolidating, amending, replacing, supplementing, or
interpreting such Requirement of Law.
1.6 Exchange Rates. Notwithstanding the foregoing, for purposes of any determination under Section 9, Section
10 or Section 11 or any determination under any other provision of this Agreement expressly requiring the use of a
current exchange rate, all amounts incurred, outstanding, or proposed to be incurred or outstanding in currencies other than Dollars
shall be translated into Dollars at the Spot Rate; provided, however, that for purposes of determining compliance
with Section 10 with respect to the amount of any Indebtedness, Restricted Investment, Lien, Asset Sale, or Restricted
Payment in a currency other than Dollars, no Default or Event of Default shall be deemed to have occurred solely as a result of
changes in rates of exchange occurring after the time such Indebtedness, Lien or Restricted Investment is incurred or Asset Sale
or Restricted Payment made; provided that, for the avoidance of doubt, the foregoing provisions of this Section 1.6
shall otherwise apply to such Sections, including with respect to determining whether any Indebtedness, Lien, or Investment
may be incurred or Asset Sale or Restricted Payment made at any time under such Sections. For purposes of any determination of
Consolidated Total Debt, amounts in currencies other than Dollars shall be translated into Dollars at the currency exchange rates
used in preparing the most recently delivered Section 9.1 Financials.
1.7 Interest Rates; LIBOR Notification. The interest rate on LIBOR Loans is determined by reference to the LIBOR Rate,
which is derived from the London interbank offered rate. The London interbank offered rate is intended to represent the rate at
which contributing banks may obtain short-term borrowings from each other in the London interbank market. In July 2017, the U.K.
Financial Conduct Authority announced that, after the end of 2021, it would no longer persuade or compel contributing banks to
make rate submissions to the ICE Benchmark Administration (together with any successor to the ICE Benchmark Administrator, the
“IBA”) for purposes of the IBA setting the London interbank offered rate. As a result, it is possible that
commencing in 2022, the London interbank offered rate may no longer be available or may no longer be deemed an appropriate reference
rate upon which to determine the interest rate on LIBOR Loans. In light of this eventuality, public and private sector industry
initiatives are currently underway to identify new or alternative reference rates to be used in place of the London interbank
offered rate. Upon the occurrence of a Benchmark Transition Event or an Early Opt-in Election, Section 2.10(b) provides
a mechanism for determining an alternative rate of interest. The Administrative Agent will promptly notify the Borrower, pursuant
to Section 2.10(d), of any change to the reference rate upon which the interest rate on LIBOR Loans is based. However,
the Administrative Agent does not warrant or accept any responsibility for, and shall not have any liability with respect to,
the administration, submission or any other matter related to the London interbank offered rate or other rates in the definition
of “Adjusted LIBOR Rate” or with respect to any alternative or successor rate thereto, or replacement rate thereof
(including, without limitation, (i) any such alternative, successor or replacement rate implemented pursuant to Section 2.10(b),
whether upon the occurrence of a Benchmark Transition Event or an Early Opt-in Election, and (ii) the implementation of any Benchmark
Replacement Conforming Changes pursuant to Section 2.10(c)), including without limitation, whether the composition or characteristics
of any such alternative, successor or replacement reference rate will be similar to, or produce the same value or economic equivalence
of, the LIBOR Rate or have the same volume or liquidity as did the London interbank offered rate prior to its discontinuance or
unavailability.
1.8 Times of Day. Unless otherwise specified, all references herein to times of day shall be references to Eastern
time (daylight or standard, as applicable).
1.9 Timing
of Payment or Performance. Except as otherwise provided herein, when the payment of any obligation or the performance of any
covenant, duty, or obligation is stated to be due or performance required on (or before) a day which is not a Business Day, the
date of such payment (other than as described in the definition of “Interest Period”) or performance shall extend
to the immediately succeeding Business Day, and such extension of time shall be reflected in computing interest or fees, as the
case may be.
1.10 Certifications. All certifications to be made hereunder by an officer or representative of a Credit Party shall
be made by such a Person in his or her capacity solely as an officer or a representative of such Credit Party, on such Credit
Party’s behalf and not in such Person’s individual capacity.
1.11 Compliance
with Certain Sections. In the event that any Lien, Investment, Indebtedness (whether at the time of incurrence or upon application
of all or a portion of the proceeds thereof), disposition, Restricted Payment, Affiliate transaction, Contractual Requirement,
or prepayment of Indebtedness meets the criteria of one or more than one of the categories of transactions then permitted pursuant
to any clause or subsection of Section 9.9 or any clause or subsection of Sections 10.1, 10.2, 10.3,
10.4, 10.5 or 10.6 then, such transaction (or portion thereof) at any time shall be allocated to one or more
of such clauses or subsections within the relevant sections as determined by the Borrower in its sole discretion at such time.
1.12 Pro
Forma and Other Calculations.
(a) For
purposes of calculating the Fixed Charge Coverage Ratio, Consolidated Total Debt to Consolidated EBITDA Ratio, Investments, acquisitions,
dispositions, mergers, consolidations, and disposed operations (as determined in accordance with GAAP) that have been made by
the Borrower or any Restricted Subsidiary during the Test Period or, except in connection with determining actual compliance (as
opposed to compliance on a Pro Forma Basis) with the Consolidated Total Debt to Consolidated EBITDA Ratio set forth in Section
10.7, subsequent to such Test Period and on or prior to or simultaneously with the date of determination shall be calculated
on a Pro Forma Basis assuming that all such Investments, acquisitions, dispositions, mergers, consolidations, and disposed operations
(and the change in any associated fixed charge obligations and the change in Consolidated EBITDA resulting therefrom) had occurred
on the first day of the Test Period. If since the beginning of such period any Person (that subsequently became a Restricted Subsidiary
or was merged with or into the Borrower or any Restricted Subsidiary since the beginning of such period) shall have made any Investment,
acquisition, disposition, merger, consolidation, or disposed operation that would have required adjustment pursuant to this definition,
then the Fixed Charge Coverage Ratio, Consolidated Total Debt to Consolidated EBITDA Ratio shall be calculated giving Pro Forma
Effect thereto for such Test Period as if such Investment, acquisition, disposition, merger, consolidation, or disposed operation
had occurred at the beginning of the Test Period. Notwithstanding anything to the contrary herein, with respect to any amounts
incurred or transactions entered into (or consummated) in reliance on a provision of any covenant in this Agreement that does
not require compliance with a financial ratio or test (including, without limitation, the Consolidated Total Debt to Consolidated
EBITDA Ratio) (any such amounts, the “Fixed Amounts”) substantially concurrently with any amounts incurred
or transactions entered into (or consummated) in reliance on a provision of the same covenant in this Agreement that requires
compliance with any such financial ratio or test (any such amounts, the “Incurrence Based Amounts”), it is
understood and agreed that the Fixed Amounts (and any cash proceeds thereof) shall be disregarded in the calculation of the financial
ratio or test applicable to the Incurrence Based Amounts in connection with such substantially concurrent Incurrence.
(b) Whenever
Pro Forma Effect is to be given to a transaction, the pro forma calculations shall be made in good faith by a responsible financial
or accounting officer of a Borrower (and may include, for the avoidance of doubt and without duplication, cost savings, operating
expense reductions and synergies resulting from such Investment, acquisition, merger, or consolidation which is being given Pro
Forma Effect that have been or are expected to be realized; provided that such costs savings, operating expense reductions
and synergies are made in compliance with the definition of “Pro Forma Adjustment”). If any Indebtedness bears a floating
rate of interest and is being given Pro Forma Effect, the interest on such Indebtedness shall be calculated as if the rate in
effect on the date of determination had been the applicable rate for the entire period (taking into account for such entire period,
any Hedging Obligation applicable to such Indebtedness with a remaining term of 12 months or longer, and in the case of any Hedging
Obligation applicable to such Indebtedness with a remaining term of less than 12 months, taking into account such Hedging Obligation
to the extent of its remaining term). Interest on a Capitalized Lease Obligation shall be deemed to accrue at an interest rate
reasonably determined by a responsible financial or accounting officer of the Borrower to be the rate of interest implicit in
such Capitalized Lease Obligation in accordance with GAAP. For purposes of making the computation referred to above, interest
on any Indebtedness under a revolving credit facility computed on a Pro Forma Basis shall be computed based upon the average daily
balance of such Indebtedness during the applicable period (or, if lower, the greater of (i) maximum commitments under such revolving
credit facilities as of the date of determination and (ii) the aggregate principal amount of loans outstanding under such a revolving
credit facilities on such date). Interest on Indebtedness that may optionally be determined at an interest rate based upon a factor
of a prime or similar rate, a eurocurrency interbank offered rate, or other rate, shall be deemed to have been based upon the
rate actually chosen, or, if none, then based upon such optional rate chosen as the Borrower may designate.
In
connection with any action (other than with respect any Credit Event subject to the conditions set forth in Section 7.1)
being taken solely in connection with a Limited Condition Transaction, for purposes of:
(i) determining
compliance with any provision of this Agreement which requires the calculation of the Consolidated Total Debt to Consolidated
EBITDA Ratio or the Fixed Charge Coverage Ratio;
(ii) determining
the accuracy of representations and warranties in Section 8 and/or whether a Default or Event of Default shall have occurred
and be continuing under Section 11; or
(iii) testing availability under baskets set forth in this agreement (including baskets measured as a percentage of Consolidated
EBITDA or Consolidated Total Assets);
in each
case, at the option of the Borrower (the Borrower’s election to exercise such option in connection with any Limited Condition
Transaction, an “LCT Election”), the date of determination of whether any such action (other than with respect
any Credit Event subject to the conditions set forth in Section 7.1) is permitted hereunder, shall be deemed to be
the date the definitive agreements for such Limited Condition Transaction are entered into (the “LCT Test Date”),
and if, after giving Pro Forma Effect to the Limited Condition Transaction and the other transactions to be entered into in connection
therewith (including any incurrence of Indebtedness and the use of proceeds thereof) as if they had occurred at the beginning of
the most recent Test Period ending prior to the LCT Test Date, the Borrower could have taken such action on the relevant LCT Test
Date in compliance with such ratio or basket, such ratio or basket shall be deemed to have been complied with; provided
that, for the purpose of determining whether a Default or Event of Default shall have occurred and be continuing under Section
11, such condition shall be deemed to be satisfied to the extent that on the date of consummation of the relevant Limited Condition
Transaction, no Event of Default under Section 11.1 or Section 11.5 has occurred and is continuing. For the avoidance
of doubt, if the Borrower has made an LCT Election and any of the ratios or baskets for which compliance was determined or tested
as of the LCT Test Date are exceeded as a result of fluctuations in any such ratio or basket, including due to fluctuations in
Consolidated EBITDA of the Borrower and its Restricted Subsidiaries or the Person subject to such Limited Condition Transaction,
at or prior to the consummation of the relevant transaction or action, such baskets or ratios will not be deemed to have been exceeded
as a result of such fluctuations. If the Borrower has made an LCT Election for any Limited Condition Transaction, then in connection
with any subsequent calculation of any ratio (other than the Consolidated Total Debt to Consolidated EBITDA Ratio set forth in
Section 10.7) or basket availability with respect to the incurrence of Indebtedness or Liens, or the making of Restricted
Payments, mergers, the conveyance, lease or other transfer of all or substantially all of the assets of the Borrower, the prepayment,
redemption, purchase, defeasance or other satisfaction of Indebtedness, or the designation of an Unrestricted Subsidiary on or
following the relevant LCT Test Date and prior to the earlier of (i) the date on which such Limited Condition Transaction
is consummated or (ii) the date that the definitive agreement for such Limited Condition Transaction is terminated or expires
without consummation of such Limited Condition Transaction, any such ratio (other than the Consolidated Total Debt to Consolidated
EBITDA Ratio set forth in Section 10.7) or basket shall be calculated on a Pro Forma Basis assuming such Limited Condition
Transaction and other transactions in connection therewith (including any incurrence of Indebtedness and the use of proceeds thereof)
have been consummated.
(c) Notwithstanding
anything to the contrary in this Section 1.12 or in any classification under GAAP of any Person, business, assets or operations
in respect of which a definitive agreement for the disposition thereof has been entered into as discontinued operations, no Pro
Forma Effect shall be given to any discontinued operations (and the EBITDA attributable to any such Person, business, assets or
operations shall not be excluded for any purposes hereunder) until such disposition shall have been consummated.
(d) Any
determination of Consolidated Total Assets shall be made by reference to the last day of the Test Period most recently ended on
or prior to the relevant date of determination for which Section 9.1 Financials have been or were required to be delivered. Notwithstanding
anything to the contrary herein, to the extent compliance with a financial ratio or test is calculated prior to the date financial
statements are first delivered under Section 9.1, such calculation shall use the latest financial statements delivered
pursuant to Section 6.11.
(e) Except
as otherwise specifically provided herein, all computations of Consolidated Total Assets, Available Amount, Consolidated Total
Debt to Consolidated EBITDA Ratio and other financial ratios and financial calculations (and all definitions (including accounting
terms) used in determining any of the foregoing) and all computations and all definitions (including accounting terms) used in
determining compliance with Section 10.7 shall be calculated, in each case, with respect to the Borrower and its Restricted
Subsidiaries on a consolidated basis.
1.13 Divisions.
For all purposes under the Credit Documents, in connection with any division or plan of division under Delaware law (or any comparable
event under a different jurisdiction’s laws): (a) if any asset, right, obligation or liability of any Person becomes the
asset, right, obligation or liability of a different Person, then it shall be deemed to have been transferred from the original
Person to the subsequent Person, and (b) if any new Person comes into existence, such new Person shall be deemed to have been
organized and acquired on the first date of its existence by the holders of its Equity Interests at such time.
1.14 Effect
of Restatement.
(a) This
Agreement shall amend and restate the Original Credit Agreement in its entirety, with the parties hereby agreeing that there is
no novation of the Original Credit Agreement and from and after the Restatement Effective Date, the rights and obligations of
the parties under the Original Credit Agreement shall be subsumed and governed by this Agreement. From and after the Restatement
Effective Date, the Obligations and Commitments under the Original Credit Agreement shall continue as Obligations and Commitments
under this Agreement until otherwise paid or terminated in accordance with the terms hereof. Without limiting the generality of
the foregoing, the Security Documents and all of the Collateral described therein do and shall continue to secure the payment
of all Obligations of the Credit Parties under the Credit Documents, in each case, as amended by this Agreement.(b) On and
after the Restatement Effective Date, each reference to the “Credit Agreement” in any other Credit Document shall
mean and be a reference to this Agreement.
Section
2. Amount and Terms of Credit.
2.1 Commitments.
(a) Subject
to and upon the terms and conditions herein set forth, (i) each Closing Date Term A Loan outstanding under the Original Credit
Agreement on the Restatement Effective Date shall remain outstanding under this Agreement as an Initial Term A Loan of the same
Type, and with an initial Interest Period equal to the then remaining Interest Period, as the Initial Term A Loans outstanding
immediately prior to the Restatement Effective Date and (ii) each Additional Term A Lender severally agrees to make Additional
Term A Loans to the Borrower on the Restatement Effective Date, which Additional Term A Loans shall not exceed for any such Additional
Term A Lender the Additional Term A Term A Loan Commitment of such Additional Term A Lender and in the aggregate shall not exceed
$200,000,000. Upon funding, the Additional Term A Loans made on the Restatement Effective Date will constitute “Initial
Term A Loans” for all purposes hereunder and will, together with the Closing Date Term A Loans, be treated as one Class
of Term Loans, with an initial Interest Period (with the same Adjusted LIBOR Rate) ending on same day as the current Interest
Period for the Closing Date Term A Loans. Such Initial Term A Loans (i) may at the option of the Borrower be incurred and maintained
as, and/or converted into, ABR Loans or LIBOR Loans; provided that all Initial Term A Loans made by each of the Lenders
pursuant to the same Borrowing shall, unless otherwise specifically provided herein, consist entirely of Initial Term A Loans
of the same Type, (ii) may be repaid or prepaid (without premium or penalty) in accordance with the provisions hereof, but once
repaid or prepaid, may not be reborrowed, and (iii) shall not exceed in the aggregate the Total Initial Term A Loan Commitments.
On the Initial Term A Loan Maturity Date, all then unpaid Initial Term A Loans shall be repaid in full in Dollars.
(b) Subject
to and upon the terms and conditions herein set forth each Revolving Credit Lender severally agrees to make Revolving Credit Loans
denominated in any Dollars to the Borrower from its applicable lending office (each, a “Revolving Credit Loan”)
in an aggregate principal amount not to exceed at any time outstanding the amount of such Revolving Credit Lender’s Revolving
Credit Commitment, provided that any such Revolving Credit Loans (A) shall be made available at any time and from time
to time on and after the Closing Date and prior to the Revolving Credit Maturity Date, (B) may, at the option of the Borrower,
be incurred and maintained as, and/or converted into ABR Loans or LIBOR Loans that are Revolving Credit Loans; provided
that all Revolving Credit Loans made by each of the Lenders pursuant to the same Borrowing shall, unless otherwise specifically
provided herein, consist entirely of Revolving Credit Loans of the same Type, (C) may be repaid (without premium or penalty) and
reborrowed in accordance with the provisions hereof, (D) shall not, for any Lender at any time, after giving effect thereto and
to the application of the proceeds thereof, result in such Revolving Credit Lender’s Revolving Credit Exposure in respect
of any Class of Revolving Loans at such time exceeding such Revolving Credit Lender’s Revolving Credit Commitment in respect
of such Class of Revolving Loan at such time and (E) shall not, after giving effect thereto and to the application of the proceeds
thereof, result at any time in the aggregate amount of the Revolving Credit Lenders’ Revolving Credit Exposures at such
time exceeding the Total Revolving Credit Commitment then in effect or the aggregate amount of the Revolving Credit Lenders’
Revolving Credit Exposures of any Class of Revolving Loans at such time exceeding the aggregate Revolving Credit Commitment with
respect to such Class.
2.2 Minimum
Amount of Each Borrowing; Maximum Number of Borrowings. The aggregate principal amount of each Borrowing of Term Loans or
Revolving Credit Loans shall be in a minimum amount of at least the Minimum Borrowing Amount for such Type of Loans and in a multiple
of $100,000 in excess thereof. More than one Borrowing may be incurred on any date; provided that at no time shall there
be outstanding more than five Borrowings of LIBOR Loans that are Term Loans and fifteen Borrowings of LIBOR Loans that are Revolving
Credit Loans under this Agreement.
2.3 Notice
of Borrowing.
(a) The
Borrower shall give the Administrative Agent at the Administrative Agent’s Office (i) prior to 11:00 a.m. (New York City
time) at least three Business Days’ prior written notice in the case of a Borrowing of Additional Term A Loans to be made
on the Restatement Effective Date if such Additional Term A Loans are to be LIBOR Loans and (ii) prior to 11:00 a.m. (New York
City time) at least one Business Day’s prior written notice in the case of a Borrowing of Additional Term A Loans to be
made on the Restatement Effective Date if such Additional Term A Loans are to be ABR Loans. Such notice (a “Notice of
Borrowing”) shall specify (A) the aggregate principal amount of the Term Loans to be made, (B) the date of the Borrowing
and (C) whether the Term Loans shall consist of ABR Loans and/or LIBOR Loans and, if the Term Loans are to include LIBOR Loans,
the Interest Period to be initially applicable thereto. If no election as to the Type of Borrowing is specified in any such notice,
then the requested Borrowing shall be an ABR Borrowing. If no Interest Period with respect to any Borrowing of LIBOR Loans is
specified in any such notice, then the Borrower shall be deemed to have selected an Interest Period of one month’s duration.
The Administrative Agent shall promptly advise the applicable Lenders of any notice given pursuant to this Section 2.3(a)
(and the contents thereof), and of each Lender’s pro rata share of the requested Borrowing.
(b) Whenever
the Borrower desires to incur Revolving Credit Loans (other than to repay Unpaid Drawings), the Borrower shall give the Administrative
Agent at the Administrative Agent’s Office a Notice of Borrowing (i) prior to 12:00 noon (New York City Time) at least three
Business Days’ prior to each Borrowing of LIBOR Loans that are Revolving Credit Loans; and (ii) prior to 10:00 a.m.
(New York City time) on the Business Day of each Borrowing of Revolving Credit Loans that are ABR Loans. Each such Notice of Borrowing,
except as otherwise expressly provided in Section 2.10, shall specify (x) the aggregate principal amount of the Revolving
Credit Loans to be made pursuant to such Borrowing, (y) the date of Borrowing (which shall be a Business Day) and (z) whether
the respective Borrowing shall consist of ABR Loans or LIBOR Loans that are Revolving Credit Loans and, if LIBOR Loans that are
Revolving Credit Loans, the Interest Period to be initially applicable thereto. The Administrative Agent shall promptly give each
Revolving Credit Lender written notice of each proposed Borrowing of Revolving Credit Loans, of such Lender’s Revolving
Credit Commitment Percentage thereof, of the identity of the Borrower, and of the other matters covered by the related Notice
of Borrowing.
(c) Borrowings
to reimburse Unpaid Drawings shall be made upon the notice specified in Section 3.4(a).
(d) Without
in any way limiting the obligation of the Borrower to confirm in writing any notice they shall give hereunder by telephone (which
obligation is absolute), the Administrative Agent may act prior to receipt of written confirmation without liability upon the
basis of such telephonic notice believed by the Administrative Agent in good faith to be from an Authorized Officer of the Borrower.
2.4 Disbursement
of Funds.
(a) No
later than 2:00 p.m. (New York City time) on the date specified in each Notice of Borrowing, each Lender shall make available
its pro rata portion, if any, of each Borrowing requested to be made on such date in the manner provided below; provided
that on the Restatement Effective Date, such funds may be made available at such earlier time as may be agreed among the Lenders,
the Borrower, and the Administrative Agent for the purpose of consummating the Restatement Date Transactions.
(b) Each
Lender shall make available all amounts it is to fund to the Borrower under any Borrowing for its applicable Commitments, and
in immediately available funds, to the Administrative Agent at the Administrative Agent’s Office and the Administrative
Agent will (except in the case of Borrowings to repay Unpaid Drawings) make available to the Borrower, by depositing to an account
designated by the Borrower to the Administrative Agent the aggregate of the amounts so made available in Dollars. Unless the Administrative
Agent shall have been notified by any Lender prior to the date of any such Borrowing that such Lender does not intend to make
available to the Administrative Agent its portion of the Borrowing or Borrowings to be made on such date, the Administrative Agent
may assume that such Lender has made such amount available to the Administrative Agent on such date of Borrowing, and the Administrative
Agent, in reliance upon such assumption, may (in its sole discretion and without any obligation to do so) make available to the
Borrower a corresponding amount. If such corresponding amount is not in fact made available to the Administrative Agent by such
Lender and the Administrative Agent has made available such amount to the Borrower, the Administrative Agent shall be entitled
to recover such corresponding amount from such Lender. If such Lender does not pay such corresponding amount forthwith upon the
Administrative Agent’s demand therefor the Administrative Agent shall promptly notify the Borrower and the Borrower shall
immediately pay such corresponding amount to the Administrative Agent in Dollars. The Administrative Agent shall also be entitled
to recover from such Lender or the Borrower interest on such corresponding amount in respect of each day from the date such corresponding
amount was made available by the Administrative Agent to the Borrower to the date such corresponding amount is recovered by the
Administrative Agent, at a rate per annum equal to (i) if paid by such Lender, the Overnight Bank Funding Rate or (ii) if paid
by the Borrower, the then-applicable rate of interest or fees, calculated in accordance with Section 2.8, for the respective
Loans.
(c) Nothing
in this Section 2.4 shall be deemed to relieve any Lender from its obligation to, fulfill its commitments hereunder or
to prejudice any rights that the Borrower may have against any Lender as a result of any default by such Lender hereunder (it
being understood, however, that no Lender shall be responsible for the failure of any other Lender to fulfill its commitments
hereunder).
2.5 Repayment
of Loans; Evidence of Debt.
(a) The
Borrower shall repay to the Administrative Agent, for the benefit of the applicable Lenders, on the Initial Term A Loan Maturity
Date, the then outstanding Initial Term A Loans. The Borrower shall repay to the Administrative Agent for the benefit of the Revolving
Credit Lenders, on the Revolving Credit Maturity Date, the then outstanding Revolving Credit Loans. The Borrower shall repay to
the Administrative Agent for the benefit of the Revolving Credit Lenders, on each Extended Revolving Loan Maturity Date, the then
outstanding amount of Extended Revolving Credit Loans.
(b) The
Borrower shall repay to the Administrative Agent, in Dollars, for the benefit of the Initial Term A Loan Lenders, on each date
set forth below (or, if not a Business Day, the immediately following Business Day) (each, a “Term Loan Repayment Date”),
a principal amount in respect of each of the Initial Term A Loans made to the Borrower equal to (x) the outstanding principal
amount of Initial Term A Loans (including, for the avoidance of doubt, the Additional Term A Loans) on the Restatement Effective
Date multiplied by (y) the percentage set forth below opposite such Term Loan Repayment Date (each, a “Term Loan Repayment
Amount”):
|
Date
|
|
Initial Term A Loan
|
|
|
March 31, 2021
|
|
|
0.625
|
%
|
|
June 30, 2021
|
|
|
0.625
|
%
|
|
September 30, 2021
|
|
|
0.625
|
%
|
|
December 31, 2021
|
|
|
0.625
|
%
|
|
March 31, 2022
|
|
|
0.625
|
%
|
|
June 30, 2022
|
|
|
0.625
|
%
|
|
September 30, 2022
|
|
|
0.625
|
%
|
|
December 31, 2022
|
|
|
0.625
|
%
|
|
March 31, 2023
|
|
|
1.875
|
%
|
|
June 30, 2023
|
|
|
1.875
|
%
|
|
September 30, 2023
|
|
|
1.875
|
%
|
|
December 31, 2023
|
|
|
1.875
|
%
|
|
March 31, 2024
|
|
|
1.875
|
%
|
|
June 30, 2024
|
|
|
1.875
|
%
|
|
September 30, 2024
|
|
|
1.875
|
%
|
|
December 31, 2024
|
|
|
1.875
|
%
|
|
March 31, 2025
|
|
|
2.50
|
%
|
|
June 30, 2025
|
|
|
2.50
|
%
|
|
September 30, 2025
|
|
|
2.50
|
%
|
|
Initial Term A Loan Maturity Date
|
|
|
Remaining outstanding amounts
|
|
(c) In
the event that any Incremental Term Loans are made, such Incremental Term Loans shall be repaid by the Borrower on each Term Loan
Repayment Date in an amount equal to the Term Loan Repayment Amount and subject to any adjustment to ensure fungibility with the
Initial Term A Loans. In the event that any Extended Term Loans are established, such Extended Term Loans shall, subject to Section
2.14(g), be repaid by the Borrower in the amounts (each such amount with respect to any Extended Repayment Date, an “Extended
Term Loan Repayment Amount”) and on the dates (each, an “Extended Repayment Date”) set forth in the
applicable Extension Amendment.
(d) Each
Lender shall maintain in accordance with its usual practice an account or accounts evidencing the Indebtedness of the Borrower
to the appropriate lending office of such Lender resulting from each Loan made by such lending office of such Lender from time
to time, including the amounts of principal and interest payable and paid to such lending office of such Lender from time to time
under this Agreement.
(e) The
Administrative Agent shall maintain the Register pursuant to Section 13.6(b), and a subaccount for each Lender, in which
Register and subaccounts (taken together) shall be recorded (i) the amount of each Loan made hereunder, whether such Loan is an
Initial Term A Loan, Incremental Term Loan or Revolving Credit Loan, as applicable, the Type of each Loan made, the name of the
Borrower and the Interest Period, if any, applicable thereto, (ii) the amount of any principal or interest due and payable or
to become due and payable from the Borrower to each Lender hereunder, and (iii) the amount of any sum received by the Administrative
Agent hereunder from the Borrower and each Lender’s share thereof.
(f) The
entries made in the Register and accounts and subaccounts maintained pursuant to clauses (d) and (e) of this Section
2.5 shall, to the extent permitted by applicable law, be prima facie evidence of the existence and amounts of the obligations
of the Borrower therein recorded; provided, however, that in the event of any inconsistency between the Registrar
and any such account or subaccount, the Registrar shall govern, provided, further, that the failure of any Lender
or the Administrative Agent to maintain such account, such Register or subaccount, as applicable, or any error therein, shall
not in any manner affect the obligation of the Borrower to repay (with applicable interest) the Loans made to the Borrower by
such Lender in accordance with the terms of this Agreement.
(g) The
Borrower hereby agrees that, upon request of any Lender at any time and from time to time after the Borrower have made an initial
borrowing hereunder, the Borrower shall provide to such Lender, at the Borrower’s own expense, a promissory note, substantially
in the form of Exhibit I-1 or Exhibit I-2, as applicable, evidencing the Initial Term A Loans, Incremental Term
Loans and Revolving Loans, respectively, owing to such Lender. Thereafter, unless otherwise agreed to by the applicable Lender,
the Loans evidenced by such promissory note and interest thereon shall at all times (including after assignment pursuant to Section
13.6) be represented by one or more promissory notes in such form payable to the payee named therein (or, if requested by
such payee, to such payee and its registered assigns).
2.6 Conversions
and Continuations.
(a) Subject
to the penultimate sentence of this clause (a), (x) the Borrower shall have the option on any Business Day to convert all
or a portion equal to the Minimum Borrowing Amount for Term Loans of one Type or the Minimum Borrowing Amount for Revolving Credit
Loans of one Type into a Borrowing or Borrowings of another Type and (y) the Borrower shall have the option on any Business Day
to continue the outstanding principal amount of any LIBOR Loans as LIBOR Loans for an additional Interest Period; provided
that (i) no partial conversion of LIBOR Loans shall reduce the outstanding principal amount of LIBOR Loans made pursuant to
a single Borrowing to less than the Minimum Borrowing Amount, (ii) ABR Loans may not be converted into LIBOR Loans if an Event
of Default is in existence on the date of the conversion and the Administrative Agent has or the Required Lenders have determined
in its or their sole discretion not to permit such conversion, (iii) LIBOR Loans may not be continued as LIBOR Loans for an additional
Interest Period if an Event of Default is in existence on the date of the proposed continuation and the Administrative Agent has
or the Required Lenders have determined in its or their sole discretion not to permit such continuation, and (iv) Borrowings resulting
from conversions pursuant to this Section 2.6 shall be limited in number as provided in Section 2.2. Each such conversion
or continuation shall be effected by the Borrower by giving the Administrative Agent at the Administrative Agent’s Office
prior to 12:00 p.m. (New York City time) at least (i) three Business Days prior, in the case of a continuation of or conversion
to LIBOR Loans (other than in the case of a notice delivered on the Closing Date, which shall be deemed to be effective on the
Closing Date), or (ii) one Business Day prior in the case of a conversion into ABR Loans (each, a “Notice of Conversion
or Continuation” substantially in the form of Exhibit K) specifying the Loans to be so converted or continued,
the Type of Loans to be converted or continued into and, if such Loans are to be converted into or continued as LIBOR Loans, the
Interest Period to be initially applicable thereto. If no Interest Period is specified in any such notice with respect to any
conversion to or continuation as a LIBOR Loan, the Borrower shall be deemed to have selected an Interest Period of one month’s
duration. The Administrative Agent shall give each applicable Lender notice as promptly as practicable of any such proposed conversion
or continuation affecting any of its Loans.
(b) If
any Event of Default is in existence at the time of any proposed continuation of any LIBOR Loans denominated in Dollars and the
Administrative Agent has or the Required Lenders have determined in its or their sole discretion not to permit such continuation,
such LIBOR Loans shall be automatically converted on the last day of the current Interest Period into ABR Loans. If upon the expiration
of any Interest Period in respect of LIBOR Loans, the Borrower has failed to elect a new Interest Period to be applicable thereto
as provided in clause (a) above, the Borrower shall be deemed to have elected to convert such Borrowing of LIBOR Loans
into a Borrowing of ABR Loans, effective as of the expiration date of such current Interest Period.
2.7 Pro
Rata Borrowings. Each Borrowing of Additional Term A Loans under this Agreement shall be made by the Lenders pro rata on the
basis of their then-applicable Additional Term A Loan Commitments. Each Borrowing of Revolving Credit Loans under this Agreement
shall be made by the Revolving Credit Lenders pro rata on the basis of their then-applicable Revolving Credit Commitment Percentages.
Each Borrowing of Incremental Term Loans under this Agreement shall be made by the Lenders pro rata on the basis of their then-applicable
Incremental Term Loan Commitments. Each Borrowing of Incremental Revolving Credit Loans under this Agreement shall be made by
the Revolving Credit Lenders pro rata on the basis of their then-applicable Incremental Revolving Credit Commitments. It is understood
that (a) no Lender shall be responsible for any default by any other Lender in its obligation to make Loans hereunder and that
each Lender severally but not jointly shall be obligated to make the Loans provided to be made by it hereunder, regardless of
the failure of any other Lender to fulfill its commitments hereunder and (b) other than as expressly provided herein with
respect to a Defaulting Lender, failure by a Lender to perform any of its obligations under any of the Credit Documents shall
not release any Person from performance of its obligation, under any Credit Document.
2.8 Interest.
(a) The
unpaid principal amount of each ABR Loan shall bear interest from the date of the Borrowing thereof until maturity (whether by
acceleration or otherwise) at a rate per annum that shall at all times be the Applicable Margin for ABR Loans plus the
ABR, in each case, in effect from time to time.
(b) The
unpaid principal amount of each LIBOR Loan shall bear interest from the date of the Borrowing thereof until maturity thereof (whether
by acceleration or otherwise) at a rate per annum that shall at all times be the Applicable Margin for LIBOR Loans plus
the relevant Adjusted LIBOR Rate.
(c) If
an Event of Default has occurred and is continuing under Section 11.1 or Section 11.5 hereto, if all or a portion
of (i) the principal amount of any Loan or (ii) any interest payable thereon or any other amount payable hereunder shall not be
paid when due (whether at the stated maturity, by acceleration or otherwise), such overdue amount shall bear interest at a rate
per annum (the “Default Rate”) that is (x) in the case of overdue principal, the rate that would otherwise be
applicable thereto plus 2.00% per annum or (y) in the case of any other overdue amount, including overdue interest, to the
extent permitted by applicable law, the rate described in Section 2.8(a) for the applicable Class plus 2.00% per
annum from the date of such non-payment to the date on which such amount is paid in full (after as well as before judgment).
(d) Interest
on each Loan shall accrue from and including the date of any Borrowing to but excluding the date of any repayment thereof and shall
be payable in the same currency in which the Loan is denominated; provided that any Loan that is repaid on the same date
on which it is made shall bear interest for one day. Except as provided below, interest shall be payable (i) in respect of each
ABR Loan, quarterly in arrears on the last Business Day of each fiscal quarter of the Borrower, (ii) in respect of each LIBOR Loan,
on the last day of each Interest Period applicable thereto and, in the case of an Interest Period in excess of three months, on
each date occurring at three-month intervals after the first day of such Interest Period, and (iii) in respect of each Loan, (A)
on any prepayment in respect thereof, (B) at maturity (whether by acceleration or otherwise), and (C) after such maturity, on demand.
(e) All
computations of interest hereunder shall be made in accordance with Section 5.5.
(f) The
Administrative Agent, upon determining the interest rate for any Borrowing of LIBOR Loans, shall promptly notify the Borrower and
the relevant Lenders thereof. Each such determination shall, absent clearly demonstrable error, be final and conclusive and binding
on all parties hereto.
2.9 Interest
Periods. At the time the Borrower gives a Notice of Borrowing or Notice of Conversion or Continuation in respect of the making
of, or conversion into or continuation as, a Borrowing of LIBOR Loans in accordance with Section 2.6(a), the Borrower shall
give the Administrative Agent written notice of the Interest Period applicable to such Borrowing, which Interest Period shall,
at the option of the Borrower be a one, two, three or six month period (or if available to all the Lenders making such LIBOR Loans
as determined by such Lenders in good faith based on prevailing market conditions, a twelve month or shorter period).
Notwithstanding
anything to the contrary contained above:
(a) the
initial Interest Period for any Borrowing of LIBOR Loans shall commence on the date of such Borrowing (including the date of any
conversion from a Borrowing of ABR Loans) and each Interest Period occurring thereafter in respect of such Borrowing shall commence
on the day on which the next preceding Interest Period expires; to the extent available to each applicable Lender of such LIBOR
Loan, twelve months or a period shorter than one month, thereafter as selected by the Borrower in its Notice of Borrowing;
(b) if
any Interest Period relating to a Borrowing of LIBOR Loans begins on the last Business Day of a calendar month or begins on a
day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period, such Interest
Period shall end on the last Business Day of the calendar month at the end of such Interest Period;
(c) if
any Interest Period would otherwise expire on a day that is not a Business Day, such Interest Period shall expire on the next
succeeding Business Day; provided that if any Interest Period in respect of a LIBOR Loan would otherwise expire on a day
that is not a Business Day but is a day of the month after which no further Business Day occurs in such month, such Interest Period
shall expire on the immediately following Business Day; and
(d) the
Borrower shall not be entitled to elect any Interest Period in respect of any LIBOR Loan if such Interest Period would extend
beyond the Maturity Date of such Loan.
2.10 Increased
Costs, Illegality, Alternate Rate of Interest, Etc.
(a) Subject
to clauses (b), (c), (d) and (e) of this Section 2.10, if prior to the commencement of any Interest Period for a Borrowing of
LIBOR Loans:
(i) the
Administrative Agent determines (which determination shall be conclusive absent manifest error) that adequate and reasonable means
do not exist for ascertaining the Adjusted LIBOR Rate or the LIBOR Rate, as applicable (including because the LIBOR Screen Rate
is not available or published on a current basis), for such Interest Period; provided that no Benchmark Transition Event
shall have occurred at such time; or
(ii) the
Administrative Agent is advised by the Required Lenders that the Adjusted LIBOR Rate or the LIBOR Rate, as applicable, for such
Interest Period will not adequately and fairly reflect the cost to such Lenders (or Lender) of making or maintaining their Loans
(or its Loan) included in such Borrowing for such Interest Period;
then the
Administrative Agent shall give notice thereof to the Borrower and the Lenders by telephone, telecopy or electronic mail as promptly
as practicable thereafter and, until the Administrative Agent notifies the Borrower and the Lenders that the circumstances giving
rise to such notice no longer exist, (A) any Notice of Conversion or Continuation that requests the conversion of any Borrowing
of Revolving Credit Loans to, or continuation of any Borrowing of Revolving Credit Loans as, a Borrowing of LIBOR Loans shall be
ineffective and (B) if any Notice of Borrowing requests a Borrowing of Revolving Credit Loans which shall be LIBOR Loans, such
Borrowing shall be made as an ABR Borrowing.
(b) Notwithstanding
anything to the contrary herein or in any other Credit Document, if a Benchmark Transition Event or an Early Opt-in Election,
as applicable, and its related Benchmark Replacement Date have occurred prior to the Reference Time in respect of any setting
of the then-current Benchmark, then (x) if a Benchmark Replacement is determined in accordance with clause (1) or (2) of the definition
of “Benchmark Replacement” for such Benchmark Replacement Date, such Benchmark Replacement will replace such Benchmark
for all purposes hereunder and under any Credit Document in respect of such Benchmark setting and subsequent Benchmark settings
without any amendment to, or further action or consent of any other party to, this Agreement or any other Credit Document and
(y) if a Benchmark Replacement is determined in accordance with clause (3) of the definition of “Benchmark Replacement”
for such Benchmark Replacement Date, such Benchmark Replacement will replace such Benchmark for all purposes hereunder and under
any Credit Document in respect of any Benchmark setting at or after 5:00 p.m. (New York City time) on the fifth (5th) Business
Day after the date notice of such Benchmark Replacement is provided to the Lenders without any amendment to, or further action
or consent of any other party to, this Agreement or any other Credit Document so long as the Administrative Agent has not received,
by such time, written notice of objection to such Benchmark Replacement from Lenders comprising the Required Lenders of each Class.
(c) Notwithstanding
anything to the contrary herein or in any other Credit Document and subject to the proviso below in this paragraph, if a Term
SOFR Transition Event and its related Benchmark Replacement Date have occurred prior to the Reference Time in respect of any setting
of the then-current Benchmark, then the applicable Benchmark Replacement will replace the then-current Benchmark for all purposes
hereunder or under any Credit Document in respect of such Benchmark setting and subsequent Benchmark settings, without any amendment
to, or further action or consent of any other party to, this Agreement or any other Credit Document; provided that, this
clause (c) shall not be effective unless the Administrative Agent has delivered to the Lenders and the Borrower a Term SOFR Notice.
For the avoidance of doubt, the Administrative Agent shall not be required to deliver a Term SOFR Notice after a Term SOFR Transition
Event and may do so in its sole discretion.
(d) In
connection with the implementation of a Benchmark Replacement, the Administrative Agent will have the right to make Benchmark
Replacement Conforming Changes from time to time and, notwithstanding anything to the contrary herein or in any other Credit Document,
any amendments implementing such Benchmark Replacement Conforming Changes will become effective without any further action or
consent of any other party to this Agreement or any other Credit Document.
(e) The
Administrative Agent will promptly notify the Borrower and the Lenders of (i) any occurrence of a Benchmark Transition Event,
a Term SOFR Transition Event or an Early Opt-in Election, as applicable, and its related Benchmark Replacement Date, (ii) the
implementation of any Benchmark Replacement, (iii) the effectiveness of any Benchmark Replacement Conforming Changes, (iv) the
removal or reinstatement of any tenor of a Benchmark pursuant to clause (f) below and (v) the commencement or conclusion of any
Benchmark Unavailability Period. Any determination, decision or election that may be made by the Administrative Agent or, if applicable,
any Lender (or group of Lenders) pursuant to this Section 2.10, including any determination with respect to a tenor, rate
or adjustment or of the occurrence or non-occurrence of an event, circumstance or date and any decision to take or refrain from
taking any action or any selection, will be conclusive and binding absent manifest error and may be made in its or their sole
discretion and without consent from any other party to this Agreement or any other Credit Document, except, in each case, as expressly
required pursuant to this Section 2.10.
(f) Notwithstanding
anything to the contrary herein or in any other Credit Document, at any time (including in connection with the implementation
of a Benchmark Replacement), (i) if the then-current Benchmark is a term rate (including Term SOFR or LIBOR Rate) and either (A)
any tenor for such Benchmark is not displayed on a screen or other information service that publishes such rate from time to time
as selected by the Administrative Agent in its reasonable discretion or (B) the regulatory supervisor for the administrator of
such Benchmark has provided a public statement or publication of information announcing that any tenor for such Benchmark is or
will be no longer representative, then the Administrative Agent may modify the definition of “Interest Period” for
any Benchmark settings at or after such time to remove such unavailable or non-representative tenor and (ii) if a tenor that was
removed pursuant to clause (i) above either (A) is subsequently displayed on a screen or information service for a Benchmark (including
a Benchmark Replacement) or (B) is not, or is no longer, subject to an announcement that it is or will no longer be representative
for a Benchmark (including a Benchmark Replacement), then the Administrative Agent may modify the definition of “Interest
Period” for all Benchmark settings at or after such time to reinstate such previously removed tenor.
(g) Upon
the Borrower’s receipt of notice of the commencement of a Benchmark Unavailability Period, the Borrower may revoke any request
for a Eurodollar Borrowing of, conversion to or continuation of Eurodollar Loans to be made, converted or continued during any
Benchmark Unavailability Period and, failing that, the Borrower will be deemed to have converted any such request into a request
for a Borrowing of or conversion to ABR Loans. During any Benchmark Unavailability Period or at any time that a tenor for the
then-current Benchmark is not an Available Tenor, the component of ABR based upon the then-current Benchmark or such tenor for
such Benchmark, as applicable, will not be used in any determination of ABR.
(h) If,
after the Closing Date, any Change in Law relating to capital adequacy or liquidity of any Lender or compliance by any Lender
or its parent with any Change in Law relating to capital adequacy or liquidity occurring after the Closing Date, has or would
have the effect of reducing the actual rate of return on such Lender’s or its parent’s or its Affiliate’s capital
or assets as a consequence of such Lender’s commitments or obligations hereunder to a level below that which such Lender
or its parent or its Affiliate could have achieved but for such Change in Law (taking into consideration such Lender’s or
its parent’s policies with respect to capital adequacy or liquidity), then from time to time, promptly after demand by such
Lender (with a copy to the Administrative Agent), the Borrower shall pay to such Lender such actual additional amount or amounts
as will compensate such Lender or its parent for such actual reduction, it being understood and agreed, however, that a Lender
shall not be entitled to such compensation as a result of such Lender’s compliance with, or pursuant to any request or directive
to comply with, any law, rule or regulation as in effect on the Closing Date or to the extent such Lender is not imposing such
charges on, or requesting such compensation from, borrowers (similarly situated to the Borrower hereunder) under comparable syndicated
credit facilities similar to the Credit Facilities. Each Lender, upon determining in good faith that any additional amounts will
be payable pursuant to this Section 2.10(f), will give prompt written notice thereof to the Borrower, which notice shall
set forth in reasonable detail the basis of the calculation of such additional amounts, although the failure to give any such
notice shall not, subject to Section 2.13, release or diminish the Borrower’s obligations to pay additional amounts
pursuant to this Section 2.10(f) promptly following receipt of such notice.
2.11 Compensation.
If (a) any payment of principal of any LIBOR Loan is made by the Borrower to or for the account of a Lender other than on the
last day of the Interest Period for such LIBOR Loan as a result of a payment or conversion pursuant to Sections 2.5, 2.6,
2.10, 5.1, 5.2 or 13.7, as a result of acceleration of the maturity of the Loans pursuant to Section
11 or for any other reason, (b) any Borrowing of LIBOR Loans is not made as a result of a withdrawn Notice of Borrowing or
a failure to satisfy borrowing conditions, (c) any ABR Loan is not converted into a LIBOR Loan as a result of a withdrawn Notice
of Conversion or Continuation, (d) any LIBOR Loan is not continued as a LIBOR Loan, as the case may be, as a result of a withdrawn
Notice of Conversion or Continuation or (e) any prepayment of principal of any LIBOR Loan is not made as a result of a withdrawn
notice of prepayment pursuant to Sections 5.1 or 5.2, the Borrower shall, after receipt of a written request by
such Lender (which request shall set forth in reasonable detail the basis for requesting such amount), promptly pay to the Administrative
Agent for the account of such Lender any amounts required to compensate such Lender for any additional losses, costs or expenses
that such Lender may reasonably incur as a result of such payment, failure to convert, failure to continue or failure to prepay,
including any loss, cost or expense (excluding loss of anticipated profits) actually incurred by reason of the liquidation or
reemployment of deposits or other funds acquired by any Lender to fund or maintain such LIBOR Loan. For purposes of calculating
amounts payable by the Borrower to the Lenders under this Section, each Lender shall be deemed to have funded each LIBOR Loan
made by it at the Adjusted LIBOR Rate for such Loan by a matching deposit or other borrowing in the London interbank market for
a comparable amount and for a comparable period, whether or not such LIBOR Loan was in fact so funded. A certificate of a Lender
setting forth the amount or amounts necessary to compensate such Lender as specified in this Section 2.11 and setting forth
in reasonable detail the manner in which such amount or amounts were determined shall be delivered to the Borrower and shall be
conclusive, absent manifest error. Without limiting the foregoing, in connection with each request for compensation by any Lender
the Borrower shall also pay such Lender with respect to each affected LIBOR Loan customary administrative fees requested by such
Lender in an amount not to exceed $250 per such LIBOR Loan.
2.12 Change
of Lending Office. Each Lender agrees that, upon the occurrence of any event giving rise to the operation of Sections 2.10(a)(ii),
2.10(a)(iii), 2.10(b), 3.5 or 5.4 with respect to such Lender, it will, if requested by the Borrower,
use reasonable efforts (subject to overall policy considerations of such Lender) to designate another lending office for any Loans
affected by such event; provided that such designation is made on such terms that such Lender and its lending office suffer
no unreimbursed cost or other material economic, legal or regulatory disadvantage, with the object of avoiding the consequence
of the event giving rise to the operation of any such Section. Nothing in this Section 2.12 shall affect or postpone any
of the obligations of the Borrower or the right of any Lender provided in Sections 2.10, 3.5 or 5.4.
2.13 Notice
of Certain Costs. Notwithstanding anything in this Agreement to the contrary, to the extent any notice required by Sections
2.10, 2.11, 3.5 or 5.4 is given by any Lender more than 120 days after such Lender has knowledge (or
should have had knowledge) of the occurrence of the event giving rise to the additional cost, reduction in amounts, loss, or other
additional amounts described in such Sections, such Lender shall not be entitled to compensation under Sections 2.10, 2.11,
3.5 or 5.4, as the case may be, for any such amounts incurred or accruing prior to the 121st day prior to the giving
of such notice to the Borrower.
2.14 Incremental
Facilities.
(a) The
Borrower may by written notice to Administrative Agent elect to request the establishment of one or more (x) increases in Term
Loans of any Class (the commitments thereto, the “Incremental Term Loan Commitments”) and/or (y) increases
in Revolving Credit Commitments of any Class (the “Incremental Revolving Credit Commitments” and, together
with the Incremental Term Loan Commitments, the “Incremental Loan Commitments”), by an aggregate amount not
in excess of the Maximum Incremental Facilities Amount in the aggregate and not less than $10,000,000 individually (or such lesser
amount as (x) may be approved by the Administrative Agent or (y) shall constitute the difference between the Maximum Incremental
Facilities Amount and all such Incremental Loan Commitments obtained on or prior to such date). In connection with the incurrence
of any Indebtedness under this Section 2.14, at the request of the Administrative Agent, the Borrower shall provide to
the Administrative Agent a certificate certifying that the Incremental Loan Commitments do not exceed the Maximum Incremental
Facilities Amount. The Borrower may approach any Lender or any Person (other than a natural Person) to provide all or a portion
of the Incremental Loan Commitments; provided that any Lender offered or approached to provide all or a portion of the
Incremental Loan Commitments may elect or decline, in its sole discretion, to provide an Incremental Loan Commitment. In each
case, such Incremental Loan Commitments shall become effective as of the applicable Increased Amount Date; provided that
(i) no Event of Default (or, if incurred in connection with a Limited Condition Transaction, no Event of Default under Section
11.1 or Section 11.5) shall exist on such Increased Amount Date before or after giving effect to such Incremental Loan
Commitments, as applicable, (ii) the representations and warranties of the Borrower and each other Credit Party contained in Section
8 or any other Credit Document shall be true and correct in all material respects (or, with respect to representations and
warranties modified by a materiality or Material Adverse Effect standard, in all respects) on and as of the Increased Amount Date,
except to the extent that such representations and warranties specifically refer to an earlier date, in which case they are true
and correct in all material respects (or, with respect to representations and warranties modified by a materiality or Material
Adverse Effect standard, in all respects) as of such earlier date, (iii) the Incremental Loan Commitments shall be effected pursuant
to one or more Joinder Agreements executed and delivered by the Borrower and Administrative Agent, and each of which shall be
recorded in the Register and shall be subject to the requirements set forth in Section 5.4(e), and (iv) the Borrower shall
make any payments required pursuant to Section 2.11 in connection with the Incremental Loan Commitments, as applicable.
No Lender shall have any obligation to provide any Commitments pursuant to this Section 2.14(a). Any Incremental Term Loans
shall be designated as part of a series of existing Term Loans for all purposes of this Agreement.
(b) Incremental
Revolving Credit Commitments shall be subject to the satisfaction of the following terms and conditions, (a) with respect to Incremental
Revolving Credit Commitments, each of the Lenders with Revolving Credit Commitments of such Class shall assign to each Lender
with an Incremental Revolving Credit Commitment (each, an “Incremental Revolving Loan Lender”) and each of
the Incremental Revolving Loan Lenders shall purchase from each of the Lenders with Revolving Credit Commitments of such Class,
at the principal amount thereof, such interests in the Revolving Credit Loans outstanding on such Increased Amount Date as shall
be necessary in order that, after giving effect to all such assignments and purchases, the Revolving Credit Loans of such Class
will be held by existing Revolving Credit Lenders and Incremental Revolving Loan Lenders ratably in accordance with their Revolving
Credit Commitments of such Class after giving effect to the addition of such Incremental Revolving Credit Commitments to the Revolving
Credit Commitments, and (b) with respect to Incremental Revolving Credit Commitments, (i) each Incremental Revolving Credit Commitment
shall be deemed for all purposes a Revolving Credit Commitment and, each Loan made under an Incremental Revolving Credit Commitment
(an “Incremental Revolving Credit Loan”) shall be deemed, for all purposes, Revolving Credit Loans and (ii)
each Incremental Revolving Loan Lender shall become a Lender with respect to the Incremental Revolving Credit Commitment and all
matters relating thereto; provided that the Administrative Agent and the Letter of Credit Issuer shall have consented (not
to be unreasonably withheld or delayed) to such Lender’s or Incremental Revolving Loan Lender’s providing such Incremental
Revolving Credit Commitment to the extent such consent, if any, would be required under Section 13.6(b) for an assignment
of Revolving Loans or Revolving Credit Commitments, as applicable, to such Lender or Incremental Revolving Loan Lender.
(c) Incremental
Term Loan Commitments shall be subject to the satisfaction of the following terms and conditions, (i) each Lender with an Incremental
Term Loan Commitment (each, a “Incremental Term Loan Lender”) shall make a Loan to the Borrower (a “Incremental
Term Loan” and, together with the Incremental Revolving Credit Loans, the “Incremental Loans”) in
an amount equal to its Incremental Term Loan Commitment, and each Incremental Term Loan shall be deemed, for all purposes, an
Initial Term A Loan, and (ii) each Incremental Term Loan Lender shall become a Lender hereunder with respect to the Incremental
Term Loan Commitment and the Incremental Term Loans made pursuant thereto.
(d) The
terms and provisions of the Incremental Term Loans shall be identical to the terms and provisions of the Initial Term A Loans.
(e) Incremental
Revolving Credit Commitments and Incremental Revolving Credit Loans shall be identical to the Initial Revolving Credit Commitments
and the related Revolving Credit Loans.
(f) Each
Joinder Agreement may, without the consent of any other Lenders, effect technical and corresponding amendments to this Agreement
and the other Credit Documents as may be necessary or appropriate, in the opinion of the Administrative Agent, to effect the provision
of this Section 2.14.
(g) (i)
The Borrower may at any time and from time to time request that all or a portion of the Term Loans of any Class (an “Existing
Term Loan Class”) be converted to extend the scheduled maturity date(s) of any payment of principal with respect to
all or a portion of any principal amount of such Term Loans (any such Term Loans which have been so converted, “Extended
Term Loans”) and to provide for other terms consistent with this Section 2.14(g). In order to establish any Extended
Term Loans, the Borrower shall provide a notice to the Administrative Agent (who shall provide a copy of such notice to each of
the Lenders of the applicable Existing Term Loan Class which such request shall be offered equally to all such Lenders) (a “Term
Loan Extension Request”) setting forth the proposed terms of the Extended Term Loans to be established, which shall
not be materially more restrictive to the Credit Parties (as determined in good faith by the Borrower), when taken as a whole,
than the terms of the Term Loans of the Existing Term Loan Class unless (x) the Lenders of the Term Loans of such applicable Existing
Term Loan Class receive the benefit of such more restrictive terms or (y) any such provisions apply after the Initial Term A Loan
Maturity Date (a “Permitted Other Provision”); provided, however, that (x) the scheduled final
maturity date shall be extended and all or any of the scheduled amortization payments of principal of the Extended Term Loans
may be delayed to later dates than the scheduled amortization of principal of the Term Loans of such Existing Term Loan Class
(with any such delay resulting in a corresponding adjustment to the scheduled amortization payments reflected in Section 2.5
or in the Joinder Agreement, as the case may be, with respect to the Existing Term Loan Class from which such Extended Term
Loans were converted, in each case as more particularly set forth in paragraph (iv) of this Section 2.14(g) below), (y)
(A) the interest margins with respect to the Extended Term Loans may be higher or lower than the interest margins for the Term
Loans of such Existing Term Loan Class and/or (B) additional fees, premiums or applicable high-yield discount obligation
payments may be payable to the Lenders providing such Extended Term Loans in addition to or in lieu of any increased margins contemplated
by the preceding clause (A), in each case, to the extent provided in the applicable Extension Amendment and to the extent
that any Permitted Other Provision (including a financial maintenance covenant) is added for the benefit of any such Indebtedness,
no consent shall be required by the Administrative Agent or any of the Lenders if such Permitted Other Provision is also added
for the benefit of any corresponding Loans remaining outstanding after the issuance or incurrence of such Indebtedness or if such
Permitted Other Provision applies only after the Initial Term A Loan Maturity Date. Notwithstanding anything to the contrary in
this Section 2.14 or otherwise, no Extended Term Loans may be optionally prepaid prior to the date on which the Existing
Term Loan Class from which they were converted is repaid in full, except in accordance with the last sentence of Section 5.1(a).
No Lender shall have any obligation to agree to have any of its Term Loans of any Existing Term Loan Class converted into Extended
Term Loans pursuant to any Extension Request. Any Extended Term Loans of any Extension Series shall constitute a separate Class
of Term Loans from the Existing Term Loan Class from which they were converted.
(ii) The
Borrower may at any time and from time to time request that all or a portion of the Revolving Credit Commitments of any Class,
any Extended Revolving Credit Commitments and/or any Incremental Revolving Credit Commitments, each existing at the time of such
request (each, an “Existing Revolving Credit Commitment” and any related Revolving Credit Loans thereunder,
“Existing Revolving Credit Loans”; each Existing Revolving Credit Commitment and related Existing Revolving
Credit Loans together being referred to as an “Existing Revolving Credit Class”) be converted to extend the
termination date thereof and the scheduled maturity date(s) of any payment of principal with respect to all or a portion of any
principal amount of Loans related to such Existing Revolving Credit Commitments (any such Existing Revolving Credit Commitments
which have been so extended, “Extended Revolving Credit Commitments” and any related Loans, “Extended
Revolving Credit Loans”) and to provide for other terms consistent with this Section 2.14(g). In order to establish
any Extended Revolving Credit Commitments, the Borrower shall provide a notice to the Administrative Agent (who shall provide
a copy of such notice to each of the Lenders of the applicable Class of Existing Revolving Credit Commitments which such request
shall be offered equally to all such Lenders) setting forth the proposed terms of the Extended Revolving Credit Commitments to
be established, which shall not be materially more restrictive to the Credit Parties (as determined in good faith by the Borrower),
when taken as a whole, than the terms of the applicable Existing Revolving Credit Commitments (the “Specified Existing
Revolving Credit Commitment”) unless (x) the Lenders providing existing Revolving Credit Loans receive the benefit of
such more restrictive terms or (y) any such provisions apply after the Revolving Credit Termination Date, in each case, to the
extent provided in the applicable Extension Amendment; provided, however, that (w) all or any of the final maturity
dates of such Extended Revolving Credit Commitments may be delayed to later dates than the final maturity dates of the Specified
Existing Revolving Credit Commitments, (x) (A) the interest margins with respect to the Extended Revolving Credit Commitments
may be higher or lower than the interest margins for the Specified Existing Revolving Credit Commitments and/or (B) additional
fees and premiums may be payable to the Lenders providing such Extended Revolving Credit Commitments in addition to or in lieu
of any increased margins contemplated by the preceding clause (A) and (y) the revolving credit commitment fee rate with
respect to the Extended Revolving Credit Commitments may be higher or lower than the Revolving Credit Commitment Fee Rate for
the Specified Existing Revolving Credit Commitment; provided that, notwithstanding anything to the contrary in this Section
2.14(g) or otherwise, (1) the borrowing and repayment (other than in connection with a permanent repayment and termination
of commitments) of Loans with respect to any Original Revolving Credit Commitments shall be made on a pro rata basis with all
other Original Revolving Credit Commitments and (2) assignments and participations of Extended Revolving Credit Commitments and
Extended Revolving Credit Loans shall be governed by the same assignment and participation provisions applicable to Revolving
Credit Commitments and the Revolving Credit Loans related to such Commitments set forth in Section 13.6. No Lender shall
have any obligation to agree to have any of its Revolving Credit Loans or Revolving Credit Commitments of any Existing Revolving
Credit Class converted into Extended Revolving Credit Loans or Extended Revolving Credit Commitments pursuant to any Extension
Request. Any Extended Revolving Credit Commitments of any Extension Series shall constitute a separate Class of revolving credit
commitments from the Specified Existing Revolving Credit Commitments and from any other Existing Revolving Credit Commitments
(together with any other Extended Revolving Credit Commitments so established on such date).
(iii) Any
Lender (an “Extending Lender”) wishing to have all or a portion of its Term Loans, Revolving Credit Commitments,
Incremental Revolving Credit Commitment or Extended Revolving Credit Commitment of the Existing Class or Existing Classes subject
to such Extension Request converted into Extended Term Loans or Extended Revolving Credit Commitments, as applicable, shall notify
the Administrative Agent (an “Extension Election”) on or prior to the date specified in such Extension Request
of the amount of its Term Loans, Revolving Credit Commitments, Incremental Revolving Credit Commitment or Extended Revolving Credit
Commitment of the Existing Class or Existing Classes subject to such Extension Request that it has elected to convert into Extended
Term Loans or Extended Revolving Credit Commitments, as applicable. In the event that the aggregate amount of Term Loans, Revolving
Credit Commitments, Incremental Revolving Credit Commitment or Extended Revolving Credit Commitment of the Existing Class or Existing
Classes subject to Extension Elections exceeds the amount of Extended Term Loans or Extended Revolving Credit Commitments, as
applicable, requested pursuant to the Extension Request, Term Loans or Revolving Credit Commitments, Incremental Revolving Credit
Commitments or Extended Revolving Credit Commitments of the Existing Class or Existing Classes subject to Extension Elections
shall be converted to Extended Term Loans or Extended Revolving Credit Commitments, as applicable, on a pro rata basis based on
the amount of Term Loans, Revolving Credit Commitments, Incremental Revolving Credit Commitment or Extended Revolving Credit Commitment
included in each such Extension Election. Notwithstanding the conversion of any Existing Revolving Credit Commitment into an Extended
Revolving Credit Commitment, such Extended Revolving Credit Commitment shall be treated identically to all other Original Revolving
Credit Commitments for purposes of the obligations of a Revolving Credit Lender in respect of Letters of Credit under Section
3, except that the applicable Extension Amendment may provide that the L/C Facility Maturity Date may be extended and the
related obligations to issue Letters of Credit may be continued so long as the Letter of Credit Issuer has consented to such extensions
in their sole discretion (it being understood that no consent of any other Lender shall be required in connection with any such
extension).
(iv) Extended
Term Loans or Extended Revolving Credit Commitments, as applicable, shall be established pursuant to an amendment (an “Extension
Amendment”) to this Agreement (which, except to the extent expressly contemplated by the penultimate sentence of this
Section 2.14(g)(iv) and notwithstanding anything to the contrary set forth in Section 13.1, shall not require the
consent of any Lender other than the Extending Lenders with respect to the Extended Term Loans or Extended Revolving Credit Commitments,
as applicable, established thereby) executed by the Credit Parties, the Administrative Agent and the Extending Lenders. No Extension
Amendment shall provide for any tranche of Extended Term Loans or Extended Revolving Credit Commitments in an aggregate principal
amount that is less than $10,000,000. In addition to any terms and changes required or permitted by Section 2.14(g)(i),
each Extension Amendment (x) shall amend the scheduled amortization payments pursuant to Section 2.5 or the applicable
Joinder Agreement with respect to the Existing Term Loan Class from which the Extended Term Loans were converted to reduce each
scheduled Repayment Amount for the Existing Term Loan Class in the same proportion as the amount of Term Loans of the Existing
Term Loan Class is to be converted pursuant to such Extension Amendment (it being understood that the amount of any Repayment
Amount payable with respect to any individual Term Loan of such Existing Term Loan Class that is not an Extended Term Loan shall
not be reduced as a result thereof) and (y) may, but shall not be required to, impose additional requirements (not inconsistent
with the provisions of this Agreement in effect at such time) with respect to the final maturity and weighted average life to
maturity of Incremental Term Loans incurred following the date of such Extension Amendment. Notwithstanding anything to the contrary
in this Section 2.14(g) and without limiting the generality or applicability of Section 13.1 to any Section 2.14
Additional Amendments, any Extension Amendment may provide for additional terms and/or additional amendments other than those
referred to or contemplated above (any such additional amendment, a “Section 2.14 Additional Amendment”) to
this Agreement and the other Credit Documents; provided that such Section 2.14 Additional Amendments are within the requirements
of Section 2.14(g)(i) and do not become effective prior to the time that such Section 2.14 Additional Amendments have been
consented to (including, without limitation, pursuant to (1) consents applicable to holders of Incremental Term Loans and Incremental
Revolving Credit Commitments provided for in any Joinder Agreement and (2) consents applicable to holders of any Extended Term
Loans or Extended Revolving Credit Commitments provided for in any Extension Amendment) by such of the Lenders, Credit Parties
and other parties (if any) as may be required in order for such Section 2.14 Additional Amendments to become effective in accordance
with Section 13.1.
(v) Notwithstanding
anything to the contrary contained in this Agreement, (A) on any date on which any Existing Class is converted to extend the related
scheduled maturity date(s) in accordance with clauses (i) and/or (ii) above (an “Extension Date”),
(I) in the case of the existing Term Loans of each Extending Lender, the aggregate principal amount of such existing Term Loans
shall be deemed reduced by an amount equal to the aggregate principal amount of Extended Term Loans so converted by such Lender
on such date, and the Extended Term Loans shall be established as a separate Class of Term Loans (together with any other Extended
Term Loans so established on such date), and (II) in the case of the Specified Existing Revolving Credit Commitments of each Extending
Lender, the aggregate principal amount of such Specified Existing Revolving Credit Commitments shall be deemed reduced by an amount
equal to the aggregate principal amount of Extended Revolving Credit Commitments so converted by such Lender on such date, and
such Extended Revolving Credit Commitments shall be established as a separate Class of revolving credit commitments from the Specified
Existing Revolving Credit Commitments and from any other Existing Revolving Credit Commitments (together with any other Extended
Revolving Credit Commitments so established on such date) and (B) if, on any Extension Date, any Loans of any Extending Lender
are outstanding under the applicable Specified Existing Revolving Credit Commitments, such Loans (and any related participations)
shall be deemed to be allocated as Extended Revolving Credit Loans (and related participations) and Existing Revolving Credit
Loans (and related participations) in the same proportion as such Extending Lender’s Specified Existing Revolving Credit
Commitments to Extended Revolving Credit Commitments.
(vi) The
Administrative Agent and the Lenders hereby consent to the consummation of the transactions contemplated by this Section 2.14
(including, for the avoidance of doubt, payment of any interest, fees, or premium in respect of any Extended Term Loans and/or
Extended Revolving Credit Commitments on such terms as may be set forth in the relevant Extension Amendment) and hereby waive
the requirements of any provision of this Agreement (including, without limitation, any pro rata payment or amendment section)
or any other Credit Document that may otherwise prohibit or restrict any such extension or any other transaction contemplated
by this Section 2.14.
2.15 Permitted
Debt Exchanges.
(a) Notwithstanding
anything to the contrary contained in this Agreement, pursuant to one or more offers (each, a “Permitted Debt Exchange
Offer”) made from time to time by the Borrower, the Borrower may from time to time following the Closing Date consummate
one or more exchanges of Term Loans for Permitted Other Indebtedness in the form of notes (such notes, “Permitted Debt
Exchange Notes,” and each such exchange a “Permitted Debt Exchange”), so long as the following conditions
are satisfied: (i) no Event of Default shall have occurred and be continuing at the time the final offering document in respect
of a Permitted Debt Exchange Offer is delivered to the relevant Lenders, (ii) the aggregate principal amount (calculated on the
face amount thereof) of Term Loans exchanged shall equal no more than the aggregate principal amount (calculated on the face amount
thereof) of Permitted Debt Exchange Notes issued in exchange for such Term Loans; provided that the aggregate principal
amount of the Permitted Debt Exchange Notes may include accrued interest and premium (if any) under the Term Loans exchanged and
underwriting discounts, fees, commissions and expenses in connection with the issuance of such Permitted Debt Exchange Notes,
(iii) the aggregate principal amount (calculated on the face amount thereof) of all Term Loans exchanged under each applicable
Class by the Borrower pursuant to any Permitted Debt Exchange shall automatically be cancelled and retired by the Borrower on
the date of the settlement thereof (and, if requested by the Administrative Agent, any applicable exchanging Lender shall execute
and deliver to the Administrative Agent an Assignment and Acceptance, or such other form as may be reasonably requested by the
Administrative Agent, in respect thereof pursuant to which the respective Lender assigns its interest in the Term Loans being
exchanged pursuant to the Permitted Debt Exchange to the Borrower for immediate cancellation), (iv) if the aggregate principal
amount of all Term Loans of a given Class (calculated on the face amount thereof) tendered by Lenders in respect of the relevant
Permitted Debt Exchange Offer (with no Lender being permitted to tender a principal amount of Term Loans which exceeds the principal
amount thereof of the applicable Class actually held by it) shall exceed the maximum aggregate principal amount of Term Loans
of such Class offered to be exchanged by the Borrower pursuant to such Permitted Debt Exchange Offer, then the Borrower shall
exchange Term Loans subject to such Permitted Debt Exchange Offer tendered by such Lenders ratably up to such maximum amount based
on the respective principal amounts so tendered, (v) all documentation in respect of such Permitted Debt Exchange shall be consistent
with the foregoing, and all written communications generally directed to the Lenders in connection therewith shall be in form
and substance consistent with the foregoing and made in consultation with the Borrower and the Auction Agent, and (vi) any applicable
Minimum Tender Condition shall be satisfied.
(b) With
respect to all Permitted Debt Exchanges effected by any of the Borrower pursuant to this Section 2.15, (i) such Permitted
Debt Exchanges (and the cancellation of the exchanged Term Loans in connection therewith) shall not constitute voluntary or mandatory
payments or prepayments for purposes of Section 5.1 or 5.2, and (ii) such Permitted Debt Exchange Offer shall be
made for not less than $10,000,000 in an aggregate principal amount of Term Loans; provided that subject to the foregoing
clause (ii) the Borrower may at its election specify as a condition (a “Minimum Tender Condition”) to
consummating any such Permitted Debt Exchange that a minimum amount (to be determined and specified in the relevant Permitted
Debt Exchange Offer in the Borrower’s discretion) of Term Loans of any or all applicable Classes be tendered.
(c) In
connection with each Permitted Debt Exchange, the Borrower and the Auction Agent shall mutually agree to such procedures as may
be necessary or advisable to accomplish the purposes of this Section 2.15 and without conflict with Section 2.15(d);
provided that the terms of any Permitted Debt Exchange Offer shall provide that the date by which the relevant Lenders
are required to indicate their election to participate in such Permitted Debt Exchange shall be not less than a reasonable period
(in the discretion of the Borrower and the Auction Agent) of time following the date on which the Permitted Debt Exchange Offer
is made.
(d) The
Borrower shall be responsible for compliance with, and hereby agrees to comply with, all applicable securities and other laws
in connection with each Permitted Debt Exchange, it being understood and agreed that (x) none of the Auction Agent, the Administrative
Agent nor any Lender assumes any responsibility in connection with the Borrower’s compliance with such laws in connection
with any Permitted Debt Exchange and (y) each Lender shall be solely responsible for its compliance with any applicable “insider
trading” laws and regulations to which such Lender may be subject under the Securities Exchange Act of 1934, as amended.
2.16 Defaulting
Lenders.
(a) Adjustments.
Notwithstanding anything to the contrary contained in this Agreement, if any Lender becomes a Defaulting Lender, then, until such
time as that Lender is no longer a Defaulting Lender, to the extent permitted by applicable law:
(i) Waivers
and Amendments. Such Defaulting Lender’s right to approve or disapprove any amendment, waiver or consent with respect
to this Agreement shall be restricted as set forth in the definition of “Required Lenders” and Section 13.1.
(ii) Defaulting
Lender Waterfall. Any payment of principal, interest, fees or other amounts received by the Administrative Agent for the account
of such Defaulting Lender (whether voluntary or mandatory, at maturity, pursuant to Section 11 or otherwise) or received
by the Administrative Agent from a Defaulting Lender pursuant to Section 13.8 shall be applied at such time or times
as may be determined by the Administrative Agent as follows: first, to the payment of any amounts owing by such Defaulting
Lender to the Administrative Agent hereunder; second, to the payment on a pro rata basis of any amounts owing by such Defaulting
Lender to the Letter of Credit Issuer hereunder; third, to Cash Collateralize the Letter of Credit Issuer’s Fronting
Exposure with respect to such Defaulting Lender in accordance with Section 3.8; fourth, as the Borrower may request
(so long as no Default exists), to the funding of any Loan in respect of which such Defaulting Lender has failed to fund its portion
thereof as required by this Agreement, as determined by the Administrative Agent; fifth, if so determined by the Administrative
Agent and the Borrower, to be held in a deposit account and released pro rata in order to (x) satisfy such Defaulting Lender’s
potential future funding obligations with respect to Loans under this Agreement and (y) Cash Collateralize the Letter of
Credit Issuer’s future Fronting Exposure with respect to such Defaulting Lender with respect to future Letters of Credit
issued under this Agreement, in accordance with Section 3.8; sixth, to the payment of any amounts owing to the Borrower,
the Lenders, the Letter of Credit Issuer as a result of any judgment of a court of competent jurisdiction obtained by the Borrower,
any Lender, the Letter of Credit Issuer against such Defaulting Lender as a result of such Defaulting Lender’s breach of
its obligations under this Agreement; and seventh, to such Defaulting Lender or as otherwise directed by a court of competent
jurisdiction; provided that if (x) such payment is a payment of the principal amount of any Loans or L/C Borrowings
in respect of which such Defaulting Lender has not fully funded its appropriate share, and (y) such Loans were made or the
related Letters of Credit were issued at a time when the conditions set forth in Section 7 were satisfied or waived, such
payment shall be applied solely to pay the Loans of, and L/C Obligations owed to, all Non-Defaulting Lenders on a pro rata basis
prior to being applied to the payment of any Loans of, or L/C Obligations owed to, such Defaulting Lender until such time as all
Loans and funded and unfunded participations in L/C Obligations are held by the Lenders pro rata in accordance with the Commitments
hereunder without giving effect to Section 2.16(a)(iv). Any payments, prepayments or other amounts paid or payable
to a Defaulting Lender that are applied (or held) to pay amounts owed by a Defaulting Lender or to post Cash Collateral pursuant
to this Section 2.16(a)(ii) shall be deemed paid to and redirected by such Defaulting Lender, and each Lender irrevocably
consents hereto.
(iii) Certain
Fees.
(A) No
Defaulting Lender shall be entitled to receive any fee payable under Section 4 for any period during which that Lender
is a Defaulting Lender (and the Borrower shall not be required to pay any such fee that otherwise would have been required to
have been paid to that Defaulting Lender).
(B) Each
Defaulting Lender shall be entitled to receive Letter of Credit Fees for any period during which that Lender is a Defaulting Lender
only to the extent allocable to its applicable percentage of the stated amount of Letters of Credit for which it has provided
Cash Collateral pursuant to Section 3.8.
(C) With
respect to any Letter of Credit Fee not required to be paid to any Defaulting Lender pursuant to clause (A) or (B) above,
the Borrower shall (x) pay to each Non-Defaulting Lender that portion of any such fee otherwise payable to such Defaulting
Lender with respect to such Defaulting Lender’s participation in L/C Obligations that has been reallocated to such Non-Defaulting
Lender pursuant to clause (iv) below, (y) pay to the Letter of Credit Issuer the amount of any such fee otherwise
payable to such Defaulting Lender to the extent allocable to such Letter of Credit’s Fronting Exposure to such Defaulting
Lender, and (z) not be required to pay the remaining amount of any such fee.
(iv) Reallocation
of Applicable Percentages to Reduce Fronting Exposure. All or any part of such Defaulting Lender’s participation in
L/C Obligations shall be reallocated among the Non-Defaulting Lenders in accordance with their respective Revolving Credit Commitment
Percentages (calculated without regard to such Defaulting Lender’s Commitment) but only to the extent that such reallocation
does not cause the aggregate Revolving Credit Exposure of any Non-Defaulting Lender to exceed such Non-Defaulting Lender’s
Commitment. Subject to Section 14, no reallocation hereunder shall constitute a waiver or release of any claim of any party
hereunder against a Defaulting Lender arising from that Lender having become a Defaulting Lender, including any claim of a Non-Defaulting
Lender as a result of such Non-Defaulting Lender’s increased exposure following such reallocation.
(v) Cash
Collateral. If the reallocation described in clause (a)(iv) above cannot, or can only partially, be effected,
the Borrower shall, without prejudice to any right or remedy available to them hereunder or under applicable law, Cash Collateralize
the Letter of Credit Issuers’ Fronting Exposure in accordance with the procedures set forth in Section 3.8.
(b) Defaulting
Lender Cure. If the Borrower, the Administrative Agent and the Letter of Credit Issuer agree in writing that a Lender is no
longer a Defaulting Lender, the Administrative Agent will so notify the parties hereto, whereupon as of the effective date specified
in such notice and subject to any conditions set forth therein (which may include arrangements with respect to any Cash Collateral),
that Lender will, to the extent applicable, purchase at par that portion of outstanding Loans of the other Lenders or take such
other actions as the Administrative Agent may determine to be necessary to cause the Revolving Credit Loans and funded and unfunded
participations in Letters of Credit to be held on a pro rata basis by the Lenders in accordance with their Revolving Credit Commitment
Percentages (without giving effect to Section 2.16(a)(iv)), whereupon such Lender will cease to be a Defaulting Lender;
provided that no adjustments will be made retroactively with respect to fees accrued or payments made by or on behalf of
the Borrower while that Lender was a Defaulting Lender; and provided, further, that except to the extent otherwise
expressly agreed by the affected parties, no change hereunder from Defaulting Lender to Lender will constitute a waiver or release
of any claim of any party hereunder arising from that Lender’s having been a Defaulting Lender.
Section
3. Letters
of Credit
3.1 Letters
of Credit.
(a) Each
Letter of Credit existing under the Original Credit Agreement immediately prior to the Restatement Effective Date shall be deemed
issued under this Agreement as of the Restatement Effective Date. Subject to and upon the terms and conditions herein set forth,
at any time and from time to time after the Restatement Effective Date and prior to the L/C Facility Maturity Date, the Letter
of Credit Issuer agrees, in reliance upon the agreements of the Revolving Credit Lenders set forth in this Section 3, to
issue from time to time from the Closing Date through the L/C Facility Maturity Date for the account of the Borrower (or, so long
as the Borrower is the primary obligor, for the account of the Borrower or any Restricted Subsidiary (other than the Borrower))
letters of credit (the “Letters of Credit” and each, a “Letter of Credit”) in such form
as may be approved by the Letter of Credit Issuer in its reasonable discretion. On the Closing Date, (i) each Existing Letter
of Credit shall be automatically and without further action by the parties thereto converted to Letters of Credit issued pursuant
to this Section 3 for the account of the Borrower and subject to the provisions hereof, and for this purpose the fees specified
in Section 4.1(b) shall be payable (in substitution for any fees set forth in the applicable letter of credit reimbursement agreements
or applications relating to such Existing Letters of Credit) as if such Existing Letters of Credit had been issued on the Closing
Date, (ii) the Letter of Credit Issuers of such Existing Letters of Credit shall be “Letter of Credit Issuers” hereunder
for the purpose of maintaining such Existing Letters of Credit, for purposes of Section 5.4 relating to the obligation to provide
the appropriate forms, certificates and statements to the Borrower and the Administrative Agent and any updates required by Section
5.4 and for purposes of Section 13.6(b)(iv) relating to the entries to be made in the Register and (iii) all liabilities of a
Borrower or any of its Restricted Subsidiaries with respect to such Existing Letters of Credit shall constitute Obligations.
(b) Notwithstanding
the foregoing, (i) no Letter of Credit shall be issued the Stated Amount of which, when added to the Letters of Credit Outstanding
at such time, would exceed the Letter of Credit Commitment then in effect (or with respect to any Letter of Credit Issuer, exceed
such Letter of Credit Issuer’s Letter of Credit Commitment); (ii) no Letter of Credit shall be issued the Stated Amount
of which would cause the aggregate amount of the Lenders’ Revolving Credit Exposures at the time of the issuance thereof
to exceed the Total Revolving Credit Commitment then in effect; (iii) each Letter of Credit shall have an expiration date occurring
no later than one year after the date of issuance thereof (except as set forth in Section 3.2(d)), provided that
in no event shall such expiration date occur later than the L/C Facility Maturity Date, in each case, unless otherwise agreed
upon by the Administrative Agent, the Letter of Credit Issuer and, unless such Letter of Credit has been Cash Collateralized or
backstopped (in the case of a backstop only, on terms reasonably satisfactory to such Letter of Credit Issuer), the Revolving
Credit Lenders; (iv) the Letter of Credit shall be denominated in Dollars; (v) no Letter of Credit shall be issued if it would
be illegal under any applicable law for the beneficiary of the Letter of Credit to have a Letter of Credit issued in its favor;
and (vi) no Letter of Credit shall be issued by the Letter of Credit Issuer after it has received a written notice from any Credit
Party or the Administrative Agent or the Required Revolving Credit Lenders stating that a Default or Event of Default has occurred
and is continuing until such time as the Letter of Credit Issuer shall have received a written notice of (x) rescission of such
notice from the party or parties originally delivering such notice or (y) the waiver of such Default or Event of Default in accordance
with the provisions of Section 13.1.
(c) Upon
at least two Business Days’ prior written notice to the Administrative Agent and the Letter of Credit Issuer (which notice
the Administrative Agent shall promptly transmit to each of the Lenders), the Borrower shall have the right, on any day, permanently
to terminate or reduce the Letter of Credit Commitment in whole or in part; provided that, after giving effect to such
termination or reduction, the Letters of Credit Outstanding shall not exceed the Letter of Credit Commitment (or with respect
to a Letter of Credit Issuer, the Letters of Credit outstanding with respect to Letters of Credit issued by such Letter of Credit
Issuer shall not exceed such Letter of Credit Issuer’s Letter of Credit Commitment).
(d) The
Letter of Credit Issuer shall not be under any obligation to issue any Letter of Credit if:
(i) any
order, judgment or decree of any Governmental Authority or arbitrator shall by its terms enjoin or restrain the Letter of Credit
Issuer from issuing such Letter of Credit, or any law applicable to the Letter of Credit Issuer or any request or directive (whether
or not having the force of law) from any Governmental Authority with jurisdiction over the Letter of Credit Issuer shall prohibit,
or request that the Letter of Credit Issuer refrain from, the issuance of letters of credit generally or such Letter of Credit
in particular or shall impose upon the Letter of Credit Issuer with respect to such Letter of Credit any restriction, reserve
or capital requirement (in each case, for which the Letter of Credit Issuer is not otherwise compensated hereunder) not in effect
on the Closing Date, or shall impose upon the Letter of Credit Issuer any unreimbursed loss, cost or expense which was not applicable
on the Closing Date and which the Letter of Credit Issuer in good faith deems material to it;
(ii) the
issuance of such Letter of Credit would violate one or more policies of the Letter of Credit Issuer applicable to letters of credit
generally;
(iii) except
as otherwise agreed by the Letter of Credit Issuer, such Letter of Credit is in an initial Stated Amount less than $50,000, in
the case of a commercial Letter of Credit, or $10,000, in the case of a standby Letter of Credit;
(iv) such
Letter of Credit is denominated in a currency other than Dollars;
(v) such
Letter of Credit contains any provisions for automatic reinstatement of the Stated Amount after any drawing thereunder; or
(vi) a
default of any Revolving Credit Lender’s obligations to fund under Section 3.3 exists or any Revolving Credit Lender
is at such time a Defaulting Lender hereunder, unless, in each case, the Borrower has entered into arrangements reasonably satisfactory
to the Letter of Credit Issuer to eliminate the Letter of Credit Issuer’s risk with respect to such Revolving Credit Lender
or such risk has been reallocated in accordance with Section 2.16.
(e) The
Letter of Credit Issuer shall not increase the Stated Amount of any Letter of Credit if the Letter of Credit Issuer would not
be permitted at such time to issue such Letter of Credit in its amended form under the terms hereof.
(f) The
Letter of Credit Issuer shall be under no obligation to amend any Letter of Credit if (A) the Letter of Credit Issuer would have
no obligation at such time to issue such Letter of Credit in its amended form under the terms hereof, or (B) the beneficiary of
such Letter of Credit does not accept the proposed amendment to such Letter of Credit.
(g) The
Letter of Credit Issuer shall act on behalf of the Revolving Credit Lenders with respect to any Letters of Credit issued by it
and the documents associated therewith and the Letter of Credit Issuer shall have all of the benefits and immunities (A) provided
to the Administrative Agent in Section 13 with respect to any acts taken or omissions suffered by the Letter of Credit
Issuer in connection with Letters of Credit issued by it or proposed to be issued by it and Issuer Documents pertaining to such
Letters of Credit as fully as if the term “Administrative Agent” as used in Section 13 included the Letter
of Credit Issuer with respect to such acts or omissions, and (B) as additionally provided herein with respect to the Letter of
Credit Issuer.
3.2 Letter
of Credit Requests.
(a) Whenever
the Borrower desires that a Letter of Credit be issued for its account or amended, the Borrower shall give the Administrative
Agent and the Letter of Credit Issuer a Letter of Credit Request by no later than 1:00 p.m. (New York City time) at least four
Business Days (or such other period as may be agreed upon by the Borrower, the Administrative Agent and the Letter of Credit Issuer)
prior to the proposed date of issuance or amendment. Each Letter of Credit Request shall be executed by the Borrower. Such Letter
of Credit Request may be sent by facsimile, by United States mail, by overnight courier, by electronic transmission using the
system provided by the Letter of Credit Issuer, by personal delivery or by any other means acceptable to the Letter of Credit
Issuer.
(b) In
the case of a request for an initial issuance of a Letter of Credit, such Letter of Credit Request shall specify in form and detail
reasonably satisfactory to the Letter of Credit Issuer: (A) the proposed issuance date of the requested Letter of Credit (which
shall be a Business Day); (B) the Stated Amount thereof; (C) the expiry date thereof; (D) the name and address of the beneficiary
thereof; (E) the documents to be presented by such beneficiary in case of any drawing thereunder; (F) the full text of any certificate
to be presented by such beneficiary in case of any drawing thereunder; (G) the identity of the applicant; and (H) such other matters
as the Letter of Credit Issuer may reasonably require. In the case of a request for an amendment of any outstanding Letter of
Credit, such Letter of Credit Request shall specify in form and detail reasonably satisfactory to the Letter of Credit Issuer
(I) the Letter of Credit to be amended; (II) the proposed date of amendment thereof (which shall be a Business Day); (III) the
nature of the proposed amendment; and (IV) such other matters as the Letter of Credit Issuer may reasonably require. Additionally,
the Borrower shall furnish to the Letter of Credit Issuer and the Administrative Agent such other documents and information pertaining
to such requested Letter of Credit issuance or amendment, including any Issuer Documents, as the Letter of Credit Issuer or the
Administrative Agent may reasonably require.
(c) Unless
the Letter of Credit Issuer has received written notice from any Revolving Credit Lender, the Administrative Agent or any Credit
Party, at least one Business Day prior to the requested date of issuance or amendment of the Letter of Credit, that one or more
applicable conditions contained in Sections 6 (solely with respect to any Letter of Credit issued on the Closing Date)
and 7 shall not then be satisfied to the extent required thereby, then, subject to the terms and conditions hereof, the
Letter of Credit Issuer shall, on the requested date, issue a Letter of Credit for the account of the Borrower (or, so long as
the Borrower is the primary obligor, for the account of the Borrower or any Restricted Subsidiary) or enter into the applicable
amendment, as the case may be, in each case in accordance with the Letter of Credit Issuer’s usual and customary business
practices.
(d) If
the Borrower so requests in any Letter of Credit Request, the Letter of Credit Issuer shall agree to issue a Letter of Credit
that has automatic extension provisions (each, an “Auto-Extension Letter of Credit”); provided that
any such Auto-Extension Letter of Credit must permit the Letter of Credit Issuer to prevent any such extension at least once in
each twelve-month period (commencing with the date of issuance of such Letter of Credit) by giving prior notice to the beneficiary
thereof and the Borrower not later than a day (the “Non-Extension Notice Date”) in each such twelve-month period
to be agreed upon at the time such Letter of Credit is issued. Unless otherwise directed by the Letter of Credit Issuer, the Borrower
shall not be required to make a specific request to the Letter of Credit Issuer for any such extension. Once an Auto-Extension
Letter of Credit has been issued, the Lenders shall be deemed to have authorized (but may not require) the Letter of Credit Issuer
to permit the extension of such Letter of Credit at any time to an expiry date not later than the L/C Facility Maturity Date,
unless otherwise agreed upon by the Administrative Agent and the Letter of Credit Issuer; provided, however, that
the Letter of Credit Issuer shall not permit any such extension if (A) the Letter of Credit Issuer has reasonably determined that
it would not be permitted, or would have no obligation, at such time to issue such Letter of Credit in its revised form (as extended)
under the terms hereof (by reason of the provisions of clause (b) of Section 3.1 or otherwise), or (B) it has received
written notice on or before the day that is seven Business Days before the Non-Extension Notice Date from the Administrative Agent,
any Lender or the Borrower that one or more of the applicable conditions specified in Sections 6 and 7 are not then
satisfied, and in each such case directing the Letter of Credit Issuer not to permit such extension.
(e) Promptly
after its delivery of any Letter of Credit or any amendment to a Letter of Credit to an advising bank with respect thereto or
to the beneficiary thereof, the Letter of Credit Issuer will also deliver to the Borrower and the Administrative Agent a true
and complete copy of such Letter of Credit or amendment. On the first Business Day of each month, the Letter of Credit Issuer
shall provide the Administrative Agent a list of all Letters of Credit issued by it that are outstanding at such time.
(f) The
making of each Letter of Credit Request shall be deemed to be a representation and warranty by the Borrower that the Letter of
Credit may be issued in accordance with, and will not violate the requirements of, Section 3.1(b).
3.3 Letter
of Credit Participations.
(a) Immediately
upon the issuance by the Letter of Credit Issuer of any Letter of Credit, the Letter of Credit Issuer shall be deemed to have
sold and transferred to each Revolving Credit Lender (each such Revolving Credit Lender, in its capacity under this Section
3.3, an “L/C Participant”), and each such L/C Participant shall be deemed irrevocably and unconditionally
to have purchased and received from the Letter of Credit Issuer, without recourse or warranty, an undivided interest and participation
(each an “L/C Participation”), to the extent of such L/C Participant’s Revolving Credit Commitment Percentage
in each Letter of Credit, each substitute therefor, each drawing made thereunder and the obligations of the Borrower under this
Agreement with respect thereto, and any security therefor or guaranty pertaining thereto; provided that the Letter of Credit
Fees will be paid directly to the Administrative Agent for the ratable account of the L/C Participants as provided in Section
4.1(b) and the L/C Participants shall have no right to receive any portion of any Fronting Fees.
(b) In
determining whether to pay under any Letter of Credit, the relevant Letter of Credit Issuer shall have no obligation relative
to the L/C Participants other than to confirm that any documents required to be delivered under such Letter of Credit have been
delivered and that they appear to comply on their face with the requirements of such Letter of Credit. Any action taken or omitted
to be taken by the relevant Letter of Credit Issuer under or in connection with any Letter of Credit issued by it, if taken or
omitted in the absence of gross negligence or willful misconduct as determined in the final non-appealable judgment of a court
of competent jurisdiction, shall not create for the Letter of Credit Issuer any resulting liability.
(c) In
the event that the Letter of Credit Issuer makes any payment under any Letter of Credit issued by it and the Borrower shall not
have repaid such amount in full to the respective Letter of Credit Issuer through the Administrative Agent pursuant to Section
3.4(a), the Administrative Agent shall promptly notify each L/C Participant of such failure, and each L/C Participant shall
promptly and unconditionally pay to the Administrative Agent for the account of the Letter of Credit Issuer, the amount of such
L/C Participant’s Revolving Credit Commitment Percentage of such unreimbursed payment in Dollars and in immediately available
funds. If and to the extent such L/C Participant shall not have so made its Revolving Credit Commitment Percentage of the amount
of such payment available to the Administrative Agent for the account of the Letter of Credit Issuer, such L/C Participant agrees
to pay to the Administrative Agent for the account of the Letter of Credit Issuer, forthwith on demand, such amount, together
with interest thereon for each day from such date until the date such amount is paid to the Administrative Agent for the account
of the Letter of Credit Issuer at a rate per annum equal to the Overnight Bank Funding Rate from time to time then in effect,
plus any administrative, processing or similar fees that are reasonably and customarily charged by the Letter of Credit Issuer
in connection with the foregoing. The failure of any L/C Participant to make available to the Administrative Agent for the account
of the Letter of Credit Issuer its Revolving Credit Commitment Percentage of any payment under any Letter of Credit shall not
relieve any other L/C Participant of its obligation hereunder to make available to the Administrative Agent for the account of
the Letter of Credit Issuer its Revolving Credit Commitment Percentage of any payment under such Letter of Credit on the date
required, as specified above, but no L/C Participant shall be responsible for the failure of any other L/C Participant to make
available to the Administrative Agent such other L/C Participant’s Revolving Credit Commitment Percentage of any such payment.
(d) Whenever
the Administrative Agent receives a payment in respect of an unpaid Reimbursement Obligation as to which the Administrative Agent
has received for the account of the Letter of Credit Issuer any payments from the L/C Participants pursuant to clause (c)
above, the Administrative Agent shall promptly pay to each L/C Participant that has paid its Revolving Credit Commitment Percentage
of such Reimbursement Obligation, in Dollars and in immediately available funds, an amount equal to such L/C Participant’s
share (based upon the proportionate aggregate amount originally funded by such L/C Participant to the aggregate amount funded
by all L/C Participants) of the amount so paid in respect of such Reimbursement Obligation and interest thereon accruing after
the purchase of the respective L/C Participations at the Overnight Bank Funding Rate.
(e) The
obligations of the L/C Participants to make payments to the Administrative Agent for the account of the Letter of Credit Issuer
with respect to Letters of Credit shall be irrevocable and not subject to counterclaim, set-off or other defense or any other
qualification or exception whatsoever and shall be made in accordance with the terms and conditions of this Agreement under all
circumstances.
(f) If
any payment received by the Administrative Agent for the account of the Letter of Credit Issuer pursuant to Section 3.3(c)
is required to be returned under any of the circumstances described in Section 13.20 (including pursuant to any settlement
entered into by the Letter of Credit Issuer in its discretion), each Lender shall pay to the Administrative Agent for the account
of the Letter of Credit Issuer its Revolving Credit Commitment Percentage thereof on demand of the Administrative Agent, plus
interest thereon from the date of such demand to the date such amount is returned by such Lender, at a rate per annum equal
to the applicable Overnight Bank Funding Rate from time to time in effect. The obligations of the Lenders under this clause shall
survive the payment in full of the Obligations and the termination of this Agreement.
3.4 Agreement
to Repay Letter of Credit Drawings.
(a) The
Borrower hereby agrees to reimburse the Letter of Credit Issuer, by making payment with respect to any drawing under any Letter
of Credit in Dollars. Any such reimbursement shall be made by the Borrower to the Administrative Agent in immediately available
funds for any payment or disbursement made by the Letter of Credit Issuer under any Letter of Credit (each such amount so paid
until reimbursed, an “Unpaid Drawing”) no later than the date that is one Business Day after the date on which
the Borrower receives written notice of such payment or disbursement (the “Reimbursement Date”), with interest
on the amount so paid or disbursed by the Letter of Credit Issuer, to the extent not reimbursed prior to 5:00 p.m. (New York City
time) on the Reimbursement Date, from the Reimbursement Date to the date the Letter of Credit Issuer is reimbursed therefor at
a rate per annum that shall at all times be the Applicable Margin for ABR Loans that are Revolving Credit Loans plus the
ABR as in effect from time to time, provided that, notwithstanding anything contained in this Agreement to the contrary,
(i) unless the Borrower shall have notified the Administrative Agent and the relevant Letter of Credit Issuer prior to 1:00 p.m.
(New York City time) on the Reimbursement Date that the Borrower intends to reimburse the relevant Letter of Credit Issuer for
the amount of such drawing with funds other than the proceeds of Loans, the Borrower shall be deemed to have given a Notice of
Borrowing requesting that, with respect to Letters of Credit, the Revolving Credit Lenders make Revolving Credit Loans (which
shall be denominated in Dollars and which shall be ABR Loans) on the Reimbursement Date in the amount of such drawing and (ii)
the Administrative Agent shall promptly notify each L/C Participant of such drawing and the amount of its Revolving Credit Loan
to be made in respect thereof, and each L/C Participant shall be irrevocably obligated to make a Revolving Credit Loan to the
Borrower in Dollars in the manner deemed to have been requested in the amount of its Revolving Credit Commitment Percentage of
the applicable Unpaid Drawing by 2:00 p.m. (New York City time) on such Reimbursement Date by making the amount of such Revolving
Credit Loan available to the Administrative Agent. Such Revolving Credit Loans shall be made without regard to the Minimum Borrowing
Amount. The Administrative Agent shall use the proceeds of such Revolving Credit Loans solely for purpose of reimbursing the Letter
of Credit Issuer for the related Unpaid Drawing. In the event that the Borrower fails to Cash Collateralize any Letter of Credit
that is outstanding on the L/C Facility Maturity Date, the full amount of the Letters of Credit Outstanding in respect of such
Letter of Credit shall be deemed to be an Unpaid Drawing subject to the provisions of this Section 3.4 except that the
Letter of Credit Issuer shall hold the proceeds received from the L/C Participants as contemplated above as Cash Collateral for
such Letter of Credit to reimburse any Unpaid Drawing under such Letter of Credit and shall use such proceeds first, to reimburse
itself for any Unpaid Drawings made in respect of such Letter of Credit following the L/C Facility Maturity Date, second, to the
extent such Letter of Credit expires or is returned undrawn while any such cash collateral remains, to the repayment of obligations
in respect of any Revolving Credit Loans that have not been paid at such time and third, to the Borrower or as otherwise directed
by a court of competent jurisdiction. Nothing in this Section 3.4(a) shall affect the Borrower’s obligation to repay
all outstanding Revolving Credit Loans when due in accordance with the terms of this Agreement.
(b) The
obligation of the Borrower to reimburse the Letter of Credit Issuer for each drawing under each Letter of Credit and to repay
each L/C Borrowing shall be absolute, unconditional and irrevocable, and shall be paid strictly in accordance with the terms of
this Agreement under all circumstances, including the following:
(i) any
lack of validity or enforceability of this Agreement or any of the other Credit Documents;
(ii) the
existence of any claim, set-off, defense or other right that the Borrower may have at any time against a beneficiary named in
a Letter of Credit, any transferee of any Letter of Credit (or any Person for whom any such transferee may be acting), the Administrative
Agent, the Letter of Credit Issuer, any Lender or other Person, whether in connection with this Agreement, any Letter of Credit,
the transactions contemplated herein or any unrelated transactions (including any underlying transaction between the Borrower
and the beneficiary named in any such Letter of Credit);
(iii) any
draft, demand, certificate or other document presented under such Letter of Credit proving to be forged, fraudulent, invalid or
insufficient in any respect or any statement therein being untrue or inaccurate in any respect; or any loss or delay in the transmission
or otherwise of any document required in order to make a drawing under such Letter of Credit;
(iv) waiver
by the Letter of Credit Issuer of any requirement that exists for the Letter of Credit Issuer’s protection and not the protection
of the Borrower (or any Restricted Subsidiary) or any waiver by the Letter of Credit Issuer which does not in fact materially
prejudice the Borrower (or any Restricted Subsidiary);
(v) any
payment made by the Letter of Credit Issuer in respect of an otherwise complying item presented after the date specified as the
expiration date of, or the date by which documents must be received under, such Letter of Credit if presentation after such date
is authorized by the UCC, the ISP or the UCP, as applicable;
(vi) any
payment by the Letter of Credit Issuer under such Letter of Credit against presentation of a draft or certificate that does not
strictly comply with the terms of such Letter of Credit; or any payment made by the Letter of Credit Issuer under such Letter
of Credit to any Person purporting to be a trustee in bankruptcy, debtor-in-possession, assignee for the benefit of creditors,
liquidator, receiver or other representative of or successor to any beneficiary or any transferee of such Letter of Credit, including
any arising in connection with any proceeding under the Bankruptcy Code;
(vii) honor
of a demand for payment presented electronically even if such Letter of Credit requires that demand be in the form of a draft;
(viii) any
adverse change in any relevant exchange rates or in the relevant currency markets generally; or
(ix) any
other circumstance or happening whatsoever, whether or not similar to any of the foregoing, including any other circumstance that
might otherwise constitute a defense available to, or a discharge of, the Borrower (or any Restricted Subsidiary) (other than
the defense of payment or performance).
(c) The
Borrower shall not be obligated to reimburse the Letter of Credit Issuer for any wrongful payment made by the Letter of Credit
Issuer under the Letter of Credit issued by it as a result of acts or omissions constituting willful misconduct or gross negligence
on the part of the Letter of Credit Issuer as determined in the final non-appealable judgment of a court of competent jurisdiction.
3.5 Increased
Costs. If after the Closing Date, the adoption of any applicable law, treaty, rule, or regulation, or any change therein,
or any change in the interpretation or administration thereof by any Governmental Authority, central bank or comparable agency
charged with the interpretation or administration thereof, or actual compliance by the Letter of Credit Issuer or any L/C Participant
with any request or directive made or adopted after the Closing Date (whether or not having the force of law), by any such authority,
central bank or comparable agency shall either (x) impose, modify or make applicable any reserve, deposit, capital adequacy or
similar requirement against letters of credit issued by the Letter of Credit Issuer, or any L/C Participant’s L/C Participation
therein, or (y) impose on the Letter of Credit Issuer or any L/C Participant any other conditions or costs affecting its obligations
under this Agreement in respect of Letters of Credit or L/C Participations therein or any Letter of Credit or such L/C Participant’s
L/C Participation therein, and the result of any of the foregoing is to increase the actual cost to the Letter of Credit Issuer
or such L/C Participant of issuing, maintaining or participating in any Letter of Credit, or to reduce the actual amount of any
sum received or receivable by the Letter of Credit Issuer or such L/C Participant hereunder (including any increased costs or
reductions attributable to Taxes, other than any increase or reduction attributable to Indemnified Taxes, Excluded Taxes or Other
Taxes) in respect of Letters of Credit or L/C Participations therein, then, promptly after receipt of written demand to the Borrower
by the Letter of Credit Issuer or such L/C Participant, as the case may be (a copy of which notice shall be sent by the Letter
of Credit Issuer or such L/C Participant to the Administrative Agent (with respect to a Letter of Credit issued on account of
the Borrower (or any Restricted Subsidiary))), the Borrower shall pay to the Letter of Credit Issuer or such L/C Participant such
actual additional amount or amounts as will compensate the Letter of Credit Issuer or such L/C Participant for such increased
cost or reduction, it being understood and agreed, however, that the Letter of Credit Issuer or an L/C Participant shall not be
entitled to such compensation as a result of such Person’s compliance with, or pursuant to any request or directive to comply
with, any such law, rule or regulation as in effect on the Closing Date. A certificate submitted to the Borrower by the relevant
Letter of Credit Issuer or an L/C Participant, as the case may be (a copy of which certificate shall be sent by the Letter of
Credit Issuer or such L/C Participant to the Administrative Agent), setting forth in reasonable detail the basis for the determination
of such actual additional amount or amounts necessary to compensate the Letter of Credit Issuer or such L/C Participant as aforesaid
shall be conclusive and binding on the Borrower absent clearly demonstrable error.
3.6 New
or Successor Letter of Credit Issuer.
(a) The
Letter of Credit Issuer may resign as the Letter of Credit Issuer upon 60 days’ prior written notice to the Administrative
Agent, the Lenders, and the Borrower. The Borrower may replace the Letter of Credit Issuer for any reason upon written notice
to the Administrative Agent and the Letter of Credit Issuer. The Borrower may add Letter of Credit Issuers at any time upon notice
to the Administrative Agent. If the Letter of Credit Issuer shall resign or be replaced, or if the Borrower shall decide to add
a new Letter of Credit Issuer under this Agreement, then the Borrower may appoint from among the Lenders a successor issuer of
Letters of Credit or a new Letter of Credit Issuer, as the case may be, or, with the consent of the Administrative Agent (such
consent not to be unreasonably withheld or delayed), another successor or new issuer of Letters of Credit, whereupon such successor
issuer accepting such appointment shall succeed to the rights, powers and duties of the replaced or resigning Letter of Credit
Issuer under this Agreement and the other Credit Documents, or such new issuer of Letters of Credit accepting such appointment
shall be granted the rights, powers and duties of the Letter of Credit Issuer hereunder, and the term Letter of Credit Issuer
shall mean such successor or such new issuer of Letters of Credit effective upon such appointment. At the time such resignation
or replacement shall become effective, the Borrower shall pay to the resigning or replaced Letter of Credit Issuer all accrued
and unpaid fees applicable to the Letters of Credit pursuant to Sections 4.1(b) and 4.1(d). The acceptance of any
appointment as the Letter of Credit Issuer hereunder whether as a successor issuer or new issuer of Letters of Credit in accordance
with this Agreement, shall be evidenced by an agreement entered into by such new or successor issuer of Letters of Credit, in
a form reasonably satisfactory to the Borrower and the Administrative Agent and, from and after the effective date of such agreement,
such new or successor issuer of Letters of Credit shall become the Letter of Credit Issuer hereunder. After the resignation or
replacement of the Letter of Credit Issuer hereunder, the resigning or replaced Letter of Credit Issuer shall remain a party hereto
and shall continue to have all the rights and obligations of the Letter of Credit Issuer under this Agreement and the other Credit
Documents with respect to Letters of Credit issued by it prior to such resignation or replacement, but shall not be required to
issue additional Letters of Credit. In connection with any resignation or replacement pursuant to this clause (a) (but,
in case of any such resignation, only to the extent that a successor issuer of Letters of Credit shall have been appointed), either
(i) the Borrower, the resigning or replaced Letter of Credit Issuer and the successor issuer of Letters of Credit shall arrange
to have any outstanding Letters of Credit issued by the resigning or replaced Letter of Credit Issuer replaced with Letters of
Credit issued by the successor issuer of Letters of Credit or (ii) the Borrower shall cause the successor issuer of Letters
of Credit, if such successor issuer is reasonably satisfactory to the replaced or resigning Letter of Credit Issuer, to issue
“back-stop” Letters of Credit naming the resigning or replaced Letter of Credit Issuer as beneficiary for each outstanding
Letter of Credit issued by the resigning or replaced Letter of Credit Issuer, which new Letters of Credit shall be denominated
in the same currency as, and shall have a face amount equal to, the Letters of Credit being back-stopped and the sole requirement
for drawing on such new Letters of Credit shall be a drawing on the corresponding back-stopped Letters of Credit. After any resigning
or replaced Letter of Credit Issuer’s resignation or replacement as Letter of Credit Issuer, the provisions of this Agreement
relating to the Letter of Credit Issuer shall inure to its benefit as to any actions taken or omitted to be taken by it (A) while
it was the Letter of Credit Issuer under this Agreement or (B) at any time with respect to Letters of Credit issued by such Letter
of Credit Issuer.
(b) To
the extent there are, at the time of any resignation or replacement as set forth in clause (a) above, any outstanding Letters
of Credit, nothing herein shall be deemed to impact or impair any rights and obligations of any of the parties hereto with respect
to such outstanding Letters of Credit (including, without limitation, any obligations related to the payment of Fees or the reimbursement
or funding of amounts drawn), except that the Borrower, the resigning or replaced Letter of Credit Issuer and the successor issuer
of Letters of Credit shall have the obligations regarding outstanding Letters of Credit described in clause (a) above.
3.7 Role
of Letter of Credit Issuer. Each Lender and the Borrower agrees that, in paying any drawing under a Letter of Credit, the
Letter of Credit Issuer shall not have any responsibility to obtain any document (other than any sight draft, certificates and
documents expressly required by the Letter of Credit) or to ascertain or inquire as to the validity or accuracy of any such document
or the authority of the Person executing or delivering any such document. None of the Letter of Credit Issuer, the Administrative
Agent, any of their respective Affiliates nor any correspondent, participant or assignee of the Letter of Credit Issuer shall
be liable to any Lender for (i) any action taken or omitted in connection herewith at the request or with the approval of the
Required Revolving Credit Lenders; (ii) any action taken or omitted in the absence of gross negligence or willful misconduct as
determined in the final non-appealable judgment of a court of competent jurisdiction; or (iii) the due execution, effectiveness,
validity or enforceability of any document or instrument related to any Letter of Credit or Issuer Document. The Borrower hereby
assumes all risks of the acts or omissions of any beneficiary or transferee with respect to its use of any Letter of Credit; provided
that this assumption is not intended to, and shall not, preclude the Borrower’s pursuit of such rights and remedies
as they may have against the beneficiary or transferee at law or under any other agreement. None of the Letter of Credit Issuer,
the Administrative Agent, any of their respective Affiliates nor any correspondent, participant or assignee of the Letter of Credit
Issuer shall be liable or responsible for any of the matters described in Section 3.3(b); provided that anything
in such Section to the contrary notwithstanding, the Borrower may have a claim against the Letter of Credit Issuer, and the Letter
of Credit Issuer may be liable to the Borrower, to the extent, but only to the extent, of any direct, as opposed to consequential
or exemplary, damages suffered by the Borrower which the Borrower proves were caused by the Letter of Credit Issuer’s willful
misconduct or gross negligence or the Letter of Credit Issuer’s willful failure to pay under any Letter of Credit after
the presentation to it by the beneficiary of a sight draft and certificate(s) strictly complying with the terms and conditions
of a Letter of Credit in each case as determined in the final non-appealable judgment of a court of competent jurisdiction. In
furtherance and not in limitation of the foregoing, the Letter of Credit Issuer may accept documents that appear on their face
to be in order, without responsibility for further investigation, regardless of any notice or information to the contrary, and
the Letter of Credit Issuer shall not be responsible for the validity or sufficiency of any instrument transferring or assigning
or purporting to transfer or assign a Letter of Credit or the rights or benefits thereunder or proceeds thereof, in whole or in
part, which may prove to be invalid or ineffective for any reason.
The
Letter of Credit Issuer may send a Letter of Credit or conduct any communication to or from the beneficiary via the Society for
Worldwide Interbank Financial Telecommunication message or overnight courier, or any other commercially reasonable means of communicating
with a beneficiary.
3.8 Cash
Collateral.
(a) Certain
Credit Support Events. Upon the written request of the Administrative Agent or the Letter of Credit Issuer, if (i) as of the
L/C Facility Maturity Date, any L/C Obligation for any reason remains outstanding, (ii) the Borrower shall be required to
provide Cash Collateral pursuant to Section 11.13, or (iii) the provisions of Section 2.16(a)(v) are in effect,
the Borrower shall immediately (in the case of clause (ii) above) or within one Business Day (in all other cases)
following any written request by the Administrative Agent or the Letter of Credit Issuer, provide Cash Collateral in an amount
not less than the applicable Minimum Collateral Amount (determined in the case of Cash Collateral provided pursuant to clause (iii)
above, after giving effect to Section 2.16(a)(iv) and any Cash Collateral provided by the Defaulting Lender).
(b) Grant
of Security Interest. The Borrower, and to the extent provided by any Defaulting Lender, such Defaulting Lender, hereby grants
to (and subject to the control of) the Administrative Agent, for the benefit of the Administrative Agent, the Letter of Credit
Issuer and the Lenders, and agree to maintain, a first priority security interest in all such cash, deposit accounts and all balances
therein as described in Section 3.8(a), and all other property so provided as collateral pursuant hereto, and in all proceeds
of the foregoing, all as security for the obligations to which such Cash Collateral may be applied pursuant to Section 3.8(c).
If at any time the Administrative Agent determines that Cash Collateral is subject to any right or claim of any Person other than
the Administrative Agent or the Letter of Credit Issuer as herein provided, other than Permitted Liens, or that the total amount
of such Cash Collateral is less than the Minimum Collateral Amount (including, without limitation, as a result of exchange rate
fluctuations), the Borrower will, promptly upon written demand by the Administrative Agent, pay or provide to the Administrative
Agent additional Cash Collateral in an amount sufficient to eliminate such deficiency. Cash Collateral shall be maintained in
blocked, interest bearing deposit accounts with the Administrative Agent. The Borrower shall pay on demand therefor from time
to time all customary account opening, activity and other administrative fees and charges in connection with the maintenance and
disbursement of Cash Collateral.
(c) Application.
Notwithstanding anything to the contrary contained in this Agreement, Cash Collateral provided under any of this Section 3.8
or Sections 2.16, 5.2, or 11.13 in respect of Letters of Credit shall be held and applied to the
satisfaction of the specific L/C Obligations, obligations to fund participations therein (including, as to Cash Collateral provided
by a Defaulting Lender, any interest accrued on such obligation) and other obligations for which the Cash Collateral was so provided,
prior to any other application of such property as may otherwise be provided for herein.
(d) Cash
Collateral (or the appropriate portion thereof) provided to reduce Fronting Exposure or to secure other obligations shall be released
promptly following (i) the elimination of the applicable Fronting Exposure or other obligations giving rise thereto (including
by the termination of Defaulting Lender status of the applicable Lender (or, as appropriate, its assignee following compliance
with Section 13.6(b)(ii)) or there is no longer existing an Event of Default) or (ii) the determination by the
Administrative Agent and the Letter of Credit Issuer that there exists excess Cash Collateral.
3.9 Applicability
of ISP and UCP. Unless otherwise expressly agreed by the Letter of Credit Issuer and the Borrower when a Letter of Credit
is issued, (i) the rules of the ISP shall apply to each standby Letter of Credit, and (ii) the rules of the Uniform Customs and
Practice for Documentary Credits, as most recently published by the International Chamber of Commerce at the time of issuance,
shall apply to each commercial Letter of Credit. Notwithstanding the foregoing, the Letter of Credit Issuer shall not be responsible
to the Borrower for, and the Letter of Credit Issuer’s rights and remedies against the Borrower shall not be impaired by,
any action or inaction of the Letter of Credit Issuer required or permitted under any law, order, or practice that is required
or permitted to be applied to any Letter of Credit or this Agreement, including the applicable law or any order of a jurisdiction
where the Letter of Credit Issuer or the beneficiary is located, the practice stated in the ISP or UCP, as applicable, or in the
decisions, opinions, practice statements, or official commentary of the ICC Banking Commission, the Bankers Association for Finance
and Trade - International Financial Services Association (BAFT-IFSA), or the Institute of International Banking Law & Practice,
whether or not any Letter of Credit chooses such law or practice.
3.10 Conflict
with Issuer Documents. In the event of any conflict between the terms hereof and the terms of any Issuer Document, the terms
hereof shall control and any grant of security interest in any Issuer Documents shall be void.
3.11 Letters
of Credit Issued for Restricted Subsidiaries. Notwithstanding that a Letter of Credit issued or outstanding hereunder is in
support of any obligations of, or is for the account of, a Restricted Subsidiary, the Borrower shall be obligated to reimburse
the Letter of Credit Issuer hereunder for any and all drawings under such Letter of Credit. The Borrower hereby acknowledges that
the issuance of Letters of Credit for the account of any Restricted Subsidiary inures to the benefit of the Borrower and that
the Borrower’s business derives substantial benefits from the businesses of the Restricted Subsidiaries.
3.12 Provisions
Related to Extended Revolving Credit Commitments. If the Letter of Credit Expiration Date in respect of any tranche of Revolving
Credit Commitments occurs prior to the expiry date of any Letter of Credit, then (i) if consented to by the Letter of Credit Issuer
which issued such Letter of Credit, if one or more other tranches of Revolving Credit Commitments in respect of which the Letter
of Credit Expiration Date shall not have so occurred are then in effect, such Letters of Credit for which consent has been obtained
shall automatically be deemed to have been issued (including for purposes of the obligations of the Revolving Credit Lenders to
purchase participations therein and to make Revolving Credit Loans and payments in respect thereof pursuant to Sections 3.3
and 3.4) under (and ratably participated in by Lenders pursuant to) the Revolving Credit Commitments in respect of
such non-terminating tranches up to an aggregate amount not to exceed the aggregate amount of the unutilized Revolving Credit
Commitments thereunder at such time (it being understood that no partial face amount of any Letter of Credit may be so reallocated)
and (ii) to the extent not reallocated pursuant to immediately preceding clause (i), the Borrower shall Cash Collateralize
any such Letter of Credit in accordance with Section 3.8. Upon the maturity date of any tranche of Revolving Credit
Commitments, the sublimit for Letters of Credit may be reduced as agreed between the Letter of Credit Issuer and the Borrower,
without the consent of any other Person.
4.1 Fees.
(a) Without
duplication, the Borrower agrees to pay to the Administrative Agent in Dollars, for the account of each Revolving Credit Lender
(in each case pro rata according to the respective Revolving Credit Commitments of all such Lenders), a commitment fee (the “Revolving
Credit Commitment Fee”) for each day from the Closing Date to the Revolving Credit Termination Date. Each Revolving
Credit Commitment Fee shall be payable (x) quarterly in arrears on the last Business Day of each fiscal quarter of the Borrower
(for the quarterly period (or portion thereof) ended on such day for which no payment has been received) and (y) on the Revolving
Credit Termination Date (for the period ended on such date for which no payment has been received pursuant to clause (x)
above), and shall be computed for each day during such period at a rate per annum equal to the Revolving Credit Commitment Fee
Rate in effect on such day on the Available Commitment in effect on such day.
(b) Without
duplication, the Borrower agrees to pay to the Administrative Agent in Dollars for the account of the Revolving Credit Lenders
pro rata on the basis of their respective Letter of Credit Exposure, a fee in respect of each Letter of Credit issued on the Borrower’s
or any of the Restricted Subsidiaries’ behalf (the “Letter of Credit Fee”), for the period from the date
of issuance of such Letter of Credit to the termination date of such Letter of Credit computed at the per annum rate for each
day equal to the Applicable Margin for Revolving Credit Loans that are LIBOR Loans less the Fronting Fee set forth in clause
(d) below. Except as provided below, such Letter of Credit Fees shall be due and payable (x) quarterly in arrears on the last
Business Day of each fiscal quarter of the Borrower and (y) on the date upon which the Total Revolving Credit Commitment terminates
and the Letters of Credit Outstanding shall have been reduced to zero.
(c) Without
duplication, the Borrower agrees to pay to the Administrative Agent in Dollars, for its own account, administrative agent fees
as have been previously agreed in writing or as may be agreed in writing from time to time.
(d) Without
duplication, the Borrower agrees to pay to each Letter of Credit Issuer a fee in Dollars in respect of each Letter of Credit issued
by it on the Borrower’s behalf (the “Fronting Fee”), for the period from the date of issuance of such
Letter of Credit to the termination date of such Letter of Credit, computed at the rate for each day equal to 0.125% per annum
on the average daily Stated Amount of such Letter of Credit (or at such other rate per annum as agreed in writing between the
Borrower and the Letter of Credit Issuer). Such Fronting Fees shall be due and payable (x) quarterly in arrears on the last Business
Day of each March, June, September and December and (y) on the date upon which the Total Revolving Credit Commitment terminates
and the Letters of Credit Outstanding shall have been reduced to zero.
(e) Without
duplication, the Borrower agrees to pay directly to the Letter of Credit Issuer in Dollars upon each issuance or renewal of, drawing
under, and/or amendment of, a Letter of Credit issued by it such amount as shall at the time of such issuance or renewal of, drawing
under, and/or amendment be the processing charge that the Letter of Credit Issuer is customarily charging for issuances or renewals
of, drawings under or amendments of, letters of credit issued by it.
(f) Notwithstanding
the foregoing, the Borrower shall not be obligated to pay any amounts to any Defaulting Lender pursuant to this Section 4.1.
4.2 Voluntary
Reduction of Revolving Credit Commitments. Upon at least two Business Days’ prior written notice to the Administrative
Agent at the Administrative Agent’s Office (which notice the Administrative Agent shall promptly transmit to each of the
Lenders), the Borrower shall have the right, without premium or penalty, on any day, permanently to terminate or reduce the Revolving
Credit Commitments in whole or in part; provided that (a) any such reduction shall apply proportionately and permanently
to reduce the Revolving Credit Commitment of each of the Lenders of any applicable Class, except that (i) notwithstanding
the foregoing, in connection with the establishment on any date of any Extended Revolving Credit Commitments pursuant to Section
2.14(g), the Revolving Credit Commitments of any one or more Lenders providing any such Extended Revolving Credit Commitments
on such date shall be reduced in an amount equal to the amount of Revolving Credit Commitments so extended on such date (provided
that (x) after giving effect to any such reduction and to the repayment of any Revolving Credit Loans made on such date, the
Revolving Credit Exposure of any such Lender does not exceed the Revolving Credit Commitment thereof and (y) for the avoidance
of doubt, any such repayment of Revolving Credit Loans contemplated by the preceding clause shall be made in compliance with the
requirements of Section 5.3(a) with respect to the ratable allocation of payments hereunder, with such allocation being
determined after giving effect to any conversion pursuant to Section 2.14(g) of Revolving Credit Commitments and Revolving
Credit Loans into Extended Revolving Credit Commitments and Extended Revolving Credit Loans pursuant to Section 2.14(g)
prior to any reduction being made to the Revolving Credit Commitment of any other Lender) and (ii) the Borrower may at its
election permanently reduce the Revolving Credit Commitment of a Defaulting Lender to $0 without affecting the Revolving Credit
Commitments of any other Lender, (b) any partial reduction pursuant to this Section 4.2 shall be in the amount of at least
$5,000,000, and (c) after giving effect to such termination or reduction and to any prepayments of the Loans made on the date
thereof in accordance with this Agreement, the aggregate amount of the Lenders’ Revolving Credit Exposures shall not exceed
the Total Revolving Credit Commitment and the aggregate amount of the Lenders’ Revolving Credit Exposures in respect of
any Class shall not exceed the aggregate Revolving Credit Commitment of such Class.
4.3 Mandatory
Termination of Commitments.
(a) The
Additional Term A Loan Commitments shall terminate at 5:00 p.m. (New York City time) on the Closing Date.
(b) The
Revolving Credit Commitment shall terminate at 5:00 p.m. (New York City time) on the Revolving Credit Maturity Date.
(c) The
Incremental Term Loan Commitment shall, unless otherwise provided in the applicable Joinder Agreement, terminate at 5:00 p.m.
(New York City time) on the Increased Amount Date.
5.1 Voluntary
Prepayments. The Borrower shall have the right to prepay Loans, including Term Loans and Revolving Credit Loans, as applicable,
in each case, without premium or penalty, in whole or in part from time to time on the following terms and conditions: (1) the
Borrower shall give the Administrative Agent at the Administrative Agent’s Office written notice of its intent to make such
prepayment, the amount of such prepayment and (in the case of LIBOR Loans) the specific Borrowing(s) pursuant to which made, which
notice shall be given by the Borrower no later than 12:00 Noon (New York City time) (i) in the case of LIBOR Loans, three Business
Days prior to and (ii) in the case of ABR Loans on the date of such prepayment and shall promptly be transmitted by the Administrative
Agent to each of the Lenders; (2) each partial prepayment of (i) any Borrowing of LIBOR Loans shall be in a minimum amount of
$500,000 and in multiples of $100,000 in excess thereof and (ii) any ABR Loans shall be in a minimum amount of $500,000 and
in multiples of $100,000 in excess thereof, provided that no partial prepayment of LIBOR Loans made pursuant to a single
Borrowing shall reduce the outstanding LIBOR Loans made pursuant to such Borrowing to an amount less than the applicable Minimum
Borrowing Amount for such LIBOR Loans, and (3) in the case of any prepayment of LIBOR Loans pursuant to this Section 5.1
on any day other than the last day of an Interest Period applicable thereto, the Borrower shall, promptly after receipt of a written
request by any applicable Lender (which request shall set forth in reasonable detail the basis for requesting such amount), pay
to the Administrative Agent for the account of such Lender any amounts required pursuant to Section 2.11. Each prepayment
in respect of any Term Loans pursuant to this Section 5.1 shall be applied to the Class or Classes of Term Loans as the
Borrower shall specify. Each prepayment in respect of any Term Loans pursuant to this Section 5.1 shall be (a) applied
to the Class or Classes of Term Loans as the Borrower shall specify and (b) applied to reduce Initial Term A Loan Repayment Amounts,
any Incremental Term Loan Repayment Amounts, and, subject to Section 2.14(g), Extended Term Loan Repayment Amounts, as
the case may be, in each case, in such order and to such Classes as the Borrower may specify. At the Borrower’s election
in connection with any prepayment pursuant to this Section 5.1, such prepayment shall not be applied to any Term Loan or
Revolving Credit Loan of a Defaulting Lender.
5.2 Mandatory
Prepayments.
(a) Term
Loan Prepayments.
(i) On
each occasion that a Prepayment Event occurs, the Borrower shall, within three Business Days after receipt of the Net Cash Proceeds
of a Debt Incurrence Prepayment Event and within ten Business Days after the occurrence of any other Prepayment Event (or, in
the case of Deferred Net Cash Proceeds, within ten Business Days after the Deferred Net Cash Proceeds Payment Date), prepay, in
accordance with clause (c) below, Term Loans with an equivalent principal amount equal to 100% of the Net Cash Proceeds
from such Prepayment Event.
(ii) [Reserved].
(iii) [Reserved].
(iv) Notwithstanding
any other provisions of this Section 5.2, (A) to the extent that any or all of the Net Cash Proceeds of any Prepayment
Event by a Foreign Subsidiary that is not a Credit Party giving rise to a prepayment pursuant to clause (i) above
(a “Non-Credit Party Prepayment Event”) are prohibited or delayed by any applicable law from being repatriated
to the Credit Parties, an amount equal to the portion of such Net Cash Proceeds so affected will not be required to be applied
to repay Loans at the times provided in clause (i) above, but only so long, as the applicable law will not permit
repatriation to the Credit Parties (the Credit Parties hereby agreeing to cause the applicable Subsidiary to promptly take all
actions reasonably required by the applicable law to permit repatriation), and once a repatriation of any of such affected Net
Cash Proceeds is permitted under the applicable law, an amount equal to such Net Cash Proceeds will be promptly (and in any event
not later than ten Business Days after such repatriation is permitted) applied (net of any taxes that would be payable or reserved
against if such amounts were actually repatriated whether or not they are repatriated) to the repayment of the Loans pursuant
to clause (i) above and (B) to the extent that the Borrower has determined in good faith that repatriation of
any of or all the Net Cash Proceeds of a Foreign Subsidiary of any Non-Credit Party Prepayment Event would have a material adverse
tax consequence with respect to such Net Cash Proceeds, an amount equal to the Net Cash Proceeds so affected may be retained by
the applicable Foreign Subsidiary; provided that in the case of this clause (B), on or before the date on which
any Net Cash Proceeds from any Non-Credit Party Prepayment Event so retained would otherwise have been required to be applied
to reinvestments or prepayments pursuant to clause (i) above, (x) the Borrower shall apply an amount equal to
such Net Cash Proceeds to such reinvestments or prepayments as if such Net Cash Proceeds had been received by the Credit Parties
rather than such Foreign Subsidiary, less the amount of any taxes that would have been payable or reserved against if such Net
Cash Proceeds had been repatriated (or, if less, the Net Cash Proceeds that would be calculated if received by such Foreign Subsidiary)
or (y) such Net Cash Proceeds shall be applied to the repayment of Indebtedness of a Subsidiary that is not a Credit Party.
For the avoidance of doubt, nothing in this Agreement, including Section 5 shall be construed to require any Subsidiary
to repatriate cash.
(b) Repayment
of Revolving Credit Loans. If on any date the aggregate amount of the Lenders’ Revolving Credit Exposures in respect
of any Class of Revolving Loans for any reason exceeds 100% of the Revolving Credit Commitment of such Class then in effect, the
Borrower shall forthwith repay on such date Revolving Loans of such Class in an amount equal to such excess. If after giving effect
to the prepayment of all outstanding Revolving Loans of such Class, the Revolving Credit Exposures of such Class exceed the Revolving
Credit Commitment of such Class then in effect, the Borrower shall Cash Collateralize the Letters of Credit Outstanding in relation
to such Class to the extent of such excess.
(c) Application
to Repayment Amounts. Subject to Section 5.2(f), each prepayment of Term Loans required by Section 5.2(a)(i)
shall be allocated pro rata among the Initial Term A Loans, the Incremental Term Loans and the Extended Term Loans based on
the applicable remaining Repayment Amounts due thereunder and shall be applied within each Class of Term Loans in respect of such
Term Loans in direct order of maturity thereof or as otherwise directed by the Borrower; provided that the Borrower may
allocate a greater proportion of such prepayment in its sole discretion to the Initial Term A Loans to the extent agreed to by
the Lenders providing any applicable Incremental Term Loans and/or Extended Term Loans outstanding at such time. Subject to Section 5.2(f),
with respect to each such prepayment, the Borrower will, not later than the date specified in Section 5.2(a) for making
such prepayment, give the Administrative Agent written notice which shall include a calculation of the amount of such prepayment
to be applied to each Class of Term Loans requesting that the Administrative Agent provide notice of such prepayment to each Initial
Term A Loan Lender, Incremental Term Loan Lender or Lender of Extended Term Loans, as applicable.
(d) Application
to Term Loans. With respect to each prepayment of Term Loans required by Section 5.2(a), the Borrower may, if applicable,
designate the Types of Loans that are to be prepaid and the specific Borrowing(s) pursuant to which made; provided, that
if any Lender has provided a Rejection Notice in compliance with Section 5.2(f), such prepayment shall be applied with
respect to the Term Loans to be prepaid on a pro rata basis across all outstanding Types of such Term Loans in proportion to the
percentage of such outstanding Term Loans to be prepaid represented by each such Class. In the absence of a Rejection Notice or
a designation by the Borrower as described in the preceding sentence, the Administrative Agent shall, subject to the above, make
such designation in its reasonable discretion with a view, but no obligation, to minimize breakage costs owing under Section
2.11.
(e) Application
to Revolving Credit Loans. With respect to each prepayment of Revolving Credit Loans, the Borrower may designate (i) the Types
of Loans that are to be prepaid and the specific Borrowing(s) pursuant to which made and (ii) the Revolving Loans to be prepaid,
provided that (y) each prepayment of any Loans made pursuant to a Borrowing shall be applied pro rata among such Loans;
and (z) notwithstanding the provisions of the preceding clause (y), no prepayment of Revolving Loans shall be applied to
the Revolving Credit Loans of any Defaulting Lender unless otherwise agreed in writing by the Borrower. In the absence of a designation
by the Borrower as described in the preceding sentence, the Administrative Agent shall, subject to the above, make such designation
in its reasonable discretion with a view, but no obligation, to minimize breakage costs owing under Section 2.11.
(f) Rejection
Right. The Borrower shall notify the Administrative Agent in writing of any mandatory prepayment of Term Loans required to
be made pursuant to Section 5.2(a) at least three Business Days prior to the date of such prepayment. Each such notice
shall specify the date of such prepayment and provide a reasonably detailed calculation of the amount of such prepayment. The
Administrative Agent will promptly notify each Lender holding Term Loans of the contents of such prepayment notice and of such
Lender’s pro rata share of the prepayment. Each Term Loan Lender may reject all (but not less than all) of its pro rata
share of any mandatory prepayment other than any such mandatory prepayment with respect to a Debt Incurrence Prepayment Event
under Section 5.2(a)(i) (such declined amounts, the “Declined Proceeds”) of Term Loans required to be
made pursuant to Section 5.2(a) by providing written notice (each, a “Rejection Notice”) to the Administrative
Agent no later than 5:00 p.m. (New York City time) one Business Day after the date of such Lender’s receipt of notice from
the Administrative Agent regarding such prepayment. If a Lender fails to deliver a Rejection Notice to the Administrative Agent
within the time frame specified above, any such failure will be deemed an acceptance of the total amount of such mandatory prepayment
of Term Loans. Any Declined Proceeds shall be retained by the Borrower (“Retained Declined Proceeds”).
5.3 Method
and Place of Payment.
(a) Except
as otherwise specifically provided herein, all payments under this Agreement shall be made by the Borrower, without set-off, counterclaim
or deduction of any kind, to the Administrative Agent for the ratable account of the Lenders entitled thereto or the Letter of
Credit Issuer entitled thereto, as the case may be, not later than 2:00 p.m. (New York City time), in each case, on the date when
due and shall be made in immediately available funds at the Administrative Agent’s Office or at such other office as the
Administrative Agent shall specify for such purpose by notice to the Borrower, it being understood that written or facsimile notice
by the Borrower to the Administrative Agent to make a payment from the funds in the Borrower’s account at the Administrative
Agent’s Office shall constitute the making of such payment to the extent of such funds held in such account. All repayments
or prepayments of any Loans (whether of principal, interest or otherwise) hereunder shall be made in the currency in which such
Loans are denominated and all other payments under each Credit Document shall, unless otherwise specified in such Credit Document,
be made in Dollars. The Administrative Agent will thereafter cause to be distributed on the same day (if payment was actually
received by the Administrative Agent prior to 2:00 p.m. (New York City time) or, otherwise, on the next Business Day in the Administrative
Agent’s sole discretion) like funds relating to the payment of principal or interest or Fees ratably to the Lenders entitled
thereto.
(b) Any
payments under this Agreement that are made later than 2:00 p.m. (New York City time) may be deemed to have been made on the next
succeeding Business Day in the Administrative Agent’s sole discretion for purposes of calculating interest thereon. Except
as otherwise provided herein, whenever any payment to be made hereunder shall be stated to be due on a day that is not a Business
Day, the due date thereof shall be extended to the next succeeding Business Day and, with respect to payments of principal, interest
shall be payable during such extension at the applicable rate in effect immediately prior to such extension.
5.4 Net
Payments.
(a) Payments
Free of Taxes; Obligation to Withhold; Payments on Account of Taxes.
(i) Any
and all payments by or on account of any obligation of any Credit Party hereunder or under any other Credit Document shall to
the extent permitted by applicable laws be made free and clear of and without reduction or withholding for any Taxes.
(ii) If
any Credit Party, the Administrative Agent or any other applicable Withholding Agent shall be required by applicable law to withhold
or deduct any Taxes from any payment, then (A) such Withholding Agent shall withhold or make such deductions as are reasonably
determined by such Withholding Agent to be required by applicable law, (B) such Withholding Agent shall timely pay the full amount
withheld or deducted to the relevant Governmental Authority, and (C) to the extent that the withholding or deduction is made on
account of Indemnified Taxes or Other Taxes, the sum payable by the applicable Credit Party shall be increased as necessary so
that after any required withholding or deductions have been made (including withholding or deductions applicable to additional
sums payable under this Section 5.4) each Lender (or, in the case of a payment to the Administrative Agent for its own
account, the Administrative Agent) receives an amount equal to the sum it would have received had no such withholding or deductions
been made.
(b) Payment
of Other Taxes by the Borrower. Without limiting the provisions of subsection (a) above, the Borrower shall timely
pay any Other Taxes to the relevant Governmental Authority in accordance with applicable law or timely reimburse the Administrative
Agent or any Lender for the payment of any Other Taxes.
(c) Tax
Indemnifications. Without limiting the provisions of subsection (a) or (b) above, the Borrower shall jointly
and severally indemnify the Administrative Agent and each Lender, and shall make payment in respect thereof within 15 days after
demand therefor, for the full amount of Indemnified Taxes or Other Taxes (including Indemnified Taxes or Other Taxes imposed or
asserted on or attributable to amounts payable under this Section 5.4) payable by the Administrative Agent or such Lender,
as the case may be, and any reasonable expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes
or Other Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount
of any such payment or liability (along with a written statement setting forth in reasonable detail the basis and calculation
of such amounts) delivered to the Borrower by a Lender, or by the Administrative Agent on its own behalf or on behalf of a Lender,
shall be conclusive absent manifest error. If the Borrower reasonably believes that any such Indemnified Taxes or Other Taxes
were not correctly or legally asserted, the Administrative Agent and/or each affected Lender will use reasonable efforts to cooperate
with the Borrower in pursuing a refund of such Indemnified Taxes or Other Taxes so long as such efforts would not, in the sole
determination of the Administrative Agent or affected Lender, result in any additional costs, expenses or risks or be otherwise
disadvantageous to it.
(d) Evidence
of Payments. After any payment of Taxes by any Credit Party or the Administrative Agent to a Governmental Authority as provided
in this Section 5.4, the Borrower shall deliver to the Administrative Agent or the Administrative Agent shall deliver to
the Borrower, as the case may be, the original or a certified copy of a receipt issued by such Governmental Authority evidencing
such payment, a copy of any return required by laws to report such payment or other evidence of such payment reasonably satisfactory
to the Borrower or the Administrative Agent, as the case may be.
(e) Status
of Lenders and Tax Documentation.
(i) Each
Lender shall deliver to the Borrower and the Administrative Agent, at such time or times reasonably requested by the Borrower
or the Administrative Agent, such properly completed and executed documentation prescribed by applicable laws or by the taxing
authorities of any jurisdiction and such other reasonably requested information as will permit the Borrower or the Administrative
Agent, as the case may be, to determine (A) whether or not any payments made hereunder or under any other Credit Document are
subject to Taxes, (B) if applicable, the required rate of withholding or deduction, and (C) such Lender’s entitlement to
any available exemption from, or reduction of, applicable Taxes in respect of any payments to be made to such Lender by any Credit
Party pursuant to any Credit Document or otherwise to establish such Lender’s status for withholding Tax purposes in the
applicable jurisdiction. Any documentation and information required to be delivered by a Lender pursuant to this Section 5.4(e)
(including any specific documentation set forth in subsection (ii) below) shall be delivered by such Lender (i) on
or prior to the Closing Date (or on or prior to the date it becomes a party to this Agreement), (ii) on or before any date on
which such documentation expires or becomes obsolete or invalid, (iii) after the occurrence of any change in the Lender’s
circumstances requiring a change in the most recent documentation previously delivered by it to the Borrower and the Administrative
Agent, and (iv) from time to time thereafter if reasonably requested by the Borrower or the Administrative Agent, and each such
Lender shall promptly notify in writing the Borrower and the Administrative Agent if such Lender is no longer legally eligible
to provide any documentation previously provided.
(ii) Without
limiting the generality of the foregoing:
(A) any
Lender that is a “United States person” within the meaning of Section 7701(a)(30) of the Code (a “U.S. Lender”)
shall deliver to the Borrower and the Administrative Agent executed originals of Internal Revenue Service Form W-9 or such other
documentation or information prescribed by applicable laws or reasonably requested by the Borrower or the Administrative Agent
as will enable the Borrower or the Administrative Agent, as the case may be, to determine whether or not such Lender is subject
to backup withholding or information reporting requirements;
(B) each
Non-U.S. Lender that is entitled under the Code or any applicable treaty to an exemption from or reduction of U.S. federal withholding
Tax with respect to any payments hereunder or under any other Credit Document shall deliver to the Borrower and the Administrative
Agent (in such number of copies as shall be requested by the recipient) whichever of the following is applicable:
(1) executed
originals of the applicable Internal Revenue Service Form W-8 (or any successor form thereto) claiming eligibility for benefits
pursuant the applicable article of an income tax treaty to which the United States is a party;
(2) executed
originals of Internal Revenue Service Form W-8ECI (or any successor form thereto);
(3) in
the case of a Non-U.S. Lender claiming the benefits of the exemption for portfolio interest under Section 881(c) of the Code,
(x) a certificate, substantially in the form of Exhibit J-1 to the effect that such Non-U.S. Lender is not (A) a “bank”
within the meaning of Section 881(c)(3)(A) of the Code, (B) a “10-percent shareholder” of the Borrower within the
meaning of Section 871(h)(3)(B) of the Code, or (C) a “controlled foreign corporation” related to the Borrower, as
described in Section 881(c)(3)(C) of the Code and that no payments under any Credit Document are effectively connected with such
Non-U.S. Lender’s conduct of a United States trade or business (a “Non-Bank Tax Certificate”), and (y)
executed originals of the applicable Internal Revenue Service Form W-8 (or any successor thereto);
(4)
where such Lender is a partnership (for U.S. federal income tax purposes) or otherwise not a beneficial owner (e.g.,
where such Lender has sold a participation), Internal Revenue Service Form W-8IMY (or any successor thereto) accompanied by Internal
Revenue Service Form W-8ECI, W-8BEN, W-8BEN-E or W-9, as applicable, and/or other supporting documentation (including, where one
or more of the underlying beneficial owner(s) is claiming the benefits of the portfolio interest exemption, a Non-Bank Tax Certificate
of such beneficial owner(s) substantially in the form of Exhibit J-3 or J-4) (provided that if the Non-U.S.
Lender is a partnership and not a participating Lender, the Non-Bank Tax Certificate(s), substantially in the form of Exhibit
J-2, may be provided by the Non-U.S. Lender on behalf of the direct or indirect partner(s)); or
(5)
executed originals of any other form prescribed by applicable laws as a basis for claiming exemption from or a reduction
in United States federal withholding Tax together with such supplementary documentation as may be prescribed by applicable laws
to permit the Borrower or the Administrative Agent to determine the withholding or deduction required to be made;
(C)
if a payment made to a Lender under any Credit Document would be subject to U.S. federal withholding Tax imposed
by FATCA if such Lender were to fail to comply with the applicable reporting requirements of FATCA (including those contained in
Section 1471(b) or 1472(b) of the Code, as applicable), such Lender shall deliver to the Borrower and the Administrative Agent
at the time or times prescribed by law and at such time or times reasonably requested by the Borrower or the Administrative Agent
such documentation prescribed by applicable law (including as prescribed by Section 1471(b)(3)(C)(i) of the Code) and such additional
documentation reasonably requested by the Borrower or the Administrative Agent as may be necessary for the Borrower and the Administrative
Agent to comply with their obligations under FATCA, to determine whether such Lender has complied with such Lender’s obligations
under FATCA or to determine the amount, if any, to deduct and withhold from such payment. Solely for purposes of this clause
(C), “FATCA” shall include any amendments made to FATCA after the date of this Agreement; and
(D)
if the Administrative Agent is a “United States person” (as defined in Section 7701(a)(30) of the Code),
it shall provide the Borrower with two duly completed original copies of Internal Revenue Service Form W-9. If the Administrative
Agent is not a “United States person” (as defined in Section 7701(a)(30) of the Code), it shall provide the applicable
Form W-8 (together with required accompanying documentation) and certify that it is a U.S. branch that has agreed to be treated
as a U.S. person for United States federal withholding Tax purposes with respect to payments to be received by it on behalf of
the Lenders. Notwithstanding anything to the contrary in this Section 5.4, no Lender or the Administrative Agent shall be
required to deliver any documentation that it is not legally eligible to deliver.
(f)
Treatment of Certain Refunds. If the Administrative Agent or any Lender determines, in its sole discretion
exercised in good faith, that it has received a refund of any Indemnified Taxes or Other Taxes as to which it has been indemnified
by any Credit Party or with respect to which any Credit Party has paid additional amounts pursuant to this Section 5.4,
the Administrative Agent or such Lender (as applicable) shall promptly pay to the Borrower an amount equal to such refund (but
only to the extent of indemnity payments made, or additional amounts paid, by the Credit Parties under this Section 5.4
with respect to the Indemnified Taxes or Other Taxes giving rise to such refund), net of all out-of-pocket expenses (including
any Taxes) incurred by the Administrative Agent or such Lender, as the case may be, and without interest (other than any interest
paid by the relevant Governmental Authority with respect to such refund); provided that the Borrower, upon the request of
the Administrative Agent or such Lender, agrees to repay the amount paid over to the Borrower (plus any penalties, interest or
other charges imposed by the relevant Governmental Authority) to the Administrative Agent or such Lender in the event the Administrative
Agent or such Lender is required to repay such refund to such Governmental Authority. In such event, the Administrative Agent or
such Lender, as the case may be, shall, at the Borrower’s request, provide the Borrower with a copy of any notice of assessment
or other evidence of the requirement to repay such refund received from the relevant taxing authority (provided that the
Administrative Agent or such Lender may delete any information therein that it deems confidential). Notwithstanding anything to
the contrary in this paragraph (f), in no event will the Administrative Agent or any Lender be required to pay any amount to an
indemnifying party pursuant to this paragraph (f) the payment of which would place the Administrative Agent or any Lender in a
less favorable net after-Tax position than the Administrative Agent or any Lender would have been in if the Tax subject to indemnification
and giving rise to such refund had not been deducted, withheld or otherwise imposed and the indemnification payments or additional
amounts with respect to such Tax had never been paid. This subsection shall not be construed to require the Administrative Agent
or any Lender to make available its Tax returns (or any other information relating to its Taxes that it deems confidential) to
any Credit Party or any other Person.
(g)
For the avoidance of doubt, for purposes of this Section 5.4, the term “Lender” includes any Letter
of Credit Issuer and the term “applicable law” includes FATCA.
(h)
Each party’s obligations under this Section 5.4 shall survive the resignation or replacement of the
Administrative Agent or any assignment of rights by, or the replacement of, a Lender, the termination of the Commitments and the
repayment, satisfaction or discharge of all obligations under the Credit Documents.
5.5
Computations of Interest and Fees.
(a)
Except as provided in the next succeeding sentence, interest on LIBOR Loans shall be calculated on the basis of a
360-day year for the actual days elapsed. Interest on ABR Loans shall be calculated on the basis of a 365- (or 366-, as the case
may be) day year for the actual days elapsed.
(b)
Fees and the average daily Stated Amount of Letters of Credit shall be calculated on the basis of a 360-day year
for the actual days elapsed.
5.6
Limit on Rate of Interest.
(a)
No Payment Shall Exceed Lawful Rate. Notwithstanding any other term of this Agreement, the Borrower shall
not be obliged to pay any interest or other amounts under or in connection with this Agreement or otherwise in respect of the Obligations
in excess of the amount or rate permitted under or consistent with any applicable law, rule or regulation.
(b)
Payment at Highest Lawful Rate. If the Borrower is not obliged to make a payment that it would otherwise be
required to make, as a result of Section 5.6(a), the Borrower shall make such payment to the maximum extent permitted by
or consistent with applicable laws, rules, and regulations.
(c)
Adjustment if Any Payment Exceeds Lawful Rate. If any provision of this Agreement or any of the other Credit
Documents would obligate the Borrower to make any payment of interest or other amount payable to any Lender in an amount or calculated
at a rate that would be prohibited by any applicable law, rule or regulation, then notwithstanding such provision, such amount
or rate shall be deemed to have been adjusted with retroactive effect to the maximum amount or rate of interest, as the case may
be, as would not be so prohibited by law, such adjustment to be effected, to the extent necessary, by reducing the amount or rate
of interest required to be paid by the Borrower to the affected Lender under Section 2.8; provided that to the extent
lawful, the interest or other amounts that would have been payable but were not payable as a result of the operation of this Section
shall be cumulated and the interest payable to such Lender in respect of other Loans or periods shall be increased (but not above
the maximum rate therefor) until such cumulated amount, together with interest thereon at the Federal Funds Effective Rate to the
date of repayment, shall have been received by such Lender.
Notwithstanding
the foregoing, and after giving effect to all adjustments contemplated thereby, if any Lender shall have received from the Borrower
an amount in excess of the maximum permitted by any applicable law, rule or regulation, then the Borrower shall be entitled, by
notice in writing to the Administrative Agent to obtain reimbursement from that Lender in an amount equal to such excess, and pending
such reimbursement, such amount shall be deemed to be an amount payable by that Lender to the Borrower.
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Section 6.
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Conditions
Precedent to Initial Borrowing
|
The
obligation of the Lenders to make Additional Term A Loans on the Restatement Effective Date is subject to the satisfaction of the
following conditions precedent.
6.1
Restatement Agreement. The Administrative Agent shall have received the Restatement Agreement, executed and
delivered by a duly Authorized Officer of the Borrower and each other Credit Party.
6.2
Reserved.
6.3
Legal Opinions. The Administrative Agent shall have received the executed legal opinion of Goodwin Procter
LLP, special counsel to the Borrower. The Borrower, the other Credit Parties and the Administrative Agent hereby instruct such
counsel to deliver such legal opinions.
6.4
Closing Certificates. The Administrative Agent (or its counsel) shall have received a certificate of each
of the Borrower and each Guarantor, dated the Restatement Effective Date, substantially in the form of Exhibit G, with appropriate
insertions, executed by any Authorized Officer (or in the case of the Borrower, any Director or authorized agent of the Borrower
(which, subject to Section 13.9, may include any Electronic Signatures transmitted by telecopy, emailed pdf. Or any other electronic
means that reproduces an image of an actual executed signature page)) and the Secretary or any Assistant Secretary of the Borrower
and each Guarantor, as applicable, and attaching the documents referred to in Section 6.5.
6.5
Authorization of Proceedings of the Borrower and the other Credit Parties; Corporate Documents. The Administrative
Agent shall have received (i) a copy of the resolutions of the board of directors or other managers of the Borrower and the other
Credit Parties (or a duly authorized committee thereof) authorizing (a) the execution, delivery, and performance of the Credit
Documents (and any agreements relating thereto) to which it is a party and (b) in the case of the Borrower, the extensions of credit
contemplated hereunder, (ii) the Certificate of Incorporation and By-Laws, Certificate of Formation and Operating Agreement or
other comparable organizational documents, as applicable, of the Borrower and the other Credit Parties, and (iii) signature
and incumbency certificates (or other comparable documents evidencing the same) of the Authorized Officers of the Borrower and
the other Credit Parties executing the Credit Documents to which it is a party.
6.6
Fees. The Agents and Lenders shall have received, substantially simultaneously with the funding of the Additional
Term A Loans, fees in the amounts previously agreed in writing to be received on the Restatement Effective Date and, to the extent
invoiced at least three Business Days prior to the Restatement Effective Date (except as otherwise reasonably agreed by the Borrower),
reasonable out-of-pocket expenses in the amounts previously agreed in writing to be paid on the Restatement Effective Date (which
amounts may, at the Borrower’s option, be offset against the proceeds of the Additional Term A Loans).
6.7
Solvency Certificate. On the Restatement Effective Date, the Administrative Agent shall have received a certificate
from the Chief Executive Officer, President, the Chief Financial Officer, the Treasurer, the Vice President-Finance, or any other
senior financial officer of the Borrower to the effect that immediately following the making of the Additional Term A Loans on
the Restatement Effective Date and after giving effect to the application of the proceeds of such Additional Term A Loans (and
after giving effect to the Restatement Date Transactions, including the Restatement Date Distribution), the Borrower and its Subsidiaries
on a consolidated basis are Solvent; provided that, notwithstanding anything to the contrary set forth herein (including
the definition of “Solvent”), the certifications set forth in the certificate delivered pursuant to this Section
6.7 shall be deemed to be true and correct in all respects to the extent the Borrower has obtained a solvency opinion from
Bay Valuation Advisors, LLC or another third party financial advisory or accounting firm that is reasonably acceptable to the Administrative
Agent and experienced in such matters confirming the solvency of the Borrower and its Subsidiaries on a consolidated basis on the
Restatement Effective Date immediately following the making of the Additional Term A Loans on the Restatement Effective Date and
after giving effect to the application of the proceeds of such Additional Term A Loans (and after giving effect to the Restatement
Date Transactions, including the Restatement Date Distribution).
6.8
Patriot Act. The Administrative Agent shall have received at least three days prior to the Restatement Effective
Date, (i) a Beneficial Ownership Certification for the Borrower and (ii) such other documentation and information as is reasonably
requested in writing at least seven Business Days prior to the Restatement Effective Date by the Administrative Agent about the
Credit Parties to the extent the Administrative Agent and the Borrower in good faith mutually agree is required by regulatory authorities
under applicable “know your customer” and anti-money laundering rules and regulations, including, without limitation,
the Patriot Act.
6.9
Financial Statements. The Joint Lead Arrangers and Bookrunners shall have received the Historical Financial
Statements.
6.10
No Default; Representations and Warranties. On the Restatement Effective Date, (a) no Default or Event of
Default shall have occurred and be continuing and (b) all representations and warranties made by any Credit Party contained herein
or in the other Credit Documents shall be true and correct in all material respects; provided that any such representations
and warranties which are qualified by materiality, Material Adverse Effect or similar language shall be true and correct in all
respects.
6.11
Notice of Term Loan Borrowing. The Administrative Agent shall have received a Notice of Borrowing with respect
to the Additional Term A Loans meeting the requirements of Section 2.3.
6.12
Officer’s Certificate. The Administrative Agent shall have received from an Authorized Officer of the
Borrower an officer’s certificate certifying that the conditions set forth in Section 6.10 are satisfied as of the
Restatement Effective Date.
6.13
Promissory Notes. The Borrower shall have delivered to any Lender requesting a promissory note evidencing
its Initial Term A Loans and/or Revolving Credit Commitments signed by an Authorized Officer of the Borrower.
For
purposes of determining compliance with the conditions specified in Section 6 on the Restatement Effective Date, each Lender
that has signed the Restatement Agreement shall be deemed to have consented to, approved or accepted or to be satisfied with, each
document or other matter required thereunder to be consented to or approved by or acceptable or satisfactory to a Lender unless
the Administrative Agent shall have received notice from such Lender prior to the proposed Restatement Effective Date specifying
its objection thereto.
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Section 7.
|
Conditions
Precedent to All Credit Events
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The
agreement of each Lender to make any Loan requested to be made by it on any date (excluding Revolving Credit Loans required to
be made by the Revolving Credit Lenders in respect of Unpaid Drawings pursuant to Sections 3.3 and 3.4) and the obligation
of the Letter of Credit Issuer to issue Letters of Credit on any date is subject to the satisfaction (or waiver) of the following
conditions precedent:
7.1
No Default; Representations and Warranties. At the time of each Credit Event and also after giving effect
thereto (other than any Loan made pursuant to Section 2.14 or 2.15) (a) no Default or Event of Default shall have
occurred and be continuing and (b) all representations and warranties made by any Credit Party contained herein or in the other
Credit Documents shall be true and correct in all material respects (provided that any such representations and warranties
which are qualified by materiality, Material Adverse Effect or similar language shall be true and correct in all respects) with
the same effect as though such representations and warranties had been made on and as of the date of such Credit Event (except
where such representations and warranties expressly relate to an earlier date, in which case such representations and warranties
shall have been true and correct in all material respects (provided that any such representations and warranties which are
qualified by materiality, Material Adverse Effect or similar language shall be true and correct in all respects) as of such earlier
date).
7.2
Notice of Borrowing; Letter of Credit Request.
(a)
The Administrative Agent shall have received a Notice of Borrowing meeting the requirements of Section 2.3.
(b)
Prior to the making of each Revolving Credit Loan (other than any Revolving Credit Loan made pursuant to Section
3.4(a)), the Administrative Agent shall have received a Notice of Borrowing meeting the requirements of Section 2.3.
(c)
Prior to the issuance of each Letter of Credit, the Administrative Agent and the Letter of Credit Issuer shall have
received a Letter of Credit Request meeting the requirements of Section 3.2(a).
The acceptance
of the benefits of each Credit Event shall constitute a representation and warranty by each Credit Party to each of the Lenders
that all the applicable conditions specified in Section 7 above have been satisfied as of that time.
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Section 8.
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Representations
and Warranties
|
In
order to induce the Lenders to enter into this Agreement, to make the Loans and issue or participate in Letters of Credit as provided
for herein, the Borrower makes the following representations and warranties to the Lenders, all of which shall survive the execution
and delivery of this Agreement and the making of the Loans and the issuance of the Letters of Credit (it being understood that
the following representations and warranties shall be deemed made with respect to any Foreign Subsidiary only to the extent relevant
under applicable law):
8.1
Corporate Status. Each Credit Party (a) is a duly organized and validly existing corporation, limited liability
company or other entity in good standing (if applicable) under the laws of the jurisdiction of its organization and has the corporate,
limited liability company or other organizational power and authority to own its property and assets and to transact the business
in which it is engaged and (b) has duly qualified and is authorized to do business and is in good standing (if applicable) in all
jurisdictions where it is required to be so qualified, except where the failure to be so qualified would not reasonably be expected
to result in a Material Adverse Effect.
8.2
Corporate Power and Authority. Each Credit Party has the corporate or other organizational power and authority
to execute, deliver and carry out the terms and provisions of the Credit Documents to which it is a party and has taken all necessary
corporate or other organizational action to authorize the execution, delivery and performance of the Credit Documents to which
it is a party. Each Credit Party has duly executed and delivered each Credit Document to which it is a party and each such Credit
Document constitutes the legal, valid, and binding obligation of such Credit Party enforceable in accordance with its terms (provided
that, with respect to the creation and perfection of security interests with respect to Indebtedness, Capital Stock and Stock Equivalents
of Foreign Subsidiaries, only to the extent enforceability of such obligation with respect to which Capital Stock and Stock Equivalents
of Foreign Subsidiaries is governed by the Uniform Commercial Code), except as the enforceability thereof may be limited by bankruptcy,
insolvency or similar laws affecting creditors’ rights generally and subject to general principles of equity.
8.3
No Violation. Neither the execution, delivery or performance by any Credit Party of the Credit Documents to
which it is a party nor compliance with the terms and provisions thereof nor the other transactions contemplated hereby or thereby
will (a) contravene any applicable provision of any material law, statute, rule, regulation, order, writ, injunction or decree
of any court or governmental instrumentality, (b) result in any breach of any of the terms, covenants, conditions or provisions
of, or constitute a default under, or result in the creation or imposition of (or the obligation to create or impose) any Lien
upon any of the property or assets of such Credit Party or any of the Restricted Subsidiaries (other than Liens created under the
Credit Documents or Permitted Liens) pursuant to, the terms of any material indenture, loan agreement, lease agreement, mortgage,
deed of trust, agreement or other material instrument to which such Credit Party or any of the Restricted Subsidiaries is a party
or by which it or any of its property or assets is bound (any such term, covenant, condition or provision, a “Contractual
Requirement”) other than any such breach, default or Lien that would not reasonably be expected to result in a Material
Adverse Effect or (c) violate any provision of the certificate of incorporation, by-laws, articles or other organizational documents
of such Credit Party or any of the Restricted Subsidiaries.
8.4
Litigation. There are no actions, suits or proceedings pending or, to the knowledge of the Borrower, threatened
in writing against the Borrower or any of the Restricted Subsidiaries that would reasonably be expected to result in a Material
Adverse Effect.
8.5
Margin Regulations. Neither the Borrower nor any of its Subsidiaries is engaged principally, or as one of
its important activities, in the business of extending credit for the purpose of buying or carrying margin stock, and no portion
of the proceeds of any credit extension hereunder shall be used in any manner, whether directly or indirectly, that causes or could
reasonably be expected to cause, such credit extension or the application of such proceeds to violate Regulation T, Regulation
U or Regulation X of the Board of Governors or any other regulation thereof or to violate the Securities Exchange Act of 1934,
as amended.
8.6
Governmental Approvals. The execution, delivery and performance of each Credit Document does not require any
consent or approval of, registration or filing with, or other action by, any Governmental Authority, except for (i) such as have
been obtained or made and are in full force and effect, (ii) filings, consents, approvals, registrations and recordings in respect
of the Liens created pursuant to the Security Documents (and to release existing Liens), and (iii) such licenses, approvals, authorizations,
registrations, filings or consents the failure of which to obtain or make would not reasonably be expected to result in a Material
Adverse Effect.
8.7
Investment Company Act. Neither the Borrower nor any Restricted Subsidiary is an “investment company”
within the meaning of the Investment Company Act of 1940, as amended.
8.8
True and Complete Disclosure.
(a)
None of the written factual information and written data (taken as a whole) heretofore or contemporaneously furnished
by or on behalf of the Borrower, any of the Restricted Subsidiaries or any of their respective authorized representatives to the
Administrative Agent, any Joint Lead Arranger and Bookrunner, and/or any Lender on or before the Restatement Effective Date for
purposes of or in connection with this Agreement or any transaction contemplated herein contained any untrue statement of any material
fact or omitted to state any material fact necessary to make such information and data (taken as a whole) not materially misleading
at such time in light of the circumstances under which such information or data was furnished (after giving effect to all supplements
and updates), it being understood and agreed that for purposes of this Section 8.8(a), such factual information and data
shall not include pro forma financial information, projections, estimates (including financial estimates, forecasts, and
other forward-looking information) or other forward looking information and information of a general economic or general industry
nature.
(b)
The projections (including financial estimates, budgets, forecasts, and other forward-looking information) contained
in the information and data referred to in paragraph (a) above were based on good faith estimates and assumptions believed
by such Persons to be reasonable at the time made, it being recognized by the Lenders that such projections as to future events
are not to be viewed as facts and are subject to significant uncertainties and contingencies, many of which are beyond the Borrower’s
control, that no assurance can be given that any particular projections will be realized and that actual results during the period
or periods covered by any such projections may differ from the projected results and such differences may be material.
8.9
Financial Condition; Financial Statements.
(a)
The Historical Financial Statements, in each case present fairly in all material respects the combined financial
position of the Borrower at the respective dates of said information, statements and results of operations for the respective periods
covered thereby. The financial statements referred to in clause (a)(ii) of this Section 8.9 have been prepared in
accordance with GAAP consistently applied except to the extent provided in the notes to said financial statements. As of the Restatement
Effective Date, neither the Borrower nor any Restricted Subsidiary has any material guarantee obligations or contingent liabilities
or unusual forward or long-term commitments, in each case, that are not reflected in the most recent financial statements referred
to in this paragraph, except as would not reasonably be expected to result in a Material Adverse Effect.
(b)
There has been no Material Adverse Effect since December 31, 2018.
Each Lender and
the Administrative Agent hereby acknowledges and agrees that the Borrower and its Subsidiaries may be required to restate Historical
Financial Statements as the result of the implementation of changes in GAAP or IFRS, or the respective interpretation thereof,
and that such restatements will not result in a Default or an Event of Default under the Credit Documents.
8.10
Compliance with Laws; No Default. Each Credit Party is in compliance with all Requirements of Law applicable
to it or its property, except where the failure to be so in compliance would not reasonably be expected to result in a Material
Adverse Effect. No Default has occurred and is continuing.
8.11
Tax Matters. Except as would not reasonably be expected to have a Material Adverse Effect, (a) the Borrower
and each of the Restricted Subsidiaries has filed all Tax returns required to be filed by it and has timely paid all Taxes payable
by it (whether or not shown on a Tax return and including in its capacity as a withholding agent) that have become due, other than
those being contested in good faith and by proper proceedings if it has maintained adequate reserves (in the good faith judgment
of management of the Borrower or such Restricted Subsidiary, as applicable) with respect thereto in accordance with GAAP and (b)
the Borrower and each of the Restricted Subsidiaries has paid, or has provided adequate reserves (in the good faith judgment of
management of the Borrower or such Restricted Subsidiary, as applicable) in accordance with GAAP for the payment of all Taxes not
yet due and payable. There is no current or proposed Tax assessment, deficiency or other claim against the Borrower or any Restricted
Subsidiary that would reasonably be expected to result in a Material Adverse Effect.
8.12
Compliance with ERISA.
(a)
Except as would not reasonably be expected to have a Material Adverse Effect: (i) each Credit Party and each of their
respective ERISA Affiliates is in compliance with the applicable provisions of ERISA and the provisions of the Code relating to
Pension Plans and the regulations and the published interpretation thereunder and (ii) no ERISA Event has occurred or is reasonably
expected to occur.
(b)
Except as would not reasonably be expected to have a Material Adverse Effect, no Foreign Plan Event has occurred
or is reasonably expected to occur.
8.13
Subsidiaries. Schedule 8.13 lists each Subsidiary of the Borrower (and the direct and indirect ownership
interest of the Borrower therein), in each case existing on the Restatement Effective Date after giving effect to the Restatement
Date Transactions.
8.14
Intellectual Property. Each of the Borrower and its Restricted Subsidiaries owns or has the right to use all
Intellectual Property that is used in or otherwise necessary for the operation of their respective businesses as currently conducted,
except where the failure of the foregoing would not reasonably be expected to have a Material Adverse Effect. The operation of
their respective businesses by each of the Borrower and its Restricted Subsidiaries does not infringe upon, misappropriate, violate
or otherwise conflict with the Intellectual Property of any third party, except as would not reasonably be expected to have a Material
Adverse Effect.
8.15
Environmental Laws.
(a)
Except as would not reasonably be expected to have a Material Adverse Effect: (i) each of the Borrower and its Restricted
Subsidiaries and their respective operations and properties are in compliance with all Environmental Laws; (ii) none of the Borrower,
nor any Restricted Subsidiary has received written notice of any Environmental Claim; (iii) none of the Borrower nor any Restricted
Subsidiary is conducting any investigation, removal, remedial or other corrective action pursuant to any Environmental Law at any
location; and (iv) to the knowledge of the Borrower, no underground or above ground storage tank or related piping, or any impoundment
or other disposal area containing Hazardous Materials is located at, on or under any Real Estate currently owned or leased by the
Borrower or any of the Restricted Subsidiaries.
(b)
None of the Borrower or any of the Restricted Subsidiaries has treated, stored, transported, Released or arranged
for disposal or transport for disposal or treatment of Hazardous Materials at, on, under or from any currently or, formerly owned
or operated property nor, to the knowledge of the Borrower, has there been any other Release of Hazardous Materials at, on, under
or from any such properties, in each case, in a manner that would reasonably be expected to have a Material Adverse Effect.
8.16
Properties.
(a)
Each of the Borrower and its Restricted Subsidiaries has good and valid record title to, valid leasehold interests
in, or rights to use, all properties that are necessary for the operation of their respective businesses as currently conducted
and as proposed to be conducted, free and clear of all Liens (other than any Liens permitted by this Agreement) and except where
the failure to have such good title or interest would not reasonably be expected, individually or in the aggregate, to have a Material
Adverse Effect.
(b)
Set forth on Schedule 1.1(a) is a list of each real property owned by any Credit Party as of the Restatement
Effective Date having a Fair Market Value in excess of $5,000,000.
8.17
Solvency. On the Restatement Effective Date (after giving effect to the Restatement Date Transactions, including
the Restatement Date Distribution) immediately following the making of the Additional Term A Loans and after giving effect to the
application of the proceeds of such Additional Term A Loans, the Borrower and its Restricted Subsidiaries on a consolidated basis
will be Solvent; provided that, notwithstanding anything to the contrary set forth herein (including the definition of “Solvent”),
the representation and warranty set forth in this Section 8.17 shall be deemed to be true and correct in all respects to
the extent the Borrower has obtained a solvency opinion from Bay Valuation Advisors, LLC or another third party financial advisory
or accounting firm that is reasonably acceptable to the Administrative Agent and experienced in such matters confirming the solvency
of the Borrower and its Restricted Subsidiaries on a consolidated basis on the Restatement Effective Date immediately following
the making of the Additional Term A Loans and after giving effect to the application of the proceeds of such Additional Term A
Loans (after giving effect to the Restatement Date Transactions, including the Restatement Date Distribution).
8.18
Patriot Act. On the Restatement Effective Date, the Borrower has provided to the Administrative Agent all
information related to the Borrower and its Restricted Subsidiaries (including but not limited to names, addresses and tax identification
numbers (if applicable)) reasonably requested in writing by the Administrative Agent and mutually agreed to be required by the
Patriot Act to be obtained by the Administrative Agent or any Lender and the use of proceeds of the Loans will not violate the
Patriot Act in any material respect.
8.19
OFAC and FCPA.
(a)
The Borrower and its Restricted Subsidiaries will not, directly or indirectly, use the proceeds of the Loans, to
lend, contribute or otherwise make available such proceeds to any subsidiary, joint venture partner or other Person, for the purpose
of unlawfully funding (i) any activities of or business with any Person, or in any country or territory, that, at the time of such
funding, is the subject of Sanctions, or (ii) any other transaction that will result in a violation by any Person (including any
Person participating in the transactions, whether as a underwriter, advisor, investor, lender or otherwise) of Sanctions.
(b)
The Borrower and its Restricted Subsidiaries will not use the proceeds of the Loans directly, or, to the knowledge
of the Borrower, indirectly, for any payments to any governmental official or employee, political party, official of a political
party, candidate for political office, or anyone else acting in an official capacity, in order to obtain, retain or direct business
or obtain any improper advantage, in violation of the United States Foreign Corrupt Practices Act of 1977, as amended (the “FCPA”).
(c)
Except as could not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect,
to the knowledge of the Borrower, neither the Borrower nor the Restricted Subsidiaries has, in the past three years, committed
a violation of applicable regulations of the United States Department of the Treasury’s Office of Foreign Assets Control
(“OFAC”), Title III of the Patriot Act or the FCPA.
(d)
None of the Borrower, the Restricted Subsidiaries or, to the knowledge of the Borrower, any director, officer, employee
or agent of any Credit Party or other Restricted Subsidiary, in each case, is an individual or entity currently on OFAC’s
list of Specially Designated Nationals and Blocked Persons or is the subject of Sanctions administered by OFAC or the U.S. Department
of State, nor is the Borrower or any Restricted Subsidiary located, organized or resident in a country or territory that is the
subject of Sanctions.
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Section 9.
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Affirmative
Covenants.
|
The
Borrower hereby covenants and agrees that on the Closing Date and thereafter, until the Commitments and each Letter of Credit have
terminated or been collateralized in accordance with the terms of this Agreement and the Loans and Unpaid Drawings, together with
interest, Fees and all other Obligations incurred hereunder (other than contingent indemnity obligations, Secured Hedge Obligations
and Secured Cash Management Obligations and Letters of Credit collateralized in accordance with the terms of this Agreement), are
paid in full:
9.1
Information Covenants. The Borrower will furnish to the Administrative Agent (which shall promptly make such
information available to the Lenders in accordance with its customary practice):
(a)
Annual Financial Statements. As soon as available and in any event within five days after the date on which
such financial statements are required to be filed with the SEC (after giving effect to any permitted extensions) (or, if such
financial statements are not required to be filed with the SEC, on or before the date that is 120 days after the end of each such
fiscal year), the consolidated balance sheet of the Borrower and its Restricted Subsidiaries as at the end of each fiscal year,
and the related consolidated statements of operations and cash flows for such fiscal year, setting forth comparative consolidated
and/or combined figures for the preceding fiscal year, all in reasonable detail and prepared in accordance with GAAP, and, in each
case, certified by independent certified public accountants of recognized national standing whose opinion shall not be qualified
as to the scope of audit or as to the status of the Borrower or any of the Material Subsidiaries (or group of Subsidiaries that
together would constitute a Material Subsidiary) as a going concern (other than any exception, explanatory paragraph or qualification,
that is expressly solely with respect to, or expressly resulting solely from, (i) an upcoming maturity date under the Indebtedness,
(ii) any potential inability to satisfy a financial maintenance covenant on a future date or in a future period or (iii) the activities,
operations, financial results, assets or liabilities of any Unrestricted Subsidiary).
(b)
Quarterly Financial Statements. As soon as available and in any event within five days after the date on which
such financial statements are required to be filed with the SEC (after giving effect to any permitted extensions) with respect
to each of the first three quarterly accounting periods in each fiscal year of the Borrower (or, if such financial statements are
not required to be filed with the SEC, on or before the date that is 60 days after the end of each such quarterly accounting period),
the consolidated balance sheet of the Borrower and its Restricted Subsidiaries as at the end of such quarterly period and the related
consolidated statements of operations for such quarterly accounting period and for the elapsed portion of the fiscal year ended
with the last day of such quarterly period, and the related consolidated statement of cash flows for the elapsed portion of the
fiscal year ended with the last day of the applicable quarterly period, and setting forth comparative consolidated and/or combined
figures for the related periods in the prior fiscal year or, in the case of such consolidated balance sheet, for the last day of
the related period in the prior fiscal year, all of which shall be certified by an Authorized Officer of the Borrower as fairly
presenting in all material respects the financial condition, results of operations and cash flows of the Borrower and its Restricted
Subsidiaries as at such date and for such periods in accordance with GAAP (except as noted therein), subject to changes resulting
from normal year-end adjustments and the absence of footnotes.
(c)
Beneficial Ownership Certification. Promptly following any request therefor, information and documentation
reasonably requested by the Administrative Agent or any Lender for purposes of compliance with the Beneficial Ownership Regulation.
(d)
Officer’s Certificates. Not later than five days after the delivery of the financial statements provided
for in Sections 9.1(a) and (b), a certificate of an Authorized Officer of the Borrower to the effect that no Default
or Event of Default exists or, if any Default or Event of Default does exist, specifying the nature and extent thereof, as the
case may be, which certificate shall set forth (i) a specification of any change in the identity of the Restricted Subsidiaries
and the Unrestricted Subsidiaries as at the end of the fiscal year or the fiscal quarter, as the case may be, from the Restricted
Subsidiaries and the Unrestricted Subsidiaries, respectively, identified to the Lenders on the Closing Date or in the most recent
certificate delivered pursuant to this clause (d) in which any such changes were disclosed, as the case may be, and (ii) the
Consolidated Total Debt to Consolidated EBITDA Ratio for such Test Period and the then applicable Status and, in each case, the
underlying calculations in connection therewith. At the time of the delivery of the financial statements provided for in Section
9.1(a), a certificate of an Authorized Officer of the Borrower setting forth changes to the legal name, jurisdiction of formation
and type of entity and, solely with respect to any Credit Party organized in a jurisdiction where an organizational identification
number is required to be included in a Uniform Commercial Code financing statement, organizational number (or equivalent) of any
Credit Party or confirming that there has been no change in such information since the Closing Date or the date of the most recent
certificate delivered pursuant to this clause (d) in which any such changes were disclosed, as the case may be.
(e)
Notice of Default or Litigation. Promptly after an Authorized Officer of the Borrower or any of the Restricted
Subsidiaries obtains knowledge thereof, notice of (i) the occurrence of any event that constitutes a Default or Event of Default,
which notice shall specify the nature thereof, the period of existence thereof and what action the Borrower proposes to take with
respect thereto and (ii) any litigation or governmental proceeding pending against the Borrower or any of the Subsidiaries that
would reasonably be expected to be determined adversely and, if so determined, to result in a Material Adverse Effect.
(f)
Environmental Matters. Promptly after an Authorized Officer of the Borrower or any of the Restricted Subsidiaries
obtains knowledge of any one or more of the following environmental matters, unless such environmental matters would not reasonably
be expected to result in a Material Adverse Effect, notice of:
(i)
any pending or threatened Environmental Claim against any Credit Party or any Real Estate; and
(ii)
the conduct of any investigation, or any removal, remedial or other corrective action in response to the actual or
alleged presence, Release or threatened Release of any Hazardous Material on, at, under or from any Real Estate.
All
such notices shall describe in reasonable detail the nature of the claim, investigation or removal, remedial or other corrective
action in response thereto. The term “Real Estate” shall mean land, buildings, facilities and improvements owned
or leased by any Credit Party.
(g)
Budgets. Within 90 days after the commencement of each fiscal year of the Borrower but prior to an IPO,
a budget of the Borrower in reasonable detail on a quarterly basis for such fiscal year as customarily prepared by management of
the Borrower and limited to a projected consolidated statement of operations and a bridge to projected Consolidated EBITDA (collectively,
the “Projections”), which Projections shall in each case be accompanied by a certificate of an Authorized Officer
of the Borrower stating that such Projections have been prepared in good faith based on assumptions that were believed to be reasonable
at the time of preparation of such Projections, it being understood that actual results may vary from such Projections.
(h)
Other Information. Promptly upon filing thereof, copies of any filings (including on Form 10-K, 10-Q or 8-K)
or registration statements (other than drafts of pre-effective versions of registration statements) with, and reports to, the SEC
or any analogous Governmental Authority in any relevant jurisdiction by the Borrower or any of the Restricted Subsidiaries (other
than amendments to any registration statement (to the extent such registration statement, in the form it becomes effective, is
delivered to the Administrative Agent), exhibits to any registration statement and, if applicable, any registration statements
on Form S-8) and copies of all financial statements, proxy statements, notices, and reports that the Borrower or any of the Restricted
Subsidiaries shall send to the holders of any publicly issued debt of the Borrower and/or any of the Restricted Subsidiaries, in
their capacity as such holders, lenders or agents (in each case to the extent not theretofore delivered to the Administrative Agent
pursuant to this Agreement) and, with reasonable promptness, such other information (financial or otherwise) as the Administrative
Agent on its own behalf or on behalf of any Lender (acting through the Administrative Agent) may reasonably request in writing
from time to time; provided, that none of the Borrower nor any Restricted Subsidiary will be required to disclose or permit
the inspection or discussion of, any document, information or other matter (i) that constitutes non-financial trade secrets or
non-financial proprietary information, (ii) in respect of which disclosure to the Administrative Agent or any Lender (or their
respective contractors) is prohibited by law, or any binding agreement, (iii) that is subject to attorney client or similar privilege
or constitutes attorney work product or (iv) that is otherwise subject to Section 13.16.
Notwithstanding
the foregoing, the obligations in clauses (a) and (b) of this Section 9.1 may be satisfied with respect to
financial information of the Borrower and its Restricted Subsidiaries by furnishing (A) the applicable financial statements of
the Borrower or any direct or indirect parent of the Borrower or (B) the Borrower’s (or any direct or indirect parent
thereof), as applicable, Form 10-K or 10-Q, as applicable, filed with the SEC; provided that, with respect to each of subclauses
(A) and (B) of this paragraph, to the extent such information relates to a parent of the Borrower, such information
is accompanied by consolidating or other information that explains in reasonable detail the differences between the information
relating to such parent, on the one hand, and the information relating to the Borrower and its Restricted Subsidiaries on a standalone
basis, on the other hand.
Documents
required to be delivered pursuant to clauses (a), (b), and (h) of this Section 9.1 (to the extent any
such documents are included in materials otherwise filed with the SEC) may be delivered electronically and if so delivered, shall
be deemed to have been delivered on the earliest date on which (i) the Borrower posts such documents, or provides a link thereto
on the Borrower’s website on the Internet; (ii) such documents are posted on the Borrower’s behalf on IntraLinks/IntraAgency
or another website, if any, to which each Lender and the Administrative Agent have access (whether a commercial, third-party website
or whether sponsored by the Administrative Agent), or (iii) such financial statements and/or other documents are posted on the
SEC’s website on the internet at www.sec.gov; provided, that, (A) the Borrower shall, at the request of the Administrative
Agent, continue to deliver copies (which delivery may be by electronic transmission ) of such documents to the Administrative Agent
and (B) the Borrower shall notify (which notification may be by facsimile or electronic transmission) the Administrative Agent
of the posting of any such documents on any website described in this paragraph. Each Lender shall be solely responsible for timely
accessing posted documents or requesting delivery of paper copies of such documents from the Administrative Agent and maintaining
its copies of such documents.
Each
Credit Party hereby acknowledges and agrees that, unless the Borrower notifies the Administrative Agent in advance, all financial
statements and certificates furnished pursuant to Sections 9.1(a), (b) and (d) above are hereby deemed to
be suitable for distribution, and to be made available, to all Lenders and may be treated by the Administrative Agent and the Lenders
as not containing any material nonpublic information.
9.2
Books, Records, and Inspections. The Borrower will, and will cause each Restricted Subsidiary to, permit officers
and designated representatives of the Administrative Agent or the Required Lenders to visit and inspect any of the properties or
assets of the Borrower and any such Subsidiary in whomsoever’s possession to the extent that it is within such party’s
control to permit such inspection (and shall use commercially reasonable efforts to cause such inspection to be permitted to the
extent that it is not within such party’s control to permit such inspection), and to examine the books and records of the
Borrower and any such Subsidiary and discuss the affairs, finances and accounts of the Borrower and of any such Subsidiary with,
and be advised as to the same by, its and their officers and independent accountants, all at such reasonable times and intervals
and to such reasonable extent as the Administrative Agent or the Required Lenders may desire (and subject, in the case of any such
meetings or advice from such independent accountants, to such accountants’ customary policies and procedures); provided
that, excluding any such visits and inspections during the continuation of an Event of Default, (a) only the Administrative Agent
on behalf of the Required Lenders may exercise rights of the Administrative Agent and the Lenders under this Section 9.2,
(b) the Administrative Agent shall not exercise such rights more than one time in any calendar year, which such visit will be at
the Borrower’s expense, and (c) notwithstanding anything to the contrary in this Section 9.2, none of the Borrower
or any of the Restricted Subsidiaries will be required to disclose, permit the inspection, examination or making copies or abstracts
of, or discussion of, any document, information or other matter that (i) constitutes non-financial trade secrets or non-financial
proprietary information, (ii) in respect of which disclosure to the Administrative Agent or any Lender (or their respective representatives
or contractors) is prohibited by law or any agreement binding on a third-party or (iii) is subject to attorney-client or similar
privilege or constitutes attorney work product; provided, further, that when an Event of Default exists, the Administrative
Agent (or any of its respective representatives or independent contractors) or any representative of the Required Lenders may do
any of the foregoing at the expense of the Borrower at any time during normal business hours and upon reasonable advance notice.
The Administrative Agent and the Required Lenders shall give the Borrower the opportunity to participate in any discussions with
the Borrower’s independent public accountants.
9.3
Maintenance of Insurance. (a) The Borrower will, and will cause each Material Subsidiary to, at all times
maintain in full force and effect, pursuant to self-insurance arrangements or with insurance companies that the Borrower believes
(in the good faith judgment of the management of the Borrower) are financially sound and responsible at the time the relevant coverage
is placed or renewed, insurance in at least such amounts (after giving effect to any self-insurance which the Borrower believes
(in the good faith judgment of management of the Borrower) is reasonable and prudent in light of the size and nature of its business
and the availability of insurance on a cost-effective basis) and against at least such risks (and with such risk retentions) as
the Borrower believes (in the good faith judgment of management of the Borrower) is reasonable and prudent in light of the size
and nature of its business and the availability of insurance on a cost-effective basis; and will furnish to the Administrative
Agent, promptly following written request from the Administrative Agent, information presented in reasonable detail as to the insurance
so carried and (b) if at any time the area in which any improvements located on any Mortgaged Property is designated by the Federal
Emergency Management Agency (or any successor agency) as a special flood hazard area with respect to which flood insurance has
been made available under the Flood Insurance Laws, then the Borrower shall, or shall cause each applicable Credit Party to (i)
maintain, or cause to be maintained, with a financially sound and reputable insurer, flood insurance in an amount and otherwise
sufficient to comply with all applicable rules and regulations promulgated pursuant to the Flood Insurance Laws, (ii) cooperate
with the Administrative Agent and provide information reasonably required by the Administrative Agent to comply with the Flood
Insurance Laws and (iii) deliver to the Administrative Agent evidence of such compliance in form and substance reasonably acceptable
to the Administrative Agent, including, without limitation, evidence of annual renewals of such insurance. Each such policy of
general liability (including excess and umbrella general liability), property or casualty insurance shall (i) in the case of each
general liability (including excess and umbrella general liability) insurance policy, name the Collateral Agent, on behalf of the
Secured Parties as an additional insured thereunder as its interests may appear and (ii) in the case of each property or casualty
insurance policy, contain a loss payable clause or endorsement that names the Collateral Agent, on behalf of the Secured Parties
as the loss payee thereunder; provided that, unless an Event of Default shall have occurred and be continuing subject to
Section 5.2, (A) all proceeds from insurance policies shall be paid to the Borrower or applicable Guarantor, (B) to the extent
the Collateral Agent receives any proceeds, the Collateral Agent shall, promptly following receipt of an Officer’s Certificate
of the Borrower certifying that no Event of Default has occurred and is continuing, turn over to the Borrower any amounts received
by it as an additional insured or loss payee under any property insurance maintained by the Borrower or any of its Subsidiaries,
and (C) the Collateral Agent agrees that the Borrower and its Subsidiaries shall have the sole right to adjust or settle any claims
under such insurance.
9.4
Payment of Taxes. Except as would not reasonably be expected to have a Material Adverse Effect, the Borrower
will pay and discharge, and will cause each of the Restricted Subsidiaries to pay and discharge, all material Taxes imposed upon
it (including in its capacity as a withholding agent) or upon its income or profits, or upon any properties belonging to it, prior
to the date on which material penalties attach thereto, and all lawful material claims in respect of any Taxes imposed, assessed
or levied that, if unpaid, would reasonably be expected to become a material Lien upon any properties of the Borrower or any of
the Restricted Subsidiaries.
9.5
Preservation of Existence; Consolidated Corporate Franchises. The Borrower will, and will cause each Material
Subsidiary to, take all actions necessary (a) to preserve and keep in full force and effect its existence, organizational rights
and authority and (b) to maintain its rights, privileges (including its good standing (if applicable)), permits, licenses and franchises
necessary in the normal conduct of its business, in each case, except to the extent that the failure to do so would not reasonably
be expected to have a Material Adverse Effect; provided, however, that the Borrower and its Subsidiaries may consummate
any transaction permitted under Permitted Investments and Sections 10.2, 10.3, 10.4, or 10.5.
9.6
Compliance with Statutes, Regulations, Etc. The Borrower will, and will cause each Restricted Subsidiary to,
(a) comply with all applicable laws, rules, regulations, and orders applicable to it or its property, including, without limitation,
applicable laws administered by OFAC, the FCPA and the Patriot Act the rules and regulations promulgated thereunder, and all governmental
approvals or authorizations required to conduct its business, and to maintain all such governmental approvals or authorizations
in full force and effect, (b) comply with, and use commercially reasonable efforts to ensure compliance by all tenants and subtenants,
if any, with, all Environmental Laws, and obtain and comply with and maintain, and use commercially reasonable efforts to ensure
that all tenants and subtenants obtain and comply with and maintain, any and all licenses, approvals, notifications, registrations
or permits required by Environmental Laws, and (c) conduct and complete all investigations, studies, sampling and testing, and
all remedial, removal, and other actions required under Environmental Laws and promptly comply with all lawful orders and directives
of all Governmental Authorities regarding Environmental Laws, other than such orders and directives which are being timely contested
in good faith by proper proceedings, except in each case of clauses (a), (b), and (c) of this Section 9.6,
where the failure to do so would not reasonably be expected to result in a Material Adverse Effect.
9.7
ERISA. (a) The Borrower will furnish to the Administrative Agent promptly following receipt thereof, copies
of any documents described in Sections 101(k) or 101(l) of ERISA that any Credit Party or any of its Subsidiaries may request with
respect to any Multiemployer Plan to which a Credit Party or any of its Subsidiaries is obligated to contribute; provided
that if the Credit Parties or any of their Subsidiaries have not requested such documents or notices from the administrator or
sponsor of the applicable Multiemployer Plan, then, upon reasonable request of the Administrative Agent, the Credit Parties shall
promptly make a request for such documents or notices from such administrator or sponsor and the Borrower shall provide copies
of such documents and notices to the Administrative Agent promptly after receipt thereof; provided, further, that
the rights granted to the Administrative Agent in this Section 9.7(a) shall be exercised not more than once with respect
to the same Multiemployer Plan during any applicable plan year, and (b) the Borrower will notify the Administrative Agent
promptly following the occurrence of any ERISA Event or Foreign Plan Event that, alone or together with any other ERISA Events
or Foreign Plan Events that have occurred, would reasonably be expected to result in liability of any Credit Party that would reasonably
be expected to have a Material Adverse Effect.
9.8
Maintenance of Properties. The Borrower will, and will cause each of the Restricted Subsidiaries to, keep
and maintain all property material to the conduct of its business in good working order and condition, ordinary wear and tear,
casualty, and condemnation excepted, except to the extent that the failure to do so would not reasonably be expected to have a
Material Adverse Effect.
9.9
Transactions with Affiliates. The Borrower will conduct, and cause each of the Restricted Subsidiaries to
conduct, all transactions with any of its Affiliates (other than the Borrower and its Restricted Subsidiaries) involving aggregate
payments or consideration in excess of the greater of (x) $8,250,000 and (y) 5.5% of TTM Consolidated for any individual transaction
or series of related transactions on terms that are at least substantially as favorable to the Borrower or such Restricted Subsidiary
as it would obtain in a comparable arm’s-length transaction with a Person that is not an Affiliate, as determined by the
board of directors of the Borrower or such Restricted Subsidiary in good faith; provided that the foregoing restrictions
shall not apply to (a) [reserved], (b) transactions permitted by Section 10.5, (c) consummation of the Transactions and
the payment of the Transaction Expenses, (d) the issuance of Capital Stock or Stock Equivalents of the Borrower (or any direct
or indirect parent thereof) or any of its Subsidiaries not otherwise prohibited by the Credit Documents, (e) loans, advances and
other transactions between or among the Borrower, any Restricted Subsidiary or any joint venture (regardless of the form of legal
entity) in which the Borrower or any Subsidiary has invested (and which Subsidiary or joint venture would not be an Affiliate of
the Borrower but for the Borrower’s or a Subsidiary’s ownership of Capital Stock or Stock Equivalents in such joint
venture or Subsidiary) to the extent permitted under Section 10, (f) employment and severance arrangements between the Borrower
and its Restricted Subsidiaries and their respective employees, directors, officers, managers, consultants or independent contractors
(including management and employee benefit plans or agreements, stock option plans and other compensatory arrangements) in the
ordinary course of business (including loans and advances in connection therewith), (g) [reserved], (h) the payment of customary
fees and reasonable out-of-pocket costs to, and indemnities provided on behalf of, employees, directors, officers, managers, consultants
or independent contractors of the Borrower (or any direct or indirect parent thereof) and the Subsidiaries in the ordinary course
of business to the extent attributable to the ownership or operation of the Borrower and the Subsidiaries, (i) transactions undertaken
pursuant to membership in a purchasing consortium, (j) transactions pursuant to any agreement or arrangement as in effect as of
the Restatement Effective Date, or any amendment, modification, supplement or replacement thereto (so long as any such amendment,
modification, supplement or replacement is not disadvantageous in any material respect to the Lenders when taken as a whole as
compared to the applicable agreement as in effect on the Restatement Effective Date as determined by the Borrower in good faith),
(k) consummation of the Restatement Date Transactions and the payment of the Restatement Date Transaction Expenses, (l) transactions
by Borrower and its Subsidiaries consummated or undertaken, or otherwise subject to any IPO Reorganization Transactions, (m) the
existence and performance of agreements and transactions with any Unrestricted Subsidiary that were entered into prior to the designation
of a Restricted Subsidiary as such Unrestricted Subsidiary to the extent that the transaction was permitted at the time that it
was entered into with such Restricted Subsidiary and transactions entered into by an Unrestricted Subsidiary with an Affiliate
prior to the redesignation of any such Unrestricted Subsidiary as a Restricted Subsidiary; provided that such transaction
was not entered into in contemplation of such designation or redesignation, as applicable, (n) Affiliate repurchases of the Loans
or Commitments to the extent permitted hereunder and the holding of such Loans or Commitments and the payments and other transactions
contemplated herein in respect thereof and (o) any customary transactions with a Receivables Subsidiary effected as part of a Receivables
Facility.
9.10
End of Fiscal Years. The Borrower will, for financial reporting purposes, cause each of its, and each of the
Restricted Subsidiaries’, fiscal years to end on dates consistent with past practice; provided, however, that
the Borrower may, upon written notice to the Administrative Agent change the financial reporting convention specified above to
(x) align the dates of such fiscal year and for any Restricted Subsidiary whose fiscal years end on dates different from those
of the Borrower or (y) any other financial reporting convention (including a change of fiscal year) reasonably acceptable (such
consent not to be unreasonably withheld or delayed) to the Administrative Agent, in which case the Borrower and the Administrative
Agent will, and are hereby authorized by the Lenders to, make any adjustments to this Agreement that are necessary in order to
reflect such change in financial reporting.
9.11
Additional Guarantors and Grantors. Subject to the Perfection Exceptions and any applicable limitations set
forth in the Security Documents, the Borrower will cause each direct or indirect Subsidiary (other than any Excluded Subsidiary)
formed or otherwise purchased or acquired after the Closing Date (including pursuant to a Permitted Acquisition), and each other
Subsidiary that ceases to constitute an Excluded Subsidiary, within 60 days from the date of such formation, acquisition or cessation,
as applicable (or such longer period as the Administrative Agent may agree in its reasonable discretion), and the Borrower may
at its option cause any Domestic Subsidiary, to execute a supplement to each of the Guarantee, the Pledge Agreement and the Security
Agreement in order to become a Guarantor under the Guarantee and a grantor under such Security Documents or, to the extent reasonably
requested by the Collateral Agent, enter into a new Security Document substantially consistent with the analogous existing Security
Documents and otherwise in form and substance reasonably satisfactory to the Collateral Agent and take all other action reasonably
requested by the Collateral Agent to grant a perfected security interest in its assets to substantially the same extent as created
and perfected by the Credit Parties on the Closing Date and pursuant to Section 9.14(d) in the case of such Credit Parties.
For the avoidance of doubt, no Credit Party or any Restricted Subsidiary that is a Domestic Subsidiary shall be required to take
any action outside the United States to perfect any security interest in the Collateral (including the execution of any agreement,
document or other instrument governed by the law of any jurisdiction other than the United States, any State thereof or the District
of Columbia).
9.12
Pledge of Additional Stock and Evidence of Indebtedness. Subject to the Perfection Exceptions and any applicable
limitations set forth in the Security Documents and other than (x) when in the reasonable determination of the Administrative Agent
and the Borrower (as agreed to in writing), the cost or other consequences of doing so would be excessive in view of the benefits
to be obtained by the Lenders therefrom or (y) to the extent doing so would reasonably be expected to result in material adverse
Tax consequences as reasonably determined by the Borrower in consultation with the Administrative Agent, the Borrower will and
will cause (i) all certificates representing Capital Stock and Stock Equivalents of any Restricted Subsidiary (other than any Excluded
Stock and Stock Equivalents) held directly by the Borrower or any other Credit Party, (ii) all evidences of Indebtedness in
excess of $10,000,000 received by the Borrower or any of the Guarantors in connection with any disposition of assets pursuant to
Section 10.4(b), and (iii) any promissory notes executed after the Closing Date evidencing Indebtedness in excess of $10,000,000
that is owing to the Borrower or any other Credit Party, in each case, to be delivered to the Collateral Agent as security for
the Obligations accompanied by undated instruments of transfer executed in blank pursuant to the terms of the Security Documents.
Notwithstanding the foregoing any promissory note among the Borrower and/or its Subsidiaries need not be delivered to the Collateral
Agent so long as (i) a global intercompany note superseding such promissory note has been delivered to the Collateral Agent, (ii)
such promissory note is not delivered to any other party other than the Borrower or any other Credit Party, in each case, owed
money thereunder, and (iii) such promissory note indicates on its face that it is subject to the security interest of the Collateral
Agent.
9.13
Use of Proceeds.
(a)
The Borrower will use the proceeds of the Additional Term A Loans, together with cash on hand of the Borrower, to
finance the Restatement Date Distribution and to pay Restatement Date Transaction Expenses.
(b)
The Borrower will use Letters of Credit and Revolving Loans for working capital and general corporate purposes (including
any transaction not prohibited by the Credit Documents).
9.14
Further Assurances.
(a)
Subject to the Perfection Exceptions and the terms of Sections 9.11 and 9.12, this Section 9.14
and the Security Documents, the Borrower will, and will cause each other Credit Party to, execute any and all further documents,
financing statements, agreements, and instruments, and take all such further actions (including the filing and recording of financing
statements, fixture filings, mortgages, deeds of trust, and other documents) that may be required under any applicable law, or
that the Collateral Agent or the Required Lenders may reasonably request, in order to grant, preserve, protect, and perfect the
validity and priority of the security interests created or intended to be created by the applicable Security Documents, all at
the expense of the Borrower and its Restricted Subsidiaries.
(b)
Subject to the Perfection Exceptions and any applicable limitations set forth in the Security Documents and other
than (x) when in the reasonable determination of the Administrative Agent and the Borrower (as agreed to in writing), the cost
or other consequences of doing so would be excessive in view of the benefits to be obtained by the Lenders therefrom or (y) to
the extent doing so would result in material adverse Tax consequences as reasonably determined by the Borrower in consultation
with the Administrative Agent, if any assets (other than Excluded Property) (including any real estate or improvements thereto
or any interest therein but excluding Capital Stock and Stock Equivalents of any Subsidiary and excluding any real estate which
the Borrower or applicable Credit Party intends to dispose of pursuant to a Permitted Sale Leaseback so long as actually disposed
of within 270 days of acquisition (or such longer period as the Administrative Agent may reasonably agree)) with a book value in
excess of $5,000,000 (at the time of acquisition) are acquired by the Borrower or any other Credit Party after the Closing Date
(other than assets constituting Collateral under a Security Document that become subject to the Lien of the applicable Security
Document upon acquisition thereof) that are of a nature secured by a Security Document or that constitute a fee interest in real
property in the United States, the Borrower will notify the Collateral Agent, and, if requested by the Collateral Agent, the Borrower
will cause such assets to be subjected to a Lien securing the Obligations and will take, and cause the other applicable Credit
Parties to take, such actions as shall be necessary or reasonably requested by the Collateral Agent, as soon as commercially reasonable
but in no event later than 90 days, unless extended by the Administrative Agent in its sole discretion, to grant and perfect such
Liens consistent with the applicable requirements of the Security Documents, including actions described in clause (a) of
this Section 9.14.
(c)
Any Mortgage delivered to the Administrative Agent in accordance with the preceding clause (b) shall, if requested
by the Collateral Agent, be received as soon as commercially reasonable but in no event later than 90 days (except as set forth
in the preceding clause (b)), unless extended by the Administrative Agent acting reasonably and accompanied by (x) a policy
or policies (or an unconditional binding commitment therefor to be replaced by a final title policy) of title insurance (each a
“Title Policy”) issued by a nationally recognized title insurance company, in such amounts as reasonably acceptable
to the Administrative Agent not to exceed the book value of the applicable Mortgaged Property, insuring the Lien of each Mortgage
as a valid first Lien on the Mortgaged Property described therein, free of any other Liens except as expressly permitted by Section
10.2 or as otherwise permitted by the Administrative Agent and otherwise in form and substance reasonably acceptable to the
Administrative Agent and the Borrower, together with such endorsements, coinsurance and reinsurance as the Administrative Agent
may reasonably request but only to the extent such endorsements are (i) available in the relevant jurisdiction (provided
in no event shall the Administrative Agent request a creditors’ rights endorsement) and (ii) available at commercially reasonable
rates, (y) an opinion of local counsel to the applicable Credit Party in form and substance reasonably acceptable to the Administrative
Agent (with respect to, among other things, enforceability and due authorization, execution and delivery of the applicable Mortgage),
(z) a completed “Life-of-Loan” Federal Emergency Management Agency Standard Flood Hazard Determination, and if any
improvements on such Mortgaged Property are located in a special flood hazard area, (i) a notice about special flood hazard area
status and flood disaster assistance duly executed by the applicable Credit Parties and (ii) certificates of insurance evidencing
the insurance required by Section 9.3 in form and substance reasonably satisfactory to the Administrative Agent, each of
which shall (I) be endorsed or otherwise amended to include a “standard” or “New York” lender’s loss
payable or mortgagee endorsement (as applicable), (II) name the Collateral Agent, on behalf of the Secured Parties, as additional
insured or loss payee/mortgagee (as applicable), (III) identify the address of each property located in a special flood hazard
area, indicate the applicable flood zone designation, the flood insurance coverage and the deductible relating thereto, (IV) provide
that the insurer will give the Administrative Agent 45 days’ written notice of cancellation or non-renewal and (V) shall
be otherwise in form and substance reasonably satisfactory to the Administrative Agent, and (aa) an ALTA survey in a form and substance
reasonably acceptable to the Collateral Agent or such existing survey together with a no-change affidavit sufficient for the title
company to remove all standard survey exceptions from the Title Policy related to such Mortgaged Property and issue the endorsements
required in (x) above.
(d)
Post-Closing Covenant. The Borrower agrees that it will, or will cause its relevant Subsidiaries to, complete
each of the actions described on Schedule 9.14 as soon as commercially reasonable and by no later than the date set forth
in Schedule 9.14 with respect to such action or such later date as the Administrative Agent may reasonably agree.
9.15
Lines of Business. The Borrower and its Restricted Subsidiaries, taken as a whole, will not fundamentally
and substantively alter the character of their business, taken as a whole, from the business conducted by the Borrower and the
Subsidiaries, taken as a whole, on the Closing Date and other business activities which are extensions thereof or otherwise incidental,
synergistic, reasonably related, or ancillary to any of the foregoing (and non-core incidental businesses acquired in connection
with any Permitted Acquisition or Permitted Investment).
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Section 10.
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Negative
Covenants
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The
Borrower hereby covenants and agrees that on the Closing Date and thereafter, until the Commitments and each Letter of Credit have
terminated or been collateralized in accordance with the terms of this Agreement and the Loans and Unpaid Drawings, together with
interest, Fees, and all other Obligations incurred hereunder (other than contingent indemnity obligations, Secured Hedge Obligations
and Secured Cash Management Obligations and Letters of Credit, collateralized in accordance with the terms of this Agreement),
are paid in full:
10.1
Limitation on Indebtedness. The Borrower will not, and will not permit any Restricted Subsidiary to create,
incur, issue, assume, guarantee or otherwise become liable, contingently or otherwise (collectively, “incur”
and collectively, an “incurrence”) with respect to any Indebtedness (including Acquired Indebtedness) and the
Borrower will not issue any shares of Disqualified Stock and will not permit any Restricted Subsidiary to issue any shares of Disqualified
Stock or, in the case of Restricted Subsidiaries that are not Guarantors, preferred stock; provided that the Borrower and
its Restricted Subsidiaries may incur Indebtedness (including Acquired Indebtedness) or issue shares of Disqualified Stock, and
any Restricted Subsidiary may incur Permitted Other Indebtedness (including Acquired Indebtedness), issue shares of Disqualified
Stock and issue shares of preferred stock, if, after giving effect thereto on a Pro Forma Basis, the Borrower is in compliance
with the Consolidated Total Debt to Consolidated EBITDA Ratio set forth in Section 10.7; provided, further,
that the amount of Indebtedness (other than Acquired Indebtedness), Disqualified Stock and preferred stock that may be incurred
pursuant to the foregoing, together with any amounts incurred under Section 10.1(n)(x) by Restricted Subsidiaries that are
not Guarantors and any amounts incurred pursuant to clause (r) below, shall not exceed the greater of (x) $52,500,000 and
(y) 35.0% of TTM Consolidated EBITDA at any one time outstanding.
The
foregoing limitations will not apply to:
(a)
Indebtedness arising under the Credit Documents;
(b)
[Reserved];
(c)
(i) Indebtedness (including any unused commitment) outstanding on the Closing Date listed on Schedule 10.1
and (ii) intercompany Indebtedness (including any unused commitment) outstanding on the Restatement Effective Date listed on Schedule
10.1 (other than intercompany Indebtedness owed by a Credit Party to another Credit Party);
(d)
Indebtedness (including Capitalized Lease Obligations), Disqualified Stock and preferred stock incurred by the Borrower
or any Restricted Subsidiary, to finance the purchase, lease, construction, installation, maintenance, replacement or improvement
of property (real or personal) or equipment that is used or useful in a Similar Business, whether through the direct purchase of
assets or the Capital Stock of any Person owning such assets and Indebtedness arising from the conversion of the obligations of
the Borrower or any Restricted Subsidiary under or pursuant to any “synthetic lease” transactions to on-balance sheet
Indebtedness of the Borrower or such Restricted Subsidiary, in an aggregate principal amount which, when aggregated with the principal
amount of all other Indebtedness, Disqualified Stock and preferred stock then outstanding and incurred pursuant to this clause
(d) and all Refinancing Indebtedness incurred to refinance any other Indebtedness, Disqualified Stock and preferred stock incurred
pursuant to this clause (d), does not exceed the greater of (x) $37,500,000 and (y) 25.0% of TTM Consolidated EBITDA at
the time of incurrence; provided that Capitalized Lease Obligations incurred by the Borrower or any Restricted Subsidiary
pursuant to this clause (d) in connection with a Permitted Sale Leaseback shall not be subject to the foregoing limitation
so long as the proceeds of such Permitted Sale Leaseback are used by the Borrower or such Restricted Subsidiary in accordance with
Section 5.2(a);
(e)
Indebtedness incurred by the Borrower or any Restricted Subsidiary (including letter of credit obligations consistent
with past practice constituting reimbursement obligations with respect to letters of credit issued in the ordinary course of business),
in respect of workers’ compensation claims, deferred compensation, performance or surety bonds, health, disability or other
employee benefits or property, casualty or liability insurance or self-insurance or other Indebtedness with respect to reimbursement
or indemnification type obligations regarding workers’ compensation claims, deferred compensation, performance or surety
bonds, health, disability or other employee benefits or property, casualty or liability insurance or self-insurance;
(f)
Indebtedness arising from agreements of the Borrower or a Restricted Subsidiary providing for indemnification, adjustment
of purchase price, earnout or similar obligations, in each case, incurred or assumed in connection with the acquisition or disposition
of any business, assets or a Subsidiary or other Person, other than guarantees of Indebtedness incurred by any Person acquiring
all or any portion of such business, assets or a Subsidiary for the purpose of financing such acquisition;
(g)
Indebtedness of the Borrower to a Restricted Subsidiary; provided that any such Indebtedness owing to a Restricted
Subsidiary that is not the Borrower or a Guarantor is subordinated in right of payment to the Borrower’s Guarantee; provided,
further, that any subsequent issuance or transfer of any Capital Stock or any other event which results in any such Restricted
Subsidiary ceasing to be a Restricted Subsidiary or any other subsequent transfer of any such Indebtedness (except to another Borrower
or another Restricted Subsidiary) shall be deemed, in each case to be an incurrence of such Indebtedness not permitted by this
clause;
(h)
Indebtedness of a Restricted Subsidiary owing to the Borrower or any Restricted Subsidiary; provided that
if the Borrower or a Guarantor incurs such Indebtedness owing to a Restricted Subsidiary that is not the Borrower or a Guarantor,
such Indebtedness is subordinated in right of payment to the Obligations and to the Guarantee of such Guarantor as the case may
be; provided, further, that any subsequent transfer of any such Indebtedness (except to the Borrower or another Restricted
Subsidiary) shall be deemed, in each case to be an incurrence of such Indebtedness not permitted by this clause;
(i)
shares of preferred stock of a Restricted Subsidiary issued to the Borrower or another Restricted Subsidiary; provided
that any subsequent issuance or transfer of any Capital Stock or any other event which results in any such Restricted Subsidiary
ceasing to be a Restricted Subsidiary or any other subsequent transfer of any such shares of preferred stock (except to the Borrower
or another Restricted Subsidiary) shall be deemed in each case to be an issuance of such shares of preferred stock not permitted
by this clause;
(j)
Hedging Obligations (excluding Hedging Obligations entered into for speculative purposes);
(k)
obligations in respect of self-insurance, performance, bid, appeal, and surety bonds and completion guarantees and
similar obligations provided by the Borrower or any Restricted Subsidiary or obligations in respect of letters of credit, bank
guarantees or similar instruments related thereto, in each case, in the ordinary course of business or consistent with past practice;
(l)
(i) Indebtedness, Disqualified Stock and preferred stock of the Borrower or any Restricted Subsidiary in an aggregate
principal amount or liquidation preference up to 100% of the net cash proceeds received by the Borrower since immediately after
the Closing Date from the issue or sale of Equity Interests of the Borrower or cash contributed to the capital of the Borrower
(in each case, other than Excluded Contributions, any Cure Amount or proceeds of Disqualified Stock or sales of Equity Interests
to the Borrower or any of its Subsidiaries) as determined in accordance with Sections 10.5(a)(iii)(B) and 10.5(a)(iii)(C)
to the extent such net cash proceeds or cash have not been applied pursuant to such clauses to make Restricted Payments or to make
other Investments, payments or exchanges pursuant to Section 10.5(b) or to make Permitted Investments (other than Permitted
Investments specified in clauses (a) and (c) of the definition thereof) and (ii) Indebtedness, Disqualified Stock
or preferred stock of the Borrower or any Restricted Subsidiary not otherwise permitted hereunder in an aggregate principal amount
or liquidation preference, which when aggregated with the principal amount and liquidation preference of all other Indebtedness,
Disqualified Stock and preferred stock then outstanding and incurred pursuant to this clause (l)(ii), does not at any one
time outstanding exceed the greater of (x) $52,500,000 and (y) 35.0% of TTM Consolidated EBITDA at the time of incurrence (it being
understood that any Indebtedness, Disqualified Stock or preferred stock incurred pursuant to this clause (l)(ii) shall cease
to be deemed incurred or outstanding for purposes of this clause (l)(ii) but shall be deemed incurred for the purposes of
the first paragraph of this Section 10.1 from and after the first date on which the Borrower or such Restricted Subsidiary
could have incurred such Indebtedness, Disqualified Stock or preferred stock under the first paragraph of this Section 10.1
without reliance on this clause (l)(ii));
(m)
the incurrence or issuance by the Borrower or any Restricted Subsidiary of Indebtedness, Disqualified Stock or preferred
stock which serves to refinance any Indebtedness, Disqualified Stock or preferred stock incurred as permitted under the first paragraph
of this Section 10.1 and clause (c) above, clause (l)(i), this clause (m) and clause (n) below
or any Indebtedness, Disqualified Stock or preferred stock issued to so refinance, replace, refund, extend, renew, defease, restructure,
amend, restate or otherwise modify (collectively, “refinance”) such Indebtedness, Disqualified Stock or preferred
stock (the “Refinancing Indebtedness”) prior to its respective maturity; provided, that such Refinancing
Indebtedness (1) has a weighted average life to maturity at the time such Refinancing Indebtedness is incurred which is not less
than the remaining weighted average life to maturity of the Indebtedness, Disqualified Stock or preferred stock being refinanced,
(2) to the extent such Refinancing Indebtedness refinances (i) Indebtedness that is unsecured or secured by a Lien ranking
junior to the Liens securing the Obligations, such Refinancing Indebtedness is unsecured or secured by a Lien ranking junior to
the Liens securing the Obligations, (ii) Disqualified Stock or preferred stock, such Refinancing Indebtedness must be Disqualified
Stock or preferred stock, respectively, and (iii) Indebtedness subordinated to the Obligations, such Refinancing Indebtedness is
subordinated to the Obligations at least to the same extent as the Indebtedness being refinanced and (3) shall not include
Indebtedness, Disqualified Stock or preferred stock of a Subsidiary of the Borrower that is not a Guarantor that refinances Indebtedness,
Disqualified Stock or preferred stock of the Borrower or a Guarantor;
(n)
Indebtedness, Disqualified Stock or preferred stock of (x) the Borrower or a Restricted Subsidiary incurred or issued
to finance an acquisition, merger, or consolidation; provided that the amount of Indebtedness (other than Acquired Indebtedness),
Disqualified Stock and preferred stock that may be incurred pursuant to the foregoing, together with any amounts incurred under
the first paragraph of this Section 10.1 by Restricted Subsidiaries that are not Guarantors and any amounts incurred pursuant
to clause (r) below, shall not exceed the greater of (x) $52,500,000 and (y) 35.0% of TTM Consolidated EBITDA at any
one time outstanding, or (y) Persons that are acquired by the Borrower or any Restricted Subsidiary or merged into or consolidated
with the Borrower or a Restricted Subsidiary in accordance with the terms hereof (including designating an Unrestricted Subsidiary
a Restricted Subsidiary); provided that after giving effect to any such acquisition, merger, consolidation or designation
described in this clause (n), either: (1) the Consolidated Total Debt to Consolidated EBITDA Ratio (calculated on a
Pro Forma Basis) shall be either (A) less than or equal to the Consolidated Total Debt to Consolidated EBITDA Ratio immediately
prior to such acquisition, merger, consolidation or designation or (2) less than or equal to the Consolidated Total Debt to
Consolidated EBITDA Ratio set forth in Section 10.7;
(o)
Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument
drawn against insufficient funds in the ordinary course of business;
(p)
(i) Indebtedness of the Borrower or any Restricted Subsidiary supported by a letter of credit, in a principal amount
not in excess of the stated amount of such letter of credit so long as such letter of credit is otherwise permitted to be incurred
pursuant to this Section 10.1 or (ii) obligations in respect of letters of support, guarantees or similar obligations issued,
made or incurred for the benefit of any Subsidiary of the Borrower to the extent required by law or in connection with any statutory
filing or the delivery of audit opinions performed in jurisdictions other than within the United States;
(q)
(1) any guarantee by the Borrower or a Restricted Subsidiary of Indebtedness or other obligations of any Restricted
Subsidiary so long as in the case of a guarantee of Indebtedness by a Restricted Subsidiary that is not a Guarantor such Indebtedness
could have been incurred directly by the Restricted Subsidiary providing such guarantee or (2) any guarantee by a Restricted Subsidiary
of Indebtedness of the Borrower;
(r)
Indebtedness of Restricted Subsidiaries that are not Guarantors in an amount, together with any amounts incurred
under the first paragraph of this Section 10.1 and clause (n) above, in each case by Restricted Subsidiaries that
are not Guarantors, not to exceed, in the aggregate at any one time outstanding, the greater of (x) $52,500,000 and (y) 35.0% of
TTM Consolidated EBITDA;
(s)
Indebtedness of the Borrower or any of the Restricted Subsidiaries consisting of (i) the financing of insurance
premiums or (ii) take or pay obligations contained in supply arrangements in each case, incurred in the ordinary course of business
or consistent with past practice;
(t)
(i) Indebtedness of the Borrower or any of the Restricted Subsidiaries undertaken in connection with cash management
and related activities with respect to any Subsidiary or joint venture in the ordinary course of business, including with respect
to financial accommodations of the type described in the definition of “Cash Management Services” and (ii) Indebtedness
owed on a short term basis of no longer than 30 days to banks and other financial institutions incurred in the ordinary course
of business of the Borrower and its Restricted Subsidiaries with such banks or financial institutions that arises in connection
with ordinary banking arrangements to manage cash balances of the Borrower and its Restricted Subsidiaries;
(u)
Indebtedness consisting of Indebtedness issued by the Borrower or any of the Restricted Subsidiaries to future, current
or former officers, directors, managers and employees thereof and their respective estates, spouses and former spouses, in each
case to finance the purchase or redemption of Equity Interests of the Borrower or any direct or indirect parent company of the
Borrower to the extent described in clause (4) of Section 10.5(b);
(v)
Indebtedness of the Borrower or any Restricted Subsidiary of the Borrower that is incurred in connection with lease
agreements where such entity is considered the owner for accounting purposes only, or build-to-suit leases, to the extent such
entity is involved in the construction of structural improvements or takes construction risk prior to commencement of a lease where
such entity does not meet the sale-leaseback criteria for derecognition of the building assets and liability, incurred in the ordinary
course of business, and which in all cases is characterized on the Parent’s balance sheet as “Lease Financing Obligations”
or any replacement term in accordance with GAAP;
(w)
[reserved];
(x)
[reserved];
(y)
Indebtedness, Disqualified Stock or preferred stock of a joint venture owed to the Borrower and to the other holders
of Equity Interests or participants of such joint venture, so long as (i) the percentage of the aggregate amount of such Indebtedness,
Disqualified Stock or preferred stock of such joint venture owed to such holders of its Equity Interests or participants of such
joint venture does not exceed the percentage of the aggregate outstanding amount of the Equity Interests of such joint venture
held by such holders or such participant’s participation in such joint venture and (ii) the aggregate amount of Indebtedness,
Disqualified Stock and preferred stock that may be incurred pursuant to the foregoing shall not exceed the greater of (x) $37,500,000
and (y) 25.0% of TTM Consolidated EBITDA at any one time outstanding;
(z)
(i) guarantees incurred in the ordinary course of business in respect of obligations to suppliers, customers, franchisees,
lessors, licenses, sub-licenses and distribution partners and (ii) Indebtedness incurred by the Borrower or any Subsidiary as a
result of operating leases entered into by the Borrower or any direct or indirect parent of the Borrower in the ordinary course
of business; and
(aa)
(i) Indebtedness in respect of Permitted Debt Exchange Notes incurred pursuant to a Permitted Debt Exchange in accordance
with Section 2.15 (and which does not generate any additional proceeds) and (ii) any refinancing, refunding, renewal or
extension of any Indebtedness specified in subclause (i) above; provided that (x) the principal amount of any such
Indebtedness is not increased above the principal amount thereof outstanding immediately prior to such refinancing, refunding,
renewal or extension (except for any original issue discount thereon and the amount of fees, expenses, and premium and accrued
and unpaid interest in connection with such refinancing) and (y) such Indebtedness otherwise complies with the definition of “Permitted
Other Indebtedness.”
For
purposes of determining compliance with this Section 10.1: (i) in the event that an item of Indebtedness, Disqualified Stock
or preferred stock (or any portion thereof) meets the criteria of more than one of the categories of permitted Indebtedness, Disqualified
Stock or preferred stock described in clauses (a) through (y) above or is entitled to be incurred pursuant to the
first paragraph of this Section 10.1, the Borrower, in its sole discretion, will classify and may reclassify (including
within the definition of “Maximum Incremental Facilities Amount”) such item of Indebtedness, Disqualified Stock or
preferred stock (or any portion thereof) and will only be required to include the amount and type of such Indebtedness, Disqualified
Stock or preferred stock in one of the above clauses or paragraphs; and (ii) at the time of incurrence, the Borrower will be entitled
to divide and classify an item of Indebtedness in more than one of the types of Indebtedness described in this Section 10.1.
Accrual
of interest or dividends, the accretion of accreted value, the accretion or amortization of original issue discount and the payment
of interest or dividends in the form of additional Indebtedness, Disqualified Stock or preferred stock will not be deemed to be
an incurrence of Indebtedness, Disqualified Stock or preferred stock for purposes of this covenant. Any Refinancing Indebtedness
and any Indebtedness incurred to refinance Indebtedness incurred pursuant to clauses (a) and (l)(i) above shall be
deemed to include additional Indebtedness, Disqualified Stock or preferred stock incurred to pay premiums (including reasonable
tender premiums), defeasance costs, fees, and expenses in connection with such refinancing.
For
purposes of determining compliance with any Dollar-denominated restriction on the incurrence of Indebtedness, the principal amount
of Indebtedness denominated in another currency shall be calculated based on the relevant currency exchange rate in effect on the
date such Indebtedness was incurred, in the case of term debt, or first committed, in the case of revolving credit debt; provided
that if such Indebtedness is incurred to refinance other Indebtedness denominated in another currency, and such refinancing would
cause the applicable Dollar-denominated restriction to be exceeded if calculated at the relevant currency exchange rate in effect
on the date of such refinancing, such Dollar-denominated restriction shall be deemed not to have been exceeded so long as the principal
amount of such Refinancing Indebtedness does not exceed (i) the principal amount of such Indebtedness being refinanced plus (ii)
the aggregate amount of fees, underwriting discounts, premiums, and other costs and expenses and accrued and unpaid interest incurred
in connection with such refinancing.
The
principal amount of any Indebtedness incurred to refinance other Indebtedness, if incurred in a different currency from the Indebtedness
being refinanced, shall be calculated based on the currency exchange rate applicable to the currencies in which such respective
Indebtedness is denominated that is in effect on the date of such refinancing.
This
Agreement will not treat (1) unsecured Indebtedness as subordinated or junior to secured Indebtedness merely because it is unsecured
or (2) senior Indebtedness as subordinated or junior to any other senior Indebtedness merely because it has a junior priority with
respect to the same collateral.
10.2
Limitation on Liens. The Borrower will not, and will not permit any of the Restricted Subsidiaries to, create,
incur, assume or suffer to exist any Lien upon any property or assets of any kind (real or personal, tangible or intangible) of
the Borrower or any Restricted Subsidiary, whether now owned or hereafter acquired (each, a “Subject Lien”)
that secures obligations under any Indebtedness on any asset or property of the Borrower or any Restricted Subsidiary, except if
such Subject Lien is a Permitted Lien.
10.3 Limitation on Fundamental Changes. The Borrower will not, and will not permit any of the Restricted Subsidiaries
to, enter into any merger, consolidation or amalgamation, or liquidate, wind up or dissolve itself (or suffer any liquidation or
dissolution), or convey, sell, lease, assign, transfer or otherwise dispose of, all or substantially all its business units, assets
or other properties, except that:
(a)
so long as no Event of Default has occurred and is continuing or would result therefrom, any Subsidiary of the Borrower
or any other Person may be merged, amalgamated or consolidated with or into the Borrower; provided that (A) the Borrower
shall be the continuing or surviving corporation or (B) if the Person formed by or surviving any such merger, amalgamation or consolidation
is not the Borrower (such other Person, the “Successor Borrower”), (1) the Successor Borrower shall be an entity
organized or existing under the laws of the United States, any state thereof, the District of Columbia or any territory thereof,
(2) the Successor Borrower shall expressly assume all the obligations of the Borrower under this Agreement and the other Credit
Documents pursuant to a supplement hereto or thereto or in a form otherwise reasonably satisfactory to the Administrative Agent,
(3) each Guarantor, unless it is the other party to such merger, amalgamation or consolidation, shall have by a supplement to the
Guarantee confirmed that its guarantee thereunder shall apply to any Successor Borrower’s obligations under this Agreement,
(4) each Subsidiary grantor and each Subsidiary pledgor, unless it is the other party to such merger, amalgamation or consolidation,
shall have by a supplement to any applicable Security Document affirmed that its obligations thereunder shall apply to its Guarantee
as reaffirmed pursuant to clause (3), (5) each mortgagor of a Mortgaged Property, unless it is the other party to such merger,
amalgamation or consolidation, shall have affirmed that its obligations under the applicable Mortgage shall apply to its Guarantee
as reaffirmed pursuant to clause (3), and (6) the Successor Borrower shall have delivered to the Administrative Agent (x)
an officer’s certificate stating that such merger, amalgamation, or consolidation and such supplements preserve the enforceability
of the Guarantee and the perfection and priority of the Liens under the applicable Security Documents and (y) if requested by the
Administrative Agent, an opinion of counsel to the effect that such merger, amalgamation, or consolidation does not violate this
Agreement or any other Credit Document and that the provisions set forth in the preceding clauses (3) through (5)
preserve the enforceability of the Guarantee and the perfection of the Liens created under the applicable Security Documents (it
being understood that if the foregoing are satisfied, the Successor Borrower will succeed to, and be substituted for, the Borrower
under this Agreement); provided, further, that the Borrower agrees to provide any documentation and other information
about the Successor Borrower as shall have been reasonably requested in writing by any Lender through the Administrative Agent
that such Lender shall have reasonably determined is required by regulatory authorities under applicable “know your customer”
and anti-money laundering rules and regulations, including the Patriot Act and the Beneficial Ownership Regulation;
(b) so long as no Event of Default has occurred and is continuing or would result therefrom, any Subsidiary of the Borrower
or any other Person (in the latter case, other than the Borrower) may be merged, amalgamated or consolidated with or into any one
or more Subsidiaries of the Borrower; provided that (i) in the case of any merger, amalgamation or consolidation involving
one or more Restricted Subsidiaries, (A) a Restricted Subsidiary shall be the continuing or surviving Person or (B) the Borrower
shall cause the Person formed by or surviving any such merger, amalgamation or consolidation (if other than a Restricted Subsidiary)
to become a Restricted Subsidiary, (ii) in the case of any merger, amalgamation or consolidation involving one or more Guarantors,
a Guarantor shall be the continuing or surviving Person or the Person formed by or surviving any such merger, amalgamation or consolidation
and if the surviving Person is not already a Guarantor, such Person shall execute a supplement to the Guarantee and the relevant
Security Documents in form and substance reasonably satisfactory to the Administrative Agent in order to become a Guarantor and
pledgor, mortgagor and grantor, as applicable, thereunder for the benefit of the Secured Parties, and (iii) the Borrower shall
have delivered to the Administrative Agent an officer’s certificate stating that such merger, amalgamation or consolidation
and any such supplements to any Security Document preserve the enforceability of the Guarantees and the perfection and priority
of the Liens under the applicable Security Documents;
(c) any
Restricted Subsidiary may merge, dissolve, liquidate, amalgamate, consolidate with or into another Person or dispose of its assets
if (i) such transaction is undertaken in good faith to improve the tax efficiency of the Borrower and its Subsidiaries and (ii)
after giving effect to such transaction, each of the security interest of the Collateral Agent in the Collateral, taken as a whole,
and the value of the Guarantees, taken as a whole, is not materially impaired;
(d)
(i) any Restricted Subsidiary that is not a Credit Party may convey, sell, lease, assign, transfer or otherwise dispose
of any or all of its assets (upon voluntary liquidation or dissolution or otherwise) to the Borrower or any other Restricted Subsidiary
or (ii) any Credit Party (other than the Borrower) may convey, sell, lease, assign, transfer or otherwise dispose of any or all
of its assets (upon voluntary liquidation or dissolution or otherwise) to any other Credit Party;
(e) any
Subsidiary may convey, sell, lease, assign, transfer or otherwise dispose of any or all of its assets (upon voluntary liquidation
or dissolution or otherwise) to a Credit Party; provided that the consideration for any such disposition by any Person
other than a Guarantor shall not exceed the fair value of such assets;
(f) any Restricted Subsidiary (in each case, other than the Borrower) may liquidate or dissolve if (i) the Borrower determines
in good faith that such liquidation or dissolution is in the best interests of the Borrower and is not materially disadvantageous
to the Lenders and (ii) to the extent such Restricted Subsidiary is a Credit Party, any assets of such Restricted Subsidiary not
otherwise disposed of or transferred in accordance with Section 10.4 or 10.5 or, in the case of any such business,
not discontinued, shall be transferred to, or otherwise owned or conducted by, a Credit Party after giving effect to such liquidation
or dissolution;
(g) the Borrower and its Restricted Subsidiaries may consummate a merger, dissolution, liquidation, consolidation, investment
or conveyance, sale, lease, assignment or disposition, the purpose of which is to effect an Asset Sale (which for purposes of this
Section 10.3(g), will include any disposition below the Dollar threshold set forth in clause (d) of the definition
of “Asset Sale”, but excluding any disposition pursuant to clause (b) of the definition of “Asset Sale”)
permitted by Section 10.4 or an investment permitted pursuant to Section 10.5 or an investment that constitutes a
Permitted Investment; provided, that, for the avoidance of doubt, in no event shall the Borrower consummate a merger, dissolution,
liquidation, amalgamation or consolidation unless the terms set forth in Section 10.3(a) shall have been satisfied;
(h) the
Borrower and its Subsidiaries may undertake or consummate any IPO Reorganization Transactions and any transaction related thereto
or contemplated thereby; and
(i) so
long as no Event of Default has occurred and is continuing or would result therefrom, the Borrower or any Restricted Subsidiary
may change its legal form.
10.4
Limitation on Sale of Assets. The Borrower will not, and will not permit any Restricted Subsidiary to, consummate
an Asset Sale, unless:
(a) the Borrower or such Restricted Subsidiary, as the case may be, receives consideration at the time of such Asset
Sale at least equal to the Fair Market Value (as determined at the time of contractually agreeing to such Asset Sale) of the assets
sold or otherwise disposed of; and
(b) except
in the case of a Permitted Asset Swap, at least 75% of the consideration therefor received by the Borrower or such Restricted
Subsidiary, as the case may be, is in the form of cash or Cash Equivalents; provided that the amount of:
(i) any
liabilities (as reflected on the Borrower’s most recent consolidated balance sheet or in the footnotes thereto, or if incurred
or accrued subsequent to the date of such balance sheet, such liabilities that would have been reflected on the Borrower’s
consolidated balance sheet or in the footnotes thereto if such incurrence or accrual had taken place on or prior to the date of
such balance sheet, as determined in good faith by the Borrower) of the Borrower, other than liabilities that are by their terms
subordinated to the Loans, that are assumed by the transferee of any such assets (or are otherwise extinguished in connection
with the transactions relating to such Asset Sale) and for which the Borrower and all such Restricted Subsidiaries have been validly
released by all applicable creditors in writing;
(ii) any securities, notes or other obligations or assets received by the Borrower or such Restricted Subsidiary from
such transferee that are converted by the Borrower or such Restricted Subsidiary into cash or Cash Equivalents, or by their terms
are required to be satisfied for cash or Cash Equivalents (to the extent of the cash or Cash Equivalents received), in each case,
within 180 days following the closing of such Asset Sale;
(iii) Indebtedness,
other than liabilities that are by their terms subordinated to the Loans, that are of any Restricted Subsidiary that is no longer
a Restricted Subsidiary as a result of such Asset Sale, to the extent that the Borrower and all Restricted Subsidiaries have been
validly released from any Guarantee of payment of such Indebtedness in connection with such Asset Sale; and
(iv) any
Designated Non-Cash Consideration received by the Borrower or such Restricted Subsidiary in such Asset Sale having an aggregate
Fair Market Value, taken together with all other Designated Non-Cash Consideration received pursuant to this clause (iv)
that is at that time outstanding, not to exceed the greater of (x) $9,750,000 and (y) 6.5% of TTM Consolidated EBITDA at the time
of the receipt of such Designated Non-Cash Consideration, with the Fair Market Value of each item of Designated Non-Cash Consideration
being measured at the time received and without giving effect to subsequent changes in value,
shall
be deemed to be cash for purposes of this clause (b) of this provision and for no other purpose.
Within
the Reinvestment Period after the Borrower’s or any Restricted Subsidiary’s receipt of the Net Cash Proceeds of any
Asset Sale, the Borrower or such Restricted Subsidiary shall apply the Net Cash Proceeds from such Asset Sale:
(i) to prepay Loans in accordance
with Section 5.2(a)(i); and/or
(ii) to make investments
in the Borrower and its Restricted Subsidiaries; provided that the Borrower and its Restricted Subsidiaries will be deemed
to have complied with this clause (ii) if and to the extent that, within the Reinvestment Period after the Asset Sale that
generated the Net Cash Proceeds, the Borrower or such Restricted Subsidiary has entered into and not abandoned or rejected a binding
agreement to consummate any such investment described in this clause (ii) with the good faith expectation that such Net
Cash Proceeds will be applied to satisfy such commitment within 180 days of such commitment and, in the event any such commitment
is later cancelled or terminated for any reason before the Net Cash Proceeds are applied in connection therewith, the Borrower
or such Restricted Subsidiary prepays the Loans in accordance with Section 5.2(a)(i).
(c) Pending
the final application of any Net Cash Proceeds pursuant to this covenant, the Borrower or the applicable Restricted Subsidiary
may apply such Net Cash Proceeds temporarily to reduce Indebtedness outstanding under the Revolving Credit Facility or any other
revolving credit facility or otherwise invest such Net Cash Proceeds in any manner not prohibited by this Agreement.
10.5 Limitation on Restricted Payments.
(a) The Borrower will not, and will not permit any Restricted Subsidiary to, directly or indirectly:
(1) declare
or pay any dividend or make any payment or distribution on account of the Borrower’s or any Restricted Subsidiary’s
Equity Interests, including any dividend or distribution payable in connection with any merger or consolidation, other than:
(A) dividends
or distributions by the Borrower payable in Equity Interests (other than Disqualified Stock) of the Borrower or in options, warrants
or other rights to purchase such Equity Interests, or
(B) dividends
or distributions by a Restricted Subsidiary so long as, in the case of any dividend or distribution payable on or in respect of
any class or series of securities issued by a Restricted Subsidiary other than a Wholly-Owned Subsidiary, the Borrower or a Restricted
Subsidiary receives at least its pro rata share of such dividend or distribution in accordance with its Equity Interests in such
class or series of securities;
(2) purchase,
redeem, defease or otherwise acquire or retire for value any Equity Interests of the Borrower or any direct or indirect parent
company of the Borrower, including in connection with any merger or consolidation;
(3) make any principal payment on, or redeem, repurchase, defease or otherwise acquire or retire for value in each case,
prior to any scheduled repayment, sinking fund payment or maturity, any Subordinated Indebtedness of the Borrower or any Restricted
Subsidiary, other than (A) Indebtedness permitted under clauses (g) and (h) of Section 10.1 or (B) the purchase,
repurchase or other acquisition of Subordinated Indebtedness purchased in anticipation of satisfying a sinking fund obligation,
principal installment or final maturity, in each case due within one year of the date of purchase, repurchase or acquisition; or
(4) make any Restricted Investment;
(all such
payments and other actions set forth in clauses (1) through (4) above (other than any exception thereto) being collectively
referred to as “Restricted Payments”), unless, at the time of such Restricted Payment:
(i) no Event of Default
shall have occurred and be continuing or would occur as a consequence thereof (or in the case of a Restricted Investment, no Event
of Default under Section 11.1 or 11.5 shall have occurred and be continuing or would occur as a consequence thereof);
and
(ii) such Restricted Payment,
together with the aggregate amount of all other Restricted Payments made by the Borrower and its Restricted Subsidiaries after
the Closing Date (including Restricted Payments permitted by clauses (1), (2) (with respect to the payment of dividends
on Refunding Capital Stock pursuant to clause (b) thereof only), and (6)(C) of Section 10.5(b) below, but
excluding all other Restricted Payments permitted by Section 10.5(b)), is less than the sum of (without duplication) (the
sum of the amounts attributable to clauses (A) through (E) below is referred to herein as the “Available
Amount”):
(A) 100%
of the aggregate net cash proceeds and the Fair Market Value of marketable securities or other property received by the Borrower
since immediately after the Closing Date (other than the net cash proceeds from Cure Amounts or to the extent such net cash proceeds
have been used to incur Indebtedness, Disqualified Stock or preferred stock pursuant to clause (l)(i) of Section 10.1)
from the issue or sale of (x) Equity Interests of the Borrower, including Retired Capital Stock, but excluding cash proceeds and
the Fair Market Value of marketable securities or other property received from the sale of (A) Equity Interests to any employee,
director, officer, manager, consultant or independent contractor of the Borrower, any direct or indirect parent company of the
Borrower and the Borrower’s Subsidiaries after the Closing Date to the extent such amounts have been applied to Restricted
Payments made in accordance with clause (4) of Section 10.5(b) below, and (B) Designated Preferred Stock, and, to
the extent such net cash proceeds are actually contributed to the Borrower, Equity Interests of any direct or indirect parent
company of the Borrower (excluding contributions of the proceeds from the sale of Designated Preferred Stock of such companies
or contributions to the extent such amounts have been applied to Restricted Payments made in accordance with clause (4)
of Section 10.5(b) below) or (y) Indebtedness of the Borrower or a Restricted Subsidiary that has been converted into
or exchanged for such Equity Interests of the Borrower or any direct or indirect parent company of the Borrower; provided
that this clause (B) shall not include the proceeds from (a) Refunding Capital Stock, (b) Equity Interests or Indebtedness
that has been converted or exchanged for Equity Interests of the Borrower sold to a Restricted Subsidiary or the Borrower, as
the case may be, (c) Disqualified Stock or Indebtedness that has been converted or exchanged into Disqualified Stock or (d)
Excluded Contributions, plus
(B) 100%
of the aggregate amount of cash and the Fair Market Value of marketable securities or other property contributed to the capital
of the Borrower following the Closing Date (other than the net cash proceeds from Cure Amounts or to the extent such net cash
proceeds (i) have been used to incur Indebtedness, Disqualified Stock or preferred stock pursuant to clause (l)(i) of Section
10.1), (ii) are contributed by a Restricted Subsidiary or (iii) constitute Excluded Contributions, plus
(C) 100%
of the aggregate amount received in cash and the Fair Market Value of marketable securities or other property received by means
of (A) the sale or other disposition (other than to the Borrower or a Restricted Subsidiary) of Restricted Investments made by
the Borrower and its Restricted Subsidiaries and repurchases and redemptions of such Restricted Investments from the Borrower
and its Restricted Subsidiaries and repayments of loans or advances, and releases of guarantees, which constitute Restricted Investments
made by the Borrower or the Restricted Subsidiaries, in each case, after the Closing Date; or (B) the sale (other than to the
Borrower or a Restricted Subsidiary) of the stock of an Unrestricted Subsidiary (other than in each case to the extent the Investment
in such Unrestricted Subsidiary was made by the Borrower or a Restricted Subsidiary pursuant to clause (7) of Section
10.5(b) below or to the extent such Investment constituted a Permitted Investment) or a dividend from an Unrestricted Subsidiary
after the Closing Date, plus
(D) in the case of the redesignation of an Unrestricted Subsidiary as a Restricted Subsidiary after the Closing Date,
the Fair Market Value of the Investment in such Unrestricted Subsidiary at the time of the redesignation of such Unrestricted Subsidiary
as a Restricted Subsidiary, other than to the extent the Investment in such Unrestricted Subsidiary was made by the Borrower or
a Restricted Subsidiary pursuant to clause (7) of Section 10.5(b) below or to the extent such Investment constituted
a Permitted Investment, plus
(E) the aggregate amount of any Retained Declined Proceeds since the Closing Date.
(b) The foregoing provisions of Section 10.5(a) will not prohibit:
(1) the payment of any dividend or distribution or the consummation of any irrevocable redemption within 60 days after
the date of declaration thereof or the giving of such irrevocable notice, as applicable, if at the date of declaration or the giving
of such notice such payment would have complied with the provisions of this Agreement;
(2) (a)
the redemption, repurchase, retirement or other acquisition of any Equity Interests (“Retired Capital Stock”)
or Subordinated Indebtedness of the Borrower or any Restricted Subsidiary, or any Equity Interests of any direct or indirect parent
company of the Borrower, in exchange for, or out of the proceeds of the substantially concurrent sale (other than to a Restricted
Subsidiary) of, Equity Interests of the Borrower or any direct or indirect Parent Entity or management investment vehicle to the
extent contributed to the Borrower (in each case, other than any Disqualified Stock) (“Refunding Capital Stock”)
and (b) if immediately prior to the retirement of Retired Capital Stock, the declaration and payment of dividends thereon was
permitted under clause (6) of this Section 10.5(b), the declaration and payment of dividends on the Refunding Capital
Stock (other than Refunding Capital Stock the proceeds of which were used to redeem, repurchase, retire or otherwise acquire any
Equity Interests of any direct or indirect parent company of the Borrower) in an aggregate amount per year no greater than the
aggregate amount of dividends per annum that was declarable and payable on such Retired Capital Stock immediately prior to such
retirement;
(3) the
prepayment, redemption, defeasance, repurchase or other acquisition or retirement for value of Subordinated Indebtedness of the
Borrower or a Restricted Subsidiary made by exchange for, or out of the proceeds of the substantially concurrent sale of, new
Indebtedness of the Borrower, or a Restricted Subsidiary, as the case may be, which is incurred in compliance with Section
10.1 so long as: (A) the principal amount (or accreted value, if applicable) of such new Indebtedness does not exceed the
principal amount of (or accreted value, if applicable), plus any accrued and unpaid interest on the Subordinated Indebtedness
being so redeemed, defeased, repurchased, exchanged, acquired or retired for value, plus the amount of any premium (including
reasonable tender premiums), defeasance costs and any reasonable fees and expenses incurred in connection with the issuance of
such new Indebtedness, (B) if such Subordinated Indebtedness is subordinated to the Obligations, such new Indebtedness is subordinated
to the Obligations or the applicable Guarantee at least to the same extent as such Subordinated Indebtedness so purchased, exchanged,
redeemed, defeased, repurchased, acquired or retired for value, (C) such new Indebtedness has a final scheduled maturity date
equal to or later than the final scheduled maturity date of the Subordinated Indebtedness being so redeemed, defeased, repurchased,
exchanged, acquired or retired, (D) if such Subordinated Indebtedness so purchased, exchanged, redeemed, repurchased, acquired
or retired for value is (i) unsecured then such new Indebtedness shall be unsecured or (ii) secured by a Lien ranking junior to
the Liens securing the Obligations then such new Indebtedness shall be unsecured or secured by a Lien ranking junior to the Liens
securing the Obligations, and (E) such new Indebtedness has a weighted average life to maturity equal to or greater than the remaining
weighted average life to maturity of the Subordinated Indebtedness being so redeemed, defeased, repurchased, exchanged, acquired
or retired;
(4) a
Restricted Payment to pay for the repurchase, retirement or other acquisition or retirement for value of Equity Interests (other
than Disqualified Stock) of the Borrower or any direct or indirect parent company of the Borrower or management investment vehicle
held by any future, present or former employee, director, officer, manager, consultant or independent contractor of the Borrower,
any of its Subsidiaries or any direct or indirect Parent Entity or management investment vehicle, or their estates, descendants,
family, spouse or former spouse pursuant to any equity incentive plan, management equity plan or stock option or phantom equity
plan or any other management or employee benefit plan or agreement, or any stock subscription or shareholder agreement (including,
for the avoidance of doubt, any principal and interest payable on any notes issued by the Borrower or any direct or indirect Parent
Entity or management investment vehicle in connection with such repurchase, retirement or other acquisition), including any Equity
Interests rolled over by management of the Borrower or any direct or Parent Entity or management investment vehicle in connection
with the Transactions; provided that, except with respect to non-discretionary purchases, the aggregate Restricted Payments
made under this clause (4) subsequent to the Closing Date do not exceed in any calendar year $13,000,000 (with unused amounts
in any calendar year being carried over to succeeding calendar years); provided, further, that such amount in any
calendar year may be increased by an amount not to exceed: (A) the cash proceeds from the sale of Equity Interests (other than
Disqualified Stock) of the Borrower and, to the extent contributed to the Borrower, the cash proceeds from the sale of Equity
Interests of any direct or indirect Parent Entity or management investment vehicle, in each case to any future, present or former
employees, directors, officers, managers, consultants or independent contractors of the Borrower, any of its Subsidiaries or any
direct or indirect Parent Entity or management investment vehicle that occurs after the Closing Date, to the extent the cash proceeds
from the sale of such Equity Interests have not otherwise been applied to the payment of Restricted Payments by virtue of clause
(ii) of Section 10.5(a), plus (B) the cash proceeds of key man life insurance policies received by the Borrower and
its Restricted Subsidiaries after the Closing Date, less (C) the amount of any Restricted Payments previously made pursuant to
clauses (A) and (B) of this clause (4); and provided, further, that cancellation of Indebtedness
owing to the Borrower or any Restricted Subsidiary from any future, present or former employees, directors, officers, managers,
consultants or independent contractors of the Borrower, any direct or indirect Parent Entity or management investment vehicle
or any Restricted Subsidiary, or their estates, descendants, family, spouse or former spouse pursuant in connection with a repurchase
of Equity Interests of the Borrower or any direct or indirect Parent Entity or management investment vehicle will not be deemed
to constitute a Restricted Payment for purposes of this Section 10.5 or any other provision of this Agreement;
(5) the declaration and payment of dividends to holders of any class or series of Disqualified Stock of the Borrower
or any Restricted Subsidiary or any class or series of preferred stock of any Restricted Subsidiary, in each case, issued in accordance
with Section 10.1 to the extent such dividends are included in the definition of “Fixed Charges”;
(6) (A)
the declaration and payment of dividends to holders of any class or series of Designated Preferred Stock (other than Disqualified
Stock) issued by the Borrower after the Closing Date; (B) the declaration and payment of dividends to any direct or indirect parent
company of the Borrower, the proceeds of which will be used to fund the payment of dividends to holders of any class or series
of Designated Preferred Stock (other than Disqualified Stock) of such parent company issued after the Closing Date; provided
that the amount of dividends paid pursuant to this clause (B) shall not exceed the aggregate amount of cash actually
contributed to the Borrower from the sale of such Designated Preferred Stock; or (C) the declaration and payment of dividends
on Refunding Capital Stock in excess of the dividends declarable and payable thereon pursuant to clause (2) of this Section
10.5(b); provided that, in the case of each of (A), (B), and (C) of this clause (6), for the most recently ended
four full fiscal quarters for which internal financial statements are available immediately preceding the date of issuance of
such Designated Preferred Stock or the declaration of such dividends on Refunding Capital Stock, after giving effect to such issuance
or declaration on a Pro Forma Basis, the Borrower and its Restricted Subsidiaries on a consolidated basis would have had a Fixed
Charge Coverage Ratio of at least 2.00 to 1.00;
(7) [reserved];
(8) (i) payments made or expected to be made by the Borrower or any Restricted Subsidiary in respect of withholding or
similar Taxes payable or expected to be payable by any future, present or former employee, director, officer, manager, consultant
or independent contractor of the Borrower or any Restricted Subsidiary of the Borrower (or their respective Affiliates, management
investment vehicles, estates, descendants, family members, spouses and former spouses and any trusts, limited liability companies,
corporations, partnerships or other entities for the benefit of, or controlled by, any of the foregoing) in connection with the
exercise of stock options or the grant, vesting or delivery of Equity Interests (including, without limitation, restricted stock
units) of the Borrower (or any direct or indirect parent company of the Borrower) and repurchases of Equity Interests (including,
without limitation, restricted stock units) deemed to occur upon the exercise of stock options or the grant, vesting or delivery
of Equity Interests to the extent the Equity Interests subject to such repurchase represent a portion of the exercise price of
such options or warrants, (ii) payments or other adjustments to outstanding Equity Interests in accordance with any incentive equity
plan, management equity plan, stock option plan or any other similar employee benefit plan, agreement or arrangement in connection
with any Restricted Payment and (iii) so long as any Restricted Subsidiary is a member of a consolidated, combined or unitary group
of which the Borrower (or any direct or indirect parent entity of the Borrower) is the parent for foreign, federal, state, provincial
or local income Tax purposes, payments the proceeds of which will be used to pay the Tax liability to each foreign, federal, state,
provincial or local jurisdiction in respect of which such a consolidated, combined, unitary or affiliated income Tax return is
filed by the Borrower (or any direct or indirect parent entity of the Borrower) that includes the Restricted Subsidiary, to the
extent such Tax liability is attributable to the taxable income of such Restricted Subsidiary; provided that (x) for each
taxable period, the amount of such payments made with respect to such taxable period shall not exceed the amount that the relevant
Restricted Subsidiary and its Subsidiaries would have been required to pay as a stand-alone Tax group; and (y) the permitted payment
pursuant to this clause (iii) with respect to the Taxes of any Unrestricted Subsidiary for any taxable period shall be limited
to the amount actually paid by such Unrestricted Subsidiary to the Borrower or any of its Restricted Subsidiaries for the purpose
of paying such consolidated, combined, unitary or affiliated Taxes;
(9) the declaration and payment of dividends on the Borrower’s common stock (or the payment of dividends to any
direct or indirect parent company of the Borrower to fund a payment of dividends on such company’s common stock), following
consummation of an IPO after the Restatement Effective Date, of up to 6.00% per annum of the net cash proceeds received by or contributed
to the Borrower in or from any such public offering, other than public offerings with respect to the Borrower’s common stock
registered on Form S-8 and other than any public sale constituting an Excluded Contribution;
(10) Restricted Payments in an amount that does not exceed the amount of Excluded Contributions made since the Closing
Date;
(11) [reserved];
(12) distributions
or payments of Receivables Fees;
(13) the Specified Equity Repurchase;
(14) other
Restricted Payments; provided that after giving Pro Forma Effect to such Restricted Payments the Borrower is in compliance
with the Consolidated Total Debt to Consolidated EBITDA Ratio set forth in Section 10.7;
(15) the Restatement Date Distribution;
(16) the
repurchase, redemption or other acquisition for value of Equity Interests of the Borrower deemed to occur in connection with paying
cash in lieu of fractional shares of such Equity Interests in connection with a share dividend, distribution, share split, reverse
share split, merger, consolidation, amalgamation or other business combination of the Borrower, in each case, permitted under
this Agreement;
(17) the
distribution, by dividend or otherwise, of shares of Capital Stock of, or Indebtedness owed to the Borrower or a Restricted Subsidiary
by, Unrestricted Subsidiaries (other than Unrestricted Subsidiaries, the primary assets of which are cash and/or Cash Equivalents);
(18) the
one-time repurchase or other acquisition for value of Equity Interests of the Borrower held by future, current or former officers,
directors, managers and employees of the Borrower or any of its Subsidiaries and their respective estates, spouses and former
spouses in an amount not to exceed $54,000,000 and to be consummated within thirty (30) days after the Closing Date;
(19) payments
or distributions to satisfy dissenters’ rights, pursuant to or in connection with a consolidation, amalgamation, merger
or transfer of assets that complies with Section 10.3; and
(20) the
Borrower may make Restricted Payments in cash to any Parent Entity:
(i) the
proceeds of which shall be used by such Parent Entity to pay (1) its operating expenses incurred in the ordinary course of business
and other corporate overhead costs and expenses (including administrative, legal, accounting, tax reporting and similar expenses
payable to third parties), that are reasonable and customary and incurred in the ordinary course of business, (2) any reasonable
and customary indemnification claims made by directors, officers, members of management, managers, employees or consultants of
any Parent Entity attributable to the ownership or operations of any Parent Entity, the Borrower and the respective Restricted
Subsidiaries, and (3) fees and expenses (x) due and payable by the Borrower or any Restricted Subsidiary and (y) otherwise permitted
to be paid by the Borrower and the Restricted Subsidiaries under this Agreement;
(ii) the
proceeds of which shall be used by any Parent Entity to pay franchise and similar Taxes, and other fees and expenses (including
legal, accounting and corporate overhead expenses), required to maintain its organizational existence;
(iii) the proceeds of which shall be used by any Parent Entity to finance any Permitted Investment that would be permitted
to be made by the Borrower or any Restricted Subsidiary; provided that (1) such Restricted Payment shall be made substantially
concurrently with the closing of such Investment and (2) such Parent Entity shall, immediately following the closing thereof, cause
(x) all property acquired to be contributed to the Borrower or any Restricted Subsidiary or (y) the Person formed or acquired to
merge into or consolidate or amalgamate with the Borrower or any Restricted Subsidiary to the extent such merger or consolidation
is permitted by Section 10.3) in order to consummate such Investment;
(iv) the proceeds of which shall be used to pay customary salary, bonus, severance and other compensation and benefits
payable to current or former directors, officers, members of management, managers, consultants, independent contractors or employees
of any Parent Entity to the extent such salaries, bonuses and other benefits are attributable to the ownership or operation of
the Borrower and the Restricted Subsidiaries;
(v) the proceeds of which shall be used by any Parent Entity to pay (i) fees and expenses related to any successful or
unsuccessful equity issuance or offering or debt issuance, incurrence or offering, disposition or acquisition, Investment or other
transaction permitted by this Agreement and (ii) after the consummation of an IPO described in clause (a) of the definition thereof
or issuance of public debt securities, Public Company Costs; and
(vi) the
proceeds of which shall be used for the payment of insurance premiums to the extent attributable to any Parent Entity, the Borrower
and their subsidiaries.
provided
that at the time of, and after giving effect to, any Restricted Payment permitted under clauses (10) (but only if the
Excluded Contribution was made more than six months prior to such time) and (14) above, no Event of Default shall have occurred
and be continuing or would occur as a consequence thereof (or in the case of a Restricted Investment, no Event of Default under
Section 11.1 or 11.5 shall have occurred and be continuing or would occur as a consequence thereof).
The
Borrower will not permit any Unrestricted Subsidiary to become a Restricted Subsidiary except pursuant to the last sentence of
the definition of “Unrestricted Subsidiary.” For purposes of designating any Restricted Subsidiary as an Unrestricted
Subsidiary, all outstanding Investments by the Borrower and its Restricted Subsidiaries (except to the extent repaid) in the Subsidiary
so designated will be deemed to be Restricted Payments in an amount determined as set forth in the last sentence of the definition
of “Investment.” Such designation will be permitted only if a Restricted Payment in such amount would be permitted
at such time, whether pursuant to Section 10.5(a) or under clause (10) of Section 10.5(b), or pursuant to
the definition of “Permitted Investments,” and if such Subsidiary otherwise meets the definition of “Unrestricted
Subsidiary.” Unrestricted Subsidiaries will not be subject to any of the restrictive covenants set forth in this Agreement.
For
purposes of determining compliance with this Section 10.5, solely with respect to Investments (and not with respect to other
Restricted Payments), in the event that a proposed Investment (or a portion thereof) meets the criteria of clauses (1) through
(19) above or is entitled to be made pursuant to clause (ii) of Section 10.5(a) and/or one or more of the
exceptions contained in the definition of Permitted Investments (the “Investment Reclassification Baskets”),
the Borrower will be entitled to classify or later reclassify (based on circumstances existing on the date of such reclassification)
such Investment (or portion thereof) among such Investment Reclassification Baskets, in a manner that otherwise complies with this
Section 10.5.
(c)
Prior to the Initial Term A Loan Maturity Date, to the extent any Permitted Debt Exchange Notes are issued pursuant
to Section 10.1(aa) for the purpose of consummating a Permitted Debt Exchange, (i) the Borrower will not, and will not
permit any Restricted Subsidiary to, prepay, repurchase, redeem or otherwise defease or acquire any Permitted Debt Exchange Notes
unless the Borrower or a Restricted Subsidiary shall concurrently voluntarily prepay Term Loans pursuant to Section 5.1(a)
on a pro rata basis among the Term Loans, in an amount not less than the product of (a) a fraction, the numerator of which
is the aggregate principal amount (calculated on the face amount thereof) of such Permitted Debt Exchange Notes that are proposed
to be prepaid, repurchased, redeemed, defeased or acquired and the denominator of which is the aggregate principal amount (calculated
on the face amount thereof) of all Permitted Debt Exchange Notes in respect of the relevant Permitted Debt Exchange then outstanding
(prior to giving effect to such proposed prepayment, repurchase, redemption, defeasance or acquisition) and (b) the aggregate
principal amount (calculated on the face amount thereof) of Term Loans then outstanding and (ii) the Borrower will not waive,
amend or modify the terms of any Permitted Debt Exchange Notes or any indenture pursuant to which such Permitted Debt Exchange
Notes have been issued in any manner inconsistent with the terms of Section 2.15(a), Section 10.1(aa), or the definition
of “Permitted Other Indebtedness” or that would result in a Default hereunder if such Permitted Debt Exchange Notes
(as so amended or modified) were then being issued or incurred.
10.6 Limitation on Subsidiary Distributions. The Borrower will not permit any of the Restricted Subsidiaries that
are not Guarantors to, directly or indirectly, create or otherwise cause or suffer to exist or become effective any consensual
encumbrance or consensual restriction on the ability of any such Restricted Subsidiary to:
(a) (i)
pay dividends or make any other distributions to the Borrower or any Restricted Subsidiary on its Capital Stock or with respect
to any other interest or participation in, or measured by, its profits or (ii) pay any Indebtedness owed to the Borrower or any
Restricted Subsidiary;
(b) make
loans or advances to the Borrower or any Restricted Subsidiary; or
(c) sell, lease or transfer any of its properties or assets to the Borrower or any Restricted Subsidiary;
except (in each
case) for such encumbrances or restrictions (x) which the Borrower has reasonably determined in good faith will not materially
impair the Borrower’s ability to make payments under this Agreement when due or (y) existing under or by reason of:
(i) contractual
encumbrances or restrictions in effect on the Closing Date, including pursuant to this Agreement and the related documentation
and related Hedging Obligations;
(ii) [reserved];
(iii) purchase
money obligations for property acquired in the ordinary course of business or consistent with past practice and Capitalized Lease
Obligations that impose restrictions of the nature discussed in clause (c) above on the property so acquired;
(iv)
Requirements of Law or any applicable rule, regulation or order;
(v) any
agreement or other instrument of a Person acquired by or merged or consolidated with or into the Borrower or any Restricted Subsidiary,
or of an Unrestricted Subsidiary that is designated a Restricted Subsidiary, or that is assumed in connection with the acquisition
of assets from such Person, in each case that is in existence at the time of such transaction (but not created in contemplation
thereof), which encumbrance or restriction is not applicable to any Person, or the properties or assets of any Person, other than
the Person and its Subsidiaries, or the property or assets of the Person and its Subsidiaries, so acquired or designated;
(vi)
contracts for the sale of assets, including customary restrictions with respect to a Subsidiary of the Borrower pursuant
to an agreement that has been entered into for the sale or disposition of all or substantially all of the Capital Stock or assets
of such Subsidiary and restrictions on transfer of assets subject to Permitted Liens;
(vii)
(x) secured Indebtedness otherwise permitted to be incurred pursuant to Sections 10.1 and 10.2 that
limit the right of the debtor to dispose of the assets securing such Indebtedness and (y) restrictions on transfers of assets subject
to Permitted Liens (but, with respect to any such Permitted Lien, only to the extent that such transfer restrictions apply solely
to the assets that are the subject of such Permitted Lien);
(viii)
restrictions on cash or other deposits or net worth imposed by customers under contracts entered into in the ordinary
course of business;
(ix) other
Indebtedness, Disqualified Stock or preferred stock of Restricted Subsidiaries permitted to be incurred subsequent to the Closing
Date pursuant to the provisions of Section 10.1;
(x) customary
provisions in joint venture agreements or arrangements and other similar agreements or arrangements relating solely to such joint
venture and the Equity Interests issued thereby;
(xi) customary provisions contained in leases, sub-leases, licenses, sub-licenses or similar agreements, in each case,
entered into in the ordinary course of business;
(xii) restrictions
created in connection with any Receivables Facility that, in the good faith determination of the board of directors of the Borrower,
are necessary or advisable to effect such Receivables Facility; and
(xiii)
any encumbrances or restrictions of the type referred to in clauses (a), (b), and (c) above
imposed by any amendments, modifications, restatements, renewals, increases, supplements, refundings, replacements or refinancings
of the contracts, instruments or obligations referred to in clauses (i) through (xii) above; provided that
such amendments, modifications, restatements, renewals, increases, supplements, refundings, replacements, or refinancings (x) are,
in the good faith judgment of the Borrower’s board of directors, no more restrictive in any material respect with respect
to such encumbrance and other restrictions taken as a whole than those prior to such amendment, modification, restatement, renewal,
increase, supplement, refunding, replacement or refinancing or (y) do not materially impair the Borrower’s ability to pay
its respective obligations under the Credit Documents as and when due (as determined in good faith by the Borrower).
10.7 Consolidated
Total Debt to Consolidated EBITDA Ratio(b). Commencing with the Test Period ending December 31, 2020, the Borrower will not
permit the Consolidated Total Debt to Consolidated EBITDA Ratio as of the last day of any Test Period set forth below to exceed
the ratio set forth below opposite such Test Period:
|
Test
Period Ending
|
|
Consolidated
Total Debt to
Consolidated EBITDA Ratio
|
|
December 31, 2020
|
|
4.50 to 1.00
|
|
March 31, 2021
|
|
4.50 to 1.00
|
|
June 30, 2021
|
|
4.50 to 1.00
|
|
September 30, 2021
|
|
4.50 to 1.00
|
|
December 31, 2021
|
|
4.50 to 1.00
|
|
March 31, 2022
|
|
4.25 to 1.00
|
|
June 30, 2022
|
|
4.25 to 1.00
|
|
September 30, 2022
|
|
4.00 to 1.00
|
|
December 31, 2022
|
|
4.00 to 1.00
|
|
March 31, 2023 and thereafter
|
|
3.75 to 1.00
|
Notwithstanding
the foregoing, upon the consummation of a Material Permitted Acquisition and until the completion of four fiscal quarters following
such Material Permitted Acquisition (the “Increase Period”), if elected by the Borrower by written notice to
the Administrative Agent given on or prior to the date of consummation of such Material Permitted Acquisition, the maximum permitted
Consolidated Total Debt to Consolidated EBITDA Ratio level for purposes of this covenant shall be increased by 0.50x for the relevant
period (the “Step-Up”) during such Increase Period; provided (i) that Increase Periods may not be successive
unless the Consolidated Total Debt to Consolidated EBITDA Ratio would have been complied with for at least two fiscal quarters
without giving effect to the Step-Up and (ii) there shall be a maximum of two Increase Periods in the aggregate under this Credit
Agreement.
|
|
Section
|
11. Events of Default
|
Upon
the occurrence of any of the following specified events (each an “Event of Default”):
11.1 Payments.
The Borrower shall (a) default in the payment when due of any principal of the Loans or (b) default, and such default shall continue
for five or more Business Days, in the payment when due of any interest on the Loans or any Fees or any Unpaid Drawings or of
any other amounts owing hereunder or under any other Credit Document; or
11.2 Representations,
Etc. Any representation, warranty or statement made or deemed made by any Credit Party herein or in any other Credit Document
or any certificate delivered or required to be delivered pursuant hereto or thereto shall prove to be untrue in any material respect
on the date as of which made or deemed made, and, to the extent capable of being cured (except those in the Credit Documents made
or deemed made on the Closing Date), such incorrect representation or warranty shall remain incorrect for a period of 30 days
after written notice thereof from the Administrative Agent to the Borrower; or
11.3 Covenants. Any Credit Party shall:
(a) default
in the due performance or observance by it of any term, covenant or agreement contained in Section 9.1(e)(i), Section 9.5 (solely
with respect to the Borrower), Section 9.14(d) or Section 10; provided that any Event of Default under Section 10.7
is subject to cure as provided in Section 11.14 and an Event of Default with respect to such Section shall not occur until the
expiration of the 10th Business Day subsequent to the date the relevant financial statements are required to be delivered for
the applicable fiscal quarter pursuant to Section 9.1(a) or (b); or
(b) default
in the due performance or observance by it of any term, covenant or agreement (other than those referred to in Section 11.1 or
11.2 or clause (a) of this Section 11.3) contained in this Agreement or any Security Document and such default shall continue
unremedied for a period of at least 30 days after receipt of written notice by the Borrower from the Administrative Agent or the
Required Lenders; or
11.4 Default
Under Other Agreements. (a) The Borrower or any of the Restricted Subsidiaries shall (i) fail to make any payment with respect
to any Indebtedness (other than the Obligations) in an aggregate principle amount in excess of $30,000,000, for the Borrower and
such Restricted Subsidiaries, beyond the period of grace and following all required notices, if any, provided in the instrument
or agreement under which such Indebtedness was created or (ii) default in the observance or performance of any agreement or condition
relating to any such Indebtedness or contained in any instrument or agreement evidencing, securing or relating thereto, or any
other event shall occur or condition exist (after giving effect to all applicable grace period and delivery of all required notices)
(other than, with respect to Indebtedness consisting of any Hedge Agreements, termination events or equivalent events pursuant
to the terms of such Hedge Agreements (it being understood that clause (i) above shall apply to any failure to make any
payment with respect to any Indebtedness (other than the Obligations) in an aggregate principle amount in excess of $30,000,000
that is required as a result of any such termination or similar event and that is not otherwise being contested in good faith)),
the effect of which default or other event or condition is to cause, or to permit the holder or holders of such Indebtedness (or
a trustee or agent on behalf of such holder or holders) to cause, any such Indebtedness to become due or to be repurchased, prepaid,
defeased or redeemed (automatically or otherwise), or an offer to repurchase, prepay, defease or redeem such Indebtedness to be
made, prior to its stated maturity; provided that this clause (a) shall not apply to secured Indebtedness that becomes
due as a result of the sale, transfer or other disposition (including as a result of a casualty or condemnation event) of the
property or assets securing such Indebtedness (to the extent such sale, transfer or other disposition is not prohibited under
this Agreement), or (b) without limiting the provisions of clause (a) above, any such Indebtedness shall be declared to
be due and payable, or required to be prepaid other than by a regularly scheduled required prepayment or as a mandatory prepayment
(and, with respect to Indebtedness consisting of any Hedge Agreements, other than due to a termination event or equivalent event
pursuant to the terms of such Hedge Agreements (it being understood that clause (a)(i) above shall apply to any failure
to make any payment in excess of $30,000,000 that is required as a result of any such termination or equivalent event and that
is not otherwise being contested in good faith)), prior to the stated maturity thereof; provided that this clause (b)
shall not apply to (x) secured Indebtedness that becomes due as a result of the voluntary sale or transfer of the property
or assets securing such Indebtedness, if such sale or transfer is permitted hereunder and under the documents providing for such
Indebtedness, (y) Indebtedness which is convertible into Qualified Stock and converts to Qualified Stock in accordance with its
terms and such conversion is not prohibited hereunder, or (z) any breach or default that is (I) remedied by the Borrower or the
applicable Restricted Subsidiary or (II) waived (including in the form of amendment) by the required holders of the applicable
item of Indebtedness, in either case, prior to the acceleration of Loans pursuant to this Section 11; or
11.5 Bankruptcy, Etc. Except as otherwise permitted by Section 10.3, the Borrower or any Material Subsidiary
shall commence a voluntary case, proceeding or action concerning itself under (a) Title 11 of the United States Code entitled “Bankruptcy”
or (b) in the case of any Foreign Subsidiary that is a Material Subsidiary, any domestic or foreign law relating to bankruptcy,
judicial management, insolvency, reorganization, administration or relief of debtors in effect in its jurisdiction of incorporation,
in each case as now or hereafter in effect, or any successor thereto (collectively, the “Bankruptcy Code”);
or an involuntary case, proceeding or action is commenced against the Borrower or any Material Subsidiary and the petition is not
dismissed within 60 days after commencement of the case, proceeding or action; or a custodian (as defined in the Bankruptcy Code),
judicial manager, compulsory manager, receiver, receiver manager, trustee, liquidator, administrator, administrative receiver or
similar Person is appointed for, or takes charge of, all or substantially all of the property of the Borrower or any Material Subsidiary;
or the Borrower or any Material Subsidiary commences any other voluntary proceeding or action under any reorganization, arrangement,
adjustment of debt, relief of debtors, dissolution, insolvency, winding-up, administration or liquidation or similar law of any
jurisdiction whether now or hereafter in effect relating to the Borrower or any Material Subsidiary; or there is commenced against
the Borrower or any Material Subsidiary any such proceeding or action that remains undismissed for a period of 60 days; or the
Borrower or any Material Subsidiary is adjudicated insolvent or bankrupt; or any order of relief or other order approving any such
case or proceeding or action is entered; or the Borrower or any Material Subsidiary suffers any appointment of any custodian receiver,
receiver manager, trustee, administrator or the like for it or any substantial part of its property to continue undischarged or
unstayed for a period of 60 days; or the Borrower or any Material Subsidiary makes a general assignment for the benefit of creditors;
or any corporate action is taken by the Borrower or any Material Subsidiary for the purpose of effecting any of the foregoing;
or
11.6
ERISA. (a) An ERISA Event or a Foreign Plan Event shall have occurred, (b) a trustee shall be appointed by
a United States district court to administer any Pension Plan(s), (c) the PBGC shall institute proceedings to terminate any Pension
Plan(s), or (d) any Credit Party or any of their respective ERISA Affiliates shall have been notified by the sponsor of a Multiemployer
Plan that it has incurred or will be assessed Withdrawal Liability to such Multiemployer Plan and such entity does not have reasonable
grounds for contesting such Withdrawal Liability or is not contesting such Withdrawal Liability in a timely and appropriate manner;
and in each case in clauses (a) through (d) above, such event or condition, together with all other such events or
conditions, if any, would reasonably be expected to result in a Material Adverse Effect; or
11.7 Credit Documents; Guarantee. Any material provision of any Credit Document shall for any reason be asserted
in writing by any Credit Party not to be a legal, valid and binding obligation of any party thereto (other than in accordance with
its terms). Any Guarantee provided by any Credit Party or any material provision thereof shall cease to be in full force or effect
(other than pursuant to the terms hereof and thereof) or any such Guarantor thereunder or any other Credit Party shall deny or
disaffirm in writing any such Guarantor’s obligations under the Guarantee; or
11.8
Pledge Agreement. The Pledge Agreement or any other Security Document pursuant to which the Capital Stock
or Stock Equivalents of the Borrower or any Subsidiary is pledged shall cease to be in full force or effect or any material collateral
pledged thereunder shall cease to be subject to a valid and perfected security interest (other than pursuant to the terms hereof
or thereof, as a result of acts or omissions of the Collateral Agent or any Lender or as a result of the Collateral Agent’s
failure to maintain possession of any Capital Stock or Stock Equivalents that have been previously delivered to it) or any pledgor
thereunder or any Credit Party shall deny or disaffirm in writing any pledgor’s obligations under any Security Document;
or
11.9
Security Agreement. The Security Agreement or any other Security Document pursuant to which the assets of
the Borrower or any Material Subsidiary are pledged as Collateral shall cease to be in full force or effect or any material collateral
pledged thereunder shall cease to be subject to a valid and perfected security interest (other than pursuant to the terms hereof
or thereof, as a result of acts or omissions of the Collateral Agent in respect of certificates, promissory notes or instruments
actually delivered to it (including as a result of the Collateral Agent’s failure to file a Uniform Commercial Code continuation
statement)) or any grantor thereunder or any Credit Party shall deny or disaffirm in writing any grantor’s obligations under
the Security Agreement or any other Security Document; or
11.10 Judgments.
One or more final judgments or decrees shall be entered against the Borrower or any of the Restricted Subsidiaries involving a
liability in excess of $30,000,000 in the aggregate for all such judgments and decrees for the Borrower and its Restricted Subsidiaries
(to the extent not covered by insurance or indemnities as to which the applicable insurance company or third party has not denied
coverage) and any such judgments or decrees shall not have been satisfied, vacated, discharged or stayed or bonded pending appeal
within 60 days after the entry thereof; or
11.11 Change
of Control. A Change of Control shall occur.
11.12 Remedies Upon Event of Default. If an Event of Default occurs and is continuing, the Administrative Agent
shall, upon the written request of the Required Lenders, by written notice to the Borrower, take any or all of the following actions,
without prejudice to the rights of the Administrative Agent or any Lender to enforce its claims against the Borrower, except as
otherwise specifically provided for in this Agreement (provided that, if an Event of Default specified in Section 11.5
shall occur with respect to the Borrower, the result that would occur upon the giving of written notice by the Administrative Agent
as specified in clauses (i), (ii), (iii), and (iv) below shall occur automatically without the giving
of any such notice): (i) declare the Total Revolving Credit Commitment terminated, whereupon the Revolving Credit Commitment of
each Lender shall forthwith terminate immediately and any Fees theretofore accrued shall forthwith become due and payable without
any other notice of any kind; (ii) declare the principal of and any accrued interest and fees in respect of all Loans and all Obligations
to be, whereupon the same shall become, forthwith due and payable without presentment, demand, protest or other notice of any kind,
all of which are hereby waived by the Borrower to the extent permitted by applicable law; (iii) terminate any Letter of Credit
that may be terminated in accordance with its terms; and/or (iv) direct the Borrower to pay (and the Borrower agree that upon receipt
of such notice, or upon the occurrence of an Event of Default specified in Section 11.5 with respect to the Borrower, it
will pay) to the Administrative Agent at the Administrative Agent’s Office such additional amounts of cash, to be held as
security for the Borrower’s respective Reimbursement Obligations for Unpaid Drawings that may subsequently occur thereunder,
equal to the aggregate Stated Amount of all Letters of Credit issued and then outstanding. In the case of an Event of Default under
Section 11.3(a) in respect of a failure to observe or perform the covenant under Section 10.7, provided that
the actions hereinafter described will be permitted to occur only following the expiration of the ability to effectuate the Cure
Right if such Cure Right has not been so exercised.
11.13 Application
of Proceeds. Any amount received by the Administrative Agent or the Collateral Agent from any Credit Party (or from proceeds
of any Collateral) following any acceleration of the Obligations under this Agreement or any Event of Default with respect to
the Borrower under Section 11.4 shall be applied:
(i) first, to the payment of all reasonable and documented costs and expenses incurred by the Administrative Agent
or the Collateral Agent in connection with any collection or sale of the Collateral or otherwise in connection with any Credit
Document, including all court costs and the reasonable fees and expenses of its agents and legal counsel, the repayment of all
advances made by the Administrative Agent or the Collateral Agent hereunder or under any other Credit Document on behalf of any
Credit Party and any other reasonable and documented costs or expenses incurred in connection with the exercise of any right or
remedy hereunder or under any other Credit Document to the extent reimbursable hereunder or thereunder;
(ii)
second, to the Secured Parties, an amount (x) equal to all Obligations owing to them on the date of any distribution
and (y) sufficient to Cash Collateralize all Letters of Credit Outstanding on the date of any distribution, and, if such moneys
shall be insufficient to pay such amounts in full and Cash Collateralize all Letters of Credit Outstanding, then ratably (without
priority of any one over any other) to such Secured Parties in proportion to the unpaid amounts thereof and to Cash Collateralize
the Letters of Credit Outstanding; and
(iii) third,
any surplus then remaining shall be paid to the applicable Credit Parties or their successors or assigns or to whomsoever may
be lawfully entitled to receive the same or as a court of competent jurisdiction may direct;
provided
that any amount applied to Cash Collateralize any Letters of Credit Outstanding that has not been applied to reimburse the Borrower
for Unpaid Drawings under the applicable Letters of Credit at the time of expiration of all such Letters of Credit shall be applied
by the Administrative Agent in the order specified in clauses (i) through (iii) above. Notwithstanding the foregoing,
amounts received from any Guarantor that is not an “Eligible Contract Participant” (as defined in the Commodity Exchange
Act) shall not be applied to its Obligations that are Excluded Swap Obligations.
11.14 Equity Cure. Notwithstanding anything to the contrary contained in this Section 11, in the event that
the Borrower fails to comply with the requirement of the financial covenant set forth in Section 10.7, from the beginning
of the most recently ended fiscal period until the expiration of the 10th Business Day following the date financial statements
referred to in Sections 9.1(a) or (b) are required to be delivered in respect of such fiscal period for which such
financial covenant is being measured, any holder of Capital Stock or Stock Equivalents of the Borrower or any direct or indirect
parent of the Borrower shall have the right to cure such failure (the “Cure Right”) by causing cash net equity
proceeds derived from an issuance of Capital Stock or Stock Equivalents (other than Disqualified Stock, unless reasonably satisfactory
to the Administrative Agent) by the Borrower or from a contribution to the common equity capital of the Borrower, and upon receipt
by the Borrower of such cash contribution (such cash amount being referred to as the “Cure Amount”) pursuant
to the exercise of such Cure Right, such financial covenant shall be recalculated giving effect to the following pro forma adjustments:
(a) Consolidated EBITDA of the Borrower and its Restricted Subsidiaries on a consolidated basis shall be increased, solely
for the purpose of determining the existence of an Event of Default resulting from a breach of the financial covenant set forth
in Section 10.7 with respect to any period of four consecutive fiscal quarters that includes the fiscal quarter for which
the Cure Right was exercised and not for any other purpose under this Agreement, by an amount equal to the Cure Amount;
(b) Consolidated Total Debt shall not be decreased from the proceeds of the Cure Amount (including, without limitation,
by means of “cash netting”) for calculating compliance with the financial covenant in Section 10.7 for the fiscal
quarter for which such Cure Amount is deemed applied; provided the amount of Consolidated Total Debt may be reduced for
purposes of determining compliance with the financial covenant set forth in Section 10.7 in subsequent fiscal quarters to
the extent the proceeds of the Cure Amount are applied to prepay Indebtedness; and
(c) if, after giving effect to the foregoing recalculations, the Borrower shall then be in compliance with the requirements
of the financial covenant set forth in Section 10.7, the Borrower shall be deemed to have satisfied the requirements of
the financial covenant set forth in Section 10.7 as of the relevant date of determination with the same effect as though
there had been no failure to comply therewith at such date, and the applicable breach or default of such financial covenants that
had occurred shall be deemed cured for the purposes of this Agreement; provided that (i) in each period of four consecutive
fiscal quarters there shall be at least two fiscal quarters in which no Cure Right is made, (ii) there shall be a maximum of five
Cure Rights made during the term of this Agreement, (iii) each Cure Amount shall be no greater than the amount expected to be required
to cause the Borrower to be in compliance with the financial covenant set forth in Section 10.7; and (iv) all Cure Amounts
shall be disregarded for the purposes of any financial ratio determination under the Credit Documents other than for determining
compliance with Section 10.7.
12.1 Appointment.
(a) Each Lender hereby irrevocably designates and appoints the Administrative Agent as the agent of such Lender under
this Agreement and the other Credit Documents and irrevocably authorizes the Administrative Agent, in such capacity, to take such
action on its behalf under the provisions of this Agreement and the other Credit Documents and to exercise such powers and perform
such duties as are expressly delegated to the Administrative Agent by the terms of this Agreement and the other Credit Documents,
together with such other powers as are reasonably incidental thereto. The provisions of this Section 12 (other than Section
12.1(c) with respect to the Joint Lead Arrangers and Bookrunners and Sections 12.1, 12.9, 12.11 and 12.12
with respect to the Borrower) are solely for the benefit of the Agents and the Lenders, none of the Borrower or any other Credit
Party shall have rights as third party beneficiary of any such provision. Notwithstanding any provision to the contrary elsewhere
in this Agreement, the Administrative Agent shall not have any duties or responsibilities, except those expressly set forth herein,
or any fiduciary relationship with any Lender, and no implied covenants, functions, responsibilities, duties, obligations or liabilities
shall be read into this Agreement or any other Credit Document or otherwise exist against the Administrative Agent. In performing
its functions and duties hereunder, each Agent shall act solely as an agent of Lenders and does not assume and shall not be deemed
to have assumed any obligation towards or relationship of agency or trust with or for the Borrower or any of its respective Subsidiaries.
(b) The
Administrative Agent, each Lender and the Letter of Credit Issuer hereby irrevocably designate and appoint the Collateral Agent
as the agent with respect to the Collateral, and each of the Administrative Agent, each Lender and the Letter of Credit Issuer
irrevocably authorizes the Collateral Agent, in such capacity, to take such action on its behalf under the provisions of this
Agreement and the other Credit Documents and to exercise such powers and perform such duties as are expressly delegated to the
Collateral Agent by the terms of this Agreement and the other Credit Documents, together with such other powers as are reasonably
incidental thereto. Notwithstanding any provision to the contrary elsewhere in this Agreement, the Collateral Agent shall not
have any duties or responsibilities except those expressly set forth herein, or any fiduciary relationship with any of the Administrative
Agent, the Lenders or the Letter of Credit Issuers, and no implied covenants, functions, responsibilities, duties, obligations
or liabilities shall be read into this Agreement or any other Credit Document or otherwise exist against the Collateral Agent.
(c) Each
of the Joint Lead Arrangers and Bookrunners each in its capacity as such, shall not have any obligations, duties or responsibilities
under this Agreement but shall be entitled to all benefits of this Section 12.
12.2 Delegation
of Duties. The Administrative Agent and the Collateral Agent may each execute any of its duties under this Agreement and the
other Credit Documents by or through agents, sub-agents, employees or attorneys-in-fact and shall be entitled to advice of counsel
concerning all matters pertaining to such duties. Neither the Administrative Agent nor the Collateral Agent shall be responsible
for the negligence or misconduct of any agents, subagents or attorneys-in-fact selected by it in the absence of its gross negligence
or willful misconduct (as determined in the final non-appealable judgment of a court of competent jurisdiction).
12.3 Exculpatory Provisions. No Agent nor any of its officers, directors, employees, agents, attorneys-in-fact
or Affiliates shall be (a) liable for any action lawfully taken or omitted to be taken by any of them under or in connection with
this Agreement or any other Credit Document (except for its or such Person’s own gross negligence or willful misconduct,
as determined in the final non-appealable judgment of a court of competent jurisdiction, in connection with its duties expressly
set forth herein) or (b) responsible in any manner to any of the Lenders or any participant for any recitals, statements, representations
or warranties made by any Credit Party or any officer thereof contained in this Agreement or any other Credit Document or in any
certificate, report, statement or other document referred to or provided for in, or received by such Agent under or in connection
with, this Agreement or any other Credit Document or for the value, validity, effectiveness, genuineness, enforceability or sufficiency
of this Agreement or any other Credit Document, or the creation, perfection or priority of any Lien or security interest created
or purported to be created under the Security Documents, or for any failure of any Credit Party to perform its obligations hereunder
or thereunder. No Agent shall be under any obligation to any Lender to ascertain or to inquire as to the observance or performance
of any of the agreements contained in, or conditions of, this Agreement or any other Credit Document, or to inspect the properties,
books or records of any Credit Party or any Affiliate thereof. The Collateral Agent shall not be under any obligation to the Administrative
Agent or any Lender to ascertain or to inquire as to the observance or performance of any of the agreements contained in, or conditions
of, this Agreement or any other Credit Document, or to inspect the properties, books or records of any Credit Party.
12.4 Reliance by Agents. The Administrative Agent and the Collateral Agent shall be entitled to rely, and shall
be fully protected in relying, upon any writing, resolution, notice, consent, certificate, affidavit, letter, telecopy, telex or
teletype message, statement, order or other document or instruction believed by it to be genuine and correct and to have been signed,
sent or made by the proper Person or Persons and upon advice and statements of legal counsel (including counsel to the Borrower),
independent accountants and other experts selected by the Administrative Agent or the Collateral Agent. The Administrative Agent
may deem and treat the Lender specified in the Register with respect to any amount owing hereunder as the owner thereof for all
purposes unless a written notice of assignment, negotiation or transfer thereof shall have been filed with the Administrative Agent.
The Administrative Agent and the Collateral Agent shall be fully justified in failing or refusing to take any action under this
Agreement or any other Credit Document unless it shall first receive such advice or concurrence of the Required Lenders as it deems
appropriate or it shall first be indemnified to its satisfaction by the Lenders against any and all liability and expense that
may be incurred by it by reason of taking or continuing to take any such action. The Administrative Agent and the Collateral Agent
shall in all cases be fully protected in acting, or in refraining from acting, under this Agreement and the other Credit Documents
in accordance with a request of the Required Lenders, and such request and any action taken or failure to act pursuant thereto
shall be binding upon all the Lenders and all future holders of the Loans; provided that the Administrative Agent and the
Collateral Agent shall not be required to take any action that, in its opinion or in the opinion of its counsel, may expose it
to liability or that is contrary to any Credit Document or applicable law.
12.5 Notice
of Default. Neither the Administrative Agent nor the Collateral Agent shall be deemed to have knowledge or notice of the occurrence
of any Default or Event of Default hereunder unless the Administrative Agent or the Collateral Agent has received written notice
from a Lender or the Borrower referring to this Agreement, describing such Default or Event of Default and stating that such notice
is a “notice of default.” In the event that the Administrative Agent receives such a notice, it shall give notice
thereof to the Lenders and the Collateral Agent. The Administrative Agent shall take such action with respect to such Default
or Event of Default as shall be reasonably directed by the Required Lenders; provided that unless and until the Administrative
Agent shall have received such directions, the Administrative Agent may (but shall not be obligated to) take such action, or refrain
from taking such action, with respect to such Default or Event of Default as it shall deem advisable in the best interests of
the Lenders except to the extent that this Agreement requires that such action be taken only with the approval of the Required
Lenders or each of the Lenders, as applicable.
12.6 Non-Reliance on Administrative Agent, Collateral Agent, and Other Lenders. Each Lender expressly acknowledges
that neither the Administrative Agent nor the Collateral Agent nor any of their respective officers, directors, employees, agents,
attorneys-in-fact or Affiliates has made any representations or warranties to it and that no act by the Administrative Agent or
the Collateral Agent hereinafter taken, including any review of the affairs of any Credit Party, shall be deemed to constitute
any representation or warranty by the Administrative Agent or the Collateral Agent to any Lender or any Letter of Credit Issuer.
Each Lender and the Letter of Credit Issuer represents to the Administrative Agent and the Collateral Agent that it has, independently
and without reliance upon the Administrative Agent, the Collateral Agent or any other Lender, and based on such documents and information
as it has deemed appropriate, made its own appraisal of and investigation into the business, operations, property, financial and
other condition and creditworthiness of the Borrower and each other Credit Party and made its own decision to make its Loans hereunder
and enter into this Agreement. Each Lender also represents that it will, independently and without reliance upon the Administrative
Agent, the Collateral Agent or any other Lender, and based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit analysis, appraisals and decisions in taking or not taking action under this Agreement and
the other Credit Documents, and to make such investigation as it deems necessary to inform itself as to the business, operations,
property, financial and other condition and creditworthiness of any of the Credit Parties. Except for notices, reports, and other
documents expressly required to be furnished to the Lenders by the Administrative Agent hereunder, neither the Administrative Agent
nor the Collateral Agent shall have any duty or responsibility to provide any Lender with any credit or other information concerning
the business, assets, operations, properties, financial condition, prospects or creditworthiness of any Credit Party that may come
into the possession of the Administrative Agent or the Collateral Agent any of their respective officers, directors, employees,
agents, attorneys-in-fact or Affiliates.
12.7 Indemnification. The Lenders agree to severally indemnify each Agent in its capacity as such (to the extent
not reimbursed by the Credit Parties and without limiting the obligation of the Credit Parties to do so), ratably according to
their respective portions of the Total Credit Exposure in effect on the date on which indemnification is sought (or, if indemnification
is sought after the date upon which the Commitments shall have terminated and the Loans shall have been paid in full, ratably in
accordance with their respective portions of the Total Credit Exposure in effect immediately prior to such date), from and against
any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses, or disbursements
of any kind whatsoever that may at any time (including at any time following the payment of the Loans) be imposed on, incurred
by or asserted against an Agent in any way relating to or arising out of the Commitments, this Agreement, any of the other Credit
Documents or any documents contemplated by or referred to herein or therein or the transactions contemplated hereby or thereby
or any action taken or omitted by the Administrative Agent or the Collateral Agent under or in connection with any of the foregoing;
provided that no Lender shall be liable to an Agent for the payment of any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements resulting from such Agent’s gross negligence
or willful misconduct as determined by a final non-appealable judgment of a court of competent jurisdiction; provided, further,
that no action taken by the Administrative Agent in accordance with the directions of the Required Lenders (or such other number
or percentage of the Lenders as shall be required by the Credit Documents) shall be deemed to constitute gross negligence or willful
misconduct for purposes of this Section 12.7. In the case of any investigation, litigation or proceeding giving rise to
any liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind
whatsoever that may at any time occur (including at any time following the payment of the Loans), this Section 12.7 applies
whether any such investigation, litigation or proceeding is brought by any Lender or any other Person. Without limitation of the
foregoing, each Lender shall reimburse each Agent upon demand for its ratable share of any costs or out-of-pocket expenses (including
attorneys’ fees) incurred by such Agent in connection with the preparation, execution, delivery, administration, modification,
amendment or enforcement (whether through negotiations, legal proceedings or otherwise) of, or legal advice rendered in respect
of rights or responsibilities under, this Agreement, any other Credit Document, or any document contemplated by or referred to
herein, to the extent that such Agent is not reimbursed for such expenses by or on behalf of the Borrower; provided that
such reimbursement by the Lenders shall not affect the Borrower’s continuing Reimbursement Obligations with respect thereto.
If any indemnity furnished to any Agent for any purpose shall, in the opinion of such Agent, be insufficient or become impaired,
such Agent may call for additional indemnity and cease, or not commence, to do the acts indemnified against until such additional
indemnity is furnished; provided, in no event shall this sentence require any Lender to indemnify any Agent against any
liability, obligation, loss, damage, penalty, action, judgment, suit, cost, expense or disbursement in excess of such Lender’s
pro rata portion thereof; and provided, further, this sentence shall not be deemed to require any Lender to indemnify
any Agent against any liability, obligation, loss, damage, penalty, action, judgment, suit, cost, expense or disbursement resulting
from such Agent’s gross negligence or willful misconduct as determined by a final non-appealable judgment of a court of competent
jurisdiction. The agreements in this Section 12.7 shall survive the payment of the Loans and all other amounts payable hereunder.
The indemnity provided to each Agent under this Section 12.7 shall also apply to such Agent’s respective Affiliates,
directors, officers, members, controlling persons, employees, trustees, investment advisors and agents and successors. For the
avoidance of doubt, for purposes of this Section 12.7, the term “Lender” includes any Letter of Credit Issuer.
12.8 Agents in Their Individual Capacities. The agency hereby created shall in no way impair or affect any of the
rights and powers of, or impose any duties or obligations upon, any Agent in its individual capacity as a Lender hereunder. Each
Agent and its Affiliates may make loans to, accept deposits from and generally engage in any kind of business with any Credit Party
as though such Agent were not an Agent hereunder and under the other Credit Documents. With respect to the Loans made by it, each
Agent shall have the same rights and powers under this Agreement and the other Credit Documents as any Lender and may exercise
the same as though it were not an Agent, and the terms Lender and Lenders shall include each Agent in its individual capacity.
12.9 Successor
Agents.
(a) Each of the Administrative Agent and the Collateral Agent may at any time give notice of its resignation to the Lenders,
the Letter of Credit Issuer and the Borrower. Upon receipt of any such notice of resignation, the Required Lenders shall have the
right, subject to the consent of the Borrower (not to be unreasonably withheld or delayed) so long as no Event of Default has occurred
and is continuing, to appoint a successor, which shall be a bank with an office in the United States, or an Affiliate of any such
bank with an office in the United States. If no such successor shall have been so appointed by the Required Lenders and shall have
accepted such appointment within 30 days after the retiring Agent gives notice of its resignation, then the retiring Agent may
on behalf of the Lenders, appoint a successor Agent meeting the qualifications set forth above (including receipt of the Borrower’s
consent (not to be unreasonably withheld or delayed)); provided that if the Administrative Agent or Collateral Agent shall
notify the Borrower and the Lenders that no qualifying person has accepted such appointment, then such resignation shall nonetheless
become effective in accordance with such notice (the “Resignation Effective Date”).
(b) If the Person serving as the Administrative Agent is a Defaulting Lender pursuant to clause (v) of the definition
of “Lender Default,” the Required Lenders may to the extent permitted by applicable law, subject to the consent of
the Borrower (not to be unreasonably withheld or delayed), by notice in writing to the Borrower and such Person remove such Person
as the Administrative Agent and, in consultation with the Borrower, appoint a successor. If no such successor shall have been so
appointed by the Required Lenders and shall have accepted such appointment within 30 days (or such earlier day as shall be agreed
by the Required Lenders) (the “Removal Effective Date”), then such removal shall nonetheless become effective
in accordance with such notice on the Removal Effective Date.
(c) With
effect from the Resignation Effective Date or the Removal Effective Date (as applicable), (1) the retiring or removed agent shall
be discharged from its duties and obligations hereunder and under the other Credit Documents (except that in the case of any collateral
security held by the Collateral Agent on behalf of the Lenders or the Letter of Credit Issuer under any of the Credit Documents,
the retiring or removed Collateral Agent shall continue to hold such collateral security as nominee until such time as a successor
Collateral Agent is appointed) and (2) all payments, communications and determinations provided to be made by, to or through the
retiring or removed Administrative Agent shall instead be made by or to each Lender and the Letter of Credit Issuer directly,
until such time as the Required Lenders appoint a successor Agent as provided for above in this paragraph. Upon the acceptance
of a successor’s appointment as the Administrative Agent or the Collateral Agent, as the case may be, hereunder, and upon
the execution and filing or recording of such financing statements, or amendments thereto, and such amendments or supplements
to the Mortgages, and such other instruments or notices, as may be necessary or desirable, or as the Required Lenders may request,
in order to continue the perfection of the Liens granted or purported to be granted by the Security Documents, such successor
shall succeed to and become vested with all of the rights, powers, privileges and duties of the retiring (or retired) or removed
Agent, and the retiring or removed Agent shall be discharged from all of its duties and obligations hereunder or under the other
Credit Documents (if not already discharged therefrom as provided above in this Section 12.9). Except as provided above,
any resignation or removal of JPMorgan Chase Bank, N.A. as the Administrative Agent pursuant to this Section 12.9 shall
also constitute the resignation or removal of JPMorgan Chase Bank, N.A. as the Collateral Agent. The fees payable by the Borrower
(following the effectiveness of such appointment) to such Agent shall be the same as those payable to its predecessor unless otherwise
agreed between the Borrower and such successor. After the retiring or removed Agent’s resignation or removal hereunder and
under the other Credit Documents, the provisions of this Section 12 (including Section 12.7) and Section 13.5
shall continue in effect for the benefit of such retiring or removed Agent, its sub-agents and their respective Related Parties
in respect of any actions taken or omitted to be taken by any of them while the retiring or removed Agent was acting as an Agent.
(d) Any
resignation by or removal of JPMorgan Chase Bank, N.A. as the Administrative Agent pursuant to this Section 12.9 shall
also constitute its resignation or removal, as applicable, as a Letter of Credit Issuer (if such Affiliate or JPMorgan Chase Bank,
N.A.is a Letter of Credit Issuer). Upon the acceptance of a successor’s appointment as the Administrative Agent hereunder,
(a) such successor shall succeed to and become vested with all of the rights, powers, privileges and duties of the retiring Letter
of Credit Issuer, (b) the retiring Letter of Credit Issuer (if an Affiliate of JPMorgan Chase Bank, N.A. is a Letter of Credit
Issuer or if JPMorgan Chase Bank, N.A.is a Letter of Credit Issuer) shall be discharged from all of their respective duties and
obligations hereunder or under the other Credit Documents, and (c) the successor Letter of Credit Issuer shall issue letters of
credit in substitution for the Letters of Credit issued by such Affiliate of the Administrative Agent or the Administrative Agent,
if any, outstanding at the time of such succession or make other arrangements satisfactory to the retiring Letter of Credit Issuer
(if an Affiliate of JPMorgan Chase Bank, N.A. or JPMorgan Chase Bank, N.A. is a Letter of Credit Issuer) to effectively assume
the obligations of the retiring Letter of Credit Issuer (if an Affiliate or JPMorgan Chase Bank, N.A. or JPMorgan Chase Bank,
N.A. is a Letter of Credit Issuer) with respect to such Letters of Credit.
12.10 Withholding
Tax. To the extent required by any applicable law, the Administrative Agent may withhold from any payment to any Lender under
any Credit Document an amount equivalent to any applicable withholding Tax. If the Internal Revenue Service or any authority of
the United States or other jurisdiction asserts a claim that the Administrative Agent did not properly withhold Tax from amounts
paid to or for the account of any Lender for any reason (including because the appropriate form was not delivered, was not properly
executed, or because such Lender failed to notify the Administrative Agent of a change in circumstances that rendered the exemption
from, or reduction of, withholding Tax ineffective) or if the Administrative Agent reasonably determines that a payment was made
to a Lender pursuant to this Agreement without deduction of applicable withholding Tax from such payment, such Lender shall indemnify
the Administrative Agent (to the extent that the Administrative Agent has not already been reimbursed by any applicable Credit
Party and without limiting the obligation of any applicable Credit Party to do so) fully for all amounts paid, directly or indirectly,
by the Administrative Agent as Tax or otherwise, including penalties, additions to Tax and interest, together with all expenses
incurred, including legal expenses, allocated staff costs and any out-of-pocket expenses. A certificate as to the amount of such
payment or liability delivered to any Lender by the Administrative Agent shall be conclusive absent manifest error. Each Lender
hereby authorizes the Administrative Agent to set off and apply any and all amounts at any time owing to such Lender under this
Agreement or any other Credit Document against any amount due to the Administrative Agent under this Section 12.10. The
agreements in Section 12.10 shall survive the resignation and/or replacement of the Administrative Agent, any assignment
of rights by, or the replacement of, a Lender, the termination of the Commitments and the repayment, satisfaction or discharge
of all other Obligations. For the avoidance of doubt, for purposes of this Section 12.10, the term Lender includes the
Letter of Credit Issuer.
12.11 Agents Under Security Documents and Guarantee. Each Secured Party hereby further authorizes the Administrative
Agent or the Collateral Agent, as applicable, on behalf of and for the benefit of the Secured Parties, to be the agent for and
representative of the Secured Parties with respect to the Collateral and the Security Documents. Subject to Section 13.1,
without further written consent or authorization from any Secured Party, the Administrative Agent or the Collateral Agent, as applicable,
may execute any documents or instruments necessary to (a) release any Lien on any property granted to or held by the Administrative
Agent or the Collateral Agent (or any sub-agent thereof) under any Credit Document (i) upon the termination of all Commitments
and all Letters of Credit (other than Letters of Credit that have been Cash Collateralized) and the payment in full (or Cash Collateralization)
of all Obligations (except for contingent indemnification obligations in respect of which a claim has not yet been made and Secured
Hedge Obligations and Secured Cash Management Obligations), (ii) that is sold or transferred as part of or in connection with any
sale or other transfer permitted hereunder or under any other Credit Document to a Person that is not a Credit Party, (iii) if
the property subject to such Lien is owned by a Guarantor, upon the release of such Guarantor from its Guarantee otherwise in accordance
with the Credit Documents, (iv) as to the extent provided in the Security Documents, (v) that constitutes Excluded Property or
Excluded Stock and Stock Equivalents or (vi) if approved, authorized or ratified in writing in accordance with Section 13.1;
(b) release any Guarantor from its obligations under the Guarantee if such Person ceases to be a Restricted Subsidiary (or becomes
an Excluded Subsidiary) as a result of a transaction or designation permitted hereunder; (c) subordinate any Lien on any property
granted to or held by the Administrative Agent or the Collateral Agent under any Credit Document to the holder of any Lien permitted
under clause (vi) (solely with respect to Section 10.1(d)); or (d) enter into subordination or intercreditor agreements
with respect to Indebtedness to the extent the Administrative Agent or the Collateral Agent is otherwise contemplated herein as
being a party to such intercreditor or subordination agreement.
The
Collateral Agent shall have its own independent right to demand payment of the amounts payable by the Borrower under this Section
12.11, irrespective of any discharge of the Borrower’s obligations to pay those amounts to the other Lenders resulting
from failure by them to take appropriate steps in insolvency proceedings affecting the Borrower to preserve their entitlement to
be paid those amounts.
Any
amount due and payable by the Borrower to the Collateral Agent under this Section 12.11 shall be decreased to the extent
that the other Lenders have received (and are able to retain) payment in full of the corresponding amount under the other provisions
of the Credit Documents and any amount due and payable by the Borrower to the Collateral Agent under those provisions shall be
decreased to the extent that the Collateral Agent has received (and is able to retain) payment in full of the corresponding amount
under this Section 12.11.
12.12
Right to Realize on Collateral and Enforce Guarantee. Anything contained in any of the Credit Documents to
the contrary notwithstanding, the Borrower, the Agents, and each Secured Party hereby agree that (i) no Secured Party shall have
any right individually to realize upon any of the Collateral or to enforce the Guarantee, it being understood and agreed that all
powers, rights, and remedies hereunder may be exercised solely by the Administrative Agent, on behalf of the Secured Parties in
accordance with the terms hereof and all powers, rights, and remedies under the Security Documents may be exercised solely by the
Collateral Agent, and (ii) in the event of a foreclosure by the Collateral Agent on any of the Collateral pursuant to a public
or private sale or other disposition, the Collateral Agent or any Lender may be the purchaser or licensor of any or all of such
Collateral at any such sale or other disposition and the Collateral Agent, as agent for and representative of the Secured Parties
(but not any Lender or Lenders in its or their respective individual capacities unless Required Lenders shall otherwise agree in
writing) shall be entitled, for the purpose of bidding and making settlement or payment of the purchase price for all or any portion
of the Collateral sold at any such public sale, to use and apply any of the Obligations as a credit on account of the purchase
price for any collateral payable by the Collateral Agent at such sale or other disposition. No holder of Secured Hedge Obligations
or Secured Cash Management Obligations shall have any rights in connection with the management or release of any Collateral or
of the obligations of any Credit Party under this Agreement. No holder of Secured Hedge Obligations or Secured Cash Management
Obligations that obtains the benefits of any Guarantee or any Collateral by virtue of the provisions hereof or of any other Credit
Document shall have any right to notice of any action or to consent to, direct or object to any action hereunder or under any other
Credit Document or otherwise in respect of the Collateral (including the release or impairment of any Collateral) other than in
its capacity as a Lender or Agent and, in such case, only to the extent expressly provided in the Credit Documents. Notwithstanding
any other provision of this Agreement to the contrary, the Administrative Agent shall not be required to verify the payment of,
or that other satisfactory arrangements have been made with respect to, Obligations arising under Secured Hedge Agreements and
Secured Cash Management Agreements, unless the Administrative Agent has received written notice of such Obligations, together with
such supporting documentation as the Administrative Agent may request, from the applicable Cash Management Bank or Hedge Bank,
as the case may be.
12.13
[Reserved].
12.14
The Administrative Agent May File Proofs of Claim. In case of the pendency of any proceeding under the Bankruptcy
Code or any other judicial proceeding relative to any Credit Party, the Administrative Agent (irrespective of whether the principal
of any Loan or outstanding Letter of Credit shall then be due and payable as herein expressed or by declaration or otherwise and
irrespective of whether the Administrative Agent shall have made any demand on the Borrower) shall be entitled and empowered, by
intervention in such proceeding or otherwise:
(a)
to file and prove a claim for the whole amount of the principal and interest owing and unpaid in respect of the Loans,
Letters of Credit Outstanding and all other Obligations that are owing and unpaid and to file such other documents as may be necessary
or advisable in order to have the claims of the Lenders, the Letter of Credit Issuer and the Administrative Agent (including any
claim for the reasonable compensation, expenses, disbursements and advances of the Lenders, the Letter of Credit Issuer and the
Administrative Agent and their respective agents and counsel and all other amounts due the Lenders, the Letter of Credit Issuer
and the Administrative Agent under Section 4 and Section 12.4) allowed in such judicial proceeding; and
(b)
to collect and receive any monies or other property payable or deliverable on any such claims and to distribute the
same; and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceeding
is hereby authorized by each Lender and the Letter of Credit Issuer to make such payments to the Administrative Agent and, if the
Administrative Agent shall consent to the making of such payments directly to the Lenders and the Letter of Credit Issuer, to pay
to the Administrative Agent any amount due for the reasonable compensation, expenses, disbursements and advances of the Administrative
Agent and its Agents and counsel, and any other amounts due the Administrative Agent under Section 4 and Section 12.4.
Nothing
contained herein shall be deemed to authorize the Administrative Agent to authorize or consent to or accept or adopt on behalf
of any Lender or the Letter of Credit Issuer any plan of reorganization, arrangement, adjustment or composition affecting the Obligations
or the rights of any Lender or the Letter of Credit Issuer to authorize the Administrative Agent to vote in respect of the claim
of any Lender or the Letter of Credit Issuer or in any such proceeding.
12.15
ERISA Representation of the Lenders.
(a)
Each Lender (x) represents and warrants, as of the date such Person became a Lender party hereto, to, and (y) covenants,
from the date such Person became a Lender party hereto to the date such Person ceases being a Lender party hereto, for the benefit
of, the Administrative Agent, the Agents and their respective Affiliates and not, for the avoidance of doubt, to or for the benefit
of the Borrower or any other Credit Party, that at least one of the following is and will be true:
(i)
such Lender is not using “plan assets” (within the meaning of Section 3(42) of ERISA or otherwise) of
one or more Benefit Plans with respect to such Lender’s entrance into, participation in, administration of and performance
of the Loans, the Letters of Credit, the Commitments, or this Agreement,
(ii)
the transaction exemption set forth in one or more PTEs, such as PTE 84-14 (a class exemption for certain transactions
determined by independent qualified professional asset managers), PTE 95-60 (a class exemption for certain transactions involving
insurance company general accounts), PTE 90-1 (a class exemption for certain transactions involving insurance company pooled separate
accounts), PTE 91-38 (a class exemption for certain transactions involving bank collective investment funds) or PTE 96-23 (a class
exemption for certain transactions determined by in-house asset managers), is applicable with respect to such Lender’s entrance
into, participation in, administration of and performance of the Loans, the Letters of Credit, the Commitments and this Agreement,
(iii)
(A) such Lender is an investment fund managed by a “Qualified Professional Asset Manager” (within the
meaning of Part VI of PTE 84-14), (B) such Qualified Professional Asset Manager made the investment decision on behalf of such
Lender to enter into, participate in, administer and perform the Loans, the Letters of Credit, the Commitments and this Agreement,
(C) the entrance into, participation in, administration of and performance of the Loans, the Letters of Credit, the Commitments
and this Agreement satisfies the requirements of subsections (b) through (g) of Part I of PTE 84-14 and (D) to the best knowledge
of such Lender, the requirements of subsection (a) of Part I of PTE 84-14 are satisfied with respect to such Lender’s entrance
into, participation in, administration of and performance of the Loans, the Letters of Credit, the Commitments and this Agreement,
or
(iv)
such other representation, warranty and covenant as may be agreed in writing between the Administrative Agent, in
its sole discretion, and such Lender.
(b)
In addition, unless either (1) subclause (i) in the immediately preceding clause (a) is true with respect
to a Lender or (2) a Lender has provided another representation, warranty and covenant in accordance with subclause (iv)
in the immediately preceding clause (a), such Lender further (x) represents and warrants, as of the date such Person became
a Lender party hereto, to, and (y) covenants, from the date such Person became a Lender party hereto to the date such Person ceases
being a Lender party hereto, for the benefit of, the Administrative Agent, the Agents and their respective Affiliates and not,
for the avoidance of doubt, to or for the benefit of the Borrower or any other Credit Party, that the Administrative Agent is not
a fiduciary with respect to the assets of such Lender involved in such Lender’s entrance into, participation in, administration
of and performance of the Loans, the Letters of Credit, the Commitments and this Agreement (including in connection with the reservation
or exercise of any rights by the Administrative Agent under this Agreement, any Credit Document or any documents related hereto
or thereto).
Section 13. Miscellaneous
13.1
Amendments, Waivers, and Releases. Except as otherwise expressly set forth in the Credit Documents, neither
this Agreement nor any other Credit Document, nor any terms hereof or thereof, may be amended, supplemented or modified except
in accordance with the provisions of this Section 13.1. Except as provided to the contrary under Section 2.10(b),
(c) and (d) Section 2.14 or 2.15 or the fifth and sixth paragraphs hereof in respect of Replacement Term Loans,
and other than with respect to any amendment, modification or waiver contemplated in the proviso to clause (i) below, which
shall only require the consent of the Lenders expressly set forth therein and not the Required Lenders, the Required Lenders may,
or, with the written consent of the Required Lenders, the Administrative Agent and/or the Collateral Agent may, from time to time,
(a) enter into with the relevant Credit Party or Credit Parties written amendments, supplements or modifications hereto and to
the other Credit Documents for the purpose of adding any provisions to this Agreement or the other Credit Documents or changing
in any manner the rights of the Lenders or of the Credit Parties hereunder or thereunder or (b) waive in writing, on such terms
and conditions as the Required Lenders or the Administrative Agent and/or the Collateral Agent, as the case may be, may specify
in such instrument, any of the requirements of this Agreement or the other Credit Documents or any Default or Event of Default
and its consequences; provided, however, that each such waiver and each such amendment, supplement or modification
shall be effective only in the specific instance and for the specific purpose for which given; and provided, further,
that no such waiver and no such amendment, supplement or modification shall (x) (i) forgive or reduce any portion of any Loan or
extend the final scheduled maturity date of any Loan or reduce the stated rate (it being understood that only the consent of the
Required Lenders shall be necessary to waive any obligation of the Borrower to pay interest at the “default rate” or
amend Section 2.8(c)), or forgive any portion thereof, or reduce or forgive any interest or fee payable hereunder, or extend
the date for the payment of any interest or fee payable hereunder (other than as a result of waiving the applicability of any post-default
increase in interest rates), or extend the final expiration date of any Letter of Credit beyond the L/C Facility Maturity Date,
or amend or modify any provisions of Sections 5.2(c), 5.3(a) (with respect to the ratable allocation of any payments
only), 11.13, 13.8(a) or 13.20, or make any Loan, interest, Fee or other amount payable in any currency other
than expressly provided herein, in each case without the written consent of each Lender directly and adversely affected thereby;
provided that a waiver of any condition precedent in Section 6 or 7 of this Agreement, the waiver of any Default,
Event of Default, default interest, mandatory prepayment or reductions, any modification, waiver or amendment to the financial
covenant definitions or financial ratios or any component thereof or the waiver of any other covenant shall not constitute an increase
of any Commitment of a Lender, a reduction or forgiveness in the interest rates or the fees or premiums or a postponement of any
date scheduled for the payment of principal, premium or interest or an extension of the final maturity of any Loan or the scheduled
termination date of any Commitment, in each case for purposes of this clause (i), or (ii) consent to the assignment
or transfer by the Borrower of its rights and obligations under any Credit Document to which it is a party (except as permitted
pursuant to Section 10.3), in each case without the written consent of each Lender, or (iii) amend, modify or waive any
provision of Section 12 without the written consent of the then-current Administrative Agent and Collateral Agent in a manner
that directly and adversely affects such Person, or (iv) amend, modify or waive any provision of Section 3 with respect
to any Letter of Credit without the written consent of the Letter of Credit Issuer to the extent such amendment, modification or
waiver directly and adversely affects the Letters of Credit Issuer, or (v) [reserved], or (vi) change any Revolving Credit Commitment
to a Term Loan Commitment, or change any Term Loan Commitment to a Revolving Credit Commitment, in each case without the prior
written consent of each Lender directly and adversely affected thereby, or (vii) release all or substantially all of the Guarantors
under the Guarantees (except as expressly permitted by the Guarantees or this Agreement) or release all or substantially all of
the Collateral under the Security Documents (except as expressly permitted by the Security Documents or this Agreement) without
the prior written consent of each Lender, or (viii) decrease the Initial Term A Loan Repayment Amount applicable to Initial Term
A Loans or extend any scheduled Term Loan Repayment Date applicable to Initial Term A Loans, in each case without the written consent
of each Lender directly and adversely affected thereby, or (ix) reduce the percentages specified in the definitions of the terms
“Required Lenders,” “Required Revolving Credit Lenders” or “Required Initial Term A Loan Lenders”
or amend, modify or waive any provision of this Section 13.1 that has the effect of decreasing the number of Lenders that
must approve any amendment, modification or waiver, without the written consent of each Lender, (y) notwithstanding anything to
the contrary in clause (x), (i) extend the final expiration date of any Lender’s Commitment or (ii) increase the aggregate
amount of the Commitments of any Lender, in each case, without the written consent of such Lender, or (z) in connection with an
amendment that addresses solely a repricing transaction in which any Class of Term Loans is refinanced with a replacement Class
of Term Loans bearing (or is modified in such a manner such that the resulting Term Loans bear) a lower Effective Yield, only the
consent of the Lenders holding Term Loans subject to such permitted repricing transaction that will continue as a Lender in respect
of the repriced tranche of Term Loans or modified Term Loans.
Notwithstanding
anything to the contrary herein, no Defaulting Lender shall have any right to approve or disapprove any amendment, waiver or consent
hereunder, except (x) that the Commitment of such Lender may not be increased or extended without the consent of such Lender and
(y) for any such amendment, waiver or consent that treats such Defaulting Lender disproportionately from the other Lender of the
same Class (other than because of its status as a Defaulting Lender).
Any
such waiver and any such amendment, supplement or modification shall apply equally to each of the affected Lenders and shall be
binding upon the Borrower, such Lenders, the Administrative Agent and all future holders of the affected Loans. In the case of
any waiver, the Borrower, the Lenders and the Administrative Agent shall be restored to their former positions and rights hereunder
and under the other Credit Documents, and any Default or Event of Default waived shall be deemed to be cured and not continuing,
it being understood that no such waiver shall extend to any subsequent or other Default or Event of Default or impair any right
consequent thereon. In connection with the foregoing provisions, the Administrative Agent may, but shall have no obligations to,
with the concurrence of any Lender, execute amendments, modifications, waivers or consents on behalf of such Lender.
Notwithstanding
the foregoing, in addition to any credit extensions and related Joinder Agreement(s) effectuated without the consent of Lenders
in accordance with Section 2.14, this Agreement may be amended (or amended and restated) with the written consent of the
Required Lenders, the Administrative Agent and the Borrower (a) to add one or more additional credit facilities to this Agreement
and to permit the extensions of credit from time to time outstanding thereunder and the accrued interest and fees in respect thereof
to share ratably in the benefits of this Agreement and the other Credit Documents with the Term Loans and the Revolving Credit
Loans and the accrued interest and fees in respect thereof and (b) to include appropriately the Lenders holding such credit facilities
in any determination of the Required Lenders and other definitions related to such new Term Loans and Revolving Credit Loans.
In
addition, notwithstanding the foregoing, this Agreement may be amended with the written consent of the Administrative Agent, the
Borrower and the Lenders providing the relevant Replacement Term Loans to permit the refinancing of all outstanding Term Loans
of any Class (“Refinanced Term Loans”) with a replacement term loan tranche (“Replacement Term Loans”)
hereunder; provided that (a) the aggregate principal amount of such Replacement Term Loans shall not exceed the aggregate
principal amount of such Refinanced Term Loans (plus an amount equal to all accrued but unpaid interest, fees, premiums,
and expenses incurred in connection therewith), (b) the Applicable Margin for such Replacement Term Loans shall not be higher than
the Applicable Margin for such Refinanced Term Loans, unless any such Applicable Margin applies after the Initial Term A Loan Maturity
Date, (c) the weighted average life to maturity of such Replacement Term Loans shall not be shorter than the weighted average life
to maturity of such Refinanced Term Loans at the time of such refinancing (except to the extent of nominal amortization for periods
where amortization has been eliminated as a result of prepayment of the applicable Term Loans), and (d) the covenants, events of
default and guarantees shall be not materially more restrictive (taken as a whole) (as determined in good faith by the Borrower)
to the Lenders providing such Replacement Term Loans than the covenants, events of default and guarantees applicable to such Refinanced
Term Loans, except to the extent necessary to provide for covenants, events of default and guarantees applicable to any period
after the maturity date in respect of the Refinanced Term Loans in effect immediately prior to such refinancing.
The
Lenders hereby irrevocably agree that the Liens granted to the Collateral Agent by the Credit Parties on any Collateral shall be
automatically released (i) in full, upon the termination of this Agreement all Commitments and all Letters of Credit (other than
Letters of Credit that have been Cash Collateralized pursuant to arrangement reasonably satisfactory to the Letter of Credit Issuers)
and the payment of all Obligations (except for (w) contingent indemnification obligations in respect of which a claim has not yet
been made, (x) Secured Hedge Obligations, (y) Cash Collateralized Letters of Credit pursuant to arrangements reasonably acceptable
to the applicable Letter of Credit Issuer, and (z) Secured Cash Management Obligations), (ii) upon the sale or other disposition
of such Collateral (including as part of or in connection with any other sale or other disposition permitted hereunder) to any
Person other than another Credit Party, to the extent such sale or other disposition is made in compliance with the terms of this
Agreement (and the Collateral Agent may rely conclusively on a certificate to that effect provided to it by any Credit Party upon
its reasonable request without further inquiry), (iii) to the extent such Collateral is comprised of property leased to a Credit
Party, upon termination or expiration of such lease, (iv) if the release of such Lien is approved, authorized or ratified in writing
by the Required Lenders (or such other percentage of the Lenders whose consent may be required in accordance with this Section
13.1), (v) to the extent the property constituting such Collateral is owned by any Guarantor, upon the release of such Guarantor
from its obligations under the applicable Guarantee (in accordance with the second following sentence), (vi) as required to effect
any sale or other disposition of Collateral in connection with any exercise of remedies of the Collateral Agent pursuant to the
Security Documents, and (vii) if such assets constitute Excluded Property or Excluded Stock and Stock Equivalents. Any such release
shall not in any manner discharge, affect, or impair the Obligations or any Liens (other than those being released) upon (or obligations
(other than those being released) of the Credit Parties in respect of) all interests retained by the Credit Parties, including
the proceeds of any sale, all of which shall continue to constitute part of the Collateral except to the extent otherwise released
in accordance with the provisions of the Credit Documents. Additionally, the Lenders hereby irrevocably agree that any Restricted
Subsidiary that is a Guarantor shall be released from the Guarantees upon consummation of any transaction not prohibited hereunder
resulting in such Subsidiary ceasing to constitute a Restricted Subsidiary. The Lenders hereby authorize the Administrative Agent
and the Collateral Agent, as applicable, to execute and deliver any instruments, documents, and agreements necessary or desirable
to evidence and confirm the release of any Guarantor or Collateral pursuant to the foregoing provisions of this paragraph, all
without the further consent or joinder of any Lender.
Notwithstanding
anything herein to the contrary, the Credit Documents may be amended to add syndication or documentation agents and make customary
changes and references related thereto with the consent of only the Borrower and the Administrative Agent.
Notwithstanding
anything in this Agreement (including, without limitation, this Section 13.1) or any other Credit Document to the contrary,
(i) this Agreement and the other Credit Documents may be amended to effect an incremental facility or extension facility pursuant
to Section 2.14 (and the Administrative Agent and the Borrower may effect such amendments to this Agreement and the other
Credit Documents without the consent of any other party as may be necessary or appropriate, in the reasonable opinion of the Administrative
Agent and the Borrower, to effect the terms of any such incremental facility or extension facility); (ii) no Lender consent is
required to effect any amendment or supplement to any intercreditor agreement or arrangement permitted under this Agreement that
is for the purpose of adding the holders of any Indebtedness as expressly contemplated by the terms of such intercreditor agreement
or arrangement permitted under this Agreement, as applicable (it being understood that any such amendment or supplement may make
such other changes to the applicable intercreditor agreement as, in the good faith determination of the Administrative Agent, are
required to effectuate the foregoing; provided that such other changes are not adverse, in any material respect, to the
interests of the Lenders taken as a whole); provided, further, that no such agreement shall amend, modify or otherwise
directly and adversely affect the rights or duties of the Administrative Agent hereunder or under any other Credit Document without
the prior written consent of the Administrative Agent; (iii) any provision of this Agreement or any other Credit Document may be
amended by an agreement in writing entered into by the Borrower and the Administrative Agent to (x) cure any ambiguity, omission,
mistake, defect or inconsistency (as reasonably determined by the Administrative Agent and the Borrower) and (y) effect administrative
changes of a technical or immaterial nature (including to effect changes to the terms and conditions applicable solely to the Letter
of Credit Issuer in respect of Issuances of Letters of Credit), and, in each case, such amendment shall be deemed approved by the
Lenders if the Lenders shall have received at least five Business Days’ prior written notice of such change and the Administrative
Agent shall not have received, within five Business Days of the date of such notice to the Lenders, a written notice from the Required
Lenders stating that the Required Lenders object to such amendment; and (iv) guarantees, Security Documents and related documents
executed by Credit Parties in connection with this Agreement may be in a form reasonably determined by the Administrative Agent
and may be, together with any other Credit Document, entered into, amended, supplemented or waived, without the consent of any
other Person, by the applicable Credit Party or Credit Parties and the Administrative Agent or the Collateral Agent in its or their
respective sole discretion, to (A) effect the granting, perfection, protection, expansion or enhancement of any security interest
in any Collateral or additional property to become Collateral for the benefit of the Secured Parties, (B) as required by local
law or advice of counsel to give effect to, or protect any security interest for the benefit of the Secured Parties, in any property
or so that the security interests therein comply with applicable law, or (C) to cure ambiguities, omissions, mistakes or defects
(as reasonably determined by the Administrative Agent and the Borrower) or to cause such guarantee, collateral security document
or other document to be consistent with this Agreement and the other Credit Documents.
Notwithstanding
anything in this Agreement or any Security Document to the contrary, the Administrative Agent may, in its sole discretion, grant
extensions of time for the satisfaction of any of the requirements under Sections 9.12, 9.13 and 9.14 or any
Security Documents in respect of any particular Collateral or any particular Subsidiary if it determines that the satisfaction
thereof with respect to such Collateral or such Subsidiary cannot be accomplished without undue expense or unreasonable effort
or due to factors beyond the control of the Borrower and its Restricted Subsidiaries by the time or times at which it would otherwise
be required to be satisfied under this Agreement or any Security Document.
13.2
Notices. Unless otherwise expressly provided herein, all notices and other communications provided for hereunder
or under any other Credit Document shall be in writing (including by facsimile transmission). All such written notices shall be
mailed, faxed or delivered to the applicable address, facsimile number or electronic mail address, and all notices and other communications
expressly permitted hereunder to be given by telephone shall be made to the applicable telephone number, as follows:
(a)
if to the Borrower, the Administrative Agent, the Collateral Agent or the Letter of Credit Issuer, to the address,
facsimile number, electronic mail address or telephone number specified for such Person on Schedule 13.2 or to such other
address, facsimile number, electronic mail address or telephone number as shall be designated by such party in a notice to the
other parties; and
(b)
if to any other Lender, to the address, facsimile number, electronic mail address or telephone number specified in
its Administrative Questionnaire or to such other address, facsimile number, electronic mail address or telephone number as shall
be designated by such party in a notice to the Borrower, the Administrative Agent, the Collateral Agent and the Letter of Credit
Issuer.
All such
notices and other communications shall be deemed to be given or made upon the earlier to occur of (i) actual receipt by the relevant
party hereto and (ii) (A) if delivered by hand or by courier, when signed for by or on behalf of the relevant party hereto; (B)
if delivered by mail, three Business Days after deposit in the mails, postage prepaid; (C) if delivered by facsimile, when sent
and receipt has been confirmed by telephone; and (D) if delivered by electronic mail, when delivered; provided that notices
and other communications to the Administrative Agent or the Lenders pursuant to Sections 2.3, 2.6, 2.9, 4.2
and 5.1 shall not be effective until received.
13.3
No Waiver; Cumulative Remedies. No failure to exercise and no delay in exercising, on the part of the Administrative
Agent, the Collateral Agent or any Lender, any right, remedy, power or privilege hereunder or under the other Credit Documents
shall operate as a waiver thereof, nor shall any single or partial exercise of any right, remedy, power or privilege hereunder
preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege. The rights, remedies,
powers and privileges herein provided are cumulative and not exclusive of any rights, remedies, powers, and privileges provided
by law.
13.4
Survival of Representations and Warranties. All representations and warranties made hereunder, in the other
Credit Documents and in any document, certificate or statement delivered pursuant hereto or in connection herewith shall survive
the execution and delivery of this Agreement and the making of the Loans hereunder.
13.5
Payment of Expenses; Indemnification, Limitation of Liability;.
(a)
Payment of Expenses; Indemnification. The Borrower agrees, within thirty (30) days after receipt of a written
request therefor, together with any supporting documentation reasonably requested by the Borrower, (i) to pay or reimburse each
of the Agents for all their reasonable and documented out-of-pocket costs and expenses (without duplication) incurred in connection
with the development, preparation, execution and delivery of, and any amendment, supplement, modification to, waiver and/or enforcement
of this Agreement and the other Credit Documents and any other documents prepared in connection herewith or therewith, and the
consummation and administration of the transactions contemplated hereby and thereby (limited, in the case of legal fees, costs
and expenses, to the reasonable fees, disbursements and other charges of Cahill Gordon & Reindel llp
(or such other counsel as may be agreed by the Administrative Agent and the Borrower) and, if reasonably necessary, one firm or
local counsel in each relevant material local jurisdiction with the consent of the Borrower (such consent not to be unreasonably
withheld or delayed) (which may include a single special counsel acting in multiple jurisdictions)), (ii) to pay or reimburse each
Agent or any Letter of Credit Issuer for all their reasonable and documented out-of-pocket costs and expenses incurred in connection
with the enforcement or preservation of any rights under this Agreement, the other Credit Documents and any such other documents
(limited, in the case of legal fees, costs and expenses, to the reasonable fees, disbursements and other charges of one firm or
counsel to the Administrative Agent and the Collateral Agent, and, if reasonably necessary, one firm or local counsel in each relevant
material local jurisdiction with the consent of the Borrower (such consent not to be unreasonably withheld or delayed) (which may
include a single special counsel acting in multiple jurisdictions)), (iii) to pay or reimburse all reasonable out-of-pocket expenses
incurred by the Letter of Credit Issuer in connection with the issuance, amendment, renewal or extension of any Letter of Credit
or any demand for payment thereunder (limited, in the case of legal fees, costs and expenses, to the reasonable fees, disbursements
and other charges of one firm or counsel to the Letter of Credit Issuer, and, if reasonably necessary, one firm or local counsel
in each relevant material local jurisdiction with the consent of the Borrower (such consent not to be unreasonably withheld or
delayed) (which may include a single special counsel acting in multiple jurisdictions)), and (iv) to pay, indemnify and hold
harmless each Lender, each Agent, the Letter of Credit Issuer and their respective Related Parties (without duplication) (the “Indemnified
Persons”) from and against any and all losses, claims, damages, liabilities, obligations, demands, actions, judgments,
suits, costs, expenses, disbursements or penalties of any kind or nature whatsoever of any such Indemnified Person, in each case,
to the extent arising out of or relating to any action, claim, litigation, investigation or other proceeding (regardless of whether
such Indemnified Person is a party thereto), arising out of, or with respect to the Transactions or to the execution, delivery,
performance and administration of this Agreement and the other Credit Documents including any of the foregoing relating to the
violation of, noncompliance with or liability under, any Environmental Law or any actual or alleged presence, Release or threatened
Release of Hazardous Materials attributable to the Borrower or any of its Subsidiaries (limited, in the case of legal fees, costs
and expenses, to the reasonable fees, disbursements and other charges of one firm or counsel to all Indemnified Persons taken as
a whole (and, solely in the case of an actual or reasonably perceived conflict of interest
where the Indemnified Person affected by such conflict notifies the Borrower of the existence of such conflict, one additional
counsel for all similarly situated and affected Indemnified Person taken as a whole), and, if reasonably necessary, one
firm or local counsel in each relevant material local jurisdiction with the consent of the Borrower (such consent not to be unreasonably
withheld or delayed) (which may include a single special counsel acting in multiple jurisdictions)) (all the foregoing in this
clause (iv), regardless of whether brought by the Borrower, any of its subsidiaries or any other Person collectively, the
“Indemnified Liabilities”); provided that the Borrower shall have no obligation hereunder to any Indemnified
Person with respect to Indemnified Liabilities to the extent arising from (i) the gross negligence, bad faith or willful misconduct
of such Indemnified Person or any of its Related Parties as determined in a final and non-appealable judgment of a court of competent
jurisdiction, (ii) a material breach of the obligations of such Indemnified Person or any of its Related Parties under the terms
of this Agreement by such Indemnified Person or any of its Related Parties as determined in a final and non-appealable judgment
of a court of competent jurisdiction, or (iii) any proceeding between and among Indemnified Persons that does not involve an act
or omission by the Borrower or its Restricted Subsidiaries; provided the Agents, to the extent acting in their capacity
as such, shall remain indemnified in respect of such proceeding, to the extent that neither of the exceptions set forth in clause
(i) or (ii) of the immediately preceding proviso applies to such person at such time. The agreements in this Section
13.5 shall survive repayment of the Loans and all other amounts payable hereunder. This Section 13.5 shall not apply
with respect to Taxes, other than any Taxes that represent losses, claims, damages, liabilities, obligations, penalties, actions,
judgments, suits, costs, expenses or disbursements arising from any non-Tax claim.
(b)
Limitation of Liability. No Credit Party nor any of the Administrative Agent, any Arranger, any Letter of
Credit Issuer and any Lender, and any Related Party of any of the foregoing Persons (each such Person being called a “Lender-Related
Person”) shall have any liability for any special, punitive, indirect or consequential damages resulting from the Original
Credit Agreement, this Agreement or any other Credit Document or arising out of its activities in connection herewith or therewith
(whether before or after the Closing Date); provided that the foregoing shall not limit the Borrower’s indemnification
obligations to the Indemnified Persons pursuant to Section 13.5(a) in respect of damages incurred or paid by a Lender-Related
Person to a third party. No Lender-Related Person shall be liable for any damages arising from the use by unintended recipients
of any information or other materials distributed by it through telecommunications, electronic or other information transmission
systems in connection with the Original Credit Agreement, this Agreement or the other Credit Documents or the transactions contemplated
hereby or thereby, except to the extent that such damages have resulted from the willful misconduct, bad faith or gross negligence
of any Lender-Related Person as determined by a final and non-appealable judgment of a court of competent jurisdiction.
13.6
Successors and Assigns; Participations and Assignments.
(a)
The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns permitted hereby, except that (i) except as expressly permitted by Section 10.3, the Borrower may
not assign or otherwise transfer any of its rights or obligations hereunder without the prior written consent of the Administrative
Agent and each Lender (and any attempted assignment or transfer by the Borrower without such consent shall be null and void) and
(ii) no Lender may assign or otherwise transfer its rights or obligations hereunder except in accordance with this Section 13.6.
Nothing in this Agreement, expressed or implied, shall be construed to confer upon any Person (other than the parties hereto, their
respective successors and assigns permitted hereby, Participants (to the extent provided in clause (c) of this Section
13.6) and, to the extent expressly contemplated hereby, the Related Parties of each of the Administrative Agent, the Collateral
Agent, the Letter of Credit Issuer and the Lenders and each other Person entitled to indemnification under Section 13.5)
any legal or equitable right, remedy or claim under or by reason of this Agreement.
(b)
(i) Subject to the conditions set forth in clause (b)(ii) below and Section 13.7, any Lender may at
any time assign to one or more assignees all or a portion of its rights and obligations under this Agreement (including all or
a portion of its Commitments and the Loans (including participations in L/C Obligations) at the time owing to it) with the prior
written consent (such consent not to be unreasonably withheld or delayed):
(A)
the Borrower; provided that no consent of the Borrower shall be required for (1) an assignment of Loans to
(X) a Lender, (Y) an Affiliate of a Lender, or (Z) an Approved Fund or (2) an assignment of Loans or Commitments to any assignee
if an Event of Default under Section 11.1 or Section 11.5 (with respect to the Borrower) has occurred and is continuing;
provided, further, that the Borrower shall be deemed to have consented to an assignment of all or a portion of the
Loans and Commitments unless it shall have objected thereto by written notice to the Administrative Agent within ten (10) Business
Days after having received notice thereof; and
(B)
the Administrative Agent (not to be unreasonably withheld or delayed) and, in the case of Revolving Credit Commitments
or Revolving Credit Loans only, the Letter of Credit Issuer; provided that no consent of the Administrative Agent shall
be required for an assignment of any Term Loan to a Lender, an Affiliate of a Lender or an Approved Fund; and provided,
further that no consent of the Administrative Agent and the Letter of Credit Issuer shall be required for an assignment
of any Revolving Credit Commitments or Revolving Credit Loans to a Lender or an Affiliate of a Lender.
Notwithstanding
the foregoing, no such assignment shall be made to a natural Person, Disqualified Lender, Defaulting Lender or the Borrower or
any of its Affiliates or Subsidiaries. For the avoidance of doubt, the Administrative Agent shall bear no responsibility or liability
for ascertaining, monitoring or enforcing compliance with the list of Persons who are Disqualified Lenders at any time.
(ii)
Assignments shall be subject to the following additional conditions:
(A)
except in the case of an assignment to a Lender, an Affiliate of a Lender or an Approved Fund or an assignment of
the entire remaining amount of the assigning Lender’s Commitment or Loans of any Class, the amount of the Commitment or Loans
of the assigning Lender subject to each such assignment (determined as of the date the Assignment and Acceptance with respect to
such assignment is delivered to the Administrative Agent) shall not be less than $5,000,000, unless each of the Borrower and the
Administrative Agent otherwise consents (which consents shall not be unreasonably withheld or delayed); provided that no
such consent of the Borrower shall be required if an Event of Default under Section 11.1 or Section 11.5 has occurred
and is continuing; provided, further, that contemporaneous assignments by a Lender and its Affiliates or Approved
Funds shall be aggregated for purposes of meeting the minimum assignment amount requirements stated above (and simultaneous assignments
to or by two or more Related Funds shall be treated as one assignment), if any;
(B)
each partial assignment shall be made as an assignment of a proportionate part of all the assigning Lender’s
rights and obligations under this Agreement; provided that this clause shall not be construed to prohibit the assignment
of a proportionate part of all the assigning Lender’s rights and obligations in respect of one Class of Commitments or Loans;
(C)
the parties to each assignment shall execute and deliver to the Administrative Agent an Assignment and Acceptance
via an electronic settlement system or other method reasonably acceptable to the Administrative Agent, together with a processing
and recordation fee in the amount of $3,500 (which, for the avoidance of doubt, shall be payable by the assignor); provided
that the Administrative Agent may, in its sole discretion, elect to waive such processing and recordation fee in the case of any
assignment;
(D)
the assignee, if it shall not be a Lender, shall deliver to the Administrative Agent an administrative questionnaire
in a form approved by the Administrative Agent (the “Administrative Questionnaire”) and applicable Tax forms
(as required under Section 5.4(e)).
(iii)
Subject to acceptance and recording thereof pursuant to clause (b)(v) of this Section 13.6, from and
after the effective date specified in each Assignment and Acceptance, the assignee thereunder shall be a party hereto and, to the
extent of the interest assigned by such Assignment and Acceptance, have the rights and obligations of a Lender under this Agreement,
and the assigning Lender thereunder shall, to the extent of the interest assigned by such Assignment and Acceptance, be released
from its obligations under this Agreement (and, in the case of an Assignment and Acceptance covering all of the assigning Lender’s
rights and obligations under this Agreement, such Lender shall cease to be a party hereto but shall continue to be entitled to
the benefits of Sections 2.10, 2.11, 3.5, 5.4 and 13.5). Any assignment or transfer by a Lender
of rights or obligations under this Agreement that does not comply with this Section 13.6 shall be treated for purposes
of this Agreement as a sale by such Lender of a participation in such rights and obligations in accordance with clause (c)
of this Section 13.6. For the avoidance of doubt, in case of an assignment to a new Lender pursuant to this Section 13.6,
(i) the Administrative Agent, the new Lender and other Lenders shall acquire the same rights and assume the same obligations between
themselves as they would have acquired and assumed had the new Lender been an original Lender signatory to this Agreement with
the rights and/or obligations acquired or assumed by it as a result of the assignment and to the extent of the assignment the assigning
Lender shall each be released from further obligations under the Credit Documents and (ii) the benefit of each Security Document
shall be maintained in favor of the new Lender.
(iv)
The Administrative Agent, acting for this purpose as a non-fiduciary agent of the Borrower, shall maintain at the
Administrative Agent’s Office a copy of each Assignment and Acceptance delivered to it and a register for the recordation
of the names and addresses of the Lenders, and the Commitments of, and principal amount of the Loans (and stated interest amounts)
and any payment made by the Letter of Credit Issuer under any Letter of Credit owing to each Lender pursuant to the terms hereof
from time to time (the “Register”). The entries in the Register shall be conclusive, absent manifest error,
and the Borrower, the Administrative Agent, the Collateral Agent, the Letter of Credit Issuer and the Lenders shall treat each
Person whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement,
notwithstanding notice to the contrary. The Register shall be available for inspection by the Borrower, the Collateral Agent, the
Letter of Credit Issuer, the Administrative Agent and its Affiliates and, with respect to itself, any Lender, at any reasonable
time and from time to time upon reasonable prior notice.
(v) Upon
its receipt of a duly completed Assignment and Acceptance executed by an assigning Lender and an assignee, the assignee’s
completed Administrative Questionnaire and applicable Tax forms (unless the assignee shall already be a Lender hereunder), the
processing and recordation fee referred to in clause (b) of this Section 13.6 and any written consent to such assignment
required by clause (b) of this Section 13.6, the Administrative Agent shall promptly accept such Assignment and
Acceptance and record the information contained therein in the Register. No assignment, whether or not evidenced by a promissory
note, shall be effective for purposes of this Agreement unless it has been recorded in the Register as provided in this clause
(b)(v).
(c)
(i) Any Lender may, without the consent of the Borrower, the Administrative Agent or the Letter of Credit Issuer,
sell participations to one or more banks or other entities (other than (x) a natural person, (y) the Borrower and its Subsidiaries
and (z) any Disqualified Lender provided, however, that, notwithstanding clause (y) hereof, participations
may be sold to Disqualified Lenders unless a list of Disqualified Lenders has been made available to all Lenders) (each, a “Participant”)
in all or a portion of such Lender’s rights and obligations under this Agreement (including all or a portion of its Commitments
and the Loans owing to it); provided that (A) such Lender’s obligations under this Agreement shall remain unchanged,
(B) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations, and (C) the
Borrower, the Administrative Agent, the Letter of Credit Issuer, and the other Lenders shall continue to deal solely and directly
with such Lender in connection with such Lender’s rights and obligations under this Agreement. For the avoidance of doubt,
the Administrative Agent shall bear no responsibility or liability for ascertaining, monitoring or enforcing compliance with the
list of Disqualified Lenders or the sales of participations thereto at any time. Any agreement or instrument pursuant to which
a Lender sells such a participation shall provide that such Lender shall retain the sole right to enforce this Agreement and to
approve any amendment, modification or waiver of any provision of this Agreement or any other Credit Document; provided
that such agreement or instrument may provide that such Lender will not, without the consent of the Participant, agree to any amendment,
modification or waiver described in clauses (i) and (vii) of the second proviso to Section 13.1 that affects
such Participant. Subject to clause (c)(ii) of this Section 13.6, the Borrower agrees that each Participant shall
be entitled to the benefits of Sections 2.10, 2.11, 3.5, and 5.4 to the same extent as if it were a
Lender (subject to the limitations and requirements of those Sections as though it were a Lender and had acquired its interest
by assignment pursuant to clause (b) of this Section 13.6, including the requirements of clause (e) of Section
5.4) (it being agreed that any documentation required under Section 5.4(e) shall be provided to the participating Lender)).
To the extent permitted by law, each Participant also shall be entitled to the benefits of Section 13.8(b) as though it
were a Lender; provided such Participant shall be subject to Section 13.8(a) as though it were a Lender.
(ii)
A Participant shall not be entitled to receive any greater payment under Section 2.10, 2.11, 3.5
or 5.4 than the applicable Lender would have been entitled to receive absent the sale of such the participation sold to
such Participant, unless the sale of the participation to such Participant is made with the Borrower’s prior written consent
(which consent shall not be unreasonably withheld). Each Lender that sells a participation shall, acting solely for this purpose
as a non-fiduciary agent of the Borrower, maintain a register on which it enters the name and address of each Participant and the
principal amounts (and stated interest amounts) of each Participant’s interest in the Loans or other obligations under this
Agreement (the “Participant Register”). The entries in the Participant Register shall be conclusive, absent
manifest error, and such Lender shall treat each Person whose name is recorded in the Participant Register as the owner of such
participation for all purposes of this Agreement notwithstanding any notice to the contrary. No Lender shall have any obligation
to disclose all or any portion of the Participant Register to any Person (including the identity of any Participant or any information
relating to a Participant’s interest in any commitments, loans, letters of credit or its other obligations under any Credit
Document) except to the extent that such disclosure is necessary to establish that such commitment, loan, letter of credit or other
obligation is in registered form under Section 5f.103-1(c) of the United States Treasury Regulations.
(d)
Any Lender may, without the consent of the Borrower or the Administrative Agent, at any time pledge or assign a security
interest in all or any portion of its rights under this Agreement to secure obligations of such Lender, including any pledge or
assignment to secure obligations to a Federal Reserve Bank, or other central bank having jurisdiction over such Lender and this
Section 13.6 shall not apply to any such pledge or assignment of a security interest; provided that no such pledge
or assignment of a security interest shall release a Lender from any of its obligations hereunder or substitute any such pledgee
or assignee for such Lender as a party hereto.
(e)
Subject to Section 13.16, the Borrower authorizes each Lender to disclose to any Participant, secured creditor
of such Lender or assignee (each, a “Transferee”) and any prospective Transferee any and all financial information
in such Lender’s possession concerning the Borrower and its Affiliates that has been delivered to such Lender by or on behalf
of the Borrower and its Affiliates pursuant to this Agreement or that has been delivered to such Lender by or on behalf of the
Borrower and its Affiliates in connection with such Lender’s credit evaluation of the Borrower and its Affiliates prior to
becoming a party to this Agreement.
(f)
The words “execution,” “signed,” “signature,” and words of like import in any
Assignment and Acceptance shall be deemed to include electronic signatures or the keeping of records in electronic form, each of
which shall be of the same legal effect, validity or enforceability as a manually executed signature or the use of a paper-based
recordkeeping system, as the case may be, to the extent and as provided for in any applicable law, including the Federal Electronic
Signatures in Global and National Commerce Act, the New York State Electronic Signatures and Records Act, or any other similar
state laws based on the Uniform Electronic Transactions Act.
(g)
SPV Lender. Notwithstanding anything to the contrary contained herein, any Lender (a “Granting Lender”)
may grant to a special purpose funding vehicle (an “SPV”), identified as such in writing from time to time by
the Granting Lender to the Administrative Agent and the Borrower, the option to provide to the Borrower all or any part of any
Loan that such Granting Lender would otherwise be obligated to make the Borrower pursuant to this Agreement; provided that
(i) nothing herein shall constitute a commitment by any SPV to make any Loan and (ii) if an SPV elects not to exercise such option
or otherwise fails to provide all or any part of such Loan, the Granting Lender shall be obligated to make such Loan pursuant to
the terms hereof. The making of a Loan by an SPV hereunder shall utilize the Commitment of the Granting Lender to the same extent,
and as if, such Loan were made by such Granting Lender. Each party hereto hereby agrees that no SPV shall be liable for any indemnity
or similar payment obligation under this Agreement (all liability for which shall remain with the Granting Lender). In furtherance
of the foregoing, each party hereto hereby agrees (which agreement shall survive the termination of this Agreement) that, prior
to the date that is one year and one day after the payment in full of all outstanding commercial paper or other senior indebtedness
of any SPV, it shall not institute against, or join any other Person in instituting against, such SPV any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceedings under the laws of the United States or any State thereof. In addition, notwithstanding
anything to the contrary contained in this Section 13.6, any SPV may (i) with notice to, but without the prior written consent
of, the Borrower and the Administrative Agent and without paying any processing fee therefor, assign all or a portion of its interests
in any Loans to the Granting Lender or to any financial institutions (consented to by the Borrower and the Administrative Agent)
other than a Disqualified Lender providing liquidity and/or credit support to or for the account of such SPV to support the funding
or maintenance of Loans and (ii) subject to Section 13.16, disclose on a confidential basis any non-public information relating
to its Loans to any rating agency, commercial paper dealer or provider of any surety, guarantee or credit or liquidity enhancement
to such SPV. This Section 13.6(g) may not be amended without the written consent of the SPV. Notwithstanding anything to
the contrary in this Agreement but subject to the following sentence, each SPV shall be entitled to the benefits of Sections
2.10, 2.11, 3.5 and 5.4 to the same extent as if it were a Lender (subject to the limitations and requirements
of those Sections as though it were a Lender and had acquired its interest by assignment pursuant to clause (b) of this
Section 13.6, including the requirements of clause (e) of Section 5.4 (it being agreed that any documentation
required under Section 5.4(e) shall be provided to the Granting Lender)). Notwithstanding the prior sentence, an SPV shall
not be entitled to receive any greater payment under Section 2.10, 2.11, 3.5 or 5.4 than its Granting
Lender would have been entitled to receive absent the grant to such SPV, unless such grant to such SPV is made with the Borrower’s
prior written consent (which consent shall not be unreasonably withheld).
13.7
Replacements of Lenders Under Certain Circumstances.
(a)
The Borrower shall be permitted (x) to replace any Lender or (y) terminate the Commitment of such Lender or Letter
of Credit Issuer, as the case may be, and (1) in the case of a Lender (other than the Letter of Credit Issuer), repay all
Obligations of the Borrower due and owing to such Lender relating to the Loans and participations held by such Lender as of such
termination date and (2) in the case of the Letter of Credit Issuer, repay all Obligations of the Borrower owing to such Letter
of Credit Issuer relating to the Loans and participations held by the Letter of Credit Issuer as of such termination date and cancel
or backstop on terms satisfactory to such Letter of Credit Issuer any Letters of Credit issued by it that (a) requests reimbursement
for amounts owing pursuant to Sections 2.10 or 5.4, (b) is affected in the manner described in Section 2.10(a)(iii)
and as a result thereof any of the actions described in such Section is required to be taken, or (c) becomes a Defaulting Lender,
with a replacement bank or other financial institution; provided that (i) such replacement does not conflict with any Requirements
of Law, (ii) no Event of Default shall have occurred and be continuing at the time of such replacement, (iii) the Borrower shall
repay (or the replacement bank or institution shall purchase, at par) all Loans and other amounts pursuant to Sections 2.10,
2.11, or 5.4, as the case may be, owing to such replaced Lender prior to the date of replacement, (iv) the replacement
bank or institution, if not already a Lender, an Affiliate of the Lender or Approved Fund, and the terms and conditions of such
replacement, shall be reasonably satisfactory to the Administrative Agent, (v) the replacement bank or institution, if not already
a Lender shall be subject to the provisions of Section 13.6(b), (vi) the replaced Lender shall be obligated to make such
replacement in accordance with the provisions of Section 13.6 (provided that unless otherwise agreed the Borrower
shall be obligated to pay the registration and processing fee referred to therein), and (vii) any such replacement shall not be
deemed to be a waiver of any rights that the Borrower, the Administrative Agent or any other Lender shall have against the replaced
Lender.
(b)
If any Lender (such Lender, a “Non-Consenting Lender”) has failed to consent to a proposed amendment,
waiver, discharge or termination that pursuant to the terms of Section 13.1 requires the consent of either (i) all of the
Lenders directly and adversely affected or (ii) all of the Lenders, and, in each case, with respect to which the Required Lenders
(or at least 50.1% of the directly and adversely affected Lenders) shall have granted their consent, then, the Borrower shall have
the right (unless such Non-Consenting Lender grants such consent) to (x) replace such Non-Consenting Lender by requiring such Non-Consenting
Lender to assign its Loans, and its Commitments hereunder to one or more assignees reasonably acceptable to the Administrative
Agent (to the extent such consent would be required under Section 13.6) or to terminate the Commitment of such Lender or
Letter of Credit Issuer, as the case may be, and (1) in the case of a Lender (other than the Letter of Credit Issuer), repay
all Obligations of the Borrower due and owing to such Lender relating to the Loans and participations held by such Lender as of
such termination date and (2) in the case of the Letter of Credit Issuer, repay all Obligations of the Borrower owing to such
Letter of Credit Issuer relating to the Loans and participations held by the Letter of Credit Issuer as of such termination date
and cancel or backstop on terms satisfactory to such Letter of Credit Issuer any Letters of Credit issued by it; provided
that (a) all Obligations hereunder of the Borrower owing to such Non-Consenting Lender being replaced shall be paid in full to
such Non-Consenting Lender concurrently with such assignment including any amounts that such Lender may be owed pursuant to Section
2.11, and (b) the replacement Lender shall purchase the foregoing by paying to such Non-Consenting Lender a price equal to
the principal amount thereof plus accrued and unpaid interest thereon, and (c) the Borrower shall pay to such Non-Consenting Lender
the amount, if any, owing to such Lender pursuant to Section 5.1(b). In connection with any such assignment, the Borrower,
the Administrative Agent, such Non-Consenting Lender and the replacement Lender shall otherwise comply with Section 13.6;
provided that any Non-Consenting Lender shall be deemed to have consented to the assignment and delegation of its interests,
rights and obligations if it does not execute and deliver an Assignment and Acceptance to the Administrative Agent within one (1)
Business Day after having received a request therefor.
13.8
Adjustments; Set-off.
(a)
Except as contemplated in Section 13.6 or elsewhere herein, if any Lender (a “Benefited Lender”)
shall at any time receive any payment of all or part of its Loans, or interest thereon, or receive any collateral in respect thereof
(whether voluntarily or involuntarily, by set-off, pursuant to events or proceedings of the nature referred to in Section 11.5,
or otherwise), in a greater proportion than any such payment to or collateral received by any other Lender, if any, in respect
of such other Lender’s Loans, or interest thereon, such Benefited Lender shall purchase for cash from the other Lenders a
participating interest in such portion of each such other Lender’s Loan, or shall provide such other Lenders with the benefits
of any such collateral, or the proceeds thereof, as shall be necessary to cause such Benefited Lender to share the excess payment
or benefits of such collateral or proceeds ratably with each of the Lenders; provided, however, that if all or any
portion of such excess payment or benefits is thereafter recovered from such Benefited Lender, such purchase shall be rescinded,
and the purchase price and benefits returned, to the extent of such recovery, but without interest.
(b)
After the occurrence and during the continuance of an Event of Default, in addition to any rights and remedies of
the Lenders provided by law, each Lender or its affiliate shall have the right, without prior notice to the Credit Parties but
with the prior consent of the Administrative Agent, any such notice being expressly waived by the Credit Parties to the extent
permitted by applicable law, upon any amount becoming due and payable by the Credit Parties hereunder (whether at the stated maturity,
by acceleration or otherwise) to set-off and appropriate and apply against such amount any and all deposits (general or special,
time or demand, provisional or final) (other than payroll, trust, Tax, fiduciary, and petty cash accounts), in any currency, and
any other credits, indebtedness or claims, in any currency, in each case whether direct or indirect, absolute or contingent, matured
or unmatured, at any time held or owing by such Lender or any branch or agency thereof to or for the credit or the account of the
Credit Parties. Each Lender agrees promptly to notify the Credit Parties and the Administrative Agent after any such set-off and
application made by such Lender; provided that the failure to give such notice shall not affect the validity of such set-off
and application.
13.9
Counterparts. This Agreement may be executed by one or more of the parties to this Agreement on any number
of separate counterparts (including by facsimile or other electronic transmission), and all of said counterparts taken together
shall be deemed to constitute one and the same instrument. A set of the copies of this Agreement signed by all the parties shall
be lodged with the Borrower and the Administrative Agent. Delivery of an executed counterpart of a signature page of (x) this Agreement,
(y) any other Credit Document and/or (z) any document, amendment, approval, consent, information, notice (including, for the avoidance
of doubt, any notice delivered pursuant to Section 13.2), certificate, request, statement, disclosure or authorization related
to this Agreement, any other Credit Document and/or the transactions contemplated hereby and/or thereby (each an “Ancillary
Document”) that is an Electronic Signature transmitted by telecopy, emailed pdf. or any other electronic means that reproduces
an image of an actual executed signature page shall be effective as delivery of a manually executed counterpart of this Agreement,
such other Credit Document or such Ancillary Document, as applicable. The words “execution,” “signed,”
“signature,” “delivery,” and words of like import in or relating to this Agreement, any other Credit Document
and/or any Ancillary Document shall be deemed to include Electronic Signatures, deliveries or the keeping of records in any electronic
form (including deliveries by telecopy, emailed pdf. or any other electronic means that reproduces an image of an actual executed
signature page), each of which shall be of the same legal effect, validity or enforceability as a manually executed signature,
physical delivery thereof or the use of a paper-based recordkeeping system, as the case may be; provided that nothing herein
shall require the Administrative Agent to accept Electronic Signatures in any form or format without its prior written consent
and pursuant to procedures approved by it; provided, further, without limiting the foregoing, (i) to the extent the
Administrative Agent has agreed to accept any Electronic Signature, the Administrative Agent and each of the Lenders shall be entitled
to rely on such Electronic Signature purportedly given by or on behalf of the Borrower or any other Loan Party without further
verification thereof and without any obligation to review the appearance or form of any such Electronic signature and (ii) upon
the request of the Administrative Agent or any Lender, any Electronic Signature shall be promptly followed by a manually executed
counterpart. Without limiting the generality of the foregoing, the Borrower and each other Loan Party hereby (i) agrees that, for
all purposes, including without limitation, in connection with any workout, restructuring, enforcement of remedies, bankruptcy
proceedings or litigation among the Administrative Agent, the Lenders, the Borrower and each other Loan Party, Electronic Signatures
transmitted by telecopy, emailed pdf. or any other electronic means that reproduces an image of an actual executed signature page
and/or any electronic images of this Agreement, any other Credit Document and/or any Ancillary Document shall have the same legal
effect, validity and enforceability as any paper original, (ii) the Administrative Agent and each of the Lenders may, at its option,
create one or more copies of this Agreement, any other Credit Document and/or any Ancillary Document in the form of an imaged electronic
record in any format, which shall be deemed created in the ordinary course of such Person’s business, and destroy the original
paper document (and all such electronic records shall be considered an original for all purposes and shall have the same legal
effect, validity and enforceability as a paper record), (iii) waives any argument, defense or right to contest the legal effect,
validity or enforceability of this Agreement, any other Credit Document and/or any Ancillary Document based solely on the lack
of paper original copies of this Agreement, such other Credit Document and/or such Ancillary Document, respectively, including
with respect to any signature pages thereto and (iv) waives any claim against any Lender-Related Person for any Liabilities arising
solely from the Administrative Agent’s and/or any Lender’s reliance on or use of Electronic Signatures and/or transmissions
by telecopy, emailed pdf. or any other electronic means that reproduces an image of an actual executed signature page, including
any Liabilities arising as a result of the failure of the Borrower (and/or any Loan Party) to use any available security measures
in connection with the execution, delivery or transmission of any Electronic Signature.
13.10
Severability. Any provision of this Agreement that is prohibited or unenforceable in any jurisdiction shall,
as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable
such provision in any other jurisdiction.
13.11
Integration. This Agreement and the other Credit Documents represent the agreement of the Borrower, the Collateral
Agent, the Administrative Agent and the Lenders with respect to the subject matter hereof, and there are no promises, undertakings,
representations or warranties by the Borrower, the Administrative Agent, the Collateral Agent nor any Lender relative to subject
matter hereof not expressly set forth or referred to herein or in the other Credit Documents.
13.12
GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY,
AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK. EACH LETTER OF CREDIT SHALL BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
13.13
Submission to Jurisdiction; Waivers. Each party hereto irrevocably and unconditionally:
(a)
submits for itself and its property in any legal action or proceeding relating to this Agreement and the other Credit Documents
to which it is a party to the exclusive general jurisdiction of the courts of the State of New York or the courts of the United
States for the Southern District of New York, in each case sitting in New York City in the Borough of Manhattan, and appellate
courts from any thereof;
(b)
consents that any such action or proceeding shall be brought in such courts and waives (to the extent permitted by
applicable law) any objection that it may now or hereafter have to the venue of any such action or proceeding in any such court
or that such action or proceeding was brought in an inconvenient court and agrees not to plead or claim the same or to commence
or support any such action or proceeding in any other courts;
(c)
agrees that service of process in any such action or proceeding shall be effected by mailing a copy thereof by registered
or certified mail (or any substantially similar form of mail), postage prepaid, to such Person at its address set forth on Schedule
13.2 at such other address of which the Administrative Agent shall have been notified pursuant to Section 13.2;
(d)
agrees that nothing herein shall affect the right of the Administrative Agent, any Lender or another Secured Party
to effect service of process in any other manner permitted by law or to commence legal proceedings or otherwise proceed against
the Borrower or any other Credit Party in any other jurisdiction; and
(e)
waives, to the maximum extent not prohibited by law, any right it may have to claim or recover in any legal action
or proceeding referred to in this Section 13.13 any special, exemplary, punitive or consequential damages; provided
that nothing in this clause (e) shall limit the Credit Parties’ indemnification obligations set forth in Section
13.5.
13.14
Acknowledgments. The Borrower hereby acknowledges that:
(a)
it has been advised by counsel in the negotiation, execution, and delivery of this Agreement and the other Credit
Documents;
(b)
(i) the credit facilities provided for hereunder and any related arranging or other services in connection therewith
(including in connection with any amendment, waiver or other modification hereof or of any other Credit Document) are an arm’s-length
commercial transaction between the Borrower and the other Credit Parties, on the one hand, and the Administrative Agent, the Lenders
and the other Agents on the other hand, and the Borrower and the other Credit Parties are capable of evaluating and understanding
and understand and accept the terms, risks and conditions of the transactions contemplated hereby and by the other Credit Documents
(including any amendment, waiver or other modification hereof or thereof);
(ii)
in connection with the process leading to such transaction, each of the Administrative Agent and the other Agents,
is and has been acting solely as a principal and is not the financial advisor, agent or fiduciary for the Borrower, any other Credit
Parties or any of their respective Affiliates, stockholders, creditors or employees, or any other Person;
(iii)
neither the Administrative Agent nor any other Agent has assumed or will assume an advisory, agency or fiduciary
responsibility in favor of the Borrower or any other Credit Party with respect to any of the transactions contemplated hereby or
the process leading thereto, including with respect to any amendment, waiver or other modification hereof or of any other Credit
Document (irrespective of whether the Administrative Agent or other Agent has advised or is currently advising the Borrower, the
other Credit Parties or their respective Affiliates on other matters) and neither the Administrative Agent or other Agent has any
obligation to the Borrower, the other Credit Parties or their respective Affiliates with respect to the transactions contemplated
hereby except those obligations expressly set forth herein and in the other Credit Documents;
(iv)
the Administrative Agent, each other Agent and each Affiliate of the foregoing may be engaged in a broad range of
transactions that involve interests that differ from those of the Borrower and its Affiliates, and neither the Administrative Agent
nor any other Agent has any obligation to disclose any of such interests by virtue of any advisory, agency or fiduciary relationship;
and
(v)
neither the Administrative Agent nor any other Agent has provided and none will provide any legal, accounting, regulatory
or tax advice with respect to any of the transactions contemplated hereby (including any amendment, waiver or other modification
hereof or of any other Credit Document) and the Borrower has consulted its own legal, accounting, regulatory and tax advisors to
the extent it has deemed appropriate. The Borrower hereby agrees that it will not claim that any Agent owes a fiduciary or similar
duty to the Credit Parties in connection with the transactions contemplated hereby and waives and releases, to the fullest extent
permitted by law, any claims that it may have against the Administrative Agent or any other Agent with respect to any breach or
alleged breach of agency or fiduciary duty; and
(c) no
joint venture is created hereby or by the other Credit Documents or otherwise exists by virtue of the transactions contemplated
hereby among the Lenders or among the Borrower, on the one hand, and any Lender, on the other hand.
13.15
WAIVERS OF JURY TRIAL. EACH PARTY HERETO IRREVOCABLY AND UNCONDITIONALLY WAIVE (TO THE EXTENT PERMITTED BY
APPLICABLE LAW) TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT AND FOR
ANY COUNTERCLAIM THEREIN.
13.16
Confidentiality. The Administrative Agent, each other Agent and each Lender, each on behalf of itself and
its controlled Affiliates (collectively, the “Restricted Persons” and, each a “Restricted Person”),
shall treat confidentially all non-public information provided to any Restricted Person by or on behalf of any Credit Party hereunder
in connection with such Restricted Person’s evaluation of whether to become a Lender hereunder or obtained by such Restricted
Person pursuant to the requirements of this Agreement (“Confidential Information”) and shall not publish, disclose
or otherwise divulge such Confidential Information; provided that nothing herein shall prevent any Restricted Person from
disclosing any such Confidential Information (a) pursuant to the order of any court or administrative agency or in any pending
legal, judicial or administrative proceeding, or otherwise as required by applicable law, rule or regulation or compulsory legal
process (in which case such Restricted Person agrees (except with respect to any routine or ordinary course audit or examination
conducted by bank accountants or any governmental or bank regulatory authority exercising examination or regulatory authority),
to the extent practicable and not prohibited by applicable law, rule or regulation, to inform the Borrower promptly thereof prior
to disclosure), (b) upon the request or demand of any regulatory authority having jurisdiction over such Restricted Person or any
of its Affiliates (in which case such Restricted Person agrees (except with respect to any routine or ordinary course audit or
examination conducted by bank accountants or any governmental or bank regulatory authority exercising examination or regulatory
authority) to the extent practicable and not prohibited by applicable law, rule or regulation, to inform the Borrower promptly
thereof prior to disclosure), (c) to the extent that such Confidential Information becomes publicly available other than by reason
of improper disclosure by such Restricted Person or any of its affiliates or any Related Parties thereto in violation of any confidentiality
obligations owing under this Section 13.16, (d) to the extent that such Confidential Information is received by such Restricted
Person from a third party that is not, to such Restricted Person’s knowledge, subject to contractual or fiduciary confidentiality
obligations owing to any Credit Party or any of their respective subsidiaries or affiliates, (e) to the extent that such Confidential
Information was already in the possession of the Restricted Persons prior to any duty or other undertaking of confidentiality or
is independently developed by the Restricted Persons without the use of such Confidential Information, (f) to such Restricted Person’s
affiliates and to its and their respective officers, directors, partners, employees, legal counsel, independent auditors, and other
experts or agents who need to know such Confidential Information in connection with providing the Loans or action as an Agent hereunder
and who are informed of the confidential nature of such Confidential Information and who are subject to customary confidentiality
obligations of professional practice or who agree to be bound by the terms of this Section 13.16 (or confidentiality provisions
at least as restrictive as those set forth in this Section 13.16) (with each such Restricted Person, to the extent within
its control, responsible for such person’s compliance with this paragraph), (g) to potential or prospective Lenders, hedge
providers, participants or assignees, in each case who agree (pursuant to customary syndication practice) to be bound by the terms
of this Section 13.16 (or confidentiality provisions at least as restrictive as those set forth in this Section 13.16);
provided that (i) the disclosure of any such Confidential Information to any Lenders, hedge providers or prospective Lenders,
hedge providers or participants or prospective participants referred to above shall be made subject to the acknowledgment and acceptance
by such Lender, hedge provider or prospective Lender or participant or prospective participant that such Confidential Information
is being disseminated on a confidential basis (on substantially the terms set forth in this Section 13.16 or confidentiality
provisions at least as restrictive as those set forth in this Section 13.16) in accordance with the standard syndication
processes of such Restricted Person or customary market standards for dissemination of such type of information, which shall in
any event require “click through” or other affirmative actions on the part of recipient to access such Confidential
Information and (ii) no such disclosure shall be made by such Restricted Person to any person that is at such time a Disqualified
Lender; provided that, for the avoidance of doubt, the Administrative Agent shall be permitted upon request of any Lender
or Participant to make available to such Lender or Participant any list of Disqualified Lenders and any Lender may provide the
list of Disqualified Lenders to any prospective assignee or Participant on a confidential basis (it being understood that the identity
of Disqualified Lenders will not be posted or distributed to any Person, other than a distribution by the Administrative Agent
to a Lender upon written request and by a Lender to any prospective assignee or Participant on a confidential basis), (h) for purposes
of establishing a “due diligence” defense, and (i) in connection with the exercise of any remedies under this Agreement,
under any other Credit Document or under any Secured Hedge Agreement or Secured Cash Management Agreement, or any action or proceeding
relating to this Agreement, any other Credit Document or any Secured Hedge Agreement or Secured Cash Management Agreement, or the
enforcement of rights hereunder or thereunder Notwithstanding the foregoing, (i) Confidential Information shall not include, with
respect to any Person, information available to it or its Affiliates on a non-confidential basis from a source other than the Borrower,
its Subsidiaries or their respective Affiliates, (ii) the Administrative Agent shall not be responsible for compliance with this
Section 13.16 by any other Restricted Person (other than its officers, directors or employees), (iii) in no event shall
any Lender, the Administrative Agent or any other Agent be obligated or required to return any materials furnished by the Borrower
or any of its Subsidiaries, and (iv) each Agent and each Lender may (A) disclose solely the existence of this Agreement, the size
and type of the credit facilities, the parties to the Credit Documents and the Closing Date (but not the use of proceeds of the
Loans made hereunder), in each case, to market data collectors, similar services providers to the lending industry, and service
providers to the Agents and the Lenders in connection with the administration, settlement and management of this Agreement and
the other Credit Documents, in each case, to the extent the applicable Agent or Lender advises such parties of the confidential
nature of such information and instructs such parties to keep such information confidential and (B) in consultation with the Borrower,
place customary advertisements in financial and other newspapers and periodicals or on a home page or similar place for dissemination
of customary information on the Internet or worldwide web as such Agent or Lender may choose, and circulate similar promotional
materials, in the form of a “tombstone” or otherwise describing the names of the Borrower and its affiliates (or any
of them), and the type, size and Closing Date of the credit facilities, all at the expense of such Agent or Lender; provided
that, without the prior written consent of the Borrower, such advertisements may not disclose any information other than the existence
of this Agreement, the size and type of the credit facilities, the parties to the Credit Documents and the Closing Date (but not
the use of proceeds of the Loans made hereunder).
13.17
Direct Website Communications. The Borrower may, at its option, provide to the Administrative Agent any information,
documents and other materials that it is obligated to furnish to the Administrative Agent pursuant to the Credit Documents, including,
without limitation, all notices, requests, financial statements, financial, and other reports, certificates, and other information
materials, but excluding any such communication that (A) relates to a request for a new, or a conversion of an existing, borrowing
or other extension of credit (including any election of an interest rate or interest period relating thereto), (B) relates to the
payment of any principal or other amount due under this Agreement prior to the scheduled date therefor, (C) provides notice of
any Default or Event of Default under this Agreement or (D) is required to be delivered to satisfy any condition precedent to the
effectiveness of this Agreement and/or any borrowing or other extension of credit thereunder (all such non-excluded communications
being referred to herein collectively as “Communications”), by transmitting the Communications in an electronic/soft
medium in a format reasonably acceptable to the Administrative Agent to the Administrative Agent at an email address provided by
the Administrative Agent from time to time; provided that (i) upon written request by the Administrative Agent or the Borrower
shall deliver paper copies of such documents to the Administrative Agent for further distribution to each Lender until a written
request to cease delivering paper copies is given by the Administrative Agent and (ii) the Borrower shall notify (which may be
by facsimile or electronic mail) the Administrative Agent of the posting of any such documents and provide to the Administrative
Agent by electronic mail electronic versions (i.e., soft copies) of such documents. Each Lender shall be solely responsible for
timely accessing posted documents or requesting delivery of paper copies of such documents from the Administrative Agent and maintaining
its copies of such documents. Nothing in this Section 13.17 shall prejudice the right of the Borrower, the Administrative
Agent, any other Agent or any Lender to give any notice or other communication pursuant to any Credit Document in any other manner
specified in such Credit Document.
The
Administrative Agent agrees that the receipt of the Communications by the Administrative Agent at its e-mail address set forth
above shall constitute effective delivery of the Communications to the Administrative Agent for purposes of the Credit Documents.
Each Lender agrees that notice to it (as provided in the next sentence) specifying that the Communications have been posted to
the Platform shall constitute effective delivery of the Communications to such Lender for purposes of the Credit Documents. Each
Lender agrees (A) to notify the Administrative Agent in writing (including by electronic communication) from time to time of such
Lender’s e-mail address to which the foregoing notice may be sent by electronic transmission and (B) that the foregoing notice
may be sent to such e-mail address.
(a)
The Borrower further agrees that any Agent may make the Communications available to the Lenders by posting the Communications
on Intralinks or a substantially similar electronic transmission system (the “Platform”), so long as the access
to such Platform (i) is limited to the Agents, the Lenders and Transferees or prospective Transferees and (ii) remains subject
to the confidentiality requirements set forth in Section 13.16.
(b)
THE PLATFORM IS PROVIDED “AS IS” AND “AS AVAILABLE.” THE AGENT PARTIES DO NOT WARRANT THE
ACCURACY OR COMPLETENESS OF ANY MATERIALS OR INFORMATION PROVIDED BY THE CREDIT PARTIES (THE “BORROWER MATERIALS”)
OR THE ADEQUACY OF THE PLATFORM, AND EXPRESSLY DISCLAIM LIABILITY FOR ERRORS IN OR OMISSIONS FROM THE BORROWER MATERIALS. NO WARRANTY
OF ANY KIND, EXPRESS, IMPLIED OR STATUTORY, INCLUDING ANY WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT
OF THIRD PARTY RIGHTS OR FREEDOM FROM VIRUSES OR OTHER CODE DEFECTS, IS MADE BY ANY AGENT PARTY IN CONNECTION WITH THE BORROWER
MATERIALS OR THE PLATFORM. In no event shall the Administrative Agent or any of its Related Parties (collectively, the “Agent
Parties” and each an “Agent Party”) have any liability to the Borrower, any Lender, or any other Person
for losses, claims, damages, liabilities, or expenses of any kind (whether in tort, contract or otherwise) arising out of the Borrower’s
or the Administrative Agent’s transmission of Borrower Materials through the internet, except to the extent the liability
of any Agent Party resulted from such Agent Party’s (or any of its Related Parties’ (other than any trustee or advisor))
gross negligence, bad faith or willful misconduct or material breach of the Credit Documents as determined in the final non-appealable
judgment of a court of competent jurisdiction.
(c)
The Borrower and each Lender acknowledge that certain of the Lenders may be “public-side” Lenders (Lenders
that do not wish to receive material non-public information with respect to the Borrower, the Subsidiaries or their securities)
and, if documents or notices required to be delivered pursuant to the Credit Documents or otherwise are being distributed through
the Platform, any document or notice that the Borrower has indicated contains only publicly available information with respect
to the Borrower may be posted on that portion of the Platform designated for such public-side Lenders. If the Borrower has not
indicated whether a document or notice delivered contains only publicly available information, the Administrative Agent shall post
such document or notice solely on that portion of the Platform designated for Lenders who wish to receive material nonpublic information
with respect to the Borrower, the Subsidiaries and their securities. Notwithstanding the foregoing, the Borrower shall use commercially
reasonable efforts to indicate whether any document or notice contains only publicly available information; provided, however
that, the following documents shall be deemed to be marked “PUBLIC,” unless the Borrower notify the Administrative
Agent promptly that any such document contains material nonpublic information: (1) the Credit Documents, (2) any notification of
changes in the terms of the Credit Facility and (3) all financial statements and certificates delivered pursuant to Sections
9.1(a), (b) and (d).
13.18
USA PATRIOT Act. Each Lender hereby notifies each Credit Party that pursuant to the requirements of the USA
Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)) (the “Patriot Act”), it is required
to obtain, verify, and record information that identifies each Credit Party, which information includes the name and address of
each Credit Party and other information that will allow such Lender to identify each Credit Party in accordance with the Patriot
Act.
13.19
[Reserved].
13.20
Payments Set Aside. To the extent that any payment by or on behalf of the Borrower is made to any Agent or
any Lender, or any Agent or any Lender exercises its right of setoff, and such payment or the proceeds of such setoff or any part
thereof is subsequently invalidated, declared to be fraudulent or preferential, set aside or required (including pursuant to any
settlement entered into by such Agent or such Lender in its discretion) to be repaid to a trustee, receiver, or any other party,
in connection with any proceeding or otherwise, then (a) to the extent of such recovery, the obligation or part thereof originally
intended to be satisfied shall be revived and continued in full force and effect as if such payment had not been made or such setoff
had not occurred, and (b) each Lender severally agrees to pay to the Administrative Agent upon demand its applicable share of any
amount so recovered from or repaid by any Agent, plus interest thereon from the date of such demand to the date such payment is
made at a rate per annum equal to the applicable Overnight Bank Funding Rate from time to time in effect.
13.21
No Fiduciary Duty. Each Agent, each Lender and their Affiliates (collectively, solely for purposes of this
paragraph, the “Lenders”), may have economic interests that conflict with those of the Credit Parties, their
stockholders and/or their affiliates. Each Credit Party agrees that nothing in the Credit Documents or otherwise will be deemed
to create an advisory, fiduciary or agency relationship or fiduciary or other implied duty between any Lender, on the one hand,
and such Credit Party, its stockholders or its affiliates, on the other. The Credit Parties acknowledge and agree that (i) the
transactions contemplated by the Credit Documents (including the exercise of rights and remedies hereunder and thereunder) are
arm’s-length commercial transactions between the Lenders, on the one hand, and the Credit Parties, on the other, and (ii)
in connection therewith and with the process leading thereto, (x) no Lender has assumed an advisory or fiduciary responsibility
in favor of any Credit Party, its stockholders or its affiliates with respect to the transactions contemplated hereby (or the exercise
of rights or remedies with respect thereto) or the process leading thereto (irrespective of whether any Lender has advised, is
currently advising or will advise any Credit Party, its stockholders or its Affiliates on other matters) or any other obligation
to any Credit Party except the obligations expressly set forth in the Credit Documents and (y) each Lender is acting solely as
principal and not as the agent or fiduciary of any Credit Party, its management, stockholders or creditors. Each Credit Party acknowledges
and agrees that it has consulted its own legal and financial advisors to the extent it deemed appropriate and that it is responsible
for making its own independent judgment with respect to such transactions and the process leading thereto. Each Credit Party agrees
that it will not claim that any Lender has rendered advisory services of any nature or respect, or owes a fiduciary or similar
duty to such Credit Party, in connection with such transaction or the process leading thereto.
13.22
[Reserved].
13.23
Acknowledgement Regarding Any Supported QFCs. To the extent that the Credit Documents provide support, through
a guarantee or otherwise, for any Hedge Agreement or any other agreement or instrument that is a QFC (such support, “QFC
Credit Support,” and each such QFC, a “Supported QFC”), the parties acknowledge and agree as follows
with respect to the resolution power of the Federal Deposit Insurance Corporation under the Federal Deposit Insurance Act and Title
II of the Dodd-Frank Wall Street Reform and Consumer Protection Act (together with the regulations promulgated thereunder, the
“U.S. Special Resolution Regimes”) in respect of such Supported QFC and QFC Credit Support (with the provisions
below applicable notwithstanding that the Credit Documents and any Supported QFC may in fact be stated to be governed by the laws
of the State of New York and/or of the United States or any other state of the United States). In the event a Covered Entity that
is party to a Supported QFC (each, a “Covered Party”) becomes subject to a proceeding under a U.S. Special Resolution
Regime, the transfer of such Supported QFC and the benefit of such QFC Credit Support (and any interest and obligation in or under
such Supported QFC and such QFC Credit Support, and any rights in property securing such Supported QFC or such QFC Credit Support)
from such Covered Party will be effective to the same extent as the transfer would be effective under the U.S. Special Resolution
Regime if the Supported QFC and such QFC Credit Support (and any such interest, obligation and rights in property) were governed
by the laws of the United States or a state of the United States. In the event a Covered Party or a BHC Act Affiliate of a Covered
Party becomes subject to a proceeding under a U.S. Special Resolution Regime, Default Rights under the Credit Documents that might
otherwise apply to such Supported QFC or any QFC Credit Support that may be exercised against such Covered Party are permitted
to be exercised to no greater extent than such Default Rights could be exercised under the U.S. Special Resolution Regime if the
Supported QFC and the Credit Documents were governed by the laws of the United States or a state of the United States. Without
limitation of the foregoing, it is understood and agreed that rights and remedies of the parties with respect to a Defaulting Lender
shall in no event affect the rights of any Covered Party with respect to a Supported QFC or any QFC Credit Support.
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Section 14.
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Acknowledgement and Consent to Bail-In of Affected Financial Institutions.
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Notwithstanding
anything to the contrary in any Credit Document or in any other agreement, arrangement or understanding among any parties to any
Credit Document, each party hereto acknowledges that any liability of any Lender that is an Affected Financial Institution arising
under any Credit Document, to the extent such liability is unsecured, may be subject to the Write-Down and Conversion Powers of
the applicable Resolution Authority and agrees and consents to, and acknowledges and agrees to be bound by:
(a)
the application of any Write-Down and Conversion Powers by the applicable Resolution Authority to any such liabilities
arising hereunder which may be payable to it by any Lender that is an Affected Financial Institution; and
(b)
the effects of any Bail-In Action on any such liability, including, if applicable:
(i)
a reduction in full or in part or cancellation of any such liability
(ii)
a conversion of all, or a portion of, such liability into shares or other instruments of ownership in such Affected
Financial Institution, its parent undertaking, or a bridge institution that may be issued to it or otherwise conferred on it, and
that such shares or other instruments of ownership will be accepted by it in lieu of any rights with respect to any such liability
under this Agreement or any other Credit Document; or
(iii)
the variation of the terms of such liability in connection with the exercise of the Write-Down and Conversion Powers
of the applicable Resolution Authority.
[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]
Exhibit 10.17
AGREEMENT OF LEASE
between
TRINITY HUDSON HOLDINGS, LLC,
Landlord
and
SQUARESPACE, INC.,
Tenant
Dated: September 19, 2014
Portions of the Ground Floor and the Entire
Tenth (10th),
Eleventh (11th) and Twelfth (12th)
Floors
225 Varick Street
New York, New York 10014
**********************************************************************
Trinity Real Estate
75 Varick Street, 2nd Floor
New York, New York, 10013
TABLE OF CONTENTS
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Page
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ARTICLE 1
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GLOSSARY
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3
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ARTICLE 2
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DEMISE, PREMISES, TERM, RENT
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9
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ARTICLE 3
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ESCALATION
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10
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ARTICLE 4
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ELECTRICITY
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13
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ARTICLE 5
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USE AND OCCUPANCY
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15
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ARTICLE 6
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ALTERATIONS
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17
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ARTICLE 7
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REPAIRS; FLOOR LOAD
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28
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ARTICLE 8
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WINDOW CLEANING
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31
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ARTICLE 9
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REQUIREMENTS OF LAW
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31
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ARTICLE 10
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SUBORDINATION
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34
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ARTICLE 11
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RULES AND REGULATIONS
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37
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ARTICLE 12
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INSURANCE, PROPERTY LOSS OR DAMAGE;
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REIMBURSEMENT
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37
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ARTICLE 13
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DESTRUCTION BY FIRE OR OTHER CAUSE
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40
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ARTICLE 14
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EMINENT DOMAIN
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43
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ARTICLE 15
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ASSIGNMENT, SUBLETTING, MORTGAGE, ETC.
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44
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ARTICLE 16
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ACCESS TO PREMISES
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50
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ARTICLE 17
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CERTIFICATE OF OCCUPANCY
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51
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ARTICLE 18
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DEFAULT
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53
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ARTICLE 19
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REMEDIES AND DAMAGES
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55
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ARTICLE 20
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FEES AND EXPENSES
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57
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ARTICLE 21
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NO REPRESENTATIONS BY LANDLORD
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58
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ARTICLE 22
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END OF TERM
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58
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ARTICLE 23
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POSSESSION
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60
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ARTICLE 24
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NO WAIVER
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60
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ARTICLE 25
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WAIVER OF TRIAL BY JURY
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61
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ARTICLE 26
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INABILITY TO PERFORM
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61
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ARTICLE 27
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BILLS AND NOTICES
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62
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ARTICLE 28
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SERVICES AND EQUIPMENT
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63
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ARTICLE 29
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PARTNERSHIP TENANT
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70
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ARTICLE 30
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VAULT SPACE
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70
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ARTICLE 31
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SIGNS
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71
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ARTICLE 32
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BROKER
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71
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ARTICLE 33
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INDEMNITY
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71
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ARTICLE 34
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ADJACENT EXCAVATION; SHORING
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72
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ARTICLE 35
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SECURITY DEPOSIT
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73
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ARTICLE 36
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RENT REGULATION
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75
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ARTICLE 37
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COVENANT OF QUIET ENJOYMENT
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75
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ARTICLE 38
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LANDLORD’S WORK
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75
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ARTICLE 39
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MISCELLANEOUS
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76
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ARTICLE 40
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INTENTIONALLY OMITTED
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82
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ARTICLE 41
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TERRACE
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82
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ARTICLE 42
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OPTION TO RENEW
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84
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ARTICLE 43
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RIGHT OF FIRST OFFER
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85
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ARTICLE 44
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COMMUNICATIONS EQUIPMENT; GENERATOR
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88
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ARTICLE 45
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CONDENSER WATER SYSTEM
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89
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TABLE OF CONTENTS
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CONTINUED
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Page
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SCHEDULE A
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Floor Plans of the Premises
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SCHEDULE B
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Building Rules and Regulations for Construction Work
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SCHEDULE C
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Fixed Rent and Operating Expense Payment
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SCHEDULE D
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Location of Terrace
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SCHEDULE E
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Form of Commencement Date Agreement
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SCHEDULE F
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Rules and Regulations
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SCHEDULE G
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Contractor’s Insurance Requirements
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SCHEDULE H
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Cleaning Specifications
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SCHEDULE I
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Certificate of Occupancy
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SCHEDULE J
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Approved Contractors
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SCHEDULE J-1
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Additional Contractor List
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SCHEDULE K
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Building Access Policy & Procedures
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SCHEDULE L-1
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Landlord’s Pre-Delivery Work
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SCHEDULE L-2
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Landlord’s Post-Delivery Work
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SCHEDULE L-3
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Locations of Steam and Water Risers, Sewers, Vents and
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Leaders
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SCHEDULE M
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Intentionally Omitted
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SCHEDULE N
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Location of Storefront
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SCHEDULE O
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Tenant Services Charges
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AGREEMENT OF LEASE
AGREEMENT
OF LEASE, made as of the 19th day of September 2014 (this “Lease”),
between TRINITY HUDSON HOLDINGS, LLC, a Delaware limited liability company, having its office at 75 Varick Street, 2nd Floor,
New York, New York 10013 (“Landlord”),
and SQUARESPACE, INC., a Delaware corporation, having an address at 459 Broadway, 5th Floor, New York, New York 10013
(“Tenant”).
REFERENCE PAGE
In addition to other terms elsewhere defined
in this Lease, the following terms whenever used in this Lease shall have the meanings set forth in this Reference Page.
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(1)
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Premises:
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(a) A portion of the rentable area of the ground floor of the Building, as approximately shown hatched on the floor plan annexed hereto as Schedule A-1; (b) the entire rentable area of the tenth (10th) floor, as approximately shown hatched on the floor plan annexed hereto as Schedule A-2; (c) the entire rentable area of the eleventh (11th) floor, as approximately shown hatched on the floor plan annexed hereto as Schedule A-3; and (d) the entire rentable area of the twelfth (12th) floor as approximately shown hatched on the floor plan annexed hereto as Schedule A-4.
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(2)
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Commencement Date:
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The Substantial Completion Date of Landlord’s Pre-Delivery Work or the date Tenant first occupies the Premises for the normal conduct of its business, whichever occurs earlier.
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(3)
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Rent Commencement Date:
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The date that is six (6) months after the Commencement Date.
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(4)
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Fixed Expiration Date:
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The last day of the month in which occurs the fifteenth (15th) anniversary of the Rent Commencement Date.
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(5)
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Term:
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Approximately fifteen (15) years and six (6) months, subject to extension pursuant to the terms of Article 42.
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(6)
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Fixed Rent:
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The amounts payable from the Rent Commencement Date through the Fixed Expiration Date, inclusive of all escalation and operating expenses other than Taxes as set forth in Article 3, as more particularly set forth on Schedule C attached hereto.
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(7)
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Tenant’s Share:
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Ground Floor
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1.45%
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Tenth Floor
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8.67%
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Eleventh Floor
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8.67%
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Twelfth Floor
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8.28%
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For purposes of the initial Term of this Lease, Landlord
and Tenant agree that the portions of the Premises on (i) the ground floor contains 5,279 rentable square feet, (ii) the tenth
(10th) floor contains 31,637 rentable square feet, (iii) the eleventh (11th) floor contains 31,637 rentable
square feet, (iv) the twelfth (12th) floor contains 30,243 rentable square feet and (v) the Building contains 365,071
rentable square feet, each as measured in accordance with REBNY standards.
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(8)
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Base Tax Factor:
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The Taxes payable for the calendar year commencing on January 1, 2015
and ending on December 31, 2015.
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(9)
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Permitted Use:
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General, executive and
administrative offices (including, without limitation, if Tenant so elects, the Kitchen (as hereinafter defined)), retail uses
and sales, and uses incidentally and directly related thereto.
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(10)
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Broker(s):
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CBRE, Inc.
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(11)
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Tenant Improvement Allowance:
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$4,675,850.
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(12)
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Storefront Allowance:
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$400,000.
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(13)
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Restroom Allowance:
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$750,000.
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(14)
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Tenant’s AC System Allowance:
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$920,000.
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(15)
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Security Deposit:
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$7,142,974, as the same may be reduced pursuant to Article 35
hereof.
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(16)
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Renewal Term:
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One (1) term of five (5) years.
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W I T N E S S E T H:
The parties hereto, for themselves, their
legal representatives, successors and assigns, hereby agree as follows:
ARTICLE 1
GLOSSARY
The following terms shall have the meanings
indicated below:
“AC
Units” shall mean the water-cooled air-conditioning units to be installed by Tenant
in the mechanical equipment rooms on the 10th-12th floors, to be operated in conjunction with the cooling
tower, as part of Tenant’s AC System.
“AAA”
shall have the meaning set forth in Section 42.3.
“Acceptance
Notice” shall have the meaning set forth in Section 43.2(B).
“ADA”
shall have the meaning set forth in Section 9.1.
“Additional
Rent” shall have the meaning set forth in Section 2.2.
“Administrative
Code” shall mean the Administrative Code of the City of New York, as amended.
“Alteration
Fee” shall have the meaning set forth in Section 6.2.
“Alterations”
shall mean alterations, decorations, installations, repairs, improvements, additions, replacements
or other physical changes in or about the Premises made by Tenant.
“Anticipated
Inclusion Date” shall have the meaning set forth in Section 43.2(A).
“Applicable
Rate” shall mean the lesser of (x) three percentage points above the then current
Base Rate, and (y) the maximum rate permitted by applicable law.
“ASHRAE”
shall mean the American Society of Heating, Refrigeration and Air-Conditioning Engineers.
“Available”
shall have the meaning set forth in Section 43.1(A).
“Bankruptcy
Code” shall mean 11 U.S.C. Section 101 et seq., or any statute, federal
or state, of similar nature and purpose.
“Base
Rate” shall mean the rate of interest publicly announced from time to time by
Citibank, N.A., or its successor, as its “base rate” (or
such other term as may be used by Citibank, N.A., from time to time, for the rate presently referred to as its “base
rate”).
“Baseball
Arbitrator” shall have the meaning set forth in Section 42.3.
“BID
Charges” shall have the meaning set forth in Section 3.1(B).
“Building”
shall mean the buildings, equipment and other improvements and appurtenances of every kind and
description now located or hereafter erected, constructed or placed upon the Land and any and all alterations, renewals, and replacements
thereof, additions thereto and substitutions therefor.
“Building
Insurance” shall have the meaning set forth in Section 12.2.
“Building
Systems” shall mean the base building mechanical, electrical, sanitary, heating,
ventilating, elevator (other than the Exclusive Elevators), plumbing, life-safety and other service systems of the Building, but
shall not include Tenant’s AC System (including the cooling tower and the AC Units),
the Communications Equipment, the Generator or any Supplemental AC System, other installations made by Tenant or fixtures or appliances.
“Business
Day(s)” shall mean all days, excluding Saturdays, Sundays and all days observed
as holidays by the State of New York, the federal government or the labor unions servicing the Building.
“Class
E System” shall mean the fire and life safety system of the Building and its components.
“CPA”
shall have the meaning set forth in Section 15.4(C).
“Decorative
Alterations” shall have the meaning set forth in Section 6.1(A).
“Deficiency”
shall have the meaning set forth in Section 19.2(A)(2).
“Directory”
shall have the meaning set forth in Section 39.9.
“Electricity
Additional Rent” shall have the meaning set forth in Section 4.2(A).
“Embargoed
Person” shall have the meaning set forth in Section 39.6(A).
“Escalation
Rent” shall mean payments required to be made by Tenant pursuant to Article
3.
“Event
of Default” shall have the meaning set forth in Section 18.1.
“Exclusive
Elevators” shall have the meaning set forth in Section 28.1(A).
“Expiration
Date” shall mean the Fixed Expiration Date set forth on the Reference Page or
such earlier or later date on which the Term sooner or later ends pursuant to any of the terms, conditions or covenants of this
Lease or pursuant to law.
“Fair
Rental Value” shall mean the rental rate per annum determined at the applicable
time set forth in Articles 42 and 43 for vacant space, in buildings of comparable quality and age of the Building and located
in the immediate vicinity of the Building taking into account all relevant factors.
“Government
Authority (Authorities)” shall mean the United States of America, the State of
New York, the City of New York, any political subdivision thereof and any agency, department, commission, board, bureau or instrumentality
of any of the foregoing, now existing or hereafter created, having jurisdiction over the Real Property or any portion thereof.
“Hazardous
Materials” shall have the meaning set forth in Section 9.2.
“Indemnitees”
shall mean Landlord, its trustees, partners, shareholders, officers, directors and the Manager.
“Initial
Alterations” shall have the meaning set forth in Section 6.5(A).
“Issuing
Bank” shall have the meaning set forth in Section 35.2.
“Issuing
Bank Criteria” shall have the meaning set forth in Section 35.2.
“Kitchen”
shall have the meaning set forth in Section 6.1(B)(3).
“Land”
shall mean the land known by the address of 225 Varick Street, New York, New York 10014.
“Landlord”
shall mean Trinity Hudson Holdings, LLC and thereafter the person that holds the interest of the
landlord hereunder at any particular time.
“Landlord’s
Determination” shall have the meaning set forth in Section 42.2.
“Landlord’s
Equity” shall have the meaning set forth in Section 39.2.
“Landlord’s
Maximum Offer Determination” shall have the meaning set forth in Section 43.2(A).
“Landlord’s
Post-Delivery Work” shall have the meaning set forth in Section 38.2.
“Landlord’s
Pre-Delivery Work” shall have the meaning set forth in Section 38.2.
“Landlord’s
Statement” shall mean a Landlord’s
Tax Statement.
“Landlord’s
Tax Statement” shall mean a statement containing a computation of Escalation Rent
due pursuant to the provisions of Section 3.2 furnished by Landlord to Tenant.
“Landlord’s
Work” shall have the meaning set forth in Article 38.
“Laws”
shall mean all present and future laws, rules, ordinances, regulations, statutes, requirements,
codes and executive orders, extraordinary as well as ordinary, retroactive and prospective, of all Government Authorities now existing
or hereafter created, and of any applicable fire rating bureau, or other body exercising similar functions, affecting the Real
Property, or any street, avenue or sidewalk comprising a part or in front thereof or any vault in or under the same, or requiring
removal of any encroachment, or affecting the maintenance, use or occupation of the Real Property.
“Lease”
shall have the meaning set forth in the recital hereto.
“Lease
Year” shall have the meaning set forth on Schedule C annexed hereto.
“Lessor(s)”
shall mean a lessor under a Superior Lease.
“Letter
of Credit” shall have the meaning set forth in Section 35.2.
“List”
shall have the meaning set forth in Section 39.6(A).
“Manager”
shall mean a contractor under Landlord’s contract
for the management of the Building, if any.
“Mortgage(s)”
shall mean any trust indenture or mortgage which may now or hereafter affect the Real Property,
the Building or any Superior Lease and the leasehold interest created thereby, and all renewals, extensions, supplements, amendments,
modifications, consolidations and replacements thereof or thereto, substitutions therefor, and advances made thereunder.
“Mortgagee(s)”
shall mean any trustee under or mortgagee or holder of a Mortgage.
“Non-Renewal
Notice” shall have the meaning set forth in Section 35.2(B).
“Notice(s)”
shall have the meaning set forth in Section 27.1.
“OFAC”
shall have the meaning set forth in Section 39.6(A).
“Offer
Notice” shall have the meaning set forth in Section 43.2(A).
“Offer
Space” shall have the meaning set forth in Section 43.1(B).
“Offer
Space Inclusion Date” shall have the meaning set forth in Section 43.3.
“Offer
Space Option” shall have the meaning set forth in Section 43.2(B)
“Operating
Hours” shall mean 8:00 a.m. to 6:00 p.m. on Business Days.
“Overtime
Periods” shall have the meaning set forth in Section 28.1(B).
“Parties”
shall have the meaning set forth in Section 39.2.
“Partnership
Tenant” shall have the meaning set forth in Section 29.1.
“Person(s)
or person(s)” shall mean any natural person or persons, a partnership, a corporation
and any other form of business or legal association or entity.
“Persons
Within Tenant’s Control” shall
mean and include Tenant, all of Tenant’s respective principals, officers, agents,
contractors, servants, employees.
“Prohibited
Person” shall have the meaning set forth in Section 39.6(B).
“Real
Property” shall mean the Building and the Land.
“Renewal
Notice” shall have the meaning set forth in Section 42.1.
“Renewal
Option” shall have the meaning set forth in Section 42.1.
“Renewal
Term” shall have the meaning set forth in Section 42.1.
“Rental”
shall mean and be deemed to include Fixed Rent, Additional Rent and any other sums payable by Tenant
hereunder.
“Requirements”
shall mean (i) all Laws, (ii) all requirements, obligations and conditions of all instruments of
record on the date of this Lease, and (iii) all requirements, obligations and conditions imposed by the carrier of Landlord’s
or Tenant’s commercial property insurance policy for the Building.
“Restroom
Alterations” shall have the meaning set forth in Section 6.7.
“Rules
and Regulations” shall mean the rules and regulations annexed hereto as Schedule
F, and such other reasonable modifications and additions to same as Landlord and Landlord’s
agents may from time to time adopt, on notice to Tenant to be given in accordance with the terms of this Lease and equally applied
to all tenants in the Building. The parties agree that all rules and regulations that are designed for the safety or security of
occupants of the Building, property in the Building, or the Building itself, shall be deemed to be reasonable.
“Soft
Costs” shall have the meaning set forth in Section 6.5(A).
“Specialty
Alterations” shall have the meaning set forth in Section 6.1(C).
“Storefront
Alterations” shall have the meaning set forth in Section 6.6.
“Sublease
Additional Rent” shall have the meaning set forth in Section 15.5.
“Sublease
or Assignment Statement” shall have the meaning set forth in Section 15.4(B).
“Substantially
Completed” or “Substantial
Completion” shall, whenever used in this Lease with respect to: (a)
Landlord’s Pre-Delivery Work, be deemed to mean the completion of
Landlord’s Pre-Delivery Work except for minor details of construction,
decoration and mechanical adjustments (the “Punchlist
Items”), if any, the non-completion of which does not individually or in the
aggregate prevent Tenant from obtaining (i) the services to be provided to Tenant pursuant to Article 28 hereof (other
than such services which are dependent upon the Substantial Completion of Landlord’s
Post-Delivery Work), and (ii) access to the Premises to commence and perform Tenant’s
Initial Alterations without material interference by reason of the need to complete unfinished details of
Landlord’s Pre-Delivery Work and (b) Landlord’s
Post-Delivery Work, be deemed to mean (i) the completion of Landlord’s
Post-Delivery Work, except for Punch-List Items, which shall not interfere with or prevent (a) the use of the Premises for
the Permitted Use, (ii) the issuance of a temporary certificate of occupancy or the permanent certificate of occupancy for
the Premises, (iii) the delivery to Tenant of a certificate from Landlord’s
architect, engineer or construction supervisor supervising the construction certifying that Landlord’s
Post-Delivery Work has been Substantially Completed, and (iv) the issuance of any final approvals required from any Government
Authority signifying the approval of Landlord’s Work. On or before the Substantial
Completion of Landlord’s Pre-Delivery Work or Landlord’s
Post-Delivery Work, as the case may be, Landlord’s and Tenant’s
representatives together shall conduct a walk-through of the Premises to compile a list of the Punchlist Items. Tenant shall deliver
to Landlord a copy of said punch list within five (5) Business Days after the walk-through. Landlord shall use commercially reasonable
efforts to complete any Punchlist Items within thirty (30) days after it receives a copy of said punchlist.
“Substantial
Completion Date” shall mean the date that Landlord that Landlord’s
Pre-Delivery Work shall be Substantially Completed.
“Superior
Lease(s)” shall mean all ground or underlying leases of the Real Property or the
Building heretofore or hereafter made by Landlord and all renewals, extensions, supplements and modifications thereof.
“Supplemental
AC System” shall have the meaning set forth in Section 28.1(D).
“Tax
Year” shall mean each period of twelve (12) months, commencing on the first day
of July of each year, that includes any part of the Term, or such other period of twelve (12) months as may be duly adopted as
the fiscal year for real estate tax purposes by the City of New York.
“Taxes”
shall have the meaning set forth in Section 3.1(A).
“Tenant”,
on the date as of which this Lease is made, shall mean the Tenant named in this Lease, but thereafter “Tenant”
shall mean only the tenant under this Lease at the time in question; provided, however, that the
Tenant named in this Lease and any successor tenant hereunder shall not be released from liability hereunder in the event of any
assignment of this Lease, unless otherwise specified herein.
“Tenant
Delay” shall mean any of the following that causes an actual delay in Substantial
Completion of Landlord’s Post-Delivery Work: (i) changes made or requested by Tenant
(or its authorized agents, architect or contractor) to Landlord’s Post-Delivery Work
pursuant to a signed change order or other written request or authorization, (ii) the failure of Tenant to furnish all or any information
requested by Landlord for the performance of Landlord’s Post-Delivery Work within
three (3) Business Days after Tenant’s receipt of written notice from Landlord; or
(iii) any other delays that are caused by Tenant, provided that, with respect to clause (iii) only, a Tenant Delay shall only be
deemed to exist if Landlord notifies Tenant of such delay, in writing, within ten (10) Business Days of its occurrence.
“Tenant’s
AC System” shall have the meaning set forth in Section 45.1.
“Tenant’s
AC System Alterations” shall have the meaning set forth in Section 6.8.
“Tenant’s
BID Payment” shall have the meaning set forth in Section 3.2(A)(ii).
“Tenant’s
Determination” shall have the meaning set forth in Section 42.2.
“Tenant’s
Minimum Offer Determination” shall have the meaning set forth in Section 43.2(B).
“Tenant’s
Property” shall mean Tenant’s movable
fixtures and movable partitions, telephone and other equipment, furniture, furnishings and other movable items of personal property.
“Tenant’s
Tax Payment” shall have the meaning set forth in Section 3.2(A)(i).
“Umbrella”
shall have the meaning set forth in Section 12.4(A).
“Unavoidable
Delays” shall have the meaning set forth in Section 26.1.
“Unusable”
shall have the meaning set forth in Section 28.3(B).
ARTICLE 2
DEMISE, PREMISES, TERM, RENT
Section 2.1. (A) Landlord hereby leases
to Tenant and Tenant hereby hires from Landlord the Premises for the Term to commence, subject to Article 23, on the Commencement
Date and to end on the Fixed Expiration Date, unless earlier terminated or extended as provided herein.
(B) Landlord
shall submit to Tenant a written agreement, substantially in the form annexed as Schedule E, confirming the Commencement
Date, the Rent Commencement Date and the Expiration Date fixed in accordance with the provisions of this Lease, and Landlord and
Tenant shall execute such agreement within five (5) Business Days thereafter. Any failure of the parties to execute such written
agreement shall not affect the validity of the dates specified therein for the Premises as fixed and determined by Landlord as
aforesaid or result in an Event of Default.
Section
2.2. Tenant shall pay to Landlord, in lawful money of the United States of America, without notice or demand, by good and sufficient
check drawn to the Landlord’s order on a bank or trust company which is a member of
the New York Clearinghouse Association with an office in the Borough of Manhattan, the City of New York, State of New York, at
the office of Landlord or at such other place as Landlord may designate from time to time or by wire transfer of immediately available
funds in United States Dollars to an account designated by Landlord, the following:
(A) commencing
upon the Rent Commencement Date, the Fixed Rent, at the annual fixed rental rate set forth on Schedule C annexed hereto,
which shall be payable in equal monthly installments of Fixed Rent in advance on the first day of each and every calendar month
during the Term, except that the first (1st) full monthly installment of Fixed Rent shall be payable by Tenant upon the execution
of this Lease; and
(B) commencing
upon the Commencement Date, additional rent (“Additional Rent”)
consisting of all other sums of money (including, without limitation, Escalation Rent) as shall become due from and be payable
by Tenant (for default in the payment of which Landlord shall have the same remedies as for a default in the payment of Fixed Rent).
Any non-recurring Additional Rent (i.e., Additional Rent that does not appear on Tenant’s
monthly rent bill) shall be payable within thirty (30) days after receipt of Landlord’s
invoice or demand.
Section 2.3. If the Rent Commencement
Date is other than the first day of a calendar month, or the Expiration Date is other than the last day of a calendar month, Fixed
Rent for such month shall be prorated on a per diem basis.
Section 2.4. Tenant shall pay the Fixed
Rent and Additional Rent when due without abatement, deduction, counterclaim, setoff or defense for any reason whatsoever, except
said abatement as may be occasioned by the occurrence of any event permitting an abatement of Fixed Rent and Escalation Rent as
specifically set forth in this Lease.
Section
2.5. Notwithstanding anything to the contrary set forth herein, provided that no Event of Default shall have occurred
and then be continuing, Tenant shall receive an aggregate rent credit in the amount of $1,426,566 (the “Aggregate
Rent Credit”), to be applied in six (6) equal installments of $237,761 against
the amounts of Fixed Rent due hereunder for the first six (6) installments of Fixed Rent commencing on the first (1st)
anniversary of the Commencement Date.
ARTICLE 3
ESCALATION
Section 3.1. For the purposes of this
Article 3, the following terms shall have the meanings set forth below:
(A) “Taxes”
shall mean the aggregate amount of real estate taxes and any general or special assessments (exclusive
of penalties and interest thereon) imposed upon the Real Property (including, without limitation, (i) assessments made upon or
with respect to any “air” and “development”
rights now or hereafter appurtenant to or affecting the Real Property, (ii) any fee, tax or charge
imposed by any Government Authority for any vaults, vault space or other space within or outside the boundaries of the Real Property,
and (iii) any assessments levied after the date of this Lease for public benefits to the Real Property or the Building, other than
BID Charges (as hereinafter defined); provided that if, because of any change in the taxation of real estate, any other tax or
assessment, however denominated (including, without limitation, any franchise, income, profit, sales, use, occupancy, gross receipts
or rental tax) is imposed upon or the owner of the Real Property or the Building, or the occupancy, rents or income therefrom,
in substitution for any of the foregoing Taxes or for an increase in any of the foregoing Taxes, such other tax or assessment to
the extent substituted shall be deemed part of Taxes computed as if Landlord’s sole
asset were the Real Property. With respect to any Tax Year, all expenses, including reasonable attorneys’ fees
and disbursements and experts’ and other witnesses’ fees,
incurred in contesting the validity or amount of any Taxes or in obtaining a refund of Taxes shall be considered as part of the
Taxes for such Tax Year. Anything contained herein to the contrary notwithstanding, Taxes shall
not be deemed to include (a) any taxes on Landlord’s income, (b) franchise taxes,
(c) estate or inheritance taxes, or (d) any similar taxes imposed on Landlord, unless such taxes are levied, assessed or imposed
as a substitute for the whole or any part of, or as a substitute for an increase in, the taxes, assessments, levies, fees, charges
and impositions that now constitute Taxes nor shall Taxes include any tax imposed upon the transfer or mortgage by Landlord of
any interest of Landlord in the Building or the Land, or any penalties, interest or late charges imposed against Landlord or any
superior party with respect to Taxes.
(B) “BID
Charges” shall mean business improvement district charges imposed on the Building
and/or the Land, and any reasonable out of pocket expenses incurred by Landlord in contesting the same.
Section 3.2.
(A) Tenant
shall pay as Escalation Rent for each Tax Year, (i) an amount (“Tenant’s
Tax Payment”) equal to Tenant’s Share
of the amount by which the Taxes for such Tax Year are greater than the Base Tax Factor and (ii) an amount (“Tenant’s
BID Payment”) equal to Tenant’s Share
of the BID Charges. Tenant’s Tax Payment and Tenant’s
BID Payment shall be payable by Tenant to Landlord in twelve (12) equal monthly installments (subject to the further provisions
of this Section 3.2), the first of which shall be due within thirty (30) days after receipt of a Landlord’s
Tax Statement, regardless of whether such Landlord’s Tax Statement is received prior
to, on or after the first day of such Tax Year and the remaining installments shall be due on the first day of each month thereafter.
If there is any increase in Taxes or in BID Charges for any Tax Year, whether during or after such Tax Year, or if there is any
decrease in the Taxes or in BID Charges for any Tax Year during such Tax Year, Landlord may furnish a revised Landlord’s
Tax Statement with accompanying back-up documentation for any Tax Year affected, and Tenant’s
Tax Payment and Tenant’s BID Payment for such Tax Year shall be adjusted and, (a)
within thirty (30) days after Tenant’s receipt of such revised Landlord’s
Tax Statement, Tenant shall (with respect to any increase in Taxes and/or BID Charges for such Tax Year) pay the appropriate increase
in Tenant’s Tax Payment and/or Tenant’s
BID Payment to Landlord, or (b) (with respect to any decrease in Taxes and/or BID Charges for such Tax Year) Landlord shall, at
its election, either credit such decrease in Tenant’s Tax Payment and/or Tenant’s
BID Payment against the next installment of Rental payable by Tenant or refund the amount of such decrease by check to the order
of Tenant or, if at the end of the Term, there shall not be any further installments of Rental remaining against which Landlord
can credit any decrease in Taxes and/or BID Charges due Tenant, Landlord shall deliver to Tenant Landlord’s
check in the amount of the refund due Tenant within thirty (30) days after Landlord’s
receipt of any refund. If, during the Term, Taxes or BID Charges are required to be paid (either to the appropriate taxing authorities
or as tax escrow payments to a Lessor or Mortgagee), in full or in quarterly or other installments on any other date or dates than
as presently required, then Tenant’s Tax Payments and Tenant’s
BID Payments shall be correspondingly accelerated or revised so that Tenant’s Tax
Payments and Tenant’s BID Payments are due at least thirty (30) days prior to the
date payments are due to the taxing authorities, the Lessor or the Mortgagee.
(B) Only
Landlord shall be eligible to institute tax reduction or other proceedings to reduce Taxes or BID Charges, which Landlord shall
institute for each Tax Year during the Term unless Landlord’s certiorari counsel advises
Landlord in writing not to institute such proceedings, in which event
Landlord shall send Tenant a copy of such written advice. If, after a Landlord’s Tax
Statement has been sent to Tenant, a refund of Taxes or BID Charges is actually received by or on behalf of Landlord, thee, promptly
after receipt of such refund, Landlord shall send Tenant a Landlord’s Tax Statement
adjusting the Taxes and BID Charges for such Tax Year (taking into account Landlord’s
expenses therefor) and setting forth Tenant’s Share of such refund, and Tenant shall
be entitled to receive such amount by way of a credit against the next installment(s) of Rental until fully applied or by a refund
if at the end of the Term; provided, however, that Tenant’s Share of such refund shall
be limited to the amount of Tenant’s Tax Payment or Tenant’s
BID Payment as applicable, which Tenant had theretofore paid to Landlord attributable to increases in Taxes or BID Charges for
the Tax Year to which the refund is applicable.
(C) Tenant’s
Tax Payment and Tenant’s BID Payment and any credits with respect thereto as provided
in this Section 3.2 shall be made as provided in this Section 3.2 regardless of the fact that Tenant may be exempt,
in whole or in part, from the payment of any taxes by reason of Tenant’s diplomatic
or other tax exempt status or for any other reason whatsoever.
(D) Tenant
shall pay to Landlord within thirty (30) days after written demand as Additional Rent any occupancy tax or rent tax now in effect
or hereafter enacted, if payable by Landlord in the first instance or hereafter required to be paid by Landlord.
(E) Each
Landlord’s Tax Statement furnished by Landlord with respect to Tenant’s
Tax Payment and Tenant’s BID Payment shall, at Tenant’s
request, be accompanied by a copy of the real estate tax bill or bills for the Tax Year referred to therein, but Landlord shall
have no obligation to deliver more than one such copy of the real estate tax bill or bills in respect of any Tax Year, and Landlord’s
failure to deliver such copy shall not affect Tenant’s obligations as to amount or
due date(s) thereof.
(F) If
the Base Tax Factor subsequently shall be adjusted, corrected or reduced whether as the result of protest, by means of agreement
or as the result of legal proceedings, the Base Tax Factor for the purpose of computing any Additional Rent payable pursuant to
this Article shall be the Base Tax Factor as so adjusted, corrected or reduced. Until the Base Tax Factor is so adjusted, corrected
or reduced, if ever, Tenant shall pay Additional Rent hereunder based upon the unadjusted, uncorrected or unreduced Base Tax Factor
and upon such adjustment, correction or reduction occurring, any Additional Rent payable by Tenant prior to the date of such occurrence
shall be recomputed and Tenant shall pay to Landlord any Escalation Rent found due by such re-computation within thirty (30) days
after being billed therefor (which bill shall set forth in reasonable detail the pertinent data causing and comprising such re-computation).
(G) If
the Commencement Date or the Expiration Date occurs on a date other than July 1 or June 30, respectively, any Tenant’s
Tax Payment and Tenant’s BID Payment under this Article 3 for the Tax Year
in which such Commencement Date or Expiration Date occurs shall be apportioned in that percentage which the number of days in the
period from the Commencement Date to June 30 or from July 1 to the Expiration Date, as the case may be, both inclusive, bears to
the total number of days in such Tax Year. In the event of a termination of this Lease, any Escalation Rent
under this Article 3 shall be paid or adjusted within thirty (30) days after submission of a Landlord’s
Statement. In no event shall Fixed Rent ever be reduced by operation of this Article 3, and the rights and obligations of
Landlord and Tenant under the provisions of this Article 3 with respect to any Escalation Rent shall survive the Expiration
Date.
Section
3.3. Landlord’s failure to render any Landlord’s
Statement with respect to any Tax Year shall not prejudice Landlord’s right thereafter
to render a Landlord’s Statement with respect thereto or with respect to any subsequent
Tax Year, nor shall the rendering of a Landlord’s Statement prejudice Landlord’s
right thereafter to render a corrected Landlord’s Statement for that Tax Year. Notwithstanding
anything to the contrary contained in this Lease, Landlord shall not be permitted to issue a Landlord’s
Statement, bill or demand with respect to any item of Additional Rent later than the date that is (x) the later of two (2) years
after the end of any Tax Year or after the settlement of any tax reduction proceedings for such Tax Year or (y) two (2) years after
any other charge is incurred.
Section
3.4. Each Landlord’s Statement shall be conclusive and binding upon Tenant unless
within one hundred twenty (120) days after receipt of such statement Tenant shall notify Landlord that it disputes the correctness
of such Landlord’s Statement, specifying the particular respects in which such Landlord’s
Statement is claimed to be incorrect. Pending the resolution of such dispute, and as a condition precedent to Tenant’s
right to dispute the correctness of such statement, Tenant shall make its payments in accordance with such Landlord’s
Statement without prejudice to Tenant’s position. In the event of the resolution of
such dispute so that there shall have been an overpayment of any of Tenant’s Tax Payment,
Landlord shall permit Tenant to credit the amount of such overpayment against the next subsequent rental payments under this Lease.
After the termination of this Lease and the payment to Landlord of the balance, if any, of all Fixed Rent and Additional Rent due
hereunder, Landlord shall pay to Tenant the amount of any credit not previously applied by Tenant. The obligations contained in
this Section 3.4 shall survive the Expiration Date.
Section 3.5. In order to adjust, during
the Term of this Lease, for increases in the expenses of Landlord in operating the Building, Tenant shall pay to Landlord the amounts
indicated in Schedule C as the Operating Expense Payment, such amount to be paid (in addition to Fixed Rent) in twelve equal
monthly installments.
ARTICLE 4
ELECTRICITY
Section
4.1. Tenant shall at all times comply with the rules, regulations, terms and conditions applicable to service, equipment,
wiring and requirements of the public utility supplying electricity to the Building. As of the Commencement Date, Landlord
shall furnish sufficient electricity to the Premises to enable Tenant to perform the Initial Alterations. From and after the
Substantial Completion of Landlord’s Post-Delivery Work, Landlord shall furnish
through risers which are dedicated for Tenant’s use a demand electrical load in
the Premises of six (6) watts per usable square foot (exclusive of the electricity to operate the Building Systems, the
Exclusive Elevators, Tenant’s AC System (including the cooling tower and the AC
Units), Tenant’s Communications Equipment (as hereinafter defined) and
Tenant’s Generator (as hereinafter defined), if any, but inclusive of the
electricity utilized by any Supplemental AC Systems serving the Premises), and in no event shall the electrical load in the
Premises exceed such capacity. In addition to such demand electrical load, Landlord shall furnish sufficient electricity to
operate the Building Systems, the Exclusive Elevators, Tenant’s AC System, Tenant’s Communications Equipment and
Tenant’s Generator. Provided Tenant has submitted a load letter from Tenant’s engineer reasonably acceptable to
Landlord justifying the need for additional electrical capacity, Landlord shall furnish such additional electrical capacity
up to an additional one (1) watt per usable square foot demand load, provided that Landlord has such capacity available at
the time of such request. Tenant may distribute such electric power across the Premises as it deems necessary, provided that,
at the end of the Term, Tenant, at its expense, shall perform any work to ensure that each floor of the Premises has a demand
load of at least six (6) watts per usable square foot. Tenant shall not, without Landlord’s prior written consent in
each instance, connect any fixtures, machinery, appliances or equipment to the Building electric distribution system or make
any alteration or addition to Tenant’s machinery, appliances or equipment, or the electric system of the Premises, if
the effect thereof would be to increase the electrical load in the Premises over the demand load specified in this Section
4.1. Notwithstanding the foregoing, Landlord shall not be liable in any way to Tenant for any interruption or failure or
defect in the supply or character of electric service furnished to the Premises or for any loss, damage or expense Tenant may
sustain if either the quantity or character of electric service is changed or is no longer suitable for Tenant’s
requirements, whether by reason of any requirement, act or omission of the public utility serving the Building or for any
other reason.
Section
4.2. (A) Electricity shall be furnished by Landlord to a pull box on each floor of the Premises. Tenant shall pay to Landlord,
as Additional Rent for such electrical service (including the electricity used (i) to service all air-conditioning equipment (including
Tenant’s AC System (including the cooling tower and the AC Units) and any Supplemental
AC Systems) serving the Premises, (ii) to operate Exclusive Elevators, (iii) to operate Tenant’s
Communications Equipment, and (iv) to operate Tenant’s Generator, if any, but excluding
the electricity to operate any other Building Systems, one hundred eight percent (108%) of the amounts (the “Electricity
Additional Rent”), as determined by an existing submeter or submeter(s) installed
by Landlord, at Landlord’s expense (which submeter(s) shall be maintained, repaired
and replaced by Landlord, at Landlord’s cost), at charges, terms and rates, applied
to the monthly readings on such submeter(s), as set from time to time during the Term by the public utility serving the Building
based upon the average rate per kilowatt hour payable by Landlord for the electricity furnished to the Building during the applicable
billing period (computed by dividing the electricity bill for the applicable period by the total kilowatt hours on such bill),
provided that the foregoing eight percent (8%) surcharge shall be applied prior to the application of any sales tax so that Tenant
shall not be paying any surcharge on the sales tax. Tenant shall be permitted to install, at Tenant’s
sole cost and expense, a totalizing meter to aggregate the readings on all of the meters in the Premises in order to measure the
entire electrical usage within the Premises, provided Tenant engages Landlord’s Building
electrical contractor for such work.
(B) Bills
for the Electricity Additional Rent shall be rendered to Tenant on a monthly basis and Tenant shall pay the amount shown
thereon to Landlord within thirty (30) days after the rendering of such bill. To the extent that Tenant installs a totalizing
meter, where more than one submeter measures Tenant’s
consumption of electricity in the Premises, the electricity measured by each submeter shall be computed and billed in the
aggregate in accordance with the provisions set forth above.
(C) Wherever
reference is made in this Article to rate(s) or charge(s) of the public utility supplying electricity to the Building or to increases
in such rates or charges, the words rates or charges shall be deemed to include without limitation, any and all (including any
new or additional): (i) kilowatt hours or energy charge; (ii) kilowatts of demand charge; (iii) fuel adjustment charge; (iv) transfer
adjustment charge; (v) utility tax; (vi) sales tax, and (vii) any and all other charges and taxes required to be paid by Landlord
to the utility company.
Section
4.3. Landlord shall have the right, in its sole discretion, to select any entity or entities which it desires to have as the
electrical service provider to the Building (including the Premises), and Tenant shall not have the right to select the same or
participate in the selection of the same, except and to the extent that any Laws mandate that Tenant have any such right(s). Any
such new electric service provider shall charge electric rates that are then competitive with the then existing electric service
provider to the Building and shall have sufficient electrical capacity available to satisfy Landlord’s
requirements to Tenant under Section 4.1 of this Lease.
Section
4.4. Landlord reserves the right to discontinue furnishing electric energy to
the Premises at any time upon not less than ninety (90) days’ written notice to
the extent Landlord is required to do so by virtue of any Requirements (and for no other reason) and only to the extent
Landlord discontinues furnishing electricity to all tenants in the Building. Any such termination date shall be extended for
such period of time as shall reasonably be necessary for Tenant to make arrangements for and obtain electric service directly
from the public utility company serving the Building. If Landlord exercises such right of termination, this Lease shall
continue in full force and effect and shall be unaffected thereby, except only that, from and after the effective date of
such discontinuance, Landlord shall not be obligated to furnish electric energy to Tenant. If Landlord discontinues
furnishing electric energy to Tenant, Landlord shall, prior to the effective date of such discontinuance, at
Landlord’s and Tenant’s joint
expense shared equally between Tenant and Landlord, make such changes in panel boards, feeders, risers, wiring and other
conductors and equipment to the extent required to permit Tenant to obtain electric energy directly from the electric service
provider for the Building.
Section
4.5. Tenant shall conduct routine maintenance on the lighting fixtures, Tenant’s
AC System, Supplemental AC Systems and appliances serving the Premises in order to maintain maximum energy efficiency. Tenant shall
reasonably cooperate with Landlord in conducting energy savings audits and shall participate, at no cost to Tenant, in Landlord-sponsored
training programs applicable to all tenants in the Building regarding energy savings.
ARTICLE 5
USE AND OCCUPANCY
Section 5.1. Tenant shall use and occupy
the Premises for the Permitted Use and for no other purpose.
Section
5.2. Tenant shall not use the Premises or any part thereof, or permit the Premises or any part thereof to be used (1) for the
business of photographic, multilith or multigraph reproductions or offset printing (other than those which are ancillary to an
otherwise Permitted Use), (2) for an off-the-street retail commercial banking, thrift institution, loan company, trust company,
depository or safe deposit business accepting deposits from the general public, (3) for the off-the-street retail sale of travelers
checks, money orders, drafts, foreign exchange or letters of credit or for the receipt of money for transmission, (4) by the United
States government, the City or State of New York, any foreign government, the United Nations or any agency or department of any
of the foregoing having or asserting sovereign immunity, (5) for the preparation, dispensing or consumption of food or beverages
in any manner whatsoever (except for the preparation, dispensing and consumption of food by Tenant’s
employees and Tenant’s business guests), (6) for the sale of food to any Persons (other
than its employees and Tenant’s business guests), (7) as an employment agency, day-care
facility, labor union, school, or vocational training center (except for the training of employees of Tenant intended to be employed
at the Premises), (8) as a barber shop, beauty salon or manicure shop, (9) for product display activities (such as those of a manufacturer’s
representative), (10) as offices of any public utility company, (11) for data processing activities (other than those which are
ancillary to an otherwise Permitted Use), (12) for health care activities, (13) for clerical support services or offices of public
stenographers or typists (other than those which are ancillary to an otherwise Permitted Use), (14) as reservation centers for
airlines or travel agencies, (15) for retail or manufacturing use, except for retail use on the ground floor, or (16) for any obscene
or pornographic purpose or any sort of commercial sex establishment or for exhibition to the public of any obscene or pornographic
materials. For purposes of the preceding clause (16), “pornographic”
shall mean that the material or purpose has prurient appeal or relates, directly or indirectly,
to lewd or prurient sexual activity and “obscene” shall
have the meaning ascribed thereto in New York Penal Law Section 235.00. Furthermore, the Premises shall not be used for any purpose
that is inconsistent with the first-class character of the Building, creates excessive floor loads, violates the certificate of
occupancy of the Building, materially impairs or interferes with any of the Building operations or the proper and economic heating,
air-conditioning, cleaning or any other services of the Building, interferes with the use of the other areas of the Building by
any other tenants, or impairs the appearance of the Building. Notwithstanding anything to the contrary contained in this Lease,
that portion of the Premises located on the ground floor of the Building may be used for either a retail use in connection with
the operation of Tenant’s business, the business of any of Tenant’s
affiliates or another retail use reasonably approved by Landlord, provided such other retail use shall not violate the specific
restrictions in this Section 5.2 above or an exclusive use provision in another lease in the Building previously granted
by Landlord. In the event of a retail use on the ground floor which is open to the general public, Tenant shall comply with Landlord’s
reasonable and uniformly enforced, portfolio-wide retail rules, regulations and standards with respect to advertising, signage
and other displays which are visible to the general public, provided such rules, regulations and standards do not conflict with
any express provision of this Lease, including Article 31.
ARTICLE 6
ALTERATIONS
Section 6.1.
(A) Tenant,
upon at least five (5) Business Days’ written notice to Landlord, but without obtaining
Landlord’s consent, may make Alterations (x)(i) which do not affect Building Systems
or the exterior of the Building, (ii) which do not require a building permit and (iii) the cost of which, when aggregated with
any other such Alterations performed by Tenant without Landlord’s consent during the
prior twelve (12) month period, does not exceed $900,000, or (y) are purely decorative or cosmetic in nature, such as painting,
carpeting, wall covering and the like (such Alterations, under clauses (x) and (y) collectively, hereinafter “Decorative
Alterations”). Tenant shall not make or permit to be made any other Alterations
without Landlord’s prior written consent, which consent shall not be unreasonably
withheld, conditioned or delayed, provided that (1) the outside appearance of the Building shall not be affected; (2) the physical
integrity of the Building shall not be affected; (3) the structural parts of the Building shall not be affected; (4) except as
otherwise expressly provided in this Lease, no part of the Building outside of the Premises shall be affected; and (5) the proper
functioning of the Building Systems shall not be affected and the use of such systems by Tenant shall not be increased beyond Tenant’s
allocable portion of reserve capacity thereof, if any. Reference is made to Schedule B annexed to this Lease, which contains
the Building Rules and Regulations for Construction Work applicable to the Building, which is incorporated by reference in this
Lease. Landlord reserves the right to make reasonable changes and reasonable additions to the Building Rules and Regulations for
Construction Work and shall not enforce any of the Building Rules and Regulations for Construction Work against Tenant in a discriminatory
manner.
(B) (1) Prior
to making any Alterations, Tenant shall, at Tenant’s expense, (i) other than with
respect to Decorative Alterations, submit to Landlord three (3) sets of final, stamped and detailed plans and specifications (including
layout, architectural, electrical, mechanical and structural drawings) that comply with all Laws for each proposed Alteration,
and Tenant shall not commence any such Alteration without first obtaining Landlord’s
approval of such plans and specifications, which approval shall not be unreasonably withheld, conditioned or delayed, (ii) obtain
all permits, approvals and certificates required by any Government Authorities, and (iii) furnish to Landlord certificates evidencing
worker’s compensation insurance (covering, to the extent applicable, all persons
to be employed by Tenant or Tenant’s contractors, and their respective subcontractors,
in connection with such Alteration) and commercial general liability insurance (including premises operation, bodily injury, personal
injury, death, independent contractors, products and completed operations, broad form contractual liability and broad form property
damage coverages) in such form, with such companies, for such periods and in such amounts as Landlord may reasonably approve,
and as otherwise specified in Schedule G annexed to this Lease, naming Landlord and its agents, any Lessor and any Mortgagee,
as additional insureds. Within thirty (30) days after completion of such Alteration, Tenant, at Tenant’s
expense, shall obtain certificates of final approval of such Alterations required by any Government Authority and shall furnish
Landlord with copies thereof, together with shop drawings for MEP and design drawings updated to reflect material changes for
such Alterations, in AutoCad, Release 14 format, on a CD Rom, PDF digital format, via ftp site or such other format as shall
from time to time be reasonably designated by Landlord. Notwithstanding the foregoing, Tenant shall submit Tenant’s plans
and specifications to applicable Government Authorities in such format as may be required by such Government Authorities. All
Alterations shall be made and performed substantially in accordance with the plans and specifications therefor as approved by
Landlord (which approval shall not be unreasonably withheld, conditioned or delayed), all Laws and the Rules and Regulations.
All materials and equipment to be incorporated in the Premises as a result of any Alterations shall be first quality and no such
materials or equipment shall be subject to any lien, encumbrance, chattel mortgage, title retention or security agreement. In
addition, except for Decorative Alterations, any Alteration for which the cost of labor and materials (as estimated by Landlord’s
architect, engineer or contractor) is in excess of One Million ($1,000,000.00) Dollars, either individually or in the aggregate
with any other Alteration constructed in any twelve (12) month period, shall not be undertaken prior to Tenant’s delivering
to Landlord such security for timely lien-free completion thereof as is reasonably satisfactory to Landlord (except that such
security shall not be required with respect to the Initial Alterations). Any Alteration requiring a building permit shall be performed
only under the supervision of a licensed architect reasonably satisfactory to Landlord.
(2) Landlord
shall respond to the proposed plans and specifications referred to in Section 6.1(B)(1)(i) within ten (10) Business Days
after submission (and within five (5) Business Days after any resubmission if Landlord requires revisions or additional information
with respect to the plans and specifications), but Landlord shall have no liability to Tenant by reason of Landlord’s failure
to respond within such time period, except as otherwise specified herein. If Landlord shall fail to respond within such time period,
however, Landlord’s approval of such plans and specifications shall be deemed granted, provided that Tenant shall
have sent Landlord a second request for approval containing the following language in bold print: “THIS IS A SECOND REQUEST
FOR APPROVAL OF THE PROPOSED PLANS AND SPECIFICATIONS. IF LANDLORD DOES NOT RESPOND TO THIS REQUEST WITHIN FIVE (5) BUSINESS DAYS,
LANDLORD’S APPROVAL SHALL BE DEEMED GRANTED PURSUANT TO THE PROVISIONS OF THE LEASE” and Landlord shall have failed
to respond within such time period. Tenant agrees that any review or approval by Landlord of any plans and/or specifications with
respect to any Alteration is solely for Landlord’s benefit, and without any representation or warranty whatsoever to Tenant
or any other Person with respect to the adequacy, correctness or sufficiency thereof or with respect to Laws or otherwise.
(3) Subject
to Tenant’s compliance with all of the applicable provisions of this Article 6, including submitting
Tenant’s plans and specifications (including plumbing and fire alarm) for Landlord’s approval, Landlord approves
in concept the installation by Tenant of a commercial grade kitchen in the Premises in a location approved by Landlord (the
“Kitchen”). If Tenant installs the Kitchen, it shall also install a refrigerated garbage room in the
Kitchen. Tenant shall cause the Kitchen to be cleaned daily, shall dispose of all of its garbage and waste matter in
compliance with all Rules and Regulations and all Requirements and shall cause the Premises to be free at all times of all
vermin and insects and shall take (at its sole cost and expense) reasonable precautions necessary to prevent any such vermin
or insects from existing in the Premises or permeating into any other parts of the Building, including, but not limited to,
the hiring by Tenant of any exterminator to provide regular monthly service (and more often if need be) to the Premises.
Tenant, at Tenant’s sole cost and expense, properly shall vent and exhaust odors from the Premises, and shall install,
in accordance with the provisions of this Article 6, any customary system or systems to accomplish the same that
comply with all applicable Laws governing the same now or hereafter in effect. Subject to Landlord’s approval of
Tenant’s plans and specifications in accordance with the terms of this Lease, Landlord shall permit Tenant to vent such
exhaust through a penetration of the roof of the Building. Tenant, at its sole cost and expense, shall thoroughly clean and
maintain, at quarterly intervals (and any time as may be reasonably required upon Landlord’s reasonable request
together with documentation that such cleaning is necessary), in accordance with all Laws the entire Kitchen exhaust system,
including but not limited to the hoods over all stoves and ranges in the Kitchen, all cooking exhaust ducts within or serving
the Premises and shall promptly, upon Landlord’s reasonable request, furnish to Landlord certificates of completion of
such cleaning. Tenant, at its sole cost and expense, shall maintain and keep in good condition all stove hoods and ducts in
the Premises in accordance with this Section 6.1(B).
(C) Except
as otherwise provided in the Rules and Regulations and Building Rules and Regulations for Construction Work, Tenant shall be permitted
to perform Alterations during Operating Hours, provided that such work does not interfere with or interrupt the operation and maintenance
of the Building or interfere with or interrupt the use and occupancy of the Building by other tenants in the Building. Otherwise,
Alterations shall be performed at Tenant’s expense and at such times and in such manner as Landlord may from time to time
reasonably designate. All Alterations shall become a part of the Building and shall be Landlord’s property from and after
the installation thereof and may not be removed or changed without Landlord’s consent. Notwithstanding the foregoing, however,
Landlord shall indicate in writing to Tenant at the time Landlord approves Tenant’s plans and specifications whether any
structural Alterations, the Kitchen, vaults, raised flooring, internal staircases, and other slab penetrations, fire suppression
or uninterrupted power supply systems, satellites, antennas, dumbwaiters, cafeterias, fitness rooms, showers, and other improvements
of a similar nature if installed by Tenant (the “Specialty Alterations”) will be required to be removed at the
end of the Term, and in such case, Tenant shall remove the Specialty Alterations in accordance with such request and repair and
restore in a good and workmanlike manner to Building standard condition (reasonable wear and tear excepted) any damage to the Premises
or the Building caused by such removal. Except as provided in Section 41.1(B), if Landlord shall not designate any Alterations
in question for which Tenant seeks Landlord’s consent in accordance with this Lease as Specialty Alterations that requires
removal at the end of the Term, then Landlord shall be deemed to have waived Landlord’s right to require such removal at
the end of the Term. In no event shall Tenant be obligated to remove any wiring and cabling from the raceways and conduits located
in the Premises nor shall Tenant be required to restore the ground floor portion of the Premises to its condition prior to the
performance of Landlord’s Work. All Tenant’s Property shall remain the property of Tenant and, on or before the Fixed
Expiration Date or earlier end of the Term, may be removed from the Premises by Tenant at Tenant’s option, provided,
however, that Tenant shall repair and restore in a good and workmanlike manner to Building standard condition existing as
of the date Landlord completes Landlord’s Post-Delivery Work (reasonable wear and tear excepted) any damage to the Premises
or the Building caused by such removal. The provisions of this Section 6.1(C) shall survive the expiration or earlier termination
of this Lease.
(D) (1) All
Alterations shall be designed and performed, at Tenant’s sole cost and expense (but subject to the Tenant Improvement
Allowance), by consultants, contractors and subcontractors selected by Tenant and approved by Landlord (which approval shall
not be unreasonably withheld, conditioned or delayed) and under the supervision of a construction or project manager approved
by Landlord (which approval shall not be unreasonably withheld, conditioned or delayed). Prior to making any subsequent
Alteration, at Tenant’s request, Landlord shall furnish Tenant with a list of approved contractors for the Building
listed by trade. Tenant shall not be required to obtain Landlord’s consent to engage any such approved contractor
unless, prior to entering into a contract with such contractor or the commencement of work by the contractor, Landlord
notifies Tenant that such contractor has been removed from the list. In furtherance of the foregoing, a list of contractors
and subcontractors approved to perform work in the Building as of the date of this Lease is attached hereto as Schedule
J. If Tenant wishes to use a contractor not on Landlord’s approved list, Tenant shall submit to Landlord the
identity and other information reasonably required by Landlord along with the submission of Tenant’s plans and
specifications for the particular Alterations. With respect to the Initial Alterations, Landlord also approves the
contractors and subcontractors set forth on the list attached hereto as Schedule J-1.
(2) Notwithstanding
the foregoing, with respect to any structural Alterations and/or Alterations affecting the sprinklers or the Class E System of
the Building, Tenant shall employ Landlord’s or the Manager’s designated contractor for connection and programming
to the Building Systems (at competitive market rates for like-qualified contractors). In addition, Tenant shall employ Landlord’s
or the Manager’s designated expediter (which, as of the date of this Lease, is Brookbridge Consulting Services, Inc.) with
respect to any filings with, or other submissions to, applicable Government Authorities in connection with any of Tenant’s
Alterations.
(3) Tenant
shall be responsible for the installation and maintenance of all fire alarm devices within the Premises. Landlord shall make available
to Tenant connection points at the nearest Building DGP panel for tying in Tenant’s fire alarm devices. Final connection
to the base Building System for life safety shall be performed by Landlord’s fire alarm vendor (which, as of the date of
this Lease, is Simplex Grinnell), at Tenant’s reasonable expense. Landlord’s fire alarm vendor, which shall charge
competitive market rates, must be contracted directly by Tenant or Tenant’s general contractor for the performance of such
work. All installations of fire alarm devices must be approved by the New York City Department of Buildings (the “Building
Department”) and the New York City Fire Department (“FDNY”). Any so-called “Letters of Defect”
issued by the Building Department or FDNY relating to Tenant’s fire alarm devices (so long as such defects are not caused
by problems in the base Building System) must be promptly and diligently corrected, and so-called “Letters of Approval and
Completion” must be obtained by Tenant within forty-five (45) days after Tenant’s fire alarm devices shall have been
installed and connected to the base Building System for life safety.
(4) In
accordance with Landlord’s Work, Landlord shall provide a sprinkler loop for Tenant’s connections. All
sprinklers, including without limitation, any pre-action panels installed in the Premises, must be installed in compliance
with all Requirements (including without limitation, the NYC Code), at Tenant’s cost and expense. Prior to FDNY
inspection, Tenant shall cause all new sprinkler installations to be hydrostatically tested (it being agreed that
arrangements for such testing much be upon notice to and coordinated with Landlord).
(E) (1) Any mechanic’s lien filed
against the Premises or the Real Property for work claimed to have been done for, or materials claimed to have been furnished to,
Tenant shall be cancelled or discharged by Tenant, by payment or filing of the bond required by law, within thirty (30) days after
written notice from Landlord, and Tenant shall indemnify and hold Landlord harmless from and against any and all reasonable, actual
out of pocket, costs, expenses, claims, losses or damages resulting therefrom by reason thereof.
(2) If
Tenant shall fail to discharge such mechanic’s lien within the aforesaid period, then, in addition to any other right or
remedy of Landlord, Landlord may, but shall not be obligated to, discharge the same either by paying the amount claimed to be due
or by procuring the discharge of such lien by deposit in court or bonding, and in any such event, Landlord shall be entitled, if
Landlord so elects, to compel the prosecution of an action for the foreclosure of such mechanic’s lien by the lienor and
to pay the amount of the judgment, if any, in favor of the lienor, with interest, costs and allowances.
(3) Any
amount paid by Landlord for any of the aforesaid charges and for all reasonable expenses of Landlord (including, but not limited
to, reasonable attorneys’ fees and disbursements) incurred in defending any such action, discharging said lien or in procuring
the discharge of said lien, with interest on all such amounts at the Applicable Rate, shall be repaid by Tenant within thirty (30)
days after written demand therefor, and all amounts so repayable, together with such interest, shall be considered Additional Rent.
(F) (1) All Alterations made by Tenant
shall meet all applicable energy savings and/or energy efficient building code requirements at the time of installation.
(2) To
the extent feasible, Tenant shall install in the Premises Energy Star rated appliances, including dishwashers, refrigerators, vending
machines and water coolers, and Energy Star rated office equipment, including computers, monitors, printers, faxes and scanners.
(3) Tenant
shall ensure that any lighting installed by Tenant in the Premises complies with all applicable energy savings and/or energy efficient
code requirements at the time of installation.
(4) To
the extent feasible, Tenant shall locate refrigeration and other heat-generating equipment where such equipment can be adequately
ventilated, and also shall locate refrigerators in an area of the Premises that is not within direct sunlight or near another heat
source.
Section 6.2. Except with respect to the
Initial Alterations, Tenant shall reimburse Landlord, within thirty (30) days after demand therefor, for any reasonable, out-of-pocket,
expense incurred by Landlord for third party engineering fees in (x) reviewing the plans and specifications for, and/or (y) inspecting
the progress of completion of such Alterations. Landlord shall not charge any management, supervisory, alteration fee or tie-in
fees in connection with any Alterations.
Section 6.3. Landlord, at Tenant’s expense,
and within five (5) days after the request of Tenant, shall join in any applications for any permits, approvals or certificates
required to be obtained by Tenant in connection with any permitted Alteration (provided that the provisions of the applicable
Laws shall require that Landlord join in such application) and shall otherwise cooperate with Tenant in connection therewith,
provided that Landlord shall not be obligated to incur any cost or expense or liability in connection therewith. Notwithstanding
anything to the contrary contained herein, at Tenant’s request, Landlord shall execute all required permit forms within
five (5) days after Tenant’s submission of its plans and specifications prior to Landlord’s review of the same, but
the execution of such permit forms by Landlord shall not constitute approval of the Alterations or the plans and specifications
in question, and Tenant shall not commence construction of such Alterations without Landlord’s written approval of the same,
as and to the extent required pursuant to this Lease.
Section 6.4. Upon written request of
Landlord after the completion of any Alteration, Tenant shall furnish to Landlord copies of records of all Alterations and of the
cost thereof.
Section 6.5.
(A) Subject
to the conditions set forth below and to Section 41.2, Landlord shall pay to Tenant the Tenant Improvement Allowance in
connection with the Alterations to be made by Tenant for Tenant’s initial occupancy of the Premises, other than the ground
floor portion of the Premises (the “Initial Alterations”) up to a maximum amount not to exceed the amount set
forth in the Reference Page for those costs and expenses in connection with the construction of the Initial Alterations, as shown
on the approved plans and specifications referred to in Section 6.1 for such Initial Alterations. For purposes of the preceding
sentence, actual costs of construction shall include both so-called “hard” construction costs and so called “soft”
costs for Tenant’s architectural, engineering, construction consultants, and filing and permitting fees, voice and data cabling
and moving expenses (collectively, “Soft Costs”), provided that Landlord shall not be obligated to fund more
than ten (10%) percent of the Tenant Improvement Allowance for Soft Costs. Notwithstanding anything to the contrary set forth herein,
the Tenant Improvement Allowance shall not be used for telephone systems, computer systems, furniture or decorations (other than
carpeting, wall coverings and window blinds). Tenant shall submit to Landlord a line item budget or other reasonable evidence (for
Landlord’s review and approval) setting forth estimated construction costs (the “Estimated Initial Alterations Costs”)
in detail prior to commencement of the Initial Alterations.
(B) (i) During the performance of
the Initial Alterations, Landlord shall reimburse Tenant, from time to time within thirty (30) days after Tenant’s
request therefor (not more often than once per month), for the actual costs of construction of the Initial Alterations (up to
the amount of the Tenant Improvement Allowance), provided further that Landlord shall have received from Tenant: (a) proper
receipts marked “paid” and original unconditional lien waivers from all contractors, subcontractors and
materialmen involved in the performance of such portion of the Initial Alterations and the supply of materials used in
connection with such portion of the Initial Alterations, evidencing that Tenant has spent the amount claimed in the
requisition on authorized hard cost improvements to the Premises (and/or on Soft Costs incurred in connection with such
improvements, provided that Soft Costs may not account for more than ten (10%) percent of the Tenant Improvement Allowance);
(b) an original executed certificate from Tenant’s independent licensed architect (provided that, if Tenant, acting in
good faith, cannot cause its architect to deliver such certification, then an executive officer of Tenant may deliver such
certification) stating that, (x) in his or her opinion, such portion of the Initial Alterations that is the subject to the
requisition request has been completed and all work in connection therewith has been performed in a good and workmanlike
manner and in accordance with Tenant’s plans and specifications and (y) to his or her knowledge, all contractors,
subcontractors and materialmen have been paid for such portion of the Initial Alterations and all materials furnished in
connection therewith, and (c) a written signed statement or request from an authorized officer of Tenant outlining in detail
the amount of the Tenant Improvement Allowance being requested, along with a certification by Tenant that the amount claimed
is for reimbursement to the listed parties. Landlord may withhold an amount equal to 10% of the requisition for retainage.
Notwithstanding anything to the contrary contained in this Section 6.5, it is the intention of the parties that
Landlord and Tenant shall fund the costs of the Initial Alterations proportionately based upon each party’s respective
share of the total Estimated Initial Alterations Cost. Accordingly, for each requisition made by Tenant, Landlord, after
taking into account the retainage described above, shall reimburse Tenant for a portion of such requisition equal to the
amount of such requisition multiplied by a fraction, the numerator of which is the amount of the Tenant Improvement Allowance
and the denominator of which is the total Estimated Initial Alterations Cost, until the Tenant Improvement Allowance to which
Tenant is entitled shall have been fully funded. If the scope of Tenant’s Initial Alterations changes, resulting in an
increase in the approved Estimated Initial Alterations Cost by more than 10%, then Tenant shall submit the revised Estimated
Initial Alterations Cost for Landlord’s review and approval and the foregoing formula shall be revised accordingly.
(ii) It
is expressly understood and agreed that (a) in the event the cost of the Initial Alterations exceeds the Tenant Improvement Allowance,
Tenant shall be responsible to pay all of such excess costs and expenses, and (b) Tenant shall complete the Initial Alterations
for the entire rentable areas of the 10th, 11th and 12th floors in accordance with the plans and
specifications, whether or not the Tenant Improvement Allowance is sufficient to fund such completion.
(C) Notwithstanding
anything to the contrary contained in this Section 6.5, if, at the time payment of the Tenant Improvement Allowance is required
to be made, Tenant is in arrears in the payment of Fixed Rent or Additional Rent, then Landlord may offset the amount of such arrearages
against the Tenant Improvement Allowance due from Landlord under this Section 6.5.
(D) In
no event shall the aggregate amount paid by Landlord to Tenant ever exceed the amount of the Tenant Improvement Allowance. If the
costs and expenses for the Initial Alterations are less than the amount of the Tenant Improvement Allowance, or if Tenant has not
submitted a request for payment of the Tenant Improvement Allowance within twelve (12) months following the Commencement Date (with
time being of the essence), Tenant shall not be entitled to any payment or credit for such excess or unused amounts.
(E) Subject
to the terms and conditions set forth in this Section 6.5, within thirty (30) days after the last to occur of (i)
Tenant’s request for the final installment of the Tenant Improvement Allowance, (ii) substantial completion
(i.e., completion other than punchlist items) of the Initial Alterations in accordance with the terms hereof, (iii)
delivery to Landlord of general releases and waivers of lien from all contractors, subcontractors and materialmen involved in
the performance of the Initial Alterations and the supply of materials used in connection with the Initial Alterations, and
(iv) a certificate from Tenant’s independent licensed architect (provided, that, if Tenant, acting in good faith,
cannot cause its architect to deliver such certification, then an executive officer of Tenant may deliver such certification)
certifying that in his or her opinion the Initial Alterations have been completed substantially in accordance with
Tenant’s plans and specifications for the Initial Alterations, Landlord shall fund the balance of the Tenant
Improvement Allowance which had been retained.
(F) Notwithstanding
anything to the contrary contained in this Section 6.5 or in Sections 6.6 through 6.8, for ease of administration,
Tenant may submit a comprehensive requisition for the Tenant Improvement Allowance, the Storefront Allowance, the Restroom Allowance
and Tenant’s AC System Allowance, so long as the amounts requisitioned for each such allowance are specified and reasonably
identifiable by Landlord, and the required certificates and lien waivers cover the Alteration in question, it being understood
that Tenant shall not be obligated to submit separate requisitions for each such allowance.
Section 6.6.
(A) Subject
to the conditions set forth below, Landlord shall pay to Tenant the Storefront Allowance in connection with the Alterations to
be made by Tenant (the “Storefront Alterations”) up to a maximum amount not to exceed the amount set forth in
the Reference Page for those costs and expenses in connection with the construction of the Storefront Alterations, as shown on
the approved plans and specifications submitted to Landlord for its approval pursuant to Article 6. For the avoidance of
doubt, the design, specifications, materials, dimensions and finishes of the Storefront Alterations shall be subject to Landlord’s
approval, which shall not be unreasonably withheld, conditioned or delayed. For purposes of the preceding sentence, actual costs
of construction shall include both so-called “hard” construction costs and so called “soft” costs for Tenant’s
architectural, engineering, construction consultants, and filing and permitting fees (collectively, “Soft Costs”),
provided that Landlord shall not be obligated to fund more than ten (10%) percent of the Storefront Allowance for Soft Costs.
(B) (i) During the performance of
the Storefront Alterations, Landlord shall reimburse Tenant, from time to time within thirty (30) days after Tenant’s
request therefor (not more often than once per month), for the actual costs of construction of the Storefront Alterations (up
to the amount of the Storefront Allowance), provided further that Landlord shall have received from Tenant: (a) proper
receipts marked “paid” and original unconditional lien waivers from all contractors, subcontractors and
materialmen involved in the performance of such portion of the Storefront Alterations and the supply of materials used in
connection with such portion of the Storefront Alterations, evidencing that Tenant has spent the amount claimed in the
requisition on authorized hard cost improvements (and/or on Soft Costs incurred in connection with such improvements,
provided that Soft Costs may not account for more than ten (10%) percent of the Storefront Allowance); (b) an original
executed certificate from Tenant’s independent licensed architect (provided that, if Tenant, acting in good faith,
cannot cause its architect to deliver such certification, then an executive officer of Tenant may deliver such certification)
stating that, (x) in his or her opinion, such portion of the Storefront Alterations that is the subject to the requisition
request has been completed and all work in connection therewith has been performed in a good and workmanlike manner and in
accordance with Tenant’s plans and specifications and (y) to his or her knowledge, all contractors, subcontractors and
materialmen have been paid for such portion of the Storefront Alterations and all materials furnished in connection
therewith, and (c) a written signed statement or request from an authorized officer of Tenant outlining in detail the amount
of the Storefront Allowance being requested, along with a certification by Tenant that the amount claimed is for
reimbursement to the listed parties. Landlord may withhold an amount equal to 10% of the requisition for retainage.
(ii) It
is expressly understood and agreed that (a) in the event the cost of the Storefront Alterations exceeds the Storefront Allowance,
Tenant shall be responsible to pay all of such excess costs and expenses, and (b) Tenant shall complete the Storefront Alterations,
whether or not the Storefront Allowance is sufficient to fund such completion.
(C) In
no event shall the aggregate amount paid by Landlord to Tenant ever exceed the amount of the Storefront Allowance. If the costs
and expenses for the Storefront Alterations are less than the amount of the Storefront Allowance, or if Tenant has not submitted
a request for payment of the Storefront Allowance within twelve (12) months following the Commencement Date (with time being of
the essence), Tenant shall not be entitled to any payment or credit for such excess or unused amounts.
(D) Subject
to the terms and conditions set forth in this Section 6.6, within thirty (30) days after the last to occur of (i) Tenant’s
request for the final installment of the Storefront Allowance, (ii) substantial completion (i.e., completion other than
punch list items) of the Storefront Alterations in accordance with the terms hereof, (iii) delivery to Landlord of general releases
and waivers of lien from all contractors, subcontractors and materialmen involved in the performance of the Storefront Alterations
and (iv) a certificate from Tenant’s independent licensed architect (provided, that, if Tenant, acting in good faith, cannot
cause its architect to deliver such certification, then an executive officer of Tenant may deliver such certification) certifying
that in his or her opinion the Storefront Alterations have been completed substantially in accordance with Tenant’s plans
and specifications for the Storefront Alterations, Landlord shall fund the balance of the Storefront Allowance which had been retained.
Section 6.7.
(A) Subject
to the conditions set forth below, Landlord shall pay to Tenant the Restroom Allowance in connection with the Alterations to
be made by Tenant to install one men’s and one women’s ADA-compliant restroom in each of the 10th
– 12th floors of the Premises (the “Restroom Alterations”) up to a maximum amount not to
exceed the amount set forth in the Reference Page for those costs and expenses in connection with the construction of the
Restroom Alterations, as shown on the approved plans and specifications submitted to Landlord for its approval pursuant to Article
6. For the avoidance of doubt, the design, specifications, materials and finishes of the Restroom Alterations (which
shall contain at least the same number of fixtures, and shall be at least the same quality and level of finish as contained
in new, Building-standard ADA-compliant restrooms installed by Landlord in its portfolio) shall be subject to
Landlord’s approval, which shall not be unreasonably withheld, conditioned or delayed. For purposes of the preceding
sentence, actual costs of construction shall include both so-called “hard” construction costs and so called
“soft” costs for Tenant’s architectural, engineering, construction consultants, and filing and permitting
fees (collectively, “Soft Costs”), provided that Landlord shall not be obligated to fund more than ten
(10%) percent of the Restroom Allowance for Soft Costs.
(B) (i) During the performance of the
Restroom Alterations, Landlord shall reimburse Tenant, from time to time within thirty (30) days after Tenant’s request therefor
(not more often than once per month), for the actual costs of construction of the Restroom Alterations (up to the amount of the
Restroom Allowance), provided further that Landlord shall have received from Tenant: (a) proper receipts marked “paid”
and original unconditional lien waivers from all contractors, subcontractors and materialmen involved in the performance of such
portion of the Restroom Alterations and the supply of materials used in connection with such portion of the Restroom Alterations,
evidencing that Tenant has spent the amount claimed in the requisition on authorized hard cost improvements to the Premises (and/or
on Soft Costs incurred in connection with such improvements, provided that Soft Costs may not account for more than ten (10%) percent
of the Restroom Allowance); (b) an original executed certificate from Tenant’s independent licensed architect (provided that,
if Tenant, acting in good faith, cannot cause its architect to deliver such certification, then an executive officer of Tenant
may deliver such certification) stating that, (x) in his or her opinion, such portion of the Restroom Alterations that is the subject
to the requisition request has been completed and all work in connection therewith has been performed in a good and workmanlike
manner and in accordance with Tenant’s plans and specifications and (y) to his or her knowledge, all contractors, subcontractors
and materialmen have been paid for such portion of the Restroom Alterations and all materials furnished in connection therewith,
and (c) a written signed statement or request from an authorized officer of Tenant outlining in detail the amount of the Restroom
Allowance being requested, along with a certification by Tenant that the amount claimed is for reimbursement to the listed parties.
Landlord may withhold an amount equal to 10% of the requisition for retainage.
(ii) It
is expressly understood and agreed that (a) in the event the cost of the Restroom Alterations exceeds the Restroom Allowance, Tenant
shall be responsible to pay all of such excess costs and expenses, and (b) Tenant shall complete the Restroom Alterations, whether
or not the Restroom Allowance is sufficient to fund such completion.
(C) In
no event shall the aggregate amount paid by Landlord to Tenant ever exceed the amount of the Restroom Allowance. If the costs and
expenses for the Restroom Alterations are less than the amount of the Restroom Allowance, or if Tenant has not submitted a request
for payment of the Restroom Allowance within twelve (12) months following the Commencement Date (with time being of the essence),
Tenant shall not be entitled to any payment or credit for such excess or unused amounts.
(D) Subject
to the terms and conditions set forth in this Section 6.7, within thirty (30) days after the last to occur of (i)
Tenant’s request for the final installment of the Restroom Allowance, (ii) substantial completion (i.e.,
completion other than punch list items) of the Restroom Alterations in accordance with the terms hereof, (iii) delivery to
Landlord of general releases and waivers of lien from all contractors, subcontractors and materialmen involved in the
performance of the Restroom Alterations and the supply of materials used in connection with the Restroom Alterations, and
(iv) a certificate from Tenant’s independent licensed architect (provided, that, if Tenant, acting in good faith,
cannot cause its architect to deliver such certification, then an executive officer of Tenant may deliver such certification)
certifying that in his or her opinion the Restroom Alterations have been completed substantially in accordance with
Tenant’s plans and specifications for the Restroom Alterations, Landlord shall fund the balance of the Restroom
Allowance which had been retained.
Section 6.8.
(A) Subject
to the conditions set forth below, Landlord shall pay to Tenant the Tenant’s AC System Allowance in connection with the Alterations
to be made by Tenant to install Tenant’s AC System (the “Tenant’s AC System Alterations”) up to
a maximum amount not to exceed the amount set forth in the Reference Page for those costs and expenses in connection with the construction
of the Tenant’s AC System Alterations, as shown on the approved plans and specifications submitted to Landlord for its approval
pursuant to Article 6. For the avoidance of doubt, the location, design, specifications, materials and dimensions of the
Tenant’s AC System Alterations shall be subject to Landlord’s approval, which shall not be unreasonably withheld, conditioned
or delayed. For purposes of the preceding sentence, actual costs of construction shall include both so-called “hard”
construction costs and so called “soft” costs for Tenant’s architectural, engineering, construction consultants,
and filing and permitting fees, (collectively, “Soft Costs”), provided that Landlord shall not be obligated
to fund more than ten (10%) percent of the Tenant’s AC System Allowance for Soft Costs.
(B) (i) During the performance of the
Tenant’s AC System Alterations, Landlord shall reimburse Tenant, from time to time within thirty (30) days after Tenant’s
request therefor (not more often than once per month), for the actual costs of construction of the Tenant’s AC System Alterations
(up to the amount of the Tenant’s AC System Allowance), provided further that Landlord shall have received from Tenant:
(a) proper receipts marked “paid” and original unconditional lien waivers from all contractors, subcontractors and
materialmen involved in the performance of such portion of the Tenant’s AC System Alterations and the supply of materials
used in connection with such portion of the Tenant’s AC System Alterations, evidencing that Tenant has spent the amount
claimed in the requisition on authorized hard cost improvements to the Premises (and/or on Soft Costs incurred in connection with
such improvements, provided that Soft Costs may not account for more than ten (10%) percent of the Tenant’s AC System Allowance);
(b) an original executed certificate from Tenant’s independent licensed architect (provided that, if Tenant, acting in good
faith, cannot cause its architect to deliver such certification, then an executive officer of Tenant may deliver such certification)
stating that, (x) in his or her opinion, such portion of the Tenant’s AC System Alterations that is the subject to the requisition
request has been completed and all work in connection therewith has been performed in a good and workmanlike manner and in accordance
with Tenant’s plans and specifications and (y) to his or her knowledge, all contractors, subcontractors and materialmen
have been paid for such portion of the Tenant’s AC System Alterations and all materials furnished in connection therewith,
and (c) a written signed statement or request from an authorized officer of Tenant outlining in detail the amount of the Tenant’s
AC System Allowance being requested, along with a certification by Tenant that the amount claimed is for reimbursement to the
listed parties. Landlord may withhold an amount equal to 10% of the requisition for retainage.
(ii) It
is expressly understood and agreed that (a) in the event the cost of the Tenant’s AC System Alterations exceeds the Tenant’s
AC System Allowance, Tenant shall be responsible to pay all of such excess costs and expenses, and (b) Tenant shall complete the
Tenant’s AC System Alterations, whether or not the Tenant’s AC System Allowance is sufficient to fund such completion.
(C) In
no event shall the aggregate amount paid by Landlord to Tenant ever exceed the amount of the Tenant’s AC System Allowance.
If the costs and expenses for the Tenant’s AC System Alterations are less than the amount of the Tenant’s AC System
Allowance, or if Tenant has not submitted a request for payment of the Tenant’s AC System Allowance within twelve (12) months
following the Commencement Date (with time being of the essence), Tenant shall not be entitled to any payment or credit for such
excess or unused amounts.
(D) Subject
to the terms and conditions set forth in this Section 6.8, within thirty (30) days after the last to occur of (i) Tenant’s
request for the final installment of the Tenant’s AC System Allowance, (ii) substantial completion (i.e., completion
other than punch list items) of the Tenant’s AC System Alterations in accordance with the terms hereof, (iii) delivery to
Landlord of general releases and waivers of lien from all contractors, subcontractors and materialmen involved in the performance
of the Tenant’s AC System Alterations and the supply of materials used in connection with the Tenant’s AC System Alterations,
and (iv) a certificate from Tenant’s independent licensed architect (provided, that, if Tenant, acting in good faith, cannot
cause its architect to deliver such certification, then an executive officer of Tenant may deliver such certification) certifying
that in his or her opinion the Tenant’s AC System Alterations have been completed substantially in accordance with Tenant’s
plans and specifications for the Tenant’s AC System Alterations, Landlord shall fund the balance of the Tenant’s AC
System Allowance which had been retained.
Section 6.9. Tenant shall not, at any
time prior to or during the Term, directly or indirectly employ, or permit the employment of, any contractor, mechanic or laborer
in the Premises, whether in connection with any Alteration or otherwise, if such employment would unreasonably interfere or cause
any conflict with other contractors, mechanics or laborers engaged in the construction, maintenance or operation of the Building
by Landlord. In the event of any such interference or conflict, Tenant, upon reasonable demand of Landlord, shall cause as soon
as reasonably practicable all such contractors, mechanics or laborers causing such interference or conflict to leave the Building.
ARTICLE 7
REPAIRS; FLOOR LOAD
Section
7.1. (A) (i) Tenant, at Tenant’s sole cost and expense, shall take good care of the Premises (including the
interior and exterior of the storefront to be installed by Tenant) and the fixtures, equipment and appurtenances therein
(including, without limitation, the Exclusive Elevators (subject to Section 7.3), Tenant’s AC System (including
the cooling tower and AC Units), the Generator, the Communications Equipment and any Supplemental AC System serving the
Premises) and make all repairs thereto as and when needed to preserve them in good working order and condition, except for
(a) reasonable wear and tear, (b) obsolescence and (c) damage for which Tenant is not responsible pursuant to the provisions
of Article 13. Except as otherwise provided in this Section 7.1, Tenant shall not be obligated to repair any
Building Systems. The design and decoration of the elevator areas of each floor of the Premises and the public corridors of
any floor of the Premises occupied by more than one (1) occupant shall be under the sole control of Landlord. Notwithstanding
any provision contained in this Lease to the contrary, all damage or injury to the Premises, and all damage or injury to any
other part of the Building (including the Terrace), or to its fixtures, equipment and appurtenances (including the Building
Systems), whether requiring structural or non-structural repairs, caused by the moving of Tenant’s Property or caused
by Alterations made by Tenant or Persons Within Tenant’s Control, shall be repaired by Tenant, at Tenant’s sole
but reasonable cost and expense (if the required repairs are non-structural in nature and do not affect any Building
Systems), or by Landlord at Tenant’s sole but reasonable cost and expense (if the required repairs are structural in
nature or affect any Building Systems). All of the aforesaid repairs shall be performed in a manner of first class and
quality consistent with first-class office buildings in Manhattan, in accordance with the provisions of Article 6, and
with materials and design existing immediately before the occurrence of any such damage which repairs shall be made. If
Tenant shall fail, after thirty (30) days’ written notice (or such shorter period as may be required because of an
emergency), to proceed with due diligence to make repairs required to be made by Tenant, the same may be made by Landlord, at
the reasonable expense of Tenant, and the reasonable out of pocket expenses thereof incurred by Landlord, with interest
thereon at the Applicable Rate, shall be paid to Landlord, as Additional Rent, within thirty (30) days after rendition of a
bill or statement therefor. Tenant shall give Landlord prompt notice of any defective condition to which it becomes aware in
any Building Systems located in, servicing or passing through the Premises.
(ii) Without
limiting the generality of the foregoing, Tenant’s obligations under this Article 7 shall include any exhaust system
located in the Kitchen in the Premises, all components of the plumbing system serving the Kitchen within the Premises and any related
equipment. Tenant’s obligations shall also apply to the supply, waste and vent systems within the Premises serving Tenant’s
refrigeration system in the Kitchen.
(B) In
addition to the requirements set forth in Section 7.1(A), Tenant shall perform such maintenance and testing of Tenant’s
(x) fire alarm devices and (y) sprinkler devices as shall be required pursuant to all applicable Requirements (including, without
limitation, the NYC Fire Code). Scheduling of such maintenance and testing must be performed upon notice to and coordination with
Landlord. Landlord shall cooperate with Tenant in satisfying its obligations hereunder. If Tenant shall fail to so maintain its
fire alarm devices and the same shall result in unnecessary or unwarranted activation of Tenant’s fire alarm devices and/or
any fines or other charges, Tenant shall pay any such fines or other charges imposed on Landlord or the Building in connection
therewith within thirty (30) days after written demand, as Additional Rent. If Tenant shall fail to so maintain its sprinkler devices
and the same shall result in any fines or other charges imposed on Landlord or the Building in connection therewith, Tenant shall
pay the same within thirty (30) days after written demand, as Additional Rent.
Section 7.2. Tenant shall not place a
load upon any floor of the Premises which exceeds the per square foot “live load” that such floor was designed to carry.
Tenant shall not locate or move any safe, heavy machinery, heavy equipment, business machines, freight, bulky matter or fixtures
into or out of the Building without Landlord’s prior consent, which consent shall not be unreasonably withheld. If such safe,
machinery, equipment, freight, bulky matter or fixture requires special handling, Tenant shall employ only persons holding a Master
Rigger’s license to do said work. All work in connection therewith shall comply with the Requirements, and shall be done
during such hours as Landlord may reasonably designate. Business machines and mechanical equipment shall be placed and maintained
by Tenant, at Tenant’s expense, in settings reasonably sufficient, to absorb and prevent vibration, noise and annoyance.
Section 7.3. (A) Landlord shall operate,
maintain and make all necessary repairs (both structural and non-structural) to the Building Systems, the Terrace (except the improvements
to the Terrace made by or on behalf of Tenant) and the common areas and other public portions of the Building, both exterior and
interior, in compliance with all applicable Requirements and in conformance with standards applicable to non-institutional, first
class office buildings in the vicinity of the Building, except for those repairs for which Tenant is responsible pursuant to any
other provision of this Lease, including the storefront installed by Tenant. Landlord shall have no obligation to provide any service
to the Terrace or to clean the same or to remove snow or ice from the Terrace. Notwithstanding the foregoing, if Landlord determines
that snow or ice should be removed from the Terrace to protect the structural integrity of the Terrace or the roof, or for any
other reason, Tenant shall afford Landlord access to the Terrace for such removal. Landlord shall use reasonable efforts to minimize
interference with Tenant’s use and occupancy of the Premises in making any repairs, alterations, additions or improvements;
provided, however, that Landlord shall have no obligation to employ contractors or labor at so-called overtime or other premium
pay rates or to incur any other overtime costs in connection with such repairs, alterations, additions or improvements. Notwithstanding
the foregoing, if Tenant shall so request, Landlord shall employ contractors or labor at so-called overtime or other premium pay
rates or incur other overtime costs in making such repairs, alterations, additions or improvements, provided Tenant shall pay to
Landlord, as Additional Rent, within thirty (30) days after written demand therefor, an amount equal to the reasonable excess costs
incurred by Landlord by reason of compliance with Tenant’s request. Except as expressly provided in this Lease, there shall
be no allowance to Tenant for a diminution of rental value and no liability on the part of Landlord by reason of inconvenience,
annoyance or injury to business arising from Landlord, Tenant or others making, or failing to make, any repairs, alterations, additions
or improvements in or to any portion of the Building or the Premises, or its fixtures, appurtenances or equipment.
(B) Provided
that Tenant shall have maintained the Exclusive Elevators in accordance with their warranty and pursuant to the service and
maintenance contract referred to in Section 28.1(A), Landlord, at its expense, shall replace any major component of
the Exclusive Elevators when necessary to the extent such major component requires replacement at any time following the
seventh (7th) anniversary of the Commencement Date. For the purposes of this Section 7.3(B), “major
components” shall mean the following: (i) solid state or microprocessor controller, (ii) SCR drive, (ii) traction hoist
machine, (iv) car and counterweight roller guides, (v) limit switches, (vi) pit devices and (vii) Whisper Flex compensating
chains. The foregoing shall not be construed to limit Tenant’s obligation to maintain the service and maintenance
contract after the seventh (7th) anniversary of the Commencement Date.
ARTICLE 8
WINDOW CLEANING
Section 8.1. Tenant shall not clean,
nor require, permit, suffer or allow any window in the Premises to be cleaned, from the outside in violation of Section 202 of
the Labor Law, or any other applicable law, or of the rules of the Board of Standards and Appeals, or of any other board or body
having or asserting jurisdiction.
ARTICLE 9
REQUIREMENTS OF LAW
Section
9.1. Tenant shall not do, and shall not permit Persons Within Tenant’s Control to do, any act or thing in or upon
the Premises or the Building which will invalidate or be in conflict with the certificate of occupancy for the Premises or
the Building or violate any Requirements. Tenant shall, at Tenant’s sole cost and expense, take all action, including
making any required Alterations necessary to comply with all Requirements (including, but not limited to, applicable terms of
Local Laws No. 5 of 1973, No. 16 of 1984, No. 76 of 1985, No. 58 of 1987 and the Americans With Disabilities Act of 1990 (the
“ADA”), each as modified and supplemented from time to time) which shall impose any violation, order or
duty upon Landlord or Tenant arising from, or in connection with, the Premises, Tenant’s occupancy, use or manner of
use of the Premises (including, without limitation, any occupancy, use or manner of use that constitutes a “place of
public accommodation” under the ADA), or any installations in the Premises, or required by reason of a breach of any of
Tenant’s covenants or agreements under this Lease, whether or not such Requirements shall now be in effect or hereafter
enacted or issued, and whether or not any work required shall be ordinary or extraordinary or foreseen or unforeseen at the
date hereof. In addition, Tenant shall comply with all Laws relating to the Terrace, Tenant’s AC System (including the
cooling tower and AC Units), the Communications Equipment and the Generator, to the extent any of such equipment is installed
by Tenant. Notwithstanding the preceding sentence, Tenant shall not be obligated to perform any Alterations necessary to
comply with any Requirements, unless compliance shall be required by reason of (i) any cause or condition arising out of any
Alterations or installations in the Premises (whether made by Tenant or by Landlord on behalf of Tenant other than
Landlord’s Pre-Delivery Work and Landlord’s Post-Delivery Work), or (ii) Tenant’s particular use, manner of
use or occupancy on behalf of Tenant of the Premises (as opposed to mere office use), or (iii) any breach of any of
Tenant’s covenants or agreements under this Lease, or (iv) any wrongful act or omission by Tenant or Persons Within
Tenant’s Control, or (v) Tenant’s use or manner of use or occupancy of the Premises as a “place of public
accommodation” within the meaning of the ADA, in which event Tenant’s obligation to perform any Alteration by
reason of this clause (v) shall apply only to the Premises. Notwithstanding the foregoing or any other provision of this
Lease to the contrary, from and after the Substantial Completion of Landlord’s Post-Delivery Work, Tenant shall comply
with all Laws with respect to the Exclusive Elevators and all restrooms on any full floor of the Premises (whether or not any
such restroom is existing as of the date of this Lease and whether or not Tenant has retrofitted or altered the same) and
with respect to all elevator lobbies serving any full floor of the Premises (whether or not Tenant has retrofitted or altered
any such elevator lobby); such compliance shall include the making of any Alterations that may be required by any Laws.
Section 9.2. Tenant covenants and agrees
that Tenant shall, at Tenant’s sole cost and expense, comply at all times with all Requirements governing the use, generation,
storage, treatment and/or disposal of any Hazardous Materials (as defined below), the presence of which results from the introduction
by Tenant or Persons Within Tenant’s Control of such Hazardous Materials in the Premises or the breach of this Lease by Tenant
or Persons Within Tenant’s Control. The term “Hazardous Materials” shall mean any biologically or chemically
active or other toxic or hazardous wastes, pollutants or substances, including, without limitation, asbestos, PCBs, petroleum products
and by-products, substances defined or listed as “hazardous substances” or “toxic substances” or similarly
identified in or pursuant to the Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. § 9601 et
seq., and as hazardous wastes under the Resource Conservation and Recovery Act, 42 U.S.C. § 6010, et seq., any
chemical substance or mixture regulated under the Toxic Substance Control Act of 1976, as amended, 15 U.S.C. § 2601, et
seq., any “toxic pollutant” under the Clean Water Act, 33 U.S.C. § 466 et seq., as amended, any hazardous
air pollutant under the Clean Air Act, 42 U.S.C. § 7401 et seq., hazardous materials identified in or pursuant to the
Hazardous Materials Transportation Act, 49 U.S.C. § 1802, et seq., and any hazardous or toxic substances or pollutant
regulated under any other Requirements. Tenant shall agree to execute, from time to time, at Landlord’s reasonable request,
affidavits, representations and the like in form reasonably acceptable to Tenant concerning Tenant’s knowledge regarding
the presence of Hazardous Materials in, on, under or about the Premises, the Building or the Land. Tenant shall indemnify and hold
harmless all Indemnitees from and against any actual, reasonable, out of pocket loss, cost, damage, liability or expense (including
reasonable attorneys’ fees and disbursements) arising by reason of any clean up, removal, remediation, detoxification action
or any other activity required of any Indemnitees by any Government Authority by reason of the presence in or about the Building
or the Premises of any Hazardous Materials in violation of any applicable Laws, as a result of the introduction by Tenant or Persons
Within Tenant’s Control of Hazardous Materials in the Premises or the Building or the breach of this Lease by Tenant or Persons
Within Tenant’s Control. Landlord shall indemnify and hold harmless Tenant from and against any actual, reasonable, out of
pocket, loss, cost, damage, liability or expense (including reasonable attorneys’ fees and disbursements) arising by reason
of any clean up, removal, remediation, detoxification action or any other activity required of Tenant or Persons Within Tenant’s
Control by any Government Authority by reason of the presence in or about the Premises or the Building of any Hazardous Materials
in violation of any applicable Laws, as a result of the act or omission of Indemnitees or the breach of this Lease by Indemnitees.
The foregoing covenants and indemnity shall survive the expiration or any termination of this Lease.
Section 9.3. If Tenant shall receive
written notice of any violation of, or defaults under, any Requirements, liens or other encumbrances applicable to the Building
or the Premises, Tenant shall give notice thereof to Landlord.
Section 9.4. If any governmental
license or permit shall be required for the proper and lawful conduct of Tenant’s business and if the failure to secure
such license or permit would materially adversely affect Landlord or the Building, then Tenant, at Tenant’s expense,
shall promptly procure and thereafter maintain, submit for inspection by Landlord, and at all times comply with the terms and
conditions of, each such license or permit.
Section 9.5. Tenant, at Tenant’s
sole cost and expense and after notice to Landlord, may contest, by appropriate proceedings prosecuted diligently and in good faith,
the legality or applicability of any Requirement affecting the Premises provided that: (a) neither Landlord nor any Indemnitees
shall be subject to criminal penalties, nor shall the Real Property or any part thereof be subject to being condemned or vacated,
nor shall the certificate of occupancy for the Premises or the Building be suspended or threatened to be suspended, by reason of
non-compliance or by reason of such contest; (b) before the commencement of such contest, if Landlord or any Indemnitees may be
subject to any civil fines or penalties or if Landlord may be liable to any independent third party as a result of such non-compliance,
then Tenant shall furnish to Landlord either (i) a bond of a surety company satisfactory to Landlord, in form and substance reasonably
satisfactory to Landlord, and in an amount at least equal to Landlord’s estimate of the sum of (A) the cost of such compliance,
(B) the penalties or fines that may accrue by reason of such non-compliance (as reasonably estimated by Landlord) and (C) the amount
of such liability to independent third parties; or (ii) other security satisfactory in all respects to Landlord; and shall indemnify
Landlord (and any Indemnitees) against the cost of such compliance and liability resulting from or incurred in connection with
such contest or non-compliance; (c) such non-compliance or contest shall not constitute or result in a violation (either with the
giving of notice or the passage of time or both) of the terms of any Mortgage or Superior Lease, or if such Superior Lease or Mortgage
conditions such non-compliance or contest upon the taking of action or furnishing of security by Landlord, such action shall be
taken or such security shall be furnished at the expense of Tenant; and (d) Tenant shall keep Landlord regularly advised as to
the status of such proceedings.
Section 9.6. As part of Landlord’s
Pre-Delivery Work, Landlord shall deliver to Tenant three (3) originals of a Form ACP-5 certificate or ACP-21 certificate in connection
with the demolition of the 10th – 12th floors and with respect to the ground floor. Landlord shall
promptly remediate in accordance with Laws, any asbestos-containing materials (“ACM”) or, if required by Laws
to be removed from the Premises or to enable Tenant to obtain a building permit for the Initial Alterations, any other Hazardous
Materials, existing in the Premises or discovered in the Premises during the performance of Tenant’s Initial Alterations
or at any other time discovered in the Premises during the Term, so long as such ACM or Hazardous Materials was not introduced
by Tenant or Persons Within Tenant’s Control. Any such work of removal, remediation and abatement shall be conducted in such
manner as to minimize interference with the conduct of Tenant’s business in the Premises and, provided Tenant has taken occupancy
of the Premises for the conduct of its business, during any such period of remediation hereunder, Fixed Rent, Escalation Rent and
Additional Rent shall abate for each day that Tenant is (x) unable to use the Premises or any portion thereof for the normal conduct
of its business or (y) delayed in the performance of Tenant’s work or occupancy of the Premises.
Section 9.7. Except as otherwise provided
in this Lease, Landlord shall comply with all Laws which shall impose a duty on Landlord or Tenant with respect to the Premises
or the Real Property with which Tenant is not obligated to comply.
ARTICLE 10
SUBORDINATION
Section 10.1. Subject to the terms of
this Section 10.1, this Lease shall be subject and subordinate to each Superior Lease and to each Mortgage, whether made
prior to or after the execution of this Lease, and to all renewals, extensions, supplements, amendments, modifications, consolidations
and replacements thereof or thereto, substitutions therefor, and advances made thereunder. As a condition to Tenant’s agreement
to subordinate its interest in this Lease to any Superior Lease or Mortgage, Landlord shall obtain at its sole cost and expense
from each Mortgagee and/or Lessor an agreement, in recordable form and otherwise on such Lessor’s or Mortgagee’s standard
form (provided the same is consistent with the provisions of this Article 10), pursuant to which such Mortgagee and/or Lessor
shall agree that if and so long as Tenant is not in default in the payment or performance of its obligations under this Lease beyond
applicable notice and cure periods and subject to the reasonable conditions of Tenant’s attornment set forth thereunder,
Tenant’s quiet and peaceful possession of the Premises shall not be terminated, modified, affected or disturbed by any action
which such Mortgagee or Superior Lessor may take to foreclose any such Mortgage or to terminate the Superior Lease, and that any
Lessor or Mortgagee shall recognize this Lease as being in full force and effect as if it were a direct lease between such successor
and Tenant upon all of the then executory terms, covenants, conditions and options granted to Tenant under this Lease (a “Non-Disturbance
Agreement”). Landlord shall obtain from any future Lessor or Mortgagee, and deliver to Tenant, within thirty (30) days after
Tenant executes and delivers the Non-Disturbance Agreement, an original fully-executed counterpart of the Non-Disturbance Agreement
in favor of Tenant. If, in connection with the financing of the Real Property, the Building or the interest of the lessee under
any Superior Lease, or if, in connection with the entering into of a Superior Lease, any lending institution or Lessor, as the
case may be, requests, as a condition of such financing, reasonable modifications of this Lease that do not increase rent or change
the Term of this Lease, or increase any other obligations or diminish any other rights of Tenant under this Lease (except to a
de minimis extent, such as the delivery of additional notices), Tenant shall agree to make such modifications in form reasonably
acceptable to Tenant.
Section 10.2. If, at any time prior to
the expiration of the Term, any Superior Lease shall terminate or shall be terminated for any reason, or any Mortgagee comes into
possession of the Real Property or the Building or the estate created by any Superior Lease by receiver or otherwise, Tenant shall
attorn, from time to time, to any such owner, Lessor or Mortgagee or any person acquiring the interest of Landlord as a result
of any such termination, or as a result of a foreclosure of the Mortgage or the granting of a deed in lieu of foreclosure, upon
the then executory terms and conditions of this Lease (except as provided below), for the remainder of the Term, provided that
such owner, Lessor or Mortgagee, as the case may be, or receiver caused to be appointed by any of the foregoing, assumes Landlord’s
prospective obligations under this Lease, is then entitled to possession of the Premises and shall have agreed in writing to accept
Tenant’s attornment. Any such attornment shall be made upon the condition that no such owner, Lessor or Mortgagee shall be:
(1) liable
for any act or omission (other than to cure any default of a continuing nature) of any prior landlord (including, without limitation,
the then defaulting landlord); or
(2) subject
to any defense, abatement, or offsets (except as expressly set forth in this Lease) which Tenant may have against any prior landlord
(including, without limitation, the then defaulting landlord); or
(3) bound
by any payment of Rental which Tenant might have paid for more than one month in advance of its due date to any prior landlord
(including, without limitation, the then defaulting landlord) except to the extent such monies are actually received by such owner,
Lessor or Mortgagee; or
(4) bound
by any obligation to make any payment to Tenant which was required to be made prior to the time such owner, Lessor or Mortgagee
succeeded to any prior landlord’s interest; or
(5) accountable
for any monies deposited with Landlord (including security deposits), except to the extent such monies are actually received by
such owner, Lessor or Mortgagee, or
(6) bound
by any surrender or termination of this Lease (other than as expressly provided for in this Lease) made without the consent of
such owner, Lessor or Mortgagee, or any amendment or modification of this Lease made without the consent of such owner, Lessor
or Mortgagee, other than those amendments or modifications entered into as a result of Tenant’s exercise of the Renewal Option
contained in this Lease, provided such amendments or modifications contain no changes to this Lease other than those expressly
related to such option as set forth in this Lease or unless the termination, modification or amendment shall have occurred prior
to the creation of the superior interest of such owner, Lessor or Mortgagee; or
(7) bound
by any obligation to perform any work or to make improvements to the Premises except for (i) repairs and maintenance pursuant to
the provisions of Article 7, (ii) repairs to the Premises or any part thereof as a result of damage by fire or other casualty
pursuant to Article 13, but only to the extent that such repairs can be reasonably made from the net proceeds of any insurance
actually made available to such owner, Lessor or Mortgagee, and (iii) repairs to the Premises as a result of a partial condemnation
pursuant to Article 14, but only to the extent that such repairs can be reasonably made from the net proceeds of any award
made available to such owner, Lessor or Mortgagee.
The provisions of this Section
10.2 shall inure to the benefit of any such owner, Lessor or Mortgagee, shall apply notwithstanding that, as a matter of
law, this Lease may terminate upon the termination of any such Superior Lease, and shall be operative upon any such demand
provided such owner, Lessor or Mortgagee shall have agreed in writing to accept Tenant’s attornment in accordance with Section
10.1. Tenant, however, within a reasonable period of time after the request of any such owner, Lessor or Mortgagee, shall
execute, from time to time, agreements in confirmation of the foregoing provisions of this Section 10.2, reasonably
satisfactory to any such owner, Lessor or Mortgagee and Tenant, and acknowledging such attornment and setting forth the terms
and conditions of its tenancy. Nothing contained in this Section 10.2 shall be construed to impair any right otherwise
exercisable by any such owner, Lessor or Mortgagee.
Section 10.3. At any time and from time
to time within fifteen (15) days after notice to Tenant or Landlord given by the other, or to Tenant given by a Lessor or Mortgagee
(which fifteen (15) day period is not subject to any notice and cure periods otherwise provided in this Lease), Tenant or Landlord,
as the case may be, shall, without charge, execute, acknowledge and deliver a statement in writing addressed to such party as Tenant,
Landlord, Lessor or Mortgagee, as the case may be, may designate, in form satisfactory to Tenant, Landlord, Lessor or Mortgagee,
as the case may be, certifying all or any of the following: (i) that this Lease is unmodified and in full force and effect (or
if there have been modifications, that this Lease is in full force and effect as modified and stating the modifications); (ii)
whether the Term has commenced and Fixed Rent and Additional Rent have become payable hereunder and, if so, the dates to which
they have been paid; (iii) whether or not, to the knowledge of the signer of such certificate, Landlord is in default in performance
of any of the terms of this Lease and, if so, specifying each such event of default of which the signer may have knowledge; (iv)
whether Tenant has accepted possession of the Premises; (v) whether Tenant has made any claim against Landlord under this Lease
and, if so, the nature thereof and the dollar amount, if any, of such claim; and (vi) that, to the knowledge of Tenant, there are
no proceedings pending or threatened against Tenant before or by any court or administrative agency which, if adversely decided,
would materially and adversely affect the financial condition or operations of Tenant or, if any such proceedings are pending or
threatened to the knowledge of Tenant, specifying and describing the same; and (viii) such further information with respect to
this Lease or the Premises as Landlord may reasonably request or Lessor or Mortgagee may require; it being intended that any such
statement delivered pursuant hereto may be relied upon by any prospective purchaser of the Real Property or any part thereof or
of the interest of Landlord in any part thereof, by any Mortgagee or prospective Mortgagee, by any Lessor or prospective Lessor,
by any tenant or prospective tenant of the Real Property or any part thereof, or by any prospective assignee of any Mortgage or
by any assignee of Tenant.
Section 10.4. In the event of a default
by Landlord under this Lease which would give Tenant the right, immediately or after the lapse of a period of time, to cancel or
terminate this Lease or to claim a partial or total eviction, or in the event of any other act or omission of Landlord which would
give Tenant the right to cancel or terminate this Lease, Tenant shall not exercise such right until Tenant has given written notice
of such default, act or omission to the Lessor or Mortgagee and the Lessor or Mortgagee has failed to cure the default, act or
omission giving rise to the cancellation or termination within the time period as Landlord may be entitled to under this Lease
plus a reasonable additional period, not to exceed sixty (60) days; provided, however, in the case of a non-monetary default, if
such non-monetary default cannot be cured within such time period or cannot be cured until after the Lessor or Mortgagee obtains
possession of the Real Property, then, provided the Lessor or Mortgagee gives Tenant written notice of its intention to obtain
possession and remedy such act or omission and promptly commences such cure or commences proceedings under the Superior Lease or
Mortgage and thereafter diligently prosecutes such cure to completion, such cure period shall be extended as necessary to enable
the Lessor or Mortgagee to effectuate such cure.
Section 10.5. Landlord represents that
as of the date of this Lease there is no Superior Lease or Mortgage affecting the Real Property.
ARTICLE 11
RULES AND REGULATIONS
Section 11.1. Tenant and Persons Within
Tenant’s Control shall comply with the Rules and Regulations. Nothing contained in this Lease shall be construed to impose
upon Landlord any duty or obligation to enforce the Rules and Regulations or the terms, covenants or conditions in any other lease
against any other tenant, and Landlord shall not be liable to Tenant for violation of the same by any other tenant, its employees,
agents, visitors or licensees. Landlord shall not discriminate against Tenant in enforcing the Rules and Regulations. In case of
any conflict or inconsistency between the provisions of this Lease and of any of the Rules and Regulations as originally or as
hereafter adopted, the provisions of this Lease shall control.
ARTICLE 12
INSURANCE, PROPERTY LOSS OR DAMAGE; REIMBURSEMENT
Section 12.1.
(A) Except
as expressly provided in this Lease, Landlord and Landlord’s agents shall not be liable for any damage to any of Tenant’s
Property or for interruption of Tenant’s business, however caused, including but not limited to damage caused by other tenants
or persons in the Building. Except as set forth in Article 21, Landlord shall not be liable for any latent defect in the
Premises or in the Building. The foregoing is not intended to relieve Landlord from liability from any actual damages suffered
by Tenant directly resulting from the negligence or willful misconduct of Landlord, its agents, employees or contractors, subject
to the provisions of Sections 12.6 and 39.10.
(B) If
at any time any windows of the Premises are temporarily closed, darkened or covered for any reason, including Landlord’s
own acts, or if any such windows are permanently closed, darkened or covered by reason of any Requirements, Landlord shall not
be liable for any damage Tenant may sustain thereby, and except as expressly provided in this Lease, Tenant shall not be entitled
to any compensation therefor nor abatement of Fixed Rent or any other item of Rental, nor shall the same release Tenant from Tenant’s
obligations hereunder nor constitute an eviction.
(C) Tenant
shall give notice to Landlord promptly after Tenant learns of any accident, emergency, occurrence for which Landlord might be liable,
fire or other casualty and all damages to or defects in the Premises or the Building for the repair of which Landlord might be
responsible or which constitutes Landlord’s property.
Section 12.2. Tenant
shall not do or permit to be done any act or thing in or upon the Premises which will invalidate or be in conflict with the terms
of the New York State standard policies of fire insurance and liability (hereinafter referred to as “Building Insurance”);
and Tenant, at Tenant’s own expense, shall comply with all rules, orders, regulations and requirements of all insurance
boards, and shall not do or permit anything to be done in or upon the Premises or bring or keep anything therein or use the Premises
in a manner which increases the rate of premium for any of the Building Insurance over the rate in effect at the commencement
of the Term of this Lease.
Section 12.3. If
by reason of any failure of Tenant to comply with the provisions of this Lease, the rate of premium for Building Insurance or other
insurance on the property and equipment of Landlord shall increase, Tenant shall reimburse Landlord for that part of the insurance
premiums thereafter paid by Landlord which shall have been charged because of such failure by Tenant. Tenant shall make said reimbursement
with thirty (30) days after written request therefor by Landlord with evidence of Tenant’s failure and such rate increase.
Section 12.4.
(A) Tenant,
at Tenant’s sole cost and expense, shall obtain, maintain and keep in full force and effect during the Term commercial general
liability insurance (without deductible) in a form approved in New York State (including broad form property damage coverages and
coverage for contractual liability recognizing the indemnity provisions of this Lease and protecting the Indemnitees as required).
The limits of liability shall be not less than Ten Million and 00/100 ($10,000,000.00) Dollars per occurrence, which amount may
be satisfied with a primary commercial general liability policy of not less than One Million and 00/100 ($1,000,000.00) Dollars
per occurrence and Two Million and 00/100 ($2,000,000.00) Dollars general aggregate, and an excess (or “Umbrella”)
liability policy affording coverage, at least as broad as that afforded by the primary commercial general liability policy, in
an amount not less than the difference between Five Million and 00/100 ($5,000,000.00) Dollars and the amount of the primary policy.
Landlord, the Manager, any Lessors and any Mortgagees shall be included as additional insureds in said policies and shall be protected
against all liability arising in connection with this Lease. All said policies of insurance shall be written as “occurrence”
policies with general aggregate limit provided on a “per location” basis. Whenever, in Landlord’s reasonable
judgment, good business practice and changing conditions indicate a need for additional amounts or different types of insurance
coverage, Tenant shall, within sixty (60) days after Landlord’s request, and to the extent any such change or increase requested
is consistent with industry standard for tenants occupying space of a similar size to the Premises and Landlord is requesting such
coverage for all of its other tenants leasing similarly-sized space in Landlord’s Hudson Square portfolio, obtain such insurance
coverage, at Tenant’s expense.
(B) Tenant,
at Tenant’s sole cost and expense, shall obtain, maintain and keep in full force and effect during the Term:
(i) “Special
Form” (formerly known as “All Risk”) insurance, with commercially reasonable deductibles, protecting and indemnifying
Tenant against any and all damage to or loss of any Alterations and leasehold improvements, including any made by Landlord to prepare
the Premises for Tenant’s occupancy, and Tenant’s Property. Such insurance shall not contain any exclusions for flood,
mold/fungus or acts of terrorism or similar events. All said policies shall cover the full replacement value of all Alterations,
leasehold improvements and Tenant’s Property;
(ii) Workers’
compensation and occupational disease insurance, employee benefit insurance or any other insurance in the statutory amounts required
by the laws of the State of New York with broad form all-states endorsement, and employer’s liability insurance with a limit
of One Million and 00/100 ($1,000,000.00) Dollars for each accident; and
(iii) Business
interruption insurance (including “Extra Expense”) fully compensating for the amount of Fixed Rent, additional rent
and other charges owed to Landlord by Tenant for a period of not less than twelve (12) months. The coverage shall be “All
Risk” as stated in clause (i) above.
(C) All
policies of insurance shall be: (i) written as primary policy coverage and not contributing with or in excess of any coverage
which Landlord or any Lessor may carry; and (ii) issued by reputable and independent insurance companies rated in Best’s
Insurance Guide or any successor thereto (or, if there is none, an organization having a national reputation), as having a general
policyholder rating of “A” and a financial rating of at least “13”, and which are licensed to do business
in the State of New York. Tenant shall, not later than ten (10) Business Days prior to the Commencement Date, deliver to Landlord
the policies of insurance and shall thereafter furnish to Landlord, prior to the expiration of any such policies and any renewal
thereof, a new policy in lieu thereof. Tenant shall promptly send to Landlord a copy of all notices of cancellation or modification
sent to Tenant by Tenant’s insurer.
(D) Tenant
shall pay all premiums and charges for all of said policies, and, if Tenant shall fail to make any payment when due or carry any
such policy, Landlord may, after thirty (30) days’ written notice thereof, but shall not be obligated to, make such payment
or carry such policy, and the amount paid by Landlord, with interest thereon (at the Applicable Rate), shall be repaid to Landlord
by Tenant within (30) days’ after written demand therefor, and all such amounts so repayable, together with such interest,
shall be deemed to constitute Additional Rent hereunder. Payment by Landlord of any such premium, or the carrying by Landlord of
any such policy, shall not be deemed to waive or release the default of Tenant with respect thereto.
Section 12.5. Landlord
shall maintain and keep in full force and effect, with reputable insurance companies licensed to do business in the State of New
York, commercial general liability insurance and “all risk” insurance on the Building, all containing such coverages
and exclusions, and in such amounts, as maintained by prudent owners of other buildings comparable to, and located in the Midtown
South, Hudson Square or Tribeca submarkets of Manhattan.
Section 12.6.
(A) Landlord
shall cause each policy carried by Landlord insuring the Building against loss, damage or destruction by fire or other
casualty, and Tenant shall cause each insurance policy carried by Tenant and insuring the Premises and Tenant’s
Alterations, leasehold improvements and Tenant’s Property against loss, damage or destruction by fire or other
casualty, to be written in a manner so as to provide that the insurance company waives all rights of recovery by way of
subrogation against Landlord, Tenant and any tenant of space in the Building in connection with any loss or damage covered by
any such policy. Neither party shall be liable to the other for the amount of such loss or damage which is in excess of the
applicable deductible, if any, caused by fire or any of the risks enumerated in its policies, provided that such waiver was
obtainable at the time of such loss or damage. However, if such waiver cannot be obtained, or shall be obtainable only by the
payment of an additional premium charge above that which is charged by companies carrying such insurance without such waiver
of subrogation, then the party undertaking to obtain such waiver shall notify the other party of such fact and such other
party shall have a period of ten (10) days after the giving of such notice to agree in writing to pay such additional
premium if such policy is obtainable at additional cost (in the case of Tenant, pro rata in proportion of Tenant’s
rentable area to the total rentable area covered by such insurance); and if such other party does not so agree or the waiver
shall not be obtainable, then the provisions of this Section 12.6 shall be null and void as to the risks covered
by such policy for so long as either such waiver cannot be obtained or the party in whose favor a waiver of subrogation is
desired shall refuse to pay the additional premium. If the release of either Landlord or Tenant, as set forth in the second
sentence of this Section 12.6, shall contravene any law with respect to exculpatory agreements, the liability of
the party in question shall be deemed not released, but no action or rights shall be sought or enforced against such party
unless and until all rights and remedies against the other’s insurer are exhausted and the other party shall be unable
to collect such insurance proceeds.
(B) The
waiver of subrogation referred to in Section 12.6(A) above shall extend to the agents and employees of each party
(including, as to Landlord, the Manager), but only if and to the extent that such waiver can be obtained without additional charge
(unless such party shall pay such charge). Nothing contained in this Section 12.6 shall be deemed to relieve either
party from any duty imposed elsewhere in this Lease to repair, restore and rebuild.
ARTICLE 13
DESTRUCTION BY FIRE OR OTHER CAUSE
Section 13.1. If
the Premises or any part thereof shall be damaged by fire or other casualty, Tenant shall give prompt written notice thereof
to Landlord. Landlord shall, subject to the provisions of Sections 13.2 and 13.3 below, proceed with reasonable
diligence to repair or cause to be repaired such damage at its expense, but in no event shall Landlord be obligated to repair
any damage to or to restore any of Tenant’s leasehold improvements or Alterations, whether initially installed by
Landlord or Tenant. For the avoidance of doubt, however, Landlord’s restoration obligations shall include the following
items in the Premises: the floor slabs, columns, ceilings, radiators, mechanical equipment rooms, exterior windows, roof and
Building Systems and Landlord’s Post-Delivery Work, including, without limitation, the Exclusive Elevators. Tenant
shall repair and restore in accordance with Article 6 and with reasonable dispatch all leasehold improvements and
Alterations made by or for Tenant in the Premises. If the Premises, or any part thereof (other than the Terrace), shall be
rendered untenantable by reason of such damage and such damage shall not be due to the fault of Tenant or Persons Within
Tenant’s Control, then the Fixed Rent and the Escalation Rent hereunder, or an amount thereof apportioned according to
the area of the Premises so rendered untenantable (if less than the entire Premises shall be so rendered untenantable), shall
be abated for the period from the date of such damage to the earlier of (i) the date which is 120 days after the repair
of such damage shall have been Substantially Completed and (ii) the date upon which Tenant reoccupies the Premises for
the conduct of its business. Notwithstanding any provisions contained in this Lease to the contrary, there shall be no
abatement with respect to any portion of the Premises which has not been so damaged and which is accessible unless otherwise
rendered unusable for the conduct of Tenant’s business as a result of damage to any critical paths or closets necessary
for the operation of the Premises, including communications closets and other Tenant’s systems or Building Systems.
Landlord’s determination of the date when the Premises are tenantable shall be controlling unless Tenant disputes the
same by notice to Landlord given within thirty (30) days after such determination by Landlord, and pending resolution of such
dispute, Tenant shall commence the payment of the Fixed Rent and the Escalation Rent that had been abated, as of the date
specified by Landlord. Each of Tenant and Landlord covenants and agrees to reasonably cooperate with the other (and in the
case of Tenant, any Lessor or any Mortgagee) in each party’s efforts to collect insurance proceeds (including rent
insurance proceeds) payable to such parties.
Section 13.2. Landlord
shall not be liable for any inconvenience or annoyance to Tenant or injury to the business of Tenant resulting in any way from
damage from fire or other casualty or the repair thereof. Tenant understands that Landlord, in reliance upon Section 12.4,
will not carry insurance of any kind on Tenant’s Property, Tenant’s Alterations and on leasehold improvements, and
that Landlord shall not be obligated to repair any damage thereto or replace the same. In the event of a partial or total destruction
of the Premises, Tenant shall as if necessary and as soon as practicable remove any and all of Tenant’s Property from the
Premises or the portion thereof destroyed, as the case may be, and if Tenant does not promptly so remove Tenant’s Property,
Landlord may discard the same after giving Tenant ten (10) Business Days prior notice of the same or may remove Tenant’s
Property to a public warehouse for deposit until such restoration shall have been completed or, in the case this Lease is terminated
in accordance herewith, Landlord may retain the same in its own possession and at its discretion may sell the same at either public
auction or private sale, the proceeds of which shall be applied first to the expenses of removal, storage and sale, second to any
sums owed by Tenant to Landlord, with any balance remaining to be paid to Tenant; if the expenses of such removal, storage and
sale shall exceed the proceeds of any sale, Tenant shall pay such excess to Landlord within thirty (30) days after written demand.
Section 13.3.
(A) Notwithstanding
anything to the contrary contained in Sections 13.1 and 13.2 above, in the event that:
(i) at
least one-third of the rentable square feet of the Building shall be damaged by fire or other casualty so that substantial alteration
or reconstruction of the Building shall, in Landlord’s sole opinion, be required (whether or not the Premises shall have
been damaged by fire or other casualty and without regard to the structural integrity of the Building), provided that Landlord
shall also be terminating all other office leases in the Building; or
(ii) the
Premises shall be totally or substantially damaged or shall be rendered wholly or substantially untenantable (and at least 150,000
of the rentable square feet of the Building other than the Premises shall also have been totally or substantially damaged or shall
be rendered wholly or substantially untenantable); or
(iii) there
shall be any damage to the Premises within the last year of the Term wherein the cost of repair exceeds an amount equal to six
(6) monthly installments of Fixed Rent,
then
Landlord may, in its sole and absolute discretion, in the circumstances described in clauses (i) – (iii) above
and Tenant may, in its sole and absolute discretion, in the circumstances described in clause (iii) above or if the Premises
shall be totally or substantially damaged or shall be rendered wholly or substantially untenantable, terminate this Lease and the
term and estate hereby granted, by notifying the other party in writing of such termination within one hundred twenty (120) days
after the date of such damage. In the event that such a notice of termination shall be given, then this Lease and the term and
estate hereby granted shall expire as of the date of termination stated in said notice with the same effect as if that were the
Fixed Expiration Date, and the Fixed Rent and Escalation Rent hereunder shall be apportioned as of such date.
(B) Notwithstanding
anything to the contrary contained in this Section 13.3, Landlord shall deliver to Tenant within sixty (60) days after
the date of any casualty an estimate prepared by a reputable contractor selected by Landlord setting forth such contractor’s
estimate as to the time reasonably required to repair such damage. If the period to repair set forth in any such estimate exceeds
twelve (12) months from the date of such casualty, Tenant may elect to terminate this Lease by notice to Landlord given not later
than thirty (30) days following Tenant’s receipt of such estimate. If Tenant exercises such election, this Lease and the
term and estate hereby granted shall expire as of the 60th day after notice of such election given by Tenant with the same effect
as if that were the Fixed Expiration Date, and the Fixed Rent and Escalation Rent hereunder shall be apportioned as of such date.
If (i) Tenant shall not have exercised its right to terminate this Lease pursuant to this Section 13.3(B), but
the damage shall not have been repaired by the date set forth in such estimate (subject to extension due to Unavoidable Delay),
or (ii) the period to repair in such estimate is twelve (12) months or less, but the damage shall not have been repaired within
twelve (12) months after the date of the casualty (subject to extension due to Unavoidable Delay), Tenant may elect to terminate
this Lease by notice to Landlord given not later than thirty (30) days following the period set forth in such estimate for completion
(where the same exceeds twelve (12) months in the circumstances contemplated in clause (i) or following such twelve (12) month
period (where the period set forth in such estimate for completion was twelve (12) months or less, in the circumstances contemplated
in clause (ii)), unless prior to the giving of such notice, Landlord shall have Substantially Completed such repair.
Section 13.4. Except
as may be provided in Section 12.6, nothing herein contained shall relieve Tenant from any liability to Landlord or
to Landlord’s insurers in connection with any damage to the Premises or the Building by fire or other casualty if Tenant
shall be legally liable in such respect.
Section 13.5. This
Lease shall be considered an express agreement governing any case of damage to or destruction of the Building or any part thereof
by fire or other casualty, and Section 227 of the Real Property Law of the State of New York providing for such a contingency
in the absence of express agreement and any other law of like import now or hereafter in force, shall have no application in such
case.
ARTICLE 14
EMINENT DOMAIN
Section 14.1. If
the whole of the Real Property, the Building or the Premises is acquired or condemned for any public or quasi-public use or purpose,
this Lease and the Term shall end as of the date of the vesting of title with the same effect as if said date were the Fixed Expiration
Date. If only a part of the Real Property and not the entire Premises is so acquired or condemned then, (1) except as hereinafter
provided in this Section 14.1, this Lease and the Term shall continue in effect but, if a part of the Premises is included
in the part of the Real Property so acquired or condemned, from and after the date of the vesting of title, the Fixed Rent and
Tenant’s Share shall be reduced in the proportion which the area of the part of the Premises so acquired or condemned bears
to the total area of the Premises immediately prior to such acquisition or condemnation; (2) whether or not the Premises are
affected thereby, Landlord, at Landlord’s option, may give to Tenant, within sixty (60) days next following the date upon
which Landlord receives notice of vesting of title, a sixty (60) day notice of termination of this Lease provided Landlord shall
then be terminating all leases and tenancies in the Building; and (3) if the part of the Real Property so acquired or condemned
contains more than ten (10%) percent of the total area of the Premises immediately prior to such acquisition or condemnation, or
if, by reason of such acquisition or condemnation, Tenant no longer has reasonable access to the Premises (excluding the Terrace),
Tenant, at Tenant’s option, may give to Landlord, within sixty (60) days next following the date upon which Tenant receives
notice of vesting of title, a sixty (60) day notice of termination of this Lease. If any such sixty (60) day notice of termination
is given, by Landlord or Tenant, this Lease and the Term shall come to an end and expire upon the expiration of said sixty (60)
days with the same effect as if the date of expiration of said sixty (60) days were the Fixed Expiration Date. If a part of the
Premises is so acquired or condemned and this Lease and the Term are not terminated pursuant to the foregoing provisions of this
Section 14.1, Landlord, at Landlord’s cost and expense, shall restore that part of the Premises not so acquired
or condemned to a self-contained rental unit, exclusive of Tenant’s Alterations, Tenant’s leasehold improvements and
Tenant’s Property. In the event of any termination of this Lease and the Term pursuant to the provisions of this Section 14.1,
the Fixed Rent shall be apportioned as of the date of sooner termination and any prepaid portion of the Fixed Rent or Escalation
Rent for any period after such date shall be refunded by Landlord to Tenant.
Section 14.2. In
the event of any such acquisition or condemnation of all or any part of the Real Property, Landlord shall be entitled to receive
the entire award for any such acquisition or condemnation. Tenant shall have no claim against Landlord or the condemning authority
for the value of any unexpired portion of the Term and Tenant hereby expressly assigns to Landlord all of its right in and to any
such award. Nothing contained in this Section 14.2 shall be deemed to prevent Tenant from making a separate claim in
any condemnation proceedings for the value of any Tenant’s Property included in such taking, and for any moving expenses,
so long as Landlord’s award is not reduced thereby.
Section 14.3. If
the whole or any part of the Premises is acquired or condemned temporarily during the Term for any public or quasi-public use
or purpose, Tenant shall give prompt notice thereof to Landlord and the Term shall not be reduced or affected in any way and
Tenant shall continue to pay in full all items of Rental payable by Tenant hereunder without reduction or abatement, and
Tenant shall be entitled to receive for itself any award or payments for such use, provided, however, that if the acquisition
or condemnation is for a period extending beyond the Term, such award or payment shall be apportioned between Landlord and
Tenant as of the Expiration Date; provided further that the amount of any award or payment allowed or retained for
restoration of the Premises shall remain the property of Landlord if this Lease expires prior to the restoration of the
Premises.
ARTICLE 15
ASSIGNMENT, SUBLETTING, MORTGAGE, ETC.
Section 15.1. Except
as otherwise provided in this Article 15, Tenant shall not (a) assign this Lease (whether by operation of law,
transfers of interests in Tenant or otherwise); or (b) mortgage or encumber Tenant’s interest in this Lease, in whole
or in part; or (c) sublet, or permit the subletting of, the Premises or any part thereof; or (d) permit the Premises
or any part thereof to be occupied or used for desk space, mailing privileges or otherwise by any person other than Tenant.
Section 15.2. If
Tenant’s interest in this Lease shall be assigned in violation of the provisions of this Article 15, such assignment
shall be invalid and of no force and effect against Landlord; provided, however, that Landlord may collect an amount equal to the
then Fixed Rent plus any other item of Rental from the assignee as a fee for its use and occupancy. If the Premises or any part
thereof are sublet to, or occupied by, or used by, any person other than Tenant, whether or not in violation of this Article 15,
Landlord, after default by Tenant under this Lease, may collect any item of Rental or other sums paid by the subtenant, user or
occupant as a fee for its use and occupancy, and shall apply the net amount collected to the Fixed Rent and the items of Rental
reserved in this Lease. No such assignment, subletting, occupancy, or use, whether with or without Landlord’s prior consent,
nor any such collection or application of Rental or fee for use and occupancy, shall be deemed a waiver by Landlord of any term,
covenant or condition of this Lease or the acceptance by Landlord of such assignee, subtenant, occupant or user as Tenant hereunder,
nor shall the same, in any circumstances, relieve Tenant of any of its obligations under this Lease. The consent by Landlord to
any assignment, subletting, occupancy or use shall not relieve Tenant from its obligation to obtain the express prior consent of
Landlord to any further assignment, subletting, occupancy or use. Any person to which this Lease is assigned with Landlord’s
consent shall be deemed without more to have assumed all of the obligations arising under this Lease from and after the date of
such assignment and shall execute and deliver to Landlord, upon demand, an instrument confirming such assumption. Notwithstanding
and subsequent to any assignment, Tenant’s primary liability hereunder shall continue notwithstanding (a) any subsequent
amendment hereof, or (b) Landlord’s forbearance in enforcing against Tenant any obligation or liability, without notice
to Tenant, to each of which Tenant hereby consents in advance. If any such amendment operates to increase the obligations of Tenant
under this Lease, the liability under this Section 15.2 of the assigning Tenant shall continue to be no greater than
if such amendment had not been made (unless such party shall have expressly consented in writing to such amendment).
Section 15.3.
(A) For
purposes of this Article 15, (i) the transfer of a majority of the issued and outstanding capital stock of any
corporate tenant, or of a corporate subtenant, or the transfer of a majority of the total interest in any partnership tenant or
subtenant, or the transfer of control in any general or limited liability partnership tenant or subtenant, or the transfer of a
majority of the issued and outstanding membership interests in a limited liability company tenant or subtenant, however accomplished,
whether in a single transaction or in a series of related or unrelated transactions, involving the tenant, subtenant and/or its
parent (including, without limitation, and by way of example only, the transfer of a majority of the outstanding capital stock
of a company, which company owns 100% of a second tier company, which in turn owns 51% of the outstanding capital stock of a corporate
tenant hereunder), shall be deemed an assignment of this Lease, or of such sublease, as the case may be, except that an initial
public or secondary offering or the transfer of the outstanding capital stock of any corporate tenant, subtenant or parent, shall
be deemed not to include the sale of such stock by persons or parties, other than those deemed “affiliates” of Tenant
within the meaning of Rule 144 promulgated under the Securities Act of 1933, as amended, through the “over-the-counter
market” or through any recognized stock exchange, (ii) any increase in the amount of issued and/or outstanding capital
stock of any corporate tenant, or of a corporate subtenant, or such tenant’s or subtenant’s parent, or of the issued
and outstanding membership interests in a limited liability company tenant or subtenant, or such tenant’s or subtenant’s
parent, and/or the creation of one or more additional classes of capital stock of any corporate tenant or any corporate subtenant,
or such tenant’s or subtenant’s parent, in a single transaction or a series of related or unrelated transactions involving
the tenant, subtenant and/or its parent, resulting in a change in the legal or beneficial ownership of such tenant, subtenant or
parent so that the shareholders or members of such tenant, subtenant or parent existing immediately prior to such transaction or
series of transactions shall no longer own a majority of the issued and outstanding capital stock or membership interests of such
entity, shall be deemed an assignment of this Lease, (iii) an agreement by any other person or entity, directly or indirectly,
to assume Tenant’s obligations under this Lease shall be deemed an assignment, (iv) any person or legal representative
of Tenant, to whom Tenant’s interest under this Lease passes by operation of law, or otherwise, shall be bound by the provisions
of this Article 15, (v) a modification, amendment or extension of a sublease shall be deemed a sublease, and (vi) the
change or conversion of Tenant from an entity in which the partners or members have personal liability to a limited liability company,
a limited liability partnership or any other entity which possesses the characteristics of limited liability shall be deemed an
assignment. Tenant agrees to furnish to Landlord on reasonable request at any time such information as Landlord may reasonably
request to evidence that neither Tenant, nor any previously permitted subtenant, has violated the provisions of this Article 15
if Landlord has reasonable cause to believe that such a transaction has occurred.
(B) The
provisions of clauses (a), (c) and (d) of Section 15.1, Section 15.3(A), Section 15.4(B), Section 15.4(C), Section 15.5
and Section 15.6 shall not apply to (and Landlord’s consent shall not be required for) (i) a change in
ownership of Tenant as a result of a merger, consolidation or reorganization or the sale of substantially all of
Tenant’s assets (provided such merger, consolidation, reorganization or transfer of assets is for a good business
purpose and not principally for the purpose of transferring the leasehold estate created by this Lease, and provided further,
that the assignee has a net worth at least equal to or in excess of the net worth of Tenant immediately prior to such
transaction); (ii) the sale, exchange, issuance or other transfer of Tenant’s stock on a national stock exchange
(including in connection with any initial public offering in a single or series of transactions); or (iii) the
assignment of this Lease or sublease of all or any portion of the Premises to, or the use of the Premises by, an entity which
controls, is controlled by or is under the common control of Tenant (each, a “Permitted Transfer” and such
transferee, a “Permitted Transferee”). Tenant shall notify Landlord before any such transaction is
consummated, unless such prior notice violates any securities laws or regulatory requirements or contractual confidentiality
provision applicable to Tenant, in which event Tenant shall notify Landlord promptly after Tenant is permitted to do so.
(C) The
term “control” as used in this Lease (i) in the case of a corporation shall mean ownership of more than fifty
(50%) percent of the outstanding capital stock of that corporation, (ii) in the case of a general or limited liability partnership,
shall mean ownership of more than fifty (50%) percent of the general partnership or membership interests of the partnership, (iii) in
the case of a limited partnership, shall mean ownership of more than fifty (50%) percent of the general partnership interests of
such limited partnership, and (iv) in the case of a limited liability company, shall mean ownership of more than fifty (50%)
percent of the membership interests of such limited liability company.
Section 15.4.
(A) If
Landlord shall not exercise its rights pursuant to Section 15.4(B), Landlord shall not unreasonably withhold or delay
its consent to a proposed subletting of the Premises, or an assignment of this Lease, provided that in each such instance, the
following requirements shall have been satisfied (if Tenant proposes a partial sublet, references in this Section 15.4
to the Premises shall, unless the context otherwise requires, refer to such portion):
(1) in
the case of a proposed subletting, the listing or advertising for subletting of the Premises shall not have included a proposed
rental rate, provided, however, that Tenant may quote in writing directly to prospective subtenants the proposed rental rate;
(2) no
Event of Default shall have occurred and be continuing;
(3) the
proposed subtenant or assignee shall have a financial standing, be engaged in a business, and propose to use the Premises in a
manner in keeping with the standards in such respects of the other tenancies in the Building;
(4) the
proposed subtenant or assignee shall not be (x) a Person with whom Landlord is then negotiating or discussing the leasing
of comparably-sized space in the Building or any other building then owned by Landlord or its affiliates in the Hudson Square area;
or (y) a tenant in or occupant of the Building or any other building then owned by Landlord or its affiliates in the Hudson
Square area;
(5) any
subletting shall be expressly subject to all of the terms, covenants, conditions and obligations on Tenant’s part to be
observed and performed under this Lease and, provided that any such assignee or subtenant shall then be in compliance with
its obligations under this Lease, such assignee or subtenant shall have the same rights as Tenant to assign its sublease or
sublet the subleased premises hereunder, provided further that Sections 15.5 and 15.6
of this Lease shall apply to any such transactions as if the further subletting or assignment of the sublease were a proposed
subletting or assignment being made by Tenant under this Lease so that Landlord shall be entitled to receive all amounts
described in such Sections;
(6) the
subleased premises shall be regular in shape and at no time shall there be more than three (3) occupants with separately demised
space for each full floor, including Tenant, in the Premises, all of whom shall have direct access through existing public corridors
to elevators, fire stairs and core rest rooms. In no event shall Tenant be permitted to sublet the Terrace (except to a subtenant
of the entire 12th Floor);
(7) Tenant
shall reimburse Landlord on demand for any reasonable out of pocket costs that may be incurred by Landlord in connection with said
assignment or sublease, including, without limitation, any processing fees, reasonable attorneys’ fees and disbursements,
and the costs of making investigations as to the acceptability of the proposed assignee or subtenant;
(8) any
sublease shall expressly provide that in the event of termination, re-entry or dispossession of Tenant by Landlord under this Lease,
Landlord may, at its option, take over all of the right, title and interest of Tenant as sublessor under such sublease, and such
subtenant shall, at Landlord’s option, attorn to Landlord pursuant to the then executory provisions of such sublease, except
that Landlord shall not be (i) liable for any previous act or omission of Tenant under such sublease (other than to cure any
default of a continuing nature), (ii) subject to any offset that theretofore accrued to such subtenant against Tenant, (iii) bound
by any previous modification of such sublease or by any previous prepayment of more than one month’s rent unless previously
approved by Landlord, (iv) bound by any covenant to undertake or complete or make payment to or on behalf of a subtenant with
respect to any construction of the Premises or any portion thereof demised by such sublease and (v) bound by any obligations
to make any other payment to or on behalf of the subtenant, except for services, repairs, maintenance and restoration provided
for under the sublease to be performed after the date of such termination, reentry or dispossession by Landlord under this Lease
and which Landlord is required to perform hereunder with respect to the subleased space at Landlord’s expense;
(9) the
nature of the occupancy of the proposed assignee or subtenant will not cause excessive demands on the Building;
(10) the
nature of the occupancy, the use and the manner of use of the Premises by the proposed subtenant or assignee shall not impose on
Landlord any requirements of the ADA in excess of those requirements imposed on Landlord in the absence of such proposed subtenant
or assignee or such occupancy, use or manner of use, unless such proposed subtenant or assignee shall have agreed to comply with
each of such excess requirements and, at Landlord’s option, shall have furnished Landlord with such security as Landlord
may require to assure that such subtenant or assignee shall so comply; and
(11) Landlord
and Tenant shall have agreed on the computation required under Section 15.5 or Section 15.6, as applicable.
(B) Should
Tenant desire to assign this Lease or sublet the Premises or any portion thereof, Tenant shall give written notice (the “Sublease
or Assignment Statement”) thereof to Landlord specifying the financial and other material terms on which Tenant is willing
to assign this Lease or sublet the Premises or the applicable portion thereof and the effective date of such assignment or subletting,
which shall be no less than thirty (30) nor more than two hundred seventy (270) days after the date of Tenant’s notice to
Landlord. Landlord shall have the right, exercisable within fifteen (15) Business Days after Landlord’s receipt of the Sublease
or Assignment Statement, in the case of an assignment of this Lease or in the case of a proposed sublease for the entire, or substantially
the entire, Premises for a term ending within one (1) year prior to the Expiration Date, to terminate this Lease. Subject
to the other provisions of this Article 15, if Landlord shall notify Tenant within said fifteen (15) Business Day period
of Landlord’s intention not to exercise its termination right pursuant to this Section 15.4(B) (or if Landlord
shall be deemed not to have exercised such right, as set forth in this Section 15.4(B)), Tenant shall be free to consummate
a subletting or assignment on the same material terms and conditions (i.e., an offer having financial terms with
a net present value (when calculated in a manner consistent with the calculation of the proposed Rental rate), including the term
thereof, of not more than ten (10%) percent more favorable to the subtenant or assignee than the financial terms set forth in the
Sublease or Assignment Statement) set forth in the Sublease or Assignment Statement, subject to the terms and conditions of this
Lease, including obtaining Landlord’s consent under paragraph (A) of this Section 15.4 upon Tenant obtaining
an assignee or subtenant. If Tenant shall desire to modify the terms and conditions more than ten (10%) percent more favorable
than the financial terms set forth in the Sublease or Assignment Statement, Tenant shall submit the revised Sublease or Assignment
Statement to Landlord. Landlord shall have the right, exercisable within ten (10) Business Days after receipt of the revised
Sublease or Assignment Statement to terminate this Lease in the circumstances set forth above. Subject to this Section 15.4(B),
if Landlord shall notify Tenant within said ten (10) Business Day period of Landlord’s intention not to exercise its
termination right pursuant to this Section 15.4(B) (or if Landlord shall be deemed not to have exercised such
right, as set forth in this Section 15.4(B)), Tenant shall be free to consummate a subletting or assignment on the
same material terms and conditions (i.e., an offer having financial terms with a net present value (when calculated
in a manner consistent with the calculation of the proposed Rental rate), including the term thereof, of not more than ten (10%)
percent more favorable to the subtenant or assignee than the financial terms set forth in the revised Sublease or Assignment Statement)
set forth in the Sublease or Assignment Statement, subject to the terms and conditions of this Lease, including obtaining Landlord’s
consent under paragraph (A) of this Section 15.4 upon Tenant’s obtaining an assignee or subtenant. If Tenant
shall not enter into a sublease or assignment having the same material terms and conditions as defined above within 270 days after
the delivery of the Sublease or Assignment Statement, then the provisions of this Section 15.4(B) shall again
be applicable to any other proposed subletting or assignment. If Landlord shall fail to respond to Tenant within the specified
time periods set forth above, Landlord shall be deemed to have waived its recapture right as to such proposed transaction, provided
Tenant has sent Landlord a second request for approval containing the following language in bold print and Landlord shall again
have failed to respond within the time period set forth therein: “THIS IS A SECOND REQUEST FOR A WAIVER OF RECAPTURE RIGHTS.
IF LANDLORD DOES NOT RESPOND TO THIS REQUEST WITHIN FIVE (5) BUSINESS DAYS, LANDLORD’S WAIVER SHALL BE DEEMED GRANTED
PURSUANT TO THE PROVISIONS OF THE LEASE.”
(C) If
Landlord shall not have exercised its termination right under Section 15.4(B) above (or if Landlord shall not
have the right to exercise such termination right), then upon obtaining a proposed assignee or subtenant for all or a portion of
the Premises, upon terms satisfactory to Tenant, Tenant shall submit to Landlord in writing (i) the name and business address
of the proposed assignee or subtenant; (ii) in the case of a sublease, a description of the portion of the Premises to be
sublet; (iii) an original counterpart of the proposed assignment or sublease and all related agreements; and (iv) the
nature of the business and credit of the proposed assignee or subtenant (including its most recent financial statements, certified
by an independent certified public accountant (“CPA”) if such financial statements are certified by a CPA (or,
if not, certified by the chief financial officer of the proposed assignee or subtenant as being true and correct). Landlord shall
respond to such request for approval within fifteen (15) Business Days after Landlord’s receipt of the foregoing documents
and information. If Landlord shall fail to respond to Tenant within said period, Landlord shall be deemed to have approved such
transaction, provided that Tenant have sent Landlord a second request for approval containing the following language in bold print
and Landlord shall again have failed to respond within the time period set forth therein: “THIS IS A SECOND REQUEST FOR APPROVAL
OF THE PROPOSED [ASSIGNMENT] OR [SUBLETTING]. IF LANDLORD DOES NOT RESPOND TO THIS REQUEST WITHIN FIVE (5) BUSINESS DAYS,
LANDLORD’S APPROVAL SHALL BE DEEMED GRANTED PURSUANT TO THE PROVISIONS OF THE LEASE.”
Section 15.5. If
Tenant sublets any portion of the Premises to a Person in a transaction for which Landlord’s consent is required, Landlord
shall be entitled to and Tenant shall pay to Landlord, as Additional Rent (the “Sublease Additional Rent”),
a sum equal to fifty (50%) percent of the net amount that any rents, additional charges and other consideration payable under the
sublease to Tenant by the subtenant is in excess of the Fixed Rent and Escalation Rent payable under this Lease accruing during
the term of the sublease in respect of the subleased space (including, but not limited to, sums paid for the sale or rental of
Tenant’s Property and Alterations less, in the case of a sale thereof, the then net unamortized or undepreciated cost
thereof determined on the basis of Tenant’s federal income tax or federal information returns) and after first deducting
from any rents, additional charges and other consideration payable under the sublease to Tenant the actual out-of-pocket expenses
reasonably incurred by Tenant in connection with such sublease, on account of brokerage commissions, advertising expenses, legal
fees, work contributions and the cost of work performed by Tenant to prepare the Premises for the subtenant’s occupancy,
and other economic concessions granted by Tenant to the subtenant, all amortized over the term of the sublease. Such Sublease Additional
Rent shall be payable as and when received by Tenant.
Section 15.6. If
Tenant shall assign this Lease to a Person in a transaction for which Landlord’s consent is required, Landlord shall be
entitled to and Tenant shall pay to Landlord, as Additional Rent, an amount equal to fifty (50%) percent of the net amount of
all sums and other consideration paid to Tenant by the assignee for or by reason of such assignment solely related to the Premises
(including, but not limited to, sums paid for the sale or rental of Tenant’s Property and Alterations less, in the
case of a sale thereof, the then net unamortized or undepreciated cost thereof determined on the basis of Tenant’s federal
income tax or federal information returns) after first deducting from any sums and other consideration paid to Tenant by the assignee
the actual out-of-pocket expenses reasonably incurred by Tenant in connection with such assignment, on account of brokerage commissions,
advertising expenses, legal fees, work contributions and the cost of work performed by Tenant to prepare the Premises for the
assignee’s occupancy and other economic concessions granted by Tenant to the assignee. Such Additional Rent shall be payable
as and when received by Tenant from the assignee.
Section 15.7. Landlord
shall have no liability for brokerage commissions incurred with respect to any assignment of this Lease or any subletting of all
or any part of the Premises by or on behalf of Tenant. Tenant shall pay, and shall indemnify and hold Landlord harmless from and
against, any and all cost, expense (including reasonable attorneys’ fees and disbursements) and liability in connection with
any compensation, commissions or charges claimed by any broker or agent with respect to any such assignment or subletting.
ARTICLE 16
ACCESS TO PREMISES
Section 16.1.
(A) Tenant
shall permit Landlord and public utilities servicing the Building to erect, use and maintain concealed ducts, pipes and conduits
in and through the Premises provided that the same shall not reduce the usable area of the Premises beyond a de minimis
amount nor adversely affect any Tenant installations in the Premises. Landlord or Landlord’s agents shall have the right
to enter the Premises at all reasonable times upon (except in case of emergency, in which case Landlord shall use reasonable efforts
to provide such notice as is possible under the circumstances) not less than 48 hours prior notice (which may be oral), accompanied
by a representative of Tenant, and subject to the other applicable provisions of this Lease, to examine the same, to show the same
to prospective purchasers, Mortgagees or lessees (but, in the case of prospective tenants of the Building, only during the last
eighteen (18) months of the Term of this Lease) of the Building, or to make such repairs, alterations, improvements or additions
(i) as may be required in connection with Landlord’s Post-Delivery Work, (ii) as Landlord may reasonably deem necessary
to the Premises or to any other portion of the Building, or (iii) which Landlord may elect to perform after ten (10) days’
notice (except in an emergency when no notice shall be required, but in which case Landlord shall use reasonable efforts to provide
such notice as is possible under the circumstances) following Tenant’s failure to make repairs or perform any work which
Tenant is obligated to make or perform under this Lease, or (iv) for the purpose of complying with Requirements, and Landlord
shall be allowed to take all material into and upon the Premises that may be required therefor (provided all such material shall
be removed at the end of each day or placed in mechanical rooms or closets) without the same constituting an eviction or constructive
eviction of Tenant in whole or in part and, except as expressly provided in this Lease, the Fixed Rent (and any other item of Rental)
shall in no respect abate or be reduced by reason of said repairs, alterations, improvements or additions, wherever located, or
while the same are being made, by reason of loss or interruption of business of Tenant, or otherwise. Landlord shall at its sole
cost and expense promptly repair any damage caused to the Premises by such work, alterations, improvements or additions.
(B) Any
work performed or installations made pursuant to this Article 16 shall be made with reasonable diligence and
otherwise pursuant to Section 7.3, including the provisions thereof relating to minimizing interference with
Tenant’s business and the use of overtime labor.
Section 16.2. If
Tenant is not present when for any reason entry into the Premises may be necessary or permissible, Landlord or Landlord’s
agents may enter the same without rendering Landlord or such agents liable therefor (if during such entry Landlord or Landlord’s
agents accord reasonable care to Tenant’s Property), and without in any manner affecting this Lease.
Section 16.3. Landlord
also shall have the right at any time at its sole cost and expense, without the same constituting an actual or constructive eviction
and without incurring any liability to Tenant therefor, to change the arrangement or location of entrances or passageways but not
access to that portion of the Premises located on the ground floor), doors and doorways, and corridors, elevators (but not the
Exclusive Elevators or the elevator to the Terrace, if any), stairs, toilets or other public parts of the Building, provided any
such change does not interfere with, or deprive Tenant of access to, the Building or the Premises substantially equivalent to its
access as of the date hereof and does not affect the use of the Premises or first-class nature of the Building; to put so-called
“solar film” or other energy-saving installations on the inside and outside of the windows; and to change the name,
number or designation by which the Building is commonly known. All parts (except surfaces facing the interior of the Premises)
of all walls, windows and doors bounding the Premises (including exterior Building walls, exterior core corridor walls, exterior
doors and entrances), all balconies, terraces and roofs adjacent to the Premises, all space in or adjacent to the Premises used
for shafts, stacks, stairways, chutes, pipes, conduits, ducts, fan rooms, heating, air cooling, plumbing and other mechanical facilities,
service closets and other Building facilities are not part of the Premises, and Landlord shall have the use thereof, as well as
access thereto through the Premises for the purposes of inspection, operation, maintenance, alteration and repair, subject in all
cases to the terms of this Lease.
ARTICLE 17
CERTIFICATE OF OCCUPANCY
Section 17.1. (A) The
Certificate of Occupancy currently applicable to the Premises (annexed hereto as Schedule I) permits the tenth (10th)
through twelfth (12th) floors of the Building to be used for office and factory purposes and the ground floor portion
of the Premises to be used for stores and a restaurant. In order to permit the Premises to be improved for the Permitted Use, Tenant
will furnish to Landlord the plans relating to the Initial Alterations to be installed by Tenant in the Premises and background
drawings in CAD format (the “Tenant’s Plans”). In addition, Tenant will be required to file an “Alt
2” application with the New York City Buildings Department (the “Building Department”) in connection with
the work contemplated by Tenant’s Plans. Landlord, at its expense, shall remedy any violations of Laws that would prevent
Tenant from obtaining a building permit for the Initial Alterations. Tenant agrees that it will obtain all “sign offs”
required in connection with such work, including all necessary “sign offs” relating to all fire and life safety systems
required for the Premises to be used for the Permitted Use (the “Tenant’s ‘Alt 2’ Sign- Offs”),
and Tenant shall furnish Landlord with copies thereof.
(B) Landlord
agrees that after it has approved the Tenant’s Plans in accordance with this Lease, it will promptly file an “Alt 1”
application with the Building Department (or amend a previously filed “Alt 1” application) to permit the Premises to
be used for the Permitted Use. Following the completion of the work contemplated by the “Alt 1” application, as it
may be amended in the future, Landlord shall take all commercially reasonable action to obtain a permanent Certificate of Occupancy
(a “C of O”) for the Building, or, if necessary on a temporary basis, a temporary Certificate of Occupancy (a
“TCO”), to permit the Premises to be used for the Permitted Use. Landlord shall also request that the TCO or
C of O permit the maximum number of Persons to occupy each floor of the Premises under applicable Law. Landlord shall, at its sole
cost and expense, retain any expediter or other consultant to assure that Landlord obtains the TCO or C of O as expeditiously as
possible. Landlord shall provide Tenant with periodic updates (or at any time upon the request of Tenant) of the status of the
TCO or C of O.
(C) In
the event that Tenant has obtained Tenant’s “Alt 2” Sign-Offs, then, if any governmental action is taken or a
proceeding is commenced (collectively, the “Proceeding”) by the City of New York or any agency thereof or any
other Government Authority based on the fact that a TCO or a C of O has not been issued or a TCO has not been renewed, which Proceeding
(x) imposes a penalty against Tenant, or (y) specifically prohibits Tenant from utilizing the Premises as offices, or
(z) evicts Tenant from the Premises, then Tenant shall notify Landlord in writing of such fact and Landlord shall indemnify,
hold harmless and defend Tenant against such Proceeding and all costs incurred by Tenant, including reasonable legal fees, and,
in the event of a final judgment or administrative determination assessing a fine or penalty, Landlord shall pay such amount and
all costs incurred by Tenant, including reasonable legal fees, and in the event that Tenant is actually evicted from the Premises
as a result of the Proceeding or a final judgment or administrative determination evicting Tenant from the Premises or specifically
prohibiting it from occupying the Premises is issued, Tenant shall receive an abatement of the Fixed Rent and the Escalation Rent
payable under this Lease for the period during which Tenant is evicted or prohibited from using the Premises as offices because
a TCO or C of O has not been issued, provided, however, that in no event shall Tenant be entitled to receive an abatement of rent
for any period during which Tenant actually occupies or utilizes the Premises for the conduct of its business.
(D) In
the event that Tenant is entitled to an abatement of rent pursuant to the provisions of paragraph (C) above, then following
the expiration of a six-month period during which rent is abated, either Landlord or Tenant may elect to terminate this Lease,
and Tenant will vacate and surrender the Premises (such vacation to be in accordance with the provisions of this Lease relating
to surrender at the expiration of the Term) on a date not earlier than the 10th day and not later than the 30th day
following the date on which Landlord or Tenant notifies the other of its election to terminate this Lease. If neither Landlord
nor Tenant shall exercise such right of termination, then this Lease shall remain in full force and effect.
(E) The
rights of indemnification, termination of this Lease, abatement, and reimbursement, as described in paragraphs (C) and (D) above,
shall constitute Tenant’s sole remedies either pursuant to this Lease or otherwise relating to Tenant’s use of the
Premises for the Permitted Use, and Landlord will not have any obligations under this Lease.
(F) Once
Landlord has obtained an amended Certificate of Occupancy permitting the Premises (other than the ground floor space and Terrace)
to be used for office purposes, Tenant shall immediately discontinue any use of the Premises, which may, at any time, be claimed
or declared by the City or State of New York or other Government Authority to be in violation of or contrary to such amended Certificate
of Occupancy, or by reason of which any attempt may be made to penalize Landlord or require Landlord to secure any Certificate
of Occupancy other than the amended Certificate of Occupancy obtained by Landlord.
(G) Notwithstanding
anything to the contrary in this Article 17, in the event that at any time during the Term Tenant intends to install
the Kitchen, Landlord shall cooperate with Tenant and diligently, at Tenant’s expense, take commercially reasonable steps
to promptly secure an Amended Certificate permitting such use, if same is required by Law.
ARTICLE 18
DEFAULT
Section 18.1. Each
of the following events shall be an “Event of Default” under this Lease:
(A) if
Tenant shall on any occasion default in the payment when due of any installment of Fixed Rent or in the payment when due of any
other item of Rental and such default shall, in either case, continue for five (5) Business Days after Landlord shall have
given Tenant written notice of such default; or
(B) if
Tenant shall fail more than two (2) times in any period of twelve consecutive months to make a payment when due of any Rental,
and Landlord shall have given Tenant notice of such default after two (2) such occurrences; or
(C) Intentionally
Omitted; or
(D) if
the Premises shall be abandoned and Tenant shall fail to take reasonable precautions to safeguard the Premises; or
(E) if
Tenant’s interest in this Lease shall devolve upon or pass to any person, whether by dissolution, operation of law or otherwise,
except as expressly permitted under Article 15 hereof; or
(F) (1) if
Tenant shall voluntarily commence or institute any case, proceeding or other action (a) seeking relief on Tenant’s behalf
as debtor, or to adjudicate it a bankrupt or insolvent, or seeking reorganization, arrangement, adjustment, winding-up, liquidation,
dissolution, composition or other relief with respect to Tenant or Tenant’s debts under any existing or future law of any
jurisdiction, domestic or foreign, relating to bankruptcy, insolvency, reorganization or relief of debtors, or (b) seeking
appointment of a receiver, trustee, custodian or other similar official for it or for all or any substantial part of its property;
or
(2) if
Tenant shall make a general assignment for the benefit of creditors; or
(3) if
any case, proceeding or other action shall be commenced or instituted against Tenant (a) seeking to have an order for relief
entered against Tenant as debtor or to adjudicate Tenant a bankrupt or insolvent, or seeking reorganization, arrangement, adjustment,
winding-up, liquidation, dissolution, composition or other relief with respect to Tenant or Tenant’s debts under any existing
or future law of any jurisdiction, domestic or foreign, relating to bankruptcy, insolvency, reorganization or relief of debtors,
or (b) seeking appointment of a receiver, trustee, custodian or other similar official for Tenant or for all or any substantial
part of Tenant’s property, which either (i) results in any such entry of an order for relief, adjudication of bankruptcy
or insolvency or such an appointment or the issuance or entry of any other order having a similar effect or (ii) remains undismissed
for a period of ninety (90) days; or
(4) if
a trustee, receiver or other custodian shall be appointed for any substantial part of the assets of Tenant which appointment is
not vacated or effectively stayed within ninety (90) days; or
(5) if
Tenant rejects this Lease in connection with any action or proceeding under the Bankruptcy Code; or
(G) if
Tenant shall default in the observance or performance of any other term, covenant or condition of this Lease on Tenant’s
part to be observed or performed and Tenant shall fail to remedy such default within thirty (30) days after notice by Landlord
to Tenant of such default, or if such default is of such a nature that it cannot with due diligence be completely remedied within
said period of thirty (30) days and the continuation of which for the period required for cure will not subject Landlord to the
risk of criminal liability or termination of any Superior Lease or foreclosure of any Mortgage, if Tenant shall not, (i) within
said thirty (30) day period advise Landlord of Tenant’s intention duly to institute all steps necessary to remedy such situation,
(ii) duly institute within said thirty (30) day period, and thereafter diligently and continuously prosecute to completion
all steps necessary to remedy the same and (iii) complete such remedy within such time after the date of the giving of said
notice by Landlord as shall reasonably be necessary.
Section 18.2. If
an Event of Default shall occur, Landlord may, at any time thereafter, at Landlord’s option, give written notice to
Tenant stating that this Lease and the Term shall expire and terminate on the date specified in such notice, which date shall
not be less than five (5) days after the giving of such notice, whereupon this Lease and the Term and all rights of
Tenant under this Lease shall automatically expire and terminate as if the date specified in the notice given pursuant to
this Section 18.2 were the Fixed Expiration Date and Tenant immediately shall quit and surrender the Premises,
but Tenant shall remain liable for damages as provided herein or pursuant to law. Anything contained herein to the contrary
notwithstanding, if such termination shall be stayed by order of any court having jurisdiction over any proceeding described
in Section 18.1(F), or by federal or state statute, then, following the expiration of any such stay, or if the
trustee appointed in any such proceeding, Tenant or Tenant as debtor-in-possession fails to assume Tenant’s obligations
under this Lease within the period prescribed therefor by law or within one hundred twenty (120) days after entry of the
order for relief or as may be allowed by the court, or if said trustee, Tenant or Tenant as debtor-in-possession shall fail
to provide adequate protection of Landlord’s right, title and interest in and to the Premises or adequate assurance of
the complete and continuous future performance of Tenant’s obligations under this Lease, Landlord, to the extent
permitted by law or by leave of the court having jurisdiction over such proceeding, shall have the right, at its election, to
terminate this Lease on fifteen (15) days’ notice to Tenant, Tenant as debtor-in-possession or said trustee and upon
the expiration of said fifteen (15) day period if Tenant shall not have assumed Tenant’s obligation as required or
continues to fail to provide adequate protection of Landlord’s right, this Lease shall cease and expire as aforesaid
and Tenant, Tenant as debtor-in-possession or said trustee shall immediately quit and surrender the Premises as
aforesaid.
Section 18.3. If,
at any time, (i) Tenant shall consist of two (2) or more persons, or (ii) Tenant’s obligations under this
Lease shall have been guaranteed by any person other than Tenant, or (iii) Tenant’s interest in this Lease has been
assigned, the word “Tenant” as used in Section 18.1(F), shall be deemed to mean any one or more of the
persons primarily or secondarily liable for Tenant’s obligations under this Lease. Any monies received by Landlord from or
on behalf of Tenant during the pendency of any proceeding of the types referred to in Section 18.1(F) shall be
deemed paid as compensation for the use and occupancy of the Premises and the acceptance of any such compensation by Landlord shall
not be deemed an acceptance of Rental or a waiver on the part of Landlord of any rights under Section 18.2.
ARTICLE 19
REMEDIES AND DAMAGES
Section 19.1.
(A) If
any Event of Default shall occur, or this Lease and the Term shall expire and come to an end as provided in Article 18:
(1) Tenant
shall quit and peacefully surrender the Premises to Landlord, and Landlord and its agents may immediately, or at any time after
such Event of Default or after the date upon which this Lease and the Term shall expire and come to an end, re-enter the Premises
or any part thereof, without notice, either by summary proceedings, or by any other applicable action or proceeding or otherwise
(without being liable to indictment, prosecution or damages therefor), but excluding by force, and may repossess the Premises and
dispossess Tenant and any other persons from the Premises by summary proceedings or otherwise (excluding by force) and remove any
and all of their property and effects from the Premises (and Tenant shall remain liable for damages as provided herein or pursuant
to law); and
(2) Landlord,
at Landlord’s option, may relet the whole or any part or parts of the Premises from time to time, either in the name of
Landlord or otherwise, to such tenant or tenants, for such term or terms ending before, on or after the Fixed Expiration
Date, at such rent or rentals and upon such other conditions, which may include concessions and free rent periods, as
Landlord, in Landlord’s sole discretion, may determine; provided, however, that Landlord shall have no obligation to
relet the Premises or any part thereof and shall in no event be liable for refusal or failure to relet the Premises or any
part thereof, or, in the event of any such reletting, for refusal or failure to collect any rent due upon any such reletting,
and no such refusal or failure shall operate to relieve Tenant of any liability under this Lease or otherwise affect any such
liability, and Landlord, at Landlord’s option, may make such Alterations, in and to the Premises as Landlord, in
Landlord’s sole discretion, shall consider advisable or necessary in connection with any such reletting or proposed
reletting, without relieving Tenant of any liability under this Lease or otherwise affecting any such liability.
(B) Tenant,
on its own behalf and on behalf of all persons claiming through or under Tenant, including all creditors, does further hereby waive
any and all rights that Tenant and all such persons might otherwise have under any present or future law to redeem the Premises,
or to re-enter or repossess the Premises, or to restore the operation of this Lease, after (a) Tenant shall have been dispossessed
by a judgment or by warrant of any court or judge, or (b) any re-entry by Landlord, or (c) any expiration or termination
of this Lease and the Term, whether such dispossess, re-entry, expiration or termination is by operation of law or pursuant to
the provisions of this Lease. The words “re-entry”, “re-enter” and “re-entered” as used in
this Lease shall not be deemed to be restricted to their technical legal meanings. In the event of a breach or threatened breach
by Tenant, or any persons claiming through or under Tenant, of any term, covenant or condition of this Lease, Landlord shall have
the right to enjoin such breach and the right to invoke any other remedy allowed by law or in equity as if re-entry, summary proceedings
and other special remedies were not provided in this Lease for such breach. The right to invoke the remedies hereinbefore set forth
are cumulative and shall not preclude Landlord from invoking any other remedy allowed at law or in equity.
Section 19.2.
(A) If
this Lease and the Term shall expire and come to an end as provided in Article 18, or by or under any summary proceeding
or any other action or proceeding, or if Landlord shall re-enter the Premises as provided in Section 19.1, or by or
under any summary proceeding or any other action or proceeding, then, in any of said events:
(1) Tenant
shall pay to Landlord all Fixed Rent, Escalation Rent, other Additional Rent and other items of Rental payable under this Lease
by Tenant to Landlord to the date upon which this Lease and the Term shall have expired and come to an end or to the date of re-entry
upon the Premises by Landlord, as the case may be;
(2) Tenant
also shall be liable for and shall pay to Landlord, as damages, any deficiency (“Deficiency”) between the Rental
for the period which otherwise would have constituted the unexpired portion of the Term and the net amount, if any, of rents collected
under any reletting effected pursuant to the provisions of Section 19.1(A)(2) for any part of such period (after
first deducting from the rents collected under any such reletting all of Landlord’s expenses in connection with the termination
of this Lease, Landlord’s reentry upon the Premises and such reletting including, but not limited to, all repossession costs,
brokerage commissions, reasonable attorneys’ fees and disbursements, alteration costs and other expenses of preparing the
Premises for such reletting); any such Deficiency shall be paid in monthly installments by Tenant on the days specified in this
Lease for payment of installments of Fixed Rent; Landlord shall be entitled to recover from Tenant each monthly Deficiency as the
same shall arise, and no suit to collect the amount of the Deficiency for any month shall prejudice Landlord’s right to collect
the Deficiency for any subsequent month by a similar proceeding; and
(3) whether
or not Landlord shall have collected any monthly Deficiency as aforesaid, Landlord shall be entitled to recover from Tenant, and
Tenant shall pay to Landlord, on demand, in lieu of any further Deficiency as and for liquidated and agreed final damages, a sum
equal to the amount by which the unpaid Rental for the period which otherwise would have constituted the unexpired portion of the
Term exceeds the then fair and reasonable rental value of the Premises for the same period, both discounted to present worth at
the Base Rate; if, before presentation of proof of such liquidated damages to any court, commission or tribunal, the Premises,
or any part thereof, are relet by Landlord for the period which otherwise would have constituted the unexpired portion of the Term,
or any part thereof, the amount of rent reserved upon such reletting shall be deemed, prima facie, to the fair and reasonable
rental value for the part or the whole of the Premises so relet during the term of the reletting.
(B) If
the Premises, or any part thereof, shall be relet together with other space in the Building, the rents collected or reserved under
any such reletting and the expenses of any such reletting shall be equitably apportioned for the purposes of this Section 19.2.
Tenant shall in no event be entitled to any rents collected or payable under any reletting, whether or not such rents exceed the
Fixed Rent reserved in this Lease. Solely for the purposes of this Article 19, the term “Escalation Rent”
as used in Section 19.2(A) shall mean the Escalation Rent in effect immediately prior to the Expiration Date,
or the date of re-entry upon the Premises by Landlord, as the case may be, plus the scheduled Operating Expense Payment set forth
in Schedule C. Nothing contained in Article 18 or this Article 19 shall be deemed to limit or preclude
the recovery by Landlord from Tenant of the maximum amount allowed to be obtained as damages by any statute or rule of law,
or of any sums or damages to which Landlord may be entitled in addition to the damages set forth in this Section 19.2.
ARTICLE 20
FEES AND EXPENSES
Section 20.1. If
(i) Tenant shall default under this Lease beyond any applicable notice or cure period, or (ii) Tenant does or permits
any act or thing upon the Premises that would cause Landlord to be in default under any Superior Lease or Mortgage and Tenant does
not cure such act or thing within thirty (30) days after written notice thereof, or (iii) Tenant fails to comply with its
obligations under this Lease and the preservation of property or the safety of any tenant, occupant or other person is imminently
threatened, Landlord may (1) perform the same for the account of Tenant, or (2) make any expenditure or incur any obligation
for the payment of money in connection with any obligation owed to Landlord, including, but not limited to, reasonable attorneys’
fees and disbursements in instituting, prosecuting or defending any action or proceeding, and in either case the reasonable cost
thereof, with interest thereon at the Applicable Rate, shall be deemed to be Additional Rent hereunder and shall be paid by Tenant
to Landlord within thirty (30) days after rendition of any bill or statement to Tenant therefor. In addition, Tenant shall pay
Landlord any reasonable attorneys’ fees and disbursements incurred by Landlord in connection with any proceeding in which
the value for the use and occupancy of the Premises by Tenant is being determined (to the extent such proceeding results from a
default by Tenant under this Lease).
Section 20.2. If
Tenant shall fail to pay any installment of Fixed Rent, Additional Rent or any other item of Rental for a period longer than five
(5) days after the same shall have become due, Tenant shall pay to Landlord, in addition to such installment of Fixed Rent,
Additional Rent or other item of Rental, as the case may be, as a late charge and as Additional Rent, a sum equal to three (3%)
percent of the amount unpaid. Notwithstanding the foregoing, in the first three (3) instances during only the first two (2) years
of the Term, no late charge shall be payable unless and until the applicable payment is not paid within five (5) Business
Days after the date that Landlord gives Tenant notice that Tenant has failed to make such payment. If Tenant shall fail to pay
any installment of Fixed Rent, Additional Rent or any other item of Rental for a period longer than thirty (30) days after the
same shall have become due, Tenant shall pay to Landlord, in addition to such installment of Fixed Rent, Additional Rent or other
item of Rental, as the case may be, and in addition to the late charge payable by Tenant pursuant to the preceding sentence, as
a late charge and as Additional Rent, a sum equal to interest at the Applicable Rate on the amount unpaid. All late charges payable
by Tenant hereunder shall be computed from the date such payment was due (without regard to any grace period set forth in this
Section 20.2), to and including the date of payment.
ARTICLE 21
NO REPRESENTATIONS BY LANDLORD
Section 21.1. Landlord
and Landlord’s agents have made no representations, warranties or promises with respect to the Building, the Real Property
or the Premises (including the Terrace), except as herein expressly set forth, and no rights, easements or licenses are acquired
by Tenant by implication or otherwise except as expressly set forth herein. Tenant shall accept possession of the Premises (including
the Terrace), on the Commencement Date in the condition required on the Substantial Completion Date with Landlord’s Pre-Delivery
Work Substantially Complete therein and otherwise is in its “as-is” condition. Except for (i) the completion of
Landlord’s Post-Delivery Work and any Punchlist Items, (ii) any latent defects in Landlord’s Pre-Delivery Work
or Landlord’s Post-Delivery Work of which Tenant shall have notified Landlord within nine (9) months following the Substantial
Completion thereof, and (iii) the Terrace Elevator Work (as defined in Section 41.2), Landlord shall have no obligation
to perform any other work or make any other installations in order to prepare the Premises for Tenant’s occupancy. The taking
of occupancy of the whole or any part of the Premises by Tenant shall be conclusive evidence, as against Tenant, that Tenant accepts
possession of the same and that the Premises and the Building were in good and satisfactory condition at the time such occupancy
was so taken and that the Premises were substantially as shown hatched on Schedule A. The foregoing is not intended to relieve
Landlord from its repair and compliance with Law obligations under this Lease.
ARTICLE 22
END OF TERM
Section 22.1. Upon
the expiration or earlier termination of this Lease, Tenant shall quit and surrender to Landlord the Premises, vacant, broom clean,
in in its then “as-is” condition, ordinary wear and tear excepted, and Tenant shall remove all of Tenant’s Specialty
Alterations as may be required pursuant to Article 6. Tenant shall also remove all of Tenant’s Property and
all other personal property and personal effects of all persons claiming through or under Tenant, and shall pay the cost of repairing
all damage to the Premises and the Real Property occasioned by such removal. Any Tenant’s Property or other personal property
that remains in the Premises after the termination of this Lease shall be deemed to have been abandoned and either may be retained
by Landlord as its property or may be disposed of in such manner as Landlord may see fit. If such Tenant’s Property or other
personal property or any part thereof is sold, Landlord may receive and retain the proceeds of such sale as the property of Landlord.
Any reasonable out of pocket expense incurred by Landlord in removing or disposing of such Tenant’s Property or other personal
property or Alterations required to be removed as provided in Article 6, as well as the reasonable cost of repairing
all damage to the Building or the Premises caused by such removal, shall be reimbursed to Landlord by Tenant, as Additional Rent,
within thirty (30) days after written demand.
Section 22.2. If
the Fixed Expiration Date falls on a day which is not a Business Day, then Tenant’s obligations under Section 22.1
shall be performed on or prior to the immediately preceding Business Day.
Section 22.3. If
the Premises are not surrendered within ninety (90) days after the expiration or other termination of this Lease, Tenant agrees
to reimburse Landlord for any actual and direct liability or expense resulting from delay by Tenant in so surrendering the Premises,
including any payments or rent concessions that Landlord is required to grant to a succeeding tenant by reason of such delay. Landlord
shall notify Tenant if Landlord enters into a lease with a third party for all or any part of the Premises. Landlord’s rights
under this Section 22.3 are in addition to the holdover rental payable by Tenant under Section 22.4.
Section 22.4. If
Tenant shall remain in possession of the Premises after the Expiration Date, without the execution by both Tenant and Landlord
of a new lease, Tenant, at the election of Landlord, shall be deemed to be occupying the Premises as a Tenant from month-to-month,
at a monthly rental equal one hundred fifty (150%) percent of the Fixed Rent payable during the last month of the Term. If Tenant
shall remain in possession of the Premises after the Expiration Date beyond thirty (30) days, then the monthly rental shall after
such thirtieth (30th) day equal two hundred (200%) percent of the Fixed Rent payable during the last month of the Term, subject,
for the entire period of such holdover, to all the other conditions, provisions and obligations of this Lease insofar as the same
are applicable to a month-to-month tenancy, including the payment of Escalation Rent under Article 3 and Electricity
Additional Rent under Article 4. The acceptance of any holdover rental paid by Tenant pursuant to this Section 22.4
shall not preclude Landlord from commencing and prosecuting a holdover or summary eviction proceeding.
Section 22.5. Tenant
expressly waives, for itself and for any person claiming through or under Tenant, any rights that Tenant or any such person may
have under the provisions of Section 2201 of the New York Civil Practice Law and Rules and of any similar or successor
law of like import then in force in connection with any holdover proceedings that Landlord may institute to enforce the provisions
of this Article.
Section 22.6. Tenant’s
obligations under this Article shall survive the expiration or termination of this Lease.
ARTICLE 23
POSSESSION
Section 23.1. Tenant
acknowledges that Landlord does not anticipate obtaining possession of the Premises and commencing the performance of Landlord’s
Pre-Delivery Work until December 1, 2014. If the existing tenant holds over, Landlord agrees that it shall diligently proceed
using all good faith efforts, including summary possession and eviction proceedings, to remove the existing tenant from the Premises
and shall not enter into any settlement as part of its litigation or otherwise that allows the existing tenant to remain in possession
of the Premises for more than 30 days. Landlord shall commence Landlord’s Work in accordance with this Lease immediately
following the vacatur of the existing tenant of the Premises. In the event Landlord shall not have obtained possession of the Premises
and commenced to perform Landlord’s Pre-Delivery Work in accordance with this Lease on or prior to March 1, 2015 (the
“Possession Date”), Tenant, as its sole and exclusive remedy for such delay, shall be entitled to an additional
abatement of Fixed Rent equal to one (1) day for each day after March 1, 2015 until the Possession Date, which abatement
shall be automatically applied to the next installment of Fixed Rent payable as of the Rent Commencement Date until fully applied.
ARTICLE 24
NO WAIVER
Section 24.1. No
act or thing done by Landlord or Landlord’s agents during the Term shall be deemed an acceptance of a surrender of the Premises,
and no agreement to accept such surrender shall be valid unless in writing signed by Landlord. No employee of Landlord or of Landlord’s
agents shall have any power to accept the keys to the Premises prior to the termination of this Lease. The delivery of keys to
any employee of Landlord or of Landlord’s agents shall not operate as a termination of this Lease or a surrender of the Premises.
If Tenant shall at any time desire to have Landlord sublet the Premises for Tenant’s account, Landlord or Landlord’s
agents are authorized to receive the keys for such purpose without releasing Tenant from any of the obligations under this Lease,
and Tenant hereby relieves Landlord of any liability for loss of or damage to any of Tenant’s effects in connection with
such subletting.
Section 24.2. The
failure of Landlord to seek redress for violation of, or to insist upon the strict performance of, any covenant or condition of
this Lease, or any of the Rules and Regulations, shall not prevent a subsequent act, which would have originally constituted
a violation, from having all of the force and effect of an original violation. The receipt by Landlord of Fixed Rent, Additional
Rent or any other item of Rental with knowledge of the breach of any covenant of this Lease shall not be deemed a waiver of such
breach. The failure of Landlord to enforce any of the Rules and Regulations against Tenant or any other tenant in the Building
shall not be deemed a waiver of any such Rules and Regulations. No provision of this Lease shall be deemed to have been waived
by Landlord, unless such waiver shall be in writing and shall be signed by Landlord. No payment by Tenant or receipt by Landlord
of a lesser amount than the Rental then due and payable shall be deemed to be other than on account of the earliest item(s) of
Rental, or as Landlord may elect to apply the same, nor shall any endorsement or statement on any check or any letter accompanying
any check or payment be deemed an accord and satisfaction, and Landlord may accept such check or payment without prejudice to
Landlord’s right to recover the balance due of the Rental or pursue any other remedy in this Lease provided. This Lease
contains the entire agreement between the parties and all prior negotiations and agreements are merged herein. Any executory agreement
hereafter made shall be ineffective to change, discharge or effect an abandonment of this Lease in whole or in part unless such
executory agreement is in writing and signed by the party against whom enforcement of the change, discharge or abandonment is
sought.
ARTICLE 25
WAIVER OF TRIAL BY JURY
Section 25.1. Landlord
and Tenant shall and they hereby do waive trial by jury in any action, proceeding or counterclaim brought by either of them against
the other on any matters whatsoever arising out of or in any way connected with this Lease, the relationship of Landlord and Tenant,
Tenant’s use or occupancy of the Premises, whether during or after the Term, or for the enforcement of any remedy under any
statute, emergency or otherwise. If Landlord shall commence any summary proceeding against Tenant, Tenant will not interpose any
counterclaim of whatever nature or description in any such proceeding (unless failure to impose such counterclaim would preclude
Tenant from asserting in a separate action the claim which is the subject of such counterclaim), and will not seek to consolidate
such proceeding with any other action which may have been or will be brought in any other court by Tenant or Landlord.
ARTICLE 26
INABILITY TO PERFORM
Section 26.1. Except
as expressly provided otherwise in this Lease, this Lease and the obligation of Tenant to pay Rental hereunder and Landlord’s
or Tenant’s obligation to perform all of the other covenants and agreements hereunder on the part of Landlord or Tenant,
as the case may be, to be performed shall in no way be affected, impaired or excused because the other party is unable to fulfill
any of its obligations under this Lease, expressly or implicitly to be performed by such party, or because such party is unable
to make or is delayed in making any repairs, additions, alterations, improvements or decorations, if prevented from or delayed
in so doing by reason of acts of God, casualty, strikes or labor troubles (unless such strikes or labor troubles are solely against
Landlord or Tenant or its affiliates or the Building and not on a wide spread basis), accident, acts of war, terrorism, bioterrorism
(i.e., the release or threatened release of an airborne agent that may adversely affect the Building or its occupants),
governmental preemption in connection with an emergency, Requirements, conditions of supply and demand which have been or are affected
by war, terrorism, bioterrorism or other emergency, or any other cause whatsoever, whether similar or dissimilar to the foregoing,
beyond such party’s reasonable control, other than lack of funds (“Unavoidable Delays”). Notwithstanding
the foregoing, the provisions of Article 13 shall control in all cases where the Premises have been destroyed in whole
or in part.
ARTICLE 27
BILLS AND NOTICES
Section 27.1.
(A) Except
as otherwise expressly provided in this Lease, any bills, statements, consents, notices, demands, requests or other communications
given or required to be given under this Lease (“Notice(s)”) shall be in writing and shall be deemed sufficiently
given or rendered if delivered by hand (against a signed receipt), by a recognized overnight courier service (with a signed receipt)
or if deposited in a securely fastened, postage prepaid envelope in a depository that is regularly maintained by the U.S. Postal
Service, sent by registered or certified mail (return receipt requested) and in any case addressed:
(a) if
to Tenant, prior to Tenant’s occupancy of the Premises for the conduct of its business, at Tenant’s address set forth
on the first page of this Lease, Attention: Jesse Hertzberg and Peter Kyviakidis, and thereafter to the same notice parties
at the Premises, in all cases, with a copy to Mintz Levin Cohn Ferris Glovsky and Popeo PC, 666 Third Avenue, New York, New York
10017, Attention: David M. Alin, Esq., or at any place where Tenant or any agent or employee of Tenant may be found if given
subsequent to Tenant’s vacating, deserting, abandoning or surrendering such address;
(b) if
to Landlord, at Landlord’s address set forth in this Lease, Attention: Executive Vice President, with simultaneous copies
to each of:
(i) Trinity
Real Estate
75 Varick Street, 2nd Floor
New York, New York 10013
Attention: General Counsel
(ii) Loeb &
Loeb LLP
345 Park Avenue
New York, New York 10154
Attention: Kenneth W. Sold, Esq.,
and
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(iii)
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any Mortgagee or Lessor who may have requested the same, by Notice given in accordance with the provisions of this Article 27,
at the address designated by such Mortgagee or Lessor.
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Landlord or Tenant may designate new address(es) by notice given
to the other in accordance with the provisions of this Article 27.
(B) Notices
shall be deemed to have been rendered or given (i) on the Business Day delivered, if delivered by hand or by recognized overnight
courier service, prior to 5:00 p.m. of such Business Day, or if delivered on a day other than a Business Day or after 5:00
p.m. on any day, then on the next Business Day following such delivery, or (ii) three (3) Business Days after the
date mailed, if mailed as provided in Section 27.1(A). Notice given by counsel for either party on behalf of such
party or by the Manager on behalf of Landlord shall be deemed valid notices if addressed and sent in accordance with the provisions
of this Article.
Section 27.2. Notwithstanding
the provisions of Section 27.1, (i) Notices requesting services for Overtime Periods pursuant to Article 28
may be given by delivery to the Building superintendent or any other person in the Building designated by Landlord to receive such
Notices and (ii) Landlord’s Statements or bills may be rendered by delivering them to Tenant at the Premises without
the necessity of a receipt, and without providing a copy of Landlord’s Statements or bills to any other party. At the end
of the Term, Tenant shall advise Landlord of Tenant’s forwarding address.
ARTICLE 28
SERVICES AND EQUIPMENT
Section 28.1. Except
as set forth in Section 28.1(A) or as otherwise noted below, Landlord shall, at Landlord’s expense, provide
the services described in this Article 28. Except to the extent otherwise expressly provided in this Lease, Landlord
shall provide such services in accordance with the operational standard set forth in the first sentence of Section 7.3(A) of
this Lease:
(A) Subject
to the provisions of Section 38.2, Tenant shall obtain elevator service to the Premises through the two existing freight
elevator cars depicted in Schedule A-1 within the ground floor portion of the Premises, which Landlord shall convert to
two automated passenger cars as part of Landlord’s Post-Delivery Work (the “Exclusive Elevators”). Landlord
shall assign to Tenant any warranty obtained by Landlord in respect of the Exclusive Elevators and shall cooperate with Tenant
to enforce such warranty. Without limiting Tenant’s obligations under Articles 7 or 9, but subject to Landlord’s
obligations in Section 7.3(B), from and after the Substantial Completion of Landlord’s Post-Delivery Work, Tenant,
at its expense, shall be responsible for the repair, maintenance and replacement of the Exclusive Elevators and shall procure
an annual maintenance and service contract with a contractor reasonably approved by Landlord, provided that Tenant shall engage
Landlord’s elevator consultant or the Building elevator contractor at competitive market rates for the testing and filings
in compliance with Government Authorities and any applicable Laws. Tenant shall, upon Landlord’s request, forward evidence
of such contract and annual renewals. Tenant shall also be responsible for obtaining all required permits and inspections under
any applicable Laws with respect to the Exclusive Elevators. Tenant acknowledges that its employees and invitees may only access
the Premises through the entrance to the ground floor portion of the Premises and by the use of the Exclusive Elevators. For the
avoidance of doubt, Tenant’s employees and invitees may not use the Building lobby and the passenger elevators serving the
rest of the Building to access the Premises; provided that, in the event the Premises or any portion thereof is subleased in accordance
with this Lease, Landlord shall reasonably cooperate with Tenant and permit use of the Building lobby and the passenger elevators
serving the Building generally to access the Premises or any subleased portions thereof, subject to Landlord’s approval
of such Alterations to be made by Tenant, at its expense, in accordance with this Lease to modify any such ingress or egress of
any subleased portions of the Premises, the Building and the Building Systems, which, notwithstanding anything to the contrary
contained in this Lease, shall not be unreasonably withheld, conditioned or delayed, provided that, at the end of such sublease,
Tenant shall restore the Premises, the Building and the Building Systems to the condition existing prior to such Alterations.
(B) Provide
non-exclusive access to the Building’s freight elevator(s) and loading dock serving the Premises during the Term (including
during construction of the Initial Alterations) on call on a “first come, first served” basis on Business Days during
Operating Hours without additional charge to Tenant; and on a reservation, “first come, first served” basis from 6:00
p.m. to 8:00 a.m. on Business Days and at any time on days other than Business Days (such periods, hereinafter “Overtime
Periods”), with a minimum block of four (4) consecutive hours to be reserved during such Overtime Periods at Landlord’s
Building-standard rate (which Landlord represents is currently $165.00 per hour), which amounts shall be payable to Landlord as
Additional Rent within thirty (30) days after written notice thereof. As an accommodation to Tenant, Landlord shall not increase
such hourly rate for the first two (2) years of the Term. In lieu of so-called free freight elevator usage for Tenant’s
initial move into the Premises, Landlord shall grant Tenant a credit in the amount of $3,960 against the installment of Fixed Rent
due on the Rent Commencement Date.
(C) Furnish
sufficient steam heat to the 10th - 12th floors for the comfortable occupancy of such portions of the Premises
through perimeter radiators. The Building’s heating system will be so operated by Landlord during the cold season on Business
Days during Operating Hours, and, upon the request of Tenant pursuant to Section 28.2, during Overtime Periods at Landlord’s
customary charge therefor (which Landlord represents is currently $175 per hour) which amounts shall be payable to Landlord as
Additional Rent within thirty (30) days after written notice thereof. As an accommodation to Tenant, Landlord shall not increase
such hourly rate for the first two (2) years of the Term. The locations of the existing steam risers are identified in Schedule
L-3 annexed hereto. Landlord, throughout the Term, shall have free access to all mechanical installations of Landlord, including
but not limited to machine rooms and electrical closets, and Tenant shall not construct or place partitions, furniture or other
obstructions that may unreasonably interfere with Landlord’s free access thereto or the proper functioning of the Building
Systems, or unreasonably interfere with the moving of Landlord’s equipment to and from the enclosures containing said installations.
Neither Tenant nor its agents, employees or contractors shall at any time enter the said enclosures or tamper with, adjust, touch
or otherwise in any manner affect such mechanical installations. Tenant acknowledges that Landlord shall have no obligation to
provide heat to the ground floor portion of the Premises and Tenant, pursuant to the provisions of Article 6, shall
install such equipment as Tenant requires to heat such portion of the Premises.
(D) (i) Air-conditioning
shall be provided to the 10th - 12th floors by Tenant’s AC System installed by Tenant. Any supplemental
air-conditioning units or system installed by or on behalf of Tenant in accordance with the terms and conditions of this Lease
(each, a “Supplemental AC System”) shall be sized for maximum efficiency and shall have an air-cooled energy
efficiency rating of not less than 11. Subject to compliance with the provisions of Article 6 and Article 41,
Tenant may locate Tenant’s Supplemental AC System on the Terrace. Tenant, at its sole cost and expense, shall procure
and maintain any permits required by Government Authorities with respect to Tenant’s AC system (including the AC Units,
the cooling tower and any Supplemental AC System), and Tenant shall operate the same in compliance therewith and in compliance
with all Rules and Regulations which Landlord may prescribe. In furtherance of the foregoing, Tenant’s AC System and
the Supplemental AC System must be equipped with an automatic shutdown device connected to the Building’s fire alarm system.
Tenant acknowledges that, in addition to Tenant’s AC System serving the 10th-12th floors, Tenant,
pursuant to the provisions of Article 6, shall install such equipment that Tenant requires to cool the ground floor
portion of the Premises. Any such equipment installed by Tenant shall be included in the term “Tenant’s AC System”
for purposes of Tenant’s maintenance and repair obligations and the payment of electricity to operate such equipment. Landlord
shall not charge any connection or tap-in fee for Tenant’s Supplemental AC System.
(ii) Throughout
the Term, Tenant, at its sole cost and expense, shall procure and maintain an annual maintenance and service contract for the maintenance
and repair of all heating equipment serving the ground floor, Tenant’s AC System (including the AC Units, the cooling tower
and any Supplemental AC System now or hereafter serving the Premises), providing for inspections and/or service at least twice
a year, to be renewed each year throughout the Term of this Lease with an air-conditioning contractor, reasonably approved by Landlord.
Tenant shall furnish evidence of such service contracts not later than thirty (30) days after installation and evidence of renewals
thereof promptly after procuring the same.
(iii) Tenant
shall, at its sole cost and expense, perform any and all necessary repairs to, and cause any and all replacements of, all heating
equipment serving the ground floor, and Tenant’s AC System (including the AC Units, the cooling tower and any Supplemental
AC System now or hereafter serving the Premises). Subject to Section 6.1(C), Tenant’s AC System, any Supplemental
AC System(s), and any replacements thereof, shall be surrendered to Landlord on the Expiration Date in their condition as of the
Commencement Date or the date the same was put into service, as applicable, reasonable wear and tear excepted.
(iv) All
electricity used in connection with the operation of Tenant’s AC System and any Supplemental AC System shall be supplied
by Landlord upon, and subject to, all of the terms, covenants and conditions contained in Article 4 hereof.
(E) Furnish
cold water for ordinary lavatory and drinking and office cleaning purposes to the 10th - 12th floors. If
Tenant uses or consumes water for any other purposes (including the Kitchen) or in unusual quantities, Landlord may, at Tenant’s
expense, install a water meter or require Tenant to install the same. In addition, Landlord shall, at Tenant’s expense,
install a cooling tower “make up” meter to measure the make up water used in the operation of the Cooling Tower. Landlord
shall thereafter maintain the meters in good working order at Tenant’s expense and Tenant shall pay for water consumed as
shown on said meters as Additional Rent as and when bills are rendered at 105% of Landlord’s metered cost therefor. Tenant
shall pay the New York City sewer rents, charges or any other tax apportioned to Tenant’s metered consumption of water at
the Premises. The apportionment of the sewer rent to the Premises shall be made in accord with the measurement or apportionment
of water consumed at the Premises as provided herein. The sewer rents shall be billed with the water charges and shall constitute
Additional Rent. If Tenant shall default in making such payments, Landlord shall have all remedies available to it for the collection
of Fixed Rent hereunder. Tenant acknowledges that Landlord shall not be obligated to furnish water to the ground floor portion
of the Premises.
(F) (i) Landlord,
at Landlord’s expense, shall cause the 10th – 12th floors, excluding any portions thereof used
as security areas or use for the storage, preparation, service or consumption of food or beverages (including the Kitchen), if
any, to be cleaned on Business Days substantially in accordance with the cleaning specifications annexed to this Lease as Schedule
H. If, however, any additional cleaning of the Premises is to be done by Tenant, including to the ground floor portion of the
Premises and to the interior and exterior glass and metal of the storefront (in both cases, which shall be Tenant’s obligation),
it shall be done at Tenant’s sole expense, in a manner reasonably satisfactory to Landlord and no one other than persons
approved by Landlord shall be permitted to enter the Premises or the Building for such purpose or perform such cleaning, except
that Tenant may clean the Kitchen with its own employees. Tenant shall cause the exterior glass of the storefront to be cleaned
in such reasonable frequency consistent with other ground floor retail businesses visible from the street in the Hudson Square
area. Tenant shall pay to Landlord the reasonable cost of removal of any of Tenant’s refuse and rubbish from the Premises
and the Building (x) to the extent that the same, in any one day, exceeds the average daily amount of refuse and rubbish usually
attendant upon the use of such Premises as offices, as described and included in Landlord’s cleaning contract for the Building
or recommended by Landlord’s cleaning contractor, and (y) related to or deriving from the preparation or consumption
of food or drink. Bills for the same shall be rendered by Landlord to Tenant within thirty (30) days of the performance of such
services and shall be due and payable as Additional Rent within thirty (30) days after the time rendered. Tenant shall cause all
portions of the Premises used for the storage, preparation, service or consumption of food or beverages to be cleaned daily in
a manner reasonably satisfactory to Landlord, and to be treated against infestation by vermin, rodents or roaches, whenever there
is evidence of any infestation. Tenant shall not permit any person to enter the Premises or the Building for the purpose of providing
such extermination services, unless such persons have been approved by Landlord (which approval shall not be unreasonably withheld,
conditioned or delayed). Tenant acknowledges that Landlord shall not be obligated to provide cleaning service to the ground floor
portion of the Premises.
(ii) In
addition to the requirements of Section 28.1(F)(i), Tenant shall, at its sole cost and expense, comply with all Requirements
with respect to the recycling or sorting of refuse and rubbish, and, without limiting the generality of the foregoing, (a) shall
recycle spent products, including toner cartridges, copier drums and fluorescent tubes, and (b) shall provide facilities in
the Premises for separate storage and recycling of each of the following: (x) paper products and cardboard, (y) aluminum,
glass and plastic, and (z) food wastes and so-called “wet garbage”. Tenant shall, in Tenant’s discretion,
participate in Landlord-sponsored training programs regarding recycling. Landlord reserves the right to refuse to collect or accept
from Tenant any refuse or rubbish which is not separated and sorted as required and to require Tenant to arrange for such collection,
at Tenant’s sole cost and expense, using a contractor reasonably satisfactory to Landlord.
(G) If
any “sprinkler system” installed in the Building or any of its appurtenances are damaged or injured or not in proper
working order by reason of any act or omission of Tenant or of Persons Within Tenant’s Control, Tenant shall forthwith restore
the same to good working condition at Tenant’s expense; and if the New York Board of Fire Underwriters or the New York Insurance
Rating Organization or any Government Authority requires or recommends that any changes, modifications, alterations or additional
sprinkler heads or other equipment be made or supplied by reason of Tenant’s particular business (as distinguished from
the mere use of the Premises for offices), or the location of the partitions, trade fixtures, or other contents of the Premises,
Landlord shall, at Tenant’s expense, promptly make and supply such changes, modifications, alterations, additional sprinkler
heads or other equipment (pursuant to submission of necessary engineering plans and specifications for Landlord’s approval,
not to be unreasonably withheld, conditioned or delayed). Notwithstanding anything in this Lease to the contrary and for the avoidance
of doubt, Tenant shall not be responsible for repairing, or for paying the cost of repairing, any defects in the base Building
sprinkler system.
(H) Subject
to compliance with Schedule K, Tenant shall have access to the Premises twenty-four (24) hours per day seven (7) days
per week.
(I) Without
limiting the provisions of Schedule K, provide a security program with respect to ingress to and egress from the Building
and the common areas of the Building, which security program shall include equipment and personnel for twenty-four (24) hours per
day, seven (7) days per week electronic lobby access control, a lobby security guard station and visitor registration procedures.
(J) So
long as Landlord maintains a bicycle storage room in the Building for the general use of Building tenants, Tenant’s employees
may store their bicycles in such bicycle storage room on a “first come, first served” basis, in accordance with Landlord’s
rules and procedures with respect to such use applicable to all tenants in the Building generally.
Section 28.2. (A) Landlord
shall not be required to furnish freight elevator or heating services to the Premises during any Overtime Periods unless Landlord
has received advance notice from Tenant requesting such services, which notice must be given by 2:00 p.m. on the Business
Day for which such request shall be applicable or by 2:00 p.m. on the Business Day immediately preceding the non-Business
Day for which such services are needed by Tenant. If Tenant shall fail to give Landlord such advance notice, then Landlord shall
have no liability whatsoever to Tenant, for any annoyance or inconvenience, or any injury from interruption of Tenant’s business
or otherwise, for so failing to furnish any such services during such Overtime Periods. Tenant shall pay Landlord its then current
charges for such services during Overtime Periods as Additional Rent within thirty (30) days after presentation of a bill, and
in the event of default of payment therefor, Landlord shall have all remedies available to it for the collection of Fixed Rent.
Landlord’s Tenant Services Charges for 2014 are annexed to this Lease as Schedule O.
(B) Landlord
shall be entitled to refuse to furnish passenger or freight elevator service in connection with any sale at auction of Tenant’s
fixtures, machinery, stock in trade and other property or a sale in any other manner of all or substantially all of such property
unless Landlord shall have been given not less than two (2) days’ notice of the intention to hold the auction or other
sale and unless Landlord shall be given an undertaking by a person, firm or corporation of satisfactory financial resources wherein
Landlord shall be indemnified against (x) all reasonable expenses incurred by Landlord in connection with the removal by
purchasers of any property sold to them at the auction or other sale, (y) all expenses for removal or storage of any property
sold at the auction or other sale which is not removed by the purchaser within two (2) days following the sale, and (z) all
expenses which Landlord may incur for the removal of property not sold and waste and rubbish from the Premises.
Section 28.3. (A) Landlord
reserves the right to temporarily stop the furnishing of the Building services and to stop service of the Building Systems, when
necessary, by reason of accident, or emergency, or for Alterations in the reasonable judgment of Landlord is necessary to be made,
until said Alterations shall have been completed; and Landlord shall have no responsibility or liability for failure to supply
air-conditioning, ventilation, heat, elevator, plumbing, electric, or other services during said period or when prevented from
so doing by strikes (not caused solely by Landlord or its affiliates at the Building), lockouts (not caused solely by Landlord
or its affiliates at the Building), labor troubles (not caused solely by Landlord or its affiliates at the Building), difficulty
of obtaining materials, accidents or by any cause beyond Landlord’s reasonable control, or by Requirements or failure of
electricity, water, steam, coal, oil or other suitable fuel or power supply, or inability by exercise of commercially reasonable
diligence to obtain electricity, water, steam, coal, oil or other suitable fuel or power. Except as expressly provided in this
Lease, no diminution or abatement of rent or other compensation shall or will be claimed by Tenant as a result therefrom, nor shall
this Lease or any of the obligations of Tenant be affected or reduced by reason of such interruption, curtailment or suspension,
nor shall the same constitute an actual or constructive eviction. Without limiting events that may constitute “any cause
beyond Landlord’s reasonable control,” the following are items which Landlord and Tenant agree that, to the extent
not caused by any act or omission of Landlord or Indemnitees, are beyond Landlord’s reasonable control:
(i) Lack
of access to the Building or the Premises (which shall include, but not be limited to, the lack of access to the Building or the
Premises when it or they are structurally sound but inaccessible due to evacuation of the surrounding area or damage to nearby
structures or public areas);
(ii) Any
cause outside the Building;
(iii) Reduced
air quality or other contaminants within the Building that would adversely affect the Building or its occupants (including, but
not limited to, the presence of biological or other airborne agents within the Building or the Premises);
(iv) Disruption
of mail and deliveries to the Building or the Premises resulting from a casualty;
(v) Disruption
of telephone and telecommunications services to the Building or the Premises resulting from a casualty; or
(vi) Blockages
of any windows, doors, or walkways to the Building or the Premises resulting from a casualty.
(B) Notwithstanding
anything to the contrary contained in this Lease, if, without the fault or neglect of Tenant or any Persons Within Tenant’s
Control, the Premises or any portion thereof is rendered Unusable for a period of five (5) consecutive Business Days by reason
of any access to the Premises or repairs performed by Landlord as permitted under this Lease, stoppage or interruption of
(i) any Landlord’s services referred to in Section 28.1(A)-(D) above or (ii) electricity to the
Premises, due, in any case referred to in the preceding clauses (i) and (ii), to Landlord’s repair or failure to repair
any Building facilities and systems or electrical risers that Landlord is required under this Lease to repair, and for reasons
other than Unavoidable Delays and after Tenant shall have given Landlord notice (which notice may be oral or written) of said
event, then for the period commencing on the sixth (6th) consecutive Business Day that such portion of the Premises
is Unusable and Tenant shall have given Landlord notice of the same, Fixed Rent and Escalation Rent shall be appropriately abated
for so much of the Premises as shall be so Unusable. “Unusable” means that Tenant shall be unable to occupy,
and shall not be occupying, the Premises or the applicable portion thereof for the normal conduct of its business. Nothing contained
in this Section 28.3(B) shall be deemed to grant Tenant any rent abatement for an interruption or stoppage in
electricity to the Premises arising by reason of any cause emanating from outside the Building (including a failure by the electric
service provider to supply electricity to the Building). Further, nothing contained in this Section 28.3(B) is
intended to, or shall be deemed to, make any event described in or contemplated by Article 13, Article 14, Article 26
or Section 28.3(A)(i)-(vi) a failure of Landlord to provide any of Landlord’s services.
Section 28.4. Tenant
agrees to reasonably cooperate with Landlord, and to abide by all requirements which Landlord may reasonably prescribe generally
throughout the Building (at no material cost to Tenant), to ensure the most effective and energy-efficient operation of the Building,
and for the proper protection and functioning of its Building Systems and the furnishing of the Building services. Tenant further
agrees to reasonably cooperate with Landlord in any conservation effort pursuant to a program or procedure promulgated or recommended
by the public utility serving the Building, or ASHRAE or any Requirements.
Section 28.5. Other
than the cleaning of the bathrooms located in the Premises as required and set forth in Schedule H, Landlord shall have
no obligation to clean, repair, replace or maintain any “private” plumbing fixtures or facilities (i.e., plumbing
fixtures and facilities other than those that would be the common toilets in a multi-tenant floor) or the rooms in which they are
located.
Section 28.6. To
the extent Tenant installs the Kitchen, Tenant may utilize an existing gas line serving the Building but Landlord makes no representation
regarding the adequacy of such gas line for Tenant’s purposes nor shall Landlord have any obligation to furnish gas service
to Tenant, provided that Landlord shall cooperate with Tenant in any required relocation of such gas line if necessary. Tenant
shall arrange to purchase directly from the provider furnishing gas to the Building the gas required to be consumed in the Premises
for the operation of the Kitchen. Tenant shall pay all costs and expenses of obtaining gas directly from the provider furnishing
gas to the Building, including the cost to install a separate gas meter to measure Tenant’s consumption. Tenant shall pay
the bills rendered by such provider when due. Landlord shall reasonably cooperate without cost to Landlord in assisting Tenant
to obtain gas service. Landlord shall not be liable or responsible to Tenant for any loss or damage or expense that Tenant may
sustain or incur if either the quantity or character of gas is changed or is no longer available or suitable for Tenant’s
requirements except to the extent resulting from the negligence or willful misconduct of Landlord, its employees, agents or contractors.
Tenant agrees, at its own cost and expense, to keep the gas system serving the Kitchen in good working order during the Term,
including the repair and maintenance of the meters.
Section 28.7. Landlord
shall provide Tenant, at no cost to Tenant, non-exclusive access to a shaftway in the Building from the Building’s point
of entry for Tenant to install, at its sole cost and expense, conduits for the installation, removal, replacement, repair, maintenance
and operation therein, of Tenant’s telecommunications lines and cables, including the Communications Equipment and installations
related to any Generator, to the Premises. Such conduits and other installations shall be Alterations governed by the provisions
of Article 6. If Tenant desires to use a service provider of telecommunications and/or data services that is not then
providing service in the Building, such service provider shall be granted access to the Building, at Tenant’s sole cost and
expense, subject to (x) Landlord’s reasonable approval and (y) the execution by such service provider of Landlord’s
standard form of license agreement.
ARTICLE 29
PARTNERSHIP TENANT
Section 29.1. If
Tenant is a partnership, or is comprised of two (2) or more persons, individually or as co-partners of a partnership (any
such partnership and such persons are referred to in this Article 29 as “Partnership Tenant”), or
if Tenant’s interest in this Lease shall be assigned to a Partnership Tenant, the following provisions shall apply to such
Partnership Tenant: (a) each of the parties comprising Partnership Tenant hereby consents in advance to, and agrees to be
bound by (i) any written agreement that may hereafter be executed by Partnership Tenant or any successor entity, changing,
extending or discharging this Lease, in whole or in part, or surrendering all or any part of the Premises to Landlord, and (ii) any
Notices that may hereafter be given by Partnership Tenant or by any of the parties comprising Partnership Tenant; and (b) any
Notices given or rendered to Partnership Tenant or to any of such parties shall be binding upon Partnership Tenant and all such
parties.
ARTICLE 30
VAULT SPACE
Section 30.1. Notwithstanding
anything contained in this Lease or indicated on any sketch, blueprint or plan, any vaults, vault space or other space outside
the boundaries of the Real Property are not included in the Premises. Landlord makes no representation as to the location of the
boundaries of the Real Property. All vaults and vault space and all other space outside the boundaries of the Real Property which
Tenant may be permitted to use or occupy are to be used or occupied under a revocable license, and if any such license is revoked,
or if the amount of such space is diminished or required by any Government Authority or by any public utility company, such revocation,
diminution or requisition shall not constitute an actual or constructive eviction, in whole or in part, or entitle Tenant to any
abatement or diminution of Rental, or relieve Tenant from any of its obligations under this Lease, or impose any liability upon
Landlord. Any fee, tax or charge imposed by any Government Authority for any such vaults, vault space or other space occupied by
Tenant shall be paid by Tenant.
ARTICLE 31
SIGNS
Section 31.1. Tenant
shall have the right to maintain identifying signage on the entrance doors to the Premises and in the elevator lobby on each floor
of the Premises. Tenant may also install signage and banners in the windows in the ground floor portion of the Premises. Notwithstanding
the foregoing, the location, size, materials, quality, design, color and lettering of any signs desired by Tenant (whether or not
contemplated by the preceding sentence) shall be subject to the prior approval of Landlord (which shall not be unreasonably withheld)
and shall be in compliance with the standards set forth in the Building’s Rules and Regulations and Building Rules and
Regulations for Construction Work.
ARTICLE 32
BROKER
Section 32.1. Landlord
represents and warrants to Tenant that Landlord has not dealt with any broker, agent, finder or other Person in connection with
this Lease other than the Broker. Tenant represents and warrants to Landlord that Tenant has not dealt with any broker, agent,
finder or other Person in connection with this Lease other than the Broker. The execution and delivery of this Lease shall be conclusive
evidence that the parties have relied upon the foregoing representation and warranty. Landlord and Tenant shall indemnify and hold
harmless the other party from and against any and all claims for commission, fee or other compensation by any broker, agent, finder
or other Person (other than the Broker with respect to Tenant’s indemnity to Landlord) who claims to have dealt with the
indemnitor in connection with this Lease and for any and all costs incurred by the indemnitee in connection with such claims, including,
without limitation, attorneys’ fees and disbursements. Landlord shall pay the Broker its commission pursuant to separate
agreement. This provision shall survive the expiration or earlier termination of this Lease.
ARTICLE 33
INDEMNITY
Section 33.1. Tenant
shall not do or permit any act or thing to be done upon the Premises or the Real Property that may subject any Indemnitee to any
liability or responsibility for injury, damage to persons or property or to any liability by reason of the existence or application
of, compliance with or violation of any Requirement, but shall exercise such control over the Premises as to protect each Indemnitee
against any such liability and responsibility as provided hereunder. Tenant shall indemnify and save harmless the Indemnitees
to the extent provided hereunder from and against (a) all claims of whatever nature against the Indemnitees arising from
any act, omission or negligence of Tenant or Persons Within Tenant’s Control, (b) all claims against the Indemnitees
arising from any accident, injury or damage whatsoever caused to any person or to the property of any person and occurring in
or about the Premises (including the Terrace) during the Term or during Tenant’s occupancy of the Premises, unless and to
the extent caused by the act, omission or negligence of Landlord or its principals, officers and employees, (c) all claims
against the Indemnitees arising from any accident, injury or damage occurring outside of the Premises but anywhere within or about
the Real Property, where such accident, injury or damage results or is claimed to have resulted from an act, omission or negligence
of Tenant or Persons Within Tenant’s Control, and (d) any breach, violation or non-performance of any covenant, condition
or agreement contained in this Lease to be fulfilled, kept, observed and performed by Tenant. Landlord shall indemnify and save
harmless Tenant or Persons Within Tenant’s Control to the extent provided hereunder from and against (i) all claims
of whatever nature against the Tenant or Persons Within Tenant’s Control arising from any act, omission or negligence of
Indemnitees, (ii) all claims against the Tenant or Persons Within Tenant’s Control arising from any accident, injury
or damage occurring within or about the Real Property, where such accident, injury or damage results or is claimed to have resulted
from an act, omission or negligence of the Indemnitees, and (iii) any breach, violation or non-performance of any covenant,
condition or agreement contained in this Lease to be fulfilled, kept, observed and performed by Landlord. This indemnity and hold
harmless agreement shall include indemnity from and against any and all actual out of pocket liability, fines, suits, demands,
costs and expenses of any kind or nature (including, without limitation, reasonable attorneys’ fees and disbursements) incurred
in or in connection with any such claim or proceeding brought thereon, and the defense thereof, and all reasonable actual out
of pocket collection costs (including, without limitation, reasonable attorneys’ fees and disbursements) incurred by such
party in enforcing this indemnity provision against the other.
Section 33.2. If
any claim, action or proceeding is made or brought against any Indemnitee, Tenant or Persons within Tenant’s Control, against
which claim, action or proceeding the other party is obligated to indemnify pursuant to the terms of this Lease, then, upon demand
by the Indemnitee, Tenant or Persons within Tenant’s Control, such other party, at its sole cost and expense, shall resist
or defend such claim, action or proceeding in the Indemnitee’s, Tenant or Persons within Tenant’s Control’s name,
as the case may be, if necessary, by such attorneys as such applicable party may reasonably select, including, without limitation,
attorneys for such party’s insurer. The provisions of this Article 33 shall survive the expiration or earlier
termination of this Lease.
ARTICLE 34
ADJACENT EXCAVATION; SHORING
Section 34.1. If
an excavation shall be made upon land adjacent to the Building, or shall be authorized to be made, Tenant shall, upon reasonable
advance notice, afford to the person causing or authorized to cause such excavation, license to enter upon the Premises for the
purpose of doing such work as said person shall deem necessary to preserve the walls of the Building from injury or damage and
to support the same by proper foundations without any claim for eviction or constructive eviction, damages or indemnity against
Landlord, or diminution or abatement of Rental, provided that Tenant continues to have access to the Premises.
ARTICLE 35
SECURITY DEPOSIT
Section 35.1. Tenant
has deposited with Landlord on the signing of this Lease the Security Deposit by Letter of Credit (as defined and further described
in Section 35.2), as security for the faithful performance and observance by Tenant of the terms, provisions and conditions
of this Lease. Tenant agrees that in the event of the occurrence of an Event of Default, Landlord may draw the entire amount of
the Letter of Credit and use, apply or retain the whole or any part of such proceeds, to the extent required for the payment of
any Fixed Rent, Escalation Rent, or any other sum as to which Tenant is in default, or for any sum that Landlord may expend or
may be required to expend by reason of the default (including any damages or deficiency accrued before or after summary proceedings
or other re-entry by Landlord). If Landlord applies or retains any portion or all of the proceeds of the Letter of Credit, Tenant
shall forthwith restore the amount so applied or retained by delivering an additional or new Letter of Credit so that, at all times,
the amount of the Security Deposit shall be the amount set forth on the Reference Page. Provided there is no uncured default, any
balance of the proceeds of the Letter of Credit held by Landlord and not used, applied or retained by Landlord as above provided,
and any remaining Letter of Credit, shall be returned to Tenant after the Fixed Expiration Date and after delivery of possession
of the entire Premises to Landlord in accordance with the terms of this Lease.
Section 35.2. Tenant
shall deliver to Landlord a clean, irrevocable and unconditional letter of credit (such letter of credit, and any replacement thereof
as provided herein, is called a “Letter of Credit”) issued and drawn upon any commercial bank approved by Landlord
with offices for banking purposes in the City of New York (“Issuing Bank”), which Letter of Credit shall have
a term of not less than one year, be in form and content reasonably satisfactory to Landlord, be for the account of Landlord and
be in the amount of the Security Deposit set forth in the Reference Page. Landlord hereby approves Bank of America, N.A. as the
Issuing Bank as of the date of this Lease. The Issuing Bank shall have combined capital, surplus and undivided profits of at least
$500 million and a financial strength rating of at least “A” and a long-term rating of at least “Aa”, as
published by Moody’s Investors Services, Inc., or its successor (collectively, the “Issuing Bank Criteria”).
If at any time during the Term, the Issuing Bank does not maintain the Issuing Bank Criteria, then Landlord may so notify Tenant
and, unless Tenant delivers a replacement Letter of Credit from another bank meeting the Issuing Bank Criteria within 30 days after
receipt of such notice, Landlord may draw the full amount of the Letter of Credit and hold the proceeds as a cash security deposit
in accordance with all Laws. The Letter of Credit shall provide that:
(A) The
Issuing Bank shall pay to Landlord or its duly authorized representative an amount up to the face amount of the Letter of Credit
upon presentation of the Letter of Credit and a sight draft in the amount to be drawn;
(B) The
Letter of Credit shall be deemed to be automatically renewed, without amendment, for consecutive periods of one year each during
the Term, unless the Issuing Bank sends written notice (the “Non-Renewal Notice”) to Landlord by certified
or registered mail, return receipt requested, at least forty-five (45) days prior to the expiration date of the Letter of Credit,
to the effect that it elects not to have such Letter of Credit renewed;
(C) The
Letter of Credit delivered in respect of the last year of the Term shall have an expiration date of not earlier than sixty (60)
days after the Fixed Expiration Date; and
(D) The
Letter of Credit shall be transferable by Landlord as provided in Section 35.4.
Section 35.3. Landlord,
after receipt of the Non-Renewal Notice and Tenant’s failure to renew or replace the Letter of Credit within twenty (20)
days after Landlord’s receipt of the Non-Renewal Notice, shall have the right to draw the entire amount of the Letter of
Credit and to hold the proceeds as a cash Security Deposit. Landlord shall release such proceeds to Tenant upon delivery to Landlord
of a replacement Letter of Credit complying with the terms hereof.
Section 35.4. In
the event of the sale or lease of the Building or the Real Property, Landlord shall transfer the Security Deposit, without charge
for such transfer, to the purchaser or lessee, and Landlord shall thereupon be released by Tenant from all liability for the return
of such Security Deposit. In such event, Tenant agrees to look solely to the new Landlord for the return of said Security Deposit.
It is agreed that the provisions hereof shall apply to every transfer or assignment made of the Security Deposit to a new Landlord.
Tenant shall execute such documents as may be reasonably necessary to accomplish such transfer or assignment of the Letter of Credit.
Section 35.5. Tenant
covenants that it will not assign or encumber, or attempt to assign or encumber, the Security Deposit held hereunder, and that
neither Landlord nor its successors or assigns shall be bound by any such assignment, encumbrance, attempted assignment, or attempted
encumbrance. In the event that any bankruptcy, insolvency, reorganization or other debtor-creditor proceedings shall be instituted
by or against Tenant, its successors or assigns, or any guarantor of Tenant hereunder, the security shall be deemed to be applied
to the payment of the Fixed Rent and Additional Rent due Landlord for periods prior to the institution of such proceedings and
the balance, if any, may be retained by Landlord in partial satisfaction of Landlord’s damages.
Section 35.6. Provided
that no Event of Default shall have occurred and be continuing, the Security Deposit shall be reduced to (i) the amount of
$4,755,220 from and after the last day of the 43rd month following the Commencement Date, and (ii) $2,853,132 from
and after the last day of the 79th month following the Commencement Date. Such reductions shall be effected by (x) Tenant
exchanging a replacement Letter of Credit meeting the requirements of this Article 35 in the reduced amount for the
existing Letter of Credit, or (y) the Issuing Bank delivering an amendment to the Letter of Credit reducing the amount thereof
(but which does not otherwise amend or modify same), which Landlord shall promptly countersign or authorize in writing if required
by the Issuing Bank.
ARTICLE 36
RENT REGULATION
Section 36.1. If
at any time or times during the Term of this Lease, the Rental reserved in this Lease is not fully collectible by reason of any
Requirement, Tenant shall enter into such agreements and take such other steps (without additional expense to Tenant) as Landlord
may request and as may be legally permissible to permit Landlord to collect the maximum rents that may from time to time during
the continuance of such legal rent restriction be legally permissible (and not in excess of the amounts reserved under this Lease).
Upon the termination of such legal rent restriction (a) the Rental shall become and thereafter be payable hereunder in accordance
with the amounts reserved in this Lease for the remainder of the Term, and (b) Tenant shall pay to Landlord, if legally permissible,
an amount equal to (i) the items of Rental that would have been paid pursuant to this Lease but for such legal rent restriction
less (ii) the rents paid by Tenant to Landlord during the period or periods such legal rent restriction was in effect. This
provision shall survive the expiration or earlier termination of this Lease to the maximum enforceable extent.
ARTICLE 37
COVENANT OF QUIET ENJOYMENT
Section 37.1. Landlord
covenants that, upon Tenant paying the Fixed Rent and Additional Rent and observing and performing all the terms, agreements, covenants,
provisions and conditions of this Lease on Tenant’s part to be observed and performed, Tenant may peaceably and quietly enjoy
the Premises, subject nevertheless to the terms and conditions of this Lease, and provided, however, that no eviction of Tenant
by reason of the foreclosure of any Mortgage now or hereafter affecting the Premises or by reason of any termination of any Superior
Lease to which this Lease is subject and subordinate, whether such termination is effected by operation of law, by agreement or
otherwise, shall be construed as a breach of this covenant nor shall any action by reason thereof be brought against Landlord,
and provided further that this covenant shall bind and be enforceable against Landlord or any successor to Landlord’s interest,
subject to the terms hereof, only so long as Landlord or any successor to Landlord’s interest, is in possession and is collecting
rent from Tenant but not thereafter.
ARTICLE 38
LANDLORD’S WORK
Section 38.1. Landlord
shall diligently and continuously perform to completion Landlord’s work as described in Schedule L-1 (“Landlord’s
Pre-Delivery Work”) and Schedule L-2 (“Landlord’s Post-Delivery Work”), at its expense
(except as otherwise set forth in Schedule L-1 and Schedule L-2), in a good and workmanlike manner, using first-class
materials, and in accordance with all Requirements (Landlord’s Pre-Delivery Work and Landlord’s Post-Delivery Work,
collectively, “Landlord’s Work”).
Section 38.2. Landlord
shall perform Landlord’s Post-Delivery Work in conjunction with the performance by Tenant of the Initial Alterations for
the Premises and shall Substantially Complete Landlord’s Post-Delivery Work (other than the conversion of the two freight
elevators and the Terrace Elevator Work, collectively, the “Elevator Work”) no later than the date Tenant substantially
completes Tenant’s Initial Alterations, subject to extension by reason of a Tenant Delay. To the extent necessary, Tenant
shall afford Landlord access to the Premises at all reasonable times to perform Landlord’s Post-Delivery Work without the
same constituting a constructive eviction and with no abatement of Rental. Landlord shall perform Landlord’s Post-Delivery
Work diligently and continuously and Landlord and Tenant shall take commercially reasonable steps to coordinate the performance
of Landlord’s Post-Delivery Work and the performance by Tenant of the Initial Alterations so that neither party is delayed
in the completion of its work. Notwithstanding the foregoing, to the extent that Landlord’s Post-Delivery Work (other than
the Elevator Work) has not been Substantially Completed by the later of (x) the date that Tenant has completed its Initial
Alterations and (y) the date which is nine (9) months after the Commencement Date (such later date, as the same may be
extended by reason of Tenant Delay, “Landlord’s Post-Delivery Work Finish Date”), then Tenant, as its
sole and exclusive remedy for such delay, shall be entitled to an additional abatement of Fixed Rent equal to one day of Fixed
Rent for each day after Landlord’s Post-Delivery Work Finish Date that Landlord’s Post-Delivery Work (other than the
Elevator Work) has not been Substantially Completed. To the extent that the Elevator Work (other than the Terrace Elevator Work)
has not been Substantially Completed by the later of (a) the date that Tenant has completed its Initial Alterations, and (b) the
date which is twelve (12) months after the Commencement Date (such later date, as the same may be extended by reason of Tenant
Delay, “Landlord’s Elevator Work Outside Date”), then Tenant, as its sole and exclusive remedy (but not
in limitation of Tenant’s remedy with respect to Landlord’s failure to Substantially Complete Landlord’s Post-Delivery
Work (other than the Elevator Work) by Landlord’s Post-Delivery Work Finish Date) for such delay, shall be entitled to an
additional abatement of Fixed Rent equal to one (1) day of Fixed Rent for each day after Landlord’s Elevator Work Outside
Date that the Elevator Work (other than the Terrace Elevator Work) has not been Substantially Completed. In addition, if the Elevator
Work (other than the Terrace Elevator Work) is not Substantially Completed by the date that Tenant has completed its Initial Alterations,
Tenant, its employees and invitees, may use the passenger elevators in the Building to access the 10th-12th
floors of the Premises until the Elevator Work (other than the Terrace Elevator Work) is Substantially Completed.
ARTICLE 39
MISCELLANEOUS
Section 39.1. This
Lease is presented for signature by Tenant and it is understood that this Lease shall not constitute an offer by or be binding
upon Landlord unless and until Landlord shall have executed and delivered a fully executed copy of this Lease to Tenant. This
Lease may be executed in one or more counterparts, each of which shall be deemed an original, but all of which when taken together
will constitute one and the same instrument. The signature page of any counterpart of this Lease may be detached therefrom
without impairing the legal effect of the signature(s) thereon provided such signature page is attached to any other
counterpart of this Lease identical thereto except having an additional signature page executed by the other party to this
Lease attached thereto. Any counterpart of this Lease may be delivered via facsimile, email or other electronic transmission,
and shall be legally binding upon the parties hereto to the same extent as originals.
Section 39.2. The
obligations of Landlord under this Lease shall not be binding upon Landlord named herein after the sale, conveyance, assignment
or transfer by such Landlord (or upon any subsequent landlord after the sale, conveyance, assignment or transfer by such subsequent
landlord) of its interest in the Building or the Real Property, as the case may be, and in the event of any such sale, conveyance,
assignment or transfer, Landlord shall be and hereby is entirely freed and relieved of all covenants and obligations of Landlord
under this Lease thereafter arising, provided the transferee shall assume or be deemed to have assumed (either expressly or by
operation of law), subject to the remaining provisions of this Section 39.2, all obligations of the Landlord under
this Lease arising after the effective date of the transfer. No trustee, partner, shareholder, director, officer, employee, or
principal, direct or indirect, of Landlord (collectively, the “Parties”) shall have any direct or personal liability
for the performance of Landlord’s obligations under this Lease, and Tenant shall look solely to Landlord’s Equity (as
hereinafter defined) in the Real Property to enforce Landlord’s obligations hereunder and shall not otherwise seek any damages
against Landlord personally or any of the Parties whatsoever. “Landlord’s Equity” as used in the preceding
sentence, shall mean the interest of Landlord in and to the Real Property and any insurance proceeds or proceeds from the sale
of the Building. Tenant shall not look to any other property or assets of Landlord or any property or assets of any of the Parties
in seeking either to enforce Landlord’s obligations under this Lease or to satisfy a judgment for Landlord’s failure
to perform such obligations.
Section 39.3. Notwithstanding
anything contained in this Lease to the contrary, all amounts payable by Tenant to or on behalf of Landlord under this Lease, whether
or not expressly denominated Fixed Rent, Escalation Rent, Additional Rent or Rental, shall constitute rent for the purposes of
Section 502(b)(7) of the Bankruptcy Code.
Section 39.4. Neither
this Lease nor any memorandum of this Lease shall be recorded.
Section 39.5. Except
as otherwise expressly stated in this Lease, any consent or approval required to be obtained from Landlord may be granted by Landlord
in its sole discretion. In any instance in which Landlord agrees not to act unreasonably, Tenant hereby waives any claim for damages
against or liability of Landlord that Tenant may have based upon any assertion that Landlord has unreasonably withheld or unreasonably
delayed any consent or approval requested by Tenant, and Tenant agrees that its sole remedy shall be an action or proceeding to
enforce any related provision or for specific performance, injunction or declaratory judgment. If with respect to any required
consent or approval Landlord is required by the express provisions of this Lease not to unreasonably withhold or delay its consent
or approval, and if it is determined in any such proceeding referred to in the preceding sentence that Landlord acted unreasonably,
the requested consent or approval shall be deemed to have been granted; however, Landlord shall have no liability whatsoever to
Tenant for its refusal or failure to give such consent or approval. Tenant’s sole remedy for Landlord’s unreasonably
withholding or delaying consent or approval shall be as provided in this Section 39.5 and in Section 39.21.
Section 39.6.
(A) Tenant
represents and warrants that to its actual knowledge (a) Tenant is (i) not currently identified on the Specially Designated
Nationals and Blocked Persons List maintained by the Office of Foreign Assets Control, Department of the Treasury (“OFAC”)
and/or on any other similar list maintained by OFAC pursuant to any authorizing statute, executive order or regulation (collectively,
the “List”), and (ii) not a person or entity with whom a citizen of the United States is prohibited to
engage in transactions by any trade embargo, economic sanction, or other prohibition of United States Laws, regulation, or Executive
Order of the President of the United States, (b) none of the funds of Tenant have been derived from any unlawful activity
with the result that the investment in Tenant is prohibited by Laws or that this Lease is in violation of Laws, and (c) Tenant
has implemented procedures, and will consistently apply those procedures, to ensure that the foregoing representations and warranties
remain true and correct at all times. The term “Embargoed Person” means any person, entity or government subject
to trade restrictions under U.S. law, including but not limited to, the International Emergency Economic Powers Act, 50 U.S.C.
§1701 et seq., The Trading with the Enemy Act, 50 U.S.C. App. 1 et seq., and any Executive Orders or regulations
promulgated thereunder with the result that the investment in Tenant is prohibited by Laws or Tenant is in violation of Laws.
(B) Tenant
covenants and agrees (a) to comply with all Laws relating to money laundering, anti-terrorism, trade embargos and economic
sanctions, now or hereafter in effect, (b) to immediately notify Landlord in writing if any of the representations, warranties
or covenants set forth in this paragraph or the preceding paragraph are no longer true or have been breached or if Tenant has a
reasonable basis to believe that they no may no longer be true or have been breached, (c) not to use funds from any “Prohibited
Person” (as such term is defined in the September 24, 2001 Executive Order Blocking Property and Prohibiting Transactions
With Persons Who Commit, Threaten to Commit, or Support Terrorism) to make any payment due to Landlord under this Lease and (d) at
the request of Landlord, to provide such information as may be requested by Landlord to determine Tenant’s compliance with
the terms hereof.
(C) Tenant
hereby acknowledges and agrees that Tenant’s inclusion on the List at any time during the Term shall be a material default
of this Lease.
Section 39.7. This
Lease shall be construed without regard to any presumption or other rule requiring construction against the party causing
this Lease to be drafted. If any words or phrases in this Lease are stricken out or otherwise eliminated, whether or not any other
words or phrases have been added, this Lease shall be construed as if the words or phrases so stricken out or otherwise eliminated
were never included in this Lease and no implication or inference shall be drawn from the fact that such words or phrases were
stricken out or otherwise eliminated.
Section 39.8. Landlord
shall make available to Tenant in any directory maintained in the Building from time to time (the
“Directory”), Tenant’s Share of the total number of listings available, which listings may include
subtenants occupying the Premises in accordance with the terms hereof. The initial listing shall be without charge to Tenant.
From time to time, but not more frequently than once every six (6) months, Landlord shall revise any Directory then
maintained to reflect such changes in the listings therein as Tenant may request, and Tenant within thirty (30) days after
demand by Landlord shall pay to Landlord, as Additional Rent, Landlord’s administrative charge for each requested
revision.
Section 39.9. Notwithstanding
anything to the contrary contained herein, in no event shall Landlord, the Parties, Tenant or any partner, shareholder, director,
officer, employee or direct or indirect principal of Tenant, be liable for consequential or punitive damages under this Lease.
Section 39.10. If
any of the provisions of this Lease, or the application thereof to any person or circumstance, shall, to any extent, be invalid
or unenforceable, the remainder of this Lease, or the application of such provisions to persons or circumstances other than those
as to whom or which it is held invalid or unenforceable, shall not be affected thereby and shall remain valid and enforceable,
and every provision of this Lease shall be valid and enforceable to the fullest extent permitted by law.
Section 39.11. Landlord
shall have the right to erect any gate, chain or other obstruction or to close off any portion of the Real Property to the public
at any time to the extent necessary to prevent a dedication thereof for public use.
Section 39.12. Tenant
hereby represents to Landlord that it is not entitled, directly or indirectly, to diplomatic or sovereign immunity and Tenant agrees
that in all disputes arising directly or indirectly out of this Lease Tenant shall be subject to service of process in, and the
jurisdiction of the courts of, the State of New York. The provisions of this Section 39.12 shall survive the expiration
of this Lease.
Section 39.13. This
Lease contains the entire agreement between the parties and all prior negotiations and agreements are merged into this Lease. This
Lease may not be changed, abandoned or discharged, in whole or in part, nor may any of its provisions be waived except by a written
agreement that (a) expressly refers to this Lease, (b) is executed by the party against whom enforcement of the change,
abandonment, discharge or waiver is sought and (c) is permissible under the Mortgage(s) and the Superior Lease(s).
Section 39.14. Any
apportionment or prorations of Rental to be made under this Lease shall be computed on the basis of a three hundred sixty (360)
day year, with twelve (12) months of thirty (30) days each.
Section 39.15. This
Lease shall be governed by the laws of the State of New York without regard to conflict of laws principles.
Section 39.16. If
Tenant is a corporation or a limited liability company or a limited liability partnership, each person executing this Lease on
behalf of Tenant hereby covenants, represents and warrants that Tenant is a duly incorporated or duly qualified (if foreign) and
is authorized to do business in the State of New York (a copy of evidence thereof to be supplied to Landlord upon request); and
that each person executing this Lease on behalf of Tenant is an officer or member or partner of Tenant and that he or she is duly
authorized to execute, acknowledge and deliver this Lease to Landlord (a copy of a resolution to that effect to be supplied to
Landlord upon request).
If Landlord is a corporation or a limited
liability company or a limited liability partnership, each person executing this Lease on behalf of Landlord hereby covenants,
represents and warrants that Landlord is a duly incorporated or duly qualified (if foreign) and is authorized to do business in
the State of New York; and that each person executing this Lease on behalf of Landlord is an officer or member or partner of Landlord
and that he or she is duly authorized to execute, acknowledge and deliver this Lease to Tenant.
Section 39.17. The
captions are inserted only as a matter of convenience and for reference and in no way define, limit or describe the scope of this
Lease nor the intent of any provision thereof.
Section 39.18. The
covenants, conditions and agreements contained in this Lease shall bind and inure to the benefit of Landlord and Tenant and their
respective legal representatives, successors, and, except as otherwise provided in this Lease, their assigns.
Section 39.19. From
and after the date of this Lease, Tenant and Persons Within Tenant’s Control shall maintain the terms and conditions of this
Lease confidential and, without Landlord’s prior written consent, shall neither discuss nor disclose the terms and conditions
of this Lease with any tenant or occupant of the Building or with any other person, other than (i) the Broker, (ii) the
attorneys who are representing Tenant in connection with this Lease, (iii) Tenant’s accountants, agents (including any
other brokers) and consultants and (iv) any proposed subtenant of the Premises or assignee of this Lease and only if and to
the extent such other parties listed in clauses (i) to (iv) inclusive are informed by Tenant of the confidential nature
of this Lease and shall agree to act in accordance with the provisions of this section, or (v) if required to do so to enforce
the terms of this Lease, or as may otherwise be required to be disclosed by law or judicial process; provided that, if Tenant is
required or requested by legal process to disclose the terms and conditions of this Lease, Tenant shall provide Landlord with prompt
notice of such requirement or request and unless Landlord waives the confidentiality requirements of this Lease, Tenant shall reasonably
cooperate with Landlord in obtaining an appropriate protective order regarding such disclosure. Tenant acknowledges that a breach
or threatened breach of this section will cause irreparable injury and damage to Landlord, and, therefore, agrees that, in addition
to any other remedies that may be available to Landlord, Landlord shall be entitled to an injunction and/or other equitable relief
(without the requirement of posting a bond or other security) as a remedy for a breach or threatened breach of this section and
to secure its enforcement.
Section 39.20. For
the purposes of this Lease and all agreements supplemental to this Lease, unless the context otherwise requires:
(A) The
words “herein”, “hereof’, “hereunder” and “hereby” and words of similar import
shall be construed to refer to this Lease as a whole and not to any particular Article or Section unless expressly so
stated.
(B) Tenant’s
obligations hereunder shall be construed in every instance as conditions as well as covenants, each separate and independent of
any other terms of this Lease.
(C) Reference
to Landlord as having “no liability” or being “without liability” shall mean, except as otherwise expressly
provided in this Lease, that Tenant shall not be entitled to terminate this Lease, or to claim actual or constructive eviction,
partial or total, or to receive any abatement or diminution of rent, or to be relieved in any manner of any of its other obligations
hereunder, or to be compensated for loss or injury suffered or to enforce any other right or liability whatsoever against Landlord
under or with respect to this Lease or with respect to Tenant’s use or occupancy of the Premises.
(D) Reference
to “termination of this Lease” or “expiration of this Lease” and words of like import includes expiration
or sooner termination of this Lease and the Term and the estate hereby granted or cancellation of this Lease pursuant to any of
the provisions of this Lease or to law. Upon the termination of this Lease, the Term and estate granted by this Lease shall end
at midnight on the date of termination as if such date were the Fixed Expiration Date, and neither party shall have any further
obligation or liability to the other after such termination except (i) as shall be expressly provided for in this Lease, and
(ii) for such obligations as by their nature under the circumstances can only be, or by the provisions of this Lease, may
be, performed after such termination, and, in any event, unless expressly otherwise provided in this Lease, any liability for a
payment (which shall be apportioned as of such termination) which shall have accrued to or with respect to any period ending at
the time of termination shall survive the termination of this Lease.
(E) Words
and phrases used in the singular shall be deemed to include the plural and vice versa, and nouns and pronouns used in any particular
gender shall be deemed to include any other gender.
(F) The
rule of “ejusdem generis” shall not be applicable to limit a general statement following or referable to an enumeration
of specific matters to matters similar to the matters specifically mentioned.
Section 39.21. If
Tenant desires to determine any dispute between Landlord and Tenant as to the reasonableness of Landlord’s decision to
refuse to consent to any Alterations in accordance with the provisions of Article 6 or to any subletting or
assignment in accordance with the provisions of Article 15, such dispute shall be settled and finally determined
by arbitration in The City of New York in accordance with the following provisions of this Section. Within ten
(10) Business Days following the giving of any notice by one party to the other stating that it wishes such dispute to
be so determined, Landlord and Tenant shall each give notice to the other setting forth the name and address of an arbitrator
designated by the party giving such notice. If either party shall fail to give notice of such designation within said ten
(10) Business Days, then the arbitrator chosen by the other side shall make the determination alone. The two arbitrators
shall designate a third arbitrator. If the two arbitrators shall fail to agree upon the designation of a third arbitrator
within five (5) Business Days after the designation of the second arbitrator, then either party may apply to the Supreme
Court of the State of New York or to any other court having jurisdiction, for the designation of such arbitrator. All
arbitrators shall be persons who shall have had at least ten (10) years of continuous experience in the business of
owning or managing real estate in the Borough of Manhattan, The City of New York. The three arbitrators shall conduct such
hearings as they deem appropriate, making their determination in writing and giving notice to Landlord and Tenant of their
determination as soon as practicable, and if possible, within five (5) Business Days after the designation of the third
arbitrator; the concurrence of any two of said arbitrators shall be binding upon Landlord and Tenant, or, in the event no two
of the arbitrators shall render a concurrent determination, then the determination of the third arbitrator designated shall
be binding upon Landlord and Tenant. Judgment upon any award rendered in any arbitration held pursuant to this
Section shall be final and binding upon Landlord and Tenant, whether or not a judgment shall be entered in any court.
Each party shall pay its own counsel fees and expenses, if any, in connection with any arbitration under this Section,
including the expenses and fees of any arbitrator selected by it in accordance with the provisions of this Section, and the
parties shall share all other expenses and fees of any such arbitration. The arbitrators shall be bound by the provisions of
this Lease, and shall not add to, subtract from or otherwise modify such provisions.
ARTICLE 40
INTENTIONALLY OMITTED
ARTICLE 41
TERRACE
Section 41.1. (A) So
long as such use is in compliance with all Laws, subject to Landlord’s rights of access under this Lease, Tenant shall have
exclusive use of an area determined by Tenant within the portion of the roof above the twelfth (12th) floor of the Building
delineated in Schedule D annexed hereto (the “Terrace”). The Terrace shall not be included in the rentable
square footage of the Premises and the Fixed Rent and Escalation Rent shall include Tenant’s use and occupancy of the Terrace,
provided that Tenant shall not be entitled to an abatement of, or credit against, Fixed Rent for any condition affecting the Terrace
(such as, by way of an example, a casualty to the Terrace) in addition to any such abatement or credit to which Tenant shall otherwise
be entitled with respect to the Premises.
(B) Tenant’s
design of any improvements it wishes to install on the Terrace shall be subject to the approval of Landlord pursuant to the provisions
of Article 6 of this Lease (including the submission of plans and specifications depicting such design if such improvements
are of a nature as to require such submission of plans and specifications pursuant to the terms and conditions of this Lease).
At the time Landlord approves Tenant’s plans and specifications for Tenant’s proposed improvements to the Terrace,
at Tenant’s request, Landlord shall advise Tenant whether Landlord will require Tenant to remove such improvements at the
end of the Term (it being understood that Tenant shall not be obligated to remove the Terrace itself). Notwithstanding anything
to the contrary contained in Section 6.1(C)(1), to the extent Tenant installs its Supplemental A/C System, Communications
Equipment, Generator or Cooling Tower on the Terrace, Tenant shall be obligated to remove such installations at the end of the
Term without further notice from Landlord. Tenant shall remove all of such improvements specified by Landlord and shall repair
any damage to the Terrace and the Building caused by such removal, and restore the surface of the Terrace to its condition immediately
preceding the installation of such improvements.
(C) Prior
to Tenant’s use of the Terrace, Tenant shall, at Tenant’s sole cost and expense (and in compliance with all applicable
Laws), (i) place barriers and fences around the perimeter of the Terrace, the design, weight and location of which shall be
subject to Landlord’s reasonable approval pursuant to the provisions of Article 6 of this Lease, (ii) install
new pavers on the Terrace and (iii) ensure that all access doors and ramps (if any) to the Terrace are in good working order
and compliant with applicable Laws, including the ADA. Until such time as the foregoing improvements are completed, Tenant may
not use the Terrace. In addition, at any time during the Term of this Lease, Tenant may place planters and other personal property
on the Terrace, provided that (a) such property does not require structural reinforcement and is not heavier than the roofing
system or structural slab that the Terrace was designed to hold (unless Tenant, at its expense, installs such structural reinforcement
after first having obtained Landlord’s consent, not to be unreasonably withheld, conditioned or delayed) and (b) the
weight and location of such planters and other personal property shall have been approved by Landlord, which approval shall not
be unreasonably withheld, conditioned or delayed. To the extent that Tenant’s use of, or installations on the Terrace, is
the sole and direct cause of any water damage to the roof, Tenant, at its reasonable expense, shall replace the waterproofing membrane,
including any ancillary work necessary to provide a comprehensive waterproofing system in the affected area of the roof, all in
accordance with Article 6 of this Lease.
(D) Landlord,
at Tenant’s sole cost and expense, shall relocate any Building equipment located in the area depicted on Schedule D.
Landlord reserves the right to place and maintain equipment on the rest of the roof area when necessary for the proper operation
of the Building, provided that such equipment shall not generate a noise level that will adversely affect Tenant’s use of
the Terrace (except to a de minimis extent).
Section 41.2. Except
as set forth below, Landlord shall extend one of the Exclusive Elevators so that it services the Terrace (the
“Terrace Elevator Work”). The performance of Landlord’s Terrace Elevator Work shall be part of
Landlord’s Post-Delivery Work. Landlord shall furnish Tenant with copies of the bidding documents of each of the
general contractors submitting a bid to perform the Terrace Elevator Work, including a breakdown of all trades and itemized
costs per trade. Tenant shall have ten (10) Business Days after receipt of the bids to notify Landlord whether or not
Tenant elects to have Landlord perform the Terrace Elevator Work. If Tenant notifies Landlord that it does not wish Landlord
to perform the Terrace Elevator Work or fails to give such notice within such ten (10) Business Day period, then, in
either case, Landlord shall not be obligated to perform the Terrace Elevator Work. If Tenant approves the Terrace Elevator
Work by giving Landlord notice thereof within such ten (10) Business Day period, then Landlord shall select the lowest
responsible bid and shall perform the Terrace Elevator Work. If Tenant either notifies Landlord not to perform the Terrace
Elevator Work or fails to notify Landlord within such ten (10) Business Day period, and Tenant constructs the Terrace,
then Tenant, at its expense and in accordance with the provisions of Article 6, shall install an ADA-compliant
lift and internal staircase to access the Terrace. All of Landlord’s hard and soft construction costs associated with
the Terrace Elevator Work shall be deducted from the Tenant Improvement Allowance up to the amount of the approved bid.
Except in an emergency, Tenant shall not permit its employees, contractors or invitees to access the Terrace through the
Building fire stairs, except that Landlord shall designate one fire stair for the convenience use by Tenant and its employees
and invitees to use for access to the Terrace on a revocable basis. To the extent that Landlord determines that
Tenant’s employees or invitees are abusing the convenience use of such fire stair due to improper behavior, excessive
noise, smoking, causing physical damage or creating any unsafe condition, Landlord may revoke Tenant’s right to use
such fire stair and Tenant shall immediately cause its employees and invitees to cease such convenience use.
ARTICLE 42
OPTION TO RENEW
Section 42.1. (A) Provided
that both at the time of the exercise of the Renewal Option (as hereinafter defined) and at the time of the commencement of the
Renewal Term: (i) this Lease shall be in full force and effect; (ii) there shall not then be existing an Event of Default
under this Lease; and (iii) Tenant or a Permitted Transferee shall be in physical occupancy of at least 95% of the rentable
area of the Premises, Tenant shall have one (1) option to extend the Term of this Lease (the “Renewal Option”),
for the Renewal Term, on the terms of this Lease (except as set forth below). The Renewal Option shall be exercisable by written
notice (the “Renewal Notice”) to Landlord given not earlier than two years (2), nor later than fifteen (15)
months (time being of the essence), prior to the Fixed Expiration Date. Notwithstanding the first sentence of this Section 42.1,
Landlord, in its sole discretion, may waive any default by Tenant or occupancy requirement and no such default or occupancy requirement
may be used by Tenant to negate the effectiveness of Tenant’s exercise of the Renewal Option.
(B) The
Renewal Term shall constitute an extension of the Term of this Lease and shall be upon all of the same terms and conditions as
the existing Term, except that, (i) during the Renewal Term there shall be no further option to renew the Term of this Lease
unless otherwise agreed between the parties, (ii) Landlord shall not be required to furnish any materials or perform any work
to prepare the Premises for Tenant’s continued occupancy during the Renewal Term and Landlord shall not be required to reimburse
Tenant for any Alterations made or to be made by Tenant during or in preparation for the Renewal Term unless otherwise agreed between
the parties and (iii) the Fixed Rent for the first year of the Renewal Term shall be payable at a rate per annum equal to
the Fair Rental Value of the Premises as of the first day of the Renewal Term, and shall continue to increase on each anniversary
thereof to 102% of the Fixed Rent pursuant to Section 3.5 of this Lease (which annual percentage increases shall be
deemed a relevant factor in determining Fair Rental Value in any arbitration thereof).
Section 42.2. If
Tenant has given the Renewal Notice in accordance with Section 42.1, the parties shall endeavor to agree upon the Fair
Rental Value of the Premises, as of the commencement date of the Renewal Term. In the event that the parties are unable to agree
upon the Fair Rental Value for the Renewal Term within six (6) months prior to the first day of the Renewal Term, then the
same shall be determined as follows: Landlord and Tenant shall arrange to simultaneously exchange, in sealed envelopes (i) Landlord’s
determination of the Fair Rental Value of the Premises for the Renewal Term (“Landlord’s Determination”)
and (ii) Tenant’s determination of the Fair Rental Value of the Premises for the Renewal Term (“Tenant’s
Determination”).
Section 42.3. If
Landlord’s Determination and Tenant’s Determination are different, and Landlord and Tenant fail to agree as to the
amount thereof within thirty (30) days after the exchange of such determinations, then the dispute shall be resolved by arbitration
as set forth in this Section 42.3. If the dispute shall not have been resolved on or before the first day of the Renewal
Term, then pending such resolution, Tenant shall pay, as Fixed Rent for the Renewal Term, an amount equal to the average of Landlord’s
Determination and Tenant’s Determination. Within thirty (30) days after the final determination of Fair Rental Value for
the Renewal Term, Landlord and Tenant shall reconcile any overpayment or underpayment of Fixed Rent previously paid by Tenant for
the Renewal Term. Any dispute as to Fair Rental Value shall be determined as follows: A senior officer of a recognized New York
City leasing brokerage firm (the “Baseball Arbitrator”) shall be selected and paid for jointly by Landlord and
Tenant. If Landlord and Tenant are unable to agree upon the Baseball Arbitrator, then the same shall be designated by the American
Arbitration Association (“AAA”). The Baseball Arbitrator selected by the parties or designated by the AAA shall
not have been employed by Landlord or Tenant during the previous five (5) year period and shall have at least ten (10) years’
experience in the leasing of Premises in the immediate vicinity of the Building, comparable in size, location and quality to the
Premises. The Baseball Arbitrator shall determine which of the two (2) rent determinations, either Landlord’s Determination
or Tenant’s Determination, more closely represents the Fair Rental Value for the Renewal Term, taking into account all relevant
factors, whether favorable to Landlord or Tenant. The Baseball Arbitrator may not select any other rental value for the Renewal
Term other than Landlord’s Determination or Tenant’s Determination. The determination of the Baseball Arbitrator shall
be final and binding upon Landlord and Tenant and shall serve as the basis for the Fixed Rent payable for the Renewal Term and
Landlord and Tenant each consents to the entry of judgment in any court having jurisdiction based upon such determination. After
a determination has been made of the Fair Rental Value, the parties shall execute and deliver an instrument setting forth the Fixed
Rent for the Renewal Term, but the failure to so execute and deliver any such instrument shall not affect the determination of
such Fixed Rent in accordance with this Article 42.
ARTICLE 43
RIGHT OF FIRST OFFER
Section 43.1. As
used herein:
(A) “Available”
means, as to the Offer Space (as hereinafter defined), that such space is vacant and free of any present or future possessory right
now existing in favor of any third party. Notwithstanding the foregoing, such space shall not be deemed Available and Landlord
shall not be obligated to notify Tenant of the Availability of such space (i) until such space shall have been leased after
the date of this Lease or (ii) if Landlord is negotiating an extension of a lease or a new direct lease with an existing tenant
of such space, and Landlord shall be free to enter into any such extension of lease or new direct lease.
(B) “Offer
Space” means any space on the fourth (4th) or fifth (5th) floors of the Building.
Section 43.2. (A) Provided
that (i) this Lease shall be in full force and effect, (ii) there shall not then be existing an Event of Default under
this Lease, and (iii) Tenant or a Permitted Transferee shall occupy at least ninety-five percent (95%) of the rentable area
of the Premises, if any Offer Space becomes, or Landlord reasonably anticipates that within six (6) months any Offer Space
will become, Available, Landlord shall give to Tenant notice (an “Offer Notice”) thereof, specifying (a) a
description and the rentable square footage of the Offer Space, (b) Landlord’s determination of the Fair Rental Value
of the Offer Space, which shall constitute the maximum thereof Landlord can claim as the Fair Rental Value for such space in any
arbitration thereof (“Landlord’s Maximum Offer Determination”), (c) the date or estimated date that
such Offer Space has or shall become Available (the “Anticipated Inclusion Date”), and (d) any other relevant
economic and material terms.
(B) Provided
that on the date that Tenant exercises the Offer Space Option (as hereinafter defined) and on the Offer Space Inclusion Date (as
hereinafter defined) the conditions described in clauses (i) through (iii) of Section 43.2(A) continue
to be satisfied, Tenant shall have one (1) option (the “Offer Space Option”), exercisable by notice (an
“Acceptance Notice”) given to Landlord on or before the date that is ten (10) Business Days after the giving
of the Offer Notice (time being of the essence) to include the Offer Space specified in the Offer Notice in the Premises for a
term ending on the Fixed Expiration Date, as same may be extended pursuant to Article 42 hereof; provided however,
that if, as of the Offer Space Inclusion Date (as hereinafter defined), there are fewer than seven (7) full years left in
the original Term, then the Term of this Lease for the Offer Space shall be ten (10) years and the Term of this Lease for
the original Premises shall be extended so that it is coterminous, without affecting the Renewal Option under Article 42,
which shall be deferred until the extended Fixed Expiration Date (the extended Term of the Lease for the original Premises by reason
of this Section 43.2(B), the “Interim Extended Term”). Tenant shall notify Landlord in the Acceptance
Notice whether Tenant accepts or disputes Landlord’s Maximum Offer Determination (if applicable), and if Tenant disputes
Landlord’s Maximum Offer Determination, the Acceptance Notice shall set forth Tenant’s good faith determination of
the Fair Rental Value for such Offer Space (and for the original Premises for the Interim Extended Term), which shall constitute
the minimum that Tenant can claim as the Fair Rental Value for all of such space in any arbitration thereof (“Tenant’s
Minimum Offer Determination”). If Tenant fails to object to Landlord’s Maximum Offer Determination in the Acceptance
Notice and to set forth therein Tenant’s Minimum Offer Determination, then Tenant shall be deemed to have rejected Landlord’s
Maximum Offer Determination as the Fair Rental Value for such Offer Space. For the avoidance of doubt, in no event shall the Fixed
Rent for the original Premises for the Interim Extended Term be lower than the Fixed Rent and the Operating Expense Payment payable
for the original Premises for the last year of the original Term.
Section 43.3. If
Tenant timely delivers the Acceptance Notice, then, on the date on which Landlord delivers vacant and broom-clean possession
of the Offer Space to Tenant in compliance with applicable Requirements and free of violations of Laws that would prevent
Tenant from obtaining a building permit for its Alterations therein (the “Offer Space Inclusion Date”),
the Offer Space shall become part of the Premises, upon all of the terms and conditions set forth in this Lease, except
(i) the Fixed Rent for the Offer Space shall be as set forth above, (ii) Tenant’s Share shall be increased to
reflect Tenant’s lease of the Offer Space, (iii) unless otherwise specified by Landlord in the Offer Notice or in
this Section 43.3, Landlord shall not be required to perform any Landlord’s work or any other work, pay a
Landlord’s contribution or a work allowance or any other amount, or render any services to make the Building or the
Offer Space ready for Tenant’s use or occupancy, and Tenant shall accept the Offer Space vacant, free of any possessory
interest thereon, broom clean and otherwise in its “as is” condition as of the date of the Offer Notice (except
as set forth above), reasonable wear and tear excepted; and (iv) as may be otherwise set forth in the Offer Notice. In
addition, Tenant shall deliver to Landlord, on or before the Offer Space Inclusion Date, an additional Letter of Credit
meeting the requirements of Article 35 equal to the amount of Fixed Rent payable for the Offer Space multiplied
by the number of months of Fixed Rent then held by Landlord under Section 35.6 of this Lease as the Security
Deposit. Tenant, at its expense, shall also be obligated to perform all work associated with creating access to the Offer
Space through the Exclusive Elevators, to segregate the common corridor on any multi-tenanted floor and, if the Offer Space
shall be comprised of the entire fourth (4th) and/or fifth (5th) floors, to pin and enclose the
passenger elevators on such floors. All of such work shall be Alterations and shall be performed in accordance with the
provisions of Article 6 of this Lease and Landlord shall cooperate with Tenant in the performance of same.
Section 43.4. If
in the Acceptance Notice Tenant disputes Landlord’s determination of Fair Rental Value, and Landlord and Tenant fail to agree
as to the amount thereof within thirty (30) days after the giving of the Acceptance Notice, then the dispute shall be resolved
by arbitration as set forth in Article 42, except that Landlord and Tenant may each submit to the arbitrator a rent
determination that is different than Landlord’s Maximum Offer Determination or Tenant’s Minimum Offer Determination.
If the dispute shall not have been resolved on or before the Offer Space Inclusion Date, then pending such resolution, Tenant shall
pay, as Fixed Rent for the Offer Space, an amount equal to the average of Landlord’s Maximum Offer Determination and Tenant’s
Minimum Offer Determination. Within thirty (30) days after the final determination of Fair Rental Value, Landlord and Tenant shall
reconcile any overpayment or underpayment of Fixed Rent previously paid for the Offer Space.
Section 43.5. If
Landlord is unable to deliver possession of the Offer Space to Tenant for any reason on or before the Anticipated Inclusion Date,
the Offer Space Inclusion Date shall be the date on which Landlord is able to so deliver possession and Landlord shall have no
liability to Tenant therefor and this Lease shall not in any way be impaired. If an existing tenant of the Offer Space holds over,
Landlord shall use commercially reasonable efforts, which may include the commencement of an eviction action against such holdover
tenant, if such action is determined by Landlord to be commercially reasonable in the circumstances, to obtain possession of the
Offer Space. This Section 43.5 constitutes an “express provision to the contrary” within the meaning of
Section 223-a of the New York Real Property Law and any other law of like import now or hereafter in effect. Notwithstanding
anything to the contrary contained herein, in the event Landlord shall not have delivered the Offer Space in accordance with this
Lease on or before the date that is 180 days after the Anticipated Inclusion Date, Tenant shall have the right to rescind without
penalty the exercise of Tenant’s Offer Notice or terminate any amendment relating to inclusion of the Offer Space.
Section 43.6. If,
after receiving an Offer Notice as set forth above, Tenant fails timely to give an Acceptance Notice, then (i) Landlord
may enter into one or more leases of all or any part of such Offer Space with third parties on such terms and conditions as
Landlord shall determine, the Offer Space Option with respect to such Offer Space shall be null and void and of no further
force and effect and Landlord shall have no further obligation to offer such portion of the Offer Space to Tenant, and
(ii) Tenant shall, as soon as reasonably practicable after demand by Landlord, execute an instrument reasonably
satisfactory to Landlord and Tenant confirming Tenant’s waiver of, and extinguishing, the Offer Space Option contained
in this Article 43 with respect to such Offer Space.
Section 43.7. Promptly
after the occurrence of the Offer Space Inclusion Date, Landlord and Tenant shall confirm the occurrence thereof and the inclusion
of the Offer Space (and, if applicable, the extension of the Term with respect to the original premises) in the Premises by executing
an instrument reasonably satisfactory to Landlord and Tenant; provided, that failure by Landlord or Tenant to execute such instrument
shall not affect the inclusion of the Offer Space in the Premises in accordance with this Article 43.
ARTICLE 44
COMMUNICATIONS EQUIPMENT; GENERATOR
Section 44.1. Subject
to the applicable provisions of Article 6 and Article 41, Tenant shall have the right, at no additional
cost, to install a satellite dish and associated equipment (collectively, the “Communications Equipment”) on
the Terrace. The specifications for the Communications Equipment, the precise location on the Terrace and the method of attachment
shall all be subject to Landlord’s reasonable approval. Landlord hereby grants to Tenant the right to connect such equipment
in accordance with Section 28.7.
Section 44.2. Subject
to the applicable provisions of Article 6 and Article 41, Tenant shall have the further right to install
an emergency electric generator and associated fuel tank (“Generator”) as follows. In connection therewith,
Tenant may, without additional charge, install the Generator on the Terrace together with all ancillary equipment, mountings, piping,
duct work, venting, conduit, wiring and support, including, without limitation, the emergency electric riser and emergency fuel
pumps, in accordance with Section 28.7, as shall be reasonably necessary for the operation thereof. Landlord agrees
to reasonably cooperate with Tenant in any applications for any necessary license or permits provided Landlord incurs no expense
or liability in so doing.
Section 44.3. The
installation, operation and maintenance of the Communications Equipment and Generator, if any are installed, shall be at Tenant’s
expense. In connection therewith, Landlord shall provide Tenant and or its vendors, service providers and repairmen, including
but not limited to local exchange telecommunications companies and alternative access vendor service companies, with the right
of access to, from and within the Building for the installation and operation of any Communications Equipment and Generator to,
from and within the Building and the Premises in accordance with Section 28.7 and Landlord’s reasonable rules and
regulations with respect to security and access.
ARTICLE 45
CONDENSER WATER SYSTEM
Section 45.1. Tenant
shall design, permit, procure, install and commission, at Tenant’s cost and expense (subject to Section 6.8 hereof),
Tenant’s AC System (as hereinafter defined), which shall provide cooling to the 10th – 12th floors
of the Premises. Tenant shall also install, at Tenant’s cost and expense (subject to Section 6.8 hereof), the
risers to bring the condenser water from the cooling tower open loop system to the 10th – 12th floors
of the Premises for use in the operation of the AC Units on such floors. Tenant shall also install a standalone BACnet Protocol
based BMS front-end computer to be operated by Tenant’s staff. For the purposes of this Article 45, the term
“Tenant’s AC System” shall mean (i) the cooling tower to be installed on the Terrace of the Building
in a location approved by Landlord, the air handlers and the water cooled condensers, the specifications for all of the foregoing
to be approved by Landlord in accordance with Article 6, (ii) the cooling tower risers, (iii) a filtration
system, (iv) a chemical water treatment system, (v) associated dunnage, (vi) any structural improvements or reinforcements
that may be required for the safe and proper installation of any such equipment, and (vii) any associated improvements or
equipment that may be necessary for the proper installation and operation of any such equipment. For the avoidance of doubt, the
capacity of Tenant’s AC System shall be at least 230 tons.
IN WITNESS WHEREOF, Landlord and Tenant
have duly executed this Lease as of the day and year first above written.
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LANDLORD:
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TRINITY HUDSON HOLDINGS, LLC
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By:
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/s/ Jason Pizer
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Name:
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Jason Pizer
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Title:
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Executive Vice President
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By:
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/s/ Stacy Brandom
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Name:
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Stacy Brandom
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Title:
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Chief Financial Officer
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By:
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/s/ James H. Cooper
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Name:
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The Rev. Dr. James H. Cooper
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Title:
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Rector
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TENANT:
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SQUARESPACE, INC.
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By:
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/s/ Anthony Casalena
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Name:
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Anthony Casalena
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Title:
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CEO
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Exhibit 10.18
FIRST AMENDMENT OF LEASE
THIS FIRST AMENDMENT OF LEASE, dated as
of the 18 day of August 2017 (this “Agreement”), made by and between TRINITY HUDSON HOLDINGS, LLC,
a Delaware limited liability company, having its office at 120 Broadway, 38th Floor, New York, New York 10271 (“Landlord”),
and SQUARESPACE, INC., a Delaware corporation, having an address at 225 Varick Street, 12th Floor, New York, New York 10014
(“Tenant”).
W I T N E S S E T H:
WHEREAS,
Landlord and Tenant are the parties to an Agreement of Lease dated as of September 19, 2014 (the “Original Lease”),
which Original Lease has been amended by (i) a letter from Tenant to Landlord, dated March 24, 2015 (the “Terrace
Elevator Work Letter”), and (ii) a Commencement Date Agreement, dated as of April 23, 2015 (the “Commencement
Date Agreement”; the Original Lease, as amended by the Terrace Elevator Work Letter and the Commencement Date Agreement,
collectively, the “Lease”), whereby Landlord leases to Tenant a portion of the rentable area of the ground floor,
and the entire rentable area of each of the tenth (10th), eleventh (11th) and twelfth (12th) floors (as more particularly set forth
in the Lease, the “Original Premises”) of the building known as 225 Varick Street, New York, New York (the “Building”)
for a term expiring on October 31, 2030; and
WHEREAS, Landlord and Tenant desire to amend
the Lease to add certain additional premises to the premises demised under the Lease and to otherwise amend the provisions of the
Lease, all upon and subject to the terms and conditions contained in this Agreement.
NOW, THEREFORE, in consideration of the
premises and of the mutual covenants and conditions hereinafter set forth, the parties agree as follows:
1. Defined
Terms. All capitalized terms used in this Agreement which are not otherwise defined herein shall have the meanings ascribed
to them in the Lease.
2. Additional
Premises; Additional Basement Premises.
(a) (i) The
entire rentable area of the fifth (5th) floor of the Building, which the parties conclusively agree shall be deemed to
contain 31,640 rentable square feet, as more particularly shown hatched on the plan annexed hereto as Schedule A-1
(the “Fifth Floor Additional Premises”) and a portion of the rentable area of the sixth (6th) floor of the
Building, which the parties conclusively agree shall be deemed to contain 18,065 rentable square feet, as more particularly
shown hatched on the plan annexed hereto as Schedule A-2 (the “Sixth Floor Additional Premises”;
the Fifth Floor Additional Premises and the Sixth Floor Additional Premises, collectively, the “Additional
Premises”), is hereby added to and shall be considered a part of the Premises demised under the Lease, commencing
on the date (the “Additional Premises Commencement Date”) on which Landlord’s Additional Premises
Work (as hereinafter defined) is Substantially Complete and expiring on the Expiration Date (i.e., concurrently with the
Lease for the balance of the Premises). Landlord and Tenant agree that the Additional Premises shall be deemed to contain an
aggregate of 49,705 rentable square feet. Landlord shall deliver vacant, broom-clean possession of the Additional Premises to
Tenant on the Additional Premises Commencement Date, with (i) Landlord’s Additional Premises Work Substantially
Complete, and (ii) the Building Systems that service the Additional Premises being in good working order; it being
understood that (x) except for Landlord’s Additional Premises Work, Landlord shall not be obligated to perform any
work to prepare the Additional Premises for Tenant’s initial occupancy thereof, and (y) except as set forth
herein, Landlord makes no representations, warranties or promises with respect to the Additional Premises. The foregoing is
not intended to relieve Landlord from its ongoing maintenance and repair obligations set forth in the Lease. Landlord hereby
leases to Tenant, and Tenant hereby hires from Landlord, the Additional Premises upon and subject to all of the terms and
conditions of the Lease applicable to the Original Premises, except as otherwise expressly set forth herein, and all
references in the Lease to the Premises shall, from and after the Additional Premises Commencement Date, be deemed to refer
to both the Original Premises and the Additional Premises, except as otherwise expressly set forth herein.
(ii) A
portion of the usable area of the basement level of the Building, which the parties conclusively agree, without representation
or warranty, shall be deemed to contain 4,026 usable square feet, as more particularly shown hatched on the plan annexed hereto
as Schedule A-3 (the “Additional Basement Premises”), is hereby added to and shall be considered a part
of the Premises demised under the Lease, commencing on the date (the “Additional Basement Premises Commencement Date”)
on which Landlord’s Additional Premises Work is Substantially Complete with respect to the Additional Basement Premises and
expiring on the Expiration Date (i.e., concurrently with the Lease for the balance of the Premises). The Additional Basement
Premises shall be added to the Premises (including, without limitation, the Original Premises and the Additional Premises) upon
and subject to the same terms and conditions of this Lease as are applicable to the balance of the Premises (including, without
limitation, Articles 12 and 33 of the Lease and the provision of all Building services that Landlord is obligated to provide
to the Original Premises and the Additional Premises), except as otherwise expressly set forth in this Agreement, including the
following provisions of this Section 2(a)(ii):
(A) Landlord
shall deliver vacant, broom-clean and legally demised possession of the Additional Basement Premises to Tenant on the Additional
Basement Premises Commencement Date with (i) Landlord’s Additional Premises Work applicable to the Additional Basement
Premises Substantially Complete, and (ii) the Building Systems that service the Additional Basement Premises being in good
working order; it being understood that (x) except for those aspects of Landlord’s Additional Premises Work applicable
to the Additional Basement Premises, Landlord shall not be obligated to perform any work to prepare the Additional Basement Premises
for Tenant’s initial occupancy thereof, (y) Tenant shall connect Tenant’s AC System to the Additional Basement
Premises to provide air-conditioning service to the Additional Basement Premises, subject to and in accordance with the terms and
conditions of Article 6 of the Lease (the “HVAC Work”), and (z) except as set forth herein,
Landlord makes no representations, warranties or promises with respect to the Additional Basement Premises. The foregoing is not
intended to relieve Landlord from its ongoing maintenance and repair obligations set forth in the Lease. Tenant shall, subject
to the terms hereof, be entitled to an allowance in the amount of $200,000.00 (the “HVAC Work Allowance”), which
shall be disbursed to Tenant in accordance with the terms and conditions of Section 6.7 of the Original Lease, provided that
all references therein to (1) the “Restroom Alterations” shall be deemed to refer to the “HVAC Work”,
(II) the “Restroom Allowance” shall be deemed to refer to the “HVAC Work Allowance” and (III) the
“Commencement Date” shall be deemed to refer to the “Additional Basement Premises Commencement Date”.
(B) Intentionally
omitted.
(C) Tenant
shall not assign its rights with respect to the Additional Basement Premises or sublease the same or allow the same to be used
by others without the prior written consent of Landlord, which consent (i) may be granted or withheld in Landlord’s
sole discretion if such transfer or permission to use is with respect to the Additional Basement Premises only, or (ii) shall
not be unreasonably withheld, conditioned or delayed by Landlord in accordance with Section 15.4 of the Lease, in the
case of any assignment, sublease or other transfer of Tenant’s interest or right to use the Additional Basement Premises
is in conjunction with a transaction including all or a portion of any of the Original Premises or Additional Premises.
(D) In
addition to the Permitted Use as set forth in the Original Lease, Tenant shall be permitted to use the Additional Basement Premises
for video/recording booth(s), photography studio(s) and/or storage space; it being agreed that Landlord shall file for any
change of use required with respect to the Certificate of Occupancy in order to permit such use of the Additional Basement Premises
promptly after Tenant shall have prepared and submitted to Landlord the design drawings for the Additional Basement Premises and
all accompanying forms required in connection with such change in use application. Landlord shall promptly execute any such forms
required to facilitate the change in use application and diligently pursue the process to completion. Notwithstanding anything
to the contrary set forth herein, Landlord and Tenant acknowledge that obtaining a change of use for the Additional Basement Premises
on the Certificate of Occupancy shall not be a condition precedent to the occurrence of the Additional Basement Premises Commencement
Date.
(iii) The
“Additional Premises Rent Commencement Date” shall mean the date that is twelve (12) months after the Additional
Premises Commencement Date, and the “Additional Basement Premises Rent Commencement Date” shall mean the date
that is twelve (12) months after the Additional Basement Premises Commencement Date.
(iv) Following
the Additional Premises Commencement Date and the Additional Basement Premises Commencement Date, either party shall, within five
(5) days after the other party’s request, execute an agreement substantially in the form of Schedule E annexed
to the Original Lease memorializing the Additional Premises Commencement Date, the Additional Basement Premises Commencement Date,
the Additional Premises Rent Commencement Date and the Additional Basement Premises Rent Commencement Date; provided, however,
that the failure of the parties to so prepare and/or execute such agreement shall not negate the establishment of such dates as
reasonably determined by Landlord in accordance with the terms of this Section 2(a).
(b) (i) Landlord,
at its expense and in compliance with all applicable Requirements, shall diligently perform the following work in the Additional
Premises, and to the extent applicable, in the Additional Basement Premises (“Landlord’s Additional Premises Work”),
prior to delivery of the Additional Premises and/or the Additional Basement Premises to Tenant and the occurrence of the Additional
Premises Commencement Date and/or the Additional Basement Premises Commencement Date, as applicable:
(A) demolish
all leasehold improvements in the interior of the Additional Premises and the Additional Basement Premises back to the core walls,
including the toilets in the core restrooms in the Fifth Floor Additional Premises, and deliver the Additional Premises and the
Additional Basement Premises legally demised in vacant and broom-clean condition;
(B) deliver
a Form ACP-5 with respect to the demolished Additional Premises and Additional Basement Premises;
(C) deliver
any existing perimeter radiators serving the Additional Premises and the Additional Basement Premises in good working order with
Danfoss control valves with control handles, or, at Tenant’s option, demolish and remove the existing perimeter radiators
and all associated plumbing (it being agreed that if Tenant shall desire to have the existing perimeter radiators and associated
plumbing demolished, Tenant shall provide notice of such requirement to Landlord within fifteen (15) days after the date of this
Agreement, with time being of the essence);
(D) flash
patch columns, walls and ceilings, as necessary, and remove the topping slab and grind the slab to flat in the Fifth Floor Additional
Premises (it being agreed that Tenant shall be responsible for polishing and sealing the slabs of the Additional Premises and the
Additional Basement Premises); and
(E) replace
the existing steam riser expansion pipe loops, where applicable, with new inline expansion joints (i.e., a bellow, x-flex,
slip and/or universal-type expansion joint).
(ii) Landlord
will give Tenant written notice at least ten (10) Business Days in advance of the date when Landlord expects Landlord’s
Additional Premises Work to be Substantially Completed with respect to each of the Additional Premises and Additional Basement
Premises, but, Landlord shall not incur any liability whatsoever to Tenant in the event Landlord’s Additional Premises Work
is not Substantially Completed by any such date.
(iii) Notwithstanding
the foregoing or anything contained herein to the contrary, Landlord shall endeavor to cause Substantial Completion of Landlord’s
Additional Premises Work to occur on or prior to October 31, 2017 (such date, subject to day-for-day extension due to Unavoidable
Delays and delays caused by Tenant or Persons Within Tenant’s Control, the “Target Date”), and provided
that no Event of Default shall have occurred and then be continuing, if Landlord shall not have achieved Substantial Completion
of Landlord’s Additional Premises Work within thirty (30) days after the Target Date (such date, subject to day-for-day extension
due to Unavoidable Delays and delays caused by Tenant or Persons Within Tenant’s Control, the “Outside Target Date”),
Tenant shall be entitled, as Tenant’s sole and exclusive remedy by reason of such delay, to a credit against Fixed Rent commencing
on the Additional Premises Rent Commencement Date in the amount of $9,664.83 for each day after the Outside Target Date that the
Commencement Date fails to occur.
(c) For
the purposes of this Agreement, “Substantially Completed” or “Substantial Completion”
or “Substantially Complete” shall have the meaning ascribed to such terms as set forth in the Original
Lease except that all references therein to: (i) “Landlord’s Pre-Delivery Work” shall mean
“Landlord’s Additional Premises Work,” and (ii) “Landlord’s Post-Delivery Work”
shall mean “AP Post-Commencement Work.” For the avoidance of doubt, all the provisions set forth in the
definition of “Substantially Completed” or “Substantial Completion” or “Substantially
Complete” set forth in the Original Lease shall apply to Landlord’s Additional Premises Work and AP Post
Commencement Work, including, without limitation, the conduct of a walk-through and Landlord’s obligation with respect
to completing all Punchlist Items respecting Landlord’s Additional Premises Work and AP Post-Delivery Work.
(d) (i) Following
the Additional Premises Commencement Date (or, with respect to the Additional Basement Premises, the Additional Basement Premises
Commencement Date), Landlord, at its expense and in compliance with all applicable Requirements, shall diligently perform the following
work in the Additional Premises or the Additional Basement Premises, as applicable (the “AP Post-Commencement Work”):
(A) Fireproof
and firestop the Additional Premises and/or Additional Basement Premises, as necessary;
(B) Ensure
that all exterior windows in the Additional Premises are placed in good working order and are of consistent style and condition;
(C) Stub
all Building Systems to the core of the fifth (5th) floor, the sixth (6th) floor and the basement level of the Building in good
working order (it being agreed that Tenant shall connect such Building Systems and services to the Additional Premises and Additional
Basement Premises, as applicable);
(D) Furnish
a demand electrical load of six (6) watts per usable square foot of the Additional Premises and Additional Basement Premises
exclusive of the electricity to operate the Building Systems, the Exclusive Elevators (including the Additional Exclusive Elevator,
Tenant’s AC System, Tenant’s Communications Equipment and Tenant’s Generator, if any), but inclusive of the electricity
utilized by any Supplemental AC Systems serving the Additional Premises and the Additional Basement Premises (the “Basic
Capacity”). For purposes hereof the Additional Premises and the Additional Basement Premises shall be deemed to contain
38,702 useable square feet in the aggregate;
(E) Furnish
subpanels for the connection of the Additional Premises and the Additional Basement Premises to the Building’s Class E
System;
(F) Pin
and sheetrock over the existing Building passenger elevator cab openings in the Fifth Floor Additional Premises and program the
Building passenger elevators so that they will no longer stop on the fifth (5th) floor of the Building (it being agreed that if
Tenant shall lease one or more additional full floors of the Building, Tenant shall have the right, at Tenant’s option and
at Tenant’s expense, to unpin the Building passenger elevators on all floors leased by Tenant);
(G) Perform
maintenance to and modernize that Building freight elevator (the “Freight Elevator Modernization”) shown as
Car #4 on Schedule F (the “Building Freight Elevator”); it being agreed that such Building Freight Elevator
shall not be part of the Premises and shall not be for Tenant’s exclusive use);
(H) At
Tenant’s option, to be exercised by delivering notice thereof to Landlord within fifteen (15) Business Days after the later
to occur of (x) the date of this Agreement and (y) the date on which Landlord provides Tenant’s cost for such work
together with copies of the bidding documents of each of the general contractors submitting a bid to perform the work set forth
in this Section 2(d)(H), including a breakdown of all trades and itemized costs per trade, create rear stops on the Building
Freight Elevator on the fifth (5th) and sixth (6th) floors of the Building and furnish and install elevator call buttons in connection
therewith, and pin and sheetrock over the existing front stops on the Building Freight Elevator on such floors (it being agreed
that Tenant shall reimburse Landlord for the actual out-of-pocket cost of such work within thirty (30) days after demand, accompanied
by reasonable supporting documentation); and
(I) Slab
over any openings between the floors of the Additional Premises and any vertically contiguous space leased to other tenants.
(ii) For
the avoidance of doubt, the AP Post-Commencement Work shall not be required to be Substantially Completed as a condition to the
occurrence of the Additional Premises Commencement Date or the Additional Basement Premises Commencement Date. Landlord shall perform
the AP Post-Commencement Work diligently, and Landlord and Tenant shall take commercially reasonable steps to coordinate the performance
of the AP Post-Commencement Work by Landlord and the performance of the Additional Premises Initial Improvements (as hereinafter
defined) by Tenant so that neither is delayed in the completion of its work. Tenant shall provide Landlord access to the Additional
Premises and the Additional Basement Premises as necessary to perform the AP Post-Commencement Work without the same constituting
a constructive eviction and without any abatement of Rental. Notwithstanding the foregoing, Landlord shall use commercially reasonable
efforts to perform the AP Post-Commencement Work in a manner so as not to delay Tenant in the completion of the Additional Premises
Initial Improvements or in the occupancy of the Additional Premises or the Additional Basement Premises for the conduct of Tenant’s
business.
(iii) All
references in the Lease to Landlord’s Work, the Initial Alterations, the Tenant Improvement Allowance, the Storefront Alterations,
the Restroom Alterations and Tenant’s AC System Alterations shall be deemed applicable only to the Original Premises.
(iv) With
respect to the Additional Premises Initial Improvements, the Additional Restroom Alterations (as hereinafter defined) and the Additional
Tenant’s AC System Alterations (as hereinafter defined), Landlord hereby approves the contractors and subcontractors listed
on Schedule H annexed hereto. Additionally, Tenant shall have the right to continue to use Securitas as Tenant’s private
security vendor.
(v) Notwithstanding
anything to the contrary set forth herein, Landlord shall enter into a contract with an architect for the design of the
Elevator Conversion (as hereinafter defined) (the “Design Contract”) and notify Tenant thereof (which
notice may be given via email) within one (1) Business Day after the execution and delivery of this Agreement by the a
parties hereto (the “Contract Deadline”), and if Landlord shall fail to do so, then provided
further that no Event of Default shall have occurred and then be continuing, Tenant shall be entitled, as Tenant’s
sole and exclusive remedy by reason of such delay (subject to Tenant’s rights under Section 2(d)(vi) below),
to a credit against Rental the amount of $1,000.00 per day for each day after the Contract Deadline on which Landlord shall
continue to fail to enter into the Design Contract and notify Tenant thereof.
(vi) Landlord
shall use commercially reasonable efforts to Substantially Complete the Elevator Conversion on or prior to the date targeted for
the completion of such work on Schedule G annexed hereto (the “Conversion Target Date”). Notwithstanding
anything to the contrary contained herein, if Landlord fails to Substantially Complete the Elevator Conversion by the date that
is one hundred (100) days following the Conversion Target Date (such date, subject to a one-half (½)
day-for-day extension due to Unavoidable Delays and a day-for-day extension for delays caused by Persons Within Tenant’s
Control, the “Outside Elevator Conversion Date”), then provided that no Event of Default shall have occurred
and then be continuing, Tenant shall receive, as Tenant’s sole and exclusive remedy by reason of such delay (subject to the
last sentence of this Section), a credit against Rental in the amount of (x) $690.35 per day for each day after the Outside
Elevator Conversion Date that Substantial Completion of the Elevator Conversion fails to occur. In addition to the foregoing credit
against Rental, if Substantial Completion of the Elevator Conversion fails to occur by the date that is sixty (60) days following
the Conversion Target Date, Landlord shall, at its sole cost and expense, expend up to the amount of $100,000.00 on so-called overtime
and premium pay labor to expedite such Substantial Completion and shall diligently pursue the same.
(e) (i) Concurrently
with the performance of Landlord’s Additional Premises Work, Landlord shall, at its expense, and in compliance with all applicable
Requirements: (v) furnish and install elevator doors for the existing Exclusive Elevators in the Additional Premises on the
fifth (5th) and sixth (6th) floors of the Building; and (w) re-demise the freight elevator lobby and
a portion of the common corridor on the sixth (6th) floor of the Building in order to provide secure access to the Exclusive
Elevators (including the Additional Exclusive Elevator), as more particularly shown on Schedule E annexed hereto. Per the
attached Schedule G (“Elevator Construction Timeline”), Landlord shall, at its expense (subject to Section 2(e)(ii) below)
and in compliance with all applicable Requirements, (x) perform Freight Elevator Modernization to Building Freight Elevator;
(y) convert the freight elevator shown as Car #3 on Schedule F into a passenger elevator for Tenant’s exclusive
use with a cab ready to receive Tenant’s finishes (the “Additional Exclusive Elevator”), including obtaining
all Buildings Department permits, sign-offs and inspections and installing an electrical submeter to measure use of electricity
by the Additional Exclusive Elevator (collectively, the “Elevator Conversion”); and (z) re-demise Tenant’s
lobby in order to provide secure access to the Exclusive Elevators (including the Additional Exclusive Elevator), as more particularly
shown on Schedule E annexed hereto, which as re-demised shall constitute part of the Premises on the ground floor. In connection
with such re-demise of the freight elevator lobby and portion of the common corridor on the sixth (6th) floor of the
Building, Landlord shall provide Tenant with a credit against Fixed Rent in the amount of $15,000.00, and Tenant shall provide
finishes in such freight elevator lobby and portion of the common corridor consistent with the balance of the common corridor on
the sixth (6th) floor of the Building. Tenant shall also have the right, at Tenant’s expense, to perform cosmetic
upgrades to the common corridor on the sixth (6th) floor of the Building, including, by way of example only, and without
limitation, painting, flooring and lighting upgrades, subject to Landlord’s review and approval, which approval shall not
be unreasonably withheld, conditioned or delayed. For the avoidance of doubt, all interior finishes in the Additional Exclusive
Elevator cab shall be furnished and installed at Tenant’s cost and expense.
(ii) Landlord
shall cause the Elevator Conversion to be performed at Landlord’s expense, provided that Landlord’s expense in connection
therewith shall not exceed the sum of (x) $500,000.00 and (y) 50% of the amount by which the cost of the Elevator Conversion
exceeds $500,000.00, provided further that Landlord’s maximum contribution to the costs and expenses of the Elevator
Conversion shall not exceed $550,000.00 (“Landlord’s Maximum Elevator Contribution”). Tenant shall pay
to Landlord, as Additional Rent, within thirty (30) days after written demand, accompanied by reasonable supporting documentation,
those costs and expenses of the Elevator Conversion in excess of Landlord’s Maximum Elevator Contribution, provided
that in no event shall Tenant be required to make such payment prior to the completion of the Elevator Conversion. Landlord covenants
and agrees that the Elevator Conversion shall be performed during Operating Hours, except to the extent that such work (or
components thereof, including, without limitation, core drilling) will interfere with or interrupt the operation and maintenance
of the Building, or interfere with or interrupt the use and occupancy of the Building by other tenants in the Building, in which
event such work shall be performed outside Operating Hours at such times as Landlord shall reasonably determine.
(iii) Landlord
shall bid the Elevator Conversion work to at least three (3) qualified and reputable contractors, and Tenant shall have the
right to reasonably participate in the preparation and awarding of such bid, with the same being awarded based upon price, contractor
quality and reputation, and ability to perform on time and on budget. Tenant shall have the right to attend all project meetings
with respect to the Elevator Conversion, and the Elevator Conversion contractor shall reasonably coordinate with Tenant and its
contractors with respect to the installation of hall call buttons and lanterns to match the existing specifications for Tenant’s
elevator lobbies on full floors of the Premises. Tenant’s general contractor shall install all architectural components of
the elevator lobbies on any full floor occupied by Tenant (including elevator reveals, surrounds, and door finishes), at Tenant’s
expense. Notwithstanding anything to the contrary set forth herein, Landlord shall have the right to bid the Elevator Conversion
work together with the Freight Elevator Modernization work.
(iv) In
coordination with Tenant (including scheduling thereof), Landlord shall, at its sole cost and expense, continuously and diligently,
make all repairs to the existing Exclusive Elevators (including all latent defects remaining from the original conversion by Landlord
of the Exclusive Elevators from freight elevators to passenger elevators) that are necessary to improve the performance thereof
to industry standards. Landlord and Tenant shall reasonably cooperate to schedule and perform the tie-in of the Additional Exclusive
Elevator to Tenant’s existing controls for the Exclusive Elevators, using the same control hardware and software, and integrating
the same with Tenant’s operator panel at the lobby reception desk.
(f) Concurrently
with the AP Post-Commencement Work, Landlord shall, in compliance with all applicable Laws, (i) install a rear door
access on the 12th floor on Car #4 to allow for access to the roof without entering the Premises and obtain all
Buildings Department permits and sign-offs therefor (collectively, the “Roof Access Work”) at the shared
expense of Landlord and Tenant, and (ii) pursuant to the plans set forth on Schedule I annexed hereto install a
code-compliant security door to separate such access from the twelfth (12th) floor restroom corridor at Landlord’s sole
cost and expense. Notwithstanding the foregoing, prior to performing the Roof Access Work, Landlord shall first, in
consultation with Tenant regarding scheduling, construct a demising wall and access door separating such access area from the
twelfth (12th) floor restroom corridor. Tenant shall pay to Landlord, as Additional Rent, within thirty (30) days after
written demand, accompanied by reasonable supporting documentation, fifty percent (50%) of the costs and expenses of the Roof
Access Work, provided, however, that Tenant’s share of such costs shall not exceed $18,000.00, and in no
event shall Tenant be required to make payment prior to the completion of the Roof Access Work. Landlord covenants and agrees
that the Roof Access Work shall be performed during Operating Hours, except to the extent that such work (or
components thereof, including, without limitation, core drilling) will interfere with or interrupt the operation and
maintenance of the Building, or interfere with or interrupt the use and occupancy of the Building by Tenant or other tenants
in the Building, in which event such work shall be performed outside Operating Hours at such times as Landlord shall
reasonably determine.
3. Additional
Premises Improvement Allowance. In consideration of Tenant’s acceptance of the Additional Premises and the Additional
Basement Premises in its “as is” condition (except for Landlord’s Additional Premises Work and the AP Post-Commencement
Work as expressly set forth in this Agreement), and Tenant’s agreement to perform leasehold improvements to prepare the Additional
Premises and the Additional Basement Premises for Tenant’s initial occupancy (the “Additional Premises Initial Improvements”),
Tenant shall be entitled to an allowance in the amount of $3,878,850.00 (the “Additional Premises Improvement Allowance”),
which shall be disbursed to Tenant in accordance with the terms and conditions of Section 6.5 of the Original Lease, provided
that (a) all references therein to (i) the “Premises” shall be deemed to refer to the “Additional Premises
and the Additional Basement Premises”, (ii) the “Initial Alterations” shall be deemed to refer to the “Additional
Premises Initial Improvements”, (iii) the “Tenant Improvement Allowance” shall be deemed to refer to the
“Additional Premises Improvement Allowance” and (iv) the “Commencement Date” shall be deemed to refer
to the “Additional Premises Commencement Date” or the “Additional Basement Premises Commencement Date”
as applicable; (b) the reference in Section 6.5(B)(ii) to “the entire rentable areas of the 10th,
11th and 12th floors” shall be deemed to refer to “the entire Additional Premises and Additional
Basement Premises”; and (c) Section 6.5(F) shall be amended by deleting the phrase “the Storefront Allowance,
the Restroom Allowance and Tenant’s AC System Allowance” and replacing the same with “the Additional Restroom
Allowance and the Additional Tenant’s AC System Allowance”. The Additional Premises Initial Improvements shall be subject
to all of the terms and conditions of Article 6 of the Original Lease, including without limitation, Landlord’s approval
of the plans and specifications therefor. Landlord acknowledges and agrees that, subject to compliance with such terms and conditions,
Tenant shall have the right, as part of the Additional Premises Initial Improvements, to connect the vertically contiguous floors
of the Additional Premises, provided that any internal stairwell or slab opening shall constitute Specialty Alterations under the
Lease.
4. Additional
Restroom Allowance. In addition to the Additional Premises Improvement Allowance and the HVAC Work Allowance, in
consideration of Tenant’s agreement to perform Alterations to (x) upgrade the core men’s and women’s
restrooms in the Fifth Floor Additional Premises and on the south side of the sixth (6th) floor of the Building to place the
same in first-class condition and in compliance with all applicable Laws, including, without limitation, the ADA, and
(y) make cosmetic upgrades to the existing core restrooms on the north side of the sixth (6th) floor (collectively, the
“Additional Restroom Alterations”), Tenant shall, subject to the terms hereof, be entitled to an allowance
in the amount of $632,000.00 (the “Additional Restroom Allowance”), which shall be disbursed to Tenant in
accordance with the terms and conditions of Section 6.7 of the Original Lease, provided that all references
therein to (i) the “Restroom Alterations” shall be deemed to refer to the “Additional Restroom
Alterations”, (ii) the “Restroom Allowance” shall be deemed to refer to the “Additional Restroom
Allowance” and (iii) the “Commencement Date” shall be deemed to refer to the “Additional
Premises Commencement Date”. The Additional Restroom Alterations shall be subject to all of the terms and conditions of
Article 6 of the Original Lease, including without limitation, Landlord’s approval of the plans and specifications
therefor. Landlord shall facilitate access to the fourth (4th) floor of the Building to the extent reasonably required in
connection with the Additional Restroom Alterations. Notwithstanding anything herein to the contrary, $158,000.00 of the
Additional Restroom Allowance shall be allocated to the restroom Alterations on the north side of the 6th floor as follows:
(i) up to $100,000.00 for cosmetic improvements made in conjunction with the initial build-out of the sixth (6th) floor
and (ii) any unpaid balance in conjunction with future Alterations to such restrooms, provided Tenant exercises its
options or otherwise leases (via sublease, assignment or direct lease) both Expansion Space A and B.
5. Additional
Tenant’s AC System Allowance. In addition to the Additional Premises Improvement Allowance, in consideration of Tenant’s
agreement to perform Alterations to extend Tenant’s AC System to serve the Additional Premises and the Additional Basement
Premises in compliance with all applicable Laws (collectively, the “Additional Tenant’s AC System Alterations”),
Tenant shall, subject to the terms hereof, be entitled to an allowance in the amount of $628,480.00 (the “Additional Tenant’s
AC System Allowance”), which shall be disbursed to Tenant in accordance with the terms and conditions of Section 6.8
of the Original Lease, provided that all references therein to (i) “Tenant’s AC System Alterations”
shall be deemed to refer to the “Additional Tenant’s AC System Alterations”, (ii) “Tenant’s
AC System Allowance” shall be deemed to refer to the “Additional Tenant’s AC System Allowance”, and (iii) the
“Commencement Date” shall be deemed to refer to the “Additional Premises Commencement Date”. The Additional
Tenant’s AC System Alterations shall be subject to all of the terms and conditions of Article 6 of the Original Lease
(as amended by this Agreement), including without limitation, Landlord’s approval of the plans and specifications therefor.
6. Fixed
Rent.
(a) Tenant
shall continue to pay the Fixed Rent and Operating Expense Payment applicable to the Original Premises pursuant to the terms and
conditions of the Lease (as unamended by this Agreement).
(b) In
addition, (x) from and after the Additional Premises Rent Commencement Date, Tenant shall pay the Fixed Rent and Operating
Expense Payment applicable to the Additional Premises at the rates set forth on Schedule B-1 annexed hereto, and (y) from
and after the Additional Basement Premises Rent Commencement Date, Tenant shall pay the Fixed Rent and Operating Expense Payment
applicable to the Additional Basement Premises at the rates set forth on Schedule B-2 annexed hereto.
(c) For
the avoidance of doubt, (x) Tenant shall not be required to pay Fixed Rent with respect to the Additional Premises
during the period from the Additional Premises Commencement Date through and including the day immediately preceding the
Additional Premises Rent Commencement Date, and (y) Tenant shall not be required to pay Fixed Rent with respect to the
Additional Basement Premises during the period from the Additional Basement Premises Commencement Date through and including
the day immediately preceding the Additional Basement Premises Rent Commencement Date.
7. Escalation
Rent.
(a) Tenant
shall continue to pay the Escalation Rent applicable to the Original Premises pursuant to the terms and conditions of Article 3
the Lease (as unamended by this Agreement).
(b) In
addition, (x) from and after the Additional Premises Commencement Date, Tenant shall pay Escalation Rent applicable to the
Additional Premises in accordance with the terms and conditions of Article 3 of the Lease, provided, however,
that as applicable to the Additional Premises, (i) the term “Base Tax Factor” shall mean the Taxes payable
for the calendar year commencing on January 1, 2018 and ending on December 31, 2018, and (ii) the term “Tenant’s
Share” shall mean 13.615% (it being agreed that 8.667% shall be applicable to the Fifth Floor Additional Premises and
4.948% shall be applicable to the Sixth Floor Additional Premises), and (y) from and after the Additional Basement Premises
Commencement Date, Tenant shall pay Escalation Rent applicable to the Additional Basement Premises in accordance with the terms
and conditions of Article 3 of the Lease, provided, however, that as applicable to the Additional Basement Premises,
(i) the term “Base Tax Factor” shall mean the Taxes payable for the calendar year commencing on January 1,
2018 and ending on December 31, 2018, and (ii) the term “Tenant’s Share” shall mean 1.096%.
8. Electric
Current.
(a) As
of the Additional Premises Commencement Date and/or the Additional Basement Premises Commencement Date, as applicable, Landlord
shall furnish the Basic Capacity to the Additional Premises and Additional Basement Premises, and in no event shall the electrical
load in the Additional Premises or the Additional Basement Premises exceed the Basic Capacity. In addition to the Basic Capacity,
Landlord shall furnish sufficient electricity to operate the Additional Exclusive Elevator (it being agreed that Landlord shall
furnish and install, at Landlord’s expense, submeters to measure the demand and consumption of electricity in the Additional
Premises, the Additional Basement Premises and by the Additional Exclusive Elevator). Such electricity shall be provided upon and
subject to the terms and conditions set forth in Article 4 of the Original Lease, except that with respect to the Additional
Premises, the Additional Basement Premises and the Additional Exclusive Elevator only, the reference in Section 4.2(A) of
the Original Lease to “one hundred eight percent (108%)” shall be deemed to refer to “one hundred four percent
(104%)”.
(b) Landlord
shall provide a 200 amp, 208 volt dedicated feed and cause the same to serve the Additional Basement Premises, at Landlord’s
cost and expense.
9. Security
Deposit. Throughout the Term, Landlord shall continue to hold the Security Deposit in accordance with the terms and
conditions of Article 35 of the Lease. Landlord and Tenant acknowledge and agree that Tenant shall not be required to
increase the Security Deposit in conjunction with its leasing of the Additional Premises and the Additional Basement
Premises. However, the first sentence of Section 35.6 of the Original Lease is hereby deleted in its entirety and
replaced with the following text: “Provided that no Event of Default shall have occurred and be continuing, the
Security Deposit shall be reduced to (i) the amount of $4,755,220 from and after the last day of the 43rd month
following the Additional Premises Commencement Date, and (ii) $2,853,132 from and after the last day of the 79th month
following the Additional Premises Commencement Date.”
10. Brokers.
Each of Landlord and Tenant represents and warrants that it has had no dealings or communications with any broker or agent in connection
with this Agreement, other than CBRE, Inc. (the “Broker”). Landlord and Tenant covenant and agree to pay,
hold harmless and indemnify the other party from and against any and all claims or other liability for any compensation, commissions
or charges claimed by any broker or agent (other than the Broker with respect to Tenant’s indemnity to Landlord) who claims
to have dealt with the indemnitor in connection with this Agreement and for any and all costs incurred by the indemnitee in connection
with such claims, including without limitation, attorneys’ fees and disbursements. Landlord shall pay the Broker its commission
pursuant to one or more separate agreements. The provisions of this Section 10 shall survive the expiration or sooner
termination of this Agreement.
11. Notices.
Section 27.1(A) of the Original Lease is hereby amended such that, from and after the date of this Agreement, Landlord’s
and Tenant’s address(es) for notices shall be as follows:
Trinity Hudson Holdings, LLC
120 Broadway, 38th Floor
New
York, New York 10271
Attention: General Counsel
and
Trinity Hudson Holdings, LLC
120 Broadway, 38th Floor
New
York, New York 10271
Attention: CEO
with simultaneous copies to each of:
(i) Hines
Interests Limited Partnership
345
Hudson Street, 12th Floor
New
York, New York 10014
Attention: Alexis Michael
and
(ii) Loeb & Loeb LLP
345 Park Avenue
New
York, New York 10154
Attention: Kenneth W. Sold, Esq.
If to Tenant:
Squarespace, Inc.
225
Varick Street, 12th floor
New
York, New York 10014
Attention: Legal Department
and with simultaneous copy to:
Squarespace, Inc.
225
Varick Street, 12th floor
New
York, New York 10014
Attention: Facilities
and
Paul Hastings LLP
55 Second Street, 24th floor
Los
Angeles, CA 94105
Attention: Stephen Berkman, Esq.
or at such other address(es) as either party may from time to
time indicate to the other in writing.
12. Expansion
Options.
(a) Provided
that (i) the Lease (as amended by this Agreement) shall be in full force and effect; (ii) there shall not then be
an existing Event of Default thereunder; and (iii) Tenant shall not have entered into third party subleases with respect
to at least three (3) full floors of the Premises (including, without limitation, the Additional Premises) and the Sixth
Floor Additional Premises (it being agreed that Tenant shall occupy any portion of the Original Premises in a vertically
contiguous block, except that any portion of the Premises on the ground floor of the Building may be occupied on a
non-contiguous basis), Tenant shall have the options (each, an “Expansion Option”, and collectively, the
“Expansion Options”) to lease the Expansion Space (as hereinafter defined) in accordance with the
provisions of this Section 12, provided that the same shall be anticipated to be available for lease by
Tenant (the “Anticipated Expansion Date”) on or prior to June 30, 2018 (it being agreed that after
such date, any remaining Expansion Space shall become Offer Space under the terms and conditions of the Lease (as amended by
this Agreement)). The leasing of the Expansion Space shall be upon all of the terms and conditions contained in the Lease (as
amended by this Agreement), except as otherwise expressly provided herein. For the purposes hereof, the term
“Expansion Space” shall mean the balance of the rentable area of the sixth (6th) floor of the Building not
then leased to Tenant, which the parties agree consists of (x) that portion of the sixth (6th) floor of the Building
more particularly shown hatched on the floor plan annexed hereto as Schedule C- 1,
which the parties conclusively agree, without representation or warranty, contains 6,347 rentable square feet
(“Expansion Space A”), and (y) that portion of the sixth (6th) floor of the Building more
particularly shown hatched on the floor plan annexed hereto as Schedule C-2, which the parties conclusively agree
shall be deemed to contain 7,214 rentable square feet (“Expansion Space B”).
(b) If
any portion of the Expansion Space shall become available for lease with an Anticipated Expansion Date on or prior to June 30,
2018 due to an early termination or surrender of such premises by the existing tenant thereof, Landlord shall notify Tenant of
such availability of such Expansion Space (an “Availability Notice”) at least sixty (60) days, and not more
than three hundred sixty-five (365) days, prior to such Anticipated Expansion Date, in which case the Expansion Space shall be
offered to Tenant upon the terms and conditions of this Section 12. In such event, Tenant may exercise the Expansion
Option with respect to such Expansion Space by notice given to Landlord (an “Expansion Notice”) on or prior
to the date that is ten (10) Business Days after Landlord has given the Availability Notice to Tenant. Time shall be of the
essence with respect to Tenant’s giving of the Expansion Notice.
(c) If
Tenant shall timely exercise the Expansion Option(s) in the manner set forth above, then on each date (each, an
“Expansion Space Commencement Date”) on which Landlord delivers possession of Expansion Space to Tenant,
vacant, free of occupants and free and clear of any and all rights of any other tenants or occupants of the Building, with
Landlord’s Additional Premises Work Substantially Complete therein, such Expansion Space automatically shall be deemed
to be and shall be added to and form part of the Premises upon the terms and condition of the Lease (as amended by this
Agreement), except that (i) Fixed Rent payable with respect to each Expansion Space added to the Premises
pursuant to the terms of this Section 12 shall be payable at the rate applicable to the Additional Premises as of
the applicable Expansion Space Commencement Date (subject to adjustment of such rate concurrently with the adjustment of the
rate of Fixed Rent for the Additional Premises as set forth on Schedule B-1 and subject to annual operating escalation
at the same rate as is applied to Fixed Rent for the Additional Premises in accordance with Schedule B-1);
(ii) the number of days of Fixed Rent abatement applicable to each Expansion Space shall be prorated to reflect the
number of months remaining in the Term from the applicable Expansion Space Commencement Date by multiplying 365 by a
fraction, the numerator of which shall be the number of months between the applicable Expansion Space Commencement Date and
the Fixed Expiration Date (rounded to the nearest half-month) and the denominator of which shall be the number of months
between the Additional Premises Commencement Date and the Fixed Expiration Date (rounded to the nearest half- month);
(iii) the amount of the Additional Premises Improvement Allowance applicable to each Expansion Space shall be prorated
to reflect the number of months remaining in the Term from the applicable Expansion Space Commencement Date by
(1) multiplying $75.00 by a fraction, the numerator of which shall be the number of months between the applicable
Expansion Space Commencement Date and the Fixed Expiration Date (rounded to the nearest half-month) and the denominator of
which shall be the number of months between the Additional Premises Commencement Date and the Fixed Expiration Date (rounded
to the nearest half-month), (2) rounding such amount to the nearest penny, and (3) multiplying such amount by the
number of rentable square feet in the applicable Expansion Space; (iv) Tenant’s Share applicable to the Additional
Premises shall be increased to reflect Tenant’s lease of the applicable Expansion Space (i.e., by adding 1.739%
with respect to Expansion Space A and adding 1.976% with respect to Expansion Space B); and (v) other than
Landlord’s Additional Premises Work and the AP Post-Commencement Work, Landlord shall not be required to perform any
Landlord’s work or any other work, or render any services to make the applicable Expansion Space ready for
Tenant’s use or occupancy thereof; provided, that, Landlord shall not be required to perform that component of AP
Post-Commencement Work set forth in Section 2(d)(i)(F) hereof respecting the Expansion Space, unless and
until Tenant leases the entire rentable area on the 6th floor of the Building whether via exercise of one or more
Expansion Options, leasing of Offer Space pursuant to Article 43 of the Original Lease or otherwise.
(d) Promptly
after the occurrence of any Expansion Space Commencement Date, Landlord and Tenant shall confirm the occurrence thereof and the
inclusion of the applicable Expansion Space in the Premises by executing an instrument reasonably satisfactory to Landlord and
Tenant, which instrument shall memorialize the terms and conditions set forth in Section 12(c) hereof; provided
that failure by Landlord or Tenant to execute such instrument shall not affect the inclusion of the applicable Expansion Space
in the Premises in accordance with the terms and conditions of this Section 12 (including, without limitation, Section 12(c)).
(e) If
Landlord is unable to deliver possession of any portion of the Expansion Space to Tenant for any reason on or before the applicable
Anticipated Expansion Date, the applicable Expansion Space Commencement Date shall be the date on which Landlord is able to so
deliver possession and Landlord shall have no liability to Tenant therefor and the Lease shall not in any way be impaired. If an
existing tenant of the Expansion Space holds over, Landlord shall use commercially reasonable efforts, which may include the commencement
of an eviction action against such holdover tenant, if such action is determined by Landlord to be commercially reasonable in the
circumstances, to obtain possession of the applicable Expansion Space. This Section 12(e) constitutes “an
express provision to the contrary” within the meaning of Section 223-a of the New York Real Property Law and any other
law of like import now or hereafter in effect. Notwithstanding anything to the contrary contained herein, in the event Landlord
shall not have delivered the Expansion Space in accordance with this Section on or before the date that is 180 days after
the Anticipated Expansion Date, Tenant shall have the right to rescind without penalty the exercise of the Expansion Notice.
(f) If
Tenant fails timely to give any Expansion Notice under this Section 12, then Tenant’s right to add the
applicable Expansion Space to the Premises pursuant to this Section 12 shall be null and void and of no further force
or effect and shall be deemed deleted from the Lease (as amended by this Agreement) (provided, however, that such Expansion Space
shall remain Offer Space from and after July 1, 2018), and (i) Landlord may enter into one or more leases of such Expansion
Space (or any portion thereof) with third parties on such terms and conditions as Landlord shall determine, (ii) Landlord
shall have no further obligation to lease such Expansion Space to Tenant (except as may be applicable in accordance with Article 43
of the Original Lease (as amended by this Agreement)), and (iii) Tenant shall, as soon as reasonably practicable after demand
by Landlord, execute an instrument reasonably satisfactory to Landlord confirming the deletion from the Lease of the Expansion
Option with respect to such portion of the Expansion Space (provided that Tenant’s refusal to execute any such instrument
shall not negate the deletion of such Expansion Option from the Lease).
(g) The
rights granted to Tenant in this Section 12 to add certain Expansion Space to the Premises shall be personal to the
Tenant named in this Agreement (or its Permitted Transferee) and may not be exercised by any other Tenant.
(h) If,
at any time during the Term, whether or not pursuant to an option, Tenant shall lease the entire rentable area of the sixth (6th)
floor (or any other floor) of the Building, then in such event, Tenant shall be obligated to maintain and repair the core restrooms
and the elevator lobbies on each such floor of the Building on which Tenant leases the entire rentable area.
13. Options
to Renew.
(a) Article 42
of the Original Lease is hereby deleted from the Lease in its entirety and replaced with the following text: “Intentionally
omitted.” From and after the date of this Agreement, provided that at the time of the exercise of the Renewal Options (as
hereinafter defined): (i) this Lease shall be in full force and effect; (ii) there shall not then be existing an Event
of Default under this Lease; and (iii) Tenant (and/or its Permitted Transferee) shall not have subleased to a third party
more than 5% of the rentable area of the Renewal Premises (as hereinafter defined), Tenant shall have two (2) options to extend
the Term of this Lease (each, a “Renewal Option”, and collectively, the “Renewal Options”),
each for a period of five (5) years (each, a “Renewal Term”), on the terms of the Lease, as amended by
this Agreement (except as set forth below). Each Renewal Option shall be exercisable by written notice (each, a “Renewal
Notice”) given to Landlord at least eighteen (18) months prior to the Fixed Expiration Date (or, with respect to the
second Renewal Term, prior to the Expiration Date of the first Renewal Term), with time being of the essence with respect to the
giving of each Renewal Notice. Notwithstanding the first sentence of this Section 13(a), Landlord, in its sole discretion,
may waive any default by Tenant or occupancy requirement and no such default or occupancy requirement may be used by Tenant to
negate the effectiveness of Tenant’s exercise of any Renewal Option. The “Renewal Premises” shall be comprised
of either (x) the entire Premises then demised to Tenant; or (y) a portion of the Premises consisting of the Original
Premises; or (z) a portion of the Premises consisting of the Original Premises together with one or more additional full floors
of the Premises; provided, however, that if Tenant shall then lease less than the entire rentable area of any floor
of the Building, Tenant may include such space in any Renewal Premises constituted in accordance with clause (z) so
long as (1) such space is on the basement level of the Building or (2) such space shall be vertically contiguous to another
portion of the Renewal Premises. Notwithstanding anything to the contrary contained herein, Tenant shall not have the right to
create any non-existing non-contiguity through its composition of the Renewal Premises in accordance with clause (z) of
the preceding sentence. If Tenant shall fail to indicate the Renewal Premises in any Renewal Notice (with time being of the essence),
Tenant shall be deemed to have elected to exercise the applicable Renewal Option with respect to the entire Premises then demised
to Tenant.
(b) Each
Renewal Term shall constitute an extension of the Term of the Lease and shall be upon all of the same terms and conditions as the
then existing Term, except that, (i) during the second Renewal Term (if any), there shall be no further
option to renew the Term of the Lease, (ii) Landlord shall not be required to furnish any materials or perform any work to
prepare the Renewal Premises for Tenant’s continued occupancy during any Renewal Term and Landlord shall not be required
to reimburse Tenant for any Alterations made or to be made by Tenant during or in preparation for any Renewal Term, and (iii) the
Fixed Rent for each Renewal Term shall be payable at a rate per annum equal to the Fair Rental Value of the Renewal Premises as
of the first day of the applicable Renewal Term.
(c) If
Tenant shall timely give a Renewal Notice in accordance with Section 13(a), the parties shall endeavor to agree upon
the Fair Rental Value of the Renewal Premises as of the commencement date of the applicable Renewal Term. In the event that the
parties are unable to agree upon the Fair Rental Value for the applicable Renewal Premises for the applicable Renewal Term within
six (6) months prior to the first day of such Renewal Term, then the same shall be determined as follows: Landlord and Tenant
shall arrange to simultaneously exchange, in sealed envelopes, (i) Landlord’s determination of the Fair Rental Value
of the Renewal Premises for the applicable Renewal Term (“Landlord’s Determination”) and (ii) Tenant’s
determination of the Fair Rental Value of the Renewal Premises for the applicable Renewal Term (“Tenant’s Determination”).
(d) If
Landlord’s Determination and Tenant’s Determination are different, and Landlord and Tenant fail to agree as to the
amount thereof within thirty (30) days after the exchange of such determinations, then the dispute shall be resolved by arbitration
as set forth in this Section 13(d). If the dispute shall not have been resolved on or before the first day of the applicable
Renewal Term, then pending such resolution, Tenant shall pay, as Fixed Rent for the applicable Renewal Term, an amount equal to
the average of Landlord’s Determination and Tenant’s Determination. Within thirty (30) days after the final determination
of Fair Rental Value for the applicable Renewal Term, Landlord and Tenant shall reconcile any overpayment or underpayment of Fixed
Rent previously paid by Tenant for the applicable Renewal Term. Any dispute as to Fair Rental Value shall be determined as follows:
A senior officer of a recognized New York City leasing brokerage firm (the “Baseball Arbitrator”) shall be selected
and paid for jointly by Landlord and Tenant. If Landlord and Tenant are unable to agree upon the Baseball Arbitrator, then the
same shall be designated by the American Arbitration Association (“AAA”). The Baseball Arbitrator selected by
the parties or designated by the AAA shall not have been employed by Landlord or Tenant during the previous five (5) year
period and shall have at least ten (10) years’ experience in the leasing of premises in the immediate vicinity of the
Building, comparable in size, location and quality to the Renewal Premises. The Baseball Arbitrator shall determine which of the
two (2) rent determinations, either Landlord’s Determination or Tenant’s Determination, more closely represents
the Fair Rental Value for the applicable Renewal Term, taking into account all relevant factors, whether favorable to Landlord
or Tenant. The Baseball Arbitrator may not select any other rental value for the Renewal Term other than Landlord’s Determination
or Tenant’s Determination. The determination of the Baseball Arbitrator shall be final and binding upon Landlord and Tenant
and shall serve as the basis for the Fixed Rent payable for the Renewal Term and Landlord and Tenant each consents to the entry
of judgment in any court having jurisdiction based upon such determination. After a determination has been made of the Fair Rental
Value, the parties shall execute and deliver an instrument setting forth the Fixed Rent for the applicable Renewal Term, but the
failure to so execute and deliver any such instrument shall not affect the determination of such Fixed Rent in accordance with
this Section 13.
(e) It
is an express condition of each Renewal Option granted to Tenant pursuant to the terms of this Section 13 that time
is of the essence with respect to Tenant’s exercise of each such option, and that failure to exercise any such option by
the date set forth herein shall render such option null and void and of no further force or effect. In addition, Tenant shall not
have any right to exercise the second Renewal Option unless Tenant shall have timely exercised the first Renewal Option.
(f) Notwithstanding
anything contained in this Section 13, the right to exercise the Renewal Options set forth herein shall be personal
to the Tenant named in this Agreement and its Permitted Transferees.
14. Additional
Lease Modifications. From and after the date of this Agreement,
(a) the
reference to “$900,000” in Section 6.1(A)(x)(iii) of the Original Lease is hereby deleted therefrom in its
entirety and replaced with “$1,300,000 in the aggregate, or $290,000 with respect to any one floor of the Premises”;
(b) the
reference to “One Million ($1,000,000) Dollars” in Section 6.1(B)(1) of the Original Lease is hereby deleted
therefrom in its entirety and replaced with “Two Million ($2,000,000) Dollars”;
(c) the
parenthetical at the end of the penultimate sentence in Section 6.1(B)(1) of the Original Lease is hereby revised to
read as follows: “(except that such security shall not be required with respect to the Initial Alterations, the Additional
Premises Initial Improvements and any initial Alterations to Expansion Space and/or Offer Space)”;
(d) in
the first sentence of Section 6.2 of the Original Lease, the words “or the Additional Premises Initial Improvements”
are hereby added immediately after the words “Initial Alterations”;
(e) Section 12.4
of the Lease is hereby revised as follows:
(i) the
second parenthetical in the first grammatical sentence of Section 12.4(A) is hereby deleted in its entirety and replaced
with the following text: “(including broad form property damage coverages and including contractual liability coverage)”;
(ii) the
first sentence of Section 12.4(B)(i) is hereby deleted from the Lease in its entirety and replaced with the following
text: “ ‘Special Form’ insurance, with commercially reasonable deductibles, protecting and indemnifying Tenant
against damage to or loss of any Alterations and leasehold improvements, including any made by Landlord to prepare the Premises
for Tenant’s occupancy, and Tenant’s Property.”;
(iii) the
phrase “with broad form all-states endorsement” in Section 12.4(B)(ii) is hereby deleted from the Lease in
its entirety;
(iv) Section 12.4(B)(iii),
is hereby deleted in its entirety; and replaced with the following text: “Business interruption insurance (including “Extra
Expense”) fully compensating for the amount of Fixed Rent, additional rent and other charges owed to Landlord by Tenant for
a period of not less than six (6) months.”; and
(v) the
penultimate grammatical sentence of Section 12.4(C) is hereby deleted in its entirety from the Lease and replaced with
the following text: “Tenant shall, not later than ten (10) Business Days prior to the Commencement Date, deliver to
Landlord certificates of insurance evidencing compliance with the provisions herein and shall thereafter furnish to Landlord, prior
to the expiration of any such policies and any renewal thereof, a new or renewal certificate of insurance evidencing compliance
with the provisions herein.”
(f) the
following provisions are hereby added to the Lease as Section 15.8:
“(A) Notwithstanding
anything to the contrary contained herein, in no event shall Tenant enter into any assignment, sublease or transfer for the possession,
use, occupancy or utilization (collectively for the purposes of this Section 15.8(A), “use”) of
all or any portion of the Premises which either (i) provides for a rental or other payment for such use based in whole or
in part on the income or profits derived by any person from the Premises (other than an amount based on a fixed percentage or percentages
of gross receipts or sales), and Tenant agrees that all assignments, subleases or transfers of any part of the Premises shall provide
that the person having an interest in the use of the Premises shall not enter into any lease or sublease which provides for a rental
or other payment for such use based in whole or in part on the income or profits derived by any person from the Premises (other
than an amount based on a fixed percentage or percentages of gross receipts of sales), or (ii) could cause any portion of
the amounts payable to Landlord hereunder to not constitute “rents from real property” within the meaning of Section 856(d) of
the Internal Revenue Code of 1986, as amended (the “Code”) and the Treasury regulations promulgated thereunder
(the “Regulations”). If Landlord concludes, based on the information set forth in the Sublease or Assignment
Statement provided pursuant to Section 15.4(B) or other information available to Landlord, that any proposed assignment,
sublease or other transfer could cause any portion of the amounts payable to Landlord hereunder to not constitute “rents
from real property” within the meaning of Section 856(d) of the Code or the Regulations, Landlord shall so notify
Tenant promptly after Landlord makes that determination, but in any event not less than thirty (30) days prior to the effective
date of the proposed assignment, sublease or other transfer stated in the notice or notices from Tenant, and Tenant shall not proceed
with the proposed assignment, sublease or other transfer, whether or not the consent of Landlord to the proposed assignment, sublease
or other transfer is required pursuant to the terms of Section 15.1 unless such transaction is modified accordingly.
Notwithstanding anything to the contrary contained herein, any assignment, sublease or other transfer entered into by Tenant shall
be specifically conditioned on compliance, and shall comply, with the provisions of this Section 15.8.
(B) Landlord
and Tenant agree that all Rentals payable by Tenant to Landlord shall qualify as “rents from real property” within
the meaning of Section 856(d) of the Code and the Regulations. In the event that Landlord, in its sole discretion, determines
that there is any risk that all or part of any Rental shall not qualify as “rents from real property” for the purposes
of Section 856(d) of the Code and the Regulations, Tenant agrees (i) to cooperate with Landlord by entering into
such amendment or amendments as Landlord deems necessary to qualify all payments as “rents from real property,” (ii) to
permit an assignment of this Lease to a taxable REIT subsidiary and (iii) to allow Landlord to assign any and all obligations
that Landlord has under this Lease to a third party independent contractor, within the meaning of Section 856(d)(3); provided,
however, that any adjustments required pursuant to this paragraph shall be made so as to produce the equivalent rental payments
(in economic terms) payable prior to such adjustment and the same shall not materially and adversely affect Tenant’s rights
and obligations under this Lease.”
(g) supplementing
and modifying Section 16.3 of the Original Lease, Landlord hereby covenants and agrees with Tenant that
(i) throughout the term of the Lease, the Building lobby shall remain on Varick Street and the Building shall not use a
Clarkson Street address for its office premises; and (ii) Landlord shall not install a roof deck on the Building as an
amenity for the common use of the tenants; provided that Landlord shall have the right to do so if (w) Landlord
shall have at least one (1) full floor in the Building available to lease at any time on or after the third (3rd)
anniversary of the Additional Premises Commencement Date, (x) Tenant has not leased such floor pursuant to a right in
the Lease or otherwise, (y) such roof deck shall not materially interfere with the usage of Tenant’s existing roof
deck and access thereto, and (z) such Landlord roof deck shall use no portion of Tenant’s existing roof deck other
than access to the Building fire stair as shown on the area hatched on Exhibit L (“Landlord’s Roof
Deck Fire Stair Access”) and Landlord shall, at its sole cost and expense, provide appropriate code compliant
security to separate such hatched area from Tenant’s existing roof deck with plans and security systems (e.g., gates,
card readers, etc.), all of which shall be subject to the approval of Tenant (which shall not be unreasonably withheld,
conditioned or delayed);
(h) the
last sentence of Section 28.1(B) of the Original Lease shall be inapplicable to the Additional Premises and the Additional
Basement Premises. However, in lieu of so-called free freight elevator usage for Tenant’s initial move into the Additional
Premises and the Additional Basement Premises, Landlord shall grant Tenant a credit in the amount of $20,400.00 against the installment(s) of
Fixed Rent due on the Additional Premises Rent Commencement Date;
(i) the
first two (2) sentences of Section 28.1(C) of the Original Lease are hereby deleted in their entirety and replaced
with the following text: “Furnish sufficient steam heat to the 10th – 12th floors, the Additional
Premises and the Additional Basement Premises for the comfortable occupancy of such portions of the Premises through perimeter
radiators. The Building’s heating system will be so operated by Landlord during the cold season on Business Days from 8:00
a.m. through and including 8:00 p.m. (‘Heating Hours’), and, upon the request of Tenant pursuant to
Section 28.2, during Overtime Periods (it being agreed that for such purpose, Overtime Periods shall mean at times other than
during Heating Hours) at Landlord’s customary charge therefor (which Landlord represents is currently $175 per hour, subject
to increase, if at all, based only upon actual increases in rates charged by the utility supplying steam to the Building), which
amounts shall be payable to Landlord as Additional Rent within thirty (30) days after written notice thereof.”;
(j) supplementing
and modifying Section 28.1(F)(i) of the Original Lease, upon the expiration of Landlord’s cleaning contract for
the Building, Landlord shall include Tenant’s above-standard cleaning specifications as an “add alternate” with
breakout pricing in its bid for the Building’s next cleaning contract, provided, however, that Tenant shall pay that portion
of the cost of such cleaning contract attributable to such above-standard cleaning specifications;
(k) supplementing
and modifying Article 31 of the Original Lease, Tenant shall have the right to maintain identifying signage on the exterior
of the Building in the location of the Storefront as set forth on Schedule N of the Original Lease, subject to Landlord’s
reasonable approval of the size, materials, quality, design, color, lettering and method of installation of such signage (which
approval Landlord shall not unreasonably withhold, condition or delay), and provided further that the same shall (x) comply
with applicable Laws, the Building’s Rules and Regulations and the Building Rules and Regulations for Construction
Work and (y) constitute Specialty Alterations which Tenant must remove upon the expiration or earlier termination of the Lease
(as amended by this Agreement);
(l) supplementing
and modifying Section 28.7 of the Original Lease, Landlord shall provide Tenant, at no cost to Tenant, non-exclusive access
to a shaftway in the Building from the Building’s point of entry to the Additional Premises and the Additional Basement Premises
(and to any Expansion Space and Offer Space, if applicable) for Tenant to install, at its sole cost and expense, conduits for the
installation, removal, replacement, repair, maintenance and operation therein, of Tenant’s telecommunications lines and cables.
Tenant shall also have the right, to extend its existing condenser water supply and return and domestic water risers in order to
provide for a five inch (5”) condenser water supply and five inch (5”) condenser water return riser and associated
supports and a three inch (3”) hot water supply and three inch (3”) hot water return piping and associated supports,
in each case to serve the Additional Premises, the Additional Basement Premises and any Expansion Space and Offer Space, if applicable.
Such conduits, risers, piping and other installations shall be Alterations governed by the provisions of Article 6 of the
Original Lease (as amended by this Agreement);
(m) supplementing
and modifying Section 41.1(B) of the Original Lease, Landlord and Tenant agree that Tenant shall remove all material
finishes from the Terrace upon the expiration or earlier termination of the Lease, except that all structural steel installed in
connection therewith shall remain in place, and the Terrace shall be delivered to Landlord in good, watertight condition, in compliance
with all applicable Laws;
(n) intentionally
omitted;
(o) the
definition of Offer Space set forth in Section 43.1(B) of the Original Lease is hereby deleted in its entirety and replaced
with the following text: ‘‘‘Offer Space’ means any space on the fourth (4th), eighth (8th) or ninth
(9th) floors of the Building, provided that from and after July 1, 2018, Offer Space shall also include any space not leased
to Tenant on the sixth (6th) floor of the Building; provided further, however, that if more than one Offer Space
shall become Available at the same time, Tenant shall first be required to lease any full floor of the Offer Space that is contiguous
(horizontally or vertically) with the then existing Premises before leasing any non-contiguous Offer Space.”;
(p) the
rights granted to Tenant in Article 43 of the Original Lease (as amended by this Agreement) shall be personal to the Tenant
named in this Agreement and any of Permitted Transferee, and may not be exercised by any other party;
(q) Landlord
hereby approves (i) Tenant’s additional installations on the roof of the Building set forth on Schedule J annexed
hereto, and (ii) the location of Tenant’s fresh air duct in the 6th floor common corridor as set forth on Schedule
K annexed hereto, in each case, subject to the terms and conditions of Article 6 of the Lease;
(r) supplementing
and modifying the Rules and Regulations for the Building, subject to the terms and conditions set forth in this Section,
Landlord hereby permits Tenant to bring to the Building fully domesticated, fully vaccinated, trained dogs weighing no more
than 50 pounds (hereinafter referred to individually as a “Permitted Dog”, and collectively as the
“Permitted Dogs”), which are owned by Tenant’s employees as pets (as opposed to guide or service
dogs as defined in applicable Laws), and to keep such Permitted Dogs in the Premises during those times in which such
employees are present in the Premises. At no time shall there be more than ten (10) Permitted Dogs on any full floor of
the Premises at any one time, and a pro rata portion of such ten (10) Permitted Dogs on any partial floor of the
Premises. The Permitted Dogs, accompanied by their owners, shall be transported to and from the Premises only through
Tenant’s Clarkson Street lobby using the Exclusive Elevators (including the Additional Exclusive Elevator). Tenant
shall be responsible for monitoring compliance with the provisions of this Section. Permitted Dogs shall not be left
unattended in the Premises or any part of the Building at any time. In all portions of the Building other than the Premises
(specifically including, without limitation, all common areas), Permitted Dogs shall, at all times, remain on a leash and be
controlled by Tenant’s employees, and shall not be permitted to walk or otherwise roam through the Building, except for
entry and egress to the Premises. Tenant shall be responsible for any damage and/or costs incurred by Landlord as a result of
Permitted Dogs’ presence in any portion of the Building. Without limiting the generality of the foregoing, Tenant shall
promptly repair any damage caused by Permitted Dogs to the Building or the Premises, and Tenant shall indemnify, protect,
defend and hold Landlord harmless from and against all losses, damages, claims, actions, causes of action, liabilities, costs
and expenses (including reasonable attorneys’ fees) incurred by Landlord in connection with the rights granted to
Tenant under this Section. Tenant’s rights under this Section are subject to, and Tenant shall comply with, all
applicable Laws associated with or governing the presence of dogs at or within the Building. The rights granted herein with
respect to Permitted Dogs shall not apply or be transferable to any other animal, and in the event Tenant wishes to bring an
animal or dog other than Permitted Dogs into the Building, Tenant shall submit a written request to Landlord for its
approval, which approval may be withheld in Landlord’s sole and absolute discretion. Further, Tenant agrees not to
knowingly bring any Permitted Dog to the Building in the event such Permitted Dog becomes ill or contracts a disease that
could potentially threaten the health or wellbeing of any tenant or occupant of the Building (which diseases shall include,
without limitation, rabies, leptospirosis, flea infestation and Lyme disease). Landlord shall have the right to preclude
access to the Building of any Permitted Dog if such Permitted Dog is, in Landlord’s reasonable judgment after
consultation with Tenant, found to violate the prior sentence or to be a substantial nuisance to the Building (for purposes
hereof, the causes for which Permitted Dogs may be found to be a “substantial nuisance” include but are not
limited to (i) repeated or excessively loud barking by such Permitted Dog, (ii) such Permitted Dog biting any
occupant or invitee of the Building, (iii) failure to clean up any defecation or urination by such Permitted Dog
immediately upon verbal or other notice from Landlord, (iv) such Permitted Dog otherwise damaging or destroying the
Building or the Premises (or any property therein) or (v) the Permitted Dog fighting or otherwise creating a disturbance
with other Permitted Dogs. Notwithstanding anything to the contrary contained in the Lease (including Landlord’s right
to make changes to the Rules and Regulations for the Building), Landlord may not amend or modify the conditions and/or
restrictions set forth in this Section relating to Tenant’s rights to bring Permitted Dogs in the Building in
accordance with this Section;
(s) Section 15.3(b)(i) of
the Original Lease is hereby deleted in its entirety and replaced with the following text: “a change in ownership of Tenant
as a result of a merger, consolidation or reorganization, or the sale of all or substantially all of Tenant’s assets or all
or substantially all of the stock and/or other equity ownership interests in Tenant (provided such merger, consolidation, reorganization
or transfer of assets or equity ownership interests is for a good business purpose and not principally for the purpose of transferring
the leasehold estate created by this Lease, and provided further, that the assignee has a net worth at least equal to or in excess
of the net worth of Tenant immediately prior to such transaction);” and
(t) the
first “bullet point” in Section 4.0 of Article II of Schedule B of the Original Lease is hereby deleted in
its entirety and replaced with the following text: “Trinity Real Estate facilities encourages the use of union trades and
requires that work be performed in accordance with Article 6 of the annexed Lease.”
15. Certification;
Ratification. As of the date hereof, Tenant certifies to Landlord that to the best of Tenant’s knowledge, (i) Landlord
is not in default under the terms or conditions of the Lease and Tenant is not entitled to any credits or offsets against the rent
due thereunder; and (ii) no event has occurred which would constitute a default under the Lease, either upon service of notice
or the passage of time. Except as and to the extent modified by this Agreement, all of the terms, covenants and conditions of the
Lease are hereby ratified and confirmed and shall remain in full force and effect.
16. Signatures.
This Agreement is offered for signature by Tenant and it is understood that this Agreement shall not be binding upon Landlord or
Tenant unless and until Landlord shall have executed and delivered a fully-executed copy of this Agreement to Tenant.
17. No
Oral Modification. This Agreement may not be changed or terminated orally, but only by an agreement in writing signed by Landlord
and Tenant.
18. Counterparts;
Electronic Signatures, Etc. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original,
but all of which when taken together will constitute one and the same instrument. The signature page of any counterpart of
this Agreement may be detached therefrom without impairing the legal effect of the signature(s) thereon provided such signature
page is attached to any other counterpart of this Agreement identical thereto except having an additional signature page executed
by the other party(ies) to this Agreement attached thereto. An executed counterpart of this Agreement transmitted by facsimile,
email or other electronic transmission shall be deemed an original counterpart and shall be as effective as an original counterpart
of this Agreement and shall be legally binding upon the parties hereto to the same extent as delivery of an original counterpart.
* * *
[Remainder of Page Intentionally
Left Blank; Signature Page Follows.]
IN WITNESS WHEREOF, this Agreement
has been executed as of the day and year first above written.
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LANDLORD:
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TRINITY HUDSON HOLDINGS, LLC
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By:
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/s/ Susan MacEachron
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Susan MacEachron
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Chief Financial Officer
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By:
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/s/ John Franqui
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John Franqui
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COO
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TENANT:
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SQUARESPACE, INC.
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By:
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/s/ Nicole Anasenes
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Name:
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Nicole Anasenes
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Title:
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CFO
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Exhibit 10.19
Execution Copy
SECOND AMENDMENT OF LEASE
THIS SECOND AMENDMENT OF LEASE, dated as
of the 6th day of October 2017 (this “Agreement”), made by and between TRINITY HUDSON HOLDINGS, LLC, a Delaware
limited liability company, having its office at 120 Broadway, 38th Floor, New York, New York 10271 (“Landlord”),
and SQUARESPACE, INC., a Delaware corporation, having an address at 225 Varick Street, 12th Floor, New York, New York 10014 (“Tenant”).
W I T N E S S E T H:
WHEREAS,
Landlord and Tenant are the parties to an Agreement of Lease dated as of September 19, 2014 (the “Original Lease”),
which Original Lease has been amended by (i) a letter from Tenant to Landlord, dated March 24, 2015 (the “Terrace Elevator
Work Letter”), (ii) a Commencement Date Agreement, dated as of April 23, 2015
(the “Commencement Date Agreement”), and (iii) a First Amendment of Lease dated as of August 18, 2017 (the “First
Amendment”; the Original Lease, as amended by the Terrace Elevator Work Letter, the Commencement Date Agreement and the First
Amendment, collectively, the “Lease”), whereby Landlord leases to Tenant the premises more fully described in
the Lease (the “Existing Premises”) in the building known as 225 Varick Street, New York, New York (the “Building”)
for a term expiring on October 31, 2030 (the “Fixed Expiration Date”); and
WHEREAS, Landlord and Tenant desire to amend
the Lease to add certain additional premises to the premises demised under the Lease and to otherwise amend the provisions of the
Lease, all upon and subject to the terms and conditions contained in this Agreement.
NOW, THEREFORE, in consideration of the
premises and of the mutual covenants and conditions hereinafter set forth, the parties agree as follows:
1. Defined
Terms; Interpretation. All capitalized terms used in this Agreement which are not otherwise defined herein shall have the meanings
ascribed to them in the Lease. All references to “the Lease” or “this Lease” in the Lease or in this Agreement
shall be deemed to mean the Lease, as amended by this Agreement. Words in the singular shall include the plural and words in the
plural shall include the singular.
2. Expanded
Additional Premises; Delivery of Possession; Delayed Commencement.
(a) (i) The
portion of the rentable area of the sixth (6th) floor of the Building, which the parties conclusively agree shall be deemed
to contain 6,347 rentable square feet, as more particularly shown hatched on the plan annexed hereto as Schedule A
(the “Expanded Additional Premises”), is hereby added to and shall be considered a part of the Premises
demised under the Lease, commencing on the Expanded Additional Premises Commencement Date (as hereinafter defined) and
expiring on the Expiration Date (i.e., concurrently with the Lease for the balance of the Premises); it being agreed
that such Expanded Additional Premises Commencement Date is anticipated to occur on or about April 1, 2018. For the purposes
of this Agreement, the “Expanded Additional Premises Commencement Date” shall mean the date on which
Landlord’s Expanded Additional Premises Work (as hereinafter defined) is Substantially Complete (as hereinafter
defined) and Landlord shall have tendered delivery of vacant, broom-clean possession of the Expanded Additional Premises to
Tenant free of occupants and free and clear of any and all rights of any other tenants or occupants of the Building. Landlord shall deliver the Expanded Additional Premises
with the Building Systems that service the Expanded Additional Premises being in good working order; it being understood that (x)
except for Landlord’s Expanded Additional Premises Work, Landlord shall not be obligated to perform any work to prepare the
Expanded Additional Premises for Tenant’s initial occupancy thereof, and (y) except as set forth herein, Landlord makes no
representations, warranties or promises with respect to the Expanded Additional Premises. The foregoing is not intended to relieve
Landlord from its ongoing maintenance and repair obligations set forth in the Lease. Landlord hereby leases to Tenant, and Tenant
hereby hires from Landlord, the Expanded Additional Premises upon and subject to all of the terms and conditions of the Lease applicable
to the Existing Premises, except as otherwise expressly set forth herein, and all references in the Lease to the Premises shall,
from and after the Expanded Additional Premises Commencement Date, be deemed to refer to both the Existing Premises and the Expanded
Additional Premises, except as otherwise expressly set forth herein.
(ii) The parties acknowledge and agree that
this Agreement has been structured so that provided that no Event of Default is then outstanding, the Fixed Rent with respect
to the Expanded Additional Premises (as provided in Section 4 below) shall be abated during the EAP Fixed Rent Abatement
Period (as hereinafter defined). Tenant shall continue to pay all Additional Rent applicable during the EAP Fixed Rent Abatement
Period. For the purposes hereof, the “EAP Fixed Rent Abatement Period” shall be a period of three hundred fifty-three
(353) days commencing on the Expanded Additional Premises Commencement Date. If during the EAP Fixed Rent Abatement Period, an
Event of Default shall have occurred and thereafter shall have been cured by Tenant and the Lease shall not have been terminated
by Landlord, Tenant shall again have the right to receive such abatement in the amount of the outstanding balance of such abatement
in accordance with the provisions of this Section 2(a)(ii).
(iii) Following
the Expanded Additional Premises Commencement Date, either party shall, within five (5) days after the other party’s request,
execute an agreement substantially in the form of Schedule E annexed to the Original Lease memorializing the Expanded Additional
Premises Commencement Date; provided, however, that the failure of the parties to so prepare and/or execute such
agreement shall not negate the establishment of such date, as reasonably determined by Landlord.
(b) (i) Landlord,
at its expense and in compliance with all applicable Requirements, shall diligently perform the following work in the Expanded
Additional Premises (“Landlord’s Expanded Additional Premises Work”), prior to delivery of the Expanded
Additional Premises to Tenant and the occurrence of the Expanded Additional Premises Commencement Date:
(A) demolish
all leasehold improvements in the interior of the Expanded Additional Premises back to the core walls and deliver the Expanded
Additional Premises legally demised in vacant and broom-clean condition;
(B) deliver
a Form ACP-5 with respect to the demolished Expanded Additional Premises;
(C) deliver
any existing perimeter radiators serving the Expanded Additional Premises in good working order with Danfoss control valves with
control handles, or, at Tenant’s option, demolish and remove such existing perimeter radiators and all associated plumbing
(it being agreed that if Tenant shall desire to have the existing perimeter radiators and associated plumbing demolished, Tenant
shall provide notice of such requirement to Landlord within fifteen (15) days after the date of this Agreement, with time being
of the essence); and
(D) flash
patch columns, walls and ceilings, as necessary, and remove the topping slab and grind the slab to flat (if the same exists).
(ii) Landlord
will give Tenant written notice at least ten (10) Business Days in advance of the date when Landlord expects Landlord’s Expanded
Additional Premises Work to be Substantially Completed, but, Landlord shall not incur any liability whatsoever to Tenant in the
event Landlord’s Expanded Additional Premises Work is not Substantially Completed by any such date.
(c) For
the purposes of this Agreement, “Substantially Completed” or “Substantial Completion” or
“Substantially Complete” shall have the meaning ascribed to such terms as set forth in the Original Lease except
that all references therein to: (i) “Landlord’s Pre-Delivery Work” shall mean “Landlord’s Expanded
Additional Premises Work,” and (ii) “Landlord’s Post-Delivery Work” shall mean “EAP Post-Commencement
Work.” For the avoidance of doubt, all the provisions set forth in the definition of “Substantially Completed”
or “Substantial Completion” or “Substantially Complete” set forth in the Original Lease shall apply to
Landlord’s Expanded Additional Premises Work and EAP Post Commencement Work, including, without limitation, the conduct of
a walk-through and Landlord’s obligation with respect to completing all Punchlist Items respecting Landlord’s Expanded
Additional Premises Work and EAP Post-Delivery Work.
(d) (i) Following
the Expanded Additional Premises Commencement Date, Landlord, at its expense and in compliance with all applicable Requirements,
shall diligently perform the following work in the Expanded Additional Premises (the “EAP Post- Commencement Work”):
(A) Fireproof
and firestop the Expanded Additional Premises, as necessary;
(B) Ensure
that all exterior windows in the Expanded Additional Premises are placed in good working order and are of consistent style and
condition;
(C) Ensure
that all Building Systems are stubbed to the core of the sixth (6th) floor of the Building in good working order (it being agreed
that Tenant shall connect such Building Systems and services to the Expanded Additional Premises);
(D) Furnish
a demand electrical load of six (6) watts per usable square foot of the Expanded Additional Premises exclusive of the electricity
to operate the Building Systems, the Exclusive Elevators (including the Tenant’s AC System, Tenant’s Communications
Equipment and Tenant’s Generator, if any), but inclusive of the electricity utilized by any Supplemental AC Systems serving
the Expanded Additional Premises (the “Additional Basic Capacity”); it being agreed that for the purposes of
this subparagraph (D) only, the usable square footage of the Expanded Additional Premises shall be deemed to be 4,068;
(E) Furnish
subpanels for the connection of the Expanded Additional Premises to the Building’s Class E System; and
(F) Slab
over any openings between the floors of the Expanded Additional Premises and any vertically contiguous space leased to other tenants.
(ii) For
the avoidance of doubt, the EAP Post-Commencement Work shall not be required to be Substantially Completed as a condition to the
occurrence of the Expanded Additional Premises Commencement Date. Landlord shall perform the EAP Post- Commencement Work diligently,
and Landlord and Tenant shall take commercially reasonable steps to coordinate the performance of the EAP Post-Commencement Work
by Landlord and the performance of the Expanded Additional Premises Initial Improvements (as hereinafter defined) by Tenant so
that neither is delayed in the completion of its work. Tenant shall provide Landlord access to the Expanded Additional Premises
as necessary to perform the EAP Post- Commencement Work without the same constituting a constructive eviction and without any abatement
of Rental. Notwithstanding the foregoing, Landlord shall use commercially reasonable efforts to perform the EAP Post-Commencement
Work in a manner so as not to delay Tenant in the completion of the Expanded Additional Premises Initial Improvements or in the
occupancy of the Expanded Additional Premises for the conduct of Tenant’s business.
(iii) All
references in the Lease to Landlord’s Work, the Initial Alterations, the Tenant Improvement Allowance, the Additional Premises
Improvement Allowance, the Storefront Alterations, the Restroom Alterations and Tenant’s AC System Alterations shall be
deemed applicable only to the Existing Premises.
(iv) With
respect to the Expanded Additional Premises Initial Improvements, Landlord hereby approves the contractors and subcontractors
listed on Schedule H annexed to the First Amendment.
(e) The
provisions of Section 12(e) of the First Amendment shall apply to the Expanded Additional Premises, mutatis mutandis, provided
that (i) the term “Expansion Space” or “applicable Expansion Space” shall be deemed to mean the Expanded
Additional Premises, (ii) the term “Anticipated Expansion Date” or “applicable Anticipated Expansion Date”
shall be deemed to mean April 1, 2018, and (iii) the term “applicable Expansion Space Commencement Date” or “Expansion
Space Commencement Date” shall be deemed to mean the Expanded Additional Premises Commencement Date.
(f) Landlord
represents that it has entered into that certain Lease Termination and Surrender Agreement, dated September 13, 2017, with
Reservoir Media Management, Inc. (“Current Tenant”) with respect to the relocation of Current Tenant from
the Expanded Additional Premises (or a portion thereof) to a new premises located at 75 Varick Street, New York, New York
(the “New Premises”). Landlord agrees to use commercially reasonable and good faith efforts to pursue and
effectuate such relocation of Current Tenant. Notwithstanding anything to the contrary contained in this Agreement, if the
Expanded Additional Premises Commencement Date shall not have occurred on or before June 30, 2018 as a result of (x) the failure
to so relocate the Current Tenant, despite the commercially reasonable and good faith efforts of Landlord and (y) the Current
Tenant duly exercising its right to terminate that certain Agreement of Lease between Trinity REIT, Inc. and Current Tenant,
dated as of September 13, 2017, with respect to the New Premises, for the failure of the commencement date to timely occur
thereunder, then, upon notice from Landlord to Tenant thereof, (I) this Agreement shall be null and void and of no further
force or effect and the Expanded Additional Premises shall become Offer Space under the terms and conditions of Article 43 of
the Lease and (II) Landlord shall return the Lump Sum Payment (as hereinafter defined) to Tenant within fifteen (15) days of
the giving of such notice.
3. Expanded
Additional Premises Improvement Allowance. In consideration of Tenant’s acceptance of the Expanded Additional Premises
in its “as is” condition (except for Landlord’s Expanded Additional Premises Work and the EAP Post-Commencement
Work as expressly set forth in this Agreement), and Tenant’s agreement to perform leasehold improvements to prepare the Expanded
Additional Premises for Tenant’s initial occupancy (the “Expanded Additional Premises Initial Improvements”),
Tenant shall be entitled to the Expanded Additional Premises Improvement Allowance (as hereinafter defined), which shall be disbursed
to Tenant in accordance with the terms and conditions of Section 6.5 of the Original Lease once such amount has been determined
in accordance with the provisions of this Section 3, provided that (a) all references therein to (i) the “Premises”
shall be deemed to refer to the “Expanded Additional Premises”, (ii) the “Initial Alterations” shall be
deemed to refer to the “Expanded Additional Premises Initial Improvements”, (iii) the “Tenant Improvement Allowance”
shall be deemed to refer to the “Expanded Additional Premises Improvement Allowance” and (iv) the “Commencement
Date” shall be deemed to refer to the “Expanded Additional Premises Commencement Date”; (b) the reference in
Section 6.5(B)(ii) to “the entire rentable areas of the 10th, 11th and 12th floors”
shall be deemed to refer to “the entire Expanded Additional Premises”; and (c) Section 6.5(F) of the Original Lease
shall not be applicable to this Section 3. The Expanded Additional Premises Initial Improvements shall be subject to all
of the terms and conditions of Article 6 of the Original Lease, including without limitation, Landlord’s approval of the
plans and specifications therefor. For the purposes hereof, the term “Expanded Additional Premises Improvement Allowance”
shall mean an amount equal to $460,767.79.
4. Fixed
Rent.
(a) Tenant
shall continue to pay the Fixed Rent and Operating Expense Payment applicable to the Existing Premises pursuant to the terms and
conditions of the Lease (as unamended by this Agreement).
(b) Subject
to the provisions of Section 2(a)(ii) above, in addition, from and after the Expanded Additional Premises Commencement
Date, Tenant shall pay the Fixed Rent and Operating Expense Payment applicable to the Expanded Additional Premises at the rates
set forth on Schedule B annexed hereto.
5. Escalation
Rent.
(a) Tenant
shall continue to pay the Escalation Rent applicable to the Existing Premises pursuant to the terms and conditions of Article 3
of the Lease (as unamended by this Agreement).
(b) In
addition, from and after the Expanded Additional Premises Commencement Date, Tenant shall pay Escalation Rent applicable to the
Expanded Additional Premises in accordance with the terms and conditions of Article 3 of the Lease, provided, however, that
as applicable to the Expanded Additional Premises, (i) the term “Base Tax Factor” shall mean the Taxes payable
for the calendar year commencing on January 1, 2018 and ending on December 31, 2018, and (ii) the term “Tenant’s
Share” shall mean 1.739%.
6. Electric
Current. As of the Expanded Additional Premises Commencement Date, as applicable, Landlord shall furnish the Additional Basic
Capacity to the Expanded Additional Premises, and in no event shall the electrical load in the Expanded Additional Premises exceed
the Additional Basic Capacity. Such electricity shall be provided upon and subject to the terms and conditions set forth in Article
4 of the Original Lease, except that with respect to the Expanded Additional Premises, the reference in Section 4.2(A) of the Original
Lease to “one hundred eight percent (108%)” shall be deemed to refer to “one hundred four percent (104%)”.
7. Brokers.
Each of Landlord and Tenant represents and warrants that it has had no dealings or communications with any broker or agent in connection
with this Agreement, other than CBRE, Inc. (the “Broker”). Landlord and Tenant covenant and agree to pay, hold
harmless and indemnify the other party from and against any and all claims or other liability for any compensation, commissions
or charges claimed by any broker or agent (other than the Broker with respect to Tenant’s indemnity to Landlord) who claims
to have dealt with the indemnitor in connection with this Agreement and for any and all costs incurred by the indemnitee in connection
with such claims, including without limitation, attorneys’ fees and disbursements. Landlord shall pay the Broker its commission
pursuant to one or more separate agreements. The provisions of this Section 7 shall survive the expiration or sooner termination
of this Agreement. Article 32 of the Lease (Broker) and Section 10 of the First Amendment (Brokers) shall not apply to this Agreement.
8. Lump
Sum Payment. Notwithstanding anything to the contrary contained in this Agreement, within ten (10) Business Days after the
date of this Agreement, Tenant shall make a one-time Additional Rent payment to Landlord of $437,000.00 (the “Lump Sum
Payment”) by good and sufficient check drawn to the Landlord’s order on a bank or trust company which is a member
of the New York Clearinghouse Association with an office in the Borough of Manhattan, the City of the New York, State of New York,
at the office of Landlord or at such other place as Landlord may designate or by wire transfer of immediately available funds in
United Stated Dollars to an account designated by Landlord.
9. Certification;
Ratification. As of the date hereof, Tenant certifies to Landlord that to the best of Tenant’s knowledge, (i) Landlord
is not in default under the terms or conditions of the Lease and Tenant is not entitled to any credits or offsets against the rent
due thereunder; and (ii) no event has occurred which would constitute a default under the Lease, either upon service of notice
or the passage of time. Except as and to the extent modified by this Agreement, all of the terms, covenants and conditions of the
Lease are hereby ratified and confirmed and shall remain in full force and effect.
10. Signatures.
This Agreement is offered for signature by Tenant and it is understood that this Agreement shall not be binding upon Landlord or
Tenant unless and until Landlord shall have executed and delivered a fully-executed copy of this Agreement to Tenant.
11. No
Oral Modification. This Agreement may not be changed or terminated orally, but only by an agreement in writing signed by Landlord
and Tenant.
12. Governing
Law. This Agreement shall be governed by and construed in accordance with New York law, without regard to conflicts of law
principles.
13. Counterparts;
Electronic Signatures, Etc. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original,
but all of which when taken together will constitute one and the same instrument. The signature page of any counterpart of this
Agreement may be detached therefrom without impairing the legal effect of the signature(s) thereon provided such signature page
is attached to any other counterpart of this Agreement identical thereto except having an additional signature page executed by
the other party(ies) to this Agreement attached thereto. An executed counterpart of this Agreement transmitted by facsimile, email
or other electronic transmission shall be deemed an original counterpart and shall be as effective as an original counterpart of
this Agreement and shall be legally binding upon the parties hereto to the same extent as delivery of an original counterpart.
* * *
[Remainder of Page Intentionally Left
Blank; Signature Page Follows.]
IN WITNESS WHEREOF, this Agreement
has been executed as of the day and year first above written.
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TRINITY HUDSON HOLDINGS, LLC
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By:
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/s/ Susan MacEachron
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Susan MacEachron
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Chief Financial Officer
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By:
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/s/ David Godbout
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David Godbout
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Chief Executive Officer
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TENANT:
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SQUARESPACE, INC.
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By:
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/s/ Courtenay O’Connor
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Courtenay O’Connor
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Title:
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Senior Counsel
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Exhibit 10.20
THIRD AMENDMENT OF LEASE
THIS THIRD AMENDMENT OF LEASE, dated as
of the 22d day of May 2019 (this “Agreement”), made by and between TRINITY HUDSON HOLDINGS, LLC, a Delaware
limited liability company, having its office at 120 Broadway, 38th Floor, New York, New York 10271 (“Landlord”),
and SQUARESPACE, INC., a Delaware corporation, having an address at 225 Varick Street, 12th Floor, New York, New York 10014
(“Tenant”).
W I T N E S E T H:
WHEREAS, Landlord and Tenant are the parties
to an Agreement of Lease dated as of September 19, 2014 (the “Original Lease”), which Original Lease has
been amended by (i) a letter from Tenant to Landlord, dated March 24, 2015, (ii) a Commencement Date Agreement,
dated as of April 23, 2015, (iii) a letter dated June 30, 2016 (iv) a First Amendment of Lease dated as of
August 18, 2017 (the “First Amendment”), (v) a Second Amendment of Lease dated as of October 6,
2017, and (vi) a letter dated August 2, 2018 (the Original Lease, as so amended, the “Lease”), whereby
Landlord leases to Tenant portions of the rentable areas of the ground floor, basement and sixth (6th) floor, and the entire rentable
area of each of the fifth (5th), tenth (10th), eleventh (11th) and twelfth (12th) floors (as more particularly set forth in the
Lease, the “Original Premises”) of the building known as 225 Varick Street, New York, New York (the “Building”)
for a term expiring on October 31, 2030; and
WHEREAS, Landlord and Tenant desire to amend
the Lease to add certain additional premises to the premises demised under the Lease and to otherwise amend the provisions of the
Lease, all upon and subject to the terms and conditions contained in this Agreement.
NOW, THEREFORE, in consideration of the
premises and of the mutual covenants and conditions hereinafter set forth, the parties agree as follows:
1. Defined
Terms. All capitalized terms used in this Agreement which are not otherwise defined herein shall have the meanings ascribed
to them in the Lease.
2. Additional
Premises.
(a) (i) A
portion of the rentable area of the sixth (6th) floor of the Building, which the parties conclusively agree shall be deemed to
contain 7,214 rentable square feet, as more particularly shown darkened on the plan annexed hereto as Schedule A-1 (the “Additional
Premises”), is hereby added to and shall be considered a part of the Premises demised under the Lease, commencing on
the date (the “Additional Premises Commencement Date”) on which Landlord’s Additional Premises Work (as
hereinafter defined) is Substantially Complete and expiring on the Expiration Date (i.e., concurrently with the Lease for the balance
of the Premises), provided that the Additional Premises Commencement Date may not occur prior to January 1, 2020. Upon the
occurrence of the Additional Premises Commencement Date, Tenant shall be leasing the entire rentable area of the sixth (6th) floor
of the Building as more particularly shown on the floor plan annexed hereto as Schedule A-2. Landlord shall deliver vacant,
broom-clean possession of the Additional Premises to Tenant on the Additional Premises Commencement Date, with (i) Landlord’s Additional
Premises Work Substantially Complete, and (ii) the Building Systems that service the Additional Premises being in good working
order; it being understood that (x) except for Landlord’s Additional Premises Work, Landlord shall not be obligated
to perform any work to prepare the Additional Premises for Tenant’s initial occupancy thereof, and (y) except as set
forth herein, Landlord makes no representations, warranties or promises with respect to the Additional Premises. The foregoing
is not intended to relieve Landlord from its ongoing maintenance and repair obligations set forth in the Lease. Landlord hereby
leases to Tenant, and Tenant hereby hires from Landlord, the Additional Premises upon and subject to all of the terms and conditions
of the Lease applicable to the Original Premises, except as otherwise expressly set forth herein, and all references in the Lease
to the Premises shall, from and after the Additional Premises Commencement Date, be deemed to refer to both the Original Premises
and the Additional Premises, except as otherwise expressly set forth herein.
(ii) The
“Additional Premises Rent Commencement Date” shall mean the date that is ten (10) months after the Additional
Premises Commencement Date.
(iii) Following
the Additional Premises Commencement Date, either party shall, within five (5) days after the other party’s request,
execute an agreement substantially in the form of Schedule E annexed to the Original Lease memorializing the Additional
Premises Commencement Date; provided, however, that the failure of the parties to so prepare and/or execute such
agreement shall not negate the establishment of such dates as reasonably determined by Landlord in accordance with the terms of
this Section 2(a). Landlord shall have no liability to Tenant for Landlord’s failure to deliver the Additional Premises
on any particular date (except as provided in Section 2(b)(iii) below).
(b) (i) Landlord,
at its expense and in compliance with all applicable Requirements, shall diligently perform the following work in the Additional
Premises (“Landlord’s Additional Premises Work”), prior to delivery of the Additional Premises to Tenant
and the occurrence of the Additional Premises Commencement Date:
(A) Demolish
(x) all leasehold improvements in the interior of the Additional Premises back to the core walls, including the toilets in
the core restrooms on the sixth (6th) floor adjacent to the Additional Premises, (y) the common corridor that connects the
Building elevators to the Additional Premises and (z) the demising wall between the Additional Premises and the portion of
the Original Premises in the northwest corner of the Building, and deliver the Additional Premises in vacant and broom-clean condition;
(B) deliver
a Form ACP-5 with respect to the demolished Additional Premises;
(C) deliver
any existing perimeter radiators serving the Additional Premises in good working order with Danfoss control valves with
control handles, or, at Tenant’s option, demolish and remove the existing perimeter radiators and all associated
plumbing (it being agreed that if Tenant shall desire to have the existing perimeter radiators and associated plumbing
demolished, Tenant shall provide notice of such requirement to Landlord within fifteen (15) Business Days after the date of
this Agreement, with time being of the essence);
(D) flash
patch columns, walls and ceilings, as necessary, and, to the extent it exists, remove the topping slab and grind the slab to flat
in the Additional Premises (it being agreed that Tenant shall be responsible for polishing and sealing the slabs of the Additional
Premises);
(E) replace
the existing steam riser expansion pipe loops, where applicable, with new inline expansion joints (i.e., a bellow, x-flex, slip
and/or universal-type expansion joint); and
(F) At
Tenant’s option, to be exercised by notice given by Tenant to Landlord within fifteen (15) Business Days after the date of
this Agreement, pin and sheetrock over the existing Building passenger elevator cab openings in the Additional Premises and program
the Building passenger elevators so that they will no longer stop on the sixth (6th) floor of the Building (it being
agreed that Tenant shall have the right, at Tenant’s option and at Tenant’s expense, to unpin the Building passenger
elevators on all floors leased by Tenant).
(ii) Landlord
will give Tenant written notice at least ten (10) Business Days in advance of the date when Landlord expects Landlord’s
Additional Premises Work to be Substantially Completed but Landlord shall not incur any liability whatsoever to Tenant in the event
Landlord’s Additional Premises Work is not Substantially Completed by any such date.
(iii) Notwithstanding
the foregoing or anything contained herein to the contrary, Landlord shall endeavor to cause Substantial Completion of
Landlord’s Additional Premises Work to occur on or prior to January 31, 2020 (such date, subject to day-for-day
extension due to Unavoidable Delays, delays caused by Tenant or Persons Within Tenant’s Control and for not more than
60 days the holdover of the current tenant of the Additional Premises beyond October 31, 2019, which is the date its
lease of the Additional Premises shall terminate, the “First Target Date”), and provided that no Event of
Default shall have occurred and then be continuing, if Landlord shall not have achieved Substantial Completion of
Landlord’s Additional Premises Work (A) by the First Target Date (as so extended), Tenant shall be entitled as
Tenant’s sole and exclusive remedy by reason of such delay, to a credit against the first Fixed Rent thereafter due and
payable in the amount of $1,423.76 for each day after the Target Date until Landlord’s Additional Premises Work is
Substantially Completed, or (B) by March 31, 2020 (as so extended, the “Second Target Date”), Tenant
shall be entitled as Tenant’s sole and exclusive remedy by reason of such delay, to a credit against the first Fixed
Rent thereafter due and payable in the amount of $2,847.52 for each day after the Second Target Date until Landlord’s
Additional Premises Work is Substantially Completed or (C) by May 31, 2020 (as so extended) then, until
Landlord’s Additional Premises Work is Substantially Completed, Tenant shall be entitled to terminate this Agreement by
notice to Landlord, in which event this Agreement shall be deemed null and void and of no further effect, the Lease shall
remain in full force and effect according to its terms, the Additional Premises shall be Offer Space under the terms and
conditions of Article 43 of the Original Lease and Landlord shall return any sums paid by Tenant to Landlord under this
Agreement (but if Tenant shall not exercise Tenant’s termination right, the credit shall continue to accrue until
Landlord’s Additional Work is Substantially Completed).
(c) For
the purposes of this Agreement, “Substantially Completed” or “Substantial Completion” or
“Substantially Complete” shall have the meaning ascribed to such terms as set forth in the Original Lease except
that all references therein to: (i) “Landlord’s Pre-Delivery Work” shall mean “Landlord’s Additional
Premises Work,” and (ii) “Landlord’s Post-Delivery Work” shall mean “AP Post-Commencement Work.”
For the avoidance of doubt, all the provisions set forth in the definition of “Substantially Completed” or “Substantial
Completion” or “Substantially Complete” set forth in the Original Lease shall apply to Landlord’s Additional
Premises Work and AP Post Commencement Work, including, without limitation, the conduct of a walk-through and Landlord’s
obligation with respect to completing all Punchlist Items respecting Landlord’s Additional Premises Work and AP Post-Delivery
Work.
(d) (i) Following
the Additional Premises Commencement Date, Landlord, at its expense and in compliance with all applicable Requirements, shall diligently
perform the following work in the Additional Premises (the “AP Post-Commencement Work”):
(A) Fireproof
and firestop the Additional Premises, as necessary;
(B) Ensure
that all exterior windows in the Additional Premises are placed in good working order and are of consistent style and condition;
(C) Stub
all Building Systems to the core of the sixth (6th) floor in good working order (it being agreed that Tenant shall connect such
Building Systems and services to the Additional Premises);
(D) Furnish
a demand electrical load of six (6) watts per usable square foot of the Additional Premises exclusive of the electricity to
operate the Building Systems, the Exclusive Elevators (including the Additional Exclusive Elevator, Tenant’s AC System, Tenant’s
Communications Equipment and Tenant’s Generator, if any), but inclusive of the electricity utilized by any Supplemental AC
Systems serving the Additional Premises (the “Basic Capacity”). For purposes hereof the Additional Premises
shall be deemed to contain 4,624 useable square feet;
(E) Furnish
subpanels for the connection of the Additional Premises to the Building’s Class E System.
(ii) For
the avoidance of doubt, the AP Post-Commencement Work shall not be required to be Substantially Completed as a condition to the
occurrence of the Additional Premises Commencement Date. Landlord shall perform the AP Post-Commencement Work diligently, and
Landlord and Tenant shall take commercially reasonable steps to coordinate the performance of the AP Post-Commencement Work by
Landlord and the performance of the Additional Premises Initial Improvements (as hereinafter defined) by Tenant so that neither
is delayed in the completion of its work. Tenant shall provide Landlord access to the Additional Premises necessary to perform
the AP Post-Commencement Work without the same constituting a constructive eviction and without any abatement of Rental. Notwithstanding
the foregoing, Landlord shall use commercially reasonable efforts to perform the AP Post- Commencement Work in a manner so as
not to delay Tenant in the completion of the Additional Premises Initial Improvements or in the occupancy of the Additional Premises
for the conduct of Tenant’s business.
(iii) All
references in the Lease to Landlord’s Work, the Initial Alterations, the Tenant Improvement Allowance, the Storefront Alterations,
the Restroom Alterations and Tenant’s AC System Alterations shall be deemed applicable only to the Original Premises (except
as provided in Section 3 and Section 4 below).
(iv) With
respect to the Additional Premises Initial Improvements, and the Additional Tenant’s AC System Alterations (as hereinafter
defined), Landlord hereby approves the contractors and subcontractors listed on Schedule H of the First Amendment plus the
following contractors: John Gallin & Son; Apogee; Icon Interiors; Petretti; and JG Fitzgerald. Additionally, Tenant shall
have the right to continue to use Securitas or another reputable vendor as Tenant’s private security vendor.
(v) Notwithstanding
the foregoing or anything contained herein to the contrary, Landlord shall endeavor to cause Substantial Completion of the AP Post-
Commencement Work to occur on or prior to the date which is 60 days following the Additional Premises Commencement Date (such date,
subject to day-for-day extension due to Unavoidable Delays and delays caused by Tenant or Persons Within Tenant’s Control,
the “Post Commencement Work Target Date”), and provided that no Event of Default shall have occurred and then
be continuing, if Landlord shall not have achieved Substantial Completion of the AP Post-Commencement Work within thirty (30) days
after the Post-Commencement Work Target Date (such date, subject to day-for-day extension due to Unavoidable Delays and delays
caused by Tenant or Persons Within Tenant’s Control, the “Outside Post Commencement Work Target Date”),
Tenant shall be entitled, as Tenant’s sole and exclusive remedy by reason of such delay, to a credit against the first Fixed
Rent thereafter due and payable in the amount of $1,423.76 for each day after the Outside Post Commencement Work Target Date until
the AP Post-Commencement Work is Substantially Completed.
3. Additional
Premises Improvement Allowance. In consideration of Tenant’s acceptance of the Additional Premises in its “as
is” condition (except for Landlord’s Additional Premises Work and the AP Post-Commencement Work as expressly set
forth in this Agreement), and Tenant’s agreement to perform leasehold improvements to prepare the Additional Premises
for Tenant’s initial occupancy (the “Additional Premises Initial Improvements”), Tenant shall be
entitled to an allowance in the amount of $453,760.60 (the “Additional Premises Improvement Allowance”),
which shall be disbursed to Tenant in accordance with the terms and conditions of Section 6.5 of the Original Lease, provided
that (a) all references therein to (i) the “Premises” shall be deemed to refer to the “Additional
Premises”, (ii) the “Initial Alterations” shall be deemed to refer to the “Additional Premises
Initial Improvements”, (iii) the “Tenant Improvement Allowance” shall be deemed to refer to the
“Additional Premises Improvement Allowance” and (iv) the “Commencement Date” shall be deemed to
refer to the “Additional Premises Commencement Date”; (b) the reference in Section 6.5(B)(ii) to
“the entire rentable areas of the 10th, 11th and 12th floors” shall be deemed to refer to “the entire
Additional Premises”; and (c) Section 6.5(F) shall be amended by deleting the phrase “the
Storefront Allowance, the Restroom Allowance and Tenant’s AC System Allowance” and replacing the same with
“the Additional Tenant’s AC System Allowance”. The Additional Premises Initial Improvements shall be
subject to all of the terms and conditions of Article 6 of the Original Lease, including without limitation,
Landlord’s approval of the plans and specifications therefor and the amendments to Section 6.1(B)(1) and
Section 6.2 of the Original Lease set forth in Section 14(c) and Section 14(d) of the First
Amendment (which shall apply to the Additional Premises). Landlord acknowledges and agrees that, subject to compliance with
such terms and conditions, Tenant shall have the right, as part of the Additional Premises Initial Improvements, to connect
the vertically contiguous floors of the Additional Premises, provided that any internal stairwell or slab opening shall
constitute Specialty Alterations under the Lease. In addition, Landlord acknowledges that, as provided in Section 4 of
the First Amendment with respect to the Additional Restroom Allowance, there is an unpaid balance of $58,000.00 for
Tenant’s use in connection with Alterations to the restrooms on the north side of the 6th floor.
4. Additional
Tenant’s AC System Allowance. In addition to the Additional Premises Improvement Allowance, in consideration of Tenant’s
agreement to perform Alterations to extend Tenant’s AC System to serve the Additional Premises in compliance with all applicable
Laws (the “Additional Tenant’s AC System Alterations”), Tenant shall, subject to the terms hereof, be
entitled to an allowance in the amount of $91,241.38 (the “Additional Tenant’s AC System Allowance”),
which shall be disbursed to Tenant in accordance with the terms and conditions of Section 6.8 of the Original Lease, provided
that all references therein to (i) “Tenant’s AC System Alterations” shall be deemed to refer to the “Additional
Tenant’s AC System Alterations”, (ii) “Tenant’s AC System Allowance” shall be deemed to refer
to the “Additional Tenant’s AC System Allowance”, and (iii) the “Commencement Date” shall be
deemed to refer to the “Additional Premises Commencement Date”. The Additional Tenant’s AC System Alterations
shall be subject to all of the terms and conditions of Article 6 of the Original Lease (as amended by this Agreement), including
without limitation, Landlord’s approval of the plans and specifications therefor and the amendments to Section 6.1(B)(1) and
Section 6.2 of the Original Lease set forth in Section 14(c) and Section 14(d) of the First Amendment
(which shall apply to the Additional Premises).
5. Fixed
Rent.
(a) Tenant
shall continue to pay the Fixed Rent and Operating Expense Payment applicable to the Original Premises pursuant to the terms and
conditions of the Lease (as unamended by this Agreement).
(b) In
addition, from and after the Additional Premises Rent Commencement Date, Tenant shall pay the Fixed Rent and Operating Expense
Payment applicable to the Additional Premises at the rates set forth on Schedule B annexed hereto.
(c) For
the avoidance of doubt, Tenant shall not be required to pay Fixed Rent with respect to the Additional Premises during the period
from the Additional Premises Commencement Date through and including the day immediately preceding the Additional Premises Rent
Commencement Date.
6. Escalation
Rent.
(a) Tenant
shall continue to pay the Escalation Rent applicable to the Original Premises pursuant to the terms and conditions of Article 3
of the Lease (as unamended by this Agreement).
(b) In
addition, from and after the Additional Premises Commencement Date, Tenant shall pay Escalation Rent applicable to the Additional
Premises in accordance with the terms and conditions of Article 3 of the Lease, provided, however, that as applicable
to the Additional Premises, (i) the term “Base Tax Factor” shall mean the Taxes payable for the calendar
year commencing on January 1, 2020 and ending on December 31, 2020 (i.e., the average of the Taxes payable for the Tax
Years commencing July 1, 2019 and July 1, 2020), and (ii) the term “Tenant’s Share” shall
mean 1.976%.
7. Electric
Current. As of the Additional Premises Commencement Date, Landlord shall furnish the Basic Capacity to the Additional Premises,
and in no event shall the electrical load in the Additional Premises exceed the Basic Capacity. Such electricity shall be provided
upon and subject to the terms and conditions set forth in Article 4 of the Original Lease, except that with respect to the
Additional Premises, the reference in Section 4.2(A) of the Original Lease to “one hundred eight percent (108%)”
shall be deemed to refer to “one hundred four percent (104%)”.
8. Security
Deposit. Throughout the Term, Landlord shall continue to hold the Security Deposit in accordance with the terms and conditions
of Article 35 of the Lease. Landlord and Tenant acknowledge and agree that Tenant shall not be required to increase the Security
Deposit in conjunction with its leasing of the Additional Premises.
9. Brokers.
Each of Landlord and Tenant represents and warrants that it has had no dealings or communications with any broker or agent in connection
with this Agreement, other than CBRE, Inc. (the “Broker”). Landlord and Tenant covenant and agree to pay,
hold harmless and indemnify the other party from and against any and all claims or other liability for any compensation, commissions
or charges claimed by any broker or agent (other than the Broker with respect to Tenant’s indemnity to Landlord) who claims
to have dealt with the indemnitor in connection with this Agreement and for any and all costs incurred by the indemnitee in connection
with such claims, including without limitation, attorneys’ fees and disbursements. Landlord shall pay the Broker its commission
pursuant to one or more separate agreements. The provisions of this Section 9 shall survive the expiration or sooner termination
of this Agreement.
10. Expansion
Options. For the avoidance of doubt, Section 12 of the First Amendment shall be deleted in its entirety.
11. Options
to Renew. The Additional Premises shall be included in Tenant’s Renewal Options, as described in Section 13 of the
First Amendment.
12. Additional
Lease Modifications.
(a) In
lieu of so-called free freight elevator usage for Tenant’s initial move into the Additional Premises, Landlord shall grant
Tenant a credit in the amount of $10,200.00 against the installment(s) of Fixed Rent first due and payable following the Additional
Premises Rent Commencement Date;
(b) Landlord
shall furnish sufficient steam heat to the Additional Premises for the comfortable occupancy of the Additional Premises through
perimeter radiators and all other services provided by Landlord to the Original Premises.
13. Certification;
Ratification. As of the date hereof, Tenant certifies to Landlord that to the best of Tenant’s knowledge, (i) Landlord
is not in default under the terms or conditions of the Lease and Tenant is not entitled to any credits or offsets against the rent
due thereunder; and (ii) no event has occurred which would constitute a default under the Lease, either upon service of notice
or the passage of time. Except as and to the extent modified by this Agreement, all of the terms, covenants and conditions of the
Lease are hereby ratified and confirmed and shall remain in full force and effect.
14. Signatures.
This Agreement is offered for signature by Tenant and it is understood that this Agreement shall not be binding upon Landlord or
Tenant unless and until Landlord shall have executed and delivered a fully-executed copy of this Agreement to Tenant.
15. No
Oral Modification. This Agreement may not be changed or terminated orally, but only by an agreement in writing signed by Landlord
and Tenant.
16. Counterparts;
Electronic Signatures, Etc. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original,
but all of which when taken together will constitute one and the same instrument. The signature page of any counterpart of
this Agreement may be detached therefrom without impairing the legal effect of the signature(s) thereon provided such signature
page is attached to any other counterpart of this Agreement identical thereto except having an additional signature page executed
by the other party(ies) to this Agreement attached thereto. An executed counterpart of this Agreement transmitted by facsimile,
email or other electronic transmission shall be deemed an original counterpart and shall be as effective as an original counterpart
of this Agreement and shall be legally binding upon the parties hereto to the same extent as delivery of an original counterpart.
-Balance of page is blank; Signature
page follows-
IN WITNESS WHEREOF, this Agreement
has been executed as of the day and year first above written.
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LANDLORD:
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TRINITY HUDSON HOLDINGS, LLC
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By:
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/s/ Sujohn Sarkar
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Sujohn Sarkar
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Chief Executive Officer
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By:
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/s/ Susan MacEachron
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Susan MacEachron
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Chief Financial Officer
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TENANT:
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SQUARESPACE, INC.
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By:
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/s/ Courtenay O’Connor
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Name:
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Courtenay O’Connor
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Title:
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General Counsel
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Exhibit
10.21
FOURTH AMENDMENT OF LEASE
THIS FOURTH AMENDMENT OF LEASE, dated as
of the 16th day of December 2019 (this “Agreement”), made by and between TRINITY HUDSON HOLDINGS, LLC,
a Delaware limited liability company, having its office at 76 Trinity Place, New York, New York 10006 (“Landlord”),
and SQUARESPACE, INC., a Delaware corporation, having an address at 225 Varick Street, 12th Floor, New York, New York 10014
(“Tenant”).
W I T N E S E T H:
WHEREAS, Landlord and Tenant are the parties
to an Agreement of Lease dated as of September 19, 2014 (the “Original Lease”), which Original Lease has
been amended by (i) a letter from Tenant to Landlord, dated March 24, 2015, (ii) a Commencement Date Agreement,
dated as of April 23, 2015, (iii) a letter dated June 30, 2016 (iv) a First Amendment of Lease dated as of
August 18, 2017, (v) a Second Amendment of Lease dated as of October 6, 2017, (vi) a letter dated August 2,
2018 and (vii) a Third Amendment of Lease dated as of May 22, 2019 (the “Third Amendment”) (the Original
Lease, as so amended, the “Lease”), whereby Landlord leases to Tenant portions of the rentable areas of the
ground floor, basement and roof, and the entire rentable area of each of the fifth (5th), sixth (6th), tenth (10th), eleventh (11th)
and twelfth (12th) floors (as more particularly set forth in the Lease, the “Original Premises”) of the building
known as 225 Varick Street, New York, New York (the “Building”) for a term expiring on October 31, 2030;
and
WHEREAS, Landlord and Tenant desire to amend
the Lease with respect to the portion of the sixth (6th) floor of the Building demised pursuant to the Third Amendment (the “Additional
Premises”), and to otherwise amend the provisions of the Lease, all upon and subject to the terms and conditions contained
in this Agreement.
NOW, THEREFORE, in consideration of the
premises and of the mutual covenants and conditions hereinafter set forth, the parties agree as follows:
1. Defined
Terms. All capitalized terms used in this Agreement which are not otherwise defined herein shall have the meanings ascribed
to them in the Lease.
2. Amendments
to Third Amendment.
(a) Landlord
shall no longer be obligated to perform Landlord’s Additional Premises Work. In lieu thereof, and in consideration of Tenant
performing Landlord’s Additional Premises Work (except the items thereof that shall be included in the AP Post Commencement
Work, as described below), the Additional Premises Improvement Allowance is hereby increased by the amount of $85,761.00 from $453,760.60
to $539,521.60. Notwithstanding anything to the contrary contained in the Third Amendment, the period of time during which Tenant
may make requisitions with respect to the Additional Premises Improvement Allowance, the Additional Tenant’s AC System Allowance
and the Additional Restroom Allowance (referred to in Section 3 of the Third Amendment) shall be extended through December 31,
2023.
(b) The
Additional Premises Commencement Date is January 1, 2020 and the Additional Premises Rent Commencement Date is November 1,
2020. For the avoidance of doubt, Sections 2 (b) (i) and (ii) of the Third Amendment are deleted in their entirety.
However, Section 2 (b) (iii) of the Third Amendment shall continue to apply to Landlord’s obligation to deliver
to Tenant possession of the Additional Premises in accordance with this Agreement by the dates set forth in Section 2 (b) (iii) of
the Third Amendment, including the credits and right to terminate set forth in that Section, but without reference to Substantial
Completion of Landlord’s Additional Premises Work or the hold over of the current tenant of the Additional Premises. Schedule
B of the Third Amendment is deleted in its entirety and Schedule B annexed to this Agreement is substituted therefor (with
the addition of Schedule B-1 showing the schedule of the Fixed Rent and Operating Expense Payment for the entire Original
Premises, including the Additional Premises). Landlord represents to Tenant that, on the date of this Agreement, (i) the Additional
Premises are (x) vacant (so that Tenant may enter the Additional Premises prior to the Additional Premises Commencement Date
to prepare the Additional Premises for Tenant’s occupancy on all of the terms of the Lease except Tenant shall not be required
to pay Fixed Rent or the Operating Expense Payment with respect to the Additional Premises until the Additional Premises Commencement
Date and (y) broom clean and free of violations that would prevent Tenant from preparing the Additional Premises for Tenant’s
occupancy or occupying the Additional Premises and (ii) all Building Systems serving the Additional Premises are in good working
order.
(c) Item
(F) of Landlord’s Additional Premises Work is hereby added as an additional item to the AP Post-Commencement Work. In
addition, to the extent that the installation of Danfoss control valves with control handles described in Item (C) of Landlord’s
Additional Premises Work has not been Substantially Completed by the Additional Premises Commencement Date, then such work shall
also be added as an additional item of the AP Post- Commencement Work. Landlord represents that Item (E) of Landlord’s
Additional Premises Work has been Substantially Completed. Tenant shall give Landlord at least thirty (30) days’ advance
written notice of the date on which Tenant wishes Landlord to commence the performance of the AP Post-Commencement Work (the “AP
Post-Commencement Work Start Date”), including the work set forth in item (F) of Landlord’s Additional Premises
Work, provided that such notice, at Tenant’s election, may be given separately for the item (F) work and the balance
of the AP Post-Commencement Work, so that, if separate notices are given, such work would be performed at different times and the
30-day notice period set forth above in this paragraph (c) and the time periods set forth below in this paragraph (c) shall
apply separately to the item (F) work and the balance of the AP Post-Commencement Work. Accordingly, (i) the Post Commencement
Work Target Date referred to in Section 2(d)(v) of the Third Amendment shall be the date which is 60 days after the AP
Post-Commencement Work Start Date and (ii) the Outside Post Commencement Work Target Date referred to in Section 2(d)(v) of
the Third Amendment shall be the date which is thirty (30) days after such revised Post Commencement Work Target Date. As so amended,
Section 2(d)(v) of the Third Amendment remains in effect.
3. Signatures.
This Agreement is offered for signature by Tenant and it is understood that this Agreement shall not be binding upon Landlord or
Tenant unless and until Landlord shall have executed and delivered a fully-executed copy of this Agreement to Tenant.
4. No
Oral Modification. This Agreement may not be changed or terminated orally, but only by an agreement in writing signed by Landlord
and Tenant.
5. Counterparts;
Electronic Signatures, Etc. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original,
but all of which when taken together will constitute one and the same instrument. The signature page of any counterpart of
this Agreement may be detached therefrom without impairing the legal effect of the signature(s) thereon provided such signature
page is attached to any other counterpart of this Agreement identical thereto except having an additional signature page executed
by the other party(ies) to this Agreement attached thereto. An executed counterpart of this Agreement transmitted by facsimile,
email or other electronic transmission shall be deemed an original counterpart and shall be as effective as an original counterpart
of this Agreement and shall be legally binding upon the parties hereto to the same extent as delivery of an original counterpart.
-Balance of page is blank; Signature
page follows-
IN
WITNESS WHEREOF, this Agreement has been executed as of the day and year first above written.
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LANDLORD:
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TRINITY HUDSON HOLDINGS, LLC
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By:
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/s/ Sujohn Sarkar
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Sujohn Sarkar
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Chief Executive Officer
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By:
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/s/ Susan MacEachron
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Susan MacEachron
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Chief Financial Officer
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TENANT:
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SQUARESPACE, INC.
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By:
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/s/ Courtenay O’Connor
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Name:
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Courtenay O’Connor
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Title:
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General Counsel
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Exhibit 21.1
Subsidiaries of the Registrant
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Name of Entity
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Jurisdiction
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Squarespace Ireland Limited
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Ireland
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Squarespace Domains LLC
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Delaware
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Unfold Creative, LLC
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Delaware
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Tock LLC
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Delaware
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Exhibit 23.2
Consent of Independent Registered
Public Accounting Firm
We
consent to the reference to our firm under the caption "Experts" and to the use of our report dated March 11, 2021,
in the Registration Statement on Form S-1 and related Prospectus of Squarespace, Inc. for the registration of its Class A
common stock.
/s/
Ernst & Young LLP
New
York, New York
April
16, 2021
Exhibit 23.3
Independent
AUDITORS’ Consent
We consent to the inclusion in this
Registration Statement of Squarespace, Inc. on Form S-1 of our report dated February 26, 2021, with respect to our audit of the
financial statements of Tock, Inc. as of December 31, 2020 and for the year then ended which report appears in the Prospectus, which
is part of this Registration Statement. We also consent to the reference to our Firm under the heading “Experts” in such
Prospectus.
/s/ Marcum LLP
Marcum LLP
Chicago, IL
April 16, 2021
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